When elephants play rough, ants should get out of the way. But sometimes, getting away is easier said than done.
That’s our situation today. The US State Department just issued an announcement that escalated the trade war involving Huawei. Whichever way we look at it we will be affected by this latest move of the US government.
I hope more people in government and in the private telecom and banking sectors are thinking of how to deal with the impact of this order.
Here is the State Department circular in its entirety so we lose nothing in trying to understand its impact:
“The Clean Network program is the Trump administration’s comprehensive approach to guarding our citizens’ privacy and our companies’ most sensitive information from aggressive intrusions by malign actors, such as the Chinese Communist Party (CCP). Today, I am announcing the launch of five new lines of effort to protect America’s critical telecommunications and technology infrastructure.
“These programs are rooted in internationally accepted digital trust standards and built upon the 5G Clean Path initiative, announced on April 29, 2020, to secure data traveling on 5G networks into US diplomatic facilities overseas and within the United States.
“The five new lines of effort for the Clean Network are as follows:
“Clean Carrier: To ensure untrusted People’s Republic of China (PRC) carriers are not connected with US telecommunications networks. Such companies pose a danger to US national security and should not provide international telecommunications services to and from the United States.
“Clean Store: To remove untrusted applications from US mobile app stores. PRC apps threaten our privacy, proliferate viruses, and spread propaganda and disinformation. American’s most sensitive personal and business information must be protected on their mobile phones from exploitation and theft for the CCP’s benefit.
“Clean Apps: To prevent untrusted PRC smartphone manufacturers from pre-installing – or otherwise making available for download – trusted apps on their apps store. Huawei, an arm of the PRC surveillance state, is trading on the innovations and reputations of leading US and foreign companies. These companies should remove their apps from Huawei’s app store to ensure they are not partnering with a human rights abuser.
“Clean Cloud: To prevent US citizens’ most sensitive personal information and our businesses’ most valuable intellectual property, including COVID-19 vaccine research, from being stored and processed on cloud-based systems accessible to our foreign adversaries through companies such as Alibaba, Baidu, and Tencent.
“Clean Cable: To ensure the undersea cables connecting our country to the global internet are not subverted for intelligence gathering by the PRC at hyper scale. We will also work with foreign partners to ensure that undersea cables around the world aren’t similarly subject to compromise.
“Momentum for the Clean Network program is growing. More than 30 countries and territories are now Clean Countries, and many of the world’s biggest telecommunications companies are Clean Telcos. All have committed to exclusively using trusted vendors in their Clean Networks.
“The United States calls on our allies and partners in government and industry around the world to join the growing tide to secure our data from the CCP’s surveillance state and other malign entities. Building a Clean fortress around our citizens’ data will ensure all of our nations’ security.”
If we follow what happened in relation to the US financial sanctions against Iran, it is a matter of time before this Clean Network program will be felt internationally. Soon the US government will make it clear that transactions with the US financial system can only be done through clean international telecom lines.
That will most likely mean any foreign telecom company that uses Huawei or any Chinese equipment will not be allowed to convey transactions with US financial entities. Both Globe and PLDT/Smart use equipment from Huawei and other Chinese manufacturers. DITO and China Telecom would be knocked out from the start.
What happens if push comes to shove? A good part of our OFW remittances are often coursed through New York.
Or maybe some of our smaller telcos that have not invested in Chinese made equipment can be certified clean for US transactions. Here is the view of former DICT Usec Eliseo Rio, Jr:
“I think some telcos smaller than Globe, Smart or Dito will make being “Clean Carriers” their business model. Their networks will not contain any Chinese equipment and only they can connect to US telecommunication networks. Their clients or subscribers will be persons or companies that have business transactions with their counterparts in the US.
“The big players could not afford to strip their networks of Chinese equipment (and replace these with more expensive US approved equipment) just to cater to these clientele, and make subscription cost more expensive to most of their subscribers who only have local calls or transactions.”
I also asked Mon Jocson, EVP of Bank of the Philippine Islands who is on top of IT:
“We have been aware of this issue, especially with the passage of the John McCain National Defense Authorization Act of 2019 where specific provisions about covered telecom equipment specifically mention ZTE and Huawei. The context is that federal agencies are obligated to ensure that procurement and use of such equipment are not part of their networks.
“BPI has been cognizant of this as we continue to de-risk our network. Our major connection to international parties especially with US Banks is via the SWIFT Network. We are in the process of moving our SWIFT Network to a major satellite provider which uses non-covered telecom equipment and this network will totally be seperate and independent from our local telecom service providers.”
Mon was formerly head of IBM Philippines and can be depended upon to be ahead of emerging developments.
Maybe we need not worry. Trump will likely lose the November election and Biden would not be as aggressive in this trade war with China. But I doubt a significant cooling of tension.
The point of no return may have been reached. Americans would be so distrustful of China that would make a continued application of the Clean Network policy politically useful.
Chinese escalation of its policies against Hong Kong dissidents will also make this telecom sanction defensible. And here we are, minding our own business getting trampled along the way.
Hopefully, the worst case scenario doesn’t happen. But we must be ready. Our economy depends on having ready plans. Geopolitics is an important consideration these days.
Source: https://www.philstar.com/business/2020/08/17/2035758/clean-network