EU deals another blow to U.S., allowing members to decide on Huawei's 5G role

BRUSSELS (Reuters) - The EU followed Britain’s example on Wednesday, allowing members to decide what part China’s Huawei Technologies [HWT.UL] can play in its 5G telecoms networks and resisting pressure from Washington for an outright ban.

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EU countries can either restrict or exclude high-risk 5G vendors like Huawei from core parts of their telecoms networks, according to the new guidelines, which seek to address the cybersecurity risks to the bloc’s 28 countries at a national and EU level.

Britain granted Huawei a limited role in its 5G mobile network on Tuesday, frustrating an attempt by the United States to exclude the Chinese telecoms giant from the West’s next-generation communications.

Huawei is the world’s biggest producer of telecoms equipment, competing with Sweden’s Ericsson and Finland’s Nokia.

The United States wants the world to ban Huawei from 5G networks on fears that its gear could be used by China for spying, allegations which have been strongly rejected by the company.

The European Union sees 5G as key to boosting economic growth and competing with the United States and China and its recommendations, agreed by EU members, are that individual countries assess the risks and decide whether to exclude suppliers from core infrastructure, confirming a Reuters report on Jan. 22.

The approach means non-EU providers are welcome in Europe as long as they comply with the rules, Europe’s industry chief Thierry Breton told a news conference.

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“We are not picking on anybody, we are not ostracizing firms,” he said.

Huawei welcomed the guidelines, describing them as non-biased and fact-based.

EU governments were advised to use several 5G providers rather than depend on one company. The providers should be assessed on technical and non-technical factors including the risk of interference by state-backed companies, according to the guidelines.

The Commission said it was ready to bolster the bloc’s 5G cybersecurity by using trade defense tools against dumping or foreign subsidies.

The battle over Huawei has been compared to the Cold War antagonism with the Soviet Union. The United States is worried that 5G dominance is a milestone toward Chinese technological supremacy that could define the geopolitics of the 21st century.

The EU, however, is hoping a collective approach based on a checklist of risks and targeted measures will take some of the U.S. pressure off.

Lobbying group ETNO, whose members include Deutsche Telekom, Orange and Telefonica who all use Huawei equipment, had warned against disproportionate actions which may affect their investments.

“Europe’s decision-making on 5G should continue being based on facts, it should be proportionate to threats and build on a solid understanding of technology reality,” ETNO said in a statement.

EU countries have until April to implement the guidelines and June to report on their progress.

Reporting by Foo Yun Chee, additional reporting by Philip Blenkinsop; Editing by Elaine Hardcastle