International standards in flux: A balkanized ICT standard-setting paradigm and its implications for the WTO

Abstract

Voluminous studies have documented the rise of international standards and their ramifications for the World Trade Organization (WTO), though most of these studies have focused on environment, food safety, public health, and financial regulations issues. An equally important, yet less explored, area is the information and communications technology (ICT) industry. This article seeks to contribute to the literature by examining the concept of an international standard in the ICT industry and its implications for the WTO. Drawing upon empirical data, this article makes four claims. First, today, the WTO policymakers are facing a 'balkanized' standard-setting paradigm in the ICT sector. Global standard-setting in the ICT industry is no longer the sole domain of the 'Big Three': the International Organization for Standardization (ISO), the International Electrotechnical Commission (IEC), and the International Telecommunications Union (ITU). Numerous industry consortia, mostly based in the USA, have emerged on the scene and in some way compete with the Big Three. Second, this paradigm shift engenders intense legal and political interest among major trading partners in the WTO, namely the USA and the EU. Applying the current WTO jurisprudence to this new paradigm, this article suggests that certain consortia may qualify as 'international standardizing bodies' for the purpose of the WTO. To the extent that standards developed by these consortia are recognized by the WTO, firms operating outside the US-based standardizing environment would bear higher costs in global trade. Additionally, this article argues that, while the Big Three seeks to respond to evolving market demands, their structural changes undercut the legitimacy as an international standardizing body. Fourth, intellectual property in the ICT standard-setting context is an eminent threat to the WTO. Ambiguities in licensing rules of the standardizing bodies - be they the Big Three or the industry consortia - may provide loopholes for emerging economies moving up the global value chain to use selectively an international standard.