Blocking China Mobile: Trump Team Is Missing a Trick
The Trump administration's move to block China Mobile's entry to the US communications services market is a good one -- but for the wrong reasons.
Instead of seeking to exclude the Chinese operator on security grounds -- the reason cited by the National Telecommunications and Information Administration in this ruling -- it should insist that Beijing open up its telecom service markets as it promised when it joined the WTO 17 years ago. (See Unlocking China's $194B Telecom Market.)
Back then, China committed to allowing up to 49% foreign ownership for basic network services, and 50% ownership for value-added services (VAS).
Both of those markets remain effectively out of reach for foreign firms. The basic services market remains almost wholly closed to privately owned Chinese companies, let alone foreigners.
In the VAS market, which now covers cloud services and data centers, only one wholly owned foreign firm -- a Japanese retailer called Heiwado (China) -- has won a license.
Foreign operators that want to support their enterprise customers can only do so in partnership with a local telco.
It's not clear why US and European telcos, usually so willing to make their views known to their own governments, have been so silent about their exclusion from the US$190 billion China market. Most likely it is because so many other tech issues have been pressing, such as the lack of IP protection and forced technology transfer.
Additionally, most probably felt unenthused at the prospect of a minority stake in a joint venture with a state-owned Chinese partner.
But the Trumpistas are missing a trick here.
If, as they claim, their goal is to even up the lopsided trade balance, the principle of reciprocity is their friend. Forcing China to meet its WTO promises is not just an effective negotiating tool -- it also makes the administration's argument, both at the negotiating table and in public, about China reneging on its commitments.
Getting US companies into China's massive telecom and cloud services markets would actually help redress the trade imbalance that is supposedly the heart of the problem (although note the US deficit with China is in the goods trade -- in services it enjoys a surplus).
But the Trump team seems barely interested in market access issues.
By contrast, the national security card may be an easy one to play, but the Chinese have learnt to play it, too.
The Chinese may also wonder just how much of a security threat an international communications license might pose -- especially to a president who thinks securing his personal device is just "too inconvenient."
— Robert Clark, contributing editor, special to Light Reading