The Huawei and ZTE Ban: The Effect on US-China Trade War on Data Protection
Wed, 25 Jul 2018 || By Arumdriya Murwani

Introduction

There is an economic storm brewing between the world’s economic superpowers. The United States is currently imposing tariffs towards products that came from China, a move that caused China to retaliate and impose the same percentage of tariff towards products made in the US.[i] Increasing tariff of an imported product would result in the increase of prices of such product in the market—leading to the loss of consumer and therefore, the loss of income for the states involved. In the tech industry, however, the trade war has resulted in a very interesting development especially regarding cybersecurity and data protection. Recently, the United States banned two Chinese phone manufacturers, Huawei and ZTE, from selling their phones in the US market.[ii] This move, albeit done in the background of the trade war, is based on the consideration of US consumer’s data protection. In this article, we will look at how an economic trade war can have the impact on cybersecurity and data protection of consumers in the United States.

The US-China Trade War and Cybersecurity

In early 2018, the United States started to impose import tariff towards Chinese products, such as solar panels, washing machine, and steel, on the ground of an allegedly unfair Chinese trade practices.[iii] The Chinese government hit back in April 2018, in which they imposed tariffs on about $3 billion worth of US imports, which includes food products and aluminum.[iv] This tit-for-tat continues and impacted the tech sector as well. One of China’s biggest tech companies, ZTE was banned from procuring components from American firms due to the allegation that they violate US sanction on Iran and North Korea.[v] That accusation was taken further up a notch when six top intelligence officers of the US advised against using products from the Chinese tech giants due to the risk of illegal data gathering.[vi]

On the senate intelligence gathering, six heads of the US intelligence bodies—the CIA, FBI, NSA, among others—expressed their distrust on the Chinese company Huawei and ZTE.[vii] FBI Director Chris Wray testified his concern over the possibility of Chinese companies to gain position of power, exert pressure, or having the capacity to steal information inside the US telecommunication networks.[viii] Furthermore, military leaders are even concerned that ZTE and  Huawei could be utilized by Beijing to conduct espionage, by tracking soldier’s exact coordinates and track their movements.[ix] The US lawmaker even went as far as introducing a bill that would ban any US government agencies to use phone and equipment from the Chinese companies.[x] The US private citizen is at risk too, as the head of intelligence bodies voted to advise US private citizens against using these products. This move clearly indicates the high level of suspicion that the US government has towards these Chinese companies, and it can show us a very interesting trend on how digital technology had shaped our conception on what security entails.

Although trade wars are traditionally seen as a matter of the government, the concern expressed by six top US head of intelligence bodies had shown how intertwined digital technology, our data, and the matter of national security are. In the age where digital technology had pretty much disrupted every aspect of our lives, it is almost necessary for internet users to share their data to third-parties just to get service. The fact that their own devices are allegedly the means to conduct foreign espionage can raise suspicion for the US consumers—especially after the revelation of data misuse surrounding the 2016 Presidential Election.[xi] If this allegation is proven to be true, it can also mean bad news for tech producers worldwide, as consumers worldwide will have to think twice before purchasing tech products amidst fear of being spied on.

Conclusions

The current development of the trade war between the United States and China had shown us how far the matter of national security can be intertwined with our daily interaction with technology. Although the Huawei and ZTE ban is based on a seemingly far-reaching allegation of espionage, we should consider what this means for us and how we provide our data to any service providers. This does not mean that we should stop using internet altogether—a quite impossible feat in the era of digital disruption. While acknowledging the importance of internet in this age, it is important for consumers to understand how their data will be used by service providers, to what extent, and for what reasons. The first step (and the least) we can do as an internet user is therefore to read and carefully understand the terms and conditions of that we have agreed on when we are signing up for any services on the internet.

 


[i] BBC, (2018). Trade wars, Trump tariffs and protectionism explained. [online] Available at: https://www.bbc.com/news/world-43512098 [Accessed 16 July 2018].

[ii] Zhong, R., Mozur, P., & Nicas, J. (2018) Huawei and ZTE Hit Hard as U.S. Moves Against Chinese Tech Firms [online] The New York Times. Available at: https://www.nytimes.com/2018/04/17/technology/huawei-trade-war.html [Accessed 16 July 2018]

[iii]Petroff, A., Iyengar, R., & Mullen, J. (2018) US-China trade battle: Catch up here [online] CNN. Available at: https://money.cnn.com/2018/05/30/news/economy/trump-china-us-tariffs-trade-timeline/index.html [Accessed 16 July 2018]

[iv] Ibid.,

[v] Zhong, R., Mozur, P., & Nicas, J. (2018) Huawei and ZTE Hit Hard as U.S. Moves Against Chinese Tech Firms [online] The New York Times. Available at: https://www.nytimes.com/2018/04/17/technology/huawei-trade-war.html [Accessed 16 July 2018]

[vi] Salinas, S., (2018) Six top US intelligence chiefs caution against buying Huawei phones [online] CNBC. Available at: https://www.cnbc.com/2018/02/13/chinas-hauwei-top-us-intelligence-chiefs-caution-americans-away.html [Accessed 16 July 2018]

[vii] Ibid.,

[viii] Ibid.,

[ix] Liao, S. (2018) The Pentagon bans Huawei and ZTE phones from retail stores on military bases [online] The Verge. Available at: https://www.theverge.com/2018/5/2/17310870/pentagon-ban-huawei-zte-phones-retail-stores-military-bases [Accessed 16 July 2018]

[x] Ibid.,

[xi] Murwani, A. (2018). Ensuring the Safety of Cyberspace in the Upcoming 2018 US Midterm Elections. [online] Center for Digital Society. Available at: http://cfds.fisipol.ugm.ac.id/article/300/ensuring-the-safety-of-cyberspace-in-the-upcoming-2018-us-midterm-elections [Accessed 16 July 2018]

Reviewer: Atin Prabandari, MA, & Viyasa Rahyaputra, S.IP