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Britain’s Decision to Ban Huawei

What is it about?

On Tuesday, the British government announced its decision to ban Huawei from Britain’s 5G network. Huawei will be removed from the networks by 2027 and no new Huawei 5G kit can be purchased from next year. Huawei was told that part of the reason for this decision was geopolitical reason stemming from America’s pressure on Britain to choose between blocking Huawei and continue being America’s ally or accepting Huawei but losing the relationship with America.

Britain’s decision has put further pressure on other European countries to take a similar approach, but it still remains unclear whether this would become the case. In January, the EU published recommendations suggesting that member states should restrict or exclude high-risk 5G suppliers like Huawei from key parts of their telecoms networks. However, these recommendations don’t meet America’s expectation of a total ban, and many countries like Sweden and Spain are still hugely involved with Huawei. Countries like France have firmly said it will not impose a total ban on Huawei.

Thinking beyond

China responded to Britain’s announcement by saying such a decision is “groundless” and “disappointing”. Since China plays a huge role in the British economy, it is expected that Britain’s decision will have negative implications for its relationship with China. In 2019, China was the third-largest export market for the UK: 4% of the UK goods and services were exported to China. First and second were the US and the EU. Britain exports a wide range of products from motor vehicles and medicines to various luxury brands to Chinese consumers. Britain’s ban on Huawei is likely to affect its relationship with other Chinese companies and may reduce Chinese investment in Britain. Given that the Brexit transition period is nearly coming to an end and there is still uncertainty on whether Britain can maintain trade deals similar to those it enjoyed as an EU member, losing the Chinese market may have huge ramifications in the British economy.

A possible reduction in deals between Chinese and British companies may affect law firms like HSF that do a lot of deals with Chinese clients. They may face a fall in the number of deals across various industries if the relationship between the two countries deteriorates and affects their economic relationship as a whole, not just the telecommunication trade. To make up for this potential damage on the revenue coming from Chinese clients, affected law firms may have to increase their focus on clients and deals in other countries.

UK law firms will have to be prepared to advise on the new rules that will be introduced under the Telecoms Security Bill to implement the ban on Huawei. This new Bill will give powers to the UK government to take measures to protect national security in the telecoms industry and create security duties on network operators.

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