By Stephen Fidler and Max Colchester
LONDON -- The British government said it would bar telecom
companies from purchasing new equipment made by China's Huawei
Technologies Co. for their 5G networks in a further sign of the
deteriorating relations between Beijing and the West.
The sharp about-face by the U.K. -- only six months ago it said
it could manage the risks of Huawei's presence in 5G -- was a
direct consequence of new U.S. restrictions on the sale of Huawei
computer chips, the government said. It marks a significant victory
for the U.S. policy and is likely to increase pressure on other
countries to follow suit.
The decision follows British condemnation of China's imposition
of a new security law over the former British territory of Hong
Kong. A growing body of British lawmakers from the ruling
Conservative Party have been pressing the government to take
tougher action against China and recognize it as an adversary.
Tensions between Beijing and the West have heightened since the
new coronavirus broke out in China late last year, and what western
officials see as an increasingly assertive Chinese foreign policy.
This week, U.S. Secretary of State Mike Pompeo condemned China's
pursuit of territorial claims to islands in the South China Sea
that he described as "completely unlawful."
The U.S. has also positioned warships, including two aircraft
carriers, on exercises to the region, heightening tensions between
the two sides that have seen rounds of tit-for-tat sanctions in
recent weeks over other issues that also include trade, technology,
human rights and U.S. defense aid for Taiwan.
The U.K. decision will make purchases of Huawei equipment for
the country's 5G networks illegal from the end of this year and
give carriers until the end of 2027 to strip out existing Huawei
gear from 5G networks.
China's ambassador to the U.K. called the Huawei decision
"disappointing and wrong." He tweeted "It has become questionable
whether the UK can provide an open, fair and non-discriminatory
business environment for companies from other countries."
The move comes as U.S. pressure builds on European governments
to shut Huawei out of their networks. Senior U.S. officials, led by
national security adviser Robert O'Brien, and counterparts from
Italy, Germany, France and the U.K. are meeting in Paris to discuss
the issue this week.
The Trump administration ratcheted up its pressure on Huawei in
May with restrictions that stop foreign semiconductor manufacturers
whose operations use U.S. software and technology from shipping
chips to Huawei without first getting a license from U.S.
officials. British officials said this restriction raised questions
about the quality of Huawei equipment in the future.
U.S. officials have long said Beijing could direct Huawei to
sabotage or spy through 5G networks, which promise to provide
superfast wireless speeds for coming technologies such as
self-driving cars. Huawei and the Chinese government reject the
charges.
Oliver Dowden, the British minister in charge of digital issues,
said the move, which would be written into law in the fall, would
delay the development of 5G by two to three years and cost up to
GBP2 billion ($2.5 billion).
He said the U.S. measure was "a significant material change" in
the risk associated with using Huawei technology. He said the
sector suffered from "a global market failure" and was "dangerously
reliant on too few vendors."
The U.K. is also launching a consultation over banning the
purchase of Huawei equipment for the country's fiber-optic network.
This would, if necessary, be followed by a transition period that
isn't expected to exceed two years.
The U-turn followed a new review by the U.K.'s National Cyber
Security Centre, part of the nation's GCHQ electronic intelligence
agency, triggered by the U.S. export bans in May. U.K. cyber
officials said the U.S. left the U.K. with little choice. Their
analysis suggested that even if Huawei were to find workarounds,
the U.S. would modify the rules again to meet its goals, rather
than back down.
Ed Brewster, a spokesman for Huawei UK, said the decision
"threatens to move Britain into the digital slow lane." Urging the
government to reconsider, he said the new U.S. restrictions
wouldn't have affected the security of the products supplied to the
UK.
He said Huawei, whose equipment will remain in 2G, 3G and 4G
networks in the U.K., would conduct a detailed review of its
business in the U.K. Hours before the announcement, John Browne,
chairman of Huawei's U.K. board, resigned.
The long phaseout of Huawei gear suggests the government has
listened to British telecom executives who argued that imposing a
rapid deadline to tear out Huawei gear from their networks would
lead to coverage blackouts for customers.
However, several Conservative lawmakers complained Tuesday that
the seven-year phaseout of Huawei was too slow and questioned why
its technology would remain in non-5G networks.
The decision is expected to fuel broader discussions about how
the U.K., U.S. and other allies can wean themselves off Chinese
technology and production, an issue underscored during the
coronavirus pandemic by reliance on Chinese-made medical supplies
for hospitals and caregivers.
U.K. officials are talking about ways to diversify 5G suppliers
in the U.K. and Europe, both domestically and alongside allies. The
government could roll out government-supported testing programs to
help smooth entry for new players, saving wireless operators from
some of the financial risk, officials said.
The U.K.'s decision barring Huawei is expected to accelerate
work toward an international alliance to bolster non-Chinese
competitors, something U.S. officials have discussed. Part of the
idea is to incentivize companies long daunted by Huawei's strength
to expand and diversify.
The U.K. joins Australia and the U.S. in barring Huawei
equipment from its 5G network. Among the countries in the Five Eyes
intelligence alliance, Canada has yet to decide whether Huawei
equipment can be used in its 5G network after beginning a review in
the fall of 2018. While the New Zealand government hasn't made a
formal call, wireless carriers so far have awarded 5G contracts to
other companies.
In Europe, increasing U.S. pressure is likely to focus on
Germany where the government of Chancellor Angela Merkel opposes
banning Huawei but faces pushback from a group of cross-party
legislators who want to exclude the Chinese company on security
grounds. A law that will set the criteria for all vendors bidding
to participate in building the 5G network has been delayed due to
the standoff.
The French authorities are planning to restrict where operators
can use Huawei's 5G equipment, keeping the gear out of sensitive
areas around Paris or near French military installations, among
other locations. France also plans to deliver time-limited
authorizations for Huawei gear already on the network that would
expire after three to eight years.
Italy also appears to be growing cooler toward Huawei. Under
U.S. pressure, the Italian government has increased its powers to
review and veto 5G supply deals, and people across the political
spectrum are becoming increasingly vocal about the risk of
interference by Beijing.
The Italian government so far hasn't blocked Huawei from any
part of its 5G network. Italian intelligence and security officials
have said the government should consider doing so for security
reasons.
--Jenny Strasburg and Margherita Stancati contributed to this
article.
Write to Stephen Fidler at stephen.fidler@wsj.com and Max
Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
July 14, 2020 14:46 ET (18:46 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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