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China Backs Down on WAPI Deadline

China Backs Down on WAPI Deadline
April 22, 2004

WASHINGTON -- China moved to ease the growing tension with its global technology trading partners Wednesday by agreeing to support a technology neutral approach to third generation wireless standards.

As a show of good faith, Beijing indefinitely suspended a looming deadline to impose a proprietary wireless LAN encryption scheme within its borders.

The announcement came after a day of intense trade talks between China and the United States that also produced Chinese promises for stricter enforcement of intellectual property laws.

"China stated today it would apply a policy of technology neutrality to third generation wireless communications and to the issue of standards of wireless Internet businesses," U.S. Trade Representative Robert Zoellick said at the conclusion of a U.S.-China Joint Commission on Commerce and Trade session.

Late last year, China announced it would require all foreign semiconductor manufacturers to use a wireless encryption plan known as the Wired Authentication and Privacy Infrastructure (WAPI), a little known scheme incompatible with the open global wireless security standard (IEEE 802.11 and 802.11b) used by chipmakers and electronics manufacturers.

In February, the Information Technology Industry Council (ITI), the U.S. Chamber of Chamber, the National Association of Manufacturers, the Semiconductor Industry Association and other key wireless players wrote a letter to Zoellick urging him to raise the issue with his Chinese counterpart so a quick resolution could be reached.

Several weeks later, Intel and Broadcom announced they would stop shipping chips to China, the world's fastest growing wireless market, if Beijing insisted on imposing the WAPI standard. The Bush administration weighed in with a letter requesting China rethink its WAPI decision.

"China said it would not implement the WAPI standard on June 1 as had been previously planned and that China had no deadline for the implementation," Zoellick said during a news conference here Wednesday.

The resolution of the WAPI issue is unrelated to a U.S. trade complaint before the World Trade organization claiming China discriminates against U.S. semiconductor exporters.

At a media briefing before the official signing ceremonies, Chinese Vice Premier Wu Yi, who headed a 17-member delegation, called the agreement a "very good platform for the future cooperation for commerce between China and the United States."

According to Zoeliick, Wu said China would work to revise and perfect the WAPI standard, which the Chinese claim is more secure than current global standards. Chinese service providers will be allowed to make their own choices as to which standard to adopt.

China's decision to drop the WAPI deadline brought immediate praise Wednesday night from several technology trade groups.

"This is a very positive outcome for our trade relationship with China, "Information Technology Industry Council President Rhett Dawson said in a statement. "With China being the fastest growing technology market, the commitment of the Chinese government to work this issue in the international standards community is an important one."

George Scalise, president of the Semiconductor Industry Association, added, "China's decision to work through the established processes for development of international standards will benefit both Chinese and international suppliers of information technology products."

Drawing equal praise was China's commitment to lower the threshold for copyright infringements while increasing penalties for violations and applying criminal sanctions to online piracy. China also agreed to ratify and implement the World Intellectual Property Organization Internet Treaties "as soon as possible."

Mitch Bainwol, chairman and CEO of Recording Industry Association of America (RIAA), issued a statement saying, "China has committed to tangible, specific steps to address the rampant piracy of copyrighted works." Bainwol cautioned, however, "This announcement is an important first step, but we look to the Chinese government to ensure that future deeds match present words and commitments."

Bainwol said the RIAA would be "closely monitoring implementation" and called upon China to reduce piracy by "50 percent from its current levels by the end of the year, with further verifiable and significant reductions in the following years."

Commerce Secretary Don Evans called Wednesday's trade negotiation a "landmark day and a very fruitful day in the development of the relationship between China and the United States."

He added, "The issues we have addressed today are huge and complex but we're committed to the path of hard work and close cooperation. Any partnership or trading relationship rests on firm footing when it stands on the basis of goodwill, performance and accountability."

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