US legislation aimed at Huawei, ZTE telecoms infrastructure in Europe gains momentum

·5-min read

Bipartisan US legislation aimed at eliminating Chinese telecoms infrastructure in central and eastern Europe is gaining momentum as more representatives signed on as cosponsors and a Senate version was introduced.

Democratic representatives Ted Lieu of California and Brad Schneider of Illinois joined 30 other cosponsors of the Transatlantic Telecommunications Security Act this week, which would authorise the US International Development Finance Corporation (DFC) to identify projects from Austria and Greece to Ukraine and Moldova to support in conjunction with counterpart agencies in Europe.

“The United States has national security and economic interests in assisting central and eastern European countries to improve the security of their telecommunications networks by reducing dependence on covered telecommunications equipment or services that are often offered with predatory economic inducements, and replacing them with secure telecommunications equipment or services,” the House bill says.

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Huawei Technologies Co. and ZTE, both of which have been sanctioned by the US government in recent years, are the only two companies specifically mentioned in the bill, which moved to the House Foreign Affairs Committee for a vote this week. The legislation was introduced by Ohio Democrat Marcy Kaptur with Illinois Republican Adam Kinzinger as one of the first cosponsors.

On Tuesday, senators Rob Portman, a Republican from Ohio, and Jeanne Shaheen, a New Hampshire Democrat, introduced similar legislation in their chamber, in which they warn about China’s attempts “to undermine” the sovereignty of central and eastern European nations through its Belt and Road Initiative (BRI). The House version includes the same language.

Many BRI projects include telecommunications equipment made by Huawei, ZTE or other Chinese suppliers.

“The US has pushed countries to ban Huawei infrastructure, but … has not offered support to countries who cannot afford other infrastructure,” the two senators announced when they introduced their bill.

“The [Transatlantic Telecommunication Security Act] would provide financing to European allies who are most vulnerable to low-cost options like Huawei, and it would expand the number of countries that DFC can invest in, helping them modernise digital infrastructure,” they said.

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In line with the House legislation, Portman and Shaheen’s bill would compel the US Secretary of State to “prioritise diplomacy and support European allies to develop 5G markets that are inclusive, transparent, economically viable and compliant with international law” and “ensure the US leads with European allies to develop international 5G standards that favour democratic institutions”.

The two bills are progressing in tandem with “rip and replace” initiatives for rural US telecommunications carriers that use Huawei equipment, and high-profile efforts by Washington and the EU member countries to align on their technology development policies.

On Thursday, the two sides inaugurated a Trade and Technology Council (TTC), first announced in June, which aims to reduce its members’ shared reliance on Chinese manufacturing while strengthening their respective domestic supply chains.

The Biden administration has worked to shore up ties with other blocs that include close European allies, such as Nato and G7, for reasons that align with the objectives of the legislation. The TTC was a key initiative of meetings the US leader held in Brussels with EU leaders in June, a trip that also included G7 and Nato summits.

Both bills say their provisions are meant “to ensure robust military coordination and interoperability with [Nato] and transatlantic allies and partners”.

The DFC, along with Export-Import Bank of the United States (Exim), was recently reinvigorated with a larger funding authorisation to become a key tool in Washington’s efforts to counter the inroads China has made in forging closer ties with other countries through many channels, BRI in particular.

Attendees use tablets in front of signage for ZTE at a technology conference in Shanghai, China in February. Photo: Bloomberg
Attendees use tablets in front of signage for ZTE at a technology conference in Shanghai, China in February. Photo: Bloomberg

The US government has been left open to criticism that it has not offered enough in the way of an alternative.

“China is promoting Huawei fifth-generation (5G) network technology across the globe, raising concerns within the US government, which has concluded that Huawei is effectively an extension of the Chinese Communist Party,” David Sacks, a research fellow at the Council on Foreign Relations, wrote in a blog post for the New York-based think tank last week.

“Europe has not taken a unified position on Huawei, with EU members Austria, Hungary, and Ireland all leaving the door open to using Huawei 5G equipment,” he said. “BRI can be seen in part as a marketing success, a way for China to build a narrative that it is an ascendant economic power and a country’s prosperity is intimately tied to closer relations with Beijing.”

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That lack of international consensus was reflected in a study released in June by the London-based think tank Overseas Development Institute, which concluded that “a common security policy towards Chinese investment in digital infrastructure is unlikely”.

The study also said “growing concerns about technology dependence are prompting some wealthier developed countries to reassess engagement with China in digital infrastructure construction, but poorer developing countries appear reluctant to follow suit”.

Many countries in western Europe, as well as Britain, have already made moves to keep Chinese equipment out of their telecommunications infrastructure.

French President Emmanuel Macron said a year ago that he is not excluding Huawei from its 5G networks but favours European providers for security reasons. Sweden’s regulator, the Post and Telecom Authority, banned Huawei and ZTE from the country’s network last year because of security concerns on the recommendation of the nation’s intelligence services.

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