The Future of Internet

Taiwan can be East Asia’s New Internet and Data Hub

In the second half of April, Taiwan scored two major wins in consolidating its regional and global positions in digital future and data trade within a week’s time, with relatively little fanfare or local attention. Is Taiwan on the verge of a golden opportunity to transform its economy, yet without its broader business, industrial and political communities knowing its own full potential?

On April 28, 2022, the United States and “sixty partners around the world” together launched the Declaration for the Future of the Internet. Taiwan was among these partners, which included the European Commission and governments from all over the world, and the U.S. itself. As the signatories of the declaration were in effect all governments, the diplomatic choice to use the word “partners” instead of “countries” was clearly made for including Taiwan.

As a matter of background information, the concept for an Alliance for the Future of the Internet was floated by the U.S. White House shortly before the end of 2021, and was intended to be announced at the Summit for Democracy in early December. However, the plan faced pushback from the digital rights as well as technology business communities and was criticised for being merely an extension of the Trump administration’s “Clean Network” initiative, for alliance member countries to pledge to “use only trustworthy providers” in core Internet infrastructure, which makes the alliance a “no-China” club but lacks focus for the global Internet to adhere to democratic, human rights and accessibility values. Civil societies and Internet companies also felt left out of the process and without a seat at the table.

Taiwan has a place in the future of the Internet

As a result, days before the Summit for Democracy was to commence, the announcement of the alliance was delayed, until now. The April 28 announcement of the declaration takes on somewhat of a looser form compared to an alliance of national and territorial governments. The declaration itself also adjusted its focus to a more principles-driven vision for the Internet based on human rights and fundamental freedoms including expression and pluralism, increased access and affordability, safety and privacy, fair competition, and a trusted and secure infrastructure. Also, likely as a response to the more recent “splinternet” controversy that arose out of the Russian invasion of Ukraine, the declaration emphasised a global Internet and the need to refrain from shutdowns, blocking lawful content and services, and free data flows.

But the declaration is still significant in many ways, and may represent the prelude to a series of international lobbying in preparation for the important election of the next secretary general of the International Telecommunication Union (ITU), the technical body under the United Nations (U.N.) in charge of the world’s telecom standards and regulations, where a Russian candidate and and a U.S. candidate will face off later this year. With China and Russia “fully cooperating” to try not only to dominate the ITU but also to wrestle away global Internet governance from the multistakeholder ICANN to the ITU — and hence the hands of national governments — the signatories may represent one of the most visible actions to date to counter the efforts of China and Russia.

Even though Taiwan is not a member of the U.N. nor the ITU, the inclusion of Taiwan among the democratic allies and their effort to “reclaim the promise of the Internet,” as described in the declaration, is symbolic and significant. It is also important to note that, despite the U.S.’s emphasis on the Indo-Pacific region in recent years, the declaration was endorsed by relatively few Asia Pacific partners, with only Australia, Japan, New Zealand and Taiwan, and Pacific islands such as Marshall Islands, Micronesia and Palau, with major Asian countries and technology leaders such as India, South Korea and Singapore notably missing. That makes Taiwan stand out even more.

However, the news of Taiwan’s inclusion in the U.S.-led declaration apparently only received relatively limited press coverage in Taiwan, with the attention placed on digital minister Audrey Tang representing the government in the online signing ceremony with other global partners, repeating the rather plainly worded Ministry of Foreign Affairs press release and with little commentary or analysis on any of its importance.

A seat at the table in setting global data rules

Similarly, a week before the announcement of the Declaration for the Future of the Internet, Taiwan became a member of the Global Cross-Border Privacy Rules (CBPR) Forum, on April 21, 2022, along with Canada, Japan, the Philippines, Singapore, South Korea and the U.S., this time under the name of “Chinese Taipei.” In the statement from U.S. Commerce Secretary Gina Raimondo, the Forum “intends to establish the Global Cross Border Privacy Rules and Privacy Recognition Processors (PRP) Systems, first-of-their-kind data privacy certifications that help companies demonstrate compliance with internationally recognised data privacy standards.” The “APEC CBPR” System will facilitate and establishment the framework for and promote mutual recognition and trusted international data flows.

Again, Taiwan’s Ministry of Foreign Affairs put out a press release, stating that its inclusion on the Forum will have a positive impact on “international cooperation on privacy protection and cross-border digital trade development.” Indeed, the potentials for Taiwan can go way beyond this general description.

In recent years, the U.S. and the E.U. have been embroiled in a longstanding dispute about data transfers, not the least because the E.U. has led by setting up very comprehensive privacy and data protection laws, while the U.S. has not. Recently in March 2022, however, the U.S. and E.U. finally entered into a data transfer agreement. Meanwhile, earlier in June, 2021, China’s Data Security Law also came into effect, enabling a comprehensive regulatory regime for its data and security governance, including data sovereignty and requirements for local storage, with a focus on national security. Data may be the new oil, but without the pipelines and the agreements on how to transfer and exchange these data, the full economic potentials will not be realised.

In Asia, there is no comprehensive region-wise data and privacy framework, like the E.U.’s General Data Protection Regulation (GDPR), and the regulatory regimes in countries and territories can vary greatly, if they exist. The U.S.’s CBPR initiative is obviously an attempt to counter China’s influence and to take leadership to emphasise on data transfers and related business opportunities, while the Chinese regulations tends to focus more on forcing companies to keep data within China. As such, Taiwan can play a critical role.

Taiwan can fill the void left by Hong Kong

In recent years, Taiwan has made headways in its Internet infrastructure and established a respectable regional presence. Major U.S. technology giants such as Google and Meta have chosen Taiwan to host their regional datacenters, along with Singapore, but instead of Hong Kong. When Google and Meta jointly invested to build what would have been the first direct trans-Pacific undersea cable — the Pacific Light Cable Network (PLCN) — between California and Hong Kong, and the U.S. government eventually refused to allow the PCLN to reach Hong Kong, Google and Meta had to revise their proposal to have the PCLN terminate in Taiwan instead in order to receive the license approval from the U.S. In the PLCN “national security agreement” between Google and Meta with the U.S. government, the investors agreed to “pursue diversification of interconnection points in Asia, including but not limited to Indonesia, Philippines, Thailand, Singapore and Vietnam.” That could very well mean connecting to these countries from Taiwan.

In other words, Taiwan is poised to take over at least part of the role of the region’s telecommunications and Internet hub vacated by Hong Kong, as the latter’s position has been compromised since the implementation of the National Security Law from Beijing in 2020, and the subsequent political crackdowns, followed by various U.S. sanctions. While Taiwan will not be able to displace Hong Kong interconnection role into the mainland and the Greater Bay Area, it has a good chance of taking over some of the regional and international traffic and data flows in East and Southeast Asia, especially new growth in demands, because the non-China international capacity of Hong Kong will grow much more slowly than before, if at all, in the foreseeable future.

This may be a perfect opportunity for Taiwan to set its goal to become the regional Internet, data and technology service hub for East Asia, like Singapore for Southeast Asia. For years, Taiwan has been trying to diversify its industrial base and its reliance on the semiconductor, electronics and manufacturing sectors. Even though Taiwan’s prospects for its semiconductor industry still look great, it is always smarter to spread the eggs in more baskets during good times.

Next Steps for Taiwan - What should Taiwan do ?

I humbly suggest the following for Taiwan to upgrade its grand vision, soft infrastructure and skills base:
 

1. Establish Taiwan’s digital economy strategy, covering all aspects of government and industry digital transformation, attracting foreign investment and supporting research and development, as well as education and manpower development, and let the world know Taiwan is more than about semiconductor and electronics.

2. Update its legal and regulatory regimes on data and privacy protection as well as  telecommunications with a view to liberalise and attract international investment and more data and services exchange with other Asia Pacific economies, and also to catch up  with data and privacy regulations in Europe and other leading countries.

3. Double down on the effort to develop the telecommunications and Internet sector, leveraging on inroads already made in datacenters and infrastructure, attract more investment and expand regional connectivity and capacity with its East Asian neighbours such as Japan and South Korea, as well as the U.S.

4. Learn from the Singapore playbook and negotiate bilateral agreements on digital trade and data transfers with other countries, similar to Singapore’s proposed pact with the U.K. Again, as it is unlikely for Hong Kong to enter into data trade agreements with leading western economies in the near future, Taiwan is well placed to take over.

There is no need to abandon what Taiwan has been doing well, but this is the best chance for it to expand and diversify into new areas of economic growth, that would not only greatly benefit Taiwan but also offer the opportunities for its allies to help, support and bolster its regional strategic and economic importance. That can truly be a win-win situation.

*Charles Mok is a visiting scholar with the Global Digital Policy Incubator of the Cyber Policy Center at Stanford University. He represented Information Technology in Hong Kong's Legislative Council as a Member of Parliament from 2012 to 2020.