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EU and member states risk a possible WTO challenge for unfair actions against Huawei

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A Swedish court has ruled today (10 November) that Stockholm cannot prevent Huawei from participating in the country’s upcoming 5G spectrum auction. Last month, Sweden had banned Huawei from the country’s 5G networks based on the unsubstantiated claim that because Huawei is headquartered in China, its products somehow constitute a national security threat, writes Simon Lacey.

Along with Romania and Poland, Sweden is the latest country to come under fire for its arbitrary and discriminatory actions against Huawei, a company that has fought to uphold its reputation against the Trump administration’s efforts to discredit the company. Outgoing US Secretary of State Mike Pompeo in particular has mounted a high-profile campaign to pressure US allies into banning Huawei equipment from their 5G wireless networks – notwithstanding the vociferous objections of many telecom operators that have come to trust the company and its technology after decades of close co-operation.

As is well known within EU institutions, US actions against Huawei based mainly on its Chinese origins simply will not stand up to a legal challenge before the World Trade Organization. This is because of international treaty obligations that Romania, Poland and Sweden as both EU Member States and WTO members are all bound by, precluding them from discriminating against or between the products of another WTO member.

These “non-discrimination obligations” form the heart of the rules-based international trading system. Any departure from those rules must be firmly rooted in one of only a small handful of narrowly defined exceptions that contain language specifically guarding against their being abused as a means of arbitrary or unjustifiable discrimination, or a disguised restriction on international trade.

Even the WTO’s national security exception has built-in safeguards designed to prevent it from being misappropriated in ways we are currently seeing in countries like Romania, Poland, Sweden, and others. These countries have imposed de jure or de facto bans on Huawei by invoking supposedly classified evidence claiming the company poses a security threat.

In addition to these core WTO obligations, other norms exist that require member countries to adhere to international standards when enacting and enforcing technical regulations on issues such as network security. Here again, the various bans against Huawei fail to meet this test, since the company has successfully acquired international cybersecurity certifications issued by various intergovernmental organizations and industry standards bodies. What’s more, when enacting and applying technical regulations, national regulators must not discriminate against the products of other WTO members, and must regulate them in such a way as is minimally trade-restrictive in order to achieve the stated regulatory goal. If the goal is cybersecurity, a ban against the products of a single company on the basis of its flag of origin is both discriminatory and disproportionate.

Cybersecurity experts have long recognized that networks must be managed on the basis of zero trust and the understanding that any network can be breached by a determined foe. For this reason, third-party verification of all software and hardware, and other contingencies and redundancies that improve network resilience, are key to mitigating cybersecurity risk. Banning any vendor solely because it is based in China makes absolutely no sense when the vast majority of the world’s telecommunications equipment, including that of EU companies Nokia and Ericsson, is made in China; moreover, it betrays a lack of understanding by senior policymakers and regulators in many countries about both the nature of the perceived threat, and how to counter it.

Simon Lacey

Simon Lacey

Perhaps the most troubling thing is that politicians and regulators’ lack of understanding of this point, and the opportunistic exploitation of the situation by ideologically driven hardliners in many countries, is keeping us all from reaping the many benefits that a faster, more competitively neutral and cost-effective rollout of 5G networks would mean for businesses and consumers alike. Managing one of the most important technological evolutions of our lifetimes will require decision-makers to elevate their thinking and their regulatory practices, and to stop arbitrary and groundless actions against a company that simply happens to be caught in the gears of a larger geopolitical contest.

The author is a senior lecturer in international trade at the University of Adelaide in South Australia and formerly served as Vice President Trade Facilitation and Market Access at Huawei Technologies in Shenzhen, China.

 

China

EU-China investment deal stalls

Catherine Feore

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European Commission Executive Vice President Valdis Dombrovskis confirms that progress on the investment deal with China has stalled following March sanctions.

The EU concluded what Dombrovskis describes as an “asymmetric deal” with China at the end of last year. Known as the Comprehensive Agreement on Investment (CAI), it was presented on 30 December. 

Today (5 May) he said: ”There are substantially more new commitments from China as regards market access, with regards to the level playing field and this is something that European companies have been asking us for for many years. So as regards the agreement itself, that technical work is ongoing to prepare the ground for ratification.”

At the time of the agreement Dombrovskis said: “This deal will give European businesses a major boost in one of the world's biggest and fastest-growing markets, helping them to operate and compete in China. It also anchors our values-based trade agenda with one of our largest trading partners. We have secured binding commitments on the environment, climate change and combatting forced labour. We will engage closely with China to ensure that all commitments are honoured fully.”

Wider political context

When asked about whether the deal had been suspended, Dombrovskis said that the position of the European Commission has not changed. He said that the “ratification process of comprehensive agreement on investment cannot be separated from the wider political context. I will repeat that the ratification process cannot be separated from evolving dynamics of the wider EU-China relationship. And in this context, Chinese sanctions targeting among others members of European Parliament and even an entire parliamentary subcommittee are unacceptable and regrettable, and prospects and next steps concerning ratification on comprehensive agreement of investment will depend on how the situation evolves.”

The Commission faced much criticism when the agreement was reached, by appearing to move ahead of the United States, before the new administration had taken office. It was felt by some that the EU should wait to see if there was the possibility of finding common cause with the new Biden team. 

There were also accusations that the EU was ignoring China’s human rights record, particularly in relation to the treatment of the Uyghur muslim population in Xianjang province and the crackdown on the democracy protesters and the introduction of the national security law in Hong Kong.

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G7 to discuss decisive action to counter threats like Russia and China

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Britain's Foreign Secretary Dominic Raab meets with Japan's Foreign Minister Toshimitsu Motegi in Kent, Britain May 3, 2021. REUTERS/Tom Nicholson/Pool
Britain's Foreign Secretary Dominic Raab speaks at a news conference following a bilateral meeting with U.S. Secretary of State Antony Blinken in London, Britain May 3, 2021 during the G7 foreign ministers meeting. Chris J Ratcliffe/Pool via REUTERS
U.S. Secretary of State Antony Blinken attends a news conference with India's Foreign Minister Subrahmanyam Jaishankar following a bilateral meeting in London, Britain May 3, 2021 during the G7 foreign ministers meeting. Ben Stansall/Pool via REUTERS

Britain on Tuesday (4 May) sought to agree decisive action from G7 partners to protect democracies against global threats like those posed by China and Russia.

Hosting the second day of a foreign ministers' meeting in London designed to lay the groundwork for a leaders' summit in June, Dominic Raab (pictured) will lead talks among the Group of Seven wealthy nations on threats to democracy, freedoms and human rights.

"The UK’s presidency of the G7 is an opportunity to bring together open, democratic societies and demonstrate unity at a time when it is much needed to tackle shared challenges and rising threats," Raab said in a statement.

In addition to the G7 members Canada, France, Germany, Italy, Japan and the United States, Britain has also invited ministers from Australia, India, South Africa and South Korea this week.

Their first face-to-face meeting in two years is seen by Britain as a chance to reinforce support for the rules-based international system at a time when it says China's economic influence and Russian malign activity threaten to undermine it.

On Monday (3 May), having met with Raab, US Secretary of State Antony Blinken said there was a need to try to forge a global alliance of freedom loving countries, though stressed he did not want to hold China down, but make sure it played by the rules. Read more

Tuesday's discussion also covered the coup in Myanmar, urging stronger action against the military junta in the form of expanded sanctions, support for arms embargoes and more humanitarian assistance.

In the afternoon talks will turn to Russia, including how to respond to a troop manoeuvres on the border with Ukraine and the imprisonment of Kremlin critic Alexei Navalny.

Raab said on Sunday he wanted the G7 to consider a joint rebuttal unit to tackle Russian disinformation and propaganda. Read more

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De-coupling from China would be the wrong way to go, Germany warns

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The European Union needs to engage with China despite many differences instead of opting for a more isolationist approach, Germany said on Wednesday (21 April).

"In the EU, we have been describing China as a partner, competitor and systemic rival at the same time," German Foreign Minister Heiko Maas (pictured) said ahead of a virtual meeting with his Chinese counterpart Wang Yi.

"In all these three dimensions we need strong, sustainable communication channels with Beijing. De-coupling is the wrong way to go."

Berlin's warning against de-coupling is in line with Beijing's long-held position against disengagement among nations, including with China, despite mutual differences.

Last month, China was hit by a round of coordinated sanctions from the United States, European Union, Britain and Canada over reports of forced labour in the far western Chinese region of Xinjiang, accusations that Beijing rejects.

Ties between China and Germany have generally remained stable since last year, Chinese State Councilor and Foreign Minister Wang Yi said later in his meeting with Maas.

Wang also said major economies like China and Germany should jointly resist any de-coupling, and instead seek to uphold the stability of global industrial and supply chains, according to a statement from the Chinese foreign ministry.

At the same time, China does not approve of any re-drawing of ideological lines, and is even more opposed to engaging in “small cliques”, and even arbitrarily imposing unilateral sanctions based on false information, Wang said.

Last week, U.S. President Joe Biden met with Japanese Prime Minister Yoshihide Suga in his first face-to-face White House summit since taking office, where both leaders said they shared serious concerns about the human rights situation in Hong Kong and Xinjiang.

In a show of economic cooperation to the exclusion of China, Biden said Japan and the United States would jointly invest in the tech sector including semiconductor supply chains.

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