7 PM | Huawei Dispute | 23 January, 2019

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Context:  The article discusses detention of Huawei’s Chief Financial Officer (CFO) Ms. Meng and its implications.

Ms. Sabrina Meng Wanzhou, Huawei’s CFO and daughter of Huawei’s founder Ren Zhengfei, was detained at a Canadian airport on December 1, 2018, by Canadian authorities on a request made by US. Though MS. Meng got a bail but she could be extradited to US. Though charges against Meng have not been made public but as per reports, US has placed following allegations against Huawei:

  • Stealing trade secrets and technology: US alleges Huawei of conducting breach of IPR policy and stealing trade secrets and technologyfrom US companies trading with China. China forces US companies to share technology as a precondition for accessing Chinese markets, a practice not allowed under WTO rules.
  • Breaching US sanctions against Iran: According to US,Huawei allegedly used a Hong Kong shell company to sell equipment in Iran, in breach of US trade sanctions, and misled banks about its business dealings in Iran.
  • Aiding and abetting espionage: Huawei is believed to carry out espionage on US citizens and indirectly on US security installations through electronic chips installed in its equipment, thus jeopardizing US national security.
  • Huawei’s closeness to Chinese government: According to US, Huawei is not a purely commercial entity and is hand-in-gloves with Chinese government in carrying out snooping and cyber theft of critical information.

However, the stand taken by US vis-à-vis Huawei has been criticized on the following grounds:

  • Lack of substantial evidence: US has not been able to prove its snooping and cyber theft claims made against Huawei citing that Huawei conducts these activities using advanced technologies clandestinely.
  • Discriminatory move:Meng’s arrest is surprising and backed by US’ larger geo-strategic agenda because,in an earlier case, US banned American companies from selling equipment to another Chinese company ZTEwhen it was found dealing with Iran,but then US didn’t file criminal charges against ZTE’s executives.
  • Rise of Huawei as a global technology giant: Huawei has replaced Apple to become the second largest smartphone maker in the world and its rise is akin to Chinese rise in global technological dominance.
  • China’s advance in 5G technology:
    • 5G would vastly increase data transmission speed and would instantly link all internet connected devices.
    • The US worries control of vast data through 5G would give China an unprecedented power over the world’s economy and security.
    • Huawei has taken global lead in developing 5G technology and its technology is believed to be 12 to 18 months ahead of the West. Huawei now holds some 10% of patented technology for 5G and is thus well-placed to win tenders when 5G network is set up.

Implications of the ensuing dispute:

  • Technological Cold War:
    • ‘Five eyes’ nations i.e. Australia, the US, Canada, New Zealand and the UK have blocked Huawei from supplying equipment for their next-generation wireless networks.
    • India has taken a neutral stand on the issue and has not yet reacted against Huawei.
    • The ensuing dispute and the alignment of countries in separate blocs signals the oncoming of a 21st century technological cold war between the West and the East.
    • This war would be waged in pursuit of technology race as the 20th century Cold War was initiated by arms race between West and East. 
Five Eyes:
It is an intelligence alliance comprising five countries viz. Australia, New Zealand, Canada, UK and US. It was formed in post-World War II era to collaborate on intelligence gathering of Soviet Union and its allies. Currently its work is focused on intelligence gathering on terrorist activities and also includes exchanging classified information among each other on Chinese foreign activities and its assertive international operations.
  • Canada-Beijing ties: The ties between two countries have taken a sudden dip and China has retaliated by arresting two Canadian citizens (one, a diplomat on leave) on national security grounds and a third has been awarded death sentence by China for alleged drug trafficking.
  • US-China trade war:US and China are already embroiled in a trade war and are slapping tariffs on each other’ products, though a 60-day truce period has been agreed. Meng’s arrest will aggravate US –China trade, which will affect negatively global trade, as China will likely see the move as part of a broader pattern of US aggression against China.
  • Innovative stifling of competition: US has used its domestic law ( sanctions on Iran) and unfounded evidence to arrest MsMeng, with a larger goal of containing phenomenal rise of China in technology development in a free and competitive world. This stifling of competition by devising arbitrary reasons can become a new trend to be followed by other countries.
  • Using citizens as scapegoat: Detention of Meng in Canada and Canadian nationals in China highlights the disturbing trend of holding people hostage, and violating their human rights, and being used as bargaining chip for securing national interests. This would instill fear among people for freely travelling for personal and official purposes.

Although, US action against Huawei’s CFO could send shivers to other countries trading with Huawei resulting in loss of revenue to Huawei but India has taken a principled stand on the issue. Refusing to toe-in arbitrary US injunctions, India has invited Huawei recently to participate in field trials of 5G equipmentbecause:

  • Availability of Huawei’s 5G telecom equipment increases choices for domestic cellular operators (Airtel etc.) and helps in making more efficient decisions in terms of price.
  • Blocking of Huawei from participation in the trials on unfounded and flimsy security grounds would have created problems under ‘national treatment’ conditions of the WTO that prevent discrimination among investors on their country of origin.
  • A wider pool of companies participating in trials augurs well for the long-term prospects of 5G growth in India from both price and service efficiency perspectives.
  • Separating geopolitical priorities of specific strategic alliances, like those with the US and the Indo-Pacific, from the priorities of domestic economic development is the rational move.


Source: https://www.thehindu.com/opinion/op-ed/the-fault-lines-of-diplomatic-recrimination/article26053882.ece

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