We track developments of international trade relevance related to non-US organizations and persons that have been targeted by the US government on the grounds of national security and foreign policy.


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HUAWEI

 

Week Ending March 27, 2020

 

Notable Developments

  • Senior White House officials reportedly agreed to new measures to restrict the global supply of chips to Huawei. Under the proposed rule change, foreign companies using US chip making equipment would be required to obtain a US license before supplying certain chips to Huawei.
  • On March 26, the White House released its National Strategy to Secure 5G of the United States. The document outlines President Trump’s vision “for America to lead the development, deployment, and management of secure and reliable 5G communications infrastructure worldwide, arm-in-arm with [its] closest partners and allies.” The strategy includes four lines of effort:
    1. Facilitate domestic 5G rollout;
    2. Assess risks and identify core security principles for 5G infrastructure;
    3. Manage risks to U.S. economic and national security from the use of 5G infrastructure; and
    4. Promote responsible global development and deployment of 5G infrastructure.
  • On March 23, President Trump signed into law 893, the Secure 5G and Beyond Act of 2020, which requires the President to develop a strategy to:  (1) ensure the security of next generation mobile telecommunications systems and infrastructure in the United States; and (2) assist allies and strategic partners in maximizing the security of next generation mobile telecommunications systems and infrastructure.
  • Huawei joined Alibaba and other Chinese companies in donating millions of facemasks to health care workers in several European countries. Many organizations, including the German Marshall Fund, argued that Chinese companies are engaged in a publicity campaign to “downplay criticism of the Beijing government’s early response” to COVID-19. Huawei has denied these claims.

Relevant Articles


Relevant US Regulations


Order: Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, Federal Communications Commission, April 2, 2020.

Public Notice: Information Collection Being Reviewed by the Federal Communications Commission, Federal Communications Commission, March 20, 2020.

Temporary General License: Extension of Validity, Department of Commerce, Bureau of Industry and Security, Federal Register,  March 12, 2020.

Public Notice: Wireline Competition Bureau and Office of Economics and Analytics Open Reporting Portal for Supply Chain Security Information Collection, Federal Communications Commission, February 26, 2020.

Notice of Investigation and Record Requests, Department of Education, Federal Register, February 26, 2020.

Temporary General License: Extension of Validity, Department of Commerce, Bureau of Industry and Security, Federal Register, February 18, 2020.

Defense Federal Acquisition Regulation Supplement: Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, Department of Defense, Defense Acquisition Regulations System, Federal Register, February 11, 2020.

Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, Federal Communications Commission, Federal Register, January 3, 2020.


Previous Developments

  • President Trump signed the Secure and Trusted Communications Networks Act, which prohibits the use of Federal funds to purchase equipment from companies that pose a national security threat. The law also requires the FCC to establish a program to help smaller, rural carriers “rip and replace” existing equipment from Huawei and ZTE.
  • Anonymous French officials said France would allow Huawei equipment in its 5G network. The equipment will likely be excluded from France’s core networks.
  • Chris Van Hollen (D-MD) and Tom Cotton (R-AR), along with Rep. Mike Gallagher (R-WI), introduced the Neutralizing Emerging Threats from Wireless OEMs Receiving direction from Kleptocracies and Surveillance states (NETWORKS) Act. The bill would add foreign companies producing 5G technology, like Huawei, to the U.S. Treasury Department’s Specially Designated Nationals (SDN) List should they engage in economic or industrial espionage or sanctions violations.
  • Tory Members of the UK Parliament unsuccessfully attempted to overturn the Boris Johnson administration’s decision to allow Huawei equipment in the UK’s 5G network.
  • The Department of Commerce re-extended the Temporary General License (TGL) for another 45 days allowing US companies to maintain their business with Huawei. According to the bureau, the extension enables US companies to continue to operate their existing systems while identifying alternative suppliers.
  • On March 4, a bipartisan group of Senators sent a letter to Members of the United Kingdom House of Commons expressing concern over the U.K.’s decision to allow Huawei into its 5G network.
    • The letter was signed by Sens. Ben Sasse (R-Nebraska), Chuck Schumer (D-NY), Tom Cotton (R-Arkansas), Ed Markey (D-Massachusetts), Thom Tillis (R-North Carolina), Chris Coons (D-Delaware), Marco Rubio (R-Florida), Chris Van Hollen (D-Maryland), Jerry Moran (R-Kansas), Kirsten Gillibrand (D-New York), Richard Burr (R-North Carolina), Mark Warner (D-Virginia), Ted Cruz (R-Texas), Richard Blumenthal (D-Connecticut), John Thune (R-South Dakota), Mitt Romney (R-Utah), Rick Scott (R-Florida), Josh Hawley (R-Missouri), Todd Young (R-Indiana), and Marsha Blackburn (R-Tennessee).
  • Several American telecommunication industry associations voiced disapproval of the FCC’s decision to bar Chinese equipment in networks funded by the Universal Service Fund (USF), arguing that the Communications Assistance for Law Enforcement Act does not give the FCC such authority.
  • Assistant US Attorney Alexander Solomon vowed to provide additional evidence against Huawei in the ongoing RICO and trade secrets case. Huawei dismissed these new allegations as “selective, politically-motivated enforcement of the law.”
  • The Secure and Trusted Communications Networks Act would direct the FCC to design a list of suggested alternatives to Huawei and ZTE. Experts said that the effort helps US companies identify alternative suppliers and dissuade US allies from adopting Chinese equipment.
  • Reuters obtained new evidence suggesting Huawei had shipped prohibited telecommunication equipment and software to Iran.
  • On February 27, the US Senate passed the Secure and Trusted Communications Networks Act (HR 4998). The bill authorizes around $1 billion to help US telecommunications providers remove Huawei equipment from their networks. The bill now heads to President Donald Trump for his signature to be enacted into law.
  • On February 26, the FCC began soliciting information from Eligible Telecommunication Carriers (ETCs) regarding their network’s use of Huawei and ZTE equipment and the estimated expense for “ripping and replacing” the equipment. The filing deadline is April 22.
  • During the Democratic debate, former Vice President Joe Biden, former Mayor Mike Bloomberg, and Sen. Elizabeth Warren (D-MA) said they would exclude Chinese companies from involvement in critical U.S. infrastructure.
  • The House Energy and Commerce Committee leaders applaud Senate passage of legislation to protect communications networks from supply chain threats.
  • Counsel for Huawei claimed that US prosecutors overlooked HSBC’s violation of US sanctions against Iran to further their case against Huawei CFO Meng Wanzhou. The lawyers demanded information from the Justice Department, arguing new disclosures could potentially prove Meng’s innocence against bank fraud charges.
  • A US District Judge dismissed Huawei’s lawsuit against the US government. The judge ruled that the Huawei ban – legislation prohibiting Huawei from selling to the US federal government – was designed to address legitimate national security concerns and was not a “bill of attainder.”At the Munich Security Conference, US Defense Secretary Mark Esper warned US allies about Huawei’s security risks and reiterated that the US could potentially curtail its intelligence sharing.
  • On February 14, Sen. Rick Scott (R-Florida) introduced S. 3316 to further restrain American sales to Huawei. The legislation prohibits products that contain 10% US content/technologies (lowered from 25%) from being sold to blacklisted companies.
  • Speaking at the Munich Security Conference, House Speaker Nancy Pelosi (D-California) said she agreed with President Trump on the threat of Huawei and warned European allies against allowing the company into 5G markets.
  • The Department of Justice withdrew its earlier opposition to the Department of Commerce’s proposed rules restricting US companies’ sales to Huawei.
  • The Department of Justice recently charged Huawei with trade theft and violating the Racketeer Influenced and Corrupt Organizations Act (RICO). The charges allege that Huawei stole intellectual property secrets from six US companies and covered up projects in North Korea.
  • Senate Commerce Committee Chairman Roger Wicker (R-Mississippi) said the Senate would pass the Secure and Trusted Communications Networks Act (HR-4998) through unanimous consent (UC) after the upcoming Congressional recess. The bill provides around $1 billion to US providers to “rip and replace” Huawei equipment.
  • The Commerce Department’s Bureau of Industry and Security extended the temporary general license (TGL) for Huawei and 114 of its non-U.S. affiliates until April 1, allowing US companies to continue selling to these entities.

Additional Articles