The GAIN AI Act prioritizes domestic chip access and curbs exports to China, countering Nvidia’s resistance and safeguarding national security in a multipolar world.
After the United States won the Cold War, American politicians seemed to believe that the unipolar moment would last forever. They also believed that America’s victorious glow would radiate democracy to all countries, including the People’s Republic of China (PRC). Then-President Bill Clinton said as much in 2000: “The more China liberalizes its economy, the more fully it will liberate the potential of its people.” He further explained that the Chinese would “demand a greater say.”
This did not happen. In the ensuing decades, China has become both more dictatorial and more powerful, rising to challenge the United States for global supremacy in the new multipolar world. American companies, however, have been slow to realize this. Addicted to Chinese markets and profits, they wish to continue trading with China as if it were still the 1990s. These exports are often high-value products, such as computer chips, crucial for China’s economy.
Introducing the GAIN AI Act
Some elected officials have understood that the page needs to turn and that these wanton exports need to stop. One such official is Senator Jim Banks (R-IN), whose Guaranteeing Access and Innovation for National Artificial Intelligence Act (GAIN AI Act) seeks to ensure American companies have access to the latest and most advanced chips before they are exported to other countries, including America’s adversaries.
Specifically, the bill holds that it should be “the policy of the United States…to deny license for the export of the most powerful artificial intelligence chips.” To that end, it would mandate a 15-day right-of-first refusal for American companies before chips could be exported and would prohibit export whenever there is a backlog of chips. Furthermore, it requires fair pricing, ensuring American companies get the same offer as foreign companies.
While the GAIN AI Act does not target China by name, it is clear that going after chip manufacturers who sell to the PRC was the intent. Senator Banks said as much when he argued the bill puts “American companies and researchers before our adversaries like China.” It has already won plaudits from some groups like Americans for Responsible Innovation, who wrote it “would be a major win for US economic competitiveness and national security.”
Nvidia Pushes Back
But the bill also has its detractors, namely Nvidia, one of the major chip producers, who would very much like sales to continue to China unabated: last year, the company made over $17 billion in sales in China. Since the GAIN AI Act was released, the company has put it on full blast. In a statement, Nvidia claimed, “We never deprive American customers in order to serve the rest of the world. In trying to solve a problem that does not exist, the proposed bill would restrict competition worldwide in any industry that uses mainstream computing chips.”
Nvidia is wrong to critique the bill for multiple reasons.
The first is that their criticism is simply nonsensical. Nvidia claims that it would “never deprive American customers in order to serve the rest of the world.” But if this were the case, there would be nothing in the bill to concern them. Yes, American companies will be granted a right-of-first refusal. But if they already have all the chips they need, then there’s no sales lost here. American companies will be full up on chips, and Nvidia will be free to sell them elsewhere. The only reason for Nvidia to be concerned is if its practices are indeed causing a chip backlog.
In a second statement, Nvidia doubled down on its complaint, saying its sales “do not deprive US customers of anything—and in fact expand the market for many U.S. businesses and industries.” Which leads to the second reason Nvidia is wrong to critique the bill: the fact that it is no longer the 1990s.
A New Global Order
Again, this has been an extraordinarily difficult fact for policymakers and analysts to accept. Even as late as the early 2010s, scholars were writing that China was “vindicating classical modernization theory,” which holds that economic advancement turns countries into democracies.
In the post-Cold War unipolar moment, this may have made sense (it did not, but it at least fit into the framework of those who were then in power). There was no one to challenge the United States, so opening markets was no issue. Thus, many companies—including Nvidia—got wealthy off the Chinese.
But times have changed. China is rapidly increasing its economic, military, and even cultural strength. There is absolutely no reason why the United States should fully support the unrestricted sale of key computer chips to an adversary that has made clear it wishes to supplant America.
In the 1960s, selling crucial rocket parts to the Soviet Union would have been seen as anathema, even a crime. While the multipolar world order will likely be messier than the bipolar Cold War—this time there are at least three poles instead of two, after all—logic holds that the United States should treat China somewhat similarly to the Soviet Union, at least when it comes to the export of critical technologies. There are some markets that do not need to be expanded, and some competitions that do not need to be had: the American chip market in China is one such example.
The GAIN AI Act Ensures US Companies Succeed
The bill, to be clear, does not make it a crime to export to China; companies like Nvidia will still be allowed to do so. It instead simply ensures American companies have access to the chips they need to succeed.
Fortunately, the Senate has already included the GAIN AI Act in the National Defense Authorization Act (NDAA)—but final passage is still uncertain, as it can easily be stripped out. Senators and congressmen should ignore Nvidia’s cries and ensure the act remains a part of the NDAA until it gets to President Donald Trump’s desk.
About the Author: Anthony J. Constantini
Anthony J. Constantini is a Policy Analyst at the Bull Moose Project and the Foreign Affairs Editor at Upward News. He has been published on foreign affairs and the multipolar world order in domestic and international publications, including The National Interest, The American Conservative, Brussels Signal, American Affairs, and more.
Image: Alexander Supertramp/shutterstock
