Why a settlement with Huawei rather than cutting it off is in the US’ best interests
- As American allies like the UK and Germany seem unlikely to ban the Chinese telecoms giant, the US should capitalise on its current position of strength to negotiate an agreement that constrains Huawei’s ability to pose a security threat
As Canada’s consideration of the American extradition case plays out, experience suggests Beijing may find ways to increase its pressure on Ottawa, deepening Western suspicions that Huawei is in fact an instrument of the Chinese state.
Before it becomes too late, it might be worth asking a few questions about the implications of pursuing the Huawei case in the present mode. First, is delinking the US and Chinese tech industries the best way to constrain competition for the mantle of scientific and technical leadership?
By ending the profitable transfer of equipment and services to China’s hi-tech industries, will the US and its partners effectively constrain China or will it empower the Chinese eventually to develop separate standards and foundational technologies that will Balkanise the hi-tech sector and potentially reduce the markets for US products?
Has the US lost self-confidence in its technical prowess, the strength and creativity of its academic institutions, and the power of its openness and competitiveness?
The leverage that Washington has today over Huawei is extremely strong, but judging from the reactions of US partners, such as the UK, Germany and possibly others, this may not be the case for long.
US policymakers should now consider allowing the Department of Justice to negotiate a settlement of its charges against Huawei that could address multiple objectives in exchange for giving Huawei access to the US and other markets:
- Reorganise internal management to include US-nominated officers responsible for the firm’s research and development and operations
- Give the US a veto over personnel in other sensitive corporate areas
- Impose fines to penalise Huawei for its past transgressions
- Put in place mechanisms and/or escrow funds against future misdeeds
- Offer conditional access to American hi-tech equipment and services
Before such a settlement is implemented, diplomatic channels should be used to ensure the release of the Canadians held by China, possibly in exchange for decriminalising the charges against Huawei’s chief financial officer. If Huawei or China refuses to come to terms, the current policy would play itself out at huge expense to Huawei and China, and potentially to the US.
Co-optation looks like a better outcome for all than cutting Huawei off.
Douglas H. Paal is vice-president for studies and director of the Asia Programme at the Carnegie Endowment for International Peace