/Trump’s brewing tech fight with China, explained

Trump’s brewing tech fight with China, explained

Ajit Pai

The risk of Beijing spying through critical internet infrastructure built by Huawei is just too great to tolerate, said Federal Communications Commission Chairman Ajit Pai. | J. Scott Applewhite/AP Photo

Despite recent softer language from President Donald Trump in his fight with tech giant Huawei, officials guiding America’s 5G strategy lay out a simple reason the conflict isn’t going away: The U.S. is trying to safeguard the world from Chinese spies.

The officials see the firm’s dominance on 5G and its close relationship with the Chinese government as a dire threat to America and its allies. And the risk of Beijing spying through critical internet infrastructure built by Huawei is just too great to tolerate, said Federal Communications Commission Chairman Ajit Pai.

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Pai’s warning, echoed by others in interviews in the latest episode of POLITICO’s Global Translations podcast, comes as America’s allies and industry around the world are struggling to make sense of the Trump administration’s latest mixed signals on Huawei — and wondering how seriously to take Washington’s demands to block the company’s efforts to participate in the internet infrastructure of western democracies.

“If you want to trust that companies subject to Chinese jurisdiction won’t comply with a request from the Chinese intelligence services, that’s your choice,” Pai said. “But it’s not a choice that I believe is a wise one when it comes to our national security here in the United States.”

Companies in both countries are competing to build the next-generation 5G networks to enable faster and more powerful wireless connectivity that is expected to spark the next wave of lucrative technological innovation. But unlike existing internet infrastructure, 5G will be controlled by software that could be used remotely for surveillance, Pai said.

“You could imagine a situation in which 5G infrastructure that is near critical military or other important infrastructure could be monitored, could be managed or surveilled in a way that may be contrary to our national security,” he said. “And that is not a risk I am willing to take — and I don’t think many people would be willing to take in this country.”

Earlier this year, Washington banned U.S. telecommunications companies from using Huawei equipment — and has asked allies to follow suit — out of fear that the company will be subject to surveillance requests from the Chinese intelligence services. Huawei has denied the accusations.

Pai, who was appointed to the FCC by President Barack Obama and elevated to chairman by Trump, said he favors a framework to review security implications of internet firms using particular equipment. “I’ve consistently said that we don’t want to single out any particular company or country. We simply want to have a framework for evaluating risk at the front end,” he said.

While the U.S. has left 5G development to the private sector, Pai also criticized China’s cutthroat industrial strategy that supported the rise of companies like Huawei.

“China in particular has essentially tried to create its own internet economy, shutting out companies — especially companies from the United States — from entering the market or entering on neutral terms. A lot of American firms that enter that market have to license their technologies, and also have to have a majority owner who is Chinese, and then ultimately that technology is essentially misappropriated or stolen or otherwise used to benefit a domestic company,” he said.

Beijing’s use of forced technology transfers and subsidies in its quest to overtake the U.S. in high technology has been at the heart of the Trump administration’s trade battle with China, according to congressional testimony by U.S. Trade Representative Robert Lighthizer. In May, Trump issued an executive order banning U.S. companies from using telecommunications equipment from companies that pose a national security risk. Separately, the Commerce Department named Huawei to a list of entities with which U.S. firms are forbidden from doing business unless they receive a special government license.

But Trump confused allies and industry by seemingly softening his position in remarks at the G-20 meetings last month. As part of his ongoing talks with Chinese President Xi Jinping that forestalled additional tariffs, Trump said U.S. companies can sell some equipment to Huawei. “I’m talking about equipment where there is no great national emergency problem with it,” Trump said. He also suggested that Huawei’s fate would be tied to trade talks. “Huawei is a complicated situation. We’re leaving Huawei toward the end. We’re going to see. We’ll see where we go with the trade agreement.”

On Tuesday, Commerce Secretary Wilbur Ross, clarified that Huawei would remain on the so-called entity list — but that the department would issue licenses in cases where there was no threat to national security. The House will vote this week to prevent the administration from removing the blacklist without evidence the company is acting lawfully.

Meanwhile, some allied governments have bristled at what they perceive as heavy-handed diktats from Washington, and they want to take their time to evaluate the security considerations on their own.

Peter Beyer, a member of the German parliament and a trans-Atlantic coordinator for the government of chancellor Angela Merkel, said Germany is following its own process to reach a decision on Huawei, despite demands from Washington.

“We don’t think it‘s very smart to just ban Chinese companies or even Chinese companies by name,” Beyer said. “We write down criteria with which everybody would have to comply.” He predicted, however, that after an internal process, Germany would end up close to the American position.

“In the end, my best guess sitting here today would be it will be in the end a de facto exclusion of Chinese technology and of Chinese companies,” he said.

Of all U.S. allies, Canada finds itself in perhaps the most painful spot between the two rival tech powers. At the request of the U.S. government, Canada in December arrested a senior Huawei executive, Meng Wanzhou, who is also the daughter of the company’s founder. The U.S. had asked to extradite her on charges connected to violating sanctions on Iran.

Beijing’s retaliation was swift. Two Canadian citizens in China were arrested on vague charges, and another Canadian citizen’s drug trafficking sentence was revised from a 15-year term to the death penalty — moves interpreted in Canada as punishment for its arrest of Meng. In addition, Beijing has blocked some imports of important agricultural products from Canada, including canola, beef and pork.

Canadians feel squeezed between the two rival powers, said Laura Dawson, a Canadian trade economist and director of the Canada Institute at the Wilson Center in Washington.

“If you talk to the average Canadian on the street, they’re like, ‘Why are we doing this? Why are we doing President Trump’s dirty work?’” she told the podcast.

Trump’s Huawei comments at the G-20 were “very confusing to the allies,” she said. “You’re dealing with multiple messaging from the United States. I mean, Canada’s got the [U.S.] Department of Justice saying, ‘Follow the rule of law on the extradition request.’ OK. There’s one thing. Then it’s got the security community in the United States saying, ‘Be very, very cautious with Huawei. Follow our lead. Keep away from them on 5G.’ And then you’ve got a president who’s saying, ‘Oh, you know, maybe we should do business with Huawei. Maybe they’re not so bad.’”

Prime Minister Justin Trudeau had asked Trump to raise the issue of the detained Canadians with Xi at the G-20, but there has been no sign of progress.

“They’re looking to the U.S. for some form of leadership,” said Dawson. “And all they’re getting is really, really mixed messages. So it’s a tough time.”