1/2021 China, Europe and the New Power Competition over Technical Standards Tim Rühlig
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1/2021
China, Europe and the New Power
Competition over Technical Standards
—
Tim Rühlig
PUBLISHED BY THE SWEDISH INSTITUTE OF INTERNATIONAL AFFAIRS | UI.SE
Abstract Technical standards, which have long been treated as non-political product specifications, are be-coming the subject of power rivalry. This is the result of: (a) broader competition between China and the United States over key enabling technologies; (b) a more state-directed approach to technical standards in China; and (c) the often-overlooked power potential inherent in technical standards. Technical standardization’s transformation into an arena for power competition has challenged the European Union (EU), which has traditionally punched above its economic weight and held and still holds enormous influence over international technical standards. This paper unpacks the growing power rivalry over technical standards, develops a concept of “technical standardization power” and explains how China has successfully utilized its party-state-permeated economy to increase its technical standardization power. Finally, it summarizes the implications for the EU, outlines a number of scenarios and makes recommendations for Europe. Tim Rühlig Research Fellow The Swedish Institute of International Affairs © 2021 The Swedish Institute of International Affairs Language editing: Andrew Mash Cover photo: TT NYHETSBYRÅN
Introduction in concert with other products. In most
cases, states had no interest in these
commercial implications. In recent years,
Standards support acceleration of our
however, states have rediscovered the
domestic economic reform and our
power potential of technical standards,
international status. […] Technical
which had once been utilized by nation
standardization will help spread Chinese
states in the late 19th and early 20th
wisdom to the world and contribute to the
century. The recent trend is the result of
construction of a multipolar world.
three factors.
- Senior Chinese national ministry official,
Qingdao, October 2019
First, we are witnessing a broader trend of
emerging competition over key enabling
Geo-economic rivalry is back on the
technologies between the United States
international agenda, including competition
(US) and the People’s Republic of China
for the lead in high technology and
(PRC). Second, the PRC has adopted a very
innovation. Within this field, albeit largely
different approach to technical
overlooked, technical standards risk
standardization. In the West, technical
becoming a major battlefield with far-
standards are developed by private sector
reaching consequences. Only a few years
standards developing organization (SDOs)
ago, technical standards were seen purely
in what is at its core private self-regulation.
as non-political enablers of globalization.
In Information and Communication
While companies competed over technical
Technologies (ICT) standardization
standards, with some minor exceptions,
consortia, for example, commercial entities
they did not appear to be an area of concern
make up more than 90% of the
to states.
membership. In Europe, the role of public
agencies (state organs and the European
This is hardly surprising since technical
Commission) is limited to licensing a small
standards are voluntary product
number of SDOs. In Sweden and at the
specifications developed by industry. For
European level, only three organizations are
example, USB is a standard for cables,
allowed to develop national and European
connectors and protocols that enables
standards, respectively. In the US, the role
charging and the exchange of data on a
of government is even more limited. The
wide range of devices. Similarly, Wi-Fi is a
Chinese standardization system, by
family of radio technologies built on
contrast, is a state-steered one. For many
technical standards that allow for wireless
years, it was entirely controlled by the
local area networking of a wide range of
Chinese party-state. A new standardization
technological equipment. Technical
law of 2018 has supplemented the state tier
standards allow products of all kinds to be
of standardization with a “market” tier.
applicable in a wide range of contexts
However, even this market tier is subject to
across countries and manufacturers. They
considerable party-state influence. This
create interoperability and guarantee basic
makes technical standardization part of the
safety. Hence, technical standards facilitate
Chinese party-state’s strategic industrial
globalization and international trade.
policymaking and turns it into a political
tool. China’s growing footprint in
The inherent commercial force of technical
international technical standardization has
standards has always been beyond doubt.
sparked international interest in and
Products that do not comply with technical
concern over the Chinese approach. Third,
standards cannot be sold on world markets
and as a result of the first two trends, the
because they only work in isolation and not
© 2021 The Swedish Institute of International Affairs 3
power potential of technical standards has technology. Around 55% of all ICT
come to the notice of Chinese and US standards are patented technology in
leaders. widely applied in fields such as
telecommunications, e-commerce,
As long as technical standards appeared electronics, the life sciences, the health
non-political, European actors have been sector, manufacturing and the automotive
able to punch above the continent’s sector. One-third of the entire new
economic weight. Recent developments generation wireless technology, better
endanger the European Union’s (EU) known as 5G, is believed to consist of
stronghold in technical standardization and standardized patented technology. At first
will require the EU to readjust its glance, this might be surprising since
standardization policy. technical standards and patents exist for
contrasting purposes. Patents protect
This UI Brief explores how technical inventions and prevent competitors from
standardization is a source of economic, utilizing new inventions. Technical
legal, political and discursive power in standards, by contrast, spread technological
international relations, and summarizes solutions across manufactures in order to
China’s increasing standardization power. It establish interoperability and guarantee
explains the fundamental differences basic safety. This contradiction is resolved
between China’s state-steered and the through licensing schemes. Holders of
European private sector-led standardization patents that are essential for compliance
systems and describes how the PRC is with a technical standard, referred to as
utilizing the characteristics of its party- standard-essential patents (SEPs), commit
state-permeated economy to gain technical to license their patented technology on fair,
standardization power. The paper closes reasonable and non-discriminatory
with a discussion of the implications for the (FRAND) terms. While this framework
EU, outlines various scenarios and makes guarantees that SEPs are available to all
policy recommendations for Europe. suppliers and not just to the patent holder,
enormous amounts of royalty fees must be
Technical standards: a potential paid to the inventors of the innovative
technologies underlying the respective
source of power? SEPs. The Swedish technology giant,
Ericsson, for example, earned €5.2 billion by
At first glance, technical standards might
licensing technology in 2017, accounting for
appear non-political. They are developed
more than 20% of the company’s revenues.
from discussions among leading engineers
in their field in a search for efficient
The distributary effects of technical
solutions to common challenges to
standards are not limited to the payment of
generating interoperability and basic safety.
royalties for SEPs. Companies that fail to
A closer look, however, reveals that they
establish their technological solutions as
can be far more than technical
technical standards must redesign their
specifications. Below, I develop the concept
products to comply with standards that
of technical standardization power in order
generate interoperability. This results in
to outline how technical standards confer
switching or adaptation costs. Hence, those
power in at least four dimensions: the
who successfully set international technical
economic, legal, political and discursive.
standards can expect royalties from SEPs
and avoid adaption costs. Given the
Economic dimension: A large proportion of
considerable size of both, the distributary
technical standards is made up of patented
© 2021 The Swedish Institute of International Affairs 4effects resulting from technical standards Domestically, technical standards can be
affect competitiveness. Back in the late referenced in legally binding documents,
19th century, Werner von Siemens already most often in regulations. For example,
understood this when he stated that: “he when regulations prescribe certain legally
who owns the standards, owns the market”. binding thresholds, technical standards can
serve as a method for upholding the limits
Legal dimension: International technical set in that regulation. In such a case,
standards are voluntary technical technical standards remain voluntary on
specifications. Through the backdoor, paper but prescribe the easiest way for
however, these standards become part of companies to ensure compliance with the
international trade law. If domestic legally binding regulation. Both
technical standards deviate from internationally and domestically, voluntary
international standards, the judiciary of the standards can turn out to be effectively
World Trade Organizations (WTO) can find binding under the TBT Agreement or by
a state to be noncompliant with being referenced in regulations.
international trade law by violating the
Technical Barriers to Trade (TBT) Political dimension: Standards generate
Agreement. Only if the respondent can interoperability only in the area where they
provide a reasonable explanation for such are applied. Hence, technical standards can
deviations, such as specific requirements for create geographically bifurcated or
the protection of human health and safety fragmented technological areas. Competing
or environmental protection, are deviant contradictory standards result in a lack of
standards deemed legal. This is more crucial global interoperability, creating lock-in
than one might think given that around 80% effects.
of trade is affected by technical standards
and associated technical regulations.
Figure 1: Dimensions of technical standardization power. Own graphic.
© 2021 The Swedish Institute of International Affairs 5To date, for example, technical standards in observers counter that standardization is a
the railway sector remain largely national or process of maximum transparency in which
regional. If country A were to adopt the it is hardly possible to hide security-relevant
national railway standards of country B, flaws from the eyes of the engineers of
however, ranging from track gauges to potential adversaries. From this
traction technical parameters and voltage, perspective, a high degree of
the maintenance and further buildout of the standardization even increases the (cyber-
railway cannot be carried out by suppliers )security of the relevant products by
other than those based in country B. Other providing international transparency.
manufacturers will be producing using Whichever perspective is the most accurate,
deviant technical standards; their products technical standardization influences the
would simply not be compatible. Country A degree of (cyber-)security in critical digital
is therefore locked into country B’s technologies.
technology and fully reliant on suppliers
based in country B. In sum, technical standards have political
implications that stem from lock-in effects
Railways are a critical infrastructure, while also affecting the (cyber-)security of
enabling the flow of goods and people as states.
well as generating welfare and mobility. A
lock-in effect in such a critical sector would Discursive dimension: How technology is
have political implications. As the only host designed is highly political as it inscribes
to suppliers that are compliant with their ethical values to it. Technology does not
respective technical standards, Country B exist in a vacuum, divorced from the
could ask country A for political concessions political. Technical standards are of
in return for the maintenance and buildout importance in this regard since they
of its critical infrastructure. Even if country formulate a “basic recipe” by setting the
B does not explicitly ask for such general rules by which different
concessions, country A would think twice manufacturers develop specific products.
before adopting a confrontational stance on Hence, technical standards shape what is
issues of core interest to country B in fear of perceived as “normal” technology.
the consequences for the functioning of its
critical infrastructure. Today, for instance, we are used to Wi-Fi as
the dominant standard for wireless local
Apart from such lock-in effects, some area networks (WLAN). This, however, was
experts controversially suggest that by no means a given. A few years after Wi-Fi
technical standards have the potential to was adopted as the international standard,
impinge on what is often regarded as the the rival WAPI technology was proposed as
crown jewels of state power: security. Some a new standard. It promised better
observers argue that those who develop a performance but provided worse privacy
technology are likely to have a deeper compared to Wi-Fi. WAPI met considerable
knowledge of how it works, including its resistance and finally failed to become an
vulnerabilities. Once internationally international standard, largely due to
standardized, this technology spreads procedural issues. Whether intentionally or
globally. When this concerns critical digital not, by rejecting WAPI, international
infrastructure, the developer of the standards bodies prioritized privacy over
technology in question possesses prime performance, shaping what consumers and
knowledge of its flaws that can be used to manufacturers around the globe can expect
undermine an adversary’s security. Other from WLAN technology. This is not an
© 2021 The Swedish Institute of International Affairs 6isolated example. At a time when emerging China: a technical
technologies are increasingly penetrating all
spheres of public and private life, ethical,
standardization power?
political and security questions are playing a
Over the past decade, China has acquired
growing role in technical standardization.
considerable technical standardization
power. At the governance level, China is
Algorithmic bias, transparency in
taking on more and more leadership
algorithmic decision making and data
positions in international technical
privacy are just three examples of ethical
standardization organizations (see box 1).
underpinnings in technical standardization.
While still considerably behind Germany,
The discursive power implications of
the US, France, the United Kingdom and
technical standardization are not limited to
Japan, China is gaining more and more of
its underlying ethical values. If a country can
the influential secretariat positions on
shape international technical
Technical Committees, Subcommittees and
standardization it is likely to gain a
Working Groups in the International
reputation as a credible and important
Standardization Organization (ISO) and the
power in world affairs. It is a sign of
International Electrotechnical Committee
technological supremacy since technical
(IEC). In the International
solutions are accepted as international
Telecommunications Union (ITU), the PRC
standards, in a sign of societal progress
has gained leadership positions in the
beyond economic and military prowess.
Telecommunication Advisory Group, study
groups and focus groups. In the General
In addition to the economic, distributary,
Assembly of the Third Generation
legal and political implications, the ability to
Partnership Project (3GPP), another
shape international technical
international technical standardization
standardization provides a source of power
organization focused on
since it helps to “normalize” future
telecommunications standards, Chinese
technology, inscribes political values and
companies hold around 25% of the votes.
boosts a state’s image as a technological
Companies from all the European states
leader. Technical standardization can be a
combined have around one-third of the
source of power for states. It is therefore no
votes.
wonder that it has become one of the most
crucial arenas of the emerging power rivalry
over technology.
© 2021 The Swedish Institute of International Affairs 7China’s successful efforts to influence as the Belt and Road Initiative (BRI), comes
international technical standardization with a standardization component. In 2015,
organizations have not been matched by a China’s main macroeconomic agency, the
growing willingness to adopt international National development and Reform
standards in China. At the end of the 1990s, Commission (NDRC), issued its first “Action
up to 70% of new standards in the PRC were Plan for the Harmonization of Standards
adopted from international standardization along the Belt and Road”. At the end of
organizations. In 2005, the share of 2017, the NDRC published another action
international standards stood at 54%. The plan setting further benchmarks to be
proportion had declined still further to no fulfilled by the end of 2020. As part of the
more than 21% by 2017. This indicates that plan, China began to translate its domestic
the PRC’s engagement is not the result of technical standards into foreign languages
an appreciation or acceptance of to facilitate their adoption in third
established institutional frameworks. countries. By September 2019, China had
Instead, existing international signed 90 bilateral agreements on technical
standardization organizations appear to be standardization cooperation with 52
a platform that China can use to project its countries and regions.
power. It is not international standards that
are the core motivation for China’s Despite these impressive numbers, Chinese
standardization engagement, but its craving experts acknowledge that these broad
for power. agreements are vague and mostly no more
than paper tigers. A major state-sponsored
This is even more visible in China’s research project, “China Standards 2035”,
international technical standardization suggests transforming these agreements
activities outside the established into a regional technical standardization
institutional framework. Most crucially, organization, the BRI Standards Forum, that
China’s major infrastructure policy, known could develop BRI Regional Standards. If
© 2021 The Swedish Institute of International Affairs 8this plan were implemented, the new among US experts about whether high
institution would be a potential rival that frequencies provide a greater degree of
undermines existing international security for wireless communications, and
standardization organizations such as the there are concerns that US troops might
ISO and the IEC. Another interpretation of need to rely on Chinese technology for their
the Chinese initiative is that the PRC is communications in overseas operations.
aiming to improve coordination with other Beyond 5G, China’s BRI raises concerns
BRI states in the BRI Standards Forum to about the political lock-in effects described
make it more effective at influencing the above. In this context, several BRI railway
ISO and the IEC. In addition to these projects financed by China’s state-
institutional developments, many BRI controlled financial institutions have raised
projects rely on Chinese technical concerns, such as the Jakarta-Bandung
standards. It is through these projects that high-speed railway, the Abuja-Kaduna
the PRC disseminates its domestic technical railway, the Ethiopia-Djibouti railway and
standards to third countries without the China-Laos railway. All these projects
submitting them to the established are based on domestic Chinese technical
international SDOs. railway standards, which means that the
respective countries must rely exclusively
China’s growing footprint in international on Chinese suppliers to maintain and
technical standardization organizations and further build out their railway networks.
the spread of its domestic standards within
the BRI have boosted China’s technical Discursively, China’s expressed intention to
standardization power. Economically, invest in facial recognition standards and its
China’s share of SEPs declarations and of proposal for a reformed standard internet
expected revenues has increased protocol, referred to as New IP, have
dramatically. For example, the share of alarmed experts in Europe and the US. The
Chinese SEPs declarations in connection fear is that Chinese standards proposals in
with 5G is around one-third, compared to both areas could restrict privacy to a greater
only around 7% in the previous generation extent than technically necessary. In
of mobile technology, 4G/LTE. developing countries, however, China’s
reputation as a digital innovation leader is
The increase in China’s share of SEPs has improving.
been accompanied by a larger impact on
the technical standards that underpin future China’s standardization power: a
technologies linked to 5G. Legally speaking,
noncompliance with these technical
result of state-steering?
standards would be a violation of the TBT
China’s growing technical standardization
Agreement.
power is not just the result of its increased
efforts to shape international technical
Politically, China’s growing impact on 5G
standardization. Its state-steered
standards has raised concerns in the US
standardization system has also played a
about the potential cybersecurity
role. China’s recent domestic
implications. For example, the US
standardization law introduced a market-
Department of Defense is concerned that
tier alongside the previously existing state-
China’s strong presence could focus 5G
controlled standardization system, but even
technology on low-frequencies while US
this market-tier is steered by the Chinese
manufacturers have prioritized high-
party-state. State-owned enterprises
frequencies (mmWave). There is a debate
(SOEs) and privately owned national
© 2021 The Swedish Institute of International Affairs 9champions with close ties to the party- Apart from prioritizing R&D, China’s
state, and defunct ministries serving as innovation and its impact on international
industry associations played a crucial role in technical standardization have profited
the development of some of the most from efforts to become an early if not the
important technical standards developed in first mover, coupled with early
the “market tier”. The state-permeated commercialization. Of particular
character of the Chinese economy more importance in this respect is to bridge the
generally does not allow for a truly private “valley of death” between fundamental
sector-driven standardization tier. research and obtaining commercial profits
from new products and technologies based
Internationally, the PRC has made best use on that fundamental research. China has
of the core characteristics of the specific tackled this “valley of death” in key enabling
structures of its party-state permeated technologies by easing regulation to allow
economy to boost its technical, material quick rollout and by providing more long-
and reputational capabilities that – in term funding that allows innovative
combination – have helped the country to companies to put less pressure on a
shape international technical technology to become profitable. This has
standardization. allowed Chinese technology companies to
take greater risks when investing in
Technical factors: Technical standardization innovation, and helped them to set
processes are discussions by the engineers international standards because they were
debating innovative technical solutions to able to illustrate the effectiveness of their
the common problems that affect safety technical standards proposals.
and interoperability. Technical expertise is a
vital and necessary but – as discussed below A third and final technical factor that was
– not a sufficient prerequisite for shaping found to be decisive for an actor’s ability to
international technical standardization. The shape international technical
PRC was less innovative than the standardization was the capacity to make
industrialized countries for many years but regular contributions, resulting in active
this is changing rapidly. According to the EU participation, and the ability to achieve
Chamber of Commerce in China Business leadership positions. The Chinese party-
Confidence Survey, the proportion of state has incentivized active participation
European companies that perceive Chinese by setting quantitative targets for SOEs and
R&D competitiveness to be more favorable encouraging privately owned companies to
than the world average rose from 15% in do the same. At times, this has resulted in a
2016 to 38% in 2019. China’s “digital lower quality of Chinese standardization
competitiveness” has already overtaken proposals. Overall, however, the high
that of the EU according to BuinessEurope proportion of Chinese standardization
calculations based on the IMD World Digital proposals has helped the country gain
Competitiveness Ranking. This is largely the influence in international technical
result of the party-state’s prioritization of standardization.
R&D and innovation, particularly in key
enabling technologies such as electrical Material factors: China’s increased technical
equipment, energy saving, digital capabilities are largely the result of material
connectivity and railways, which have factors, primarily massive investment. In
received preferential treatment under the contrast to the private sector-led SDOs in
macro-industrial “Made in China 2025” Europe and private sector companies, their
framework. Chinese counterparts benefit from state
© 2021 The Swedish Institute of International Affairs 10backing that comprises subsidies, soft economy is not news, the role of the party-
loans, state-directed investment through state has grown still further since Xi Jinping
Special Purpose Vehicles, preferential public took office. Beyond the massive financial
and SOE procurement as well as systematic support for R&D and participation in
export credits that have similar effects to standardization work, preferential access to
subsidies. Crucial to these mechanisms of data and a conducive regulatory ecosystem
preferential funding is the fact that China’s further contribute to the unlevel playing
financial sector is almost entirely controlled field between European and Chinese
by the Chinese party-state. While the state- companies in the field of technical
permeated character of the Chinese standardization.
Figure 2: Factors influencing the ability to shape standardization. Own graphic.
Preferential financial support for Chinese dimension of technical standardization
standardization efforts from the party-state power.
go beyond funding for R&D to include the
conditioning of loans as part of the BRI. The A third and final material factor stems from
PRC has adopted a practice of offering the empirical fact that larger economies and
“package deals” that bind the granting of big companies have a higher impact on
loans for major infrastructure projects to international technical standards than
the adoption of Chinese technical smaller markets and small and medium-
standards. This incentivizes developing sized enterprises (SMEs). Early
countries in particular, as they have a strong commercialization in a large market such as
demand for Chinese funding. Chinese the Chinese market sets examples for
technical standards result in the lock-in others to follow. SMEs may have a higher
effects described above as a political adoption ratio of their technical standards
© 2021 The Swedish Institute of International Affairs 11proposals but they usually lack the ability standardization proposals as collective
and resources to contribute to technical ones, rather than just the particular
standardization to the same extent as large interests and solutions of an isolated
companies. SDOs are inclusive and easily individual company.
accessible, but technical standards-setting
is costly. It requires not only investment in More generally, China profits from its
R&D, but also lobbying work and regular improving image as an industrial innovation
participation in technical meetings. SDOs leader. This is not just the result of the
are fragmented and decentralized, involving higher quality of the products and
many highly specific bodies that meet to technologies “made in China”. It has been
negotiate all around the world. SMEs find it further boosted by the strategic media
difficult to participate in a high number of outreach of Chinese state-owned media
such meetings and lack both the personnel working in foreign languages. Highly
and the resources to finance the travel symbolic technical standardization
involved. China has strengthened its successes, such as the adoption of polar
national champions under President Xi coding for the control panels of non-
Jinping. Over the past decade, the average standalone 5G, further improve China’s
size of Chinese industrial SOEs has image and credibility.
increased from 923 million RMB in 2008 to
2.3 billion RMB in 2017. This works to the Implications for Europe
advantage of Chinese influence in
international technical standardization, at The times of an unquestioned European
least for as long as such national champions stronghold for international technical
remain innovative. standardization, which was treated as a
non-political enabler of globalization and
Reputational factors: Research on technical international trade are now over. Not only
standardization has revealed that a has the technological rivalry between the
coordinated approach in international US and China turned technical
forums correlates with greater influence. standardization into an arena of
While conflicts of interest among several competition, but China’s state-steered
actors within a state are the rule rather than approach is questioning technical
the exception, the hierarchical structure of standardization as an area of private sector
the Chinese party-state and the high degree self-regulation. The four-dimensional power
of state permeation of the economy potential of technical standardization has
facilitate a strategic Chinese approach that been exposed. For the international
allows Chinese actors to speak with one technical standardization system in general
voice in international standardization and the EU in particular, this has two major
bodies. While the unity of the PRC party- implications.
state and its political economy is often
overestimated, by international standards, First, the politicization of technical
particularly in a field of national priority standards runs the risk of turning
such as 5G, there is a fairly high degree of standardization from a cooperative into a
national coordination and cohesion. One confrontational subject. This would alter the
example of such coordination is the IMT character of standardization. The more
2020 (5G) Promotion Group, which brings participants perceive standards to be
together Chinese public agencies, research political, the less developments will use
institutes and Chinese tech companies. This technical criteria to identify the best
helps boost the reputation of technological solutions for resolving issues
© 2021 The Swedish Institute of International Affairs 12of interoperability. This will come with bifurcated international standardization
efficiency costs and hamper standardization order. Europe’s approach, which rests more
as a driver of international trade and than in any other political entity on the idea
investment, and would be yet another blow of a unitary system of technical
to globalization. European companies and standardization, will not be able to continue
SDOs that have proved highly effective at unchallenged.
playing the “cooperative standardization”
model run the risk of diminished influence. These two potential implications raise two
related questions. First, will international
Second, the politicization of standardization technical standardization remain largely
divides actors into two camps. Established cooperative or will it become more
standardization powers such as Germany, competitive? Second, will the international
France or the United Kingdom will aim to technical standards order preserve a largely
preserve the existing system. China appears unitary institutional framework or become a
to be in opposition to this group, in that it is bifurcated one? From these two questions,
a latecomer to the system and has not had it is possible theoretically to devise four
the chance to shape its institutional scenarios.
framework. This increases the risk of a
Bifurcated institutional Preservation of existing,
framework largely unitary institutional
framework
Mode of interaction: (1) rivaling institutions (2) dysfunctional institutions
competition
Mode of interaction: (4) harmonious coexistence (3) institutional adaptation
cooperation
Figure 3: Scenarios of future international technical standardization system.
Source: own graphic.
The first scenario comes true if a bifurcated institutional framework would last long, this
institutional system is combined with a scenario is unlikely remain stable.
competitive mode of action that prioritizes
relative over absolute gains. The result In the third scenario, the existing
would be rival institutions. institutional framework is not only
preserved, but continues to run in a
The second scenario becomes a reality if cooperative mode that prioritizes absolute
China and Europe perceive technical over relative gains. In this scenario,
standardization mostly as a field of institutional adaptations can be expected,
competition, and aim for relative gains over given that China’s influence will continue to
absolute gains but remain within an existing increase, and the PRC has a state-steered
international institutional framework. This approach to standardization in contrast to
scenario would essentially lead to the currently dominant private sector-led
dysfunctional standardization institutions. self-regulation. Hence, the existing system
Since it is unlikely that a dysfunctional would undergo gradual rather than radical
change.
© 2021 The Swedish Institute of International Affairs 13The fourth scenario emerges if a bifurcated possible to tackle the “valley of death” institutional framework continues to adopt between technological innovation and a cooperative mode of action. This scenario commercialization, and the synchronization is fairly unlikely. The normative force of of national regulation, among other technical standardization lies in its promise policies. Finally, the EU should build up to create global interoperability. It is hard to further its capacities for monitoring imagine that two technical standardization international developments in order to be bodies would exist in a single field without able to react swiftly and effectively. striving to establish the global validity of their standards, placing the two institutions in a relationship of rivalry and competition. It is not unlikely that we will see diverging developments in different economic sectors. While scenarios two and four are theoretically possible, but unlikely to be sustainable in the long-run, Europe should strive for scenario three but be prepared for a worst-case scenario resulting in scenario one. In order to preserve the existing non- political mode of action, which rests largely on cooperation, Europe should advocate a non-political approach to technical standardization. This would require an emphasis on the value of the existing system of private sector self-regulation. Cooperation with like-minded states while also reaching out to states that seem likely to risk adopting a politicized approach could also further EU interests. With the aim of preserving the existing institutional framework, Europe should continue to work on socializing China into the established institutions and allowing the PRC to gain influence. This would not mean accepting whatever China proposes. Instead, Europe needs to insist on the preservation of the existing rules and better implementation of reciprocity. In order to prepare for the worst, the EU needs to improve its ecosystem for innovation, which is the basis for technical standardization. This will mean increasing the budget for R&D, the adoption of unitary investment rules, deregulation wherever © 2021 The Swedish Institute of International Affairs 14
About UI Established in 1938, the Swedish Institute of International Affairs (UI) is an independent research institute on foreign affairs and international relations. Any views expressed in this publication are those of the author. They should not be interpreted as reflecting the views of the Swedish Institute of International Affairs. All manuscripts are reviewed by at least two other experts in the field. Copyright of this publication is held by UI. You may not copy, reproduce, republish or circulate in any way the content from this publication except for your own personal and non- commercial use. Any other use requires the prior written permission of UI. The Swedish Institute of International Affairs Visiting Address: Drottning Kristinas väg 37, Stockholm Postal Address: Box 27 035, 102 51 Stockholm Phone: +46 8 511 768 00 www.ui.se info@ui.se Twitter: @UISweden @ResearchUI
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