London: The European Union has designated Chinese telecoms companies Huawei and ZTE as high-risk vendors, effectively paving the way for their equipment to be removed from 5G networks across the bloc's 27 member states.
It is the first time the EU has named the two Chinese firms as high-risk. The move places additional pressure on member states to rid their networks of the Chinese-made kit, while also giving governments cover when facing pressure from Beijing to favour the companies for contracts.
Equipment produced by Huawei and ZTE currently makes up around 40 per cent of telecoms networks across the EU on average.
On the basis of available information, the European Commission considers that "Huawei and ZTE represent ... materially higher risks than other 5G suppliers".
In a statement, Commissioner for Internal Market, Thierry Breton, said member states should impose restrictions on high-risk suppliers without delay. Operators should be banned from installing any new equipment and remove existing equipment within the shortest possible timeframe.
The commission said it would take measures to avoid exposure of its corporate communications to mobile networks using Huawei and ZTE as suppliers and would not reject new contracts with companies reliant on their equipment.
On Thursday, Breton said European governments needed to move faster to mitigate the security risks involved with using the Chinese vendor.
He said just 10 member states had used previous unbinding recommendations to exclude the high-risk vendors from 5G, a move enacted by Australia on a bipartisan basis five years ago.
"This is too slow, and it poses a major security risk and exposes the union's collective security since it creates a major dependency for the EU and serious vulnerabilities," Breton said.
He likened the move to the continent's need to wean itself off Russian gas following Vladimir Putin's illegal invasion of Ukraine and said European telecoms operators need to "get to grips" with the issue and speed the replacement of Huawei and ZTE kit in their networks.
"We have been able to reduce or eliminate our dependencies in other sectors such as energy in record time, when many thought it was impossible," he said.
"The situation with 5G should be no different: we can't afford to maintain critical dependencies that could become a 'weapon' against our interests.
"That would be too critical a vulnerability and too serious a risk to our common security."
The commission left open pursuing "legislative avenues" if the new laws did not prompt a rapid removal of Huawei kit.
Huawei was contacted for comment.
According to Dell'Oro, around seven vendors - Huawei, Nokia, Ericsson, ZTE, Cisco, Samsung and Ciena - command between them about 80 per cent of the total market.
Speaking at Politico's Global Tech Day conference in London before the edict was announced, Joakim Reiter from Vodafone said operators had few vendors from which to choose.
"You can argue about a Huawei problem but you have a broader problem, there is no vendor choice and from a resilience point of view that's super important," he said.
"You simply cannot have a multi-vendor strategy, which is super important from a resilience point of view, if you are left with two."
The war in Ukraine and the COVID pandemic have sharpened focus on the continent about the need to shore up secure supply lines and reduce dependencies, particularly on authoritarian regimes.
Beijing's economic coercion of one of the EU's tiniest members, Lithuania, as well as punitive tariffs imposed on Australian barley, coal, seafood and wine producers also underlined the risk of trade dependencies.
European Commission President Ursula von der Leyen will next week release a new economic security strategy that is expected to detail how member states will "de-risk" from China.
Von der Leyen presented the concept of "de-risking" as an alternative to calls made by some in the United States for a complete "de-coupling" of America and China's economies.
The term has subsequently been adopted by the US Biden administration as well as the G7.
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