WASHINGTON — Vice President Mike Pence acknowledged Friday that the United Kingdom’s recent decision to grant Chinese telecommunications giant Huawei access to its 5G mobile networks could jeopardize trade talks between the United States and the U.K.

Asked whether the Huawei decision was a deal breaker, Pence told CNBC’s Wilfred Frost: “We’ll see.”

“We are profoundly disappointed because look, when I went at the president’s direction in September I met with Prime Minister Johnson and I told him the moment the U.K. was out of Brexit we were willing to begin to negotiate a free trade arrangement with the U.K.,” Pence said.

“But we just don’t believe that utilizing the assets and technologies of Huawei is consistent with the security or privacy interests of the U.K., of the United States and it remains a real issue between our two countries,” he added.

Pence added: “We’re anxious to build our economic ties, but we have made it clear to Prime Minister Johnson and to officials in the U.K., that as we expand opportunities to build out 5G across this country … we want to see our companies meet the needs in the United States and U.K. and among all our allies without the compromise of privacy and the compromise of security that necessarily comes with Huawei and control by the Chinese Communist Party.”

Last month, the Trump administration expressed disappointment after the U.K. announced it would allow Huawei to have limited access to some British 5G mobile networks.

“The United States is disappointed by the U.K.’s decision,” a senior Trump administration official wrote in a Jan. 28 emailed statement to CNBC. The official added that the Trump administration will work “with the U.K. on a way forward that results in the exclusion of untrusted vendor components from 5G networks.”

Trump has said that he would seek a major trade deal with the United Kingdom after the country left the European Union.

“We’re having very good trade talks between the U.K. and ourselves. We’re going to do a very big trade deal, bigger than we’ve ever had with the U.K.,” Trump said at the Group of Seven summit in August.

“At some point, they won’t have the obstacle of, they won’t have the anchor around their ankle, because that’s what they had. So, we’re going to have some very good trade talks and big numbers,” he said, without adding anymore details on a potential deal.

The latest development comes as the Trump administration works to isolate Huawei from developing a larger foothold in U.S. partner countries. The administration has specifically worked to keep members of the “five eyes” intelligence-sharing group — the U.S., U.K., Canada, Australia and New Zealand — from working with Huawei.

In 2018, the Pentagon halted sales of Huawei and ZTE mobile phones and modems on military bases around the world due to potential security risks.

“We continue to urge all of our partners and allies to carefully assess the multifaceted impacts of allowing untrusted vendors access to important 5G network infrastructure,” Pentagon spokesman U.S. Army Lt. Col. Dave Eastburn wrote in a statement to CNBC.

“It’s been assessed that there is no safe option for untrusted vendors to control any part of a 5G network,” Eastburn added.

Long-standing concerns

View of the Huawei Germany headquarters.

Rolf Vennenbernd | Picture Alliance via Getty Images

U.S. officials have long complained that Chinese intellectual property theft has cost the economy billions of dollars in revenue and thousands of jobs and that it threatens national security. China maintains that it does not engage in intellectual property theft.

When asked about the issue by CNBC on his first day as secretary of Defense, Mark Esper said he was “very concerned about Chinese technology getting into our systems or the systems of our allies.”

“Huawei is the poster child right now for that,” Esper said, adding that the U.S. trade war with China is as much about national security as it is about the economy.

“When I was in Brussels three weeks ago we talked about this among defense ministers, on how do we preserve the integrity of our networks as an alliance, and so that will continue to be important for me as we go forward,” he said in July, referring to a NATO visit he made while he was acting Defense secretary.

Read more: New Defense secretary: ‘We need to be very concerned’ about Chinese tech

Last year, in spite of national security warnings, then-U.K. Prime Minister Theresa May reportedly approved a plan to let Huawei build part of the U.K.’s 5G network.

Her decision was leaked, resulting in the dismissal of then-Defense Secretary Gavin Williamson.

Gavin Williamson, U.K. defence secretary, arrives for a weekly meeting of cabinet ministers at number 10 Downing Street in London, U.K., on Tuesday, April 23, 2019.

Bloomberg | Bloomberg | Getty Images

Williamson has denied that he was the source of the leak.

A month before Williamson’s departure, then-Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford said that if U.S. allies proceed with Huawei’s equipment, intelligence cooperation could be undermined.

“One of the things that underlines an alliance is the ability to share information and when we share information with allies and partners we have to have common standards of information assurance. We have to be sure that our secrets are protected, whether it be intelligence or technology transfer,” Dunford told a House Appropriations subcommittee in April 2019.

Echoing Dunford’s sentiments, then-acting Secretary of Defense Patrick Shanahan told lawmakers that “China aims to steal its way to a China-controlled global technological infrastructure, including 5G.”

“Huawei exemplifies the Chinese Communist Party’s systemic, organized, and state-driven approach to achieve global leadership in advanced technology.”

Acting U.S. Secretary of Defense Patrick M. Shanahan and Marine Corps Gen. Joe Dunford, chairman of the Joint Chiefs of Staff, give testimony on the Department of Defense budget posture in review of the Defense Authorization Request for Fiscal Year 2020 and the Future Years Defense Program at the Dirksen Senate Office Building, March 14, 2019.

Navy Petty Officer 1st Class Dominique Pineiro | Department of Defense photo

What’s more, the director of national intelligence, alongside the heads of the FBI, CIA, NSA, Defense Intelligence Agency and National Geospatial-Intelligence Agency testified before lawmakers in 2018 on potential security risks posed by Huawei and ZTE.

“We’re deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks,” FBI Director Christopher Wray told the U.S. Senate Intelligence Committee.

“It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage,” Wray added.

Huawei’s denials

Huawei and ZTE have previously denied allegations that their products are used to spy on Americans.

Since 2012, the U.S. government has warned against using Huawei equipment and component parts, alongside one of Huawei’s Chinese competitors, ZTE. The company has been effectively banned since that time, with an executive order from Trump making those recommendations official.

“U.S. government systems should not include Huawei or ZTE equipment,” a 2012 report by the Permanent Select Committee on Intelligence said. “Similarly, government contractors, particularly those working on contracts for sensitive U.S. system, should exclude ZTE or Huawei equipment from their systems.”

As for Huawei’s alleged ties to the Beijing government, the company has strongly denied the accusations. The 2012 report and subsequent intelligence briefings on Huawei do not outline specific proof of Huawei’s ties to Beijing, but assert that the risk of allowing Huawei to supply this critical equipment is too great. Huawei officials have said they have repeatedly asked the Department of Defense to allow the company to submit to a risk mitigation process, but no agreement has ever been discussed.

Read more: Huawei USA security chief suggests the company could be open to ‘mitigation measures’

“The task of finding and eliminating every significant vulnerability from a complex product is monumental,” the report reads. “If we consider flaws intentionally inserted by a determined and clever insider, the task becomes virtually impossible.”



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‘We’ll see’ if UK decision on Huawei is a deal breaker for a trade deal

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