America Needs Huawei

The director of the Chinese tech giant’s board warns that banning the company will hurt the U.S. economy.

Ms. Chen is director of the board at Huawei


A Huawei company logo outside a shopping mall in Shanghai.CreditCreditAly Song/Reuters

An executive order signed by President Trump on Wednesday may lay the groundwork for a ban on the sale of Huawei’s equipment in the United States by declaring a “national emergency.” Additionally, an order issued by Commerce Secretary Wilbur Ross that goes into effect today will prevent Huawei — the world’s leading telecom equipment provider — from buying components and technology from American businesses without United States government approval.

The Commerce Department’s decision to require American companies to get special licenses to sell components to Huawei could make it hard — if not impossible — for the company to obtain key components for its network switching equipment and smartphones. But a ban will not make American networks more secure. Instead, it will hurt ordinary Americans and businesses by denying them access to leading technology, reducing competition and increasing prices.

The ban will financially harm the thousands of Americans employed by the U.S. companies that do business with Huawei, which buys more than $11 billion in goods and services from U.S. companies each year. A total ban on Huawei equipment could eliminate tens of thousands of American jobs.

Because Huawei equipment is installed in dozens of 4G networks in underserved remote and rural parts of the country, a ban would prevent small, independently owned American telecom operators such as Eastern Oregon Telecom and Union Wireless in Wyoming from developing new services and delivering faster broadband connections to millions of people. Instead, those operators would be forced to spend their limited funds replacing Huawei equipment with more expensive gear supplied by its competitors (there are two — Ericsson and Nokia — and neither is an American company).

Huawei is the acknowledged industry leader in 5G technology. Blocking it could harm the American economy by preventing the United States from keeping pace with the rest of the world in rolling out 5G networks. The United States could end up falling behind the many European and Asian countries that plan to introduce 5G networks — ensuring that those countries take the lead in delivering new products and services to their residents, just as American companies did when the country moved quickly to roll out 4G, the previous generation of wireless tech.

Most important, a ban would fail to achieve its goal of making the country’s digital networks more secure.

American officials worry that using Chinese equipment would allow Beijing to shut off phones, power, banking and other critical services. The security of our telecommunications networks is a responsibility shared by operators, equipment vendors and service providers to collectively perform risk mitigation with assurance and transparency. Telecom operators control the network and the data moving across it, and circumventing their controls would be extremely hard, given the available risk-mitigation processes. Huawei has repeatedly said it would refuse any order to attack or spy on its customers.

Moreover, singling out Huawei because it is headquartered in China makes little sense. Telecommunications companies such as Nokia and Ericsson draw from a global supply chain, as Huawei does. They use equipment developed or manufactured in China, which accounts for much of the telecommunications and internet gear currently installed in American networks. Blacklisting one company — or all of the companies from one country — does nothing to mitigate this global supply chain risk and will substantially reduce competition that will inevitably increase costs.

The executive order and the Commerce Department’s regulation aim to prevent malicious actors from inserting malware into telecommunications networks that could surreptitiously monitor network traffic or launch a cyberattack. This aim reflects the reality that the world’s communications networks are vulnerable to attack by sophisticated nation-states, such as by implanting programmable code and exploitable vulnerabilities in hardware and software by virtual means. But such code can compromise the product of any equipment vendor — even those from countries that might seem friendly to America — which requires assurance and transparency in risk mitigation.


More about China and Huawei

The United States government has entered into agreements for government-monitored risk mitigation with Nokia and Ericsson, which are based in Europe, allowing them to do business in this country despite their extensive operations in China. Huawei would welcome the opportunity to discuss similar agreements.

If the White House and Commerce Department really want to protect American networks, they will focus not on barring individual companies but on establishing a comprehensive risk management approach that relies on recognized best practices. In fact, that is precisely the strategy advocated last year by the Department of Homeland Security.

A move to block any company — let alone Huawei, the industry leader — will weaken competition, delay 5G adoption, reduce innovation and prevent American consumers and businesses from having access to some of the world’s most advanced communications technology. The Trump administration should abandon its apparent course and instead develop a transparent framework to test and secure all parts of America’s communications networks.

Catherine Chen is director of the board at Huawei.

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