Beyond Boundaries: Struggle For Standards

Brigadier Rajiv Mahna

Tucked away in the last paragraph of QUAD leaders’ joint statement, issued in March 2021, is a low on optics but high on impact intent which mentions that “We will launch a critical and emerging technology working group to facilitate cooperation on international standards and innovative technologies of the future”. In February 2022, an alarmed European Commission presented a plan to bolster its influence in creating global technology standards, as the bloc acknowledged the risks relate to falling behind in global standardization organisations, where technical giants, government regulators and experts gather to set rules for how emerging technology works – everything from the internet to batteries, connected devices and beyond. Perusal of most of the relevant bilateral and multilateral agreements concluded in the last decade clearly establishes the high value attached to collaboration and cooperation commitments in the field of setting the standards.
International Organisation for Standardization defines Standards as – ‘a formula that describes the best way of doing something. Standards are ‘the distilled wisdom of people with expertise in their subject matter and who know the needs of the organisations they represent – people such as manufacturers, sellers, buyers, customers, trade associations, users, or regulators’. The European Committee for Standardization (CEN) describes standards as technical documents ‘designed to be used as a rule, guideline, or definition. It is a consensus-built, repeatable way of doing something’.
International standardization scenario presents a complex situation, driven by both state and non-state actors, through their participation in the activities of formal Standard Development Organisations (SDOs), Quasi-Formal Organisations and Industry forums including consortia. The International Organisation for Standardization (ISO),the International Electro-technical Commission (IEC) and the International Telecommunication Union (ITU) are examples of the formal SDOs. Institute of Electrical and Electronics Engineers (IEEE), the 3rd Generation Partnership Project (3GPP) and the Internet Engineering Task Force (IETF), are some of the Quasi-Formal organisations. State and non-state actors participate in SDOs, driven by technical, economic, and geopolitical interests.Economic and technological advantages of being the part of standard setting ecosystem are obvious, but it has also been clearly comprehended by the participants that standards help in achieving certain policy objectives, which may range from promoting innovation and protecting consumer rights, to safeguarding critical infrastructures and protecting national security.From economic viewpoint, standards support innovation and help develop and sustain competitiveness. International standards facilitate international trade by ready acceptance of the compliant goods in existing and new markets. Standards can also contribute to a country’s gross domestic product (GDP) and labour productivity. As per a study done by Wahlster and Winterhalter in 2020, standardization is estimated to have contributed towards the German economy €17 billion per year, while in France the average gains are estimated at €5 billion per year. Combined with intellectual property, standards provide additional monetary advantages, as licence fees etc. to companies, since many technologies that are essential parts of a standard are patented (standard essential patents – SEPs). From technical perspective, standards facilitate interoperability, allowing technologies to interact with each other. They ensure that devices and applications are built using the similar designs, rules, and protocols. Since technological competition between nations has increased, standards are gaining more attention in the geopolitical context.If a country’s actors can influence standards in strategic industries, that country could obtain a significant advantage on the international stage. Setting and following standards is also relevant in the context of the Agreement on Technical Barriers to Trade adopted at the World Trade Organization (WTO). The agreement calls on countries to base their regulations on international standards to prevent unnecessary barriers to trade.
China is competing very aggressively in the field of establishing International Standards. Since the subject of standards is vast and multifaceted, further focus of this article will be limited to relevant details about China. Chinese policymakers often invoke the idea that, third-tier companies make products, second-tier companies design technology, and first-tier companies set standards. In last few years western media has covered the so called, The China Standards 2035, extensively, in both neutral and negative manners.
China Standards 2035 has neither been released as an official document, nor approved or consensually agreed in the State Council (governing body which lays down the standardization policies). Irrespective of the terminologies used for describing the Chinese plans for standardization, ‘2035’ appears to be a research project commissioned by an entity named, Standardization Administration of China (SAC) and led by the China Academy of Engineering. The aim of this project was to assess the Chinese standardization landscape and provide further recommendations for improvement. Work commenced in January 2018 and a report was possibly submitted to the State Council in February 2021. Unofficial information indicates that some of the recommendations of this report include:
l The development of a national standardization strategy that would transform China into a ‘standardization power’ by 2035.
l A continuation of the standardization reforms, by moving to a two-layer standardization system, instead of the current system with five types of standards. Adopt a simplified system with only national standards and association standards. This could mean that standards developed by the private sector would be given more importance.
l Further engagement of Chinese stakeholders in international standardization (read SDOs).
Comprehensive analysis of available documents suggest that Chinese standardization strategy follows the broader ‘two markets, two resources’ approach (protect the domestic market, while integrating it into the international trade), and focuses on two key goals; strengthening the national standardization system and advancing engagement in international standards development processes.In October 2021, China’s State Council released its national strategy for technical standards and this document suggests that the standardization reforms which were initiated through a policy issued in 2018 are being implemented rapidly. The standardization system profile is now hybrid – ‘State Owned, Industry Driven’. The country wants to shift from being a consumer of international standards to becoming a producer and ‘exporter’ of standards. The strategy also mentions that this goal should also be pursued through regional and multilateral initiatives such as the Belt and Road Initiative (BRI) and BRICS (Brazil, the Russian Federation, India, China, and South Africa).
At the face of it, Chinese strategy is following natural aspirations of a big power for establishing its technological credentials. It is also a fact that after joining WTO IN 2001, year on year Chinese participation in SDOs has increased exponentially. China topped the list of patent applications in year 2021.China was world’s leading exporter and number two importer in year 2020(World Bank Report). Its share in global trade is 15% of the total volume. The country is also a member of large trading blocs like Regional Comprehensive Economic Partnership (RCEP), so proliferation of International Standards owned by China is a very likely scenario, provided its tactical approach towards achieving the goals remains ‘above board’, otherwise it may face stiff resistance from US, Japan, and EU.A report titled The Geopolitics of Standards: China’s Role in Standard- Setting Organisations, published in December 2021 by Diplo Foundation and Multilateral Dialogue Konrad Adenauer Foundation Geneva and authored by Sorina Teleanu mentions criticism of China by other participants in SDOs about three issues.
Firstly, the report mentions that “Chinese submit a large number of proposals that are low-quality or irrelevant to market needs in some industries. This takes valuable time and resources away from considering serious proposals”. The facts mentioned in the report support this criticism.
Secondly, “Chinese actors may abuse leadership positions within technical groups and leverage their authority to promote Chinese-led proposals without consensus or block certain proposals for the purposes of economic advantage or national prestige”. The report is not supportive of this criticism.
Thirdly, “China’s active participation in SDOs is sometimes criticized as violating the spirit of these organisations, making them less effective for other members and in some cases deliberately attempting to undermine U.S. technological leadership”. The report places this criticism in the uncertain zone since similar approach is being followed by many other nations and blocks.
China has been rather transparent while articulating its intentions of becoming global leader in standard setting. Issue of the adoption of fair practices for establishing Standard-setting leadership cannot be resolved by technological decoupling of China. However, both actors, the governments and SDOs, may consider reviewing their regulations and procedures to create adequate checks and balances for keeping China in line.
Signing off for the week, by quoting Wendy Cutler, Vice-president, Asia Society Policy Institute “It’s a really worrying situation and it’s starting to spill over into other parts of our interconnected world. It’s not just limited to the countries retaliating against each other … Both sides will need to show flexibility, so the US can’t just insist that China just dismantle its industrial policy, but China can’t deny that these policies harm its trading partners.”
Brigadier Rajiv Mahna YSM, SM, VSM is an Indian Army Veteran who has chosen to remain a student for the lifetime