America’s National Security Concerns Over China Shouldn’t Imperil Its Leadership in Technical Standards Development
The United States is a global leader in advanced technology in part due to the open, voluntary, industry-led, and consensus-based way in which international technical standards are made. It’s the secret sauce that translates U.S. technological innovation and ingenuity into standards power. The open international standards system allows technical experts from around the world (whether from government, academia, or the private sector) to both work and compete against each other (often in different standards bodies) on the strengths of their technology and their expertise in developing the most useful technical solutions. However, some U.S. national security officials are putting this system at risk as they target Chinese firms’ participation in international standards-setting activities. Targeting standards-setting activities just because certain Chinese firms participate puts the international standards-setting system—and the U.S.’s leading role in it—at risk.
Some U.S. national security officials mistakenly think that growing Chinese participation in developing technical standards is a risk in and of itself and that technical standards involve sharing sensitive technical information. When combined with the mistaken view that standards development is a zero-sum, adversarial process in which China is winning and the United States is losing, and it’s leading to poorly tailored policies. A clear recent example of this is the Department of Commerce Bureau of Industry and Security’s entity listing of Huawei (on national security grounds) without including a clear, nuanced, and sufficiently broad exemption for standards development and the bodies where Huawei and other listed firms participate.
In response, U.S. firms withdrew from certain standards bodies for fear of breaching U.S. law, creating a vacuum into which others not subject to U.S. jurisdiction stepped in. Some standards bodies have shifted to Europe and elsewhere to avoid the risk of running afoul of potential legal ramifications. More importantly, several Chinese firms created parallel standards development efforts in China that duplicate efforts already under way in international fora. Unsurprisingly, many of these efforts are closed to participation by non-Chinese entities. In a fair accusation of hypocrisy, China criticized the United States for closing off standards setting, which is exactly what the United States condemns China for in its own standards-setting activities. While it’s a false equivalence, as the closed nature of China’s standard-setting system is a feature and not a bug like in the United States, it still rings true. More concerning is that this misunderstanding about the standards-setting system and China’s growing role in it may become even more problematic if it becomes a central feature in the forthcoming U.S. standards strategy.
U.S. national security concerns are driven by China’s growing presence on leadership committees at standards organizations and the growing number of standards proposals from Chinese participants. This is the wrong approach to weighing up influence. Holding these positions does not equal power and influence. A standards committee chair can undoubtedly shape the agenda, people’s speaking order, and how meetings are run. For example, putting someone at the end of a meeting means it’s unlikely they’ll get their full time or the crowd’s full attention. But these leadership positions do not mean that their standards proposals are more likely to be approved or that they can arbitrarily demand votes from people. This might be how standards committees work in China, but it’s not so across the rest of the world, and certainly not in standards organizations that have robust rules and procedures that are rigorously followed.
Standardization power and influence come from writing practical and technically robust standards submissions. The clearest example of true standardization power comes from contributors submitting early, well-developed drafts that essentially form the basis for discussions that ultimately lead to completed standards. The tyranny of the first draft is critical to standardization—it can have a disproportionate influence on the outcome as it sets the direction and scope for the subsequent negotiation. The expert (or experts) that drafts first, and drafts well, has influence. The United States has developed a pool of experts that are good at this. This is why the United States should encourage all its stakeholders—large and small firms, academia, and government—to participate as early and consistently as possible. It costs a lot (in terms of salaries and expenses) for experts to engage for years at a time to develop technical standards, which is why the United States should help by allowing international standards-setting costs to qualify as expenditures for the research and experimentation tax credit.
Some U.S. national security officials mistakenly equate the growing number of submissions from Chinese participants with a growing influence. However, it’s the quality of standards proposals, not the quantity, that counts. This may not be true for Chinese participation in every standards forum, but there are stories of Chinese participants at the International Telecommunications Union’s Standardization Sector (ITU-T) presenting many poorly drafted standards submissions (sometimes copying-and-pasting material from online material or breaking up one proposal into several contributions). This can lead to dozens, if not hundreds, of poorly drafted submissions that need to be reviewed. Equally important is the relevance of the proposal to the problem being addressed. Proposals for standards for areas with no current need, such as technologies still in early research stages or demonstrative phases, will not proceed. For example, in December 2022, the ITU-T established a new effort to identify standards for the metaverse, even though there is (as yet) no agreement on what the even metaverse is.
Chinese participants do this as China’s centrally managed, metrics-driven planned economy has a bounty system that incentivizes firms to make submissions—the more, the better—with little regard to quality or relevance. These poorly informed and developed submissions undermine the efficiency of standards bodies as leaders and key experts spend many hours, days, and weeks analyzing and arguing why these bad contributions shouldn’t proceed or be used. This process is made all the more painful as, in many cases, Chinese contributors don’t even try to defend themselves, as they’ve already accomplished their mission.
Many Chinese firms struggle to understand and impact standards as they are latecomers to standardization, especially in cutting-edge information communication technologies. For example, a recent academic study analyzing data from the Third Generation Partnership Project (3GPP, a grouping of standards organizations that develop protocols for mobile telecommunications) found that contributions from Chinese latecomers are significantly less likely to be accepted than those from more-established actors from industrialized economies as experience and reputation are closely associated with success in international ICT standardization. This result is intuitive, but given the difficulty in analyzing data on standards setting, it’s useful nonetheless. This would inevitably impact China’s overall impact on global standards setting. For example, a report from the European Chamber of Commerce in China and the Swedish Institute of International Affairs estimated that China is responsible for just 1.8 percent of international technical standards. This indicative estimate is far lower than China’s contribution to global gross domestic product (GDP). While it’d be difficult to calculate, when considering contributions to technical standards as a ratio of GDP, China’s share would more than likely be much lower compared to leaders such as the United States, United Kingdom, Germany, France, and Japan.
Ironically, Chinese policymakers have enacted reforms to open up their far more closed standards-setting system as they recognize it is a weakness to developing better and more relevant standards. For example, China’s 2019 Foreign Investment Law makes technical committees for standards open to foreign entities. They’re also allowing consortia and other standards bodies in China to make their system more flexible as they recognize that a central feature of the United States’ successful standards-setting system is that competition between standards bodies should be welcomed, as it makes for a richer marketplace among products and services.
China’s ability to coordinate and direct Chinese stakeholders at standards meetings raises legitimate concerns, but instead of focusing on their participation, the United States should focus on the good governance of international standards bodies. Whether it’s keeping a check on individuals in leadership roles, the quality of contributions, or the consensus-based nature of discussions, what matters is ensuring that the process is transparent, open to all interested stakeholders and that there are clear and fair mechanisms for debate, review, voting, and dispute resolution. To help China enhance its governance of and participation in standards-setting bodies, the U.S. government needs to set up better communication and engagement with private sector participants so that they fully understand what is going on, where, and with who as it relates to standards.
It’s one thing for the United States to criticize China’s state-directed, country-specific (not internationally aligned) standards-setting system for its lack of transparency, openness to foreign participants, open (and not directed) voting, and lack of a genuine dispute resolution mechanism. It’s also equally fair to target China’s efforts to export its country-specific standards to other countries. Countering these policies should be a priority. The United States should improve its awareness of what is happening in standards-setting bodies by engaging the private sector and sharing information with like-minded countries, among other actions. However, when it comes to the broader global standards-setting system, the goal should be to support the good governance of relevant organizations rather than targeting specific Chinese actors, as the former acts as a guardrail for the latter.
While the World Trade Organization’s (WTO) role as the venue for new multilateral trade agreements and future trade dispute settlement is in serious jeopardy, the WTO’s Technical Barriers to Trade annex on code of good practices for standards setting remains relevant and valuable. In responding to China’s growing efforts to influence standards, the United States should not copy its approach to standards setting in closing off participation to foreign enterprises. Instead, the Biden administration and its like-minded trading partners in Australia, Japan, Singapore, and beyond should revert to first principles as agreed at the WTO and double down on their support for open, transparent, and industry-led standards development, which together demonstrates good governance for standards setting.
