The US-based Semiconductor Industry Association (SIA) has called upon the Chinese government to withdraw its proprietary national wireless local-area network (LAN) standard, which is set to become effective June 1.
The requirement would prohibit the use of a wide range of internationally-accepted technology products with wireless LAN capability, including chips, wireless cards, computers, printers, and scanners in China.
"A unique Chinese national standard will slow the development of China's information technology industries because it will hamper the ability of Chinese firms to access the innovations emerging from thousands of companies around the world and because it will make it more difficult for Chinese producers to export to world markets. China should adopt international standards for its own industry to compete globally, and it should participate in international standards bodies," stated George Scalise, SIA President.
In May 2003, China issued two new encryption standards for wireless security, ostensibly to address national security concerns, but which create significant new trade and investment barriers for many commercial products. The Chinese standards specify a new and uniquely Chinese "Wired Authentication and Privacy Infrastructure" (WAPI) which differs significantly from, and is incompatible with, internationally-recognized protocols established through the Institute of Electrical and Electronics Engineers (IEEE). While the technical details for implementation of the Chinese requirements are still not readily available to international firms, the standards became effective on December 1, 2003. Through extensive U.S. industry effort and bilateral discussions led by the U.S. Department of Commerce, USTR, and the State Department, a six-month grace period was enacted – through June 1, 2004.
Reports now indicate that Chinese authorities will require foreign firms to engage in value-added production with a select list of 24 local firms to obtain import permits in order to sell wireless LAN equipment in China. Products already in-country will also be required to obtain permits. These "co-production" requirements will force U.S. and other foreign companies to share an unprecedented amount of intellectual property with — in effect — their Chinese competitors. Those competitors will also be responsible for certifying whether or not foreign companies are compliant with the standard before they can sell in China.
"If enacted, the local co-production requirements would set a dangerous precedent by imposing technology transfer and local content requirements that China committed to eliminate with WTO accession," remarked George Scalise, "In addition, the WAPI requirements create a market access barrier and raise serious national treatment concerns."