Huawei Sues US on Ban Hours Before Senate Subpanel Probed Such Threats

The NDAA's anti-Huawei/ZTE language violates the Constitution's bill of attainder and due process clauses by “singling out Huawei for punishment” and “selectively depriving” the company of its “freedom to do business,” Huawei complained to the U.S. District Court in Sherman, Texas. The company seeks a declaratory judgment ruling the statute unconstitutional and an injunction barring the U.S. from blocking Huawei's contracts with federal agencies.

“Without Huawei equipment and services,” U.S. consumers “particularly in rural and poor areas” will be “deprived of access to the most advanced technologies, and will face higher prices and a significantly less competitive market,” the complaint said. “In the area of 5G mobile service in particular, American consumers will have reduced access to state-of-the art networks and suffer from inferior service.” Huawei “equipment and services are subject to advanced security procedures, and no backdoors, implants, or other intentional security vulnerabilities have been documented in any of the more than 170 countries in the world where Huawei equipment and services are used,” the company said.

China backs the suit, said a Foreign Ministry spokesperson Thursday. It's “totally legitimate and understandable for a company to safeguard its legitimate rights and interests in a lawful way,” he said, declining comment when asked if. China plans to join the litigation.

The State Department declined to comment on Huawei's suit, but a spokesman said during a news briefing the U.S. "advocates for secure telecom networks and supply chains that are free from suppliers subject to foreign government control or undue influence which would pose risks of unauthorized access and malicious cyber activity." Senate Commerce Committee Chairman Roger Wicker, R-Miss., and other lawmakers we spoke with didn't comment.

There has been a long conflict between the U.S. government and both Huawei and ZTE. There recently was confusion about future actions by President Donald Trump's administration to curb the companies' potential influence in the U.S. telecom apparatus (see 1902220066). The anti-Huawei/ZTE NDAA language was a compromise after a bid by Senate appropriators to attach a harder-line provision aimed at reinstating a lifted Commerce Department ban on U.S. companies selling to ZTE (see 1807200053).

Senate Security ranking member Ed Markey, D-Mass., and others cited concerns about Huawei during the subcommittee hearing. Markey cited a U.S. “need to deal with [Huawei's] desire to bring their technologies” and “build them into” U.S. communications networks. He noted earlier comments by Chairman Dan Sullivan, R-Alaska, about the need for the U.S.-China bilateral trade agreement to be based on a combination of reciprocity and fairness.

Sen. Richard Blumenthal, D-Conn., questioned whether the U.S. government “and our allies should be satisfied by the show-and-tell that this company has offered us.” The company's tactic in courting U.S. allies in Europe and elsewhere is “to allow governments to inspect the source code of their devices” and “assume that everything else is fine, everything else is safe,” Blumenthal said. A “false sense of security” would let Huawei provide software updates that can open up new vulnerabilities, he said.

Sen. Marsha Blackburn, R-Tenn., called Huawei a top example of Chinese government “weight and intensity” in trying to influence global telecom and tech standards. “We don't want our allies to use” tech from Huawei and other Chinese firms because of concerns the companies embed malware and spyware in their products, she said.

“There is no way that I would allow Huawei gear in the U.S. 5G backbone,” said Harvard University Belfer Center for Science and International Affairs co-Director Eric Rosenbach. “It's a threat to national security and clearly they don't play fair.” Rosenbach noted “the significant resources Huawei derives from the backing of the Chinese government puts American and European telecommunications equipment providers at a clear disadvantage."

Information Technology Industry Council Executive Vice President Josh Kallmer was among witnesses urging lawmakers not to overreact against China. The government is justified in wanting to implement safeguards on "American companies’ innovations in emerging technology fields such as artificial intelligence (AI) and 5G" but "it is important to ensure that such safeguards do not hamstring companies’ ability to develop the very technologies that the U.S. government values," he said.

Rhodium Group's Daniel Rosen urged the U.S. to deliver a "selective" response to China. The U.S. "can say yes to Chinese manufactured goods and direct investment most of the time," he said. "Rather than plan only for all or nothing scenarios, we should build a sliding scale of engagement that fits with the likely mixed-bag that China will present -- a nation somewhere in the middle between advanced economy norms and statism." China "is already showing signs of an economic stall," he said. "Any disengagement we pursue should be reversible, and our ability to reengage should be protected."

New America Cybersecurity Policy and China Digital Economy Fellow Samm Sacks favored a selective approach. "Overreach in the form of blanket bans, unwinding global supply chains, and discrimination based on national origin is not the answer," she said. That would have "costs for U.S. security, competitiveness, and innovation." The Committee on Foreign Investment in the U.S., export controls and law enforcement "are designed to be used as scalpels, not blunt instruments," Sacks said.