EU lawmakers brand Huawei, ZTE ‘high-risk’ 5G vendors

Politico, 14 October 2020

Below is an article published by Politico. Photo AFP/Getty Images.

A group of prominent members of the European Parliament have singled out Chinese 5G vendors Huawei and ZTE as “high-risk” companies that pose a security threat to network security in Europe, according to a letter obtained by POLITICO.

Members from five political groups called for national capitals and the Commission to cut European public funding for the two companies in the letter, which was sent to national telecom ministers and senior EU Commission officials. Telecom ministers meet for an informal videoconference on Thursday.

“As all Chinese companies, [Huawei and its smaller Chinese rival ZTE] are obliged under Chinese law to comply with China’s undemocratic authoritarian regime. This includes using networks to control its own population and to spy [on] Western governments, companies and citizens,” the MEPs wrote.

“There is therefore no question that Huawei and ZTE are ‘high-risk’ vendors, whose technology in Europe’s 5G networks would constitute a security threat,” they added.

Huawei has consistently denied allegations that it poses a security risk, and has pushed back on the notion that governments have designated it a “high-risk” vendor under the EU’s new 5G security rules.

“We should be cautious when labelling vendors on the basis of the location of their headquarters. Some companies might be headquartered in Europe, but have their substantial decision center, their supply chains and their research and development facilities in other world regions, such as the US or China. This includes two of our major 5G peers,” a spokesperson for Huawei said, referring to Swedish vendor Ericsson and Finnish firm Nokia.

“Chinese legislation not only applies to Huawei, but also and in equal extent to all companies who have substantial operations in China,” the spokesperson added.

The letter was signed by more than 40 members of the European Parliament, including former European Commission Vice President Andrus Ansip (Renew), the head of the Parliament’s China delegation Reinhard Bütikofer (Greens) and other prominent members of the conservative, center-right, liberal, social-democrat and Greens factions.

The signatories called for a review of EU and national public funding to make sure “no European funding, i.e. taxpayer money, will cover the use of technology from ‘high-risk’ telecom equipment vendors,” including in the EU’s major investment programs under the bloc’s long-term budget and coronavirus pandemic recovery funds.

Huawei has been engaged in projects jointly with European firms that receive EU innovation funding. However, the firm said in its entry in the EU’s Transparency Register that it didn’t receive EU funding in the last closed financial year.

The members also criticized China’s failure to open up its domestic telecom market for European vendors Ericsson and Nokia, saying “there is also a blatant lack of reciprocity between the EU and China in the market access of 5G vendors.”

They said the EU should agree on a draft International Procurement Instrument that would close off public procurement for companies from third countries that restrict the market access of European firms.

Members also asked national capitals to conduct a “joint assessment and categorization of ‘high-risk’ vendors,” which would mean countries have to agree on a common label for vendors Huawei and ZTE.

The Commission this year launched a “toolbox” urging countries to decrease their dependencies on Chinese kit for 5G networks, including blocking “high-risk vendors” from providing gear for sensitive parts of the next-generation telecom networks.

“5G security needs to be promoted by ensuring technically sound security solutions, excluding vendors falling into the ‘high-risk’ category from sensitive parts of the networks and, in the medium- and longer term, maintaining European know-how and capabilities in order to avoid overreliance or dependency on “high-risk” vendors,” the MEPs wrote.

But Huawei pushed back on restrictions on its market access. “There would be severe adverse consequences to consumer and business interests, and on the cohesion of the internal market if the elimination of specific suppliers would become law,” the company spokesperson said.