Washington is furious at Boris's Huawei bid

12 March 2020

10:30 PM

12 March 2020

10:30 PM

Boris Johnson faced his first major rebellion of the new parliament on Tuesday. Parliamentarians are waking up to the fact that this decision has far greater diplomatic ramifications than was originally appreciated. Despite their sizeable majority, the government narrowly avoided defeat and will be vulnerable when future bills relating to Huawei are tabled.

The reaction in Washington DC to Boris Johnson’s decision to allow Huawei to tender for the 5G contract validates the concerns of the new ‘awkward squad’ of former cabinet ministers and Tory select committee chairs. Rarely have Democrats and Republicans been so united. Capitol Hill seldom pays much attention to Britain, but everyone from Chuck Schumer, the leader of the Senate Democrats and the House Speaker Nancy Pelosi, to Secretary of State Mike Pompeo and Liz Cheney, the third most powerful Republican in the House of Representatives, have all slammed the decision. There is a consensus, in Cheney’s words, that: ‘Allowing the company into the UK’s 5G networks would pose a national security threat that could not be mitigated or contained.’

Boris’ Huawei deal is putting the UK-US trade deal in jeopardy. In the words of one Senate staffer: ‘What our British friends need to remember is that it is ultimately the Senate, and not the President, who will decide whether a trade deal passes. A few frustrated Senators have the power to put major blocks on trade legislation.’

Unlike in Britain, where parliament is not given meaningful scrutiny over trade deals, the US legislative branch holds considerable sway. There is a range of procedural mechanisms which individual Senators can use to hold things up. And there are a considerable number of angry Senators. Chuck Schumer led a joint letter from 20 members to the House of Commons last week. This bipartisan consternation should worry post-Brexit Britain.

Sceptics of the US position argue that this is a hypocritical attempt by the US to stop fair competition and that we should not allow ourselves to be dictated to by Trump and his cronies. But we should be wary of dismissing Congress on one of the only issues which unifies Cheney and Schumer.

There are four reasons for their bipartisan expressions of horror.

First, national security is on the line. The Republican leader in the House of Representatives’ Foreign Affairs Committee, Michael McCaul, recently tabled a resolution calling for the UK to change its position. The resolution listed the ways that the Chinese Communist Party (CCP) has codified into both its constitution and legislation the right to interfere in and influence the operation of all firms, whether private or state-owned. Article 30 of the Chinese Constitution requires a CCP cell to be formed in any company where there are three or more CCP members. Article 15 requires all important operating and management issues to be discussed by the party committee. The National Security Law declares nearly any issue a matter of national security and intelligence work.Cybersecurity laws give the CCP powers to dictate how and where data is stored. Cyberespionage and anti-terror legislation gives expansive powers to the state to access encrypted servers and privately held information. Huawei is not independent and thereby poses a threat to, not only our national security, but potentially that of the US.

A second objection raised by the bipartisan group of Senators, who wrote individually to each member of Whitehall’s National Security Council, is that Huawei undermines fair competition:

Between 1998 and 2019, Huawei received more than $75 billion [£57.5 billion] in grants, land licenses and other forms of financial assistance. Huawei has also routinely undercut its competitors’ prices, triggering anti-dumping investigations in the European Union and India. Last year, the Huawei 5G bid in the Netherlands was 60 percent less expensive than its nearest competitor, a difference which, according to industry experts, does not even cover the cost of parts. No one can compete with a company that has the Chinese government absorbing its losses.

Huawei can outbid their competitors because they have received such considerable funding from the Chinese government. Handing a large market share to Huawei will entrench their advantage, ramp up the cost of replacing them in the long run, and reduce the likelihood that other competitors can challenge them. The economic arguments for Huawei also frequently omit the cost of managing the risk involved with incorporating their technology.

A third issue is that the British government have failed to meaningfully conduct human rights due diligence into the actions of Huawei in Xinjiang province, where millions of Uighur Muslims are kept under mass surveillance. According to the Australian Strategic Policy Institute, Huawei has partnered with the Xinjiang Public Security Bureau to develop its surveillance technology. There should be questions about whether we feel safe handing the development of our core strategic 5G infrastructure to a firm which has helped develop the world’s most dystopian surveillance state.

Finally, and perhaps most importantly, our decision will set the direction for many other nations. There are already reports that the British decision has been used by Huawei to pressure the Australians to relax their position. From Germany to India, the UK will be held up as a model by Huawei and the Chinese government. For members of the US Congress who are concerned about a Chinese-funded firm dominating the world’s 5G infrastructure, naturally, this is unacceptable.

It is for these reasons that this decision has generated more interested on Capitol Hill than perhaps even Brexit. It will have ramifications for transatlantic relationships. The diplomatic consequences were not sufficiently debated before the government made its decision. Does Huawei remain economically beneficial if the cost of the decision is our trading relationship with the US? Thankfully, parliament still has time to scrutinise this, and the Tory rebellion on Tuesday shows that the debate is still very much alive.

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