Regulation of Standards in Technology Markets between Competition Policy and International Trade - The Chinese and European Experience (Foreword)

Chapter Authors

Paolo Davide Farah, West Virginia University (WV, USA); gLAWcal - Global Law Initiatives for Sustainable Development (UK); University of Pittsburgh School of Law (PA, USA)Follow

Document Type

Book Chapter

Book Authors/Editors

Riccardo Tremolada

Publisher

Springer, Forthcoming

Publication Date

2024

Abstract

The regulation of standard setting varies significantly across regions and covering and comparing in detail the EU and Chinese regimes is an interesting decision and illustrates how two highly bureaucratic systems address the regulation of technological advancements.

The analysis demonstrates how not only legal and economic considerations play a role in the regulation of standards, but also and most importantly political ones. The “openness” of China’s standardization is a telling example in this regard. China created a specific system for standard setting and invested heavily in high-tech industries. Initially, the State backed the industry to support the creation of a strong industrial base and then opened up to market forces. Regulatory control over standards applied in the country enables the State to have a voice in technological advancement and also directs technological developments towards reaching societal outcomes. Standards are closely connected to innovation. The adoption of particular standards has the power to shape the industry, fostering innovation and interoperability, and at the same time, competition. As pointed out in this book, this competition is not limited within State boundaries. It is taking place on a transnational scale where not only economic, but also geopolitical considerations play a role in shaping standards. Interestingly, China not only nationally but also regionally under its flagship “Belt & Road Initiative” (BRI) is focusing on standards. Under the Action Plan on Belt and Road Standard Connectivity (2018-20) standards are considered as a universal language and a way to promote human civilization. The plan is aimed at better aligning the standardization process and at “promot[ing] the application of Chinese standards in the construction of the “Belt & Road”, clearly pointing out the geopolitical importance of standards. Thus, standards are a political tool and in particular a manner for a given country to forge alliances and promote its national business.

The focus on information and communication technology (ICT) introduces the connections and interlinkage between standards and Intellectual Property Rights (IPRs). It provides a detailed analysis of the rationale behind company decisions to rely on IPR protection to recover the investments made to reach the technological innovation that the standards seek to regulate.

Language in both agreements and standards is also addressed as a critical issue. Vagueness in language and definition of terms, necessary to reach an agreeable threshold for the standard, results in even more legal disputes.

The review of case law also underlines how countries have used their own judicial bodies to push a particular interpretation forward. Both vagueness and the technical nature of standards and patents make adjudication difficult and uncertain. Competition over innovation is not limited to private companies but can also be found in the work of standard-setting bodies.

The present study further sheds light on how competition law in the EU and China fails to consider and fully take into consideration the standards-related IPR aspects. Competition law is in fact partially excluded in this context even if markets and standard setting are more and more connected. This issue could be found even more broadly in what can be termed “the crisis of multilateralism” and highlights the inability of the existing system to deal with the particular aspects of the Chinese system.

The promotion of Chinese indigenous innovation and of national digital champions is a theme not limited to standards. It is an all-encompassing issue that needs to be faced by both the WTO and the international community. Yet, little progress has been made in this regard. While under the Belt and Road Initiative China is proactively pushing the implementation of the latest.

Regulating patents and standards from the perspective of competition law overlooks the effects that standardization can have on policy and the economy when it is controlled from an individualistic perspective. The WTO can get involved in this process and there are several possible positive effects that could result from its involvement.

Recommended Citation

Paolo D. Farah, Regulation of Standards in Technology Markets between Competition Policy and International Trade - The Chinese and European Experience (Foreword), Regulation of Standards in Technology Markets Between Competition Policy and International Trade (2024).
Available at: https://scholarship.law.pitt.edu/fac_book-chapters/53