US offers Brazil money to not use Huawei as China turns on Sweden

A new front has opened up in the Trump administration’s ongoing trade war with China, while China has made its feelings clear about Sweden’s recent ban.

This time the setting is Brazil, where – according to a Reuters report late on Tuesday – a US trade delegation visiting the capital Brasilia offered financing to telcos that source network equipment from vendors other than Huawei.

The delegation was led by national security advisor Robert O’Brien, who met with Brazilian President Jair Bolsonaro ahead of the signing of a bank financing agreement that paves the way for further cooperation between the two countries in several industry sectors, 5G being one of them.

Huawei, with its competitively-priced products, already supplies Brazilian telcos. However, with the government preparing to auction 5G spectrum next year, it is a good time for Washington to exert its influence in an effort to convince them to shop elsewhere.

“China has made a very significant move in Brazil. They’re Brazil’s biggest trading partner, so it’s something that we’re concerned about,” said US trade representative Robert Lighthizer, in the report.

The US does a fair amount of business with Brazil too. In 2019, the US exported $67.4 billion worth of goods and services there, and imported $37.6 billion. Both Trump and Bolsonaro are keen to increase trade, but it looks like Brazil will first have to toe the US line on Huawei.

Already this week we have seen Sweden close the door on Huawei. The Swedish Post and Telecom Authority (PTS) on Tuesday banned operators from procuring new equipment from both Huawei and ZTE for use in networks rolled out in the 2.3 GHz and 3.5 GHz bands. Telcos planning to repurpose any of their current Huawei and ZTE gear for use in these networks must phase it out by the start of 2025.

That decision could have negative consequences for Swedish kit maker Ericsson though.

“Without any evidence, the Swedish side used national security as an excuse to groundlessly discredit Chinese companies, openly suppress Chinese telecommunications companies, and politicise normal economic cooperation,” said Zhao Lijian, a spokesman for China’s foreign ministry in a pointed statement. “The Swedish side should uphold an objective and fair attitude, correct wrong decisions, and avoid negative impacts on Sino-Swedish economic and trade cooperation and Swedish enterprises’ operations in China.”

Still, Huawei has a somewhat unlikely ally in Japan – for now at least. According to reports last week, the government will decline to sign up to any framework that bans 5G equipment supplied by specific countries, and will instead take its own measures to assess the risk of using Huawei’s products. However, at the same time, Japan is also keen to strengthen cooperation with the US on cybersecurity, so it would come as little surprise if Tokyo subsequently falls in line with Washington.

With Sweden siding with the US, but Japan keeping its own counsel for the time being, it is perhaps too tricky at this point to predict which way Brazil will swing.