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Brexit and Huawei
The new prime minister's decision on Huawei will be crucial for post-Brexit UK
By Thomas Scott-Bell  ·  2019-08-26  ·   Source: NO. 35 AUGUST 29, 2019
Vodafone launches 5G service in the UK using Huawei equipment in London on July 3 (XINHUA)

Sweltering temperatures may have finally ended in the United Kingdom, but for new Prime Minister Boris Johnson, the heat is still on to deliver Brexit, the UK's exit from the European Union (EU), by October 31.

Less than a week into the job, Johnson has spent his time carefully cultivating an optimistic, strong and ruthlessness image, everything critics say his predecessor lacked.

Johnson has already highlighted the need for the UK to invest in its infrastructure networks if it is to keep its competitive advantage post-Brexit, pledging "fantastic full fiber broadband sprouting in every household" by 2025.

By insisting that the UK will meet its latest deadline with "no ifs, no buts," Johnson has overseen a seismic shift in policy direction. He has brutally cut 12 cabinet ministers, replacing them with a squad of loyalists and Brexiteers, demanding that they work under the assumption that renegotiating former Prime Minister Theresa May's Brexit withdrawal agreement is unlikely.

According to cabinet minister Michael Gove, "no-deal is now a very real prospect." The new prime minister has reportedly instructed Gove to chair no-deal meetings daily until Brexit is delivered and instructed new Chancellor Sajid Javid to step up preparations for it, the latter promising "significant extra funding" for 500 new Border Force officers and possible infrastructure for port improvements.

Whether this is a bullish bluff aimed at unsettling Michel Barnier, European Chief Negotiator for the United Kingdom Exiting the European Union, and his team in Brussels, Belgium, or a bold new strategy, it represents the first time a no-deal Brexit has been seriously prepared.

If it is to be accomplished in a few months' time, contentious issues such as enabling customs checks and ensuring no border between the Republic of Ireland and Northern Ireland, must be resolved. Technology has been raised by the European Research Group (ERG) as a possible "unique solution" to these issues, with a mix of big data and smart technology touted as a method for facilitating frictionless trade.

Confusing U.S. ban

The revamping of networks would have been easier to implement if the UK had begun rolling out 5G across the country as planned. Chinese telecommunications company Huawei Technologies Co. Ltd. had been given the green light in April to install its equipment in the network, something that would have made a technology-based Brexit possible. But constant flip-flopping by May has delayed this to such an extent that the government no longer is able to say if or when it will begin.

Prior to losing his position in Johnson's reshuffle, former Culture Secretary Jeremy Wright stated that the government was "not yet in a position" to decide on Huawei's future, citing the U.S. ban on selling components and technology to the company effective since May as a cause for concern.

Wright said the U.S. stance "could have a potential impact on the future availability and reliability of Huawei's products along with market impact, and so there are relevant considerations in determining Huawei's involvement in the network."

Like many, the British Government has been perplexed by the U.S. administration's policy toward Huawei. Having initially enforced the ban, the U.S. immediately softened its position by granting the company a temporary license to trade. The issue was then further complicated by the announcement in early July that the ban would be relaxed further, something analysts have described as a possible bargaining chip for trade talks between China and the U.S. that have just restarted.

The indecision has negatively affected British businesses, with one of the country's network operators O2 UK forced to choose Ericsson and Nokia technology over Huawei because of the government's muddled position.

"At the very least, we need clarity on who we can work with and under what circumstances," O2 UK's parent company Telefonica UK CEO Mark Evans told the British Broadcasting Corp. (BBC).

"Not having that clarity is frustrating because it could undoubtedly slow us down in either our decision-making or our execution," Evans explained. "So, I would still encourage the government to conclude their review and finalize their judgment ASAP."

Huawei has categorically denied that its technology poses any kind of danger, assuring ministers that it is safe. Huawei's Vice President Victor Zhang said the company is confident "that we can continue to work with network operators to roll out 5G across the UK."

Already, two UK network operators Vodafone and BT Group's EE have successfully used Huawei's equipment in their 5G networks without a hitch, while more recently, the Science and Technology Select Committee of the House of Commons chaired by Member of Parliament Norman Lamb found "no technical grounds" for excluding Huawei from the UK's 5G network.

"Following my committee's recent evidential session, we have concluded that there are no technical grounds for excluding Huawei entirely from the UK's 5G or other telecommunications networks. The benefits of 5G are clear and the removal of Huawei from current or future networks could cause significant delays," Lamb said.

5G post-Brexit

With no technical grounds to exclude Huawei, nor any evidence from Vodafone or EE to suggest any problems with the equipment, delaying the use of its technology needs to be reversed and quickly. A report titled The Impact on the UK of a Restriction on Huawei in the Telecoms Supply Chain by Assembly, a London-based analyst firm, concluded that further delays or inaction risk significant weaken of the UK's business environment.

The report was commissioned by the UK's four mobile network operators and stated that a delay of 18 months to two years would cost the UK between £4.5 billion ($5.4 billion) and £6.8 billion ($8.2 billion), as well as many of the benefits associated with being a 5G leader.

"The UK is currently well-placed to possibly be the first country to launch 5G at scale in the Western world, any delays will result in the UK missing the opportunity to be the host of pioneering experimentation," the report stated.

The UK stands to benefit greatly from 5G, with the government's Future Communications Challenge Group (FCCG) reporting in 2017 that estimates of the impact on the mobile sector would be £112 billion ($135.5 billion) by 2020, growing to £198 billion ($239.6 billion) by 2030, nearly 5.7 percent of the UK's GDP. Removing Huawei from its networks would seriously reduce that figure.

Delays would also see research and development opportunities in car manufacturing "lost" to countries such as Germany and the Republic of Korea, and hamper the "country's level of competitiveness," the report added. The UK could also suffer a loss of inward investment, according to the report, having made 5G a key pillar in its ability to attract companies to the country.

China's Ambassador to the UK Liu Xiaoming warned in June that any ban on Huawei could hurt Chinese investment in the UK. "It will send a very bad message not only to Huawei but also to Chinese businesses," Liu told the BBC, adding that blocking Huawei could lead to "bad effects not only on trade but also on investment."

This would be especially negative given that the UK received more Chinese investment in 2018—£3.84 billion ($4.6 billion)—than any other country. With the UK needing to lock in free trade agreements post-Brexit, Johnson will not want to rock the current "golden era" between the two countries.

Johnson has promised that leaving the EU will ensure greater freedom and prosperity for the British people but any dilly-dallying like the previous administration threatens to blunt that promise. With parliament about to break for its summer recess, Johnson has weeks to formulate the details of his master plan so his administration is ready once the legislature reconvenes to successfully leave by October 31.

A positive decision on Huawei offers Johnson the opportunity to kill two birds with one stone: to give the UK the 5G edge; and to prove that it is out with the old, indecisive, chaotic government that blighted May's tenure, and in with a new, clear thinking, organized government that will ensure that the promises made are kept, no ifs, no buts.

The author is an editorial writer for China Focus

Copyedited by Rebeca Toledo

Comments to yulintao@bjreview.com

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