A limitation on Huawei‘s role in 5G networks in Brazil could limit the attraction of investments in the country and hinder partnerships with China in several areas, evaluates the Brazil-China Business Council (CEBC), an organization that brings together businessmen and diplomats with interests in the Asian country.
The document called Bases para uma Estratégia de Longo Prazo do Brasil para a China (or Bases for a Brazilian Long-Term Strategy for China), prepared by diplomat Tatiana Rosito and released today by CEBC, pointed out that not only is China moving towards becoming a digital power as this is one of the country’s main goals for next years.
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“China is on its way to becoming a technological and digital power, and it should be in the Brazilian interest to enhance the opportunities so that Brazil can benefit from Chinese transformations in the most diverse areas, such as the digital economy (5G, cloud computing, internet of things), artificial intelligence, e-commerce,” says the study.
Limiting foreign investment based on national security issues, warns the CECB, can be done with limitations in sensitive areas without discriminating against nationalities. According to the author of the study, the Brazilian legislation is open to foreign investments and does not provide screening mechanisms, as is the case in the United States and some European countries, to limit these investments to some partners.
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CEBC assesses that possible partnerships with China in several areas may be difficult if restrictions on the country’s participation in 5G are established. “For China, the most important thing is to avoid discriminatory attitudes,” says the document.
The Brazilian government has not yet defined the parameters for the auction of 5G infrastructure in the country, scheduled to occur until the end of the first half of 2021. However, President Jair Bolsonaro, on more than one occasion, said that the decision to veto or not Huawei participation would be his and that this decision could follow Donald Trump‘s position about the matter.
However, pressure from Brazilian telecommunications companies has been strong. Huawei has been operating in Brazil for several years as a supplier of equipment and, so far, offers the best price for 5G networks.
In the last few months, the US government has increased pressure on Brazil to try to block Chinese entry into the Brazilian 5G market, with several visits by secretaries and advisers to the Trump administration, offering financing to Brazilian companies and threats of retaliation.
Despite the defeat of Trump in the elections, the current government tries to convey that the American position will not change with Democrat Joe Biden. Two weeks ago, on a visit to Brazil, the US Under-Secretary of State for Economic Growth, Energy and Environment, Keith Krach, insisted, in conversations with Brazilian journalists and officials, that there is a consensus between Democrats Republicans on the position on China.
What may change is the position of Jair Bolsonaro about the United States. A fan of Trump, of whom he says he is a friend, Bolsonaro tended to follow the American president. The relationship with the United States under a Joe Biden presidency may change. Bolsonaro has so far not congratulated the Democrat for the election and, during the election – even after the counting already indicated a defeat for Trump –, the preference for the Republican.
During Krach’s visit, the Brazilian government announced its support for the North American Clean Network initiative, which tries to establish global networks criteria, specifically targeting China’s exclusion. However, despite the Americans celebrating their adhesion, the Brazilian government declared only “support to the principles” of the initiative, without formal acceptance of it.
Translated by LABS