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EU drafts counteroffensive to China, US on technology rules

The EU is taking a “Europe First” approach to technological standardization.

The European Commission on Wednesday presented a plan to bolster its influence in creating global technology standards, as the bloc currently risks falling behind in global standardization organizations, where tech giants, government regulators and experts gather to set rules for how emerging technology works — everything from the internet to batteries, connected devices and beyond. Faced with the U.S.’ market dominance and China’s aggressive attempts to rewrite global rules, the EU wants to raise its game.

“We need to make sure we’re not just a standard-taker. We need to be a standard-setter,” said Thierry Breton, the EU’s industry commissioner.

The new strategy comes at the start of a bumper year for standard-setting, which often happens out of the public eye, in industry-dominated groups packed with technical experts. Deals struck in organizations like the U.N.’s International Telecommunications Union (ITU) and the International Organization for Standardization (ISO) define how technology is implemented across the world.

The ITU’s flagship conference is scheduled for September in Budapest, when a new secretary-general will be named. Meanwhile, other international groups are working quickly to set standards for artificial intelligence, green technology and other major sectors, with companies and government officials tussling over which technologies will dominate the digital economy in the coming decade.

The EU’s plan follows its industrial strategy, released in March 2020, which already showed the bloc wants to set up competing policy initiatives to defend its companies against rivals from China and the U.S. that benefit from large-scale investment and subsidy schemes.

Waning leadership

Europe has led standardization efforts for years. Its policymakers claim a track record of setting regulatory standards and using its position as a key global market to force those standards on manufacturers across the world. Its telecoms sector also played a key role in setting the standards of the early internet and mobile communication.

But “there has been some shift in the weight of power … Europe is not as prominent as it used to be,” said Luis Jorge Romero, director general of the European standardization organization ETSI, which drafts many of Europe’s standards and is one of three recognized European standardization organizations.

“It’s not because Europe has diminished; I think European companies are still strong. But the fact is that other regions have come to understand the strategic relevance and importance of standardization, but not only that, of technology in general,” Romero said.

The rise of China as a leading technology creator, especially, has raised concerns in Europe and beyond.

Officials fear that European companies and institutes may find themselves on the back foot in the face of China’s growing market power when it comes to defining standards for emerging technologies like artificial intelligence, quantum computing and 6G. A specific effort by China’s telecoms giant Huawei to change the internet protocol with a “New IP” initiative, in particular, kicked up concerns in the West in 2020.

China “is very forcefully moving into the European standardization arena with their expertise,” said an EU official who requested not to be named, raising concerns about a standards strategy Beijing launched in October last year to increase its industry representation internationally and improve its tech sector’s standards compliance.

Europe’s foot in the door

One major concern the EU is trying to address with the new strategy is that its own European standardization organizations are being overrun with industry representatives from outside the bloc.

Companies like Apple and Microsoft have invested heavily in representation in standard-setting organizations in Europe. Chinese giants like Huawei have also started doing so in the last few years.

According to Romero of ETSI, “We have experienced more contributions from companies that are not European. Of course, technology in other parts of the world has grown, so this is inevitable … It would be strategically a mistake to push it out.”

Romero said European organizations’ contributions often still prevailed in becoming a certain technology’s standard. “It doesn’t matter how many people you put behind. It does matter what the quality is of what you contribute,” he said.

But the Commission on Wednesday sounded less confident, saying there were concrete examples where European interests were dismissed, even within its own standardization organizations.

Breton singled out an EU request in 2020 for ETSI to draft standards that would require smartphones sold in Europe to be compatible with the EU’s Galileo satellite navigation system. “That request was simply denied,” Breton said, adding the rejection was due to the dominance of foreign companies in ETSI’s governance.

A new EU proposal includes tweaks to its 2012 standardization regulation that would empower the EU’s national-level standardization organizations to play a bigger role in developing European “harmonized” standards and those required by law. National standardization organizations often fall under stricter oversight by their governments and pose less risk of being overtaken by foreign players, the Commission claimed.

The Commission also proposed a support fund for getting European small- and medium-sized enterprises (SMEs) and civil society organizations involved in standardization organizations, and asked EU member countries to set up similar schemes.

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