To counter China, allied nations must cooperate on technology innovation
America and our allies are in the midst of the fight of a generation. China’s rise as a technological juggernaut seems inexorable. Across the globe, there is an appearance that the U.S. and our allies’ power and influence is on the wane, supplanted by massive Chinese technology deployment and resource distribution.
In parallel to China’s rise, the potential of our core alliances may be waning, as some allies saw America walking away from commitments and, as a result, have grown skeptical of our leadership and staying power. Yet there remains time to alter our current trajectory, as the Biden administration seeks to rebuild frayed relationships with key allies and partners in Europe, Asia and other regions. This effort could not be more critical or timely, particularly as our nations look to come out of economic and social challenges presented by the COVID-19 pandemic and address the supply chain revealed in the context of this crisis through onshoring and ally-shoring.
Indeed, as we look at the strategic threat that China presents on economic and security fronts, allied nations have a chance to come together and create a lasting, mutually beneficial alliance that drives innovation, protects supply chains and creates jobs at home, while promoting development and access to opportunities for populations around the globe. In particular, next month’s meeting of the G7 in the United Kingdom presents a unique opportunity for allied leaders to bring our nations together around a common approach to the myriad challenges that China’s rise presents.
One key aspect of this joint effort must focus on ensuring that the United States and our allies maintain — and grow — our technological edge over China.
It will be difficult for our nations to effectively compete with China if we rely solely on manpower or physical resources. Rather, it is critical that we capitalize on our ability to pivot to new ideas and rapidly innovate technology solutions, and that we take advantage of the skills and knowledge on both sides of the Atlantic and the Pacific to make that happen. Doing so requires us to double down on the type of open, innovation-oriented regulatory policies that have put us in the global lead thus far. At the same time, we must avoid internal policies that undermine our allied coalition and make it harder for companies to rapidly evolve, innovate and invest in next-generation technologies.
For example, the European Union is considering legislation, the Digital Markets Act (DMA), that would limit the ability of allied technology companies to effectively compete in Europe. Such measures, while they might achieve local plaudits in the short run, are unwise in the context of the larger competition with China. Indeed, the DMA, which is designed to target American companies while leaving Chinese and other competitors largely untouched, cuts in exactly the wrong direction. Rather than building allied unity around technology innovation and supply chain protection, efforts such as the DMA have the potential to undermine the very joint collaboration that we need to effectively confront China.
There is, of course, an alternative to regulatory competition among allies. After all, our nations have, for over a generation, built innovative, game-changing capabilities. From the early days of the internet as a government-sponsored research network in California, to the creation of the World Wide Web at CERN in Switzerland, to the semiconductor design in the Silicon Valley and chip fabs in Taiwan, South Korea and Japan, allied innovation has built the modern world as we know it. These technological innovations have generated trillions of dollars in annual GDP growth for nations around the globe, while helping democracies stay ahead in the race for global technological competitiveness.
Technology companies likewise invest hundreds of billions of dollars in research and development and generate high-paying, high-skill jobs, employing tens of millions of workers in the United States, Europe, Japan and other allied nations. Working together, America and our allies can harness the power and potential of technological innovation to create economic, political and social opportunities.
Continued leadership in this arena is not guaranteed, however. Indeed, the rise of the Chinese technology industry — funded by intellectual property theft and artificial government subsidies — creates an existential threat to allied economic and national security leadership. To counter this threat, cooperation among allies is crucial. American and European nations, just like our partners in Japan, Australia, New Zealand, South Korea and India, share much in common as democracies and engines of technological innovation. It is our collective self-interest, therefore, to empower cross-border technology innovation. We must ensure that we harmonize our technology regimes to preserve and protect free and open markets.
A good starting point for such an effort would be for the U.S. and EU to agree, on the margins of the G7 meeting, to set up a trans-Atlantic venue to discuss these issues, along the lines of the proposed EU-US Trade and Technology Council. Such an organization could serve to reduce trade barriers, limit unilateral actions and ensure that proposed regulations on technology do not hamper innovation, especially when economic recovery is so reliant on ensuring technological innovation. President Biden’s upcoming visit to Europe in June presents a critical opportunity to formally approve the creation of this council and plan an agenda that best supports trans-Atlantic technology cooperation. And this effort ought to be followed swiftly by an analogous relationship in the Pacific region.
The largest barrier to sustained technology cooperation among U.S. allies and partners is our reticence to work together. If we can focus on the broader goal of protecting our collective edge in technology and using that edge to develop opportunities and rebuild our influence across the globe, we might just stand a chance. Given that the stakes could hardly be higher, one can only hope that we can press our best advantage in what is a critical long-term fight.
Jamil N. Jaffer is the former chief counsel and senior adviser to the Senate Foreign Relations Committee and is currently the founder and executive director of the National Security Institute at George Mason University’s Antonin Scalia Law School. He is an adviser to Beacon Global Strategies and co-author of the American Edge Project’s National Security Policy Framework.
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