Updated: 7 days ago

As 5th generation wireless technology rapidly develops, standards-development organizations weigh technological contributions from leading innovators. Standards development plays an important role in technological interoperability, but may also carry other consequences.

The members of SDOs assess new technologies that provide different functions. They decide, largely by consensus, whether something is technologically superior to alternatives and merits being included in the specifications of a new standard.

These standards are important. They ensure high quality and enable functions, such as video chatting with smart phones from different makers, to work seamlessly with each other.

There also are economic and national security ramifications. Chinese national champion Huawei is vying to pass U.S. innovators’ lead in foundational 5G research and standards. In foundational wireless infrastructure R&D and standards, only a few companies set the pace, led by Qualcomm and Huawei. Huawei presents a growing concern because its overtaking 5G leadership would put American national and economic security at heightened risk.

The Trump administration last year put Huawei and other foreign firms on an “entities list.” This restricts U.S. technology sales that may have military application to Chinese firms, without the U.S. Department of Commerce granting an exception.

However, the rule is so broadly written that it blocks leading U.S. companies from participation in SDOs if a Chinese competitor like Huawei belongs to the SDO. And Huawei and its cohorts have joined the key 5G SDOs.

U.S. Senators led by Armed Services Committee Chairman James Inhofe have urged the administration to fix this. They write, “We are deeply concerned about the risks to the U.S. global leadership position in 5G wireless technology as a result of this reduced participation, and the economic and national security implications of any diminished U.S. role in 5G.

“. . . It is critical for U.S. companies to participate fully in these standards-setting bodies to ensure that their technologies are represented in the standards. When U.S. export controls restrict U.S. companies from participating in standards-setting bodies, China-based Huawei is well positioned to fill any gaps. As the Committee on Foreign Investment in the United States has said, any restrictions that hinder U.S. participation in 5G standards-setting bodies ‘would leave an opening for China to expand its influence on the 5G standard-setting process,’ a result that ‘would have substantial negative national security consequences for the United States.’”

CFIUS assesses proposed foreign purchases in the United States for potential security vulnerabilities those mergers and acquisitions would cause. Congress strengthened CFIUS’s hand in 2018.

In early 2018, CFIUS, whose sole concern is U.S. national security, warned regarding America’s 5G foundational R&D leader, “Reduction in Qualcomm’s long-term technological competitiveness and influence in standards development would significantly impact national security in the United States.” In that case, upon CFIUS’s recommendation, the president blocked the U.S. firm’s being acquired by a hostile foreign competitor.

In the same way, it would be a tragedy for America’s future security and prosperity to shoot ourselves in the foot by fettering our technological leaders from standards involvement today.

If the American people have learned anything from the COVID-19 tribulations, it’s that China holds too many cards, China can’t be trusted and China plays to win at all costs. And the United States must prudently pivot for life after pandemic. We must be smart about it.

Witness America’s dangerous reliance on China for industrial and consumer necessities, from raw materials such as rare-earth minerals to manufactured goods of all sorts.

Official coronavirus case, death and recovery figures from China have raised the eyebrows of epidemiologists and other experts, including Dr. Anthony Fauci. Numbers from point-of-origin Wuhan and other parts of China remain too low to be credible. A modest Chinese concession, increasing Wuhan death numbers by 50 percent to still fewer than 4,000, and national COVID figures under 100,000 fall well below an American Enterprise Institute estimate closer to 3 million.

China is earning ire over its holding up shipments of desperately needed medical goods. It’s shipping poor quality N95 masks and other COVID-related medical equipment as well as outright fakes. It’s running a propaganda campaign, sending Chinese doctors, medical supplies and PR operatives to selected countries.

China’s shirking its responsibility and lack of accountability have prompted calls for sanctions. And the bloom has fallen off internationalist bodies such as the World Health Organization that foster corruption and cronyism.

Command and Control?

Before the pandemic put Americans in long-term “staycation,” policymakers and strategic innovators debated how best to ensure America’s leadership in cutting-edge technologies. We want to and must lead, technologically and economically, in such areas as 5G wireless and artificial intelligence as a matter of national security.

Some argue for cutting the United States’ economic ties with China cold turkey. This approach could see adoption of aspects of China’s model, including government subsidies for “national champions.” Such a top-down, command-and-control industrial system would be a radical departure from the strengths of the U.S. model.

America became the global innovation leader by enabling its citizens to realize their potential, powered by secure and reliable property rights, strong and enforceable intellectual property, a free enterprise economic system and the rule of law. Uncle Sam picking winners and losers could very well backfire while undermining our foundation.

This route risks America ending up the only nation that decouples from China. We’d leave ourselves alone, while our close allies remain economically engaged with China. For example, in 5G, Huawei would win by default and cement its security-risky base stations, antenna towers and equipment throughout the world’s 5G implementers’ infrastructure.

Nor can the United States snap its fingers and shift to domestic manufacturing. Reciprocity in trade and bolstering our industrial base for national and economic security are appropriate goals. But between the utopian globalists and stateless corporate sellouts and the foreign competitor nations with state-run economies and zero hesitation about stealing American intellectual property, China and others have vacuumed up whole industry sectors originally made in the U.S.A. We no longer have the manufacturing capacity, the domestic supply chain or enough skilled workers in these fields to switch to domestic overnight. We do have an imbalanced regulatory regime that artificially raises costs of U.S. production.

Getting the Pivot Right

Others counsel advancing U.S. leadership by bringing along allies and persuadable countries that China holds over the barrel of “Belt and Road” indebtedness. In this approach, economic engagement continues, with Chinese, Indian, South Korean and other foreign companies paying U.S. industrial leaders royalties, licensing fees, etc. Those revenues fund U.S. R&D and buy us time to develop alternative systems and alliances, new domestic manufacturing capacity and new supply chains. For example, the promising alternative to Huawei-controlled 5G of virtualized wireless networks is underway in Japan and among U.S. and other innovators.

Relying on and reinforcing America’s core assets — especially reintegrating strong private property rights in patents and IP — would put an R&D- and IP-based tiger back in our tank. It would be Reaganesque industrial competitiveness for the 21st century. As Conservatives for Property Rights and other conservatives expressed in a letter to the White House, “Our U.S. national security thus depends on U.S. innovators competing with — and beating — China in these critical technologies.”

We’re too far down the road of globalization to be able to make a U-turn on a dime. It will take time to boost domestic industrial production to firm up national and economic security. No doubt the United States has suffered under the kum-ba-yah promises of a “harmonized” regime of the “new world order.” But we mustn’t weaken sectors that already are America’s competitive assets and that provide a base on which to build.

Wisdom dictates that we start this turnaround job from where we are at present. Our conservatives’ letter counseled: “We’re concerned that the risks to our national security of decoupling from China far outweigh any benefit. Thus, we urge the Trump administration to consider the impact on U.S. innovation leadership when imposing restrictions on the ability of U.S. companies to sell non-national security technologies in China. Innovative U.S. businesses depend heavily on the licensing of U.S. patented technology and the sale of American products, technologies and services in the China market to generate revenue that they can spend on R&D, largely here in the United States. Dividing wireless technology into two spheres of influence would damage our national security, both by preventing China from adopting — and paying U.S. innovators for — U.S.-made wireless technology, and by restricting the ability of U.S. innovators to participate in the development of global wireless standards.”

It’s extremely important to be smart about how we unwind the “globaldygook” that’s led to our vulnerability to China and wisely strengthen our domestic economy. This requires the long view. It took years to displace U.S. industrial assets; we should commit to restoring them over time. This prudent approach will win us a revived industrial base, the good jobs they create, enhanced national security, the confidence of our allies and freedom from Chinese leverage over America and the world. And we must remember the hard lessons that put us in an unenviable spot.

Otherwise, we could end up with America shuffled to the side, China with the premier economy and the United States weakened.

It should be hard to miss, but America’s biomedical innovators and industry — that is, private companies putting their own or investors’ or both’s private resources at risk — are running in overdrive working on solutions to every type of need associated with COVID-19. Industry response to this pandemic has been broad and deep and sustained. For instance:

  • Abbott Laboratories has just launched a new diagnostic test for use in convenient settings like doctors’ offices instead of sending samples to clinical labs. Abbott’s new test yields coronavirus results in 5 to 13 minutes. More than 200 diagnostic tests are in development.

  • Johnson & Johnson is fast-tracking a COVID-19 vaccine that’s now expected to be widely available early in 2021. Sanofi and Moderna are each developing vaccines involving the virus’s genetic matter.

  • Ford Motor and GE are retooling factories to mass-produce medical ventilators, as are GM and Ventec at idled auto plant facilities.

  • Gilead has human trials underway, testing its antiviral drug remdesivir on COVID-19 patients while ramping up manufacture based on promising early results in animals.

  • Medical device firm Medtronic is making widely available the design specifications and software code for a ventilator model.

These pharmaceutical, biotech, medical device and other companies are able to respond so quickly and fully for several reasons, each related to property rights. One, they function on a research-and-development business model. Two, their high-risk, high-reward R&D business rests on the foundation of secure, exclusive, enforceable private property rights. Three, they depend on financial returns on their investments to replenish R&D budgets, repay investors, ensure manufacturing facilities remain up to snuff and pay their top-notch scientists, researchers and engineers. Four, they rely on free enterprise for competitive success.

Now is the absolute wrong time to threaten the private property rights of COVID-19 fighters. There’s no good time to assault private property rights. In the midst of a worldwide public health crisis is as bad a time as is conceivable. Bayh-Dole 40 Executive Director Joe Allen warns, “there are those who want to use this crisis to return to the failed policies of the past.”

But that isn’t stopping those who loathe the private property rights and free market that make all-innovator-hands-on-deck rapid response possible. Doctors Without Borders is pressing for socialistic government policies, such as price controls and compulsory licensing, and demanding that innovators foreswear patents on coronavirus-related discoveries. A group from the Ivory Tower is hawking a corporate pledge not to seek or exert intellectual property protection on any COVID-19 solutions.

Such misguided efforts are very foolish. As ITIF’s Stephen Ezell notes, “In particular, [intentional U.S. incentives for funding R&D, enabling] commercialization of university research, and a drug pricing system that allows companies to earn profits they can reinvest to finance future generations of biomedical innovation [matter] given that the risky, expensive and uncertain process of developing a drug results in only one in several thousand molecular compounds ever making it from the research phase to market, while the cost for those drugs that do become commercialized approaches $2.9 billion.”

Property rights conservatives strongly reiterate that patents and IP are vital to discovery and development, especially in high-risk sectors such as medicine. Government price controls, compulsory licensing and other forms of expropriation of private property destroy prospects for innovation and for achieving future breakthroughs.

Locke's Notebook

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