U.S. President Donald Trump’s decision to lift some restrictions on Chinese communication giant Huawei could provide a big boost to Latin American telecommunications interest, especially its move to 5G technology. It will also provide a boost to Huawei’s bottom line.
Trump reversed course following a meeting with Chinese President Xi Jinping at last week’s G20 summit in Japan.
“I had a good talk with President Xi Jinping and feel much better about things and have decided to relax the restrictions [on Huawei],” Trump said Friday, pointing out that some restrictions remain in place.
Although some Latin American countries had already planned to defy U.S. wishes that they limit business with Huawei, the latest news removes the pressure. “This will have a big impact in several areas,” says BDO Global expert Alex Sanchez. “It means that most Latin American countries will have no qualms about pushing ahead with 5G cell tests with Huawei and, since Huawei is the clear leader in the field, it means that they will have access to best technology available. It also means that Huawei has a clear path dominance in the cell phone market.”
Within the past two years, Huawei has overtaken Samsung and Apple as the top cell phone vendor in several countries, including Ecuador. “With the lifting of restrictions, it is almost certain that Huawei will rule the market just as it will car sales,” Sanchez says.
In May, the U.S. Commerce Department banned sales of American-made goods and services to Huawei without first obtaining a license. U.S. officials accused the company of working to undermine U.S. national security and foreign policy interests.
Trump said Huawei was still part of the ongoing trade discussions between Washington and Beijing, but for now, he would move to resume allowing U.S. companies to sell parts, software and services to the Chinese firm.
Not everyone is happy about Trump’s decision. “Trump caved in to politics,” claims Clive Mattheson of the German tech security firm 4Points. “South America may benefit in the long term but the security risk remains, although it is much more serious for the U.S. The intelligence advice about Huawei was correct in the first place — they do follow the bidding of the government and engage in spying — so Trump was operating from a position of expediency. There is also the issue of human rights, which factor into to Huawei’s labor model, but when money is involved that seems to fade to the background.”
Sanchez agrees that politics played a major role in Trump’s decision. “Of course it did and it means that Latin America and the rest of the world will pay less attention the next time the U.S. advises other countries not to do business with Huawei or any other Chinese company.”