In August 2018, the government of Australia concluded its review of the national security risks of the telecom sector with the new 5G networks. The review provides new guidance to telecom carriers, implicitly restricting Chinese vendors.
It concludes that 5G changes how the networks operate and increase the potential security risks to the point today’s safeguards are insufficient. The government must therefore intervene, as foreign powers may exploit these risks by coercing vendors.
The current rise in national security restrictions in the telecom sectors are different from the typical run-of-the-mill economic protectionism as they are imposed by countries that have no domestic suppliers to protect.
Instead, the root of these measures is fundamentally about distrust between governments with conflicting geopolitical agendas, rather than just trustworthiness of the vendors. The situation is not too dissimilar to the US online services after the NSA revelations in 2013.
In effect, future security screenings will assess other governments – i.e. the ability of a foreign state to exercise control over its vendors, rather than assess the vendors themselves. Some legal frameworks, such as the US reforms of Cfius or the EU’s proposed new FDI screening framework, already point towards such directions.
In August 2018, the government of Australia concluded its review of the national security risks of the telecom sector with the new 5G networks. The review provides new guidance to telecom carriers, implicitly restricting certain vendors from building the country’s future telecom networks. The decision has an impact beyond Australia, and a number of jurisdictions that have initiated similar reviews, formally or informally – including Canada, Japan, Korea, the UK and several European countries.
The circumstances leading to the decision in Australia is by no means isolated there: The number of reported cybersecurity incidents has spiked globally in recent years. On many of these occasions, involvements of government-sponsored advanced persistent threat groups (APTs) has been alleged, leading to indictments of serving officers from third countries as collusion with the government. Indeed, the Australian decree points to the “involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law”
The calls for intervention coincide with perhaps the biggest technological shifts in the modern information infrastructure: the deployment of the fifth generation (5G) networks, which will digitalise unprecedented amount of corporate and government data. The potential dividend of cyber espionage increases exponentially, which has prompted unprecedented government action.
These developments break with the openness, inclusiveness and global competition of the rule-based free trade order. However, the fundamental change in the circumstances between then and now is probably just one – the unavoidable emergence of China as a strategic power, and the reactions this has incited from the rest of the world.
While China is militarily inferior to the United States, it has other means to pursue its national interests. Its executive has a unique ability to redirect the resources in its economy, including harnessing the technological prowess of its private sector. China increasingly projects global influence by leveraging on the attractiveness of its domestic demand. Attempts to contain such power, and to resist multipolar governance, has ushered the trading system into unilateral actions and new frictions.
And Chinese industries are inarguably at the receiving end of such friction. On many occasions, such reactions are often the same run-of-the-mill economic protectionism that other Asian exporters had to face in the 1970s and 80s.
While the telecom equipment industry is not void of initiatives to protect the domestic industries, the new restrictions on mobile infrastructure and 5G suppliers are imposed by countries that have no domestic suppliers to protect. Economic protectionism or China-bashing are incomplete answers to why these new restrictions are affecting 5G technology suppliers.
Australia’s decision has many underlying technical and legal arguments. It deems that 5G changes the way the network operates compared to previous mobile generations. Also, technology vendors must follow the rules of the markets they operate but must also comply with orders to cooperate with the intelligence agencies at home. Obviously these obligations could contradict. Chinese vendors Huawei and ZTE may be singled out in today’s debate – but their situation is not too dissimilar to the US online services after the NSA revelations in 2013.
This paper argues the cause to the situation is fundamentally about distrust – not necessarily against certain vendors, but distrust between the governments of where tech firms originate and where they operate. Governments with conflicting goals distrust each other and the methods they deploy to achieve them – and such distrust, which is deeply rooted in core national interests, can neither be attributed to nor overcome by the tech firms.
 Verizon. (2017), Data Breach Investigations Report, Verizon, 10th edition.
 Accenture. (2017), 2017 Cyber Threatscape Report, Accenture, accessed at https://www.accenture.com/t20170721T220639Z__w__/us-en/_acnmedia/PDF-57/Accenture-2017-cyber-year-threatscape-report.pdf.
 Ministers for Communications and the Arts, Senator the Hon Mitch Fifield. (2018), Government Provides 5G Security Guidance To Australian Carriers, 23 August 2018.
 Lee-Makiyama, H. (2018), Stealing Thunder, ECIPE, accessed at: http://ecipe.org//app/uploads/2018/02/ECIPE_Occasional0218_HLM_V7.pdf.
 Lee-Makiyama, H. (2011), Future-proofing World Trade in Technology, ECIPE, accessed at: http://ecipe.org/publications/future-proofing-world-trade-in-technology-turning-the-wto-it-agreement-ita-into-the-international-digital-economy-agreement-idea/.
 See inter alia Posen, Keohane, Zakharia et al. developing the concept of the end of unipolarity.
 Chaffin, J. (2013), EU faces up to China over ‘mother of all cases’, Financial Times, January 31, 2013.