What has just happened?
On Tuesday 14th July, Oliver Dowden, the UK Secretary of State for Digital, Culture, Media, and Sport announced a UK ban on Huawei supplying kit for the construction of the country’s 5G mobile phone network and that by 2027 all existing Huawei equipment integrated into the network will be removed. This is a U-turn from the position the government took in January when Boris Johnson declared that the Chinese company could have a limited role as a 5G supplier[1].
What does this mean?
In 2019, Huawei took an estimated market share of 28% of the telecoms equipment sector, making the company the world’s largest supplier. It was also the second-largest manufacturer of mobile phones, after Samsung and ahead of Apple[2].
It is, therefore, possible that the reason for the UK government’s U-turn on the matter can largely be attributed to fears over the security of customer data linked to the company’s involvement in the 5G network. Conclusions were drawn that too heavy a reliance on the Chinese company would leave the UK network and infrastructure vulnerable to disruption in services and major security threats[3] from the company, which would be unable to resist orders to give customer data over to the Chinese government under China’s national security laws[4]. Indeed, Australia imposed a similar ban in 2018, after the country’s intelligence services expressed concerns that the company could shut down power networks and other key parts of its infrastructure in the event of a diplomatic crisis[5].
Trump, who has a long-standing distrust of China and its international business interests, prohibited US companies from working with Huawei in 2019 and exerted his influence to persuade other governments to do the same. A notable example is the reported “apoplectic fury” the president displayed during a phone call to Boris Johnson after the UK agreed to allow Huawei to be a part of UK 5G in January[6]. Whether Trump’s geopolitical vendetta has grounds remains to be seen, however, this move confirms the UK’s submission to US policies.
China’s reaction to the news echoes this opinion. The Chinese ambassador to the UK, Liu Xiaoming, said that his government was not asking Britain to choose a side, but rather encouraged Johnson and his cabinet to pick the right side of the argument. “Britain can only be Great Britain when it has an independent foreign policy,” he added[7].
There has been speculation that US policy (and consequently UK policy) regarding Huawei services and products could be repealed in the event of Joe Biden winning the presidential election in November. However, Dowden has stated that he has no reason to believe this would be the case, given that there has been a “bipartisan consensus” on the matter[8]. What the minister has failed to account for are the supply chain challenges for British telecommunications companies and foreign companies with branches in the UK, with Huawei supplying large providers such as BT and Vodafone[9].
How does this impact the legal sector?
The move consolidates the lack of trust between the UK and China, especially in the wake of the political unrest over the issue of Hong Kong. This ban could, therefore, precipitate the beginning of a mass exodus of Chinese business interest in the UK. This is a particularly disastrous prospect given the UK’s imminent exit from the European Union and the ties successive UK governments have forged with the Asian superpower. Johnson’s cabinet will be left with less power in negotiating trade deals with other countries, particularly the US.
In strict terms of the legal sector, whether the decision is based on genuine cybersecurity concerns or political strategy, the intellectual property segment will see the most impact in light of these events. The US government has alleged cases of intellectual property theft in China with US technology being stolen. A similar thing could happen in the UK too, but in reverse – the UK government feel it is legitimate to use Huawei’s technology when building the base stations and networks for 5G[10].
Additionally, Johnson’s primary move of capping Huawei’s market share at 35% may also set a precedent for legislation to come into place setting this limit for all companies.
Written by Hannah Phelvin
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References:
[1] Nic Fildes and Helen Warrell, ‘Why the UK has decided to ban use of Huawei’s 5G kit’, (Financial Times, 14th July 2020)
[2] Dan Sabbagh, ‘What is Huawei and why is its role in 5G so controversial?’, (The Guardian, 15th July 2020)
[3] Nic Fildes and Helen Warrell, ‘Why the UK has decided to ban use of Huawei’s 5G kit’, (Financial Times, 14th July 2020)
[4] Nick Ismail, ‘The Huawei situation: the legal and intellectual property implications for businesses’, (Information Age, 17th June 2019)
[5] Dan Sabbagh, ‘What is Huawei and why is its role in 5G so controversial?’, (The Guardian, 15th July 2020)
[6] Ibid.
[7] Patrick Wintour and Lily Kuo, ‘UK ban on Huawei in 5G network groundless, says Chinese ambassador’, (The Guardian, 15th July 2020)
[8] Stefan Boschia, ‘Oliver Dowden: Joe Biden presidency will not change UK Huawei sanctions’, (City A.M, 22nd July 2020)
[9] Dan Sabbagh, ‘What is Huawei and why is its role in 5G so controversial?’, (The Guardian, 15th July 2020)
[10] Nick Ismail, ‘The Huawei situation: the legal and intellectual property implications for businesses’, (Information Age, 17th June 2019)
Disclaimer: This article (and any information accessed through links in this article) is provided for information purposes only and does not constitute legal advice.