‘Don’t buy Huawei or we’ll rethink investment,’ US tells Brazil

Todd Chapman US ambassador.jpg

The US is pushing Brazil to ban Huawei and instead insist its telecoms companies use Scandinavian suppliers Ericsson and Nokia for their 5G networks, with US financial help.

Todd Chapman (pictured), US ambassador to Brazil, is leading the call. In an interview with São Paulo newspaper Folha he said it was an issue of national security, in order to protect data and intellectual property and “the sensitive information of nations”.

He gave a strong hint that Brazil’s decision on Huawei would affect US investment policy in the country. “All of this has an impact on the investment climate in the country,” he said, according to Folha. “I hope that we will have, here in Brazil, a decision that will satisfy your national, economic and security interest.”

Huawei has always denied that it facilitates spying by the Chinese government. The US and other countries – notably Australia – have banned operators from buying Huawei equipment, and the UK is putting strict limits on purchases.

The US Department of Commerce (DoC) last year put it on its so-called entity list, which bans US companies and citizens from trading with it.

Meanwhile the DoC agreed yesterday to ease the restrictions on US companies dealing with Huawei, to help ensure a single global standard for 5G. Many in the industry had expressed concerns that US action would lead to a global split in standards, leaving US companies unable to supply most of the world.

The DoC said: “This action is meant to ensure Huawei’s placement on the entity list in May 2019 does not prevent American companies from contributing to important standards-developing activities despite Huawei’s pervasive participation in standards-development organizations.”

Back in Brazil, where President Jair Messias Bolsonaro is a strong ally of US President Donald Trump, Huawei has already conducted 5G tests with all four operators, América Móvil’s Claro, Oi, Telefônica Brasil and TIM. Huawei was believed to be prepared to spend US$800 million on building a factory in São Paulo for 5G equipment.

Brazil’s regulator, the Agência Nacional de Telecomunicações (Anatel, National Telecoms Agency) is planning to auction spectrum for 5G services in November 2020, ready for deployment to start in 2021. Observers expect operators to bid almost $4 billion for licences, which will cover spectrum in the 700MHz, 2.3GHz, 3.5GHz and 26GHz bands.

In his interview with Folha de São Paulo, Chapman said that extra funding for operators to use Ericsson and Nokia rather than Huawei would come from the US International Development Finance Corporation, set up in 2018 to offer soft loans in competition with China’s Development Bank.

Chapman told the newspaper: “There have been some conversations in Brazil, including with my participation. And this is also happening in other parts of the world. It’s not only in Brazil that we want to work with Ericsson and Nokia.”