Trump bans Huawei in U.S. markets, saying Chinese firm poses security threat

Reporting from Washington —  President Trump issued an executive order Wednesday giving his administration sweeping powers to block Chinese telecom giant Huawei Technologies Co. and other foreign communications firms from doing business in the United States — a long-anticipated move he had postponed while Washington and Beijing were in intense trade negotiations.

The White House said the president was taking the action 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.”

Trump’s directive does not name any company from China or any other country, and senior administration officials, in a hastily arranged press call, would not talk about Huawei or any specific firm.

But the order was widely understood as one that targets Huawei, the world’s largest telecommunications equipment manufacturer, which has been in the crosshairs of America’s security and intelligence agencies.

Sen. Marco Rubio (R-Fla.), for example, singled out Huawei in a statement praising Trump’s order, calling the firm “a state-directed instrument of national power used by the Chinese government and Communist Party to destroy their international competitors, undermine U.S. companies, spy on foreign countries, and steal intellectual property and trade secrets.”

For months, U.S. officials have waged an aggressive campaign to restrain Huawei’s global expansion as a leading supplier of the next-generation 5G wireless networks. They have argued that using Huawei equipment poses risks of Chinese espionage or sabotage.

Top Huawei executives have vehemently denied they would allow the Chinese government to use their products for surveillance.

With the trade talks at an impasse since Friday, Trump signed an order that was prepared months ago. Although officials would not attribute the timing to any specific factor, its release came amid an intensifying standoff between Washington and Beijing and immediately added a new level of friction. Already, the two have engaged in escalating rounds of tit-for-tat tariffs that could damage the world’s two largest economies.

Declaring the problem of foreign adversaries seeking to exploit technological risks to be a national emergency, Trump’s order formalizes what was a de facto ban on Huawei in U.S. markets in recent years as the Pentagon and Congress made moves to discourage its growth.

Few Americans own Huawei cellphones and only a small number of local U.S. telecom service providers in rural areas have Huawei gear in their systems. Even so, many in the U.S. intelligence community sought an official ban from the White House, saying it would make the dangers clear and help the administration’s efforts — so far only partly successful — to persuade key allies to shun Huawei.

Washington has become increasingly worried about Beijing’s cyber intrusions and hacking of U.S. companies for sensitive information and technology and trade secrets. On Tuesday, during a Senate panel hearing on 5G and national security threats, lawmakers singled out Huawei in discussing the issue.

Sen. Lindsey Graham (R-S.C.), chairman of the Senate Judiciary Committee, said, “Now we’ve got a developing technology called 5G that if China dominates this market, we may not be able to do normal business or function normally, and we are sitting around looking at each other.”

The U.S. concerns about cyber theft were on the agenda during the trade talks with China, although U.S. negotiators reportedly dropped the issue recently.

The two sides broke off negotiations on Friday after the White House accused China of backing away from previous agreements, and Trump sharply escalated tariffs on Chinese goods. Chinese President Xi Jinping responded with counter-tariffs on Monday.

No new talks are scheduled, although Trump and Xi are expected to meet on the sidelines of the Group of 20 economic summit next month in Osaka, Japan.

There was no immediate reaction from China to the latest U.S. announcement.

Derek Scissors, a China expert at the American Enterprise Institute, said the Chinese would complain — “both for the sake of the trade talks and protecting Huawei’s good name.”

“As a tactical ploy, Beijing might single out an American company as a security risk,” Scissors wrote in an email. “China has recently adopted a more sweeping national security review than ours and they could soon discover that some smaller American IT firm must be tightly restricted,” he said.

“The point of this would be to frighten bigger U.S. firms and have them lobby the administration.”

The executive order authorizes the Commerce Department, with the consultation of other agencies, to block U.S. businesses from transactions of information and communications technology or services from a “foreign adversary” that poses an “unacceptable risk” to U.S. national security. Officials said the Commerce Department would have 150 days to develop implementation rules, although interim procedures are expected.

The Commerce Department rules would be retroactive to the date of Trump’s executive order.

Under existing law, the U.S. government can block foreign firms from acquiring American technology firms, and with China in mind, Congress recently expanded this authority. Trump’s order significantly adds to the government’s toolbox.

“It is striking in how broad it is,” said Doug Brake, a broadband policy expert at the Information Technology and Innovation Foundation, a nonpartisan think tank. He noted that the impact of the order would depend on how the Commerce Department implements this new power.

“So much rides on the processes Commerce sets up, how they do risk analysis of what can be allowed and what cannot,” he said.

The Trump administration, with bipartisan support in Congress, considers China a top strategic adversary and threat to America’s security and economic interests — and technology is a major battleground in this rivalry.

Against that backdrop, the White House has stepped up its rhetoric and moves to isolate Huawei and other Chinese telecom firms.

Although U.S. officials have offered no public evidence of malicious code or so-called back doors in Huawei equipment, they argue that its products can’t be trusted because Beijing could at any time order Chinese companies to do its bidding.

The Pentagon already has moved to block sales of smartphones made by Huawei and ZTE, another Chinese firm, at its retail stores in military bases. And last year’s Defense Department appropriations measure threatened to cut off federal funds to universities using components made by Huawei, prompting UC Berkeley, Stanford University and many other schools to sever new research partnerships with Huawei.

In December, Huawei’s chief financial officer, Meng Wanzhou, who is the daughter of the company’s founder, Ren Zhengfei, was arrested in Vancouver, Canada, on a U.S. warrant. She is fighting extradition to the United States on charges that she and Huawei conspired to violate U.S. sanctions on Iran.

Huawei also faces charges of stealing trade secrets from T-Mobile. Meng and Huawei have denied all charges.

The company has fought back in recent months, filing a civil lawsuit in Canada and publicly denouncing Meng’s detention as politically motivated and a violation of her rights.

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