Industrial policy, national security, and the perilous plight of the WTO

The chapter delves into the intricate landscape of non-competition interests in China’s merger control regime, examining the interplay between industrial policy and national security concerns. It explores how these non-competition considerations shape the decision-making process of the Chinese competition authority. Discussing the merger control and distinct characteristics of China’s enforcement practices highlights the pervasive influence of industrial policy. The evolution of China’s industrial policy is analysed, and while MOFCOM has been criticized for aligning with it, the recent codification of the Fair Competition Review System should mitigate this under SAMR’s jurisdiction. The chapter then focuses on the national review, analysing its substantive and procedural facets in-depth. The chapter concludes by underscoring the ever-evolving nature of non-competition interests in China’s merger control landscape. It emphasizes the intricate connection between industrial policy and national security and anticipates an escalation of national security reviews, especially in data-driven activities.

In today’s world, the semiconductor trade has changed a lot. It is conducted through GVCs (global value chains), and the new key players are not “allies.” China has now entered this market. As semiconductors are a dual-use good, continued participation in this market contains a national security element. China, in the eyes of some key WTO incumbents, did not espouse free-market economics like Japan did, and its trade relations with the West (especially the US) have been strained as a result. This (along with political economy) explains the large subsidies that we observe. While industrial policy is making a comeback, its critique has not abated. Nonetheless, (some) critics tone down their voices when industrial policy is justified on national security grounds, especially when industrial policy is response to Chinese subsidies.

China has attracted the world’s attention since it enacted its Anti-monopoly Law (AML) in August 2007. Discussion relating to merger control is frequently focused on the AML, without adequate observation to other legislation. This article argues that competition matters, which are embodied in the AML, are not the whole of the existing regime of Chinese merger control. A three ‘pillar structure’ of the regime in relation to foreign mergers, that is, anti-monopoly review, national security review, and entry review, may be seen to have been formed. Competition, national security, and industrial policy may all be considered in the assessment of foreign mergers. While it remains to be seen how industrial policy will precisely be advanced in both legislation and practice, the policy may occupy a major position in the current regime. This is understandable given the current stage of the China’s economic transition. Policy makers are however urged to establish a merger control regime that is clear-cut and transparent, from which legal certainty flows.

중국의 통상환경 변화와 국가별 상품 간 수출 대체가능성 연구 (Multidimensional Substitutability Measurement and Analysis: With an Application to Trade between China and South Korea)

Industrial policy has reemerged in response to issues as varied as climate crisis and national security. While recent industrial policy approaches prioritize state-business collaboration, historical evidence highlights the importance of achieving ‘discipline’ over key actors to enact structural change. Drawing from East Asian ‘developmental states’ and beyond, we propose a framework for analyzing industrial policy through the lens of discipline. We define discipline as anything that increases the alignment between private and social returns to capital and distinguish three types: information-sharing, rule-setting, and performance eliciting. Each involves distinct capacities and obstacles. By conceptualizing discipline as built iteratively through cumulative interventions, we address a gap in understanding how states form the capacity to implement industrial policies effectively. We examine this framework in light of shifts in the international political economy and suggest avenues for future research on industrial policy’s domestic and international impacts.

The fear that a foreign government will impose an export restriction that imperils another country’s economic and national security has driven part of the recent turn to industrial policy and the increased use of tariffs. Countries now worry about disruption not only to their access to energy but also to critical minerals, semiconductors, medical supplies, and other essential goods. Modern use of industrial and trade policy is thus often an attempt to move supply chains in the short term and to sustain them in those new places over the long term, in order to reduce national vulnerability to disruptions caused by export restrictions. However, achieving even modest forms of international cooperation on trade and industrial policy between countries seeking to improve their collective economic security will also require that these same countries take on new commitments to discipline their own use of export restrictions toward each other.

This paper extends the New Industrial Policy Observatory (NIPO) dataset from 2009 to 2023 by employing large language model techniques to identify policy motivations. We document widespread industrial policy adoption across advanced and emerging market economies since the Great Financial Crisis, which was implemented primarily through subsidies and trade restrictions. We identify a structural break around 2020, characterized by accelerated policy activity and the emergence of “new industrial policies” motivated by supply chain resilience, national security, and geopolitical concerns, in addition to policies focused on competitiveness and climate objectives, which were already prevalent in previous years. Policies have targeted dual-use and various advanced technology sectors, as well as their upstream inputs, such as critical raw materials and minerals. We find that geopolitical risk and tit-for-tat retaliation have played a greater role in driving industrial policy after 2020, and that this support extends beyond existing sectors of comparative advantage.

Введение. Ключевую роль в достижении технологического суверенитета и обеспечении национальной безопасности России в условиях геополитических вызовов и угроз играет эффективная промышленная политика. Именно она должна давать импульс к концентрации усилий на важнейших технологических направлениях, развитию высокотехнологичных отраслей промышленности и наукоёмких предприятий и таким образом обеспечивать укрепление конкурентоспособности национальной экономики. Целью данного исследования является определение ключевых приоритетов промышленной политики России в интересах обеспечения национального технологического суверенитета исходя из определённых на федеральном уровне стратегических направлений развития, а также интересов регионов. Методы. В процессе исследования использовались инструменты системного и функционального подходов, общенаучные методы (анализ и синтез, научная абстракция, сравнение, аналогия), а также индикативный анализ. Результаты. Исследование показало, что в современных условиях существует острая необходимость разработки промышленной политики регионов в целях их долгосрочного устойчивого развития и повышения конкурентоспособности. Выявлены ключевые приоритеты национальной промышленной политики, модифицированные в связи с поставленными целями снижения импортозависимости России и обеспечения её технологического суверенитета. Дана оценка показателей состояния промышленного потенциала Республики Мордовия, институциональной среды реализации региональной промышленной политики, оказывающих влияние на обеспечение технологического суверенитета. Заключение. В соответствии с выявленными тенденциями определены стратегические приоритеты формирования региональной промышленной политики в интересах обеспечения национального технологического суверенитета: развитие уже имеющихся и новых производств в соответствии с приоритетными направлениями обеспечения технологического суверенитета страны – медицинская промышленность, электронная и электротехническая промышленность, нефтегазовое машиностроение; обеспечение научно-технической и инновационной деятельности в регионе инфраструктурой опережающего развития; поддержка технологического перевооружения промышленных предприятий региона; повышение инвестиционной привлекательности региона для привлечения инвестиций в высокотехнологичные отрасли промышленности и др. Introduction. An effective industrial policy plays a key role in achieving technological sovereignty and ensuring Russia’s national security in the face of geopolitical challenges and threats. It should give impetus to concentrate efforts on the most important technological areas, develop high-tech industries and knowledge-intensive enterprises, and thus provide for strengthening the competitiveness of the national economy. Goals and objectives. The purpose of this study is to identify the key priorities of Russia's industrial policy in order to ensure national technological sovereignty based on the strategic development directions defined at the federal level, as well as the interests of the regions. Materials and methods. During the research process, tools of systemic and functional approaches, general scientific methods (analysis and synthesis, scientific abstraction, comparison, analogy), as well as indicative analysis were used. Results. The study has shown that in modern conditions there is an urgent need to develop the industrial policy of the regions with the aim of their long-term sustainable development and increasing their competitiveness. The key national industrial policy priorities modified in line with the goals of reducing Russia's import dependence and ensuring its technological sovereignty have been identified. The study has assessed the indicators of the state of the industrial potential of the Republic of Mordovia along with the institutional environment for implementing the regional industrial policy, both having an impact on ensuring technological sovereignty. Conclusion. In accordance with the identified trends, strategic priorities for the formation of the regional industrial policy aimed at strengthening the national technological sovereignty have been determined including the development of existing and emerging industries in compliance with the priority areas of ensuring the country's technological sovereignty (medical industry, electronic and electrical industry, oil and gas engineering), providing advanced development infrastructure for the implementation of scientific, technical and innovation activities in the region, providing support for the technological re-equipment of industrial enterprises in the region, increasing the investment attractiveness of the region in order to attract investment in high-tech industries, etc.

The U.S. military economy incorporates hundreds of American communities. This is the first book to connect our national security apparatus to the local level via deeply reported portraits of six carefully selected locations, including military Meccas and out-of-the-way places. They are woven into the warfare economy by bases, nuclear weapons labs, and production sites. The book includes an invaluable overview of how the military is structured, how its budget is made, and what it costs. It also shows how the military economy perpetuates itself. In on-the-ground reporting, Pemberton traces the lines of connection between the tour stops presented here and our country’s foreign policy, industrial policy, and budget priorities. She examines the meaning of national security in the current moment, as climate change becomes what the military itself calls "an urgent and growing threat." And she dramatically demonstrates how redirecting our militarized foreign and industrial policy toward climate security can help these communities become part of the solution. For students, scholars, public servants, and all concerned citizens, this book is essential reading.

Keywords: state policy, national security, intellectual property Legislative acts that form the state policy in the field of national security and defense of Ukraine regarding the protection of intellectual property are considered. The state of realization of the defined questions at development of armament and military equipment is investigated. It is determined that the effective implementation of the state national security policy is impossiblewithout a comprehensive analysis of the impact of intellectual property issues on the sphere of national security and defense of Ukraine. The importance of improving the system of intellectual property protection in the development of armaments and military equipment is noted.Ensuring Ukraine’s defense capability largely depends on equipping the Armed Forces of Ukraine with modern types and models of armaments and military equipment that is developed based on intellectual property rights. The required level of defense capability of the state is achieved through the formation and implementation of defense and industrial policy, the purpose of which is the development and production of weapons and military equipment and equipping the Armed Forces of Ukraine.It is the military-technical sphere where the objects of intellectual property rights belonging to the sphere of national security and defense are created, and the state is obliged to ensure their protection.Ukraine began to form a state policy on national security and defense from the first days of the independence.The legislation of Ukraine on national security and defense determines the need to use scientific and technical achievements and the introduction of new technologies to increase the state's defense capabilities. However, the provisions on intellectual property issues in all regulations are purely declarative by nature without defining specific tasks to eliminate possible threats and address issues.This is especially true of the use of intellectual property in the field of national security and defense.An important component of the mechanism for formulating state policy in the field of national security and defense should be the organization and comprehensive protection of intellectual property, especially in the development of armaments and military equipment.

This article examines the resurgence of industrial policy in the EU, with a particular focus on its evolving rationale in the context of geopolitical fragmentation and economic security concerns. It explores how recent global events, including the Covid-19 pandemic and Russia’s invasion of Ukraine, have intensified debates about government intervention in the economy and led to a renewed focus on strategic autonomy. The paper analyses the key EU industrial policy initiatives and their implications, particularly in sectors such as energy, defence and critical technologies. Special attention is given to the challenges and opportunities presented by Ukraine’s reconstruction, including potential adaptations to EU state aid rules. The article concludes by proposing principles for effective industrial policy design and implementation, emphasising the importance of maintaining single-market integrity, ensuring transparency and accountability, and balancing interventions with sound macroeconomic policies.

The WTO is going through an unprecedented crisis that has seriously eroded its relevance. The repeated invocations of national security against other members are evidence of a growing distrust. Industrial policy in the name of national security was unheard of when the WTO entered the realm of international relations. The disputes that arise cannot be adequately addressed because the WTO contract cannot be adequately enforced due to the dysfunctional Appellate Body. But even if this were not the case, could enforcement of an outdated contract ever solve the emerging problem? The response in this book is negative—the WTO contract is in dire need of updating. Alas, no one is working in this direction. The WTO is facing what Joseph Nye called a “Kindleberger trap”: the parties that could take the lead to invest in the international order are either unwilling or find it impossible to do so. Trading nations seem to have forgotten that the cost of no WTO is sizeable anyway (if trade growth wanes). And there is a risk that the cost extends beyond international commercial relations.

The global trading system has reached an inflection point. The future of the liberalized, rules-based global world order is in doubt as countries that have for decades preached and practiced policies, which can loosely be defined as embodying the ‘Washington Consensus’, have started to backtrack. Free and fair trade is no longer the mantra as governments embrace industrial policy, protectionism, national security, risk management, and managed trade. Perhaps the most surprising adherent of the reversal is the US, whose embrace of what has been termed a ‘modern American industrial strategy’ runs counter to traditional American views and norms. While David Ricardo's theory of comparative advantage still holds true, it has certainly fallen out of fashion. Where it leads remains unknown – caveat emptor. This article analyses President Joe Biden's industrial policy and its implications as well as shifts that have occurred as a result of the pandemic, geopolitical competition, and other recent global events.

This article first analyzes Ricardo’s theorem, not just his argument in favor of comparative advantage, but also the conditions that are necessary for the theory to work, namely, that capital is loyal to the country of origin and that currencies will adjust to level out imbalances in trade. It then traces the flow of foreign direct investment into China and the basis for that flow – cheap labor. It then analyzes China’s manipulation of the yuan and the changes in the relative valuation of currencies. The next section of the article addresses China’s entry into the World Trade Organization and its failure to live up to its agreement to move to a market-based economy. China’s reliance on state owned enterprises, its subsidization of export and high-tech industries, and its direct and indirect coercion of technological transfer and know-how from the U. S. and other countries – all stand in opposition to the principles to which other countries have agreed in connection with their participation in the World Trade Organization. A critical factor that is not been understood in connection with global trade is that the transfer of dual-use technology to China also carries with it national security implications. The next sections look at forced technology transfer and China’s military goals, including its policy to be both industrially and militarily self-sufficient, something United States needs to be likewise. This leads to a discussion of industrial policy. China has clearly articulated its industrial policy and the steps that it will take to implement it. The United States cannot afford, either from the standpoint of providing good paying jobs for its citizens, or from the standpoint of being a leader in research and development, or from the standpoint of national security, to be dependent upon products originating from, or supply chains running through, other countries – particularly when such countries are hostile to the United States. The conclusion asserts that Sen. Rubio’s “Made in China 2025 and the Future of American Industry” may be the opening of a critically necessary dialogue on the need for, and nature of, an industrial policy for the United States. Just relying upon the mantra that free trade benefits all, and supporting such mantra on the basis that it is “proved” by Ricardo’s theorem of comparative advantage, is to put our head in the sand and ignore the evidence set forth in this article.

ABSTRACTViewing cybersecurity as a matter of national security, in May 2018, authorities in Taiwan passed the Information and Communication Management Act (ICM Act) in response to the increasing awareness of potential malicious cyberattacks targeting the public and private sectors. Under the ICM Act, both government and non-government bodies are complied with the coded regulations and new management scheme. This article provides a thorough review of the proposed national information security policies in Taiwan between 2001 and 2017, as well as to deliver a case for the comparative study of industrial policies employed to bolster domestic cybersecurity markets. Using interview data and government documents, we argue that the industrial policy for cybersecurity in Taiwan is a top-down centralised approach. The new basic law for cybersecurity requests all government agencies and the critical infrastructure providers to comply with the new regulation. On top of the legislative base, the state policy adopts traditional policy instruments as economic stimulus, for instance announcing series of national development programme, imposing new security standards, and providing financial subsidy and R&D credits for SMEs. This paper also describes the major rationale and drivers behind the government’s plan of action to shape the cybersecurity industry policy in Taiwan.