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‘What to Do about Huawei?’

Thursday, July 26, 2012

It is time for both the administration and the Congress to reveal what they have discovered about the Chinese telecoms giant.

The title above was taken from a recent column by Wall Street Journal columnist Holman Jenkins Jr. that chronicles the difficulties the Chinese telecommunications giant Huawei has encountered in its attempt to crack the U.S. market. The column provoked a strong letter of protest from three members of Congress—Senator Jon Kyl (R.-Arizona) and Representatives Frank Wolf (R.-Virginia) and Sue Myrick (R.-North Carolina)—arguing that the matter of Huawei’s activities is “far more complicated and dangerous than the piece suggests” and constitutes a threat to national security.

In his piece, Jenkins first notes that, given the abysmal Chinese record of intellectual property theft and official corruption, “Tears don’t spring from our eyes … for the travails of Huawei Technologies.” Though it is the world’s second-largest provider of telecoms equipment, with 45 of the 50 top wireless operators among its customers, Huawei has been minimally successful in the United States—not least because of direct interventions by U.S. government agencies. For example, last October, the U.S. Department of Commerce banned the company from supplying equipment to a new emergency wireless network for first responders. Huawei and the Chinese government have complained bitterly about this “unfair” treatment, arguing that it stems from a desire to protect American companies (specifically Cisco) from foreign competition.

In his article, Jenkins concedes an element of protectionism, but he also tackles the security issue and queries: “Does blackballing Huawei actually make America safer?” His answer: “Probably not.”

Jenkins bases this position on several arguments. First, he posits that “nations will spy on each other.” But he adds that “governments understand it makes no sense to endanger their most successful companies, the ones with large and vulnerable overseas assets” for “the penny-ante, highly perishable gains that state intelligence agencies typically produce.” In other words, forcing Huawei to install a “Trojan horse” that would allow the Chinese government to sabotage U.S. or other nations’ networks would destroy the company’s highly successful business model and its future prospects for global competition.

Jenkins also notes that Huawei technology “is proliferating around the globe,” and he points out that, though banned from major contracts, Huawei equipment is utilized by several second-tier U.S. providers such as Clearwire and Leap Wireless. Writ large, the problem is that of the Dutch boy’s finger in the dike—there are potential leaks and “trap doors” from countless sources into U.S. networks.

They glide past the fact that U.S. government’s ex parte interventions certainly undermine our exhortations to the People’s Republic of China concerning due process and adherence to the rule of law.

Having completed a study of Huawei’s history in the U.S. last year, I had a strong sense of déjà vu from these exchanges. The three members of Congress, along with several others, have previously written a number of letters raising major security concerns about Huawei. As before, in the latest instance they recite examples of cases where U.S. government agencies have warned U.S. service providers not to award contracts to Huawei on pain of losing all future government contracts. As before, they cap their arguments with an ominous allusion to “classified material” that they “cannot here describe.” And they glide past the fact that U.S. government’s ex parte interventions certainly undermine our exhortations to the People’s Republic of China concerning due process and adherence to the rule of law.

There is a way, however, to move forward and clear the air. In late 2011, the White House announced that it was setting up a task force to evaluate the risks posed by foreign telecoms equipment providers, and U.S. officials let it be known to the press that Huawei was a “key impetus” for the initiative. In addition, in early 2012, the House Intelligence Committee began an investigation of the security challenges posed by Chinese telecommunications companies. As part of that investigation, committee staff recently spent a week at Huawei HQ in Shenzhen.

It is time for both the administration and the Congress to reveal and publish what they have discovered. Paraphrasing what I wrote earlier, “If these are bad guys, say so. If nothing has been uncovered, butt out.”

Claude Barfield is a resident scholar at the American Enterprise Institute.

FURTHER READING: Barfield also writes “A Big Deal: Canada and Mexico Join the Pacific Trade Pact,” “The First Carbon Trade War?,” “Reforming the Patent System: How Did We Do?,” and “The White House and Congress Repel Chinese Investment.” Michael Mazza contributes the “Top Four National Security Challenges That China Poses.” Michael Auslin says “For China, It's All about America.”


Image by Darren Wamboldt / Bergman Group

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