White Paper Trade Rules and the Digital Economy Key Points and Findings

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Chapter One | Defining the Digital Economy CHAPTER TWO | HUAWEI’S PLACE IN THE DIGITAL ECONOMY Across all of our three business groups, we occupy a unique place in the digital economy in terms of product coverage, but also in terms of our geographical footprint, since we operate in both very underdeveloped as well as highly technologically advanced markets. With regard to our core carrier network business, we are responsible for building the underlying network infrastructure (pipe) that allows the digital economy to function in the first place. When it comes to our enterprise business, we provide a range of new services and solutions that leverage the many advantages of the digital economy to overcome the physical constraints of the real world by harnessing the power of cloud computing and remotely serviced platforms, such as in the area of digital customs, or our many Smart City solutions. Finally in our devices business, where we are contesting global smartphone, tablet and wearables markets, we operate as a manufacturer and seller of the terminals with which users interface with the digital economy, availing themselves of the services, solutions, products and information that the digital economy provides. As such, we are potentially vulnerable to changes in the underlying legal, regulatory and policy regimes that govern the many stages of the digital value chain. This section will discuss the many ways new and existing trade and investment rules affect different aspects of our business across the three business units. Key Points Summarized 7
Huawei | Trade and the Digital Economy | White Paper Key Points and Findings Key Points Explained 01 At Huawei we are uniquely placed across a very broad swathe of the digital economy, selling equipment and network management services to operators, providing cloud computing services to both operators and a range of other services providers across different industry verticals, as well as selling devices and wearables to consumers. As such, we can claim to be playing from a position of some strength as we attempt to define and articulate our interests, particularly in those product segments like network equipment and devices where we have recently emerged as an industry leader. Nevertheless, our broad engagement across such a wide range of industry segments also means there is some potential for misalignments between different customers and stakeholders. Because of our size and the breadth of our engagement, the rule of thumb for us at Huawei will be that what is good for the global ICT industry as a whole will be good for us as a company. This is likewise bound to be true in areas of international rule making that target trade and investment in the digital economy. 02 Opinions tend to differ on how profound the changes are that have been wrought by the digital economy and whether or not we are at the end or just the very beginning of an age of new digital innovation. Regardless of where one stands on this particular question, the productivity gains and the welfare‐enhancing innovation we have seen in the last 20 years are all too readily apparent even to casual observers. The powerful capabilities of digitization and the internet to instantly reproduce and disseminate knowledge at almost zero cost has ushered in far‐reaching and often disruptive changes to a range of industries, especially those whose goods and services can be rendered into a series of ones and zeros. This is yet another important and distinctly unique characteristic of the digital economy that must be taken into account when trying to negotiate new rules to govern international trade in this space. 03 The digital divide is a very real phenomenon and recent research has shown that it is getting deeper, meaning that the disparities in access and capabilities (and ultimately access to opportunities in the digital economy) between the connected and the unconnected are widening even as more and more people come online in one way or another. This is something that many in the international community, including private sector players like Huawei, are working hard to address. And here also, there may be a role for trade rules, since negotiating outcomes can be harnessed to help mitigate shortfalls in developing countries on both the demand and the supply side, through instruments like technical assistance, aid for trade, or concessional loans tied to the realization of carefully conceived and articulated targets in trade agreements. 04 At Huawei, like at almost every other player in the digital economy, we are forced to confront inconsistencies and uncertainties in terms of market access and the treatment we encounter once we have entered a market. This is unfortunately a reality of doing business today although internationally negotiated rules and recognized best practices can be useful tools in both fostering predictability and creating a level playing field on which Huawei and our industry partners can compete. We see our role here as cooperating with, and where called for, advising and educating policymakers on the best possible choices for them in terms of achieving their policy objectives and refraining from imposing measures that unnecessarily distort trade or unfairly favor one set of industry actors to the detriment of another. 8
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White Paper Trade Rules and the Digital Economy Key Points and Findings

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