Ben Roback is Head of Trade and International Policy at Cicero Group.
As we prepare for the Government to publish details of its trade objectives with the EU and USA in the first two weeks of February, our United States counterparts and the White House are watching political developments in Westminster with a keen interest.
Yesterday’s decision to give the green light for Huawei to build non-core parts of the UK’s 5G network has laid down an important early diving line in talks that are yet to enter even their nascent stage.
The United States has engaged in a furious bout of lobbying in London, of both ministers and officials, but to no effect. Washington is incensed; Beijing could hardly be happier. Not just because of the critical technology role it has embedded itself into, but because of the wedge it has driven between London and Washington at a time when the two are actively working to achiever greater proximity, not divergence. Abroad, Washington further fears that the UK’s green light could create a permission structure for Germany and France to do the same.
The dilemma in Downing Street will not have been viewed as a binary choice between trade with the US and Chinese FDI. Instead, they will have made its decision with, naturally, the Red Wall in mind.
The Government is rightly committed to asking itself a simple question before making big decisions on Huawei and HS2: ‘Will this help us deliver our pledge to level up the country?’ If Huawei is the only company capable of delivering the technology required to provide 5G coverage nationwide, then it must be viewed as a tangible form of ‘levelling up’. Small businesses cannot thrive in Bishop Auckland or Blyth Valley, Durham North West or Devizes, if connectivity is patchy.
That has not prevented caution from the Conservative benches in the Commons. It was a famous Frost – the American poet Robert, not Chief Brexit Negotiator David – who wrote that “Good fences make good neighbours”, a viewpoint echoed in the Commons on Monday by Neil O’Brien, who urged caution in granting an extension of the Chinese state access to our technological infrastructure.
Echoing that view, the Government has sought a compromise: partial access, but with a barrier protecting core parts of the system.
Don’t discount the reaction in Congress
The response amongst Conservative MPs has been divided, to say the least. Notable figures on the backbenches, including Tom Tugendhat and Iain Duncan Smith, described the prospect of granting access like “allowing the fox into the hen house” and “utterly bizarre” respectively. Alarmingly for Downing Street, concerns echoed by Tugendhat were retweeted by Mike Pompeo, the US Secretary of State, who warned of a “momentous decision ahead”.
Yet whilst the reactions from senior Tories matter in isolation, the size of the Government’s majority, and the fact that Parliament will have no say in approving future trade deals, means the objections are in effect moot.
Not so in Congress, where the House Ways and Means Committee and the Senate Finance Committee have primary congressional jurisdiction on trade matters. The Subcommittee on Trade plays the lead role in drafting trade legislation in the House of Representatives, and also plays a key oversight role of executive action on trade issues. What members of the House and Senate think about the UK’s Huawei decision therefore matters as we look ahead to a US-UK FTA.
Congresswoman Elise Stefanik, the youngest Republican woman ever elected to Congress and a rising star on the right, said: “wrong, dangerous, and a grave shortsighted mistake. Congress must work on a bipartisan basis to push back on this decision by the UK to open their arms to China’s surveillance state”. Senator Tom Cotton did not pull his punches, saying: “This decision is deeply disappointing for American supporters of the Special Relationship. I fear London has freed itself from Brussels only to cede sovereignty to Beijing.”
Meanwhile Mitt Romney warned: “By prioritising costs, the UK is sacrificing national security and inviting the CCP’s surveillance state in. I implore our British allies to reverse their decision.” The Heritage Foundation, a conservative think tank that is well connected on both sides of the Atlantic and has hosted British Ministers in recent years, could not have been clearer: “The consequences of his choice will impact not only the security of the United Kingdom, but the long-term strength of the U.S.-U.K. Special Relationship.”
It is hard to find a supportive voice of the decision on Capitol Hill – cause for deep concern in Westminster even before reckoning with the scope for the Government’s proposed Digital Services Tax to cause further alarm in Washington.
In short, we risk alienating our most important political and diplomatic ally at the exact same time we are trying to negotiate a new trade deal; and we might anger our most important defence ally while in the midst of a comprehensive defence and foreign policy review.
To flourish on the world stage, ‘Global Britain’ will inevitably ruffle a few feathers. But we cannot act solely with our international allies in mind, while forgetting the voters at home who put us into office in the first place.
In Westminster, journalists and politicos will reflect on a decision born out of pragmatism, and recognition that the Chinese role in our infrastructure is for now something of a necessary evil.
Arguably, it delivers on two manifesto pledges – investing in infrastructure around the UK, and taking back control. Many during the 2016 referendum thought that we would take back control from Brussels. Few thought we’d also take it back from Washington.