By Katim S Touray
Some things cannot change
In January 2018, US Representative Mike Conaway introduced a bill to ban US government agencies from buying phones and equipment from Huawei and ZTE. Similarly, two US Senators introduced a bill in February 2018 to prohibit the U.S. government from contracting with companies that use equipment or services from Huawei and other Chinese telecommunications companies. Although the bills got little support, similar ones were introduced in the US House of Representatives and Senate in January 2019 to create a central government agency to assure supply chain security and combat foreign theft of US technologies.
The pressure on Huawei increased in February 2018, when the heads of six US government intelligence agencies testified before a Senate Intelligence Committee hearing that they did not trust Huawei and ZTE, and that they would not advise Americans to use Huawei products or services. In response, Huawei said that it was trusted by customers and governments in 170 countries around the world, and posed no greater cybersecurity risk than other vendors. Nevertheless, the FBI Director said that China was seeking to become a global power, and as such, posed a “whole-of-society threat” that requires an equivalent response from the US. That conclusion certainly raised the bar; at least far more so than the concern expressed every year, for five years, from 2008 to 2012 by the US DoD in its Annual Report on Military Power of the People’s Republic of China about the close collaboration between Huawei and ZTE and the PLA.
In March 2018, Best Buy, the largest electronics store chain in the US said it would stop selling Huawei products. A month later, the FCC voted in favor of a proposal to forbid the use of the Universal Service Funds (USF) of the US government to buy telecommunications equipment from companies considered to be a national security risk.
Although Huawei vigorously opposed the proposed FCC ban, it saw the writing on the wall. At the company’s annual meeting with analysts, Eric Xu, Huawei’s Deputy Chairman said that “Some things cannot change their course according to our wishes,” and that you can feel more at ease when you let them go. Huawei started dialing down its US presence, announcing a layoff of five workers, and reducing its lobbying efforts in Washington DC after almost a decade of efforts to counter accusations against it.
ordering in May 2018 that stores on US military bases stop selling the company’s devices as well as those of ZTE. According to the DoD spokesperson, Huawei and ZTE devices potentially pose “unacceptable risk to [DoD] personnel, information and mission,” and as such, it was not prudent to continue selling these devices to them.
In August 2018, President Trump signed into law the $716 billion “John S. McCain National Defense Authorization Act,” (NDAA) which prohibits US government agencies from procuring telecommunications and video surveillance equipment or services produced by Huawei Technologies Company or ZTE Corporation, or any of their subsidiaries or affiliates. Shortly after, US colleges and universities started falling in line, with Stanford University imposing a moratorium on its use of new research support from Huawei.
More US colleges announced in 2019 that they were dropping the company’s equipment in compliance with the NDAA. Among these universities were the University of California (UC) Berkeley, UC San Diego, as well as Princeton and Ohio State Universities. Half a dozen other universities such as the University of Wisconsin-Madison (my alma mater), UC Los Angeles, UC Davis and the University of Texas at Austin had, as at March 2019, reviewed or were reviewing their telecommunications equipment for compliance with the provisions of the NDAA.
In January 2019, the US Department of Justice hit Huawei with 23 indictments for alleged theft of trade secrets and fraud. The indictments consisted of an indictment for 10 counts of theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud, and one count of obstruction of justice. In addition, the DOJ unsealed a 13-count indictment against Huawei, two of its affiliates, and Meng Wanzhou, its Chief Financial Officer (CFO), and daughter of the company’s founder, Ren Zhengfei. The defendants were charged with bank and wire fraud and conspiracy to commit both, violations of the International Emergency Economic Powers Act (IEEPA), and conspiracy to violate that Act, as well as conspiracy to commit money laundering. Furthermore, Huawei and Huawei USA were charged with conspiracy to obstruct justice, while Ms. Meng (who took her mother’s surname) was charged with bank fraud, wire fraud, and conspiracies to commit bank and wire fraud. Huawei also got hit in January 2019 by an FBI sting operation at the Consumer Electronics Show (CES), and an FBI raid on a Huawei lab in connection with its investigation of the company’s suspected theft of US intellectual property.
On May 15, 2019, President Trump issued an Executive Order (EO) declaring a national emergency in the face of the “unusual and extraordinary threat” posed by foreign adversaries to the use of “information and communications technology or services” in the US. The EO did not name China or any other country, or Huawei, and left it to the Secretary of Commerce to identify the foreign adversaries. A day later, the Department of Commerce did just that, and added Huawei and 68 of its non-U.S. affiliates in 26 countries to the Entity List of companies, organizations, or individuals which pose significant threats to the national security or foreign policy interests of the United States.
Google’s parent company, Alphabet, dealt a strong blow to Huawei on May 19, 2019, when it cut off Huawei from future updates of Google’s propriety apps (e.g. Google Play Store, Gmail, and YouTube) and Android operating system, which ran 87 percent of all mobile phones in the world in 2019. Other companies, including three of the world’s leading chip makers, Intel, Qualcomm, and Broadcom announced they were cutting off their relationships with Huawei. The next day, Huawei got a 90-day reprieve from the restrictions imposed by its placement on the Entity List, and Google was able to resume working with it.
But Huawei was not out of the woods yet, because two important US-based technology standards organizations, the Wi-Fi Alliance (which certifies and promotes Wi-Fi technology), and the SD Association (which sets standards for SD memory cards) both imposed restrictions on it. Thus, the Wi-Fi Alliance temporarily restricted Huawei’s participation in its activities, while the SD Association removed Huawei from its membership. Both organizations restored Huawei’s membership shortly afterward. Similarly, the Institute of Electrical and Electronics Engineers (IEEE), which is also US-based, first restricted Huawei scientist from reviewing its papers, only to reverse that decision a few days later in early June 2019. Facebook also got into the act, restricting Huawei from preinstalling its Facebook, WhatsApp, and Instagram apps on its new phones.
In August 2019, on the eve of the end of the 90-day reprieve granted to Huawei in May 2019, President Trump declared that he does not want to do business with Huawei because it was a threat to national security. Nevertheless, the US Department of Commerce extended the reprieve on August 19, 2019, for another 90 days, but added 46 more Huawei affiliates to the Entity List.
To be continued
Katim is a soil scientist, entrepreneur, international development consultant, and writer on global issues