Telecommunications (Security) Bill – committee stage (day 1) – 13th July 2021
All-party support for amendments to the Telecom Bill which I moved today which would strengthen international action against CCP threats and bolster UK resilience and security.
Telecommunications (Security) Bill – committee stage (day 1) – 13th July 2021
In moving amendments 1, 20, and 27 I would first like to thank Lord Blencathra, Baroness Northover and Lord Coaker who have signed one or all of the amendments – a clear signal from across the House that the Bill must be strengthened to deal 1. with companies who have been banned in other jurisdictions; 2, the need to dig deeper into ownership and investment of companies and 3., the desirability of acting in concert with our allies in Five Eyes.
These amendments sit comfortably alongside the call for additional parliamentary scrutiny which the Intelligence and Security Committee has called for. At Second Reading Lady Morgan of Coates said we should focus on what other nations are doing: “we have allies around the world and will want to be able to work with other companies and countries around the world to make sure we have that diversity in the supply chain.” (col 716).
On November 30th 2020 the Secretary of State told the House of Commons on “We must never find ourselves in this position again. Over the last few decades, countless countries across the world have become over-reliant on too few vendors (Col 75).
Lord Young of Cookham told us “Other countries in the free world face the same challenges as the UK.” (col 718).
Lady Stroud urged us to work “ in close partnership with our Five Eyes allies” reminding us that “We have known that Huawei is a security risk since 2013” (col 726) –enabling us to avoid what Lady Merron described as “another costly security debacle” and my noble and gallant friend, Lord Stirrup, told us we “need to develop an approach that… constantly monitors and rebalances this equation in the context of our complex and dynamic world” (col 715). These amendments seek to do address many of those points.
During Second Reading noble lords referred companies which have caused security concerns in other jurisdictions, including including Huawei, Tik Tok, ZTE Corporation – which the Government have named as a high risk vendor – , Hytera Communications Corporation Limited, Limited, Dahua Technology Co. Limited. and Hangzhou Hikvision Digital Co.
I will return to Hikvision later.
At Second Reading Lord Fox said that the Bill’s headline is “the ban and purchase of new Huawei equipment” and like Baroness Northover and Lady Bennett, he referred to the genocide against Uyghurs in Xinjiang.
Following the House of Commons decision to name a genocide in Xinjiang last week the Foreign Affairs Select Committee published a damning report calling for a much stronger response from the Government.
These amendments, like those to the Trade Bill, which the House passed with three figure majorities, are a modest attempt to force that stronger and effective response.
The noble lord, Lord Blencathra has frequently pointed to the way Chinese companies can fundamentally compromise our infrastructure and through subsidies asphyxiate UK industry. The one billion lateral flow tests we have bought from the CCP are a glaring example.
These amendments specifically address the telecommunications sector.
Last week we learned that, in a deal estimated to be worth £63 million, the Newport Wafer Fab, the UK’s largest producer of semiconductors has been acquired by the Chinese-owned manufacturer Nexperia. Nexperia is a Dutch firm but owned by China’s Wingtech.
Newport Wafer Fab is the UK’s largest producer of silicon chips – vital in products from TVs and mobile phones to cars and games consoles.
This acquisition is happening during an increasingly severe global shortage of computer chips.
Kwasi Kwarteng, the Business Secretary, said that the Government was monitoring the situation closely, “but does not consider it appropriate to intervene at the current time”.
Could the Minister tell us why it wasn’t appropriate and when would be the right time to protect a key national asset and whether, following the Prime Minister’s subsequent expression of concern, the acquisition is being reviewed under the National Security and Investment Act, which at Second Reading we were told would protect key national assets from dangerous foreign takeovers. There is a lamentable lack of strategic coherence or consistency.
We have Lord Grimstone saying he wants to deepen trade deals with China while the Foreign Secretary tells us slave labour in Xinjiang is “on an industrial scale”. We have the Integrated Review telling us that China is a threat to the UK but the Business Secretary telling us it is not appropriate to do anything at the present time.
This predatory absorption of our semiconductor industry is inimical to the material interests of our technology companies and to national security.
The Committee should consider carefully what is at stake here and why these amendments are so very relevant.
Has the Government examined what is happening within the same sector in other jurisdictions? What assessment has been made of the dependence by UK manufacturers on China for imports of critical technologies such as semiconductors and semiconductor devices?
The applicability of this amendment, by generating a of review of other practices in other regions, is self evident.
Let me also pursue an issue which Lord Fox and I raised at Second Reading. The minister was asked about companies which operate and own CCTV security networks.
UK Local Authorities are reviewing contracts for CCTV equipment made by Hikvision used to enforce China’s Surveillance State but also operating CCTV equipment the length and breadth of Britain. Is that wise?
Hikvision is banned in the US but not here. Simple question, why not?
Last week in their report “ Never Again: The UK’s Responsibility to Act on Atrocities in Xinjiang and Beyond” the Foreign Affairs Committee said
“Cameras made by the Chinese firm Hikvision have been deployed throughout Xinjiang, and provide the primary camera technology used in the internment camps.” They heard concerns that “facial recognition cameras made by companies such as Hikvision operating in the UK are collecting facial recognition data, which can then be used by the Chinese government. Dr Hoffman said that Hikvision cameras are operating “all over London”.
“ Independent reports suggest that Hikvision cameras are operating throughout the UK in areas such as Kensington and Chelsea, Guildford, and Coventry, placed in leisure centres and even schools.
The Committee concluded “ Equipment manufactured by companies such as Hikvision and Dahua should not be permitted to operate within the UK. We recommend that the Government prohibits organisations and individuals in the UK from doing business with any companies known to be associated with the Xinjiang atrocities through the sanctions regime. The Government should prohibit UK firms and public sector bodies from conducting business with, investing in, or entering into partnerships with such Chinese firms…”
So, will we?
In parenthesis, the Committee also registered concern about “substantial research connections between the Chinese organisations responsible for these crimes and UK universities”and said “… the role of advanced technologies in the use of oppression in Xinjiang cannot be ignored.”
At Second Reading the Minister referred to the Report into export licences. The Select Committee complains that “the Government has not made clear when the urgent export review will be concluded. The crisis in Xinjiang is far too urgent for delay.”
Can we at least be told what plans the Government has to impose import and export controls on firms linked to China military-civil fusion programme?
Are we acting in concert with our allies over Hikvision? As in the US, will this Bill be used or amended to enable us to ban them?
The Select Committee also referred to our duties under the 2015 Modern Slavery Act. I refer to my interests as a Trustee of the Arise Foundation.
The Committee Report says “…the issue of forced labour in Xinjiang is pervasive, widespread…, “In the Government’s own words, “no business can consider themselves immune from the risks of modern slavery”.
This too is information which has been assessed in other jurisdictions and deemed to raise ethical and security issues – of which we should make ourselves aware – as these amendments would require us to do.
I can think of no compelling reason – other than vested interests – as to why we would not want to know what other jurisdictions are doing about these issues.
The argument for more concerted action was put well, in the context of Huawei, by Senator Marco Rubio, who said: “Rejecting Huawei would not mean the UK going it alone, but joining a coalition of like-minded countries determined to ensure effective, market-based alternatives to Huawei are available.” He is right.
Have we examined this? Are we doing the same?
As long ago as 2018 the US put in place a block on ZTE – China’s second-largest maker of telecommunications equipment – because of violations of sanctions against Iran and North Korea.
It has designated ZTE as a “national security threat” with government telecommunications funds banned from buying equipment from ZTE
Have we done the same?
In April, the Department of Commerce Added Seven Chinese Supercomputing Entities to the List with Gina Raimondo, the US Secretary of Commerce insisting that “The Department of Commerce will use the full extent of its authorities to prevent China from leveraging U.S. technologies to support these destabilizing military modernization efforts.”
The US has gone further in examining investments. New Clause 15 would require us to do examine what others are doing in this respect too.
President Biden has issued an Executive Order banning US investors from trading shares in China Mobile, China Unicom and China Telecom.
The list of firms in which US firms cannot invest comes to more than sixty.
I won’t read out the full list today but I have sent it to the Minister. Among those listed are a number specifically connected to surveillance technology including
– China Telecommunications Corporation
– China United Network Communications Group Co., Ltd.
– Hangzhou Hikvision Digital Technology Co., Ltd
– Huawei Technologies Co., Ltd.
– Semiconductor Manufacturing International Corporation
– China Mobile Limited
– China Telecom Corporation Limited
Australia is another of our closest allies and a core member of Five Eyes. In blocking an A$300m takeover offer by China State Construction Engineering Company it cited “national security” grounds. As long ago as 2016 Australia forbade a deal on the basis that China’s subsidies rendered it difficult for Australian bidders to make a competitive bid with the National Treasurer saying it “may be contrary to the national interest”.
In 2020 The Guardian Australia reported links between companies operating in sensitive sectors including its national science research agency and technology companies and operatives from the Chinese intelligence agencies with one reported as having ties to the CCP’s United Front Work Department, a foreign-influence body of the CCP described by Chinese president Xi Jinping as an “important magic weapon”
Future threats to the UK’s telecommunications network may not come from as high profile global brands such as Huawei. It is vital that the UK takes into account the experiences and views of its allies when considering the risks associated with a certain vendor or operator.
That is what these amendments require us to do.
Coordination with allies bolsters UK security.
Coordination with allies protects against threats from China.
Failure to take a coordinated approach with key allies on telecommunications security undermines the functioning of longstanding security arrangements which protect the UK’s security interests.
Recall, too, that US officials warned that the UK’s failure to ban Huawei could have jeopardised Five Eyes intelligence sharing arrangements.
These amendments will ensure that the views of key allies will be taken into account in reviewing the threats posed by high risk vendors.
Bear in mind, too, that failure to coordinate with allies also leads to costs and uncertainty for businesses.
Standing together will also help us to see off the threats which the CCP makes such as telling us that banning Huawei from the 5G network would cost Britain us dearly in investment.
Similar threats have been issued against Germany, Australia, and Sweden as they considered taking action against Huawei’s security risks.
Taking a coordinated approach with allies will help protect against these threats, making it harder for the Chinese government to single out any one country for retaliation.
Earlier collective action could have prevented the later expensive U-turns.
The Government’s own estimates calculate that belated Huawei decision s cost £2 billion, excluding the broader economic cost of the delayed roll out of the 5G network caused by changing policies.
Belatedly and at great cost it was the right thing to do. Let’s not make the same expensive and dangerous mistakes again.
These amendment seek to better protect our national interests in concert with our allies in the free world.
I beg to move.
Link to Bill on Parliament Website: https://bills.parliament.uk/bills/2806
Reply to the debate: Lord Alton of Liverpool
I thank all noble Lords who have participated in the debate and the Minister for her replies.
I thought that the intervention just now by the noble Lord, Lord Fox, was important. In the context of Nexperia, It drives home one of the issues that we have debated today, what is happening to a British company that has been acquired by a Chinese company through its Dutch affiliate. It is about computer chips. It is about semiconductors. It is about our ability to be able to control what goes into the technology that this Bill is very much about. That is not an on-the-side question; it is a very important central question and I look forward to seeing the response that the Minister gives to the noble Lord, Lord Fox, when she looks at it further.
I turn now to some of the contributions made today.
The noble Baroness, Lady Northover, in a typically powerful and thoughtful intervention, invited us to delve more deeply. That is what we have been doing during this afternoon’s proceedings. She emphasised the importance of countries working together. She regretted, with sadness, that we have been forced to make some of these decisions about our own individual ability to acquire intelligence as a result of our decision to leave the European Union.
I thought it was interesting that, earlier today, the European Commission issued new guidance to combat forced labour in supply chains. It rather puts our laggardly and perfunctory efforts to shame. The guidance provides concrete, practical advice on how to identify, mitigate and address the risks. This issue has been referred to and the noble Baroness has said that she is going to write to us further on modern-day slavery and supply chains. High Representative/Vice-President Josep Borell says that the guidance
“will help EU companies to ensure their activities do not contribute to forced labour practices in any sector, region or country.”
It paves the way for future legislation which will have enforcement mechanisms and should introduce a mandatory due diligence duty, requiring European Union companies to identify, prevent, mitigate and account for sustainability impacts in their operations and supply chains.
Our amendments today would gather that kind of information.
I simply do not accept that it is impossible for companies, in partnership with government—a point made by the noble Baroness the Minister in opposition to these amendments was that this would place too much responsibility on companies—or countries such as our own to collect this information. Like other noble Lords around the table, I have no staff. The information I gave to the Committee today is publicly available and, with a little bit of research, it can be obtained without too much difficulty. It is absurd to suggest that it is beyond the ability of companies or countries to collect information and share knowledge. The example from the European Union underlines what the noble Baroness said to us today.
The noble Lord, Lord Naseby, was, as always, asking all the right questions. From our many years together in another place, as well as here, I am always happy to stand with the noble Lord, not least because of his experience in many parts of the world. It is important to ensure that our people who are in post in many of our embassies are given the ability to ask these searching questions and to ensure that the information comes back to us, to prevent many of the expensive mistakes that have been made around Huawei, and which have been referred to during the debate, happening all over again.
My noble friend Lord Erroll was right to say that there are human rights abuses in many countries. Like him, I become indignant about some of those abuses; I do not argue, though, that we should no longer trade with those countries. I always prefer that we trade with countries that are on a trajectory to reform, that are law-abiding and that believe in human rights and democracy, but I accept that it would be impossible to take out of supply chains any country that carries out any kind of human rights violation.
However, there are certain markers that we can look to.
One of them is our legal duty under the 1948 convention on the crime of genocide. This is not a word to be used lightly. The word “genocide” came into our vocabulary thanks to a Polish Jewish lawyer, Raphael Lemkin, who had seen over 40 of his own family murdered in the Holocaust. During the proceedings on the telecoms infrastructure Bill last year, I gave examples from that period of how companies such as Philips had their own forced labour in the camps where people were dying. I gave the example of Corrie ten Boom, a Dutch woman who had given refuge to escaping Jewish people trying to flee the Holocaust. She and her sister were arrested and sent to work in that factory; her sister died there. Corrie ten Boom wrote a deeply moving book called The Hiding Place. That is the comparison I seek to draw.
It is not just me.
In April this year, the House of Commons said that what is taking place in Xinjiang is genocide—it is only the second time that it has ever made such a declaration, so this is of a different order. Where there is genocide, we, as signatories to an international treaty—the 1948 convention on the crime of genocide—have a legal obligation to predict the signs of genocide, prevent it from happening, protect those affected and prosecute those responsible. I accept my noble friend’s argument—we are not going to stop trading tomorrow with Gulf states or whomever it may be who is doing fairly odious things—but the crime of genocide is surely in a different league.
My noble friend was also right to talk about raw materials. During the proceedings of our International Relations and Defence Committee, in an inquiry that we conducted over a year ago into sub-Saharan Africa, I specifically raised the issue of lithium and many of the raw materials that come out of countries such as the Democratic Republic of the Congo, the use of child labour to produce them and the wicked, terrible things that happen in those supply chains. We have a duty to look at the supplies and to act.
In listening to the debate today, I was struck that the Romans had a strategy when they wanted to take over territories.
They did two things. First, they divided and ruled—many noble Lords referred to the importance of what the noble Lord, Lord Fox, described as being in step-lock and of standing together, about which the noble Baroness made a point as well. However, the truth is that we have been divided—even New Zealand, which she referred to, stepped out from the step-lock for a while, but we hope that it has re-emerged.
We have seen what happened to Australia, which dared to even ask for an independent inquiry into the origins of Covid-19. The retaliation that then took place, against WTO rules and about which we have done nothing, is a signal to countries such as our own. China said, “We will poke out their eyes”, referring to the standing together of countries such as us, the United States, Australia and others outside of those networks, “in resisting attempts to destroy our industry”.
That is the second thing that the Romans would do: they would ruin a country’s economy so that they could prey off it.
Those are two rules on which my noble and gallant friend Lord Stirrup, who is here in Committee —I referred to him in my earlier remarks—would be able to give us a long lecture. Those two elements are both there when you look at what is happening and they are why we need intelligence and information shared across the piece.
The noble Lord, Lord Fox, was right to talk about our industrial and security capacity and what has to be done at all levels—I agree with him entirely. He said that manufacturing capacity is crucial and central to our ability to innovate, and the example of semiconductors is very good. He cited the Mansion House speech of the Chancellor, Rishi Sunak.
I do not think that life is about binary choices, generally, but sometimes you have to decide and you may have to take a hit. It may cost this country something: there are consequences when we decide to pull out of agreements with Huawei and, perhaps, if Hikvision is next on the list, there will be financial consequences. However, we have to accept those things sometimes because it means that we are then able to do something about the kind of regime that has created these things in the first place. Chris Patten recently described the argument about nuances as “cakeism”, or wanting to have your cake and eat it—to have this on the one hand and that on the other. Sometimes, we have to be clearer.
I can reassure the noble Lord, Lord Coaker, that he never disappoints. I have enjoyed working with him over the years on human trafficking. We worked together on the 2015 modern slavery legislation and he has done wonderful work with the Human Trafficking Foundation. As he knows, I have a Private Member’s Bill; we mentioned it in conversation together this morning. I previously invited, and will go on inviting, the noble Baroness to get the Government to agree to sponsor that Bill, which would prevent the House from having to hear from me further on the subject, and to take it over—because it seeks to do the kind of things that the European Union is looking at and that the Government themselves agreed that they would do. I will come back to that as well before I conclude; I will not be much longer.
Bills are not semaphore, but they do send important signals. It may well be that some of what is in here is being done already, but let us spell it out in the Bill and make it clear that it is something we want to happen. That is how it gets picked up by officials, non-governmental organisations and by industry as well, because they read it in the Bill. It is not otiose to include these things. I simply say to the noble Baroness the Minister that such a requirement does not blur clarity; in fact, it seeks to strengthen it. It is pretty clear about issues such as unacceptable violations, as the noble Baroness said; it would send a clear message on those things.
I end by coming back to something that I raised with the Minister on Second Reading.
I told her that a letter had been sent to her by the right honourable Iain Duncan Smith Member of Parliament, a former leader of her party.
Earlier today, she replied to Sir Iain, saying: “I cannot agree with your assessment that there has been no meaningful progress after seven months”, and reiterating her view that this Bill “is not an appropriate vehicle to address concerns around human rights and modern slavery”. But in her reply there is no information on what has happened to the Uighur review of exports or the fines. Perhaps even in responding today she can enlighten us on when that review will be completed and point us to any single policy that has been implemented on how China is being held to account for breaching the joint declaration in Hong Kong—I should mention that I am vice-chairman of the All-Party Group on Hong Kong, which was referred to by the noble Lord, Lord Fox.
In reminding Sir Iain that the review’s primary focus is on national security and the security of the UK’s public telecoms network, I say to the Minister that she and the Bill fail to connect those issues back to companies in countries that employ slave labour, enabling them to produce components at vastly lower costs than manufacturers in free societies, who are frequently then driven out of business.
That enables the ruination of UK industry and its absorption by agencies directly linked to the CCP, and jeopardises our telecoms industry and our national security. Meanwhile, there is no sight of what was supposed to be an urgent export control review and fines for non-compliant businesses.
No doubt the noble Baroness will hear directly from Sir Iain, but I know that disquiet among her noble friends, including the noble Lords, Lord Blencathra and Lord Forsyth, and from other parts of the House, will inevitably mean that, as things stand, we will need to return to that question on Report. Those wanting to protect UK national security and protect UK consumers from complicity in mass atrocities are not the bad guys, and are not to be described as holding pitchforks for every Chinese investment, as the Prime Minister said recently. The bad guys are the people who are asleep on their watch as our industries are strategically taken over by those who threaten our national security, filling outlet schemes with slave labour-made goods.
It is for those reasons that I know that this debate is not over. I thank everyone who has participated today. I hope that the noble Baroness might be willing to continue in dialogue, between now and Report, to see whether any of these issues can be satisfactorily overcome. On that basis, today I beg leave of the Committee to withdraw my amendment.
Amendment 1 withdrawn.