Summit Dust Settled; When's the Next Dust-up?

With the Obama-Xi Summit a comfortable week behind us, it seems timely to dig into some of the rhetoric, particularly in the areas of cyber and national security - matters of critical importance to the global and interdependent information and communications technology (ICT) industry.

Indeed, putting an exclamation point on that critical importance, it is worth noting, that a month in advance of the Summit, on August 11, nineteen major U.S. industry and ICT trade associations wrote to President Obama seeking his strong engagement with President Xi to address growing barriers to ICT trade, and, while not specifically called out, not just in China (link to letter).

The letter appealed (very slightly edited for length):

·         The U.S. and China should reaffirm their commitment to open markets, particularly in the ICT sector, recognizing the significant benefits that both countries enjoy from integration into global ICT industry value chains.

·         The U.S. and China should confirm…that in pursuing measures to protect national security, they should ensure that measures affecting the ICT sector are: (i) necessary to advance a legitimate security objective; (ii) narrowly-tailored to achieve that objective; (iii) the least restrictive of open trade and competition as possible. In particular, both sides should commit to refrain from embedding in their national security laws, regulations, and policies specific requirements related to economic security that are designed to advance policies that distort markets and restrict open competition.

·         The U.S. and China should agree, at the highest levels of government, to ensure that an ongoing high-level consultation mechanism exists and is dedicated to minimize any disruption to mutually-beneficial global ICT trade through the achievement of these goals.

Ah, cyber-motherhood and digital-apple pie.  Good stuff.

And, thankfully – and rather impressively – the two Presidents ponied up, at least rhetorically.

Key takeaways from the Summit in terms of ICT:  Both sides agreed...

·         They would not “conduct or knowingly support” cyber and non-cyber-related theft of intellectual property in order to favor individual companies or sectors. 

·         They would provide timely responses to requests for information and assistance in addressing cyber-related incidents, and, to facilitate this, they would launch a high-level semi-annual dialogue on fighting cybercrime involving key law enforcement and security agencies on both sides.

·         They would work together to identify and promote international norms for government behavior in cyberspace and pledged to establish a senior experts group to discuss these issues further.

·         They would limit the scope of national security reviews, and to refrain from restricting investment/business on the basis of economic or public interest concerns.

Bravo.  (Polite golf applause).

It will come as a surprise to virtually no-one that the joint announcement was met with a bit of skepticism. 

An illustrative example of such sentiment (and by no means am I criticizing any one person or publication in particular), would be the September 25, 2015 article in the Hill, titled “Time for Constructive Confrontation with China” (linked).

The article, which bemoans China’s State-mercantilist approach to world trade, particularly in the IP-intensive ICT industry, and critiques the U.S. for its milquetoast engagement on such concerns, among other things states, in sum:

“In a properly functioning global trading system, countries are supposed to focus on innovating to differentiate themselves in fields where they have comparative advantages, and then trade for things that other countries are better at producing…The United States cannot wait for China's ruling officials to wake up to the error of their ways, however. It must forcefully push back… The strategy should be to put less emphasis on legalistic engagement and more on achieving tangible results…”

Damned straight.  Spot on.  100% non-objectionable.

But let’s be sure to make it a two-way process. 

Indeed, and specifically borrowing from the September 2015 Obama-Xi commitment to refrain from restricting investment/business on the basis of economic or public interest concerns, as well as the U.S. industry associations' plea for both sides to “refrain from…policies that distort markets and restrict open competition,” let's consider a case in point:

On June 1, 2015, the National Cybersecurity and Communications Integration Center’s National Coordinating Center for Communications (quite a mouthful), overseen by the U.S. Department of Homeland Security (DHS), distributed - across the U.S. ICT industry - an amateurish FBI document slandering China-based Huawei Technologies (my employer, as regular readers will recall).

The aptly-named FBI “SPIN” (“Strategic Partnership Intelligence Note”) document, dated February 2015, which regurgitates four pages of beyond-tired and oft-disproven misinformation, can be accessed here. 

This document, prepared by the FBI and broadly circulated by DHS, is very clearly a U.S. Government initiative to very much restrict (effectively "ice") investment/business on so-called “national security” grounds.  This fact-challenged document – its genesis, approval and dissemination – very obviously reflects a policy that very much “distorts markets and restricts open competition.”

Yes, China should be held to its commitments, and perhaps most efficiently in the context of “constructive confrontation.” 

But, so too must a light be shined on the market-distorting, trade-restricting and – very worrisome – precedent-setting policies of the U.S. Government.

Neither side should expect to have its cake and eat it too.  Any myopic attempt by either side to do so will only result in neither side delivering on their promises, preserving a status quo that is in no-one's best interest.