Huawei saga enters Brazil as US starts posturing

The US Ambassador to Brazil has warned the country would face severe consequences should it allow Huawei to supply equipment to 5G networks.

While the focus in recent years has been on European allies, the US has now seemingly turned attention to the LATAM markets. Not content on extinguishing the Huawei presence in Europe alone, the US has started throwing its weight around Brazil, one of the continents leading economies.

“I wouldn’t say there would be retaliation, but there would be consequences,” Ambassador Todd Chapman told local newspaper Globo.

It doesn’t matter if you put a cardigan on a pig, it is still a pig not a sheep. The US is threatening Brazil, imposing its anti-China campaign on another sovereign nation. What remains to be seen is whether the Brazilians have more control over their foreign policy than the UK has demonstrated.

Prospects for Huawei in the European region seem to be diminishing to zero as US administrative and bureaucratic hurdles forced the UK to effectively ban the Chinese vendor from 5G networks. The same pressure is being applied to other European nations, and it would surprise few to see similar decisions made.

It does appear the US is attempting to reduce commercial opportunities in LATAM for Huawei, though Brazil has a lot to lose also.

As it stands, Huawei has a manufacturing site in Brazil which employs 2,000 people and supports a local ecosystem. The Chinese company plans to open a smartphone manufacturing plant in Sao Paolo, employing an additional 1,000 people. With direct and indirect employment and investment tied to Huawei, banning the firm as per US demands would be quite a big call for the Government to make.

Aside from the Huawei investment, it is also worth bearing in mind that China is also one of Brazil’s most important trading partners. According to the OEC statistics, China is the largest destination for Brazilian exports (26.5%) while it is also the biggest importer to the country (19.6%). This is a very important relationship to potentially compromise at the whim of the White House.

The US is also an important trading partner, while Brazilian President Jair Bolsonaro is a Trump fan. There is also US investment being made available in exchange for a Huawei ban. This could be another example of the US deciding the foreign policy of an allied nation.