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Britain’s Huawei decision will be its first major trade test in a post-Brexit world

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After two misses, the UK is finally set to leave the European Union on Jan. 31, a move that will reshape its trade relations with the rest of world. While many of the implications remain TBD, Britain is already facing one of its first major challenges: how to tread a fine line between China and the US.

At the core of the issue is Chinese tech giant Huawei, the world’s largest telecom equipment maker, which is waiting to hear from the UK in coming weeks on how it intends to deploy the firm’s equipment in its 5G network rollout. Washington, which has long seen Huawei as a major national security threat, is urging London to ban the Chinese firm from building its next generation of wireless networks—US envoys, including from the National Security Agency (paywall), will be in the UK today for last-mile lobbying. Citing these security concerns, the US put Huawei on trade blacklist last May, cutting off the company from US suppliers.

China, for its part, has also been exerting pressure on the UK, as well as other European countries. Its went as far as to threaten Denmark that it would drop a trade deal with a self-governing Danish territory over the matter, while the Chinese ambassador to Germany warned that there would be “consequences” if the country excludes Huawei. Deutsche Telekom has frozen 5G deals for the moment.

London’s decision on Huawei is a tough one. It’s hoping to deepen its special relationship with the US, its largest individual trading partner, with bilateral trade crossing more than $260 billion (£200 billion) in 2018. In the run-up to Brexit, prime minister Boris Johnson has made it clear he’s keen to secure a favorable trade deal with the US, with political observers noting that calculus shaped his careful response to the US killing of a top Iranian general. Acceding to US wishes on Huawei could help.

However, Huawei has long been a key provider to the British telecom sector, and there aren’t a lot of alternatives, meaning that not using Huawei could slow down the UK’s 5G development. While that might be one of Beijing’s own arguments (paywall), it’s also what British telecom firms say. In addition, with the post-Brexit relationship with Europe still unclear—the bloc is UK’s largest trading partner if taken as a whole—Britain’s $87 billion (close to £70 billion) of trade with China, its sixth biggest trading partner, isn’t insignificant.

Boris Johnson’s comments at a NATO meeting last month appeared to hint the US lobbying is proving successful. The prime minister noted that the issue of being able to cooperate with key partners on intelligence-sharing “will be the key criterion that informs our decision about Huawei.” As part of its lobbying, Washington has warned that its intelligence-sharing with the UK could be curtailed if the latter decides to use Huawei, though the head of Britain’s MI5 on Sunday (Jan. 12) said he didn’t expect using Huawei’s equipment to hurt such cooperation.

The delay in announcing a clear stance, however, means the decision might have to bow to the existing situation on the ground. British telecom firms have already started using Huawei equipment in “non-core” parts (paywall) of the next-generation wireless network, in line with a leaked decision reached by the Theresa May government last year. In October, Huawei said it had secured more than 60 commercial 5G contracts (paywall), about half of them with European carriers, including several British ones.

Qz.com

A delegation of U.S. officials will arrive in Britain on Monday to try to persuade Britain not to use Huawei equipment in the upgrade of its telecoms network, two people with knowledge of the matter said on Sunday.

Britain is expected to make a final call on how to deploy Huawei Technologies equipment in its future 5G networks later this month.

Security minister Brandon Lewis told the BBC on Sunday a decision would be taken “relatively soon”.

The U.S. delegation is expected to include deputy national security adviser Matt Pottinger, the two people familiar with the matter told Reuters.

UK ministers must weigh U.S.-led allegations that the equipment could be used for Chinese state spying against Britain’s relationship with Beijing and industry warnings that banning the firm outright would cost billions of dollars.

Huawei, the world’s largest maker of mobile networking equipment, has repeatedly denied that its equipment could be used for spying. A company spokesman has previously said UK lawmakers had confirmed Huawei equipment would not be deployed in networks used for intelligence sharing.

One U.S. senator has introduced a bill that would prevent the United States from sharing intelligence with countries that allow Huawei Technologies to operate 5G network technology.

U.S. Secretary of State Mike Pompeo had been expected to press British Foreign Secretary Dominic Raab over Huawei when the pair met in Washington last week.

British defense Minister Ben Wallace told the Sunday Times that U.S. President Donald Trump and his advisers have threatened to cut off some intelligence to the UK if the National Security Council gives Huawei a green light.

“It’s not a secret. They have been consistent. Those things will be taken into account when the government collectively decides to make a decision on it,” Wallace said.

Yahoo.com

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