Soon, Huawei may no longer be able to do business in the United States [File: Tyrone Siu/Reuters]
United States President Donald Trump signed an executive order on Wednesday to stop American companies from using telecommunications equipment made by technology firms that pose a national security risk.
The order paves the way for a ban on doing business with China‘s Huawei, though it did not name specific countries or companies. Such action was under consideration for more than a year, but was repeatedly delayed.
Under the International Emergency Economic Powers Act, the president has the authority to regulate business decisions in response to a clear national threat, and the “national emergency” declaration directs the US Department of Commerce to lead enforcement efforts.
“The President has made it clear that this Administration will do what it takes to keep America safe and prosperous, and to protect America from foreign adversaries who are actively and increasingly creating and exploiting vulnerabilities in information and communications technology infrastructure and services in the United States,” the White House press secretary said in a statement.
The order targets transactions that pose “undue risk of catastrophic effects on the security or resiliency of United States critical infrastructure or the digital economy of the United States”.
Senior administration officials said that the specific guidelines and regulations will be written over the next 150 days, prohibiting firms designed or controlled by foreign adversaries.
In addition, Huawei’s placement on the “Entity List” for the Bureau of Industry and Security means a license will be required for US suppliers to sell to Huawei.
The announcement comes at a delicate time in relations between China and the US, as the world’s two largest economies levy tit-for-tat tariffs in an escalating trade battle. Retail sales in China slowed last month. Industrial production and investments were also weak.
‘Little impact’ on business
David Wang, Huawei’s executive director, said on Wednesday that new US restrictions on market access will have little impact on the tech giant’s business prospects. Huawei is the biggest global maker of switching equipment for phone and internet companies, but it has also spent a decade fighting accusations that it facilitates Chinese spying.
China’s first international tech brand has steadily expanded into new industry segments, including consumer electronics and consulting services, despite claims from the US and other governments that Huawei poses a security risk.
Huawei is a tool of the Chinese government.
James Andrew Lewis, Center for Strategic and International Studies
“Due to our global operations, any change in one country has little impact on our global business,” said Wang.
The company’s worldwide sales rose about 20 percent last year to 721bn yuan ($105bn), as profits rose 25 percent to 59.3bn yuan ($8.6bn).
Huawei’s US market dried up after a congressional panel first labeled the company a security risk in 2012. The company says that had little effect on business in Europe and emerging markets, where it continues to report strong growth.
“Some experts and governments have misrepresented the technological problems of cybersecurity as political problems,” said Wang, adding that conflating the two would “not help to build a truly security-networked world”.
James Andrew Lewis, director of the Technology Policy Program at the Center for Strategic and International Studies, told Al Jazeera that “most of the espionage cases in the United States involve China, and Huawei is a tool of the Chinese government”.
“Buying from Huawei just makes it easier to spy, and hurts our allies at the same time,” added Lewis.
Huawei Technologies Co. Ltd. is the third-largest smartphone maker in the world.
US security and intelligence agencies believe equipment made by the company could be used by the Chinese government for spying.
“We are concerned that China could compel actions by network vendors to act against the interests of US citizens and citizens of other countries around the world,” Robert Strayer, deputy assistant secretary for cyber policy at the US Department of State, told the Senate Judiciary Committee at a hearing on Tuesday.
Huawei denies allegations that its gear creates security vulnerabilities. And the company’s chairman, Liang Hua, said on Tuesday that his company is even willing to sign no-spy agreements with governments that commit the firm to “making our equipment meet the no-spy, no-backdoors standard”.
The US has been actively pushing other countries not to use Huawei’s equipment in next-generation 5G wireless networks, which it calls “untrustworthy”.
The Federal Communications Commission voted unanimously to deny China Mobile Limited’s bid to provide telecommunications services within the US last week.
In January, US prosecutors said Huawei had conspired to steal T-Mobile trade secrets, and also charged Huawei and its chief financial officer with bank and wire fraud on allegations that the company violated sanctions against Iran.
In August, Trump signed a bill that barred the US government itself from using equipment made by Huawei and another Chinese provider, ZTE Corporation.
While the big US wireless companies have already cut ties with Huawei, an estimated one quarter of small rural carriers continue to rely on both Huawei and ZTE switches because they tend to be cheaper.