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Contracts, Huawei and the US Government

October 22, 2012

It is understandable that Governments are concerned about security. The decision by the House Intelligence Committee that US Government agencies should be barred from doing business with the Chinese companies Huawei and ZTE will not be a surprise to many – but does it make sense?

The US has been a major beneficiary from global commerce and in particular from the revolution in technologies that created today’s networked world. Having failed to recognize its implications, politicians run the risk of responding with a pointless and self-defeating response. In particular, it is hard to see how the US can benefit if its actions contribute to increased tensions in international trade and a potential   downturn in world commerce.
The argument used against Huawei and ZTE is that Chinese intelligence equipment could be embedded in products destined for use in the United States. In itself, that could be true (perhaps the Committee is aware of similar actions by US intelligence services in domestically produced equipment, but of course they make no mention of that!). But even if the concern is legitimate, the response still makes no sense.
The only real alternatives to Huawei and ZTE are Ericsson and Alcatel, and almost all their equipment is manufactured in China, often by outsourced manufacturers.
The conclusion one must draw is that the committee has ignored the real issues and actually failed to deliver anything that might result in increased security. Other countries share the concern, but are following a different path to addressing it. This largely hinges around inspection processes, in which one would think the US would be a leader. There are just too many reasons why this is a bad decision.
 The real ‘security warning’ should perhaps be over the apparent partisan incompetence of this committee, where politics seems to have transcended judgment.
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