U.S. offers Brazil telecoms financing to buy 5G equipment from Huawei rivals

Lisandra Paraguassu and Andrea Shalal
·3-min read
Senate Finance Committee hearing on U.S. trade on Capitol Hill in Washington
Senate Finance Committee hearing on U.S. trade on Capitol Hill in Washington

By Lisandra Paraguassu and Andrea Shalal

BRASILIA/WASHINGTON (Reuters) - The U.S. government stepped up an offensive on Tuesday to keep China's Huawei Technologies out of Brazil's 5G market, with Washington offering to finance purchases by Brazilian telecom companies of equipment from its competitors.

During a visit to Brasilia, officials of the U.S. International Development Finance Corporation (DFC), the U.S. EXIM bank and the National Security Council told reporters that funding was available to buy equipment from other companies.

The U.S. delegation was headed by National Security adviser Robert O'Brien, who met with Bolsonaro before they attended the signing of an EXIM bank financing agreement that identifies areas of business cooperation that includes 5G telecoms.

In Washington, top U.S. officials urged Brazil to carefully monitor Chinese investments in Brazil and moves by Beijing to expand its influence in Latin America's largest economy through sale of 5G technology by Huawei.

U.S. Trade Representative Robert Lighthizer said trade agreements reached with Brazil on Monday would pave the way for further negotiations on steel, ethanol and sugar, and promote greater U.S. investment as Washington moves to provide a counter-weight to China's expansion in the region.

"I would say clearly there is a China element ... in everything that all of us do," Lighthizer told an event hosted by the U.S. Chamber of Commerce. "China has made a very significant move in Brazil. They're Brazil's biggest trading partner, so it's something that we're concerned about."

Lighthizer's remarks were part of a full-court press. White House economic adviser Larry Kudlow said Washington had urged Brazilian President Jair Bolsonaro and other Brazilian officials to keep a close watch on China's investments and advanced technologies, as Washington had done.

"We have encouraged Brazil .. to try to work together to make sure that we watch China carefully with respect to all manner of technology and telephoning and 5G," he told the event.

"We have taken actions here in the States; we continue to move, and it is my great hope that Brazil will move with us," he added. "We hope that Brazil will also keep a careful, critical eye on Chinese investment."

Washington believes Huawei would hand over data to the Chinese government for spying, a claim Huawei denies.

Brazil plans to auction 5G frequencies next year to telecom companies operating in Brazil, many of which already buy from Huawei and would like to continue doing for their 5G networks because the Chinese equipment is cheaper.

"The U.S. concern is how they use the data, how they use the technology for state benefit, not for the individuals who use that the technology," Joshua Hodges, senior director for Western Hemisphere affairs on the NSC, said in Brasilia.

DFC Managing Director Sabrina Teichman said 20% of its $135 billion portfolio was available for commercial deals with companies that wanted to partner with the United States as part of the Trump administration's China and Transformational Exports program, which is aimed at neutralizing Chinese competition.

"We have equity financing and we also have debt financing and those plans are available to Brazilian companies" that are looking to acquire new technology," she told the reporters.

"We are looking forward to supporting the Brazilian telecom sector," she added.

(Reporting by Lisandra Paraguassu in Brasilia and Andrea Shalal in Washington; writing by Anthony Boadle; Editing by David Gregorio)