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3 June 2019

Huawei takes legal and PR action to fight USA’s “unconstitutional” ban

Huawei is taking a two-pronged approach to defending itself against the USA’s decision to place it on an ‘entity list’, which bars US firms from trading with it unless they have a special license. Against the backdrop of escalating trade wars between the US and China, and cybersecurity allegations (which Huawei denies), the Chinese firm has filed suit against the Trump administration, while stepping up its attempts to woo public opinion round the world.

The firm’s chief legal officer, Song Liuping, wrote a high profile article in the Wall Street Journal last weekend which argued that the government ban is based on a new law which is unconstitutional. The 2019 National Defense Authorization Act – which allows the defense secretary to ban companies from doing business with US firms and agencies if they are deemed to be security threats –  violates the US constitutional provision against any ‘bill of attainder’ (a law punishing a person or group without trial), wrote Song.

He added that there has been “no opportunity for Huawei to rebut the accusations, to present evidence in its defense, or to avail itself of other procedures that impartial adjudicators provide to ensure a fair search for the truth. Rather, the law pronounces Huawei’s guilt and imposes vast restrictions with the express purpose of driving Huawei out of the US market.”

That was followed by the company filing suite in a Texas federal court, asking for the law to be declared unconstitutional, which would end the ban on Huawei buying US components on legal grounds without the need for a trial based on the facts of the allegations against Huawei. Some of these relate to alleged dealings with Iran that broke US sanctions; but many more to supposed national security violations, including the risk of Huawei kit being used by the Chinese government to spy on other countries via back doors in national infrastructure. No evidence has been produced of these security claims. A hearing on the motion is set for September 19.

Next came more statements from Song, pointing out the harm that a ban could do to the USA itself, claiming it would “directly harm more than 1,200 US companies” and “affect tens of thousands of American jobs”, as well as the 40 rural operators which use Huawei equipment (Huawei and ZTE were barred from national mobile network contracts in 2010, but have been able to supply smaller providers).

“The US government has provided no evidence to show that Huawei is a security threat. There is no gun, no smoke. Only speculation,” Song said. “Today it’s telecoms and Huawei. Tomorrow it could be your industry, your company, your consumers.”

He also argued that using cybersecurity as an excuse to disadvantage Huawei “will do nothing to make networks more secure. They provide a false sense of security, and distract attention from the real challenges we face. He concluded: “Politicians in the US  are using the strength of an entire nation to come after a private company. This is not normal. Almost never seen in history.”

Most of the technology companies that have suspended work with Huawei (see Wireless Watch May 20 2019) made it clear that they hoped a resolution would be found soon, since many of them stand to lose substantial business, and are also concerned about the wider impact on the whole industry – potentially creating two incompatible global technology zones, and a hi-tech arms race which will end hopes of a truly global 5G platform.

Even the president hinted that there might be a compromise possible if a Huawei reprieve could be included in a China trade deal (which seemed to contradict the idea that Huawei kit had to be banned because it was such a security threat).

But some members of the government are in no mood to relent. On Wednesday, Secretary of State Mike Pompeo said in an interview with Fox Business Network that Huawei was “an instrument of the Chinese government”, while once again producing no evidence.

So far, Huawei has focused on the damage to US businesses and the whole industry from a continuing ban, and tried to downplay the impact on its own finances. However, founder Ren Zhengfei admitted that the new band would reduce its claimed two-year lead over Nokia and Ericsson in 5G technology. To maintain that lead without access to US components and partners, Huawei would have to expand chip production or migrate to new suppliers, which would take time.