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Wireless security tops U.S.-China trade talks

Posted: 22 Apr 2004 ?? ?Print Version ?Bookmark and Share

Keywords:wireless? networking? ip?

China and the United States will square off in Washington on Wednesday (April 21, 2004) for the annual U.S.-China Joint Commission on Commerce and Trade, a forum where officials haggle over trade disputes and promote commercial agendas.

For the technology community, this week's meeting has taken on added importance in light of recent clashes between the trading partners over three key issues: China's 17 percent value-added tax (VAT) on imported semiconductors, its proprietary wireless-networking encryption standard and lagging intellectual-property (IP) protection.

The Bush administration recently filed a complaint against China with the World Trade Organization over the VAT issue. The U.S. criticized the tax as favoring domestic Chinese companies, which get a rebate and, thus, in the view of the U.S. government, are in violation of the World Trade Organization's fair-treatment rules. United States officials are also hinting that additional WTO complaints may be forthcoming.

To argue its case, China is sending one of its toughest negotiators, Vice Premier Wu Yi, to meet with U.S. Commerce Secretary Donald Evans and U.S. Trade Representative Robert Zoellick. Both American officials have been peppered with input from dissatisfied technology industry associations. "They've consulted closely with the industry in formulating the agenda [for this week's talks]," said Anne Craib, director of international trade and government affairs at the Semiconductor Industry Association (SIA). "They're very serious about addressing the challenges that the industry faces with China."

Of the three issues, China's wireless-networking protocol - known as Wireless LAN Authentication and Privacy Infrastructure, or WAPI - has most grabbed the spotlight. The scheme is aimed at boosting security but is incompatible with the industry standard developed by the IEEE 802.11 working group.

While differing standards typically are not significant, China's enforcement policy has created a stir. Only a select number of Chinese companies have access to the WAPI IP, and outside semiconductor developers must partner with them to develop WAPI-compliant equipment.

China rolled out WAPI in December, ruling that as of June 1 only WAPI-compliant equipment can be used or imported into China. Many wireless-LAN semiconductor vendors are understandably vexed, since the restriction seems to violate the concept of "national treatment," a core tenet of the WTO that mandates equality in matters of market access. The United States views WAPI as a technical barrier to trade.

The Standardization Administration of China (SAC) and the IEEE have historically not had close working relations, but efforts are under way to change that. From May 17 to 20, the IEEE 802.16 broadband wireless working group will hold what will be the first-ever IEEE standards meeting in China. "China has over 5,000 IEEE members," said Jim Carlo, president of the IEEE Standards Association, "and we need to work more closely with them."

Technical issues aside, Carlo also sees the 802.16 meeting in Shenzhen as an opportunity to reach out to the SAC and foster a better working relationship. To that end, he is seeking a meeting with SAC representatives in Beijing for high-level discussions that will focus on bringing the two groups closer together.

To date, Intel Corp. and Broadcom Corp. have declared they will not develop WAPI-compliant equipment. "We told our customers we would not be able to make that June deadline for a variety of technical reasons," said an Intel spokesman.

Not a simple swap

The challenge, the spokesman said, is meeting customer expectations for Centrino Mobile technology, which he said involves much more than simply swapping out encryption cores. "There's validation, verification, interoperability programs and support - Centrino is more than just a marketing program." While Intel will not supply the wireless portion, he said the company will still sell the processor at the heart of Centrino in China.

Texas Instruments Inc. also will not support WAPI. "Some reports have led to confusion by saying that we will support it," said a TI spokesperson, "but those were incorrect." TI referred any further inquiries on WAPI to the SIA.

China has positioned WAPI as a national-security issue, which may help its defense in the WTO, because the trade body allows leeway on such matters. China has said loopholes in the IEEE's 802.11b WLAN protocol demanded a more rigorous standard. But observers in and outside China view WAPI as a land grab - an opportunity to raise a technical trade barrier that favors Chinese companies in an industry still undeveloped there.

Chinese government agencies and industry are scrambling to make sure that WAPI systems, such as access points and client cards, are available by the June deadline. Only 24 Chinese vendors have been granted access to the WAPI IP, but those companies have been unable to come up with silicon by themselves. And little has been heard from the once-obscure company that developed the WAPI IP. Through its close connections to the government, IWNCOMM, based in Xian, was able to parlay its IP into a national standard and stands to reap huge profits if the standard succeeds.

The China Broadband Wireless Internet Protocol Standards Working Group, a key backer of WAPI, said earlier this month that IWNCOMM has a network interface card ready for release and would soon have an access point.

Several PC makers have also said they will have WAPI-compliant systems by June 1, but so far only Beijing Founder Group's NB700 PC notebook has been certified by the China Qualification Center. The company could not say when the notebook would be available, however.

Interestingly, the Chinese have also turned to Taiwan to meet the June deadline. A handful of chip and system companies here have been working with China to implement the standard, including Acer, BenQ, Cybertan Technology, Inprocomm and Silicon Integrated Systems.

At least one Taiwanese chipmaker claims to have had the algorithm for at least a few months. The company, which offered information on condition it wasn't identified by name, said it has already optimized its chip to run WAPI code, but was unsure whether it would eventually implement the encryption protocol in hardware to improve performance.

A company executive said the project has been resource-intensive.

"The hidden cost is higher than people imagined, including the Chinese. We have had a team in China for months of development, and who knows how much more support will be needed in the future?" the executive said.

State secret

Chinese officials have classified the WAPI intellectual property as a "state secret," making it illegal to release to foreign companies. Instead, foreign vendors must partner with Chinese firms, divulge their baseband IP and then let the Chinese partner integrate the WAPI algorithm.

The Taiwanese company claiming to have the algorithm said it obtained the code after offering details of its baseband architecture. The release of IP to a Taiwanese firm may indicate a subtle policy shift, or it may simply be a side deal negotiated by one of the WAPI consortium members looking for competitive advantage in the market.

Either way, it could serve as fodder for U.S. officials, who may construe the release as proof of arbitrary favoritism or as inconsistent with China's official position on the WAPI IP.

- Mike Clendenin and Patrick Mannion

EE Times

Samuel Ni of sister publication EE Times-China contributed to this story.





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