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Trade Protectionism and Cyber Espionage On TRADE PROTECTIONISM AND CYBER ESPIONAGE ON GROUNDS OF NATIONAL SECURITY: HUAWEI AS POTENTIAL SECURITY THREAT TOWARDS UNITED STATES’ TELECOMMUNICATIONS INFRASTRUCTURE (2007-2014) By MUHAMMAD AKBAR CHARISMA 016201300102 A thesis presented to the Faculty of Humanities President University in partial fulfillment of the requirements for Bachelor Degree in International Relations Major in Diplomacy Studies 2017 THESIS ADVISER RECOMMENDATION LETTER This thesis entitled “TRADE PROTECTIONISM AND CYBER ESPIONAGE ON GROUNDS OF NATIONAL SECURITY: HUAWEI AS POTENTIAL SECURITY THREAT TOWARDS UNITED STATES’ TELECOMMUNICATIONS INFRASTRUCTURE (2007-2014)” prepared and submitted by Muhammad Akbar Charisma in partial fulfillment of the requirements for the degree of Bachelor of Arts in International Relations in the Faculty of Humanities has been reviewed and found to have satisfied the requirements for a thesis fit to be examined. I therefore recommend this thesis for Oral Defense. Cikarang, Indonesia, February 23rd 2017 Recommended and Acknowledged by, Hendra Manurung, SIP., M.A. Thesis Adviser i DECLARATION OF ORIGINALITY I declare that this thesis, entitled “TRADE PROTECTIONISM AND CYBER ESPIONAGE ON GROUNDS OF NATIONAL SECURITY: HUAWEI AS POTENTIAL SECURITY THREAT TOWARDS UNITED STATES’ TELECOMMUNICATIONS INFRASTRUCTURE (2007-2014)” is, to the best of my knowledge and belief, an original piece of work that has not been submitted, either in whole or in part, to another university to obtain a degree. Cikarang, Indonesia, February 23rd 2017 Muhammad Akbar Charisma ii PANEL OF EXAMINER APPROVAL SHEET The Panel of Examiners declare that the thesis entitled “Trade Protectionism and Cyber Espionage on Grounds of National Security: Huawei as Potential Security Threat towards United States’ Telecommunications Infrastructure (2007-2014)” that was submitted by Muhammad Akbar Charisma majoring International Relations from the Faculty of Humanities was assessed and approved to have passed the Oral Examinations on February 13th 2017. Hendra Manurung, SIP., MA. Chair – Panel of Examiners Dr. Phil. Reza Alexander Antonius Wattimena Examiner Haris Rahmat Pratama, BA. IR., M.A. Examiner iii ABSTRACT Title: “TRADE PROTECTIONISM AND CYBER ESPIONAGE ON GROUNDS OF NATIONAL SECURITY: HUAWEI AS POTENTIAL SECURITY THREAT TOWARDS UNITED STATES’ TELECOMMUNICATIONS INFRASTRUCTURE (2007-2014)” Trade relation between United States and People’s Republic of China has caused a number of mergers and acquisitions towards US companies by Chinese private firms, including Huawei. According to RAND study in 2005, Huawei was alleged as one of Chinese “national champions” that U.S. – China Economic and Security Commission (USCC) argued they are subject to Chinese government order. Besides, with the growing concerns of cyber espionage incidents emanating from China (such as Titan Rain in 2005, APT1 (also known as the “comment crew”, and intellectual property theft), USCC suggested there had to be realistic assessment to secure US critical telecommunications infrastructure from Huawei that could possibly provide access for China to control US sensitive telecommunication equipment and infrastructure. Therefore, in this thesis, the writer aims to address US government’s measures that applied trade protectionism through CFIUS and cyber espionage through NSA in order to deal with Huawei as potential security threat to US telecommunications infrastructure. Keywords: CFIUS, Cyber Espionage, Huawei, NSA, Security Threat, Telecommunications infrastructure, Trade Protectionism, USCC. iv ABSTRAK JUDUL: "PROTEKSIONISME PERDAGANGAN DAN SPIONASE SIBER ATAS DASAR KEAMANAN NASIONAL: HUAWEI SEBAGAI ANCAMAN POTENSIAL TERHADAP INFRASTRUKTUR TELEKOMUNIKASI AMERIKA SERIKAT (2007-2014)" Hubungan perdagangan antara Amerika Serikat dan Republik Rakyat Cina telah menimbulkan sejumlah penggabungan dan akuisisi terhadap perusahaan - perusahaan AS oleh perusahaan swasta Cina, termasuk Huawei. Menurut studi RAND pada tahun 2005, Huawei diduga sebagai salah satu "juara nasional" China, dimana Komisi Ekonomi dan Keamanan AS - China (USCC) mengatakan bahwa mereka tunduk pada perintah pemerintah Cina. Selain itu, dengan berkembangnya keprihatinan terhadap insiden spionase siber yang berasal dari Cina (seperti Titan Rain pada tahun 2005, APT1 (juga dikenal sebagai "comment crew", dan pencurian kekayaan intelektual), USCC menyarankan harus ada penilaian yang realistis untuk mengamankan infrastruktur telekomunikasi AS dari Huawei yang mungkin bisa memberikan akses bagi Cina untuk mengontrol peralatan telekomunikasi dan infrastruktur AS yang sensitif. Oleh karena itu, dalam tugas akhir ini, penulis bertujuan menyampaikan tindakan pemerintah AS yang diterapkan melalui proteksionisme perdagangan melalui CFIUS dan spionase siber melalui NSA untuk menangani Huawei sebagai potensi ancaman keamanan terhadap infrastruktur telekomunikasi AS. Kata kunci: Infrastruktur Telekomunikasi, Huawei, CFIUS, HPSCI, NSA, Proteksionisme Perdagangan, Spionase Siber. v “Fainna ma’al ‘usri yusro. Inna ma’al usri yusro.” -(Q.S. Al-Insyirah: 5-6) vi ACKNOWLEDGEMENT Alhamdulillahirabbil ‘aalamiin, an absolute praise to the Almighty God, Allah SWT, because of His mercy and blessings the writer could finished this thesis. Shalawat and salam are given to prophet Muhammad SAW, because of his guidance that brings enlightenment to our life. I would like to deliver my highest gratitude to: 1. My beloved father and mother, Mandriadi and Laily Hidayati S., who relentlessly raised and supported me until I can finish my study in this university. For my dearest younger brother, Muhammad Firman Azima, who always makes me laugh whenever I feel homesick. 2. My advisors, Hendra Manurung, SIP., M.A. and Haris Rahmat Pratama. BA.IR., MA., for all the knowledge they have been giving to me during the process of writing this thesis. 3. My dearest F2 roommates, Muhammad Adnan Fatron, M. Lutfan Hasby, M. Nur Fadhilah, Rudi Azwan, as well as Ilham Saumi, for this wonderful university journey we make together. 4. My dearest friends, Luky Yuniansyah, Rian Akbary, Lanny Surya Alfiani, Iranti Mantasari, Lathifatus Syifa, Izzati Robbi Hamiyya, as well as the big family of IR 2013. Cikarang, February 23rd 2016 Muhammad Akbar Charisma vii Table of Contents THESIS ADVISER RECOMMENDATION LETTER __________________________ i DECLARATION OF ORIGINALITY _______________________________________ii PANEL OF EXAMINER APPROVAL SHEET _______________________________ iii ABSTRACT __________________________________________________________ iv ACKNOWLEDGEMENT ________________________________________________vii LIST OF FIGURES _____________________________________________________ xi LIST OF ACRONYMS __________________________________________________xii CHAPTER I: INTRODUCTION ____________________________________________ 1 I.1. Background of the Study _____________________________________________ 1 I.2. Problem Identification _______________________________________________ 3 I.3. Statement of the Problem ____________________________________________ 5 I.4. Research Objectives ________________________________________________ 6 I.5. Significance of Study _______________________________________________ 6 I.6. Theoretical Framework ______________________________________________ 7 I.6.1. Constructivism _________________________________________________ 7 I.6.2. Trade Protectionism _____________________________________________ 8 I.6.3. National Security _______________________________________________ 9 I.6.3.1. Cyber Security _____________________________________________ 10 I.7. Scope and Limitations of Study_______________________________________ 12 I.8. Research Methodology _____________________________________________ 13 I.8.1. Qualitative Research ____________________________________________ 13 I.8.2. Analytical-Descriptive __________________________________________ 13 I.8.3. Conceptual Framework__________________________________________ 15 I.8.4. Research Framework ___________________________________________ 16 I.9. Thesis Outline ____________________________________________________ 17 I.10. Definition of Terms _______________________________________________ 18 CHAPTER II: THE RISE OF US’ NATIONAL SECURITY CONCERNS DUE TO HUAWEI’S ATTEMPTS OF MAKING BUSINESS EXPANSION IN US TELECOMUNICATION MARKET________________________________________ 20 II.1. The Critical Role of Telecommunications Infrastructure to United States _____ 20 II.2. Chinese Cyber Espionage Conducts towards US’ and its Influence towards US’ Assessment on Chinese Companies’ Investment in the US _____________________ 22 viii II.3. The Rise of Security Concerns of United States over Huawei _______________ 26 II.3.1. Timeline of the Cases of Huawei’s Blocked Foothold in US Market ______ 28 II.3.2. Alleged Links between Huawei and Chinese Government of Potential Digital Triangle __________________________________________________________ 29 II.4. Chapter Conclusion _______________________________________________ 32 CHAPTER III: US ALLEGATION TOWARDS HUAWEI AS POTENTIAL SECURITY THREATS TO US’ TELECOMMUNICATION INFRASTRUCTURE __ 33 III.1. US Policies in Securing Telecommunications Sector as part of Its Critical Infrastructure ________________________________________________________ 33 III.1.1. Homeland Security Presidential Directive-7 in 2003__________________ 34 III.1.2. Exon-Florio Amendment (1988) and Foreign Investment in Committee on Foreign Investment in the United States (CFIUS) __________________________ 35 III.1.3. The Foreign
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