Creating a new world digital trade order is no mean feat

08 November 2018


The widely reported - and still ongoing - China-US trade war is still very potent as the 'tit for tat' nature sees almost weekly retaliations by each country to respective trade tariffs on goods and services.

Interestingly, our report on global protectionism has found that both are poles apart where levying protectionist measures that restrict overseas collaboration on digital and tech-related opportunities is concerned - with the US being, surprisingly, the most relaxed in terms of regulation surrounding digital outreach.

The Protectionism 2.0 report considers something different in the trade landscape - the threat of digital protectionism - that is, those measures that restrict the data flows crucial to businesses in this digital age - pose as much a threat to international trade as their cruder 'traditional' tools of trade protectionism. Indeed, the widespread onset of both traditional and digital forms of trade protectionism means international businesses are now faced with a challenging regulatory environment comprising a multiple package of measures that threaten the free trade of both goods, services and information.

Given that the US is one of the most relaxed where digital protectionism is concerned, there is another barrier that could throw a spanner in the works - Donald Trump. A key example of this is his blocking of the takeover of US brand, Qualcomm, by Singapore tech giant Broadcom in March of this year. This was based on the concern that Broadcom would scale back investment at Qualcomm and risk the future of US 5G. What helps support this premise is the fact that Huawei is actively in the process of preventing other providers from deploying 5G telecommunications services in the Australian and Far Eastern markets.

Given the aggression being displayed by the likes of Huawei to overseas market entrants, Trump's more protectionist approach to collaborative deals like the Broadcom/Qualcomm example seems a little more understandable - yet one that serves to stop the advantages of global collaboration on tech in its tracks. Indeed, the Financial Times recently cited Qualcomms' close proximity to the Chinese government, stating that the

"…president's action is…justifiable in light of the extreme protectionism with which China insulates its own technology industry."

This is an interesting parallel point, given that the Protectionism 2.0 report, cites China as the most protectionist, where global digital and technology-related output is concerned - and this applies to the entire spectrum of tech delivery, from manufacture to end user. For example, in 2014, China accounted for more than 90 per cent of global production of rare earth materials, has some of the largest deposits of lithium and manganese - materials needed for mobile phone batteries - and also imposes almost twice as many digital trading restrictions such as data localisation and intellectual property rights as any other country.

Despite this, China continues to seek domination of the global telecoms market, with carrier, Xiaomi launching in the United Kingdom next week, as reported by China Daily. Its collaboration with the existing UK network, 3, in order to facilitate this, is perhaps a sign of a solution where the negative effects of protectionism on tech are concerned. Seeking mutually beneficial arrangements in the US and other Western nations may well represent more friendly fire than the takeover effect which the Qualcomm deal seemed to emanate.

Unless brand owners take note of this opportunity to differentiate themselves and show value where a knowledge and appreciation of the direct effect that protectionism has on digital and tech applies, they are likely to be left behind in a new world order where only the most agile can survive.


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