Renewing U.S. Leadership in Standards
June 13, 2022
For the United States to continue to be a global leader in innovation and technology, it should shore up its commercial competitiveness, secure its national security advantages, and sustain its domestic economic growth and job creation potential. While this consideration is not new, the strategic environment within which to realize these objectives has changed in fundamental ways. The United States today confronts a world of geopolitical instability where, moreover, its primacy in science, technology, and innovation is being challenged by other nations seeking to leverage the benefits of this potential for their own commercial advantage and national power.
Indeed, other countries are strengthening their innovation and production ecosystems—from making significant investments in research and development (R&D) to supporting the development of national industrial champions. Importantly, they are also making investments in developing the technology standards that will govern not only the firm and industry cooperation needed to develop new technologies for the global market, but also the technology platforms that consumers around the word must use to work, transact, consume, and communicate. They are also investing in international organizations that help to coordinate and set new worldwide industry standards.
A “standard” is a collection of technical specifications, developed by leading engineers from around the world, which promote global coordination of R&D and ensure interoperability. The standards development process makes cutting-edge technology innovations broadly available to billions of consumers and provides the foundation, or the blueprint, for industries, business models, and further innovation that utilizes them.
Defining Standards Development Organizations
“SDOs” are voluntary, industry-led bodies that coordinate the development and publication of these standards. SDO members include both innovative companies that invent new technologies and implementers whose products incorporate standardized technologies. Because SDOs essentially help define the innovation agenda for future technologies, it is critical that technologies adopted into a standard reflect broad consensus on technological merit.
In this competition, the United States must renew its leadership of a rules-based global standards system—one that is founded on a market-driven process that rewards technological excellence in the development of new technologies—from 5G to artificial intelligence (AI).
China’s Standards Challenge
As the main U.S. competitor on the world stage, China recognizes that global leadership in standards provides distinct commercial and national security advantages. The China Standards 2035 plan, notably, is designed to take leadership or control of the process that sets global standards for emerging technologies like 5G, internet of things (IoT), and AI—as reflected in the title of a recent Wall Street Journal article, From Lightbulbs to 5G, China Battles West for Control of Vital Technology Standards.
There are several mechanisms through which Chinese firms and state-backed enterprises are increasing participation, leadership, and control of certain standards:
- Creating strategic linkage/investment incentives in China: China’s government is prioritizing investments on standards-related skillsets, along with industrial policy goals for taking global leadership in standards.
- Growing SDO participation: China is increasing its participation in SDOs, closing the gap with the number of delegates from the United States and the European Union. For example, the number of delegates affiliated with Chinese entities participating in 3GPP— the 3rd Generation Partnership Project standards body responsible for design on 5G standards—has grown tenfold since 2000.
- Gaining SDO leadership roles: China has sought to promote the election of its representatives for important leadership positions at SDOs—for example, to the 3GPP.
- Manipulating the value of standards-related technologies: China has sought in some cases to change the rules of standards bodies, even after the standards have been established. China is also using anti-suit and anti-anti-suit injunctions (for example at the U.S.-based Institute of Electrical and Electronics Engineers) to set global rates and provide favorable rates for domestic firms.
- Establishing China-led processes: China is trying to establish a China-led process for critical standards by excluding non-Chinese firms in the first round of standards development. For some critical standards, such as the future version of how the internet, IoT, and connected cars, various China-only standards working groups now exist to exert a growing influence on how these standards are shaped.
Taking the Initiative to Maintain a Rules-Based Standards Ecosystem
U.S. policymakers must take specific actions with clear policy objectives to preserve a rules-based global standards ecosystem, adhering to and maintain a market- and consumer-driven innovation agenda (rather than one that is state-driven), and technology selection based on consensus and merit.
Various parts of the U.S. administration have recognized the importance of maintaining U.S. leadership in standards that are critical for economic growth and national security:
- Executive action: Last year, for example, the National Security Commission on Artificial Intelligence (NSCAI) released a final report making critical recommendations for maintaining U.S. leadership in AI standards. Various actions by the administration have underlined the importance of maintaining leadership in 5G standards, including the president’s Executive Order on “Promoting Competition in the American Economy” in July 2021.
- Cooperate with allies and strategic partners: The United States should work with its allies and strategic partners to establish and maintain a rules-based ecosystem globally. Currently, this should include greater attention to cooperation on standards issues through the U.S.- EU Trade and Technology Council and the Quad initiative with Australia, India, and Japan.
- Congressional action: Congress can outline key design principles and relevant interagency processes to guide the development and coordination of standards through the reconciliation of the USICA COMPETES In particular, Congress should give NIST a directive to work on a companion of the existing Office of Management and Budget (OMB) directive for tighter linkage between innovation and standards policy and investment. The policy of the United States regarding the role of government in the standards process is outlined in OMB Circular A-119.
Taken together, these actions should contribute to:
- Maintaining a robust intellectual property rights (IPR) regime: To maintain the incentives of U.S. firms to participate in long-term and risky R&D that is required to be an innovation leader and lead in critical standards, protecting the ability of U.S. firms to monetize their IP in international markets is the first step.
- Establishing strong governance principles: Setting out strong governance principles for SDOs based on openness, transparency, consensus, and majority voting will avoid gamesmanship and maintain a rules-based merit-driven ecosystem.
- Maintaining global standards: It is critical that global standards are maintained, both for U.S. firms to maintain a market-driven incentive in investing in standards (due to an economy of scale that would be lost in a bifurcated world where firms are forced to work only on national standards), and for the world to have the best technologies (due to the innovation agenda being set based on the market and not based on a state’s direction).
- Promoting U.S. government interagency and public-private coordination: Such action might entail reinstating and chartering the National Science and Technology Council (NSTC) interagency subcommittee on standards for this purpose, and promoting investments made by the U.S. government that leverage and accelerate private sector commitments to advance U.S. standards leadership—such as those based on tax-incentives, direct investments, and the ability to utilize federal R&D funds towards standards-relevant technologies.
- Investing in standards-based skill sets for U.S. workers: Increasing the United States’ focus and investment for standards literacy in higher education and research should be a critical step in driving home the importance of this work to U.S. global leadership. The United States, via the National Institute of Standards and Technology (NIST), currently provides limited funding, on the order of $400,000 per year for standards education and curriculum advancement in the United States. The United States’ global competitors invest substantially in this capacity. Additionally, the investment by NIST in international relationships for standards and metrology, including education and capacity development, is dwarfed by those investments being made by Europe and Asia, and particularly by China.
Taking the Long View on U.S. Global Tech Competitiveness
In general, a focus on longer-term science and technology programs will ultimately carry benefits across the U.S. economy, with more tech workers recognizing the importance of U.S. leadership in global standard-setting. From the vantage point of wireless communications and 5G—a technology that is the ultimate enabler for many businesses—there is a growing skills gap in the United States.
Yet, only a few decades ago, the U.S. universities were able to secure funding for R&D in foundational technologies such as communications and information theory, which led to robust programs in universities that produced excellent engineers and technologists. However, as funding flows from business into shorter-term bets and technologies that can provide direct revenue gains for companies that develop them, there are reduced university grants towards fundamental communications research, ultimately having a direct impact on the investment and effort by specialized human capital at universities. The United States’ turns away from leading in technology standard-setting falls along these developments of the past several decades. It is therefore key that the United States acts now, lest it finds out a decade from now that it acted too late.
Walter G. Copan is a senior adviser (non-resident) with the Renewing American Innovation Project at the Center for Strategic and International Studies in Washington, DC. Kirti Gupta is a senior adviser at the Center for Strategic and International Studies in Washington, D.C., and the chief economist at Qualcomm.
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