Macron's answer to Trump's threat: Europe won't block Huawei

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PARIS (May 16): Donald Trump’s latest offensive against China’s Huawei Technologies Co puts Europe in an even bigger bind over which side to pick, but France’s Emmanuel Macron is holding the line.

With a stroke of his pen, the U.S. president signed an executive order to curb the Chinese telecom giant’s access to the U.S. market and American suppliers. His action could affect Europe, already caught in the cross hairs of a trade war, because it could impede the global roll-out of the fifth-generation networks.

In the first public comments by a European leader since Wednesday’s move by Trump, Macron told Bloomberg Television that he doe not intend to capitulate to U.S. pressure to block Huawei’s 5G equipment. France, Germany and the U.K. are among the key allies balking at American demands to shut Huawei out completely from 5G network construction — or risk retribution.

“Our perspective is not to block Huawei or any company,” Macron said at a technology conference in Paris. “France and Europe are pragmatic and realistic. We do believe in cooperation and multilateralism. At the same time, we are extremely careful about access to good technology and to preserve our national security and all the safety rules.”

Macron’s remarks reflect the mood across the region. While Germany plans to tighten the rules governing the security of its telecom networks, Chancellor Angela Merkel has made it clear she won’t single out any one supplier. The U.K., which has yet to announce a decision, is considering excluding Huawei equipment from the network’s core, which houses control functions, while allowing it to supply antennas and other parts for less-sensitive functions, people familiar with the matter said last month.

U.S. suppliers to Huawei including Lumentum Holdings Inc. and Qualcomm Inc are indicated to open lower, after shares in Asian suppliers including Sunny Optical Technology Group Co and AAC Technologies Holdings Inc tanked on Thursday. In Europe, STMicroelectronics NV fell, while Huawei competitor Nokia Oyj gained. Huawei has said it devotes about a third of its budget — some US$11 billion annually — to the acquisition of American components. It counts 33 U.S. companies among its top 92 suppliers.

Huawei has repeatedly denied that its equipment contains backdoors for Chinese state-ordered espionage. The Shenzhen-based company is willing to come up with ways to ensure that its products are secure and is committed to foster dialogue with Europe, it said in an emailed statement Thursday.

“In past 30 years, Huawei hasn’t had any cyber security issues,” Vincent Pang, who heads Huawei’s western Europe business, said in a speech at the Paris tech conference on Thursday. “Closed doors doesn’t make it better for anybody.”

The U.S. conflict with China has been likened to the Cold War with the Soviet Union. For Europe, it’s a delicate balancing act that has leaders trying to honour the close partnership with the U.S., with a desire to increase business with China, its second-largest trading partner.

Macron spoke meters away from Huawei’s stand at the Paris Viva Technology Conference 2019, but did not stop to greet anyone at the Chinese company.

“I think launching a trade or tech war vis-a-vis any country is not appropriate,” he said. “First, it’s not best way to defend national security, second it’s not best way to the defend the ecosystem.”