The consequences have far-reaching impacts on the free flow of trade within the region and with China. 

The new strategic focus of the United States on economic warfare, revealed in the release of the National Security Strategy, heightens the urgency of this quiet ASEAN discussion. It impacts on the way NT business develops and exports products and digital products in particular. 

The debate is about the growth of the digital economy. Or more precisely, it’s a fight to decide which standards will be adopted in AI, advanced computing, digital payment platforms, safety features on imported EVs and other aspects of the digital universe. 

On one side are the Americans and their allies who will not work with China. They regard almost everything developed in China as a security risk or an economic challenge. This ranges from cars and phones to household cleaning robots. 

On the other side is China, which offers the most advanced digital applications in the world. China is happy to work with everybody to develop and refine common standards. 

Early in 2025, China hosted a world conference to discuss these issues and to develop standards around AI. The US refused to attend. Later in the year, the UK hosted a similar world conference but refused to invite China to participate. 

Make no mistake, this intransigence will impact trade and business, particularly in our region. 

Some involved in the ASEAN discussions around digital enhancement have already concluded that the inevitable outcome is two separate and probably largely incompatible standards. This result will cripple the rapid advancement of the digital economy and hinder any efficiencies in productivity that would come from a single cooperative standard. 

This impacts on digital development and uptake. It also impacts on the physical world of business and consumer electronics and other products. 

This is much more consequential than buying an electric device in Singapore and finding that the plug is incompatible with Australian power points. 

Lack of agreement on standards is not just about software and AI. Simple things, such as different shaped and incompatible charging ports for EVs or phones, drag down productivity and hinder digital advances. The adoption of different standards can also be used as a tool of economic coercion to whittle down market share. 

China has introduced the GPMI, a single cable designed to replace USB, HDMI, audio and internet. The cable handles data, video and power at 192 gigabits per second and uses a new connector for top performance. 

If your device is not compatible with this new connector, then your productivity lags. If your new product does not cater for this new plug configuration, then you lose market share. Creating a product that takes the new plug, and also a product that uses the old plug duplicates production and eats into profits and business flexibility. 

Business can find its options limited by the products and operating systems that it chooses to work with or manufacture. Business can be facilitated or hampered by the choice of payment systems for cross border transactions. 

Another standards battleground is found in the assessment and certification of existing standards. In its ceaseless war with China, the United States has opened a new front using certification processes to slow the Chinese economy. It impacts every company that has electronic products manufactured in China for re-export. 

It works like this. 

Delve into your smart phone, turnover your computer keyboard or peek behind your flat screen TV. Moulded into the plastic or attached as a label is an alphabet soup of approvals. Among them is a FCC logo. FCC stands for the Federal Communications Commission, which is an independent US government agency regulating interstate and international communications via radio, television, wire, satellite and cable. 

These standards are designed to ensure that your smart TV does not interfere with your smart phone or laptop Wi-Fi connection. Different countries have individual processes required to gain certified approval that the product conforms with these standards. 

So far so good. The relevant approval testing can be done at the point of manufacture which is often in China. 

Except now it cannot for FCC approval because FCC testing can no longer be done in China. 

Now product samples, perhaps developed in the NT for manufacture in China, must be shipped to Taiwan or to the U.S. for certification testing before a FCC stamp of compliance can be applied. 

The necessary laboratory tests used to be done on-site in China or in laboratories that were almost next door. This enabled quick turnaround in product development and offered predictable and established schedules. It was part of an efficient manufacturing process for everything from audio speakers to cloud servers. 

Now approvals require cross-border shipping of sample products. Development lead times have increased by three times or more. In many cases the laboratory test fees are around 50 percent higher. 

This is not a response to fraudulent FCC certification. It’s not a standards compliance issue. It’s simply a malicious handful of grit thrown into the wheels of freely flowing trade. 

This small procedural change slows China-based manufacturing, adds to the hidden costs of production and reduces product development flexibility. Nothing has been blocked, or sanctioned. This is trade warfare by stealth and it impacts NT designed products with outsourced manufacturing in China. It impacts every product manufactured in China, including my Logitech wireless keyboard and mouse. 

There are no bold headlines trumpeting these changes, but they make for higher prices and slower product development. This moves weaponises the use of already agreed standards and becomes a new trip-wire in the disruption of trade with China. 

The issue of digital standards and compatibility is not an esoteric discussion. Chambers of Commerce and business need to be more actively involved in these currently soto-voice ASEAN discussions. The future of open, efficient and productive trade depends on it. TQ