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1. How Huawei Weathered the Storm: Resilience, Market Conditions or Failed Sanctions?

Author:
Hosuk Lee-Makiyama and Robin Baker
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Huawei is exhibiting stoic resilience in the face of US sanctions, economic downturns, and the slow pace of 5G investments. There is a narrative that the company has been propped up by the Chinese government, but the key to Huawei’s resilience is multifaceted. Through pre-emptive stockpiling and ingenuity, the company has continued to fulfil its base station orders and defend its market shares abroad. Concurrently, Huawei has made an autonomous business decision to reinvest its earnings and intensify R&D to secure its supply chains against political risks and diversify into new business areas. Successful forays into semiconductors, cloud services and energy grids have also been facilitated by a capital structure that lends itself to long-term planning. Huawei’s survival is not necessarily a lesson in the futility of sanctions to stifle technological progress. However, it does show that muddled political objectives and inconsistent implementation will yield potentially contrary outcomes. At the same time, factors that contribute to Huawei’s resilience also highlight the infighting and vulnerabilities of listed firms like Mavenir, Ericsson and Nokia.
Topic:
Markets, Sanctions, Digital Economy, Resilience, and Huawei
Political Geography:
China, North America, and United States of America

2. Openness as Strength: The Win-Win in EU-US Digital Services Trade

Author:
Matthias Bauer, Dyuti Pandya, and Oscar du Roy
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The discourse surrounding the EU’s supposed over-reliance on digital services imports from non-EU countries, particularly the US, has been a recurrent topic among some political circles. However, this viewpoint tends to oversimplify and misrepresent the nuanced and complex reality of the EU’s status within the global Information and Communication Technology (ICT) sector and digitally enabled trade. A thorough analysis of trade data and trends clearly illustrates that the EU’s engagement with foreign (non-EU) digital services, notably from the US, represents a strategic economic advantage, bolstering Europe’s competitiveness and fostering productivity growth. Below we underline the critical importance of openness to foreign innovation and technology diffusion for the EU’s economic future.
Topic:
European Union, Digital Economy, Strategic Competition, Imports, and Productivity
Political Geography:
Europe, North America, and United States of America

3. ICT Beyond Borders: The Integral Role of US Tech in Europe’s Digital Economy

Author:
Matthias Bauer and Dyuti Pandya
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Contrary to political assertions about the vulnerability of digital services provided by non-EU companies, the strong presence and sunk costs associated with US tech companies’ investments in data centres, skilled workforce development, and research facilities in Europe act as significant barriers to exit, highlighting the inherent symbiosis between US tech investments and Europe’s digital and non-digital sectors. These investments underscore a mutual inter-dependency that strengthens European economies, making the notion of “sudden cessation” of digital services by US companies implausible. Corporate data show a significant investment gap of approximately USD 1.36 trillion between US and EU ICT companies, attributing a competitive edge to US firms due to their heavy investment in ICT, cloud solutions, and R&D. Forecasted increases in ICT investments by US corporations outline a benchmark beyond reach for EU businesses. The notion of EU firms aligning with this growth path is rather fantastical, as it would call for immense government investment, ultimately draining financial resources from essential public services, such as healthcare, housing, and environmental policies. Substantial ICT investments across EU Member States together with a long-term commitment to the European market present an opportunity for the EU to leverage US continuous technological advancements, underscoring the potential for transatlantic collaboration to drive the EU’s digital transformation and innovation. EU-US partnerships not only fuel the EU’s digital transformation but also align with shared political values, reinforcing the significance of transatlantic collaboration in shaping a competitive and innovative digital future.
Topic:
Communications, European Union, Digital Economy, Investment, and Information Technology
Political Geography:
Europe, North America, and United States of America

4. Time to Reset the U.S. Trade Agenda

Author:
Peter Harrell
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The strongest argument for rebooting U.S. trade policy ultimately may not be geopolitics, nor even the economic argument that trade deals will help an already-strong U.S economy. Instead, the best argument is that trade is a key element of solving global challenges that affect us all, like the green energy transition and the risks of AI and the digital economy.
Topic:
Treaties and Agreements, Geopolitics, Digital Economy, Artificial Intelligence, Trade Policy, and Green Transition
Political Geography:
North America and United States of America

5. Empires of Exceptionalism: Lessons from the EU AI Act and Attempts at AI Legislation in California

Author:
Hosuk Lee-Makiyama and Claudia Lozano
Publication Date:
11-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU AI Act, which passed after three years of negotiations and much ambivalence, sets a comprehensive regulatory framework that reflects the European Union’s unique needs that are not translatable to other jurisdictions. The proposed bill in California (SB 1047) illustrates this case in point. The bill could potentially mislead the public into thinking that AI is already under effective regulatory control. Lawmakers must recognize that the EU differs from other systems. The EU AI Act is not only shaped by the desire to slow down global AI development, allowing Europe to catch up with rivals like the US and China: The EU lacks an enforceable constitution, and the Act prohibits its governments to impose social scoring and discriminatory measures. SB 1047 only addressed humanity-ending disasters and had unclear practical value. Meanwhile, the EU AI Act was passed into law to prevent internal competition and Europe’s history of authoritarianism. Existing laws in California and the EU already regulate most AI use cases. In addition, the EU AI Act reviews existing regulations to ensure they are still fit for purpose, something California failed to do in SB 1047. A critical takeaway is to examine existing obligations or executive powers (including enforcement agencies and public funding) to achieve the desired policy objectives. The diverging outcomes of the two laws show the importance of avoiding mismatches between policy objectives and legislative scope. AI regulation cannot substitute for other policy objectives, like privacy and antitrust. Also, lawmakers must weigh the cost of failed regulation against the risks of non-regulation. California did not see any immediate costs of inaction, whereas delayed action by the EU might have led to the fragmentation of its internal market. Also, given its collective decision-making, the EU can escape accountability for policy failures due to premature laws in a way the leaders in other political systems cannot.
Topic:
European Union, Digital Economy, Legislation, and Artificial Intelligence
Political Geography:
Europe, California, North America, and United States of America

6. US-ASEAN Digital Economy Cooperation

Author:
Hanh Nguyen
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Pacific Forum
Abstract:
Long criticized for its lackluster record in economic engagement with Southeast Asia, the US is now looking to bolster digital economy cooperation with the region as part of its Indo-Pacific strategy. Both sides have already engaged in several cooperation initiatives to strengthen Southeast Asia’s digital capacities. These actions/engagements aim to help the region capture the immense benefit and respond to potential socioeconomic disruptions brought by the digital economic boom. However, US-ASEAN cooperation will have to deal with two challenges. First, China has already established a comprehensive and prevalent presence in the region’s digital economy, from hard infrastructure and customer-facing businesses to developing digital standards. Second, Southeast Asia’s diversity in economic development leads to varied capacities among its members. These attributes carry certain security complications for Southeast Asia and the US in the long run. Addressing them will require both sides to further boost cooperation, particularly in shaping regional digital standards.
Topic:
Economics, International Cooperation, Digital Economy, and ASEAN
Political Geography:
North America, Southeast Asia, United States of America, and Indo-Pacific

7. Is CBDC Evolutionary or Revolutionary? What Economic History Can Teach Us

Author:
Pierre L. Siklos
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
Looking at six historical examples, this paper explores the relationship between technology and monetary arrangements in the context of central bank digital currency (CBDC). The Industrial Revolution in the United Kingdom, the greenbacks era in the United States and the end of private money in Canada are among the examples that illustrate the role of the private sector in the development of money, the role of governments in overseeing key functions of money and the impact of economic crises. The author sees CBDC as an evolution, not a revolution, of the monetary system that can co-exist with traditional currency by performing the same core functions of notes and coins.
Topic:
History, Digital Economy, Private Sector, and Industrial Revolution
Political Geography:
Canada, North America, and United States of America

8. Merger Policy for a Dynamic and Digital Canadian Economy

Author:
Keldon Bester
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
As an element of competition and antitrust law frameworks, merger policy plays an important role in preventing acquisitions that would otherwise allow incumbent firms to extinguish competitive threats and entrench their dominance. But evidence suggests that current approaches to merger law in Canada and abroad have underestimated the harms these transactions can pose to competition and overestimated the effectiveness of the remedies intended to mitigate those harms. Although relevant across the Canadian economy, this permissive treatment of mergers is particularly pronounced in digital markets, where platform business models, the importance of potential competitors and the role of intangible assets such as data as a barrier to entry test the assumptions underlying the country’s merger law. Canada’s current law and jurisprudence mean the Competition Bureau, Canada’s sole competition authority, is limited in its ability to detect potentially harmful transactions, faces material barriers to intervening and fully remedying the harms of those transactions, and is unable to assess the outcome of previous action or inaction. This paper provides recommendations for Canada to ensure its merger law is calibrated for a modern economy.
Topic:
Economics, Regulation, Digital Economy, and Digitalization
Political Geography:
Canada and North America

9. The Digital Silk Road and China’s Influence on Standard Setting

Author:
Alex He
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
China is striving to become a leader in international standard setting, and the Digital Silk Road, part of China’s Belt and Road Initiative to expand its global infrastructure and markets, is key to realizing this goal. Both roads depend on standard connectivity, fuelled by Chinese private companies that are the driving force behind China’s growing role as a leader in technology development and shaping standards in both domestic and global markets. However, China faces strong competition to gain more influence in international standard-setting bodies, which are dominated by the European Union and the United States.
Topic:
Infrastructure, Digital Economy, Trade, Digital Culture, Silk Road, and Digitalization
Political Geography:
China, Europe, Asia, North America, and United States of America

10. The Digital Economy Partnership Agreement: Should Canada Join?

Author:
Dan Ciuriak and Robert Fay
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
The Digital Economy Partnership Agreement (DEPA) provides the most comprehensive template yet for a regional trade agreement tailored for the digitally transformed economy. The DEPA lays groundwork for discussions on critical areas that go beyond the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This policy brief makes the case that joining the DEPA early would allow Canada to develop it so that it meets small, open economies’ needs and so that new provisions meet the values that Canada holds, and recommends areas for attention and collaboration with like-minded countries.
Topic:
International Cooperation, International Trade and Finance, Intellectual Property/Copyright, and Digital Economy
Political Geography:
Canada and North America