Australia's ban on Huawei would be a costly call

Lotte

29/06/2018 03:56

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Clara Ferreira-Marques
    SINGAPORE, June 29 (Reuters Breakingviews) - Australia's
Huawei ban could be an expensive call. Fresh from passing a new
law on foreign meddling in its politics, Canberra now looks set
to block the Chinese telecom giant from working on its
next-generation mobile network. There are valid concerns. But a
ban carries costs too: pricier 5G, and a longer route to
improved ties with the country’s best export customer.
    The relationship is certainly going through a rocky patch,
even as two-way trade hit a record $125 billion last year.
Australia has been increasingly anxious about influence in the
Pacific. And back in December, Prime Minister Malcolm Turnbull
cited "disturbing reports about Chinese influence", when he
announced plans to ban foreign political donations and other
forms of meddling. In response, there have been bitter
editorials in the People’s Republic and reports of wine
shipments held up at customs, triggering fears exports could be
targeted more broadly. A 2017 diplomatic spat between China and
South Korea battered both Hyundai Motor  005380.KS  and
conglomerate Lotte Group  004990.KS .
    Politicians Down Under have been trying to row back.
Minister for Trade Steven Ciobo said this week that the new
rules were not aimed at China, which may help, given Beijing's
objections to being singled out last year. 
    Still, the Huawei decision is not likely to go its way. The
company denies it poses a security risk and says it is private,
owned by employees. But its ties to the Chinese Communist Party
remain the subject of intense suspicion. In 2012 it was blocked
from supplying the country's National Broadband Network. Growing
pressure from the United States, with whom Australia is in an
intelligence-sharing partnership, will not help.
      Huawei is right, though, to point out that the decision
will have repercussions. Other 5G suppliers will likely be
pricier and potentially less advanced: China has been at the
forefront in the race for superfast wireless technology. Huawei
also owns many essential patents, meaning it will be almost
impossible to avoid using some of their technology. 
      Australia will eventually patch up with China regardless -
both sides need each other. But it can consider models other
than Washington’s hard line. London, for example, manages
Huawei’s presence using its own intelligence agents. Canberra
could have its security and 5G too. 
    On Twitter https://twitter.com/claramarquesrtr
    
    CONTEXT NEWS
    -The Australian government is widely expected to ban
telecoms giant Huawei from supplying equipment for a
soon-to-be-built 5G mobile broadband network, on national
security grounds.
    - Huawei said in a letter on June 15 that it was a private
company, owned by its employees, and abides by national laws and
guidelines. John Lord, Huawei’s Australia chairman, has said
separately the group would resist requests to transmit
Australian customer data to Beijing “because that is completely
illegal”.
    - Australia’s senate on June 28 passed new legislation
designed to prevent interference by foreign governments.
Minister for Trade Steven Ciobo said earlier on the same day
that the move was “not about China”.
    - Under the new law, lobbyists for foreign countries will be
required to register as such, and will be liable for criminal
prosecution if they intervene in domestic affairs.
    - China’s ambassador to Australia, Cheng Jingye, said in a
speech in Canberra on June 19 that Australia needed less of a
“Cold War mentality”. 
    - For previous columns by the author, Reuters customers can
click on  MARQUES/ 
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    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Australia foreign interference bill not aimed at China – trade
minister     urn:newsml:reuters.com:*:nL4N1TU450
Australia to pass foreign interference laws amid rising China
tensions     urn:newsml:reuters.com:*:nL4N1TT1T8
Chinese envoy calls on Australia to shed “Cold War mentality”   
 urn:newsml:reuters.com:*:nL4N1TL0RT
BREAKINGVIEWS-China backlash could unravel 5G network effect   
 urn:newsml:reuters.com:*:nL3N1RV1H9
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 (Editing by Pete Sweeney and Sharon Lam)
 ((clara.ferreira-marques@thomsonreuters.com; Reuters Messaging:
clara.ferreira-marques.thomsonreuters.com@reuters.net))