the legitimacy of any public policy that could require a firm to locate computing facilities in a member state is self-judging. In other words, anything can be deemed legitimate if a party says so.

The RCEP and the CPTPP diverge on provisions covering the location of computing facilities, cross-border transfer of information by electronic means, source code and dispute settlement. In all these cases, the RCEP’s chapter 12 is much weaker than the CPTPP’s chapter 14, to the point of rendering the provisions meaningless in terms of liberalizing cross-border digital trade and data flows. The RCEP’s language is such that it allows member states to impose whatever national regulatory restrictions they wish, as long as they are applied in a non-discriminatory way (are applied equally to domestic and foreign businesses).

So, how does RCEP’s chapter 12 compare with the CPTPP’s chapter 14?

RCEP will connect about 30% of the world’s people and output

Looking ahead, one U.S. option is to continue FOIP

Trump administration’s Asia policies focused on a new Free and Open Indo-Pacific (FOIP) vision

Northeast Asia

Southeast Asia

Its intellectual property rules add little to what many members have in place, and the agreement says nothing at all about labor, the environment, or state-owned enterprises — all key chapters in the CPTPP.

DIGITAL ECONOMY

the task of standardizers is to combine the political requirements of China’s “top level design” with the bottom-up demands from R&D activities, industrial interests, market factors and the international standards context

standards development and diffusion can benefit from government subsidies or funding arrangements.

Because of the central role played by the party-state in China, the country’s standardization strategies are considered as a function of established political priorities rather than solely driven by technical and business considerations.

Until institutional reforms of March 2018, the SAC was under the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), which was also administratively under the State Council’s leadership.

nurturing technology standards is a central component of China’s innovation strategy, which has led to tensions between the need to unleash market forces and private-sector initiative and the desire to maintain a robust level of state control.

the best technological solutions

it has pursued a parallel, China-centered track that involves promoting “mutual recognition” of standards at the bilateral level with a large number of countries and is increasingly coordinating standardization within the context of its Belt and Road Initiative

For example, Chinese-led technical committees or subcommittees in the International Organization for Standardization (ISO), one of the largest international standards-setting organizations (SSOs), increased 75 percent from 2011 to 2019.

CEO of Jigsaw

The T-12, by contrast, would bring together the right members while elevating technology to a level commensurate with such issues as European security and global economic policy.

To tackle the threat, the T-12 could lay out uniform standards for appropriate behavior in cyberspace and define what constitutes a proportionate response to a cyberattack. Members could cooperate in detecting and measuring attacks by increasing information sharing and establishing early warning mechanisms, then work together to attribute violations to a particular aggressor. And once a culprit is identified, the T-12 could coordinate a joint response. 

The T-12 could also develop the framework for a digital currency that preserves the central role of the U.S. dollar in the global financial system

Additional individual European states, such as Italy and the Netherlands, could be asked to join, without the complexity of including the European Union itself as a member.

AN INITIAL AGENDA

The government leaders or ministers who meet as the T-12 would also have a unique opportunity to enlist the private sector and international organizations in their work. Annual meetings could serve as an arena for business leaders to join government officials in coordinating responses to emerging issues such as the need to improve remote-learning technology in response to the COVID-19 pandemic and what the future of counterterrorism might look like. The format for these meetings could include issue-based sessions, in which governments invite leading private-sector figures for focused discussions, or standing forums akin to the Asia-Pacific Economic Cooperation’s Business Advisory Council, which provides advice to Pacific Rim leaders on concerns facing businesses throughout the region. The T-12 could also develop working groups and committees on the multistakeholder model, which brings together representatives from business, civil society, government, and research institutions. These groups would then pass recommendations up to ministers and principals. Simultaneously, leaders could collaborate with other multilateral organizations—working with NATO on AI security, for instance, or with the Organization for Economic Cooperation and Development on the industrial implications of disruptive technologies. 

For now, 12 countries stand out for inclusion in such a group. The United States is arguably still the world’s leading technological power, and France, Germany, Japan, and the United Kingdom all have large economies and impressive technology sectors. Australia, Canada, and South Korea have smaller economies, but they are also important players in technology. The same is true of Finland and Sweden, which are telecommunications and engineering powerhouses. India and Israel are also logical candidates for membership, owing to the global reach of their flourishing technology and startup sectors. 

Even Canada and South Korea, close U.S. allies, have defied Washington and are considering Huawei equipment for their 5G infrastructure.

They are shaping standards for the use of new technologies in exclusive groups such as the Shanghai Cooperation Organization, whose members have agreed to collaborate on information security, robotics, and e-commerce, among other areas.

This new grouping of leading “techno-democracies”—call it the T-12, given the logical list of members—would help democracies regain the initiative in global technology competition. It would allow them to promote their preferred norms and values around the use of emerging technologies and preserve their competitive advantage in key areas. Above all, it would help coordinate a unified response to a chief threat to the global order.

Although officials in most democratic capitals now acknowledge the profound ways in which new technologies are shaping the world, they remain strangely disconnected from one another when it comes to managing them. Coordination, when it occurs, is sporadic, reactive, and ad hoc.

it has fallen behind China in formulating an overall strategy for their use. 

China is at the forefront, no longer a mere rising power in technology and now an American peer. In multiple areas—including facial and voice recognition, 5G technology, digital payments, quantum communications, and the commercial drone market—it has surpassed the United States.

T-10 Alliance

assembling a less formalized but broader coalition of countries—would be a wiser path.

A simpler first step could be to concentrate on repairing broken ties between old allies rather than creating new structures—such as the EU’s reported proposal to revitalize transatlantic cooperation on digital regulation.

By design, such a narrow group of ten or twelve countries will exclude many digital “swing states,” such as Indonesia, Kenya, or Brazil, which will either facilitate or thwart China’s rise in their neighborhoods. The paradoxical result is that battlegrounds of digital competition—regions like Southeast Asia, Africa, and Latin America—would remain underrepresented under a T-10/T-12 configuration.

The potential scope is wide, such as ensuring China doesn’t stake an insurmountable lead in emerging technologies such as artificial intelligence (AI) and quantum computing, developing a more coherent framework for deterring cyberattacks, and providing a counterweight to China’s digital authoritarian ambitions.

pushing back against China’s “cyber sovereignty”

the group should be structured to facilitate intelligence and security partnerships and deny China’s advances in critical sectors.

One idea that is gaining traction is for the United States to initiate an alliance of democracies to combat China’s technological expansion and check the spread of digital autocratic norms. Specifically, many experts are proposing the creation of “Technology 10” or “T-12” groupings to counter China’s digital ambitions, safeguard the West’s technological leadership, and allow liberal democracies to shape emerging technologies

“First, China will make its own domestic standards into international standards, then it will export complete Chinese systems that meet” those specifications

“Even if Huawei is blocked from 5G networks, there will be times when companies have to pay it royalties for using patents that have become part of industry standards,”

China submitted 830 technical documents related to wired communications specifications to the International Telecommunication Union last year, the most of any country and more than the next three — South Korea, the US and Japan — combined, according to an industry group.

“China Standards 2035”, complementing the “Made in China 2025” industrial modernisation plan

The Tech 10 should begin with a few narrow issues and then create additional groups as needed. Topics might include: ensuring that Tech 10 countries maintain their lead in semiconductor design and production; co-ordinating on investment screening and export controls; regaining the lead in fintech innovation; and defining norms to govern safe uses of AI and other advanced technologies. Future groups might co-ordinate resources for research on advanced biotechnology and quantum computing.

Mr Biden has said he would “build a united front of friends and partners to challenge China’s abusive behaviour” in stealing “technology and intellectual property”; confront its “high-tech authoritarianism”; and build a safe 5G infrastructure and the “rules, norms and institutions” to govern the global use of new technologies

This would build on a recent UK initiative to create a “Democracy 10” that aims to group G7 countries with South Korea, India and Australia to co-ordinate on global 5G standards, and secure supply chains. So far, no country has engaged meaningfully. The UK and US must double down on the effort.

The AI research community already has technical expertise and financial resources, but not up-to-dateinformation on proceedings within standards bodies nor the institutional knowledge required to successfullyintervene.

longer does the U.S. view international participation as a way to reduce trade barriers; rather, it seesinternational participation as a way to shift influence in China’s favor globally.

At stake in the standardization101process is the economic bounty from patents incorporated into the standard and their resulting effects onnational industry competitiveness in the global ma

3. Current Landscape for AI Standards

The politics andeconomics of international institutional standards setting: an introduction

International trade rules, national policies, and corporate strategy disseminate international standards globally.

Standards will not achieve all AI policy goals, but they are a path towards effective global solutions wherenational rules may fall short. Standards can influence the development and deployment of particular AI systemsthrough product specifications for, i.a., explainability, robustness, and fail-safe design. They can also affect thelarger context in which AI is researched, developed, and deployed through process specifications. The creation,3dissemination, and enforcement of international standards can build trust among participating researchers, labs,and states.

However, a reportby the United KingdomIntelligence and Security Committee titled Foreign Involvement in the Critical National Infrastructure; The implications for national securityobserved that “[a]ny policy which seeks to block all Chinese companies from any future contracts relating to [Critical National Infrastructure] projects is not only impractical but, crucially, given the predominance of Chinese-manufactured and -developed equipment, is unlikely to result in the national security protection envisaged.

During the same period, Apple reportedly refusedChina’s requests for its source code.35Meanwhile, companies including IBM, Hewlett-Packard, McAfee, Cisco, and the German company SAP agreedto use intermediary companies to allow the source code for their products to be inspected under requirements imposed by Russia’s Federal Security Service

One way to address this challenge may be to develop regional compe-tition rules and authorities, like the COMESA16Competition Commission in Africa, which reviews mergers affecting the COMESA region.

he wide-reaching influence of digital technologies on people’s lives has led to calls for a broader definition of consumer welfare in assessing the harm of insufficient competition, covering non-price factors such as quality, choice, privacy,

A better strategy for evaluating firm behaviour is to consider competitive relationships and strategies across markets, entry barriers, con-flicts of interest, the emergence of gatekeepers and bottlenecks, the use and control of data, and the dynamics of bargaining power.

Countries with limited capacity to transform digital data into digital intelligence are constrained in their potential to capture economic value from data. To prevent dependence on a small group of advanced countries in the increasingly data-driven economy, national development strategies need to include digital upgrading (value addition) in data value chains. This would enhance domestic capacities to move from treating data as raw material to processing digital data and using artificial intelligence. It may involve designing national data policies and strategies to seize opportunities that the expansion of data can create, and manage associated risks and challenges

POLICIES AND STRATEGIES TO CLOSE THE DIGITAL DIVIDE AMONG AND WITHIN COUNTRIESInnovation policy

The digital age creates new challenges for peace and security

Roughly half of total electricity used by the Internet was due to consumer devices such as computers, mobile phones, laptops and TVs. The remainder was due to local, fixed and mobile networks, data centres and manufacturing of various components.

A significant concentration of market power can have negative implications on several fronts

The network effect, or the effect that an additional user has on the value of a product to others, and the increasing returns to scale, are both salient features of the digital economy that have enabled a small number of digital platforms to dominate markets. Possessing troves of data and algorithms to process them, these platforms can engage in anticompetitive behaviours that prevent others from enter-ing the market or competing efficiently

Interactions with other megatrendsThe relationship between the rapid spread of digital technologies and the other four megatrends is complex and bidirectional

FIGURE 5.2 LARGE PARTS OF THE WORLD ARE MISSING OUT ON TECHNOLOGY CREATION AND USE

illustrates two salient features in the creation and use of frontier digital technologies for production. First, large parts of the world, especially on the African continent, remain completely excluded.3 These countries are not even importing any significant volumes of the most representative goods. Second, even among countries with some activity in frontier digital production technologies, the roles are quite diverse. Latecomers, for instance, are entering the race, but it is not yet clear if they will become followers. Among the followers, a large number are mainly importing capital goods produced aboard, with very little or no domestic innovation and few exports. Their prospects to advance are limited, as this will require large investment

States of America; Japan; Germany; China; Taiwan, Province of China; France; Switzerland; the United Kingdom; the Republic of Korea and the Netherlands

These top economies account for almost all global activity in each area – above 90 per cent.

The United Nations is uniquely positioned to facilitate dialogue among stakeholders to develop a global compact on agreed principles for managing frontier technologies. It can bring Member States and all relevant stakeholders together to forge consensus on legal and ethical standards, including to guide research and development.

help firms develop strategies to extract and exploit their data; address the growing market concentration and dominance in the data economy; enhance consumer protection; and manage the cross-border flow of data.

Digitalization and data policies to secure and maximize value from the digital economy may involve aspects such as national data strategies, protections of the rights of individuals, open-data guidelines, standards for the interoperability of data functions and promotion of skills relevant for the data economy. Governments should deal with existing and emerging barriers to the growth of their domestic data markets;

A mix of instruments, including innovative financing mechanisms, will likely be required. And public investment must play a complementary role, crowding in rather than crowding out private investment.

To secure a digital future for the many, domes-tic and international policies should go beyond simply enlisting more developing country users and consumers into the digital economy. They should enable the building of domestic capabil-ities to create and capture value. Only then can digitalization fully support the 2030 Agenda.

mpact on the SDGs

The digital technology megatrend interacts with existing global patterns of inequality. Without compensating measures, innovators can take undue advantage of the digital divide compared to other groups. Countries with significant innovative activities will always preserve a lead over countries that mainly adopt new technol-ogies (“follower countries”), much less those that continue to struggle to provide electricity, connectivity, water, sanitation and basic health technologies. Within countries, the digital divide determines which population groups will benefit from technological advances.

Technological innovation and digitalization have clearly accentuated income inequalities.

The sheer size of the crisis threatens everything that has been achieved in sustainable development over the past five years, and much of the development progress made under the MDGs. Depending on how quickly the economies of the world can fully reopen and how soon the recovery process can actually begin, hundreds of millions of people around the world could be at risk of falling back into poverty, reversing the gains of the last two decades

o pervasive and well-established, in so many different countries and societies, that they seem beyond the control of policy, obeying their own internal momentum.And yet, they all result from human activity.

We will tackle unconscious bias that exists in people, institutions and even in algorithms

We will soon present an economic recovery package for the Western Balkans focusing on a number of regional investment initiatives.

We might not always agree with recent decisions by the White House. But we will always cherish the transatlantic alliance – based on shared values and history, and an unbreakable bond between our people. So whatever may happen later this year, we are ready to build a new transatlantic agenda. To strengthen our bilateral partnership – be it on trade, tech or taxation.

Be it in Hong Kong, Moscow or Minsk: Europe must take a clear and swift position

But what holds us back? Why are even simple statements on EU values delayed, watered down or held hostage for other motives? When Member States say Europe is too slow, I say to them be courageous and finally move to qualified majority voting – at least on human rights and sanctions implementation. 

European Magnitsky Act

a negotiating partner, an economic competitor and a systemic rival.

EU's unmatched convening power in action.  

There has never been a better time to invest in European tech companies with new digital hubs growing everywhere from Sofia to Lisbon to Katowice.  We have the people, the ideas and the strength as a Union to succeed. And this is why we will invest 20% of NextGenerationEU on digital. We want to lead the way, the European way, to the Digital Age: based on our values, our strength, our global ambitions.

Europe's digital sovereignty

And it is why we will build a European cloud as part of NextGenerationEU - based on GaiaX.

And this is why we need to secure this data for Europe and make it widely accessible. 

new industry strategy in March

Authorising more than 3 trillion euro in support to companies and industry:

general escape clause

These SMEs are the motor of our economy and will be the engine of our recovery.

Conference on the Future of Europe

This new agency will support our capacity and readiness to respond to cross-border threats and emergencies – whether of natural or deliberate origin. We need strategic stockpiling to address supply chain dependencies

And thanks to our unique social market economy, Europe can do just that. It is above all a human economy that protects us against the great risks of life

Global data flows underpin global value chains (GVCs), creating new opportunities for participation in international trade.32 For many economies, participation in GVCs is the deciding factor for trading internationally. More than 50 percent of trade in goods and over 70 percent of trade in services is in intermediate inputs.33 Data and digital technologies are affecting GVC participation in several ways. The development of these value chains has been enabled by global connectivity and cross-border data flows that facilitate communications and can be used to coordinate logistics.34 Global data flows are also enabling so-called “supply chain 4.0”—where information flows are integrated and omnidirectional instead of linear.3

Data collection and analysis are adding value to goods exports through so-called “servicification.”

taking account of the value of services embedded in goods exports, such as the design, professional service, and IT contributions tomanufactured goods, services make up over 55 percent of total EU exports.

Lucian Cernat and Zornitsa Kutlina-Dimitrova, THINKING IN A BOX: A ‘MODE 5’ APPROACH TO SERVICE TRADE, DG Trade Chief Economist Note, Issue 1 March 2014

According to the WTO, using digital technologies to reduce trade costs could increase world trade by up to 34 percent by 2030.23

around 12 percent of global goods trade is via international e-commerce.18 According to a 2019 U.N. Conference on Trade and Development (UNCTAD) report, e-commerce globally was worth $29 trillion in 2017, with around 1.3 billion people shopping online—up 12 percent from the previous year.19

Addressing these issues requires a new way of thinking about the trade rules for cybersecurity.What is needed is a more fine-grained understanding of the types of cybersecurity risk. Consideration should be given to developing a new set of cybersecurity-specific trade rules. This could include using trade policy to support the development of cybersecurity standards, commitments to good regulatory practice and to using risk assessments as a basis for cybersecurity regulation.

Many U.S. and Chinese cybersecurity measures are likely to restrict cross-border data flows and digital trade. These include data-localization requirements and import and investmentrestrictions on data and information technology (IT) products, particularly from countries or along supply chains where cyber risk is high. Import restrictions including higher tariffs are also being used to punish and deter cyberattacks.

International institutions are beginning to break, paralyzed by too much bureaucracy, too little investment, and intense major power rivalry.

desire to reshape international institutions and rules to suit its power and preferences

technological dynamism

a more anarchic order looming dimly beyond

How do we ensure that any regulatory responses do not interfere with the Internet’s underlying properties, i.e. that they do not “break” the Internet?

If regulation were needed to address consolidation, would it be better to go via the route of consumer protection, competition, or administrative law?

How do the technical community and other stakeholders ensure that there continues to be thriving development and pipeline of open standards that contribute to ensuring continued interoperability and data portability as the Internet economy evolves?

How does concentration in particular services effect the development of standard and non-standard protocols on the Internet?

Do new protocols, standards, or practices championed by especially large organisations have positive effects for all or only some?

re users facing an access environment that is increasingly optimised for the delivery of services owned by a few, or for access to an open and globally-connected Internet?

may be crowding out access to a general-purpose Internet?

Does the current trend of new traffic patterns, what has been referred to as a “flattening Internet topology”, constitute a concern or an opportunity for the long-term viability of the open Internet?

To what degree is concentration, and in some instances near monopolies, on the Internet a result of particular characteristics of the service involved? Are there natural monopolies for some Internet [enabled] services, for which the most efficient number of firms is one? And if so, why?

Could our increasing reliance on just a few companies in the Internet economy make them “too big to fail”? Are there economic and technical dependencies on services that cannot be substituted that effectively create a set of permanent favourites?

How are current trends of consolidation impacting different regions, and are they exacerbating or mitigating digital divides? Is consolidation responsible for creating new digital divides, meaning that some services are offered to others and some are not?

What are the relevant indicators for assessing the impact of consolidation over time? What metrics are available, and how can the Internet community collaborate to monitor trends over time?

On the other hand, trends of concentration in the provision of many services described in this report are often accompanied by many benefits. DNS hosting or CDNs are services that will continue to benefit from economies of scale, and as long as competition persists among the large providers, it will make services like advanced DDoS mitigation more affordable and readily available to a broader range of users and content providers. In the absence of a complete market dominance, or practices leading to single points of failure (e.g., failing to use multiple DNS hosting providers), these trends could have positive effects on security and the Internet’s resilience.

They also reinforce an opportunity divide between developed and developing countries. Mobile app stores1 do this by imposing geographical restrictions

increased dependency on well-known proprietary platforms for interoperation also imply a shift towards a qualitatively different environment than one defined by permissionless innovation, even where open standards support the interoperation.

social login functions offered by some social media platforms enable new developers to outsource the need for developing complex systems for managing not only membership and login credentials, but also the security and legal requirements related to these.

today’s dominant players, given that regulators are increasingly scrutinizing how the platforms leverage and exploit their dominance in one area to favour services in another?

The software company Mozilla has made proposals to the U.S. Federal Trade Commission around API governance, which it calls ‘”the fundamental connective tissue of the Internet.

It is problematic that these and other measures often focus on issues in isolation, potentially failing to understand how different activities fit into the platforms’ overall business models. Some could create unintended consequences by imposing rules with which only the largest companies can comply, further strengthening a dominant position, or by undermining the open and global nature of the Internet itself.

panel of experts to investigate and consider potential responses to digital dominance

Are there economic and technical dependencies on services that cannot be substituted that effectively create a set of permanent favourites?

Could our increasing reliance on just a few companies in the Internet economy make them too big to fail?

For example, the ride-hailing service, Uber, has been using Google Maps’ API to connect drivers and customers to routes and directions.46 This integration was a critical part of Uber’s success, but it meant the company’s core activity depended on access to another firm’s API.

Will the deployment of new infrastructure support the general-purpose Internet for everyone, or could the Internet fade into the background as the evolving edge is captured by a small set of private networks and services designed for a few operators?

Does this mean that a smaller player, depending on transit and therefore subject to longer latency, will necessarily lose out?

Will traffic in access networks be driven by large content and cloud providers feeding their localised infrastructures via private networks?

The Internet was envisioned as a decentralised network which facilitates communication between two endpoints. However, a discussant pointed out that the landscape of network traffic is wholly different now: video streaming makes up a significant chunk of the traffic now, with Cisco estimating the 80% of the Internet Protocol traffic will be video by 2021.96 Since video hosting is dominated by a few companies such as Youtube, Netflix, and Facebook, there has been an emergence of “super-nodes” in the Internet. This has been followed by a concerted effort to be efficient at meeting such consumers’ needs, which further contributes to changing the network topology. For example, several companies employ edge caches at various Internet Service Providers (ISPs) to optimise user performance

The evolution of edge computing is not a substitute for cloud computing in large data-centres, but rather a complement that facilitates the needs of some applications to use both types of computing resources. While some applications powered by AI need edge processing to make inferences on the device, they still rely on data models trained with the cloud’s abundant processing power and enormous amounts of data

Access networks and access devices — the edge of the Internet — evolve rapidly, with many and varied devices connecting to new services, potentially using specialised networks, driven in large part by the IoT. 5G cellular network standardisation and deployment are partially driven by anticipated uses that depend on bespoke access networks with much greater processing capabilities in base stations close to mobile terminals.

n the digital networking world, we are seeing more and more data traffic go ‘dark’. Content service operators are using their own transmission systems or slicing out entire wavelengths from the physical cable plant. This withdrawal of traffic from the shared public communications platform is now not only commonplace, but the limited visibility we have into this activity suggests that even today the private network traffic vastly overwhelms the volume of traffic on the public Internet. And the growth trends in the private data realm also is far greater than growth rates in the public Internet.

Cisco estimates that global traffic between data centres will grow by 32.7% annually between 2016 and 2021, a higher growth rate than the traffic between data centres and the users, which is projected at 25.2%

Underpinning the trend of content and cloud providers investing in their own infrastructure is the dominance of a small set of providers in the application layer, predominantly Google, Facebook, Amazon, and Microsoft. Their services rely on a global network of interconnected data centres and servers to process and deliver content closer to the users