Congress Considers Legislation To Push Back Against Chinese Telecoms Equipment in Central/Eastern Europe

Both the U.S. Senate and House are considering legislation that attempts to push Central and Eastern European countries away from using Chinese telecoms equipment such as that of Huawei or ZTE. The Senate bill was just recently introduced; the House bill was introduced in May and  could undergo a markup by the Foreign Affairs Committee soon. Both bills have bipartisan support.

The Senate bill (S.2876) was introduced by Senators Jeanne Shaheen (D-NH) and Rob Portman (R-OH) on September 28, and is entitled the Transatlantic Telecommunications Security Act (TTSA). Its stated purpose is "[t]o prioritize the efforts of, and to enhance coordination among, United States agencies to encourage countries in Central and Eastern Europe to improve the security of their telecommunications networks."

Elaborating on this goal, the legislation starts by providing a "sense of Congress" that "the United States has national security and economic interests in assisting Central and Eastern European countries to improve the security of their telecommunications networks by … reducing their dependence on covered telecommunications equipment or services that are often offered with predatory economic inducements; and … replacing such equipment or services with secure telecommunications equipment or services."

"Covered telecommunications equipment or services" is later defined as "telecommunications equipment or services produced or provided by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities)" and "telecommunications equipment or services produced or provided by an entity that the Secretary of State, in consultation with the Director of National Intelligence, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country," with "covered foreign country" defined as China.

With regard to China's role in the region, the bill states that "the People’s Republic of China’s Belt and Road Initiative and the 17+1 Initiative seek to undermine Central and Eastern Europe’s infrastructure resilience and sovereignty through predatory inducements from state-linked providers of telecommunications equipment or services, such as Huawei Technologies Company and ZTE Corporation." As a response, it explains that it is U.S. policy "to encourage public and private sector investment in European telecommunications infrastructure project" so as "to ensure secure telecommunications" and "to provide economically feasible alternatives" to financing from providers of Huawei, ZTE and other Chinese companies.

In terms of the specific actions contemplated under the legislation, the bill explains that the Secretary of State, in consultation with several other agencies, shall "prioritize and expedite" the efforts of the Department of State and these agencies in "supporting the efforts of the European Commission and the governments of Central and Eastern European countries to improve the security of their telecommunications networks" in order to remove the Huawei and ZTE equipment and support the development of equipment that is "inclusive, transparent, economically viable, financially, environmentally, and socially sustainable, compliant with international standards, laws, and regulations, and supplied by providers of secure telecommunications equipment or services."

This support will come through both "early-stage project support," such as trade missions and technical assistance; and "late-stage project support," which includes "debt financing, equity financing, insurance, and transaction advisory services."

A press release from Senator Shaheen notes that: "The bill would incentivize investments in non-Huawei 5G equipment and help federal agencies – like the State Department and U.S. International Development Finance Corporation (DFC) – improve the security of telecommunications systems against emerging threats, including those posed by China and Russia." It adds that the bill "would provide financing to European allies who are most vulnerable to low-cost options like Huawei, and it would expand the number of countries that DFC can invest in, helping them modernize digital infrastructure."

The House bill (H.R.3344) was introduced in May by Marcy Kaptur (D-OH) and Adam Kinzinger (R-IL) and is nearly identical in its wording. It currently has 32 co-sponsors.