Extraterritorial application of US economic and foreign policy

Over the recent decennia the world has become acquainted with the extraterritorial jurisdiction of US laws and regulations. Some US laws apply abroad, which infringes the national sovereignty of States. However, due to the political power of the US and the interstate political and economic interdependencies, the global community has learned to live with this phenomenon. For extraterritorial jurisdiction, the US laws have stated some requirements, for instance: is the foreign person or entity is regarded a domestic concern; the knowledge and/or goods originate from the US; shares of the foreign entity are traded on the US stock markets; payment is in US dollars; or there use made of US communication systems. The latter seems to be quite tricky in our digital world. Not only the US, but also the UK uses extraterritorial jurisdiction through the UK Bribery Act, be it that this only applies in predefined specific circumstances which makes jurisdiction predictable. The past twenty years the US has constantly broadened  its extraterritorial jurisdictional claims, which make it more and more unpredictable. Now we seem to have entered a new era where the law is no longer the anchor of claims, but politics navigate our globe. The era of the extraterritorial application of US economic and foreign policy without legal merits.

The US economic policy is set on preventing China to become world leader in electronics and the manufacturing and use of chips. China must by all means be prevented to produce high-spec chips. Therefore, according to the US policy, it is  adamant to prevent China to acquire technology to develop these high-end chips. ASML in Veldhoven (the Netherlands) is the manufacturer of the most advanced nanochip technology. Their machines are essential to create nanochips which can hold all information and technology necessary in almost all our daily appliances, be it a car, as washing machine or a quantum computer. The worldwide need for chips increases at a high speed. As a result more sophisticated machines are necessary to match the demand for chips worldwide.

ASML creates the machines to manufacture chips and this technology constantly evolves into high end laser technology to create the chips. The technology has been created and further developed by ASML and as a result, US sanctions do not apply. Only United Nations, European or Dutch sanction regimes apply. There are no sanctions to prevent this Dutch company of delivering their products to China if the products do not contain US content. ASML is traded on NASDAQ. But the content of their products contain no US restricted items.

The US want to prevent the Chinese manufacturers to become world leaders in nanotechnology. As a result, the US pushed hard to convince the Dutch government to prevent ASML to obtain export licenses for their high end chipmaking machines for the export to China. It is highly doubtful whether there is any legal merit to this US claim. The Dutch government succumbed to the US political strength. It would be questionable if the French or German government would have engaged in a game of political arm-wrestling with the US.

If ASML would request for an export license for their most advanced machines, they would probably not obtain it and if they did, deliver the latest technology to China, this would probably have repercussions for their large US clients as Intel, because they would likely be affected by their national economic and foreign policy. However, this raises the question if the US political environment would compromise an important company such as Intel? This may depend on who’s in charge. In the years to come, extraterritorial application of foreign and economic policy in the US may be highly unpredictable.