Bilateral Disputes Over Broadband Standards,Interoperability,and WTO Rules: The Need For A Safe Harbor

The development of standards to facilitate the deployment of next generation telecommunications services, particularly for wireless applications, has generated trade policy conflict between the United States and Korea.

Specific examples include Korea's development of an interoperable wireless Internet platform for use by mobile operators, as well as a standard for high-speed portable Internet (also known as WiBro in Korea).

Do the WTO Agreement on Technical Barriers to Trade (TBT) and the General Agreement on Trade in Services (GATS) constrain member governments from promoting the adoption of air interface protocols and other standards for wireless Internet applications and fourth generation transmission technologies?

The answer is yes, but not necessarily to the degree or extent that US companies with an interest in the propagation of proprietary standards have asserted in their various requests for intervention by the US. Trade Representative (USTR) on behalf of their commercial interests.

In fact, the GATS and TBT Agreement preserve the sovereign authority of member governments to promote interoperability, consumer welfare, national technological progress, and other public policy goals through the standard-setting process, so long as certain baseline nondiscrimination obligations are respected.

Now that Korea and other East Asian economies have achieved leadership positions in the deployment of wireless broadband technology, US industry is no longer in a position to establish de facto standards on the basis of US market trends alone.

Concerns in Korea and other non-US. markets (and also among “open source” advocates in the United States) about the anti-competitive implications of proprietary standards will therefore have greater weight in shaping future telecommunications standards than in prior years.

Rather than seek to interpret the WTO agreements as an impediment to the incorporation of public policy objectives in the standard setting process, the US Trade Representative should work with regulators in Korea and other jurisdictions to develop a consensus on the legitimacy of government involvement in standards development.

In particular, an understanding should be reached on the basis of a negative list; i.e., a list of government aims or objectives that are not legitimately the object of a standards-setting effort, such as the preclusion of foreign competition or propagation of a domestic monopoly.

All other public policy objectives would be presumed consistent with the WTO agreements (and thus receive “safe harbor” protection under WTO rules);

Interoperability would fall within the “safe harbor” but not if used to deny market access to an entire class of technology rather than a non-interoperable platform within one particular technology class.

By presuming a legitimate role for government except with respect to the negative list of impermissible objectives, an international understanding could help to avert future trade disputes. Such an understanding might also encourage the private sector to focus greater effort on interoperability and less on the pursuit of proprietary standards intended to secure monopoly rents.