US agencies barred from buying Huawei equipment

US agencies barred from buying Huawei equipment

US government agencies from the Pentagon to Nasa will be banned from buying Huawei equipment after the Trump administration implemented a congressional measure to crack down on Chinese companies seen as security threats.

A rule issued by the administration bans Huawei, the Shenzhen-based telecoms company, and other Chinese groups from supplying the federal government. It also covers ZTE, a telecoms company; Hikvision and Dahua, manufacturers of surveillance cameras; and Hytera, which produces two-way radios. 

The move is the latest example of the mounting concern in Washington about the potential for Chinese technology companies to help Beijing conduct cyber espionage. Much of the concern has been aimed at Huawei because of its role building ultra-high-speed 5G networks around the world. 

The US government has been urging allies and other countries to exclude Huawei from their 5G networks because of concerns the company would be unable to refuse requests from Beijing to facilitate espionage. Lawmakers also have been trying to make sure that Huawei loses any foothold in the US. 

Marco Rubio, a Republican senator and China hawk, on Wednesday asked Sundar Pichai, Google’s chief executive, to explain reports that the company had worked closely with Huawei on developing “smart speakers” until Mr Trump in May put Huawei on a trade-related blacklist. In a letter, Mr Rubio said a Google employee recently testified under oath that the company did not have any substantial business in China. 

“We wish we were shocked, but your record around China reveals a string of acts that appear designed to gain favour with the Chinese Communist party, often at the expense of Americans,” the Florida senator wrote in a letter co-authored by two other Republican senators, Tom Cotton and Josh Hawley.

Mr Trump in May put Huawei on the commerce department’s “entity list”, a move that banned US companies from supplying the Chinese group without obtaining difficult-to-receive licences.

After his meeting with Xi Jinping, Chinese president, at the G20 in June, Mr Trump said he had agreed to ease some restrictions on Huawei, as part of a deal that would see China restart purchases of soyabeans and other US agricultural products that had been put on hold because of the more than year-long trade war between the powers. 

US national security hawks were angry that Mr Trump agreed to use Huawei as a bargaining chip to secure a deal with China to end the trade war. In the interim, the commerce department has struggled to find a solution that would follow through on Mr Trump’s pledge to Mr Xi without falling afoul of US law.

One person familiar with the situation said the Huawei impasse appeared to be one of the reasons that trade negotiations in China last week failed to bridge the gulf. After Steven Mnuchin, Treasury secretary, and Robert Lighthizer, US trade representative, returned from China, Mr Trump said he would put more tariffs on Chinese products.

The interim rule banning Huawei from obtaining government contracts comes into force on August 13 while a final rule is completed. The administration was required to formulate the rule to implement provisions in the 2019 defence spending bill that were aimed at pressuring companies that pose a threat to security and human rights. 

“The administration has a strong commitment to defending our nation from foreign adversaries, and will fully comply with Congress on the implementation of the prohibition of Chinese telecom and video surveillance equipment companies, including Huawei,” said Jacob Wood, spokesperson for the White House budget office. 

Last month, the Financial Times reported that surveillance cameras manufactured by Hikvision were being used on some US military bases, despite the looming ban on the company’s products. The cameras were in use at Peterson Air Force Base in Colorado, home to the sensitive Air Force Space Command, and North American Aerospace Defense Command, which provides early warning about any incoming missile attacks.

Huawei has challenged the constitutionality of the defence spending bill in federal court. The company on Wednesday said the rule was “not unexpected” but added that the measure was a “trade barrier based on country-of-origin, invoking punitive action without any evidence of wrong doing”. 

A separate provision in the 2019 National Defense Authorization Act would bar any companies that do business with Huawei from receiving US government contracts from July 2020. The White House Office of Management and Budget in June asked Congress whether the 2020 deadline could be extended — over concern from US companies about the ability to comply with the deadline — but the request was denied.

Follow Demetri Sevastopulo on Twitter: @dimi

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