“Latin America and the conflict between China and the United States”, by Farid Kahhat

We said in a previous article that the competition to prevail in the acquisition and commercialization of state-of-the-art technologies could be one of the areas least susceptible to a negotiated solution in the economic conflicts between China Y U.S.

Within them, the conflicts around the fifth generation of telecommunications technologies (known as 5G, which offer to multiply by 10 the information transmission speed that 4G technology allowed) play a fundamental role.

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We already have some cases that indicate the peculiarities that this conflict would have in Latin America. The recent case of greatest interest (due to the size of its market) is that of the tenders for the laying of the 5G network in Brazil. These tenders had to be postponed due to differences between the governments of Brazil and the United States regarding the role that the Chinese company could play in them. Huawei.

The United States alleges that Chinese technology companies are required by law to share information with their country’s intelligence services, so their participation would imply security risks (in the case of Germany, for example, the United States threatened to stop sharing intelligence information with that country if it allowed Huawei to participate in the laying of its 5G network).

Although these security concerns are well founded, the fear was that they would become a pretext for protectionist policies (Donald Trump explicitly raised this possibility when he said that “we cannot allow any country to overtake the United States in this powerful industry from the future”). As the UK government argued at the time, excluding Huawei from certain sensitive areas of its 5G network was enough to avert legitimate security concerns, not from the entire process.

The auctions in Brazil suggest that, unlike the Trump administration, the Joe Biden administration is willing to accept arguments like that. In the auctions that took place in Brazil, for example, excluding Huawei entirely would have been prohibitively expensive, given that the Chinese company provided the companies that participated in the auctions with more than half of their wireless networks. The transaction formula was that the Brazilian federal government agencies would have their own network from which Huawei would be excluded. It was not formally an exclusion in its own right, since it was based on corporate governance conditions that listed companies had to meet if they wished to participate in the tenders (conditions that Huawei would not meet).

Although it may be too early to claim victory, so far the compromise formula offered by the Brazilian Government does not seem to have received major objections from the governments of China or the United States. It is not clear that the same will happen in the Ecuadorian case, given that, according to a report by the newspaper “Financial Times”, the International Development Finance Corporation (official entity of the United States Government), agreed with Ecuador to help it pay its debt to China in exchange for excluding companies from that country from its telecommunications networks .

The political nature of that agreement was so obvious that the executive director of the corporation in question, Adam Boehler, called it a “novel model” to exclude China from countries like Ecuador. It is hard to believe that the Chinese government will accept such transactions in the same way as it did with the tenders held in Brazil (where Huawei was only excluded from a relatively minor part of the business).

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Source: Elcomercio