U.S. Under Secretary Krach bids Seoul to join anti-China 5G Clean Network

Keith Krach, United States Under Secretary of State for Economic Growth, Energy, and the Environment, urged South Korea to join the U.S.-led Clean Network initiative for 5G, or the alliance of “trusted vendors” for a united front against China.

“We think it is imperative for Korea to join the Clean Network for the sake of its own national security,” Krach said in an exclusive interview with Maeil Business Newspaper.

Krach said the Clean Network is a comprehensive approach to addressing the long-term threats to data privacy, security, human rights, and trusted collaboration posed by the Chinese Communist Party (CCP).

He stressed the “power in unity and solidarity” in dealing with China and said that building a “network of trusted partners comprised of like-minded nations and companies” was vital.

“The CCP’s strategy has always been to divide and conquer and pick off the weak gazelle from the herd. But when we are united, the CCP cannot retaliate against all the democracies and companies in the world at the same time,” Krach said.

He noted the strong military and economic ties between the United States and South Korea, pointing out that the U.S. is Korea’s only treaty ally and its second-largest trading partner.

Below is the full transcript of the e-mail interview.

Q: I heard that you visited Korea while working for GM. If you have any special memories or episodes about Korea, please tell them to your readers. And if you have anything to say to Korean who read your interview article, please tell us.

A: I have many fond memories of Korea, dating back to 1984 when I was a Vice President at General Motors when we were helping install robots in the Hyundai car plant in Ulsan. I was amazed at the scale of Hyundai's ambition. It does not surprise me that the car manufacturing facility to is the biggest in the world which now churns out a vehicle every 10 seconds and 1.5 million last year in a sprawling mass of five different factories.

We could tell the workers were treated well. We were also told that each worker receives a free lunch every day, a legacy of a promise once made by company founder Chung Ju-Yung. Even though we were putting in a reasonable degree of automation, but it was abundantly clear everyone knew their job inside out and took immense pride in doing it well.

They tested every single car produced then took them down to the plant's own docks. We thought from production line to port, Ulsan has it down to a fine art, setting a blueprint for efficient production on a huge scale virtually every car maker in the world would love to emulate. And now the city's shipyard is also the biggest in the world, and is run by Hyundai Heavy Industries, which was founded in 1972 by the man who also formed the car company, Chung Ju-Yung.

I had many other great Korean business experiences through the years running Silicon Valley companies but the thing I treasure the most were all the trusted partners and friends I made along the way. I have great memories that range from long working sessions to incredible banquets with the best food I have ever had in the world (my 5 children’s favorite food is Korean) to late night karaoke singing filled with laughter.

Most recently, I was pleased to visit in November 2019, where I co-led our Bilateral Economic Dialogue and had a fantastic set of meetings. We have an incredible Amcham out there, led by James Kim, who regularly keeps me in the loop of the magnificent work our companies are doing with their Korean partners. I look forward to the opportunity to return there to continue efforts to achieve our shared goals of economic growth and prosperity.

Q: I believe that the US-ROK Alliance applies not only to security, but also to the economic field. Please rate the level of economic cooperation between the US and Korea. How do you think the Trump Administration has improved Korea-US economic relations over the past 4 years?

A: Global economic security is national security. The United States and Republic of Korea enjoy excellent economic cooperation, which has continued to expand under the Trump Administration. Record-high trade, increased defense spending, and expanding bilateral investment have all bolstered our relationship. Meanwhile, our partnership on regional and global issues continues to grow into terrific and meaningful new areas science and technology, space, international development, women’s economic empowerment, infrastructure, energy, and so much more.

As one recent example, consider our joint response to the pandemic. In the early months of the pandemic, the United States and the ROK collaborated to establish robust travel screening measures to preserve air linkages between our countries, which also assisted with repatriating each other’s citizens. The ROK donated essential medical supplies to the United States, including 2.5 million protective masks, and prioritized exports of COVID-19 test kits to the United States. U.S. and ROK experts and policymakers regularly share best practices on fighting COVID-19. This kind of close-knit economic cooperation is only possible during a pandemic when you already have a very deep, very well-established relationship.

The upcoming U.S.-ROK Senior Economic Dialogue is an opportunity to capture the breadth of these achievements. I look forward to honoring and building on this legacy of friendship and commitment.

Q: Do you have any specific issues in the bilateral partnership that the US government hopes for improvement or cooperation on the Korean side? And what do you think both countries should do to strengthen US-ROK relations for mutual prosperity?

A: We think it is imperative for Korea to join the Clean Network for the sake of its own national security. The Clean Network brings together countries with shared values that underpin their prosperity and their freedom. I just got back from an 8-country tour of Europe, including in depth discussions with NATO. NATO Deputy Secretary General Mircea Geoana emphasized the importance of having a 5G Clean NATO Network and a non-fractured Alliance because it is only as strong as its weakest link. It is critical during peacetime and wartime to ensure NATO countries’ civilian 5G infrastructure is secure and avoid the situation where some NATO members use trusted 5G Clean Suppliers and others – “high-risk” suppliers. He noted that now 25 NATO of the 30 countries have commitment to being Clean Countries.

The Clean Network is a comprehensive approach to addressing the long-term threats to data privacy, security, human rights, and trusted collaboration posed by the CCP. The Clean Network, which is rooted in internationally accepted Digital Trust Standards, represents the execution of a multi-year, enduring strategy built on a coalition of trusted partners. It has sparked a wave of 40 Clean Countries, 50 Clean Telcos, including KT and SK and leading Clean Companies like Oracle, HP, Reliance Jio, NEC, Fujitsu, Cisco, NTT, SoftBank and VMware to join the Clean Network which has caught the world’s attention.

Deputy Secretary General Geoana, thought it was great that EU Commissioner Thierry Breton agreed to combine the EU 5G Clean Toolbox and the Clean Network and issued a joint statement highlighting their commitment to shared principles on 5G security and the synergies between the EU 5G Clean Toolbox and the Clean Network, which is rooted in internationally accepted digital trust standards. The Toolbox further defines the criteria and gives clear measures to avoid the use of “high-risk” suppliers in the network, including the Radio Access Network. The 5G Toolbox serves as a reference for telco operators’ board of directors, who are required to make the decision on 5G suppliers. If they choose a high-risk 5G supplier and something happens, the board members may be liable.

NATO Deputy Secretary General Geoana, EU Commissioner Thierry Breton, Secretary Pompeo and I urge all stakeholders to carefully assess the long-term impact of allowing “high-risk” suppliers access – directly or indirectly – to their 5G networks and encouraged all countries to join the Clean network by adopting the Clean 5G Toolbox or developing regulations or standards that result in having only trusted suppliers in their 5G networks.

Momentum for The Clean Network initiative is accelerating. We all call on like-minded partners in government and industry around the world to join the growing tide to secure our data from the CCP’s surveillance state. By building a coalition of partners, we will enhance the protection of our citizens’ data and our freedoms and be united standing up to the CCP’s retaliation which Korea knows only all too well.

We continue to emphasize to the ROK the importance of ensuring that 5G networks are completely free from untrusted vendors, such as Huawei and ZTE. Earlier this year, Secretary Pompeo announced the Clean Path Initiative, which requires all network traffic from 5G standalone networks entering or existing U.S. diplomatic facilities to transit only through equipment provided by trusted vendors to guard against untrusted vendors by blocking their ability to intercept and disseminate sensitive information to malign actors.

I just saw news reports that your ministries of defense and foreign affairs have been the target of record number of hacking attempts this year – one more example of the critical need to work together and defend against such malign actors. We are asking all our allies and partners – including the Republic of Korea -- to join us in using a 5G clean path for their own diplomatic facilities, in addition to ensuring their own domestic networks are secure.

The Korean government has had plenty of time to study it and we are still wondering when they will decide. It is crucial for Korea’s national security. Without having Korea being a Clean Country it compromises everything the US and Korean defense forces are doing to protect Korea’s sovereignty. Plus, Korea has one of only three companies that is a trusted 5G suppliers for what will be one of the biggest and strategic markets of the future. We urge Kore to finally decide one way or the other for their own sake. This level of uncertainty puts both countries people at undue risks. We could not be more serious on this topic.

Q: Some say the Trump administration has improved the problem of unfairness in international trade while others insist it has strengthened protectionism. What ultimate goal will the Trump administration aim for in the field of international trade in its second term?

A: Our head of USTR, Bob Lighthizer, owns trade issues but I can tell you that we will continue to focus on free, fair and reciprocal trade. Americans are free traders, but when you have a government like the PRC come into the market and not play by the rules, the market is no longer free.

Q: You have been leading the EPN initiative. For Korean readers who are not familiar with EPN, can you please explain to us why you need EPN and how Korea can benefit from it? The coronavirus pandemic is changing the world a lot. The vulnerability of the global supply chain was also revealed. Do you think the necessity of promoting EPN has increased with this pandemic?

A: The Economic Prosperity Network is comprised of like-minded countries, companies, institutions, and civil society that operates by a set of Trust Principles, such as integrity, accountability, transparency, reciprocity, respect for the rule of law, property, and sovereignty. This network applies to all areas of economic collaboration, including digital, infrastructure energy, supply chains, commerce, research and so on. At the end of the day it all comes down to trust and building a coalition of trusted partners.

Currently, we’re focused on technology collaboration with the Clean Network as well as Clean Infrastructure and Clean Financing with our Blue Dot Network partners– and the ROK can certainly benefit from becoming more involved. Along with several countries, we also formed the Energy Resource Governance Initiative (ERGI) in the area critical minerals that we will be integrating into a similar mineral’s initiative with the EU. The potential exists to combine it with a similar initiative with the Quad partners and form a Clean Minerals Network. We also are focused on building Clean Supply Chains that have Clean Labor Practices and are free from the forced labor of Xingjian that is shipped throughout China and exported to the One Belt One Road developing nations.

What I have learned from my CEO days by building the Ariba Network that now has $7 trillion/year of B2B e-Commerce and the DocuSign’s Network with close to a billion users is the fastest way to build a network is to build a network of networks. What I have learned from running U.S. economic diplomacy is that when dealing with the CCP bully there is strength in numbers and when dealing with the CCP’s retribution there is power in unity and solidarity.

Just as the vast majority of our NATO and EU allies have chosen to secure their most sensitive data by joining the Clean Network, so too should the ROK, which is home to some of the world's leading tech firms, including those on the leading edge of 5G infrastructure and cybersecurity. I'm a big proponent of working in public-private partnerships and I believe that having the ROK government and ROK multinational firms becoming more involved with these worldwide trusted networks of Clean Networks would not only benefit the ROK but also the region and the world.

Q: China started to foster high-tech industries through 'Made in China 2025'. There is also a prospect that the US and China will compete for future technological leadership. What is the US's long-term roadmap to deter China's pursuit of tech hegemony?

A: The PRC’s strategies, including the military-civil fusion strategy, “Made in China 2025,” the “One Belt, One Road” initiative (OBOR), and the Global Data Security Initiative clearly indicate the CCP’s drive to reshape global rules and norms – including technology standards – to serve Beijing’s own strategic and commercial interests. The CCP has launched a systematic strategy to take advantage of international collaboration through intellectual property theft and forced technology transfer to militarize all kinds of emerging technologies.

However, the United States is the international innovation leader.  We invest the most in research and development, attract the most venture capital, award the most advanced degrees, and are the largest producer in high-technology manufacturing sectors.  We will maintain our competitiveness and continue to stay at the cutting edge through close coordination and collaboration with allies and partners around the world.  We are also taking steps with allies and partners to mitigate China-related risks to U.S. technology.

The pandemic has absolutely underscored the importance of diverse, secure, and resilient supply chains. It is important that we work together with partners and allies to strengthen resiliency and sustainability of regional and global manufacturing and supply chains. In doing so, we can contribute to stability and prosperity in the international community.

The world wants America to take the lead and protect the democratic values of the American dream. That's what I learned. It is our duty to ensure that this democratic dream remains the hope of all people around the world. We believe there is no prosperity without liberty. Every element of our national strength must be brought to bear in this task - our ideals, our entrepreneurial spirit, our hard work and our insistence on fair play, not only for ourselves but also for other nations. I am deeply convinced of this.

Q: The United States has sanctioned individual companies such as Huawei, SMIC and TikTok. In response, China is said to be creating a blacklist targeting US companies. How will the United States respond if China retaliates?

A: I don’t think I have to remind the you that the reality Korea, US and democracies face around the world is one of ever-increasing cyber warfare and seemingly ceaseless variations of intense, perhaps even weaponized, economic competition. China is playing the long game, and they are playing for keeps—a four-dimensional game of economic, military, diplomatic, and cultural chess with little respect for human rights, intellectual property, rule of law, transparency, the environment, or the sovereignty of other nations. The stakes are high. In the end, it's about our freedom verses authoritarianism.

CCP’s abuses are made possible by an Orwellian big brother surveillance state that tracks billions of people worldwide and extends the great one-way China firewall, where data comes in for CCP use but not out and propaganda goes out, but the truth doesn’t come in.

For years, the CCP has been putting pressure on telecommunications companies and countries to buy from Huawei, knowing that its national intelligence law can oblige Huawei to share data from these countries and companies at any time. CCP’s stated doctrine is to seduce with money and reinforce with intimidation and retaliation. Untrusted, high-risk vendors like Huawei and ZTE provide the CCP’s authoritarian government the capability to disrupt or weaponize critical applications and infrastructure or provide technological advances to China’s military forces.

It should surprise no one that Huawei is under indictment in the United States for bank fraud, wire fraud, conspiracy, violating sanctions, racketeering, and misappropriating intellectual property from six U.S. tech companies. And it is no secret that Huawei stole intellectual property from T-Mobile, the US subsidiary of Deutsche Telekom. We know that it deploys these same tactics wherever it can get a foothold.

The CCP is systematically coopting the world’s data through nefarious technology, from Huawei to TikTok to WeChat to a host of other Chinese companies and technologies. The restrictions that the United States has imposed on some entities in the PRC is based on behavior that crosses a line as related to the international rules –based order and U.S. national security and foreign policy interests. We have taken steps to secure our economy from the new and unique challenges posed by Beijing’s policies, including strengthening our investment review processes, bolstering export controls, examining our visa screening process, securing our supply chains, promoting and protecting the integrity of the research and development enterprise as a whole, and prioritizing cases involving the PRC’s intellectual property theft.

Further, when it comes to doing business with China, we urge our allies and partners to adopt a cautious mindset. A company backed by the Chinese Communist Party doesn’t answer to an independent board and many, if not outright controlled by the government, are nonetheless state-sponsored. A company like Huawei, for instance, poses a national security threat due to the control the government exerts over the company and its activities. But there is strength in solidarity, and when likeminded countries join together, we can meet this challenge head on through our combined economic and diplomatic power.

Appeasing bullies never works. We urge all nations to stand up to intimidation and coercion, and the United States will stand with you. The United States is the ROK’s only treaty ally and its second largest trading partner. We’re also the ROK’s second largest source of foreign investment, after Japan. But as I said before, it is not about choosing sides between one country or another. We’re both important partners for the ROK. It is about protecting our countries by defending the values and rules that underpin our prosperity, democracy, and way of life.

The U.S.-ROK Alliance is built not only on security, but our commitment to our core principles that have enabled the success of both of our nations – and that absolutely includes a strong and enduring economic partnership. The United States is a significant foreign investor in the Republic of Korea, a substantial energy supplier, and represents an enormous export market for Korean goods and services. More than 1,200 American companies operate in the ROK, including such flagship enterprises as Apple, Microsoft, and Facebook. The United States and the Republic of Korea are economic and security partners.

We want to be working together with partners like Korea to make sure that our companies have the freedom to innovate and grow long term. These are not just U.S. values. These are Korean values; many countries share these values. Countries are not "picking sides," they are defending what is important to them and looking out for the long-term interests of their people.

Q: There were comments from officials of both countries to find an intersection between the US's Indo-Pacific strategy and South Korea's new southern policy. In terms of economy, is there any ideal way to strengthen mutual benefits?

A: As developing economies reel from the shock of the China-born virus, they are also coming to terms with another pandemic —one that will ravage countries participating in the Chinese Communist Party’s One Belt One Road campaign. The PRC has demonstrated it can and will use its influence and access through OBOR to fulfill its need for raw materials, investment returns, and jobs by siphoning developing nations’ natural resources, bleeding their financial resources, and devaluing their human resources. It is no wonder one ASEAN nation Economic Minister calls it “the One Belt, One-Way-Toll Road…to Beijing.”

OBOR is a trojan horse. By concealing the true, long-term costs of OBOR financing, the PRC co-opts developing economies through unsustainable debt deals with disadvantageous conditions that undermine local transparency and governance.

The U.S. Indo-Pacific Strategy and the ROK New Southern Policy both recognize that an open and free Indo-Pacific is incredibly important to the global economy’s future. For the region to flourish economically, it’s crucial that there are open investment environments, good governance, and paths for sustainable growth. This summer, the United States and the Republic of Korea held our first-ever dialogue focused specifically on the U.S.’s Indo-Pacific Strategy and the ROK’s New Southern Policy.

We examined ways to better strengthen our coordination in the Indo-Pacific Region, particularly on cybersecurity, law enforcement, and our cooperation with Pacific Island countries. We value our partnership with the ROK on these initiatives, and we welcomed the ROK’s commitment of $233 million in Official Development Assistance to ASEAN countries in 2020, which complements our own development activity in the Indo-Pacific region. Our discussions at the SED on the Indo-Pacific Strategy and the New Southern Policy will further advance the substance of our partnership.

Q: To be honest, there are many opinions among Koreans that Korea has become a sandwich between the United States and China. Since the deployment of THAAD in the past, China has retaliated strongly against Korea. What do you want to say to Koreans who hate China's pursuit of supremacy but, on the other hand, fear economic retaliation?

A: Three things.

First, you are not alone.

Today as we sit here wearing masks, citizens around the world have woken up to the truth about the Chinese Communist Party’s three-pronged strategy of concealment, cooption, and coercion. They now understand that the pandemic is a result of the concealment of the China virus. They witness the CCP’s co-option of Hong Kong that has eviscerated the freedoms of its citizens. They realize the coercion of the Xingjian people has grown into some of the most horrific human rights abuses in their lifetime. And they don’t like it. This now has given the political will to government leaders and CEO’s around the world to stand up to that CCP bully. In Washington for Democrats and Republicans, this is one of the most unifying bipartisan issues of our time.

Second, America stands by your side.

We stand by your side. The CCP’s stated doctrine is to seduce with money and reinforce with intimidation and retaliation. Korea experienced it firsthand in 2016 when it was trying to defend itself against the CCP’s nuclear armed tyrannical twin to the north.

This year, the CCP tried the same thing on the UK when it decided to kick Huawei out of its 5G network. Beijing threatened to punish the British bank HSBC and the Chinese UK ambassador, Liu Xiaoming, threatened that China would withdraw investment from major UK infrastructure projects. That is when Secretary Pompeo said: "The United States stands by our UK friends. We stand by all our allies and partners against CCP’s retaliation and harassment, and we are ready to help our British friends. The United States is proud to do just that." I think everyone has experience with a bully some time in their life. If there’s anything I know-- when you confront a bully, they back down and they really really back down if you have your friends by your side.

Third, I repeat when dealing with the CCP bully there is strength in numbers and when dealing with the CCP’s retribution there is power in unity and solidarity. That is why a network of trusted partners comprised of like-minded nations and companies is so vital. The CCP’s strategy has always been to divide and conquer and pick off the weak gazelle when it wanders from the herd. But when we are united the CCP cannot retaliate against all the democracies and companies in the world at the same time. Unfortunately for the CCP, the world has now woken up to their malign intentions.

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