Australia bans Huawei and ZTE from involvement in country’s 5G network in August 2018
Context
On August 23, 2018, the Australian government announced in a statement that companies “likely to be subject to extrajudicial directions from a foreign government” would be blocked from providing equipment for the country’s 5G mobile network – citing potential security risks. Although not mentioned by name, this measure was widely reported to target the Chinese firms Huawei and ZTE. A tweet from Huawei Australia’s account confirmed this, saying “[w]e have been informed by the Govt that Huawei & ZTE have been banned from providing 5G technology to Australia. This is a extremely disappointing result for consumers. Huawei is a world leader in 5G. Has safely & securely delivered wireless technology in Aust [sic] for close to 15 yrs.” Similarly, China’s complaint to the WTO Council for Trade in Goods states that the Australian Secretary of the Department of Communication and the Arts ” notified Huawei, ZTE, and Australian local telecommunication operators by telephone, on 22 August 2018, that Huawei and ZTE would be banned from participating in 5G projects in Australia.”
The context behind this measure is longstanding scrutiny and concerns in Australia over potential for security risks from Chinese firm involvement in telecommunications infrastructure. In 2012, Huawei was similarly blocked from involvement in the Australian National Broadband Network (NBN). One of the cited reasons for concern about Chinese enterpirises in particular was said to be , the Chinese National Intelligence Law of 2017, which requires Chinese enterprises to assist and cooperate with national intelligence institutions.
The basis of this measure against Huawei and ZTE was the Telecommunications Sector Security Reforms (TSSR) and specifically Security of Critical Infrastructure Act 2018, which provided (amongst other things) broad ministerial discretion to make directions through the power in Section 32 of the Act to issue directions where other legislation was inadequate to protect national security in relation to Critical Infrastructure Assets. Both Huawei and the Chinese Government have described the measure as ‘informal’, with Huawei stating :
“The TSSR legislation did not provide Huawei with any formal notification or reasons for theban. Our equipment was never tested, and Government officials never accepted repeated offers to inspect our manufacturing plants and review our cyber security processes. Nine years on from the NBN ban and two years on from the 5G ban Huawei does not know why the bans have been put in place and have still not received any formal notification about either of thebans. The lack of due and transparent process is deeply concerning.”
Impact
This measure is thought to have impacted Huawei more than ZTE, with the latter only previously maintaining a comparatively small presence in Australia. Both firms were reportedly previously shortlisted as candidates to provide supplies for Australian carrier Telstra’s new 5G network. Potential beneficiaries from this measure were therefore the two remaining major shortlisted vendors – Nokia and Ericsson.
In its submission to the Department of Home Affairs in response to the Security Legislation Amendment (Critical Infrastructure) Bill 2020 Huawei reported that the ban had had an acute impact on its business: “with nearly 1,000 job losses and over $100 million lost in ICT research and development funding here in Australia.”
Responses
[i] Chinese government and Industry Responses.
Huawei later responded further to the order with a statement that labelled the measure “politically motivated”, adding that “Chinese law does not grant government the authority to compel telecommunications firms to install backdoors, listening devices, or engage in any behavior that might compromise the telecommunications equipment of other nations”.
A spokesperson for China’s foreign ministry, Lu Kang, told press at a regular briefing that “[w]e urge the Australian government to abandon ideological prejudices and provide a fair competitive environment for Chinese companies’ operations in Australia”. Kang also told press that Beijing is “gravely concerned” over the move, and called on Canberra to refrain from “us(ing) various excuses to artificially set barriers”. And a statement from China’s commerce ministry said that “[t]he Australian government has made the wrong decision and it will have a negative impact to the business interests of China and Australia companies.” Meanwhile, Chinese state media reportedly called the decision a “stab in the back”, and suggested that “those who wilfully hurt Chinese companies with an excuse of national security will meet their nemesis.”
Similarly, the Chinese Minister Wang , Xining said in an address at Australia’s National Press Club in 2021 that “Australia was among the first to falsely accusing Huawei of possible data security threat. But up to now, there’s not a single evidence has been presented to substantiate such a claim. And secondly, Australia was among the first to ban Huawei into domestic telecommunication industry building. And Australia even persuaded others to follow suit. By doing so, Australia connived with the United States in a very unethical, illegal and immoral suppression of Chinese companies. It occurred to Chinese company this time and later it will happen to other companies from emerging countries.”
Allegations were also made in Australian media in June 2020 that cyber attacks on Australian government and industry targets were thought by two former Australian officials to be partly in retaliation for this measure.
[ii] Australian Government and Industry Responses
Notably, this decision took place in the middle of a separate domestic leadership crisis in Australia, which complicated the messaging around the measure. Reflecting on the decision in March 2019, (now former) Prime Minister Malcolm Turnbull, said that the decision of his former government was intended to be a “hedge against adverse contingencies” adding that “in an uncertain world, (we have to) hedge against contingencies where people who we have friendly relations with, we may not necessarily be friends with in the future”. In October 2018, the head of the Australian Signals Directorate (ASD) spy agency, Mike Burgess, stated publicly that the decision was “supported by technical advice from our agency” and that “my advice (to the government) was to exclude high-risk vendors from the entirety of 5G networks” due to the fact that “a potential threat anywhere in the network is a threat to the whole network.” There also appears to have been coordination with the US.
Australian mobile phone carrier Vodaphone, which has a business relationship with Huawei, voiced opposition to the measure. The firm’s chief strategy officer for Australia, Dan Lloyd, told press that the decision “creates uncertainty for carriers’ investment plans”, adding that “[t]his decision is a significant change which fundamentally undermines Australia’s 5G future, and we will consider what it means for our business.”
WTO Dispute
On 9 October 2018, China first raised the issue of Australia’s ban in the formal meeting of the WTO Committee on Market Access, and raised the issue again in 2019, 2022, 2023 & 2024. See AUSTRALIA – DISCRIMINATORY MARKET ACCESS PROHIBITION ON 5G EQUIPMENT (ID 39) in the WTO Trade Concerns Database and AUSTRALIA – DISCRIMINATORY MARKET ACCESS PROHIBITION ON 5G EQUIPMENT (ID 131)
Status
Huawei and ZTE remain banned from supplying Australia’s 5G infrastructure.
Key Takeaways
This was a case where the imposing state, Australia, was proactively guarding itself against the future weaponization of the same industry. It spent years gaming the network to see if mitigation efforts would suffice to allow Chinese firms could be involved in the country’s 5G network.
References and Further Information
Bermingham, F. 2019. “Australia’s Huawei 5G ban is a ‘hedge’ against future Chinese aggression, says former prime minister Malcolm Turnbull.” South China Morning Post. March 29. Available at: https://www.scmp.com/economy/china-economy/article/3003715/australias-huawei-5g-ban-hedge-against-future-chinese
Bloomberg. 2018. “Australia bans Huawei, ZTE from working on 5G networks.” The Japan Times. August 23. Available at: https://www.japantimes.co.jp/news/2018/08/23/ business/australia-bans-huawei-zte-working-5g-networks/
Burgess, Mike, (2018) “Director-General ASD speech to ASPI National Security Dinner” available online at https://www.asd.gov.au/news-events-speeches/speeches/director-general-asd-speech-aspi-national-security-dinner#:~:text=In%20consultation%20with%20operators%20and,entirety%20of%20evolving%205G%20networks.
Chirgwin, R. 2018. “Australia blocks Huawei, ZTE from 5G rollout.” The Register. August 23. Available at: https://www.theregister.com/2018/08/23/australia_blocks_huawei _zte_from_5g_rollout/
Fernyhough, James, (2019) “Australia’s Huawei ban on shaky ground at WTO” April 15, Australian Financial Review, available online at https://www.afr.com/policy/foreign-affairs/australia-s-huawei-ban-on-shaky-ground-at-wto-20190415-p51ebi
Grigg, A. & Murray, L. 2018. “Federal government bans Huawei, ZTE from 5G on security concerns.” The Australian Financial Review. August 23. Available at: https://www.afr.com/companies/telecommunications/federal-government-bans-huawei-zte-from-5g-on-security-concerns-20180823-h14cv0
Hawes, Colin, (2022) “Huawei: Critically assessing the 5G ban and commonly cited risks” US-China Relations Institute, available online at https://www.uts.edu.au/acri/research-and-opinion/analyses/huawei-critically-assessing-5g-ban-and-commonly-cited-risks
Hartcher, P. 2021. “Huawei? No way! Why Australia banned the world’s biggest telecoms firm.” Sydney Morning Herald. May 21. Available at: https://www.smh.com.au/ national/huawei-no-way-why-australia-banned-the-world-s-biggest-telecoms-firm-20210503-p57oc9.html
Huawei Australia. 2020. Huawei Australia submission to the Department of Home Affairs Security Legislation Amendment (Critical Infrastructure) Bill 2020 https://www.homeaffairs.gov.au/reports-and-pubs/files/critical-infrastructure-consultation-submissions/EDS067-CISoNS-Huawei.PDF
Huawei Australia. 2018. Tweet. Twitter. August 23. Available at: https://x.com/ HuaweiOZ/status/1032411216184930304
Jennett, G. 2018. “Huawei’s ban to 5G network ‘supported by technical advice’, spy agency chief says.” ABC News. October 30. Available at: https://www.abc.net.au/ news/2018-10-30/australian-signals-directorate-boss-explains-huawei-ban/10444064
Jennings, P. 2018. “Banning Huawei the right decision for Australia’s security.” ASPI. August 25. Available at: https://www.aspi.org.au/opinion/banning-huawei-right-decision-australias-security
Knaus, C. 2018. “Marise Payne defends 5G ban on Chinese telcos Huawei and ZTE.” The Guardian. August 27. Available at: https://www.theguardian.com/australia-news/2018/aug/27/marise-payne-defends-5g-ban-on-chinese-telcos-huawei-and-zte
Mullen, J. and Pham, S. 2018. “Huawei: Australia just banned us from selling 5G tech.” CNN Business. August 23. Available at: https://money.cnn.com/2018/08/22/ technology/huawei-australia-5g/index.html
Peng, S. 2015. “Cybersecurity Threats and the WTO National Security Exceptions”, 18(2) Journal of International Economic Law, 449–478. https://doi.org/10.1093/jiel/jgv025
Welch, D., Hui, E. & Dziedzic, S. 2020. “’Cyber attacks’ point to China’s spy agency, Ministry of State Security, as Huawei payback, say former Australian officials.” ABC News. June 19. Available at: https://www.abc.net.au/news/2020-06-19/cyber-attacks-likely-huawei-5g-ban-payback-from-china-spy-agency/12374374
Westbrook, T. & Kaye, B. 2018. “China’s Huawei slams Australia 5G mobile network ban as ‘politically motivated’”. Reuters. August 24. Available at: https://www.reuters.com/ article/technology/chinas-huawei-slams-australia-5g-mobile-network-ban-as-politically-motivated-idUSKCN1L72GC/#:~:text=HONG%20KONG%2FSYDNEY%20(Reuters),as%20being%20%22politically%20motivated%22.