What is happening?

On September 9th, the United States Department of Homeland Security (DHS), the United Kingdom Department for Business Trade and Australian Department of Industry, Science and Resources signed a trilateral Memorandum of Understanding (MoU). The agreement on supply chain resilience, particularly focuses on the telecommunications sector, according to a DHS press release. The goal of this collaboration is to identify vulnerabilities, share information on potential risks and collaborate to address vulnerabilities and challenges throughout the  supply chain. In particular, strengthening the safeguards that organisations or companies put in place to protect data and information against malware and sabotage.

This initiative encompasses a broad remit including the securing of critical materials for production process and bolstering resilience to ‘ransomware’ attacks, where hackers break into an organisation’s network and hold data hostage until a ransom is paid. 

One overarching goal of this initiative is protecting viral undersea cables from outside interference. Such cable infrastructure is of critical importance to the global economy. They carry 95% of all international internet traffic and transmit everything from everyday emails to military secrets. The security of which has become a growing concern for both the United States and China as they grapple with the need for new undersea cable projects, which neither country is willing to cede ground on.

This memorandum of understanding can be seen as the next step in the United States’ strategy to protect telecommunications supply chains, specifically to secure against and reduce reliance on an increasingly hostile competitor in China. The start of this broader strategy would be the CHIPS and Science Act. The 2022 Act was passed to lessen the United States’ reliance on foreign suppliers by providing subsidies to domestic producers of semiconductors. These critical technologies are used in everything from communications, to healthcare and defence. Taiwan is the world’s leading producer of advanced semiconductors. But this dependence is fraught against the context of Chinese territorial ambitions over Taiwan and the South China Sea, as well as increasing economic confrontation between China and the West, in the form of sanctions and investigations into Chinese companies.

What is in it for you?

This is a far-reaching and broad initiative that has national security implications, but it depends entirely on the practical steps the U.S., UK and Australia take in order to protect supply chains. Whilst there aren’t any concretely defined goals, the fact that this was an agreement that involved the U.S. DHS rather than the Department of Commerce – a department that is more economics and trade-focused like those of the other two partners - suggests that this trilateral agreement has an explicit national security focus, at least on the part of the United States. 

The telecommunications sector’s role in sharing and transporting communications data gives it an important role in the stability of the global economy and society. Due to our collective reliance on the internet for accessing education, communication, entertainment, information and work, any disruptions to telecommunications infrastructure will have profound consequences for businesses, governments and individuals.

The pressure on global supply chains as a result of the COVID-19 pandemic and recent climate induced-drought in key trade routes like the Suez canal has highlighted the importance for governments of having structures in place to avoid disruption of the flow of goods. Whilst maritime trade routes and their security is not the focus of this agreement, it may become a dimension of increasing securitisation as vulnerabilities are identified. 

It is impossible to decouple this Memorandum of Understanding from the protection of Western interests against future conflict with China, whether over Taiwan or access to the South China Sea. The lead-up to the current conflict in Ukraine is the closest roadmap for the cost of conflict in an interconnected, globalised world, exemplified in the experience of sudden increases in energy costs after Russian gas supply was cut off to Europe. Those readers interested or employed at the intersection between the West and China must be attuned to the significance of supply chains. This is both because the securitization of telecommunications itself has made it an area of competition, but also because further developments that lessen Western dependence on China and vice-versa, would decrease the strategic cost of any future confrontation. 

What happens next?

As this agreement was only recently signed, the lack of definition on the scope of the cooperation makes it difficult to predict exact outcomes. The immediate actions will likely focus on researching and identifying structural weaknesses, and potentially expanding the MOU, to include other sectors besides telecommunications. The United States, UK and Australia are bound to take practical steps in order to ensure supply chain resilience, but mediated by their respective geographic circumstances and how they fit into larger geopolitical and national security considerations. 

The Polis Team in Edinburgh