Taiwan’s Pivotal Elections, Apple Battles Regulations, Davos Addresses World Risks, and More

MCMAHON:
In the coming week, Taiwan holds a pivotal presidential election. A patent case could shake up Apple. And, the annual Davos gathering tackles war, climate, and disinformation. It's January 11th, 2024. Time for The World Next Week. I'm Bob McMahon.

ROBBINS:
And I'm Carla Anne Robbins. Bob, let's start in Taiwan, which will be electing its new president and legislature this Saturday. It's only the eighth in its history. Democracy is still really relatively new there. And this is one of the most closely watched elections in a year with more than sixty elections around the world. What are the stakes? And this outcome going to have an effect, a major effect on U.S.-China relations?

MCMAHON:
First of all, Carla Stakes are very big. Even though they're being called the "status quo" elections, which can put some people to sleep, the status quo is actually really important as it relates to Taiwan. And this is as geopolitical as an election gets. It's also kicking off what everybody's calling the "year of mega elections." And it's because of Taiwan's status, it's because of China's aspirations, growing aspirations to bring Taiwan home to unify what it's calling an inevitable step.

And even though it's just the eighth election, as you say, with each one, we are seeing a Taiwan as an entity that is one of the more impressive democracies, it must be said, in terms of the way it carries out elections, the way it follows rule of law, the way it governs its economy and so forth. It has its share of issues certainly beyond the issue of China, but that's really the big question here.

Xi Jinping has been clear. He seems to be running out of patience towards the process of unification. This had been an issue that as a recent CFR Task Force that pointed out had a political framework that lasted more than four decades that partly existed under the terms of what's known as strategic ambiguity has starting to fray pretty seriously. And so this is a question of whether Taiwan, China, and the United States have a different conception of Taiwan's relationship to China, but don't say anything about it. And it's a competitive three-way presidential election in addition to parliamentary elections. What these candidates are saying matters. Every word they're saying is being parsed. Let's just go really quickly through the candidates to watch, Carla, and then we talk about what that might mean.

The front runner still, although it's seen as close, is William Lai of the Democratic Progressive Party. This is the current party in power. And they've been in power for eight years. Lai, who is the current vice president, has never said he's going to declare independence. In fact, what he has said is he's going to continue to uphold the status quo in which Taiwan is already independent. But China views him most unfavorably of seeing him as trying to continue this DPP policy of wrenching Taiwan further away from China.

They have made it clear their preference for the KMT, the Kuomintang candidate, Hou Yu-ih, who is a former police officer who became the mayor of New Taipei City and has talked about more of a dialogue with China, having more communication with the Chinese Communist Party, trying to lower cross-strait tensions. And his campaign is called for, quote, "deterrence, dialogue, and deescalation," end quote. And he has basically said it's an election about a choice between war and peace. 

In addition, there is a candidate Ko Wen-je of the Taiwan People's Party. He is the former mayor of Taipei. And he's tracking a bit of an independent line, although at times he's seen as being more aligned with the KMT.

And it must be said that all three of these candidates, as I said, you support a status quo in which Taiwan continues along its undeclared independence from China. There's no rapid move towards unification. But at the same time, there are different approaches towards lowering the temperature with China. And so there's a lot at stake in terms of whoever emerges, what they say coming out of the gate, how China reacts, and then how the U.S. further reacts.

I'll say finally, Carla, that the U.S. has been warning China against meddling in these elections. There was a White House press briefing earlier this week in which it said that Chinese government was trying to influence the results of the presidential election through disinformation and misinformation ops. China, for its part, is saying the U.S. needs to be aware of China's red lines in this matter, that it needs to not formally pursue relations with Taiwan.

We had recent meetings just this past week in which Chinese officials reestablished ties at the Pentagon. There was a top Chinese Communist Party official who had been making the rounds, including stopping by the Council on Foreign Relations this week where, again, he laid out the red lines. Both sides are talking red lines, it's just a question of is strategic ambiguity going to hold the day anymore or is there going to be some more frank exchanges coming up after these elections?

ROBBINS:
Obviously this question about even though it's the status quo election, this question about how they're going to approach China is central to the voters in Taiwan and absolutely central to how we think about it and how Beijing thinks about it. But from my reading of this, there are a lot of voters in Taiwan who are less obsessed with this. They're like normal voters anywhere. They're concerned about the economy. And I gather that that's the big appeal of this third party, this third choice candidate who's talking more about housing prices and all of that. Is this person going to potentially be the king maker? Or is this person have a chance of winning? This is Ko?

MCMAHON:
This is Ko. It's what makes this an intriguing race. And again, there's not a lot of elections even in the most democratically open societies where you really have choices and pretty solid choices. Although all three of these candidates don't have much of a foreign policy track record per se, they are well-known locally, they've held important positions and have something to say. Ko's party, certainly the Taiwan People's Party or TPP, could be playing a role in terms of making common cause with the KMT and parliament, for example, or taking votes away from the KMT in the presidential race. There's interesting cross-section of influences that are going on here. 

I do think there's these two things we need to watch, obviously the president being the most important position. We want to see what's emerging in Taiwan and what kind of messaging and what kind efforts to calm the waters, so to speak, literally and figuratively are taking place. And then a question of how much there's a pragmatic, locally focused approach to these elections. As you said, the economy, although envious in some respects compared to some other struggling countries, still there's housing price issues, there's inequality issues. 

There's also the issue of something we should also mention, Carla, which is the country's outsized role in creating really sophisticated chips. And the dominance of the world market is not to be understated, and it's seen as one of the issues that could especially focus attention if there are growing frictions after these elections. And let's say China holds ramped up military demonstrations or there's anything that crimps the trade on the semiconductor trade, this is something that affects the entire world, including China, including the United States. The candidates have been very carefully talking about the trade in semiconductors and diversifying it because they have trade across the street with China on these but in a way in which it's about diversifying an important product and not so much taking a strategically important product away from Chinese control. Lots playing out. Again, back to your original question, the geopolitics are huge here.

Finally, we should say that the Biden administration has said there's going to be an informal visit of U.S. officials post-election at some point and a time to be determined. Former officials coming, as they have in previous years. And they say, "China should not be concerned about that. This has happened before." But again, China seems to be changing the parameters of the red lines a bit, and we're going to have to see how all sides are able to soothe things after these elections.

ROBBINS:
Yeah. This is the Biden administration's, "Pay no attention to what's going on over here. We're trying to get good relations over there." This is an incredibly challenging balancing act and will continue to be one.

MCMAHON:
Yeah. And so we will watch very closely, again, as the results come in. We're going to see them rather quickly over this coming weekend. And then we'll see the messaging out of Beijing, out of Washington, and could emerge next week in a different kind of a world or in a world in which everybody's able to take a sigh of relief at status quo persisting.

And I should note for our listeners, a really good rundown on these elections is from our colleague, David Sacks, both in our affiliated podcast, The President's Inbox, which went out this week, as well as a series of blog posts profiling the Taiwanese presidential candidates and a new interactive looking at what a potential military confrontation could look like. It's all really good contextual info. And in his spare time, David also wrote a really good piece for Foreign Affairs laying out what's at stake in these elections. Please check out CFR.org and foreignaffairs.com. 

Carla, one thing we don't talk enough about this podcast about is patent law.

ROBBINS:
Oh, every day I wake up and think why aren't we talking more about patent law?

MCMAHON:
Well, here's the chance. We do talk about tech innovations. There's a throughline here. Many of us are familiar with the Apple Watch. I have one. I don't wear it as much as I should.

ROBBINS:
I have mine on right now.

MCMAHON:
You do? Okay. Outstanding. I'm sure it's reminding you about getting up and walking around throbbing every five minutes. But the Apple Watch is under scrutiny. The U.S. Customs and Border Protection Agency could put a stop to the sale of the newest Series 9 and Ultra 2 Apple Watches due to a violation of patent law. Are we seeing a sense of toughening of Washington's position toward big tech in this respect?

ROBBINS:
Yeah, I find a lot of things about this really fascinating about relationship with big tech and of course the anguish about how much news it made when just before Christmas, Apple was ordered by the U.S. International Trade Commission to stop importing and selling two of its watches, you mentioned the Series 9 and the Ultra, because they were found to be infringing on patents held by a medical tech company because the watch uses blood oxygen levels to detect a wearer's pulse rate. This company, Massimo, argued that Apple stole its employees and technology to enable this build. Under this order, Apple briefly suspended sales of the watches online and in their retail stores. And the Federal Appeals Court then agreed to delay enforcement of the ruling while Apple appealed. And consumers said, "Oh, thank God, it's Christmas. We can go out and buy more Apple Watches." But Apple has been using the time to redesign the software to avoid the patent infringement. And the company that brought the case says it's going to require both software and hardware changes, but what the U.S. Customs and Border Protection is going to announce on January 12th is whether or not it approves this workaround. And if it does, Apple could sell the redesigned watches. And if it doesn't, more anguish to come, I suppose.

What this tells us is a few things. One is this continuing mystique of Apple products. Their sales were down last year, but I must confess I'm a devotee. I have basically an all Apple household. And the other thing about this story that really fascinates me is how much news this made. In Europe, the EU is constantly battling big tech companies. They're doing it in court, they're doing it legislatively. And under the EU's latest regulations, this Digital Markets Act, which is intended to promote greater competition, starting in March 5 major U.S. tech companies Apple, Alphabet, Amazon, Meta, Microsoft, and China's ByteDance, the one that owns TikTok—these are also called gatekeeper service providers; we've talked about this before—they're going to be required to make their messaging apps work with competitors' products. And that means that users are going to be able to choose which ones they want installed on their devices. there's a lot more going on in Europe than is going on here in terms of going up against big tech.

But I don't want to overstate the good times here for the tech companies, not just on this Apple ruling. The Times reported last week the Justice Department is in the late stages of an antitrust investigation into Apple. And they could file what the Times says is sweeping antitrust case that could come as soon as the first half of this year. Not the level of regulation in Europe, but it seems like the Justice Department and other regulators are beginning to get on the case.

MCMAHON:
It's important as a bellwether decision obviously. What about to Apple's bottom line? Has it been able to diversify other products enough that it can shoulder a blow to the watch? Or is this going to be something that a major U.S. tech company is going to have to recoil from potentially?

ROBBINS:
Well, one of the rulings that the Trade Commission said was, "We're not persuaded that two watches is going to have much of an effect on you." They make a lot more things. Now, on the antitrust case, we'll see. And justice investigators are looking at how the Apple Watch... They basically crowd out everybody. Apple Watch works better with the iPhone than with other brands. It hadn't even occurred to me that I could have another phone with my Apple Watch. How Apple blocks competitors from using its iMessage service; that's one of the things that's going on with this new European regulation. Justice is also looking at Apple's exclusionary payment system for their iPhone. And these are things that they're looking at. But as I said, they also have these antitrust cases against Google Search and against their ad tech business. The FTC is suing Meta and Amazon. We may be going into a new era of legal cases in which they're trying to find more competition for big tech, but we don't see is the level of regulation that exists in Europe.

MCMAHON:
And I'm old enough to remember when Apple was the upstart going against Big Brother and the famous ad during the Super Bowl of the Big Brother ranting on the screen and Apple throwing a hammer against it. Those are obviously long in the past. And Apple, as you say, is this really important gatekeeper with the ability to bigfoot, hold developments and not to mention its app store and other things.

ROBBINS:
Well, these companies all say that government can't regulate them or shouldn't be regulating because they're too creative and they're supposed to break things and that we all benefit from them not having regulation, but the reality is that regulation has always been absolutely essential for the development of technology as well. After World War II, an antitrust suit forced Bell Labs to patent the transistor. These are all very fundamental things. There is a synergy that exists between the private sector and government and protecting us as consumers, and that's what's going on here as well, and also protecting smaller companies as well. People don't get to innovate if they're bigfooted all the time. I'm not taking a side, I don't know in patent law who's infringing upon whom.

MCMAHON:
Yes. Something to watch and watch.

ROBBINS:
Yes. Bob, let's move our conversation to Davos. Next Monday, leaders of governments, businesses, civil societies, will gather in Davos, Switzerland. This is the fifty-fourth World Economic Forum. And this year's theme is "Rebuilding Trust." With the wars in Gaza and Ukraine, the climate crisis, the rise of authoritarians, our anxiety about the U.S. election, so many other problems, how do I say this delicately? Why should we be paying attention to this gathering of the rich and famous?

MCMAHON:
Well, it's a really good question, and it's a question that's raised every year, especially by those of us who did not get our invite to participate in the snowy alpine reaches of Switzerland. But it is important because amidst all of the images of bundled up business correspondence, convening panels and things and the jet set attending, there are important conversations that take place. In the case of what's happening in Europe and what's happening in the world from national security, from warfare, from climate, you name it, there are really important conversations that need to continue to be had. And this group of people coming together is an influential one. I don't know whether rebuilding trust is something that's really possible, frankly, at this current level environment, but at least continuing the dialogue is going to be important.

And so you have in attendance the number two in China, Lee Qiang is going to be there giving a speech. French President, Macron, is going to be giving a special address. Two top U.S. officials, Anthony Blinken, secretary of state and National Security Advisor Jake Sullivan, are going to be attending as well as the special envoy for climate, John Kerry. Those are important interlocutors for starters. And then you have people like Javier Milei of Argentina, his first big appearance in the world stage. What does this mean for his radical attempt to shake up the Argentinian economy? Sam Altman, CEO of OpenAI, who's now been reinstated, what is he going to have to say about the AI revolution and safeguards for that?

It's worth noting that the World Economic Forum, which puts on the Davos gathering, has announced in its Global Risk Report that AI derived misinformation and disinformation is the top ranked concern in terms of its top ten risks over the next two years. That beats out climate change, war, economic weakness, and so forth. The global economy, it's going to be noted is in a bit of a funk. Global growth rates, as the World Bank says, are stalled at 1.5 percent, 1.6 percent growth. There will be top officials from the World Bank, from the IMF, from the WTO attending. And you're going to just have this opportunity to talk about this whole host of affairs that intersect just about everything.

Finally, there's going to be important discussion going on involving Ukraine, potential re-firing of talks about what some sort of an off-ramp could mean for that war in terms of a peace process, although the one that they're going to discuss is one that Russia has rejected. But Volodymyr Zelenskyy is going to be there either virtually or in person; it's not clear, rarely is until the last moment. But there's going to be important interlocutors there on the Ukraine front as well. And then the Gaza War is certainly going to be under discussion as well, and the concern about the spread of that as well as the ongoing misery taking place in Gaza. I guess a final way of responding to your question, Carla, is that talk-talk is always better than war-war. And there's going to be a lot of talk-talk going on in Davos.

ROBBINS:
There's going to be a meeting there about ways to move Zelenskyy peace plan forward. Do we think there's something significant here? Gaza sucks so much attention away from what's happening in Ukraine, and then of course we have the stalled U.S. aid package and questions of EU funding for Ukraine, all of that. Zelenskyy obviously is going to want to draw more attention back. I'm not sure he's really ready to sue for peace. How seriously do you take that conversation?

MCMAHON:
From what we've seen so far, and I have not seen reports of what, if any, Russian officials will be attending or Russians who could maybe carry messages back and forth, so I have not seen a great deal of optimism that his peace plan is going to gain traction necessarily. But I think it will be important for some of the things you referenced, Carla, in terms of the shoring up of support for Ukrainian aid, military and otherwise. The EU's at an important point just a few weeks ahead of their next summit where they might have some sort of a breakthrough in the block by the Hungarian leader, Orban, on aid to Ukraine, although he is insisting that it be reviewed every year and Ukraine's backers want it to be approved in one fell swoop for the next five years, I think. But it's going to be an important moment to shore up support. And also, as they speak over there, there is an ongoing process in the U.S. Congress to approve a spending plan that could shore up Ukraine aid, among many other issues. That's a fraught process as we follow the day by day dysfunction in Congress, but it's still something that's going to be watched very closely in Europe.

I think it's more about those sidelines, shows of support than any direct momentum for a peace plan. I could be wrong. That would be good news. I think if they can find a way forward on pushing a peace plan, it's something we haven't really seen much of in the almost two years of the Ukraine war. But it's really high time because the misery is only mounting there as well.

ROBBINS:
If I had to bet, Zelenskyy will be there. He really needs to be drawing attention back to Ukraine.

MCMAHON:
Yeah. In our ongoing series of "Will Zelenskyy Show Up?" I think my bet would be yes.

ROBBINS:
We will check back next week.

MCMAHON:
Well, Carla, we've talked our way into the audience figure of the week part of the podcast. This is the figure that listeners vote on every Tuesday and Wednesday at cfr_org's Instagram story. This week, Carla, our audience selected, "France's Youngest and First Openly Gay PM." Who is the groundbreaking prime minister?

ROBBINS:
Gabriel Attal was Macron's education minister, and before that, the government spokesperson. And according to opinion polls, he is the most popular member of Macron's government and more popular than Macron. But when you think about that, that wouldn't be particularly hard because Macron, as we know, is not particularly popular. And he's known for his especially sharp verbal skills, his nickname is Word Sniper, as well as his social media skills.

MCMAHON:
How do you say that in French, Carla?

ROBBINS:
Word Sniper.

MCMAHON:
Okay, got it, got it.

ROBBINS:
You know I speak Spanish. Despite his firsts, he still looks a lot like his boss. Both started out as young men of privilege who rose quickly in the ranks. And let's not forget that when Macron was elected at age thirty-nine, he was the youngest president in France's history. Macron, whose term ends in 2027 and can't run again, is clearly hoping with this appointment to gin up some new excitement for his lagging government, especially before the EU parliamentary elections. And Attal is replacing Elizabeth Bourne, who was only the second woman to serve in the position, but she was really identified, as is Macron, in the public's mind with highly unpopular policies, most notably this legislation to reform France's pensions program and lots of other things that were jammed through even without a vote in the lower divided lower house, the National Assembly. There's this weird thing in their constitution that you can get things through without a vote.

I think this is all an attempt to get a little bit more excitement for the government. And I think it's also a sign that up until now, Macron hasn't been willing to have anybody else with a little bit of... Well, in Spanish it would be called pachanga, with a little bit of excitement around him during the handover ceremony. Attal, who does not lack for self-confidence, herald his own selection as, quote, "the symbol of audacity."

MCMAHON:
Very interesting. France's presidential system, obviously you don't hear often from French prime ministers in terms of going out in the hustings and speaking too prominently, so could we be in for a new approach to French messaging in governance where you have a prime minister, for the reasons you cited, Carla, being out there and being visible, potentially warding off what could be encroachment from the French right wing?

ROBBINS:
I think that's why Macron chose him. He was known for setting up live Twitch broadcasts and YouTube broadcasts and answering questions. He's clearly a guy of the twenty-first century communication skills. I think the question becomes whether Macron is going to be willing to, having offered to share the space, is going to be willing to continue to share the space itself. He knows that he's got an unpopular government, and he's clearly nervous about it. And maybe he really is looking past his own time in office and trying to build more of a legacy. But I'm still going back to the notion that he herald his selection as the symbol of audacity. He clearly has his own very, very high ambitions, political ambitions. Here he is at thirty-four, the youngest and first openly gay PM of France.

MCMAHON:
All right, let's see if audacity wins. 

Well, that's our look at the world next week. Here are some other presidential stories to keep an eye on. Guatemala's Bernardo Arévalo takes office as new president, Iowa's Republican presidential caucus takes place, and Comoros holds its presidential elections.

ROBBINS:
It is going to be really cold in Iowa. They're talking about it being twenty below in Des Moines, so we'll see. Very strong commitment to democracy there for the people.

MCMAHON:
Let's compare the turnout from Iowa to Comoros, see which one prevails.

ROBBINS:
Right. Do they vote by standing around in a room? 

Please subscribe to The World Next Week on Apple Podcasts, Spotify, YouTube, or wherever you get your podcasts. And leave us a review while you're at it. We appreciate the feedback. If you'd like to reach out, please email us at [email protected]. The publications mentioned in this episode as well as the transcript of our conversation are listed on the podcast page for The World Next Week on CFR.org. Please note that opinions expressed on The World Next Week are solely those of the hosts, not of CFR, which takes no institutional positions on matters of policy. 

Today's program was produced by Ester Fang with Director of Podcasting Gabrielle Sierra. And special thanks to Sinet Adous for her research assistance. Our theme music is provided by Markus Zakaria. This is Carla Robbins saying so long, a tout alors.

MCMAHON:
And this is Bob McMahon saying goodbye, and please be careful out there. Bonne santé.