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41. Who’s a national security risk? The changing transatlantic geopolitics of data transfers

Author:
Kenneth Propp
Publication Date:
05-2024
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The geopolitics of transatlantic data transfers have been unvarying for the past decade. European governments criticize the US National Security Agency (NSA) for exploiting personal data moving from Europe to the United States for commercial reasons. The US government responds, through a series of arrangements with the European Union, by providing assurances that NSA collection is not disproportionate, and that Europeans have legal avenues if they believe their data has been illegally used. Although the arrangements have not proven legally stable, on the whole they have sufficed to keep data flowing via subsea cables under the Atlantic Ocean. Now the locus of national security concerns about international data transfers has shifted from Brussels to Washington. The Biden administration and the US Congress, in a series of bold measures, are moving aggressively to interrupt certain cross-border data flows, notably to China and Russia. The geopolitics of international data flows remain largely unchanged in Europe, however. European data protection authorities have been mostly noncommittal about the prospect of Russian state surveillance collecting Europeans’ personal data. Decisions on whether to transfer European data to Russia and China remain in the hands of individual companies. Will Washington’s new focus on data transfers to authoritarian states have an impact in Europe? Will Europe continue to pay more attention to the surveillance activities of its liberal democratic allies, especially the United States? Is there a prospect of Europe and the United States aligning on the national security risks of transfers to authoritarian countries?
Topic:
National Security, Science and Technology, Cybersecurity, Geopolitics, Economy, and Digital Policy
Political Geography:
Europe, North America, and United States of America

42. Calling on the EU-US Trade and Technology Council: How to Deliver for the Planet and the Economy

Author:
Oscar Guinea, Vanika Sharma, Philipp Lamprecht, Dyuti Pandya, and Oscar du Roy
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This Policy Brief proposes the establishment of an agreement on conformity assessment between the EU and the US that covers machinery and electrical equipment. The initiative aims to increase the number of European and US conformity assessment bodies authorized to test and certify EU and US machinery and electrical equipment for exports into each other’s markets, without recognizing the equivalency or otherwise altering the product requirements in regulation, standards, or other normative documents on either side. While this study focuses on the economic effects of an agreement on conformity assessment that includes machinery and electrical equipment, the scope of such an agreement could potentially be extended to several additional product categories, particularly those that are subject to requirements for mandatory third-party conformity assessment in both the EU and the US. The increase in the number of conformity assessment bodies is expected to reduce the costs and the time required to demonstrate conformity. If this policy succeeds as expected in achieving a reduction in trade costs between 2 and 6 percent, US exports to the EU are projected to increase between US$ 11 billion and US$ 32.5 billion while EU exports to the US are estimated to grow by between US$ 13.8 billion and US$ 42.2 billion. In percentage terms, US firms are anticipated to experience a larger increase in exports of machinery and electrical equipment than their EU counterparts. The increase in trade flows as a result of this agreement is estimated to be larger than the rise in trade flows achieved in other Free Trade Agreements signed by the EU or the US. Moreover, as an increasing number of EU regulations begin to mandate third-party conformity assessment, US firms will increasingly benefit from this agreement when exporting to the EU. Given China’s status as the largest supplier of machinery and electrical equipment to both the EU and the US, the implementation of an EU-US agreement on conformity assessment would not only improve conditions for transatlantic trade but also lead to reduced trade dependence for the EU and the US on China. The reduction in trade costs between the EU and the US on machinery and electrical equipment due to the agreement could lower Chinese exports to the EU and the US by between US$ 6.5 billion and US$ 19.4 billion. Importantly, machinery and electrical equipment are crucial inputs for some of the key technologies in which the EU and the US Administrations have identified trade dependencies on China. However, in contrast with other policies aimed at reducing reliance on Chinese imports, an agreement on conformity assessment for machinery and electrical equipment will not require public subsidies or impose any financial burden on taxpayers. This agreement also has the potential to benefit the environment. Machinery and electrical equipment are essential inputs for green technologies. Therefore, a reduction in the cost and time of conformity assessment in these industries will accelerate the adoption of green technologies. An agreement on conformity assessment between the EU and the US covering green goods and clean technologies could increase transatlantic exports between US$ 3.1 billion and US$ 9.2 billion. While this increase in exports is significant, broadening the scope of the agreement to include the entirety of machinery and electrical equipment, rather than just a subset, is projected to lead to trade effects eight times larger. Moreover, as green technologies rapidly evolve, an agreement on conformity assessment has the potential to serve as a dynamic instrument that evolves to accommodate future regulatory and economic developments on climate and the environment on both sides of the Atlantic.
Topic:
Science and Technology, European Union, Economy, and Trade
Political Geography:
Europe, North America, and United States of America

43. Decoding China’s Technology and Industrial Policy: Seven Terms You Need to Know

Author:
Barry Naughton, Siwen Xiao, and Yaosheng Xu
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
China’s technology and industrial policy programs have grown in scope and intensity since 2020, but the vocabulary used to describe them is vague and often misleading. This policy brief decodes seven essential terms and shows that they have concrete and complementary meanings. When understood in concert, they reveal the establishment of a large-scale, government-directed program of mission-oriented research, development, and application. Together these terms outline a substantial expansion of the Chinese government’s direct role in organizing economic activity, and hint at some of the limits of that expansion.
Topic:
Economics, Industrial Policy, Science and Technology, Research and Development, and Terminology
Political Geography:
China and Asia

44. The Quantum Race: U.S.-Chinese Competition for Leadership in Quantum Technologies

Author:
Juljan Krause
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
Quantum computing is poised to unleash innovation across various sectors, from materials science to pharmaceutical and medical research, finance, logistics, and even climate change management. Quantum computing also has the potential to provide the backbone for future artificial intelligence and autonomous systems that cannot be realized with digital hardware alone, while quantum communication can strengthen security in cyberspace. For these reasons, quantum technologies feature prominently in the emerging technologies race between the United States and China. In this policy brief, IGCC postdoctoral fellow Juljan Krause analyzes China’s advances in quantum communication, which aim to signal China’s technological leadership while protecting Chinese communications from foreign surveillance. He argues that Chinese leadership in quantum communication will have strategic repercussions, particularly as it is likely to give China’s efforts to shape global industry standards additional momentum. Even if quantum communication has no immediate military implications, policymakers should consider how the technology could embolden China further.
Topic:
Industrial Policy, Science and Technology, Innovation, and Quantum Computers
Political Geography:
China, Asia, and Indo-Pacific

45. Blockchain and Energy Understanding Opportunities and Challenges

Author:
Nicola De Blasio and Charles Hua
Publication Date:
02-2024
Content Type:
Special Report
Institution:
Italian Institute for International Political Studies (ISPI)
Abstract:
The transition to a decarbonized, decentralized, and digitized energy future will unlock new business, policy, and technology models with the associated opportunities and challenges. Innovative technologies like blockchain, a shared, decentralized, and immutable digital ledger system that processes, validates, and manages digital transactions based on algorithmic consensus protocols, may enable this transition. Potential blockchain applications in energy range from enhanced distributed energy resources and peer-to-peer energy trading regimes to more robust grid management and smart energy contracts. There has been significant hype around blockchain’s potential impact in shaping economic and energy systems. Yet, it is essential to separate signal from noise and assess blockchain’s potential impact. This paper aims to provide a comprehensive analysis by identifying key use cases and then addressing which key characteristics blockchain technologies need to bring to fruition to support them. It also proposes an analytical framework to evaluate the potential impact of eight applications based on four key criteria: feasibility, maturity, scalability, and value additivity.
Topic:
Science and Technology, Innovation, Blockchain, Decarbonization, Energy, and Geoeconomics
Political Geography:
Global Focus

46. Economic arguments in favour of reducing copyright protection for generative AI inputs and outputs

Author:
Bertin Martens
Publication Date:
04-2024
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Generative artificial intelligence (GenAI) models have stirred considerable controversy about copyright protection for AI training inputs and model outputs. The European Union’s AI Act will require model developers to be transparent about their use of training inputs such as text, images and music. The EU Copyright Directive allows free text and data mining of these media inputs unless copyright holders have opted out and want license payments. The right to opt-out amounts to economically inefficient overprotection of copyright. Free use of media content for GenAI training does not affect media sales to consumers. Optouts only strengthen the bargaining position of copyright holders, who decide depending on their private interests. That generates windfall profits without any increase in consumer surplus or social welfare. The licensing of training inputs reduces the quantity of data and the quality of GenAI models, creates transaction costs and reduces competition between GenAI firms. This slows down GenAI-induced innovation in media products and production processes, and productivity gains in all service sectors that apply GenAI. Ultimately, it slows down economic growth compared to what it could be with competitive and high-quality GenAI. Bargaining over license pricing is arbitrary as there is no objective revenue benchmark to start from. Defenders of the moral right to remuneration argue that any arbitrary remuneration is better than no remuneration. But this private moral right comes at the expense of social welfare. The ongoing bargaining and court cases between media producers and GenAI developers risk entrenching this market failure in jurisprudence. Early regulatory intervention and elimination of opt-outs for GenAI training, or weakening them in AI Act implementation guidelines, would solve this. There is no need for copyright on GenAI outputs either. GenAI reduces the marginal cost of machine-production of media outputs to close to zero, on par with the marginal cost of reproduction. That eliminates incentives for piracy. Moreover, composite human-machine outputs benefit from a de-facto extension of copyright on the human component.
Topic:
Science and Technology, Intellectual Property/Copyright, European Union, Regulation, Economic Growth, and Artificial Intelligence
Political Geography:
Europe

47. Knowledge State in the Era of Generative AI and the Future of the Korean Peninsula

Author:
Chaesung Chun
Publication Date:
07-2024
Content Type:
Commentary and Analysis
Institution:
East Asia Institute (EAI)
Abstract:
Korea failed to transform into a fully modern sovereign state when modern international politics was being established. Traditionally, the Korean Peninsula was a single nation and state. However, as the Westphalian modern state systеm, originating in the West, was introduced in the form of imperialism, Korea failed to become a fully sovereign state, ultimately leading to its division. The causes of this division include external factors such as the competition among surrounding empires and Cold War rivalry, as well as internal factors like the fragmentation of state-building capabilities. However, the most significant reason was the civilizational gap, as Korea could not fully absorb and follow the new civilizational standards set by the West after the Industrial Revolution. The current world order is at a turning point following the unipolar era of the United States. While the Western Westphalian domain is maintained, the core element of the liberal international order is being significantly challenged by revisionist states like China and Russia, as well as countries from the Global South. It is uncertain whether global politics will form and maintain a single integrated sphere (권역) or divide into multiple regions experiencing fundamental conflicts. If modern international politics, standardized by Western civilization, were to fragment again, the division of the Korean Peninsula could deepen based on this regional separation. The recent intensification of strategic alliances between North Korea, China, and Russia illustrates this situation. A crucial phenomenon in this process is that the Fourth Industrial Revolution and emerging technologies are redefining the international political order. Unlike previous technological advancements, current technological progress is characterized by enabling technologies or meta-technologies that define the direction of technological development. Generative artificial intelligence, in particular, exemplifies the innovation of these foundational technologies. The role and function of generative artificial intelligence, which significantly impacts military, economic, social, cultural, and governmental governance capabilities, are just beginning. The future development of foundational technologies will have a critical impact on the international political order and the development of various diverging regions. Countries, companies, societies, and international organizations that quickly adapt to these technological changes will advance further, while those that do not will face deepening material and perceptual gaps. Considering the unification of the Korean Peninsula, the current stage of digital technology development in the North and South has maintained ethnic homogeneity and power balance to a level that can aim for unification. However, as new foundational technologies like generative artificial intelligence grow, the development paths, power balance, ethnic homogeneity, and differences in state forms and functions between South and North Korea will likely deepen. If unification is a goal based on a certain degree of homogeneous historical experience and similarity in state systеms and societies, the possibility of such similarity is decreasing. South Korea, as a liberal democratic state with the world's tenth-largest economy, a close alliance with the United States, and an innovative social and corporate atmosphere, has the capacity to rapidly absorb and disseminate artificial intelligence advancements throughout society. In this context, South Korea strives for economic development, international cooperation, and social and cultural innovation. In contrast, North Korea is an exceptionally poor country on a global scale, an unprecedentedly dictatorial state, and maintains its state through strong repression of society. In this context, it is difficult to expect societal innovation, and the acquisition and dissemination of new technologies are solely state-driven, with technological innovation also being state-led. In the increasingly polarized international technology supply chain, North Korea will find it challenging to find alternatives other than relying on China and Russia. North Korea is also striving to develop foundational technologies like artificial intelligence, but its direction will be very different from South Korea's. North Korea utilizes artificial intelligence for strong repression, control, and surveillance of society and aims to use open-source artificial intelligence for political intervention in South Korea and hacking and illegal manipulation in the international community. As the civilizational standards and technological gaps, political systеms, and socio-cultural perceptions between the South and North widen, what will be the future of the power balance and systеmic homogeneity between the two Koreas? Will South Korea's advanced national capabilities increase the possibility of unification with North Korea, or will artificial intelligence act as a larger element of conflict between the two Koreas? It is necessary to recognize and respond to these issues.
Topic:
Science and Technology, Governance, Artificial Intelligence, and Unification
Political Geography:
Asia, South Korea, and North Korea

48. Reclaiming leadership: Australia and the global critical minerals race

Author:
Ian Satchwell
Publication Date:
04-2024
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
Climate policy, geopolitics and market forces are coalescing to deliver Australia a global leadership opportunity in critical minerals. To grasp that opportunity, Australia needs both to utilise its domestic mineral endowment and its mining knowledge and technology and to leverage the global footprint of Australian companies to help build a global supply chain network. How Australia responds will not only determine economic benefits to the nation but will also affect the world’s ability to achieve minerals security and the sustainability required for the global energy transition and inclusive economic growth. The global energy transition and other high-technology applications have increased demand for critical minerals, particularly in countries that have strong complex manufacturing industries. At the same time, the concentration of production of many critical minerals, the dominance of China in supply chains and its actions to restrict supply and influence markets, are disrupting both minerals production and availability. In response, developed nations have formulated critical minerals strategies and entered into bilateral and multilateral agreements, involving supplier nations and customer nations, to build alternative supply chains that are more diverse, secure and sustainable. Australia has committed in multiple agreements to work with like-minded nations to achieve this. This report is intended to provide the government with a road map to ‘step up’ to (re)activate Australia’s global mineral leadership.
Topic:
Climate Change, Science and Technology, Leadership, Alliance, Emerging Technology, Minerals, and Energy Transition
Political Geography:
Australia, Asia-Pacific, and United States of America

49. Negotiating technical standards for artificial intelligence

Author:
Bart Hogeveen, Arindrajit Basu, Isha Suri, and Baani Grewal
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
The Australian Strategic Policy Institute (ASPI) is delighted to share its latest report – the result of a multi-year project on Artificial Intelligence (AI), technical standards and diplomacy - that conducts a deep-dive into the important, yet often opaque and complicated world of technical standards. At the heart of how AI technologies are developed, deployed and used in a responsible manner sit a suite of technical standards: rules, guidelines and characteristics that ensure the safety, security and interoperability of a product. The report authors highlight that the Indo-Pacific, including Australia and India, are largely playing catch-up in AI standards initiatives. The United States and China are leading the pack, followed by European nations thanks to their size, scope and resources of their national standardisation communities as well as their domestic AI sectors. Not being strongly represented in the world of AI governance and technical standards is a strategic risk for Indo-Pacific nations. For a region that’s banking on the opportunities of a digital and technology-enabled economy and has large swathes of its population in at-risk jobs, it’s a matter of national and economic security that Indo-Pacific stakeholders are active and have a big say in how AI technologies will operate and be used. Being part of the conversations and negotiations is everything, and as such, governments in the Indo-Pacific - including Australia and India - should invest more in whole-of-nation techdiplomacy capabilities. Authored by analysts at ASPI and India’s Centre for Internet and Society, this new report ‘Negotiating technical standards for artificial intelligence: A techdiplomacy playbook for policymakers and technologists in the Indo-Pacific' - and accompanying website (https://www.techdiplomacy.aspi.org.au/) - explains the current state of play in global AI governance, looks at the role of technical standards, outlines how agreements on technical standards are negotiated and created, and describes who are the biggest ‘movers and shakers’. The authors note that there are currently no representatives from Southeast Asia (except Singapore), Australia, NZ or the Pacific Islands on the UN Secretary-General Advisory Body on AI – a body that’s tasked to come up with suggestions on how to govern AI in a representative and inclusive manner with an eye to achieving the UN Sustainable Development Goals. The capacity of the Indo-Pacific to engage in critical technology standards has historically been lower in comparison to other regions. However, given the rapid and global impact of AI and the crucial role of technical standards, the report authors argue that dialogue and greater collaboration between policymakers, technologists and civil society has never been more important. It is hoped this playbook will help key stakeholders - governments, industry, civil society and academia - step through the different aspects of negotiating technical standards for AI, while also encouraging the Indo-Pacific region to step up and get more involved.
Topic:
National Security, Science and Technology, Cybersecurity, Artificial Intelligence, Emerging Technology, and Standards
Political Geography:
Australia, Asia-Pacific, and Indo-Pacific

50. Australia’s new digital ID system: finding the right way to implement it

Author:
Rajiv Shah
Publication Date:
08-2024
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
This report reviews the Australian Government's proposed plans for establishing a digital ID, and the ways the new system is expected to work. It explores the planned digital ID system, the key features of the approach, and the privacy and security protections that have been built into the proposals. Australia has had a long and troubled history with national ID systems, dating back to the mid-1980 when the government failed to introduce the Australia Card. Since then, Australia has ended up with a clunky and inefficient process to identify peoples’ identities online. It has led to an oversharing and storage of sensitive personal data. As the Medibank and Optus data breaches has shown, this creates serious cybersecurity risks. Now that Parliament has passed the Digital ID legislation, it’s critical that government gets the implementation right. The report outlines that, although the proposed federated model for a digital ID system is commendable and a needed step-forward, there is a need to still address a range of policy issues that - if left unresolved - would jeopardise trust in the system.
Topic:
Security, Science and Technology, Cybersecurity, and Emerging Technology
Political Geography:
Australia and Australia/Pacific