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On April 14, six Republican senators wrote a letter voicing concern over guidance from the Trump administration that restrains U.S. technology companies from participating in international standards-setting efforts. The guidance in question dates back to May 2019, when the U.S. Department of Commerce wrote that “[t]he U.S. Government has determined that there is reasonable cause to believe that Huawei has been involved in activities contrary to the national security or foreign policy interests of the United States.” As a result, the Commerce Department put Huawei and many of its subsidiaries on the “Entity List”—effectively banning those companies from receiving U.S. technology without an export license. The national security threat posed by Huawei is real. But the Entity List notice and an accompanying advisory opinion issued by the Department of Commerce have resulted in an unintended—an entirely avoidable—consequence.
Because Huawei—and other entities identified by the Commerce Department—participates in organizations involved in technical standards development worldwide, the department has created uncertainty regarding whether and how engineers working for U.S. companies can participate in those organizations as well. New clarifying guidance must be issued to enable American companies to effectively engage in international standards-setting efforts and avoid further harm to the long-term competitiveness of the U.S. economy.
Standards development organizations (SDOs) are integral to the process of creating and furthering cutting-edge technologies, such as 4G and 5G cellular communications, WiFi and Bluetooth. These organizations are composed of member companies that work together, share information, and create technical specifications to guide technology development and help ensure that hardware and software created by different companies communicate seamlessly. Traditionally, this system has benefited U.S. companies, which are often the first to develop an open marketplace for a particular technology and can thus utilize standard-setting bodies to further the application and reach of that technology. And the U.S. government has previously recognized the importance of SDOs. In the National Technology Transfer and Advancement Act of 1996, Congress called on the U.S. to prioritize “voluntary, private sector, consensus standards bodies” as a part of all policy processes. History has shown us that when different parts of the tech industry get together to set standards for the next round of technology, it is better that it happen in an open forum with a structured and widely accepted process on a level playing field rather than encouraging the largest market players to set their own competing proprietary standards.
The mobile technology space has been no different. Decisions made at SDOs have a major impact on the future growth and interoperability of products and services. For example, the mobile telecommunications SDO 3rd Generation Partnership Project (3GPP) has been working to develop the standards that comprise 5G. But the Commerce Department’s Bureau of Industry and Security’s recent Entity List proclamation has left 3GPP and other similarly situated entities in a bind. Now that Huawei is on the Entity List, questions arise as to how SDOs should approach the Chinese firm—which remains a major player in the development of communications technology—in order to enable bilateral engagement on standards-setting efforts.
SDOs like 3GPP were quick to inform the Bureau of Industry and Security of their confusion regarding how to handle the addition of Huawei to the Entity List. In response to complaints surrounding the lack of clarity, the bureau published its advisory opinion on the subject—but the guidance does little to direct SDOs on how to treat Huawei as a member of their organizations. The two-page document flatly states that Huawei’s addition to the Entity List means that “a variety of activities in the standards setting or development context are prohibited absent a license or other authorization from [the bureau] if any of the listed Huawei entities … is involved.” This hard-line stance is followed by a laundry list of specific prohibited activities, many of which are typical practices SDOs engage in to develop and produce meaningful standards. For example, the list includes many “nonpublic” means of communicating and sharing information, such as through nonpublic working groups, technical committees, and presentations and demonstrations.
The Bureau of Industry and Security seems intent on making it difficult for companies to partner with Huawei. And the goal of the bureau’s guidance may be to make a distinction between public standards coming from international SDOs and proprietary standards written by a few companies. But the guidance does not consistently read that way. To do so it focuses on proscribing the means by which the SDO holds its meetings instead of the standards coming out of the process. The unfortunate result of this guidance is that it has prompted SDOs to take one of three approaches to Huawei: (a) exile Huawei from their organizations; (b) make all calls and meetings between participating members public so that there is no question about whether an SDO’s internal processes result in “published” standards under the BIS’s regulations; or (c) allow Huawei to remain a member but prohibit U.S. companies from participating in any standards development that Huawei is working on directly.
Each of these approaches is problematic for the United States in its own way. Kicking Huawei out of an SDO has the effect of eliminating a major contributor to many up-and-coming technologies. This approach also provides incentives for Huawei to build competing standards if they are able to find or create another SDO to address their needs, which could ultimately lead to excluded U.S. companies being disadvantaged in how the standard is set. Making all SDO communications public does not appear to be a workable response either, as this has had the effect of chilling participation from companies hesitant to reveal or hint at details of the company’s comments, questions and plans beyond the members of the SDO public before a finalized standard exists; a limitation that would affect only U.S. companies. Furthermore, making all discussions public plainly does not work for SDOs where participation is limited to paying members and only those members can access draft standards and in-process contributions.
Many SDOs seem to be taking the third approach, which leaves U.S companies silent while Huawei participates. This puts American businesses at a disadvantage. The effect of this approach is that when Huawei joins a call or a meeting, U.S. companies simply cannot engage. How can U.S. businesses make sure their viewpoints and preferences are heard in the context of developing watershed technologies if they effectively do not have a seat at the table?
When it comes to developing new technologies, SDOs are the lifeblood of innovation and growth. They ensure that an idea can be used on an international scale, and lead to greater advancements and developments in various industries. The Bureau of Industry and Security’s current guidance limits the ability of U.S. companies to contribute to and develop standards for technologies that will shape the future of our world. This approach could put the United States’s technological advantage at risk and could decrease the likelihood that U.S. companies’ preferences will be incorporated in international standards. The threat addressed by the Entity List is a serious one—technology transfers to adversarial nations that represent a national security threat. However, in pursuit of this goal, the U.S. government should ensure that U.S. companies are able to engage with the SDOs where industry leaders define the next wave of technology.
The United States can pursue its national security concerns with companies like Huawei via the Entity List without the need to silence American voices in vital standards development efforts. The Bureau of Industry and Security can easily provide guidance that leaves Huawei on the Entity List while it allows U.S. companies to engage in SDOs where Huawei is trying to gain a foothold. The potential negative consequences of the current status quo are too great to ignore. We cannot allow U.S. competitiveness to suffer while we protect our nation’s infrastructure. If we do, we will entirely cede the ability to out-innovate to China.