Cybersecurity

Increasing regulatory burden does not necessarily improve cybersecurity

Ships and communication networks employ technologies that are vulnerable to cyber attacks. The United States and the European Union are seeking to enforce rules to regulate commercial conduct and prevent fraudulent activity by hostile foreign companies. Some U.S. and European Union policymakers have responded by increasing regulatory burdens on domestic groups, as legal loopholes and court challenges hamper some efforts.

Section 214 designations for U.S. broadband providers and the complex burden of proof on EU shipbuilders to prove dumping by foreign companies give policymakers a sense of complacency in the political guise of national security. However, policies themselves do not necessarily protect people, businesses, or property.

Indeed, pursuing such policies could reduce national security by diverting resources from legitimate activities to secure networks and systems.

communication network

Efforts to restrict dangerous communications network equipment from malicious providers have been hotly contested in the courts in the United States and the European Union (see Hikvision USA v. FCC and Huawei v. Sweden). The Federal Communications Commission’s target list lists only 10 Chinese and Russian companies whose products are restricted from licensing, but it includes hundreds, if not thousands, of companies. There should be. These delays have led U.S. regulators to explore alternative ways to “secure” networks, often relying on outdated regulations unsuited to today’s dynamic communications environment. It will be.

A case in point is the FCC’s current efforts to apply market entry and exit rules to broadband in the name of national security. Section 214 of the Communications Act requires telephone providers to obtain permission from the FCC to operate and subsequently add or remove “lines.”

Arguing that this serves national security, the FCC is now imposing these obligations on all U.S. broadband networks, whether wired, wireless, or satellite broadband (such as SpaceX), as part of its procedures for protecting and securing the open internet. broadband providers. Recent partisan efforts to reclassify broadband into Title II of the Communications Act. This means that the 3,000 US domestic providers (mainly US-owned and operating exclusively in the US) provide the same benefits to Americans as if they were state-owned enterprises, including China Mobile and China Telecom. It corresponds to a presumption that it poses a risk.

US broadband providers did not have to abide by such conditions, making the US broadband market more robust compared to many other countries. There is no evidence that U.S. broadband providers engage in conduct that endangers national security requiring Section 214 oversight. European regulators are also concerned about network security, suggesting it may be time to modernize their heavy-handed approach to broadband regulation. As a result, networks and coverage in the EU are becoming less advanced.

Title II reclassification of broadband, with or without FCC Section 214, has had a negative impact on network investment, and developments have been well documented. U.S. broadband providers are right to worry that the layering of new Section 214 steps will derail efforts to phase out older technology in favor of safer, faster technology. . It could also slow rural deployment and delay the market entry of new broadband technologies. Ultimately, providers lose much-needed flexibility to enter and exit the market as conditions and technology demand dictate. Additionally, there has never been a massive bureaucratic effort to micromanage the federal government’s millions of broadband network locations in the United States, which will inevitably lead to higher broadband prices. , the exact opposite of the FCC’s goals in its highly successful but soon-to-expire Affordable Connectivity Program.

Section 214 aside, the FCC’s Title II efforts are in a precarious position. In fact, former Obama Justice Department lawyers argued that the entire effort to impose open internet mandates on the U.S. broadband industry was “unlawful.”

Nevertheless, partisans at the FCC support the effort, so there is hope that the agency will implement the proposal soon. Importantly, the FCC, led by Wheeler, waived Section 214 when it enacted a similar procedure in 2015, fearing lasting effects on consumers and competition. The same approach should continue. Alternatively, if the FCC concludes that Section 214 is necessary, its application should be limited to foreign corporations as intended by Congress.

shipbuilding

European Commission outlines key security challenges to the vital shipbuilding sector with 150 shipyards and more than 120,000 workers, highlighting anti-competitive practices and distortive financial subsidies by foreign governments are doing. Although the EU seeks to encourage competition on fair market conditions, many Chinese shipbuilding companies, such as China State Shipbuilding Corporation (CSSC), enjoy unfair advantages.

This includes, but is not limited to, the acquisition and copying of European ship designs. Producing ships in military dual-use shipyards under conditions that violate EU protections for workers, safety and the environment. Receiving Chinese state financial aid in violation of World Trade Organization regulations. CSSC sells vessels below market prices in the EU in order to gain market share. In 2023, China will build 48.8% of the world’s commercial cargo ships, surpassing even South Korea and Japan with 16.8% and 8.9% respectively.

In response, the EU Parliament adopted detailed anti-dumping measures that impose high burdens on the prosecution of European companies to prove four conditions: price, material damage, causation and macroeconomic damage to the economy as a whole. did. Although such an exercise seems fair in theory, it is difficult to execute in practice. In fact, very few EU shipyards have filed dumping complaints, and even fewer have been successful. Moreover, the existence of anti-dumping measures by itself does little to deter the illegal and anti-competitive practices that are ongoing today.

US and EU policymakers should strengthen national security, but that does not justify all measures. The FCC would be wise to exclude domestic broadband providers from Section 214 because it is unlikely to enhance national security. To improve the safety and security of communications, the FCC should instead expand its target list to restrict actual equipment and providers that are already documented threat actors.

The EU may clarify and amend current legislation to protect fair competition and national security in the shipbuilding sector and to assist European actors in establishing an EU shipbuilding consortium to compete with China. Member States should invoke the Article 346 exception to protect local industry when national security is at stake. Just as communication networks need to be built using equipment from trusted providers to ensure security, so too should ships and their communication systems.

Liselotte Odgard Professor at the Norwegian Defense Research Institute. Roslyn Leighton Senior Fellow at the National Security Institute at George Mason University.


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