MANHASSET, NY — A number of key U.S. government and industry bodies are behind an effort to squelch a proposed Chinese wireless encryption standard that they believe will undermine the World Trade Organization's crucial trade efforts with China.
At issue is the Wireless LAN Authentication and Privacy Infrastructure (WAPI) encryption scheme, which China last December mandated must be incorporated into every WLAN device used within China's borders by June 1, 2004.
The scheme is incompatible with the Wired Equivalent Privacy (WEP) or Advanced Encryption Scheme (AES) schemes currently used by the IEEE in its 802.11x standards.
In addition, China has demanded that any company wishing to incorporate the scheme must partner with one of 24 Chinese domestic companies which have the WAPI-specific intellectual property. This has U.S., European and Japanese industry groups up in arms.
"Forcing foreign manufacturers to co-produce with Chinese competitors to meet a unique mandatory regulation in order to enter the Chinese market is unacceptable," said Rhett Dawson, president of the Information Technology Industry Council.
Dawson spoke at a press conference in Washington earlier this week. He was joined by representatives of the Semiconductor Industry Association, the U.S. Chamber of Commerce, the National Association of Manufacturers (NAM) and U.S.-China Business Council.
"We hope the Chinese will participate in the international standards development process to achieve one global security standard for wireless products," Dawson continued.
Frank Vargo, vice president of international affairs at NAM, was less diplomatic. "This is one of the most ludicrous trade barriers I've ever come across," he said. "It doesn't pass the laugh test...it just tramples over one of the most basic provisions of the WTO and that's called National Treatment."
National Treatment is the WTO provision that ensures that foreign companies are not treated differently from domestic companies.
"This is an excellent example of why we fought so hard to get China into the WTO. They've done this kind of thing for decades and could get away with it because they weren't subject to rules — now they are and it's up to us and enforce these rules," he said.
Myron Brilliant, vice president of the Asia & International division at the Chamber of Commerce recently returned from a 15-member delegation to China that emphasized the importance of closer business ties.
"Our concern is that while China remains committed to the WTO process, it has lost momentum," said Brilliant. "China must follow through on its commitment. This goes well beyond the wireless industry and could undermine confidence in WTO implementation efforts of China. We cannot allow standards to become a thinly disguised trade barrier."
"The losers will be China," said Vargo, who predicted mirror-image legislation in U.S.
Politicians have already rallied around the cause. In a letter to U.S. Trade Representative Robert Zoellick several lawmakers asked Zoellick to become personally involved in the issue and raise it for a quick resolution with his Chinese counterpart.
Lawmakers also sent a letter to Yang Jiechi, Chinese Ambassador to the U.S., encouraging the Chinese government to work with the U.S. and the international standards community on a "mutually acceptable resolution" to address concerns regarding their WLAN standard.
In these letters, members of Congress said: "Requiring U.S. manufacturers to partner with certain Chinese competitors, while freely providing encryption information to Chinese companies, raises grave concerns about the WTO consistency of the new standards and specifically whether the WTO rules on national treatment are being followed."
