Supporters of free trade argue that it reduces conflicts between countries by building inter-reliance and trust, writes Yuan Yang in Beijing.
That may have been easier to achieve when countries were mostly trading goods whose quality and safety was easy to assess through common standards. But what if, in the world of tech and communications, trust is the prerequisite for countries to trade in the first place?
This is the situation the US and China have found themselves in. Each has started to block the other's technology from their markets on national security grounds, worrying that the devices could be used to spy. Perversely, the attempt to replace each other's products with shoddier domestic equivalents may lessen citizens' security. Yet the world trading system lacks a way of settling such disputes transparently, given that they touch on state-sponsored spying and closely held national secrets.
When China joined the World Trade Organization in 2001, the US worried that Beijing would erect trade barriers by overusing the "national security" exemption. That allows any member state to override their commitments to opening up to trade to take action "which it considers necessary for the protection of its essential security interests".
Fast forward 18 years, and, ironically, the US has become the one invoking the national security exemption to defend its tariffs on steel and aluminium to the WTO. And in domestic legislation, the Trump administration has more or less banned US suppliers from selling to telecoms company Huawei by placing the Chinese company on its "Entity List" of sanctioned bodies - on national security grounds.
The US says its sanctions against Huawei are to counter the threat the Shenzhen-based company poses to the security of its and its allies' communications, fearing that Huawei could be used by the Chinese government to spy on the data passing through their telecoms equipment. Huawei counters that it is a privately owned company and has never aided Beijing with spying.
The US is not the only one concerned about its reliance on complex networks that stretch around the world. China, more quietly, is also assessing its supply chain risks. The difference is that China is much more reliant on the US, both in software and hardware, than vice versa.
China's Cyber Security Law, enacted in 2017, mandates that "critical" infrastructure should only rely on components that are "secure and controllable". Some domestic experts are making the argument now that US-sourced components are particularly insecure and uncontrollable, not only because of potential spying threats from the US, but also because the US could cut off supply as easily as it did with Huawei.
If China starts ripping out US components in "critical" equipment (government, big banks, transportation) on national security grounds, it needs to have alternatives to replace them with - from chips to enterprise software. That means accelerating its industrial policy of self-sufficiency, the root of many of the US's complaints about its trading practices.
Where does this all leave us? In the post-Edward Snowden world, we know how much surveillance tech companies can hide from their users. The complexity of modern telecoms equipment and consumer tech means that vulnerabilities in the equipment are inevitable, and hardly anything is "unhackable".
And while companies can undergo technical reviews that alleviate most concerns, it is not possible for a system that is constantly being patched and updated - such as a telecoms network - to be completely verified all the time. Encrypting data properly solves the problem of eavesdropping on conversations, but not the problem of a malicious actor taking down parts of a network. That means there is still a gap left, which needs trust to be filled.
As Huawei's executives have said in response to US accusations that the company has poor cyber-security practices - it's not just about technical reviews, it's about trust and geopolitics.
As both sides ramped up tariffs, US exports of semiconductors to China increased, while imports from China plummeted. Some have speculated that Huawei, before being sanctioned, increased its imports of semiconductors in order to build up reserves:
All Rights Reserved © 2024
