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Hello from Brussels where everyone is supposed to think about resetting relations with the US and an upcoming deal or not about Brexit and what do you have? The truth is that everyone is finding it hard to divert their attention from the lockdown bustel sex party in Brussels, as the Belgian media have called it, which has done for the career of a Hungarian MEP who is a close ally of Hungarian Viktor Orban’s. There is simply no such thing in the trading world, or at least we were never invited.
today Main piece It’s about how the EU member states wrestled with the question of how far Huawei can be incorporated into their 5G systems, and what unobtrusive constructive role the European Commission has played. Lies deals with the further disintegration of the narrative of mass reshoring and pandemic as vaccine news sparking a wave of market exuberance is the subject of ours Chart of the day.
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The Commission and 5G: a toolbox, not an arsenal
Since the tech wars between the US and China turned into a global conflict, Europe has become one of the greatest theaters of war. In particular, the decision to use devices from Chinese technology giant Huawei to build 5G systems has turned into a hand-to-hand battle that EU member states are waging from member state to member state.
So far, there have been very different results, often reflecting the underlying political and bureaucratic culture in each country. A number of Central and Eastern European countries in the Atlantic have instinctively complied with US demands to exclude Huawei. Great Britain, with its claim to be a global tech player, originally wanted an all-rounder until Washington forcibly tore its Anglo-spherical chain and made an abrupt U-turn.
France has pursued a smoother and more subtle strategy of deterring carriers from high risk providers like Huawei by informally stating that licenses to use their kit will not be renewed. Italy has created a political-bureaucratic tangle in which operators have to repeatedly obtain permission before installing equipment. Germany, which is looking for consensus but is lobbying hard against everything with its China-oriented exporters, Beijing is trying to find a solution while telecom operators create facts on the ground by buying the kit they want. Sweden’s blunt decision to exclude Huawei and the Chinese company ZTE by name from frequency auctions led to legal action: Huawei persuaded the Swedish administrative court to suspend parts of the auction for the time being.
So there is no coherence in the reactions of the Member States? It’s not entirely fair. The European Commission has played an unusually subtle leadership role in putting these decisions into a general systematic framework.
We say unusually subtle because the Commission has had an unfortunate habit when it comes to issues of EU concern, but where decisions are made at Member State level. Screening for foreign direct investment is one; Ensuring mutual openness to public procurement is another task. Sometimes the Commission sees a promising Fracas on the battlefield, sounds the trumpet and launches a cavalry charge, only to find that the Member States do not necessarily participate and that they themselves have neither a lance nor a saber, sometimes not even a horse.
It tried a more sophisticated tactic on the 5G issue. Rather than attempting to impose policies on Member States, as has been accused of screening and raising foreign direct investment, the Commission created a detailed cybersecurity toolbox in January with analytical and procedural steps to secure 5G systems. For example, the Toolbox urges Member States to distinguish between high and medium risk critical parts of the network when deciding which equipment to approve. The publication was followed a few months later by an assessment of the progress made by Member States.
When Ericsson criticized Sweden’s decision to ban Huawei and ZTE, its CEO Borje Ekholm explicitly referred to the regulator’s failure to comply with the Toolbox protocol © Yves Herman / Reuters
The Toolbox is not a law, but it does increase transparency and comparability and may already lay down informal governance norms. When the Swedish choice for Huawei and ZTE was criticized by the device maker Ericsson (at first sight a strange thing for a rival, but the Swedish company fears retaliation in China, where it has a significant presence), Borje Ekholm, Ericsson’s chief executive referred expressly to the regulator’s non-compliance with the Toolbox protocol.
Noah Barkin from the German Marshall Fund think tank in Berlin says: “As we have seen in Sweden and other countries, Huawei is ready to take action against laws that prohibit the ban on 5G networks. This underscores the importance of creating a solid legal basis for these decisions. The 5G toolbox provides guidance on this, but each country will have its own approach. “
It is important to get the technological and legal details right. More litigation could be ahead. Edwin Vermulst, a venerable Brussels attorney who has represented Huawei, recently argued in a comment with a colleague that Sweden has made itself vulnerable to litigation under EU and WTO law due to its inept application of public and national security exceptions to free trade rules have.
The toolkit won’t magically fix this problem, but it can give the solution. Member States have changed dramatically not only in terms of the content of their 5G security decisions, but also in terms of the quality of the reasoning and execution. However, everyone should definitely acknowledge a solid performance by the Commission, limited to doing what they can and doing well.
The markets have gotten too hot to handle. The frenzy of stock buying is so intense that even many of Wall Street’s largest brokers and money managers are struggling to keep up. The emergence of several credible, effective coronavirus vaccines has sparked optimism that the global economy is poised for a strong upturn in 2021 as the pandemic recedes but the extraordinarily aggressive stimulus measures continue to slosh money in the financial system.
Great stories of the trade
We may have voiced skepticism once or twice about the widespread belief that the pandemic will result in much of manufacturing relocating to rich economies. Some have further diversified supply chains from China to other emerging markets in Asia, yes. Lots of industrial production returning to expensive countries and putting all a company’s eggs in one expensive basket? Unlikely.
So far we are right. This week, the New York Times reported that manufacturing companies operating in France, whose government is a world-class producer and exporter of eloquent rhetoric about reshoring, are continuing to cut French factory jobs. And guess what? Often, they create them in cheaper overseas economies instead – in one case in the UK as well. We know right? Amazing. Lightning out of the blue.
We noticed one detail: as early as April, when the panic over the pandemic and deglobalization was nearing its peak, an EY survey found that 83 percent of multinational companies were thinking about reshoring or nearshoring. The share in October? Thirty-seven percent. The great history of mass reshoring looks less convincing over time, and the panic over severe disruptions in world trade is subsiding.
Do not miss
Among the legacies of President Donald Trump’s administration is the continued concern of American allies that it will drag the West into unnecessary conflict with China, writes Philip Stephens. The president’s combat readiness has been a success for those who argue that when the US sees a geopolitical rival, Europeans should remain fixated on economic opportunity. Instead of taking sides, the EU should play the role of mediator.
The global financial system is resilient enough to withstand the effects of the coronavirus crisis, but policy makers need to act quickly to return to economic growth and avoid widespread financial hardship, Kristalina Georgieva, executive director of the IMF, told the Financial Times. “We are in a stable place, but we cannot take financial stability for granted,” she told Martin Wolf, chief commentator on economics, during an online global banking summit for the Financial Times.
Congress passed laws that would force Chinese companies to move away from American stock exchanges if they fail to comply with US accounting rules. The House of Representatives passed the bill that could affect China Telecom businesses after Alibaba after the Senate passed in May. Trump is expected to sign the legislation, which has benefited from a bipartisan consensus on a tougher line against China.
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After rejecting the 15-country RCEP trade deal, India is now targeting Africa, where it believes it can leverage geographic strengths to boost exports.
Japan is considering banning sales of new conventional gasoline-powered cars by the mid-2030s to encourage hybrid and electric vehicles and become a zero-emission society by 2050.
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