Taipei, Taiwan – The world is watching as Washington is reportedly preparing to impose unprecedented sanctions on Chinese state-owned surveillance technology company Hikvision, a move Beijing is reportedly weighing countermeasures for.
The sanctions could raise tensions between the United States and China to a new level, but they are also uncharted territory for countless companies worldwide that use Hikvision equipment.
The measures – first reported earlier this month by the Financial Times, citing several unnamed sources – would mark the first time a brand of this magnitude, operating in more than 180 countries, has been added to the list of Specially Designated Nationals (SDN ) comes. usually reserved for drug lords and leaders of violent groups. The strictest version would make any person or entity in the world criminally liable if doing business of any kind with Hikvision.
Hikvision has run afoul of U.S. regulators before and is already on multiple lists excluding it from much of the American economy. The proposed SDN listing is reportedly due to the Hangzhou-based company facilitating the repression of China’s Uyghur minority, which the Biden administration has described as genocide.
“Possible actions by the US government have yet to be reviewed, as reported,” Hikvision spokesman Michael Gutierrez told Al Jazeera. “We believe that such a sanction should be based on credible evidence and due process.”
Hikvision’s key customers are geographically, economically and politically diverse and could respond in significantly different ways. Besides the United States, Hikvision’s main export markets are Vietnam, Mexico, the United Kingdom and Brazil.
“Sanctions imposed by the Magnistky Act would represent a leap into the unknown…not just for Mexican companies, but for companies from most countries,” Victor Gonzalez, a Beijing-based Mexican corporate lawyer representing Chinese law firm PC Woo & Zhonglun WD advises on Latin American region, Al Jazeera said.
“Would adding Hikvision to the SDN list be an exception…?” said Gonzales. “Or would it become the new normal, meaning we are forced to follow the steps of our key partner in decoupling from our world’s second largest supplier?”
Jon Bateman, a senior fellow at the Carnegie Endowment for Peace, said Washington’s reported plans are unprecedented.
“I can’t think of another instance of a global brand being put on the SDN list, so it’s really hard to predict how this is all going to play out,” said Bateman.
Bateman said that with so many countries involved, significant “enforcement capacity” would be needed.
“If I were the Justice Department, I would first look for countries that are less friendly to the United States and where there is evidence of willful violations,” he said, adding that he expects “diplomacy to be the order of the day.” “.
“We may see countries negotiate exemptions, like when the US sanctioned Iranian oil. These can be specific use case exceptions or extended processing times.”
Risk the wrath of the US
Among other things, Mexico has previously negotiated sanctions solutions with the USA.
Gonzalez said Mexico’s experience with Huawei, which has also been hit by US sanctions, could be illustrative.
Both Mexican and American telecom companies operating in Mexico have been able to offset US concerns about Huawei against their ties to the Chinese company by downscaling Huawei’s presence on their networks without removing it altogether.
“The challenge is, as our current Mexican ambassador to China, Jesus Seade, has said, ‘find ways to get ever closer to China without distancing ourselves from our main partner,'” Gonzalez said. “But we in Mexico must be realistic as he concludes that ‘our most important relationship with the United States was, is and always will be’.”
“Mexico has more to lose by not complying with US sanctions on Chinese companies than trying to avoid them and risking America’s wrath…the challenge for Mexico is to walk a fine line, or strike a balance, between its two.” to find key partners.”
Vietnam, also used to balancing a huge northern neighbor in China, is Hikvision’s biggest customer. With more than 670,000 Hikvision camera networks set to be installed in the country, according to Top10VPN, abandoning the Chinese provider will not happen overnight.
“There are a few alternatives in the Vietnamese market, including local ones… but it will take time for the market to change significantly,” Nguyen Khac Giang, a senior fellow at the Vietnam Institute of Economic and Policy Research in Hanoi, told Al Jazeera .
Giang said he doesn’t think it’s realistic or necessary to replace all Hikvision devices, but the sanctions raise serious questions about purchasing or using its products in the future.
“There is no reason for Vietnam not to comply with sanctions, especially given the country’s recent rapprochement with the US,” he said.
“Vietnam has complied with all previous sanctions and I think it will do the same this time. Whether this will affect relations with China depends on the extent of the sanctions and how Beijing reacts to them. But I don’t think it will make the relationship much worse.”
Despite being a close US ally, the UK was “behind the curve compared to Five Eyes’ key partners” in terms of restricting Chinese technology, leaving the private sector there exposed to Hikvision fallout, according to Sam Goodman, a former Labor Party adviser and co-founder of the London-based think tank New Diplomacy Project.
“The UK Government has indicated that it will look into the issue of Hikvision and Dahua’s presence in the public sector supply chain in the forthcoming Government Procurement Act, but this will not address the private sector,” Goodman told Al Jazeera, referring to it to which another video surveillance manufacturer from Hangzhou.
Goodman has called for a nationwide plan to remove Hikvision hardware, but doesn’t see it as imminent as the country is thought to have more than a million of its cameras operational.
“It is very unlikely that the government will come up with the money to pay for the removal of these cameras. It will therefore be up to each individual company, department and agency to remove the hardware on their own schedule,” he said.
“A lot of small and medium-sized businesses, including local pubs and corner shops, use Hikvision cameras… I highly doubt they’ve given much thought to what it might mean for their relationship with the company that the US adopts Hikvision.” set a sanctions list.”
Bateman, senior fellow of the Carnegie Endowment for Peace, said companies using Hikvision’s products would face unenviable choices going forward.
“Are you just going to Dahua?” he said. “But then Dahua could be next in line.”
“Mud the Water”
Bateman said he doesn’t think such sweeping sanctions would serve US interests, but it would still be important for Washington to consistently communicate why they are happening.
“While there are a number of possible reasons why this is happening now, it may simply signal the Biden administration’s view that US-China relations are a struggle between autocracy and democracy,” he said. “Hikvision sanctions are perhaps the easiest to implement and most justifiable measure at this point.”
The US government could “put forward all sorts of reasons” to convince the international community of the need for sanctions, Bateman said, but “that would muddy the waters and open the door for many other Chinese companies to be sanctioned.”
Although the potential SDN list focuses on Uyghur oppression, Hikvision has also been sanctioned by the US in the past for other reasons, including its alleged ties to the Chinese military.
For some countries, this is a more compelling reason to ban their products.
“Of course, the bigger concern for Hanoi is the PLA connections,” Giang said. “Vietnam has always been suspicious of potential Chinese intelligence activities in the country, the recent discovery of Hikvision’s security risk certainly makes matters worse,” he added, citing claims by the US Department of Defense and investigations by video surveillance research group IPVM.