Trade War
In mounting economic pressures between the United States and China Huawei seemed to have caught in the middle of the issue. Throughout the last two years, as trade tensions continued to increase between the United States and China, more quotas and tariffs were being imposed at an astonishing rate in the Trump administrations’ attempt to close the trade gap with China. By many different indicators, the measures had proved to be ineffective, with the trade gap growing in 2018.
Huawei found itself caught between the United States and China in two different ways, the first relating back to the trade deficit, in 2017 it was estimated that the United States imported $170 billion worth of computers and electronics from China, with Huawei being a manufacturer of computers and electronics from China they are an obvious target. The second was that Huawei is headquartered in China and has historically had close ties with the Chinese government, the United States government officials then brought up the concern over national security, with networks using Huawei equipment.
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Huawei Executive Arrested
The tensions seemed to peak when the Royal Canadian Mounted Police arrested Meng Wanzhou in the Vancouver airport in December by extradition request of the United States. The United States have accused her and Huawei of fraud and violating sanctions on Iran. This revelation is still developing, as the Canadian courts are best deciding how to handle the situation. It should be of note that in what is deemed retaliation by many, the Chinese government has arrested two Canadians Michael Spavor and Michael Kovrig without charge, and are holding them at an undisclosed location. This action had possibly influenced Canada’s stance on the use of Huawei equipment in their 5G rollout as we mentioned last week.
Over the last few months different regions have stated their intention to either review or revoke the use of Huawei equipment all citing national security risks, and as independent states, they are free to do so. In the EU where things flow mostly free across the region including some forms of information, it becomes slightly more complicated. With Brexit approaching the United Kingdom will be removed from the EU, and as we reported earlier the National Cyber Security Centre claims they could mitigate the risk of using Huawei equipment on 5G networks, with the final decision still to be made by the government.
This brings us to the last two days’ news, with two statements from Huawei founder Ren Zhenfei. The first was in a conversation with BBC where Ren indicated that the arrest of his daughter in Canada was purely political, and that “The U.S. cannot crush us”, noting that if needed Huawei could shift investment from the United States to the United Kingdom. This morning in an interview on “CBS This Morning”, Ren publicly said that allegations of sharing information with the Chinese government are not based on facts. He later reiterated that “It is not possible because across our entire organization we have stressed once and again that we will never do that.”
This information although important from Ren, is not entirely new, while countries are examining the use of Huawei equipment, there hasn’t been any official proof of espionage, and the United States although has charged Meng, there hasn’t been an actual extradition yet or a trial to determine guilt. Australia and New Zealand did stop using Huawei equipment for 5G, however, New Zealand has said the decision isn’t final if their carriers can prove risk can be mitigated the manufacturer can be approved again. With politics aside, and almost every country currently investigating the use of Huawei equipment under a microscope, realistically the resolution should be reached relatively quickly based on the number of countries investigating the hardware and security risks. The 5G rollout is in its infancy carriers will need to start scaling up quickly and will need suppliers with equipment that is approved.
