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Cablegate: U.S. Industry Promotes Transparent Standards System In

DE RUEHGZ #0648 2680824
R 250824Z SEP 06




E.O. 12958: N/A
SUBJECT: U.S. Industry Promotes Transparent Standards System in
Shenzhen Symposium

(U) This document is sensitive but unclassified. Please protect

1. (SBU) Summary and comment: Representatives from Intel, Qualcomm,
and Cisco encouraged China to adopt a transparent, market-oriented
standards development process during a DOC-hosted seminar on
standards and IPR in Shenzhen on September 21. Chinese industry
attendees, who have a generally sophisticated understanding of
standards issues, were supportive of the U.S. approach. Comment: We
are encouraged that Chinese companies not only showed up to the
event but also spoke positively of an open standards-setting system.
Domestic companies that are interested in competing internationally
seem to be in favor of an industry-led approach. End summary and

2. (SBU) The U.S.-China Standards and IP Symposium in Shenzhen,
co-hosted by the U.S. Department of Commerce (DOC) Trade
Facilitation Office and the Standards Administration of China (SAC)
- with support from the U.S. Embassy in Beijing and the U.S.
Consulate General in Guangzhou - replayed many of the same themes,
i.e., the relationship between standards and IP and the benefits of
the U.S. approach, as at a similar event in Beijing on September
18-19. (Note: Chinese academics and officials are currently
debating whether to adopt a compulsory licensing regime. End note).
The Consul General opened the event, stating that an open
standards-setting process that protects the rights of IP holders
would benefit China by fostering innovation and encouraging

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U.S. Industry Makes the Case

3. (SBU) Earl Nied, Intel's Program Director for Standards and a
member of the American National Standards Institute, pointed out
that the United States has a standards system that is voluntary and
led by industry. Indeed, U.S. law requires federal agencies to use
"voluntary consensus standards" for regulatory and procurement
activities. The U.S. government imposes mandatory standards only in
cases that affect public health and safety and does not used them to
protect domestic industries.

4. (SBU) Greg Shea, President of the United States Information
Technology Office, an industry association, said China is generally
moving in the direction of an open, international-based standards
system. However, China's standards-setting process is still
characterized by a "strong government presence," lack of
transparency and inter-agency coordination, and protectionism.
Foreign companies are limited to observer roles. Shea encouraged
more Chinese participation in global standards bodies.

Audience Engaged on the Issues

5. (SBU) A case study session focused on the benefits and drawbacks
of joining standards development organizations (SDO) for a company
that has a new technology. The panelists - among them Intel's Earl
Nied; Cisco's Gil Ohana, Director of Antitrust and Competition; and
Qualcomm's Kent Baker, Director of Global IP Policy and Compliance -
said that issues to consider include the duration of the development
period, the SDO's licensing requirements, and the potential benefits
of going it alone. Generally, they said, companies benefit by
gaining market share when their technologies are used in new

6. (SBU) Audience participants included small business owners and
representatives of large domestic and foreign-invested companies.
Some audience members noted that the potential benefits of SDOs
include the learning opportunities to be gained from other members
and the increased brand recognition that may result. The drawbacks
include the possibility of no royalty payments and the costs of
joining the organization. The important point, the panelists noted,
is that the company can choose which route to take. Huawei's
Director of Industry Standards said that Huawei is involved in more
than 130 standards-setting bodies, approximately half of which are

8. (U) Embassy Beijing has approved this cable.


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