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Huawei sues U.S. government, seeks NDAA ban lift


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Huawei sues U.S. government, seeks NDAA ban lift

By Sijia Jiang and Twinnie Siu

 

2019-03-07T021454Z_3_LYNXNPEF26032_RTROPTP_4_USA-CHINA-HUAWEI-TECH.JPG

FILE PHOTO: A woman walks past a Huawei store in Beijing, China March 2, 2019. REUTERS/Jason Lee

 

HONG KONG (Reuters) - Chinese telecoms equipment maker Huawei Technologies Co Ltd on Thursday confirmed it is suing the U.S. government over a section of a defence bill passed into law last year that restricted its business in the United States.

 

Huawei said it had filed a complaint in a federal court in Texas challenging the constitutionality of Section 889 of the National Defense Authorization Act (NDAA), a section signed into law by the U.S. president in August that banned federal agencies and their contractors from procuring its equipment and services.

 

"The U.S. Congress has repeatedly failed to produce any evidence to support its restrictions on Huaweiproducts. We are compelled to take this legal action as a proper and last resort," Huawei Rotating Chairman Guo Ping said in a statement.

 

"This ban not only is unlawful, but also restricts Huawei from engaging in fair competition, ultimately harming U.S. consumers. We look forward to the court's verdict, and trust that it will benefit both Huawei and the American people."

 

While Huawei had very little market share in the U.S. telecoms market before the bill, it viewed Section 889 as a stumbling block to addressing broader problems with Washington as its existence prevented any steps towards reconciliation.

 

"Lifting the NDAA ban will give the U.S. Government the flexibility it needs to work with Huawei and solve real security issues," Guo said.

 

The privately owned firm has embarked on a public relations and legal offensive over the past two months as Washington lobbies allies to abandon Huawei when building fifth-generation (5G) mobile networks, centring on a 2017 Chinese law requiring companies cooperate with national intelligence work.

 

Founder and Chief Executive Ren Zhengfei has said Huawei, the world's biggest telecoms gear maker, has never and will never share data with China's government.

 

RETRIBUTION

The legal action and public relations outreach compare with a more restrained response in December emphasising "trust in justice" when its chief financial officer, Sabrina Meng Wanzhou, was arrested in Vancouver at U.S. request.

 

The United States has accused Meng - Ren's daughter - of bank and wire fraud related to breaches of trade sanctions against Iran.

 

Huawei's legal action comes after Meng appeared in court on Wednesday during which her lawyer expressed concerns that the allegations have a political character, raising U.S. President Donald Trump's comments on the case.

 

Separately, Meng, who is fighting extradition, is suing Canada's government for procedural wrongs in her arrest.

 

The case had strained relations with China, which this week accused two arrested Canadians of stealing state secrets in a move widely seen as retribution for Meng's arrest.

 

While Meng is under house arrest in Vancouver, it is unclear where the two Canadians are being detained in China. Sources previously told Reuters that at least one of the Canadians did not have access to legal representation.

 

CHANGE OF TUNE

Ren met international media for the first time in several years in mid-January, calling U.S. President Donald Trump "great" and refraining from commenting directly on Meng's case. Shifting tone, Ren in mid-February said Meng's arrest was politically motivated and "not acceptable".

 

Long before Trump initiated a trade war with China, Huawei's activities were under scrutiny by U.S. authorities, according to interviews with 10 people familiar with the Huawei probes and documents related to the investigations seen by Reuters.

 

(Reporting by Sijia Jiang and Twinnie Siu; Editing by James Pomfret and Christopher Cushing)

 

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-- © Copyright Reuters 2019-03-07
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5 hours ago, webfact said:

 

This ban not only i"s unlawful, but also restricts Huawei from engaging in fair competition, ultimately harming U.S. consumers. We look forward to the court's verdict, and trust that it will benefit both Huawei and the American people."

Passed by US Congress and Signed by US President seems like that is how you make a law.  By the way good luck in claiming Unconstitutional.  Don't see the US Supreme Court taking this case.

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6 hours ago, webfact said:

Ren met international media for the first time in several years in mid-January, calling U.S. President Donald Trump "great" 

So.... it looks like Huawie have hit on the solution to their problem.

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  • Section 889 of the NDAA would also prohibit executive-branch agencies from procuring or contracting for certain covered telecommunications equipment or services from companies that are associated with or believed to be owned or controlled by the People’s Republic of China. This includes ZTE and Huawei, two companies whose activities in the United States have been the subject of great scrutiny in recent months.
  • This prohibition would begin for executive-branch agencies one year after enactment of the NDAA and would extend to the beneficiaries of any grants, loans or subsidies from such agencies two years after enactment.
  • Under this provision, the head of any federal agency may issue a onetime waiver for up to two years, while only the director of national intelligence may issue subsequent waivers.

https://www.lawfareblog.com/whats-new-ndaa

  • Unverified assertions that the company is “linked” to the Chinese military appear regularly in news articles. The charges are largely based on the fact that Huawei’s media-shy founder and CEO, Ren Zhengfei, once served in the People’s Liberation Army as a telecom technician, and that the company (like AT&T, Sprint, and Verizon in the U.S.) is a military and government contractor in its home country.
  • “The context of all this is, China is very active in espionage, as are we,” says James Lewis of the Center for Strategic and International Studies (CSIS) in Washington, D.C. 
  • Huawei argues that it’s a multinational just like GE (ge, -7.99%) or IBM (ibm, -0.65%), and is only as vulnerable to intrusion as any other private corporation. It also points out that most equipment made by its main competitors — Ericsson, Alcatel-Lucent, and Nokia Siemens — is manufactured in China. What’s to stop Chinese spies from infiltrating those operations?

http://fortune.com/2011/07/28/what-makes-china-telecom-huawei-so-scary/

The US Constitution says one can't discriminate based on nationality. If Huawei is banned because its stockholders are Chinese citizens, that might make the ban unconstitutional.

 

The problem is that there is no check and balance against Chinese government intrusion into alleged Chinese privately-owned companies. As a communist country should the government order certain hostile cyber actions be taken by Huawei regarding the US electronic industry, what recourse would the shareholders have but to comply or sell the company?

A case maybe in point might be the allegedly private ownership of Chinese e-commerce giant Alibaba Group Holding Ltd. Co-founder Jack Ma with a net worth of $38.4 billion is a member of the Communist Party. 

  • The lines between business and politics have become increasingly hazy in China as President Xi Jinping has led a campaign to ensure the Communist Party plays a leading role across all aspects of society. That has at time created tensions when the interests of private business people and the state have conflicted.

https://www.bloomberg.com/news/articles/2018-11-27/jack-ma-communist-and-the-tricky-balance-for-china-s-capitalists

 

Another problem is for a Chinese company to mass extreme wealth in China may have to covertly partner with the Chinese government.

  • To get ahead in China some might say you need to be in with the Communists; the leaders, the bureaucrats, the officials.
  • Yet, others have noted that Jack Ma's CPC affiliation wasn't mentioned in Alibaba's share flotation brochure in 2014.

https://www.bbc.com/news/business-46353767

 

Ultimately however, I think the burden of proof is on the US government to show why the ban is constitutional, assuming Huawei has standing in US Courts. And that may be Trump's first line of defense.

 

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4 hours ago, Kasset Tak said:

So, again... one of the reasons (according to Trump) that US is having a trade war with China is that US companies are blocked in China... and then US block a Chinese company from it's own market and say that they are supporting Chinese spying on US...
And I guess that they are right... because surely, US have never ever spied on other countries, or tried to get information of phone users from companies like Apple.............................................................. It's just a part of the <deleted> double standard that makes countries like China and Russia able to prove their points to anyone who aren't brainwashed to be pro American!
Just like when US complained that Russia was doing overflights when a US AEIGIS cruiser was having "training exercises"... 25km from one of Russia's major naval/Air force/Army bases. Or complained that Russia deployed Iskender missiles batteries (they can be armed with nuclear missiles) at the same place... after US installed missile launchers (capable of firing nuclear missiles...) in Poland... just about 30 km from the Russian border!

What I'm saying is that: Sure, Russia and China aren't the best places but US are doing exactly the same things against them, and if you do something to others, then you need to be prepared to let others do the same thing to you!

Does the USA have a law that requires its private companies to cooperate with American intelligence agencies? 

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