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U.S. struggles to convince allies to ban Huawei

More of America’s allies are resisting pressure from Washington to rule out the use of telecom equipment from China’s Huawei Technologies — a company the Trump administration says poses national-security risks.

Germany on Monday said it will not exclude the possibility of employing the company’s technologies for its next-generation 5G mobile networks.

Also on Monday, Huawei’s India head told Reuters on the sidelines of a conference in New Delhi that the Shenzhen-based company would sign a “no backdoor” agreement that would give India greater access to monitor and ensure the security of its products. India has also said it had not made a decision regarding the company.

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A launch event last spring in London for the Huawei P30 Pro.

Over the past year, the U.S. has mounted a campaign to convince allies to ban Huawei from involvement in their mobile infrastructures. Australia and New Zealand have effectively banned Huawei from their 5G networks, while in August the U.S. Commerce Department issued a temporary reprieve for certain companies to engage in limited transactions with the telecom giant, “to afford consumers across America the necessary time to transition away from Huawei equipment, given the persistent national security and foreign policy threat.”

The 90-day extension mostly covers mobile-phone and broadband components, not network infrastructure.

See (July 29, 2019):Trump reverses Huawei ban as U.S.-China trade negotiations restart

And (May 17, 2019):Trump’s economic sanctions on Huawei could backfire on the U.S.

China and Huawei both deny the company poses any national-security risk.

Canada and the U.K., meanwhile, said they will make decisions regarding Huawei in the coming months, though London said it had already decided to exclude the company from its government networks.

Canada is in the midst of turbulent relations with Beijing, after arresting Huawei’s CFO in December at Washington’s request, which accuses her of violating sanctions against Iran, charges the company denies.

Soon after, China arrested two Canadians — seen by many as retaliation — and observers said Prime Minister Justin Trudeau may delay the decision until their cases are resolved.

While the Trump administration has sought to convince allies of the risks involved in working with Huawei, China has warned several countries about repercussions for blocking the company from their markets.

But experts predict Ottawa will eventually decide to block the company.

“I think a ban is likely,” Richard Fadden, a former national-security adviser to Trudeau, told Bloomberg earlier this year.

Related:China fires back after Trudeau rips death sentence given Canadian in drug-smuggling case

While the Trump administration has sought to convince allies of the risks involved in working with Huawei, China has warned several countries about blocking the company from their markets. China’s ambassador to Canada said Ottawa would face “repercussions” if it blocked Huawei.

Beijing has reportedly issued stronger threats to India, the world’s second largest wireless market by user count, telling New Delhi that Indian companies could face consequences if it banned the company.

In July, India’s ambassador to China was summoned to the Chinese Foreign Ministry and told that the country would face “reverse sanctions” if it banned Huawei, the South China Morning Post reported, citing anonymous sources. The recent entreaty of the “no backdoor” agreement to New Delhi is illustrative of the carrot-and-stick approach Huawei and Beijing have dually employed.

Besides being the world’s biggest telecommunications equipment provider, Huawei is the second largest smartphone company by sales globally, behind only Samsung 005930, +0.20% . It dominates the Chinese market.

Read on:The increasingly complicated Apple-China relationship

Tanner Brown is a contributor to MarketWatch and Barron’s and producer of the Caixin-Sinica Business Brief podcast.