Left Menu
Development News Edition

UPDATE 4-Trump administration hits China's Huawei with one-two punch

Reuters | Updated: 16-05-2019 06:04 IST | Created: 16-05-2019 06:04 IST
UPDATE 4-Trump administration hits China's Huawei with one-two punch
The Trump administration on Wednesday took aim at China’s Huawei Technologies Co Ltd, banning the firm from buying vital U.S. technology without special approval and effectively barring its equipment from U.S. telecom networks on national security grounds. Taken together, the two moves threaten Huawei's ability to continue to sell many products because of its reliance on American suppliers, and represents a significant escalation in the U.S. government's worldwide campaign against the company.

The steps also come at a delicate time in relations between China and the United States as the world's two largest economies ratchet up tariffs in a battle over what U.S. officials call China's unfair trade practices. Washington believes the handsets and network equipment for telecommunications companies made by Huawei could be used by the Chinese state to spy on Americans.

Huawei, which has repeatedly denied the allegations, said in a statement that "restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger; instead, this will only serve to limit the U.S. to inferior yet more expensive alternatives, leaving the U.S. lagging behind in 5G deployment." "In addition, unreasonable restrictions will infringe upon Huawei's rights and raise other serious legal issues."

The ban on U.S. suppliers, which appears similar to one on Huawei rival ZTE Corp. last year, could hit the shares of Huawei's biggest U.S. suppliers, including chipmakers Qualcomm Inc and Broadcom Inc. In the first action taken on Wednesday, President Donald Trump signed a long-awaited executive order declaring a national emergency and barring U.S. companies from using telecommunications equipment made by firms posing a national security risk.

The order invoked the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency that threatens the United States. It directs the Commerce Department, working with other government agencies, to draw up an enforcement plan by October. Members of Congress said Trump's order was squarely aimed at Chinese companies like Huawei, which generated $93 billion in revenue last year and is seen as a national champion in China.

"China’s main export is espionage, and the distinction between the Chinese Communist Party and Chinese ‘private-sector’ businesses like Huawei is imaginary," Republican Senator Ben Sasse said. ENTITY LIST

Soon after the White House announced the order had been signed, the Commerce Department said it had added Huawei and 70 affiliates to its so-called Entity List - a move that bans the telecom giant from buying parts and components from U.S. companies without U.S. government approval. U.S. officials told Reuters the decision would make it difficult, if not impossible, for Huawei, the largest telecommunications equipment producer in the world, to sell some products because of its reliance on U.S. suppliers. It will take effect in the coming days.

Commerce Secretary Wilbur Ross said in a statement Trump backed the decision that will "prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests." With Huawei on the Entity List, U.S. suppliers will need to apply for licenses to provide the Chinese company with anything subject to U.S. export control regulations. Obtaining such licenses will be difficult because they will have to show the transfer of items will not harm U.S. national security, said John Larkin, a former export control officer in Beijing for the Commerce Department.

The United States in January unsealed a 13-count indictment against Huawei accusing the company and its chief financial officer of conspiring to defraud global financial institutions by misrepresenting Huawei's relationship with a suspected front company that operated in Iran. The indictment was unsealed a month after CFO Meng Wanzhou was arrested in Canada on a U.S. warrant for her role in the alleged fraud. Meng, who maintains her innocence, is fighting extradition.

5G NETWORKS Reuters reported on Tuesday that Trump was expected to sign his long-awaited executive order this week. The order does not specifically name any country or company, but U.S. officials have previously labeled Huawei a "threat".

The United States has been actively pushing other countries not to use the Chinese company's equipment in next-generation 5G networks that it calls "untrustworthy." In August, Trump signed a bill that barred the U.S. government from using equipment from Huawei and another Chinese provider, ZTE Corp. ZTE was added to the Commerce Department's Entity List in March 2016 over allegations it organized an elaborate scheme to hide its re-export of U.S. items to sanctioned countries in violation of U.S. law.

The restrictions prevented suppliers from providing ZTE with U.S. equipment, potentially freezing the company's supply chain, but the restrictions were suspended in a series of temporary reprieves, allowing the company to maintain ties to U.S. suppliers until it agreed to a plea deal a year later. The status of Huawei and ZTE has taken on new urgency as U.S. wireless carriers rollout 5G networks.

While the big wireless companies have already cut ties with Huawei, small rural carriers continue to rely on both Huawei and ZTE switches and other equipment because they tend to be cheaper. Trump's order applies to future purchases and does not address existing hardware, officials said Wednesday. (Reporting by David Shepardson Editing by Tom Brown, Chris Sanders and Sonya Hepinstall)


TRENDING

OPINION / BLOG / INTERVIEW

‘Discounted Deaths’ and COVID 19: Anthropology of Death and Emotions

Death is a social event rather than the mere cessation of biological functions. As seen by anthropologists, death is not just physical but intensely social, cultural, and political....

Indigenous knowledge of communities a must for maximizing impact of community work

Generally, it has been observed that the majority of the academicians in higher education institutions neglect the wisdom of community people and throw their weight around thinking that they know everything and the community knows nothing. ...

In rebuking FBR, Pakistan’s courts take a stand for public health

The system, if implemented effectively, will allow Pakistans revenue service to combat the illicit trade in tobacco products and potentially add hundreds of millions of dollars to the states budget each year. ...

Dissecting how COVID-19 is catalyzing the trajectory of New World Order

The ensuing pandemic of COVID-19 has hit the globalization in two ways firstly, shrinking the importance of globalization as an economic force by curtailing mobility through worldwide lockdowns, and secondly, rejuvenating the idea of indig...

Videos

Latest News

Singapore could reopen entire economy by June end: Minister

Singapore could reopen the entire economy by the end of next month if the community transmission of COVID-19 remains low and stable, a senior minister hinted on Thursday. The move from phase one to the next will depend on the number of comm...

3 Delhi Jal Board staff test COVID-19 positive

Three Delhi Jal Board employees posted at its headquarters in Karol Bagh have been diagnosed with COVID-19, according to officialsAdhering to the governments guidelines to contain the spread of the deadly virus, the second floor of the Varu...

Centre assures full support for evacuating J-K residents stranded abroad

The Centre has assured the Jammu and Kashmir administration of full support in evacuating the union territory residents stranded abroad due to the coronavirus lockdown, an official spokesman said on Thursday. A repatriation flight for the J...

MNRE begins process to engage consultancy for One Sun One World One Grid plan

The Ministry of New Renewable Energy MNRE has started the process to engage a consulting firm for developing a long-term vision, implementation plan, road map and institutional framework for implementing the ambitious One Sun One World One...

Give Feedback