Nearshore Americas
Costa Rica China

Following Washington Meeting, Costa Rica Excludes China from 5G Contracts

Costa Rica has effectively excluded Chinese companies from bidding on local 5G network contracts, citing concerns about cybersecurity and following a meeting between President Rodrigo Chaves and President Joe Biden in Washington.

President Chaves signed a decree which establishes that only companies from countries which have endorsed the Budapest Convention on cybercrime will be eligible to bid on 5G contracts.

“It’s the clearest standard,” Chaves said to local media. “You’re either part of this international cybersecurity agreement, or you’re not.”

The Budapest Convention is a treaty that aims to harmonize cybersecurity laws and facilitate cooperation in fighting cybercrime. It has been signed by over 60 countries, but China is not one of them.

Though Chaves made no direct mention of specific countries being banned, Chinese companies will effectively be left out.

Costa Rica has good reason to play it as safe as possible when it comes to cybersecurity. The country declared a state of emergency in May of 2022 after being hit by a cyberattack which crippled several of the government’s computer systems, leading to the exposure of sensitive data stored in the authorities’ digital vaults.

Playing Favourites?

The Chinese embassy in Costa Rica expressed its disapproval of the decree, and Costa Rican lawmakers raised concerns of how the new policy might affect trade ties with China.

Chinese telecom giant Huawei already operates in the country and was expected to be a major provider of 5G network technology for ICE Group, one of Costa Rica’s biggest telecom operators.

President Chaves insisted that Costa Rica won’t be “caught in the middle” of the trade and political tensions between China and the United States.

“We cannot risk the security of our citizens and infrastructure,” he stated.

Nevertheless, his signing of the decree is likely to be taken as a rebuke of China. The new law was published on August 31, a couple days after the Chaves-Biden meeting in the White House. “Bilateral cybersecurity cooperation” was part of the agenda discussed that day.

The United States has also been eyeing Costa Rica as a potential node in the regional supply chain of semiconductors, and cybersecurity will play a major role in the decision to move forward with that partnership.

The US’s policy towards Chinese telecom and tech operatators has grown more agressive over the past five years. The Trump administration singled out Huawei as an “untrostworthy 5G vendor“. The Biden administration has continued that policy of distrust, describing China as “probably, currently […] the broadest, most active and persistent cyber espionage threat to US government and private-sector networks”.

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China’s pressence in Latin America has grown stronger over the past two decades. Bilateral trade between Latin American countries and China jumped from US$14.6billion in 2011 to US$315 billion in 2020. The China Development Bank and the China Export-Import Bank have also become major providers of financing for state-owned projects in Latin America and the Caribbean.

US authorities have been keeping a close eye on Chinese activities in the region, particularly when it comes to infrastructure projects. Their public posture on the matter has been, for the most part, one of concern.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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