Trade Policy Expert
Confederation of Finnish Industries EK
Heli Siikaluoma is one of the authors in a study ”China and the United States – A challenge to companies: Impacts of the superpower competition to Finnish companies”, https://julkaisut.valtioneuvosto.fi/handle/10024/163339
International standards have become a distinct part of foreign, security and trade policies of states. At the core lies the race between the United States and China for technological domination of the world. However, it is not just a struggle between the two superpowers: there is a wider conflict between democratic and authoritarian states and their values.
International standards, and regional or national standards developed per them, are substantial in ensuring that products and services are compatible and safe for their users. There are tens of thousands of international standards in the world. You bump into them in your everyday life: if you still use printers, you can be sure that A4 size paper fits in the printer as there is a standard for paper sizes, or you may have 5G standard broadband.
The main organisations for international standardisation are the International Organization for Standardization ISO, the International Electrotechnical Commission IEC, and the International Telecommunication Union ITU. Typically, companies have a significant role in creating international standards within the organisations. However, in the ITU states are active, and an active debate on values has taken place there.
There is a growing concern that the world markets will become divided due to superpower competition. The division of global markets may apply to, at least, technology products and services. This decoupling would create a situation where companies may be required to tailor their products to suit different standards. In the worst case of such a divide, for example, the technology of Chinese origin could not at all enter the Western market and vice versa. We have already seen decoupling regarding some sensitive technologies.
International standards and participation in international standard-setting are important competitive factors for companies and states. The party whose technology is used in international standards often gains significant economic, competitive, and technological advantages over its competitors.
Recently, international standards have become a more visible part of foreign and security policy as technology, technological infrastructure, and their vulnerability have become an increasingly important part of global societies and their success.
International standardisation is a strategic tool used by China to increase its global influence. It offers an alternative to the previous great powers of standardisation, namely the United States and the big European countries. China seeks to strengthen its role, especially in setting standards for innovative technologies. It actively promotes the implementation of its standards in its partner countries through its Belt and Road investment project.
In the United States, standardisation is a crucial tool for defending democratic values. It seems to have increased its contribution to the development of international standards, although it does not use, for example, ISO standards extensively as a basis for its standards.
As a traditional international standardisation superpower, Europe has experienced its relative importance diminishing and is now strengthening its position. The EU has inter alia published its first standardisation strategy, and active strategic participation in international standard-setting is also part of the EU’s trade strategy, which determines the direction of the Union’s trade policy for the coming years.
The EU and the United States share the same core values, and their cooperation in rule-making and international standardisation would promote democratic values globally. However, they often appear as competitors, and their standardisation systems differ from each other. The Trade and Technology Council (TTC) is a clean start and gives hope that the EU and the United States could create compatible regulations and ease their mutual trade. Recently, they agreed on a cooperation mechanism to promote common interests in international standardisation. They have common strategic interests inter alia in artificial intelligence and the Internet of Things.
It is worth noting that the EU’s new Global Gateway will provide funding to partner countries worldwide that respect the values of the EU, namely the rule of law, human rights, and international rules. The Global Gateway invests in infrastructure projects in the green transition, digitalisation, and education globally. Also, the United States and G7 countries have recently increased their contribution to infrastructure investment projects especially in developing countries.
Globalisation, as we know it, is changing its form. In addition, the superpower competition shows no signs of decreasing. On the contrary. For instance, one may observe the reaction of China to Speaker of the U.S. House of Representatives Nancy Pelosi’s visit to Taiwan. It is also unclear what kind of relationship China and Russia have in the future and how their co-operation would affect superpower competition in general and more specifically international standard-setting.
There is a risk world may become divided between the west and the authoritarian world – and both will play with different rules and standards. It would harm the companies that manufacture products for the global market and those that purchase components there. Moreover, the costs, prices and general uncertainty would drastically increase. Overall, decoupling should be avoided. To achieve this goal, cooperation in international standardisation plays an important role.
Expert article 3276
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