My article that first appeared in "South China Morning Post"
November 5, 2024
November 4, 2024
Great power struggle for undersea dominance
These thin wires, as wide as a garden hose, are owned by a consortium of parties because of high costs associated with laying of new undersea ecosystems. Over heightened risk of being damaged by natural disasters, fishing nets, ship anchors and sharks, there is a greater need for interstate cooperation to protect the flow of information they electronify.
But by proclaiming principles that aspire to advance cooperation between a handful of countries to “promote selection of secure and verifiable subsea cable providers,” Washington is stonewalling cooperation on an area that delivers international bandwidth, necessary for global digital transition.
A blend of America’s megaphone and coercive diplomacy, through which it denigrates China and strong-arms allies and telcos to dissuade them from partnering with Chinese companies, and geopolitics around information superhighways, underpinning the global economy and finance, to retain its subsea hegemony could stoke tensions with Beijing for the plan's ulterior goal is to phase one of the fastest-growing companies, China’s HMN Technologies, out of the market.
America’s SubCom, Japan’s NEC and France’s Alcatel historically dominated the sector before a seismic shift took place as HMN Tech (then Huawei Marine Networks) entered the fray in 2008 and disturbed status quo, becoming an important player in the market over the next 15 years.
Emergence of a Chinese firm shook the US Department of Justice whose Team Telecom in 2020 raised national security concerns about China’s “sustained efforts to acquire sensitive personal data of millions of US persons.” In 2021, Washington finally added HMN to its entity list.
A Guardian’s investigation of documents disclosed to it by NSA’s whistleblower Edward Snowden, in 2013 revealed the UK’s spy agency, GCHQ, had tapped into more than 200 fiber-optic cables to access a huge volume of communications including between entirely innocent people, sharing sensitive personal information with its American peer.
NSA and other US intelligence agencies have been eavesdropping on its own Five Eyes’ allies such as Australian and New Zealand and snooping on American people including protesters, racial justice activists, journalists, political commentators, campaign donors and Congressmen; there is no clear evidence that subsea cables are being tapped or sabotaged by any country, let it be US, China or Russia.
Recent reports have seen such threats as overblown. Labeling concerns vis-à-vis "tapping into cables to derive, copy or obfuscate data" as “highly unlikely,” a European report in 2022 found “no publicly available and verified reports” indicating deliberate attacks including from China. The threat scenarios “could be exaggerated and suggest a substantial risk of threat inflation and fearmongering,” it said.
Still, US unabated offensive against Chinese company continued as it through incentives and pressure on consortium members including warnings and threats of sanctions and exports controls flipped the contract of Southeast Asia-Middle East-Western Europe-6 (SEA-ME-WE-6) cable, snaking its way from Singapore to France, to SubCom.
Per Reuters, it was one of the six private undersea cable deals in Asia-Pacific where the US government had intervened to prevent HMN from winning or forced rerouting or abandonment of cable deals, unveiling Washington’s innate impulse to monopolize undersea ecosystems and marking a beginning of underwater geopolitical rivalry.
Yet China struck back through a $500 million Europe-Middle East-Asia internet cable. Known as PEACE (Pakistan and East Asia Connecting Europe) cable, the project directly competes with SEA-ME-WE-6 and supersedes its rival project with a planned length of 25,000+ km against latter’s 21,700 km, providing even higher bandwidth.
US efforts to control subsea cables shone as market share of HMN, which had built or repaired almost 25% of world's cables and supplied 18% of them in the last four years through 2022, is expected to contract to mere 7%. The top beneficiary of US interventionism is its SubCom that has grabbed only 12% of contracts but accounts for a whopping 40% of cables laid.
At the core of this competition is America’s fear of conceding a critical component of the digital economy to China. US officials have voiced concern the Chinese repair ships could be used for spying; there is no evidence of such an activity either. While some have dubbed submarine cables as “a surveillance gold mine" for world intelligence agencies, most experts believe the biggest risk isn't espionage, sabotage or even rogue anchors rather an uneven spread of cable infrastructure that threatens the very promise of digital equity and demands East-West cooperation to end this digital injustice, especially with the Global South.
For decades, America, France and Japan dominated the global underwater ecosystem. Wary of losing their ascendancy, they are pooling efforts to exorcize Chinese demon and retain influence over submarine cables. The involvement of security alliances such as Quad "to support and strengthen quality undersea cable networks in the Indo-Pacific" and Biden's push to bolster cooperation in the region on cybersecurity including undersea cables and whisk regional submarine plans away from China are beseeching Beijing to respond, elevating risk of kicking off a cold war under the sea.
Multination cooperation has been the catalyst of submarine cable expansion and is essential for the future of the digital economy. But this kiasu approach of asserting a closed group's unwater dominance is threatening to black out collaboration and divide the world in two geopolitical or ideological blocs. This simmering struggle for subsea hegemony should be lulled before it boils up and compounds global challenges, being faced by a fragmented world.
*My article (unedited) that first appeared in "Express Tribune"
October 26, 2024
Biden's de minimis move risks weakening Harris' campaign
Just days after the Democratic lawmakers urged the US President Joe Biden to exercise his executive powers to end a tariff “loophole,” his administration announced new actions to clamp down on the “abuse” of “de minimis” shipments, in particular from Chinese e-commerce platforms. These consignments over the last ten years had increased from about 140 million to one billion, making it challenging to block illicit synthetic drugs such as fentanyl, the White House readout asserted.
It is despite the proponents spurned the likelihood of any loophole in the exemption or that these low-value shipments contained fentanyl, citing screening of the “de minimis” imports by the Custom and Border Protection (CBP). All imports, regardless of value, are in fact rigorously monitored by the CBP for anti-forced labor compliance including the Uyghur Forced Labor Prevention Act and to enforce trade laws vis-à-vis intellectual property rights.
Leading industry groups have also rejected such propositions. National Foreign Trade Council (NFTC) – whose board includes Amazon and Walmart – in its letter to the Biden administration in March said there was no evidence that illegal drugs were prevalent in "de minimis," alluding to CBP data that showed 99% of fentanyl seizures occurred across areas, which were not a major channel for “de minimis," and estimate only 3% of fentanyl doses in 2024 would come through air cargo. A CBP official last year too dismissed the "misconception" the "de minimis" was a "loophole" and these cargoes were not screened.
In its recent report, the Drug Enforcement Agency has also acknowledged "Fentanyl (mainly sourced from China and India, which is becoming a "major source country" for illicit chemicals) manufactured by the Mexican cartels is the main driver behind the ongoing epidemic of drug poisoning deaths in the United States." The Department of Homeland Security's own data, which states 89% of all seizures in the cargo environment this fiscal year through July originated as “de minimis” shipments including 72% of health and safety seizures of prohibited items, further reveals the low-value packages are scrutinized at arrival in the US.
The administration's intent to "work with Congress" for key reforms including exclusion of "de minimis" shipments, covered by the Section 301, Section 201 or Section 232, as well as argument that the exemption is resulting in a flood of low-value products such as textiles and apparel into the US market duty-free unveils the flipside of the coin: curbing China's clothing exports to the US.
Inexpensive items like $5 t-shirts and $10 sweaters and dresses and digital advertisements by Chinese e-commerce platforms have benefited consumers and the US ad and shipping industry. As 70% of textiles and apparel imports from China are already subject to the Sections 301 tariffs, an imposition of duties on Chinese low-value goods will directly hit the US importers and consumers who, per the US government’s last year report, absorbed these costs and loved the torrent of ultra-cheap clothing.
The new rule risks firing back given it would wreak havoc on American consumers and businesses by triggering higher prices of everyday products like bags, dresses, toys and shoes from Chinese online marketplaces and fast fashion companies at a time when spiking inflation is set to become a burning issue in the presidential campaign.
In a recent debate with Donald Trump, the US Vice President Kamala Harris panned his rival’s plan to hike tariffs on all imports from 10% to 20% as well as slap 60% or more on Chinese goods for they would hurt the working families, characterizing it as “Trump’s sales tax.” With the administration’s new actions contradicting Harris' condemnation of Trump’s tariffs, the Democrats have given a tactic endorsement to the former president.
If enacted, the new rule could cause a drop in Harris’' approval rating, which has just edged past Trump. It's politically an unwise decision in an election year as per the NFTC, average price of "de minimis" package could double from $50, in case it "were to be eliminated or significantly degraded," suggesting American consumers would bear the brunt.
Over the years, “de minimis” has encouraged competition among e-commerce giants and delivered cheaper clothing, electronics and other home products to Americans. Purging of exemption will impact the revenues of Chinese firms; it could derail growth trajectory of the US ad industry while culminating in an estimated $8 billion to $30 billion in additional annual costs to American consumers other than harming small businesses and provoking retaliation.
Biden’s intent to crack down on Chinese e-commerce companies could inspire other countries to make changes in their “de minimis” policies, undermining American exporters’ competitiveness; they will add to the sufferings of the US low-income communities and small businesses, who could take the Democrats aback in the November election.
Rather than aggrandizing threats to American consumers and attracting their wrath by levying sweeping tariffs on “de minimis” shipments, the Biden administration should focus on staving off the challenges, being faced by the US citizens, to circumvent their angst later this year that would help Harris’ prospect to become the first ever woman president in the US history.
*My article unedited that first appeared in "Express Tribune"
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