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EU Gives Governments Scope for Bans on Some 5G Suppliers

Natalia Drozdiak

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The European Union will advise member states to consider banning some suppliers from parts of their 5G networks, in a policy document that may give them more scope to restrict the activities of China’s Huawei Technologies Co.

The proposal is part of a so-called “toolbox” of measures seen by Bloomberg, to help national governments mitigate risks arising from 5G mobile technology. The recommendations will help coordinate the policies of member states to reduce the likelihood of espionage and sabotage.

While the measures don’t explicitly mention China, they will help EU governments decide whether to limit the access of Huawei and other Chinese vendors to 5G as phone companies accelerate investment in the technology.

Member states will act following risk assessments that take into account criteria outlined in a previous report, such as the “democratic checks and balances” in the home country of the supplier, according to the proposals.

The document is due to be unveiled by senior EU officials next Wednesday. The proposals also include bolstering the role of national authorities, audits of telecom operators and measures to ensure diversity of suppliers for any single telecommunications company.

5G promises to fix data bottlenecks in busy areas and open up more sophisticated mobile applications such as augmented reality gaming and mapping. The technology will also be used to connect factories, transportation systems and critical infrastructure.

U.S. officials have long urged European governments to exclude Huawei from their networks, arguing it threatens their national security. Huawei and Chinese officials have repeatedly denied the company poses a spying risk.

Despite the U.S. lobbying, the long-anticipated document won’t point to a blanket European ban of Chinese companies from lucrative 5G contracts.

The proposals do, however, include stricter screening of foreign direct investment in the area of 5G, to avert takeovers of companies deemed critical for network security. The document also proposes anti-dumping duties and other penalties for companies benefiting from state subsidies, in what could pave the way for import levies on Chinese equipment.

Joint Approach

The European Commission’s own powers are limited as decisions to ban companies for national security reasons rest strictly with member states.

The wording of the toolbox and the political agreement leave room for countries to interpret the guidelines as they wish. Telecom companies in various European countries have already struck deals with Huawei on 5G.

Still, the attempt at a coordinated approach among EU members may avoid potential U.S. or Chinese retaliation against a single European country.

Many governments are wary of angering Beijing, a significant trading partner. China’s ambassador to Germany, Wu Ken, warned last month that a Huawei ban would result in consequences, and cited German auto sales in China. The U.S. is an important security ally that has said repeatedly it may reassess intelligence sharing with countries that use Huawei in their 5G networks.

British Culture Secretary Nicky Morgan has said the U.K. plans to keep Huawei out of critical national infrastructure. A final decision is expected later this month.

(Updates to add context on U.S., China from 10th paragraph)

To contact the reporter on this story: Natalia Drozdiak in Brussels at ndrozdiak1@bloomberg.net

To contact the editors responsible for this story: Nikos Chrysoloras at nchrysoloras@bloomberg.net, ;Giles Turner at gturner35@bloomberg.net, Thomas Pfeiffer, Rebecca Penty

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