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US blacklists China’s tech giant Huawei, 70 affiliates

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  • Huawei hits back after Trump declares national emergency on telecoms ‘threat’
  • Order ‘unreasonable’ and will harm US consumers, says Huawei
  • Move bars business with firms posing national security risk

Jude Johnson with Agency reports

The United States Commerce Department said on Wednesday it is adding Huawei Technologies Co Ltd and 70 affiliates to its so-called “Entity List” – a move that bans the telecom giant from buying parts and components from US companies without US government approval.

US officials told Reuters the decision would also make it difficult if not impossible for Huawei, the largest telecommunications equipment producer in the world, to sell some products because of its reliance on US suppliers.

Under the order that will take effect in the coming days, Huawei will need a US government license to buy American technology. Huawei did not immediately comment.

Commerce Secretary Wilbur Ross said in a statement President Donald Trump backed the decision that will “prevent American technology from being used by foreign owned entities in ways that potentially undermine US national security or foreign policy interests.”

The dramatic move comes as the Trump administration has aggressively lobbied other countries not to use Huawei equipment in next-generation 5G networks and comes just days after the Trump administration imposed new tariffs on Chinese goods amid an escalating trade war.

The Commerce Department said the move comes after the US Justice Department unsealed an indictment in January of Huawei and some entities that said the company had conspired to provide prohibited financial services to Iran. The department said it has a reasonable basis to conclude that Huawei is “engaged in activities that are contrary to US national security or foreign policy interest.”

Huawei reported first-quarter revenue of $27 billion last month and said it had shipped 59 million smartphones in the first quarter.

In March 2016, the Commerce Department added ZTE Corp to the entity list over allegations it organized an elaborate scheme to hide its re-export of US items to sanctioned countries in violation of US law.

The restrictions prevented suppliers from providing ZTE with US equipment, potentially freezing the Huawei rival’s supply chain, but they were short-lived. The U.S. suspended the restrictions in a series of temporary reprieves, allowing the company to maintain ties to U.S. suppliers until it agreed to a plea deal a year later.

In August, Trump signed a bill that barred the US government itself from using equipment from Huawei and ZTE.

Senator Ben Sasse, a Republican, said “Huawei’s supply chain depends on contracts with American companies” and he urged the Commerce Department to look “at how we can effectively disrupt our adversary.”


Huawei criticizes ‘unreasonable’ decision 

Huawei has criticised as “unreasonable” Donald Trump’s declaration of a national emergency to ban technology from “foreign adversaries” that is deemed to pose a risk to national security.

In a statement reported by the state-run Global Times, Huawei said: “If the US restricts Huawei, it will not make the US safer, nor will it make the US stronger. It will only force the US to use inferior and expensive alternative equipment, lagging behind other countries … and ultimately harming US companies and consumers.”

The company said it was willing to “communicate with the US to ensure product security”, echoing similar reassurances in the UK.

Trump’s executive order invokes the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency that threatens the US. The order directs the commerce department, working with other government agencies, to draw up a plan for enforcement within 150 days.

The commerce department said it was adding Huawei and 70 affiliates to its “entity list”, banning the company from acquiring components and technology from US firms without government approval.

Responding on Thursday to earlier reports of the executive order, Chinese foreign affairs spokesman Geng Shuang described US actions against “specific Chinese companies” as “disgraceful and unjust”.

“We urge the US side to stop oppressing Chinese companies under the pretext of security concerns and provide a fair, just and non-discriminatory environment for their normal investment and operation,” Geng said.

Trump’s commerce secretary, Wilbur Ross, said the order, which has been under review for more than a year, was aimed at protecting the supply chain from “foreign adversaries to the nation’s information and communications technology and services supply chain”.

“Under President Trump’s leadership Americans will be able to trust that our data and infrastructure are secure,” he said.

The order does not specifically name any country or company, but US officials have previously labelled Huawei a “threat” and lobbied allies not to use Huawei network equipment in next-generation 5G networks.

The order comes at a delicate time in relations between China and the US as the world’s two largest economies ratchet up tariffs in a battle over what US officials call China’s unfair trade practices.

Talks between Washington and Beijing have ground to a halt in recent days, causing volatility amid fears of a global trade war.

Beijing announced plans this week to increase tariffs on nearly $60bn worth of US imports beginning on 1 June, in what the Chinese government said was a retaliatory move after the Trump administration imposed tariffs on $200bn of Chinese goods.

Trump is expected to meet with China’s president, Xi Jinping, next month in Japan.

Washington says equipment made by Huawei could be used by the Chinese state to spy. Huawei has vehemently denied the allegations.

Ren Zhengfei, the company’s founder and CEO, claimed in a February interview that Huawei would reject any efforts to gather intelligence through its products even if the Chinese government required it to do so. “We never participate in espionage and we do not allow any of our employees to do any act like that. And we absolutely never install backdoors,” Zhengfei said in an interview with CBS News.

The White House press secretary, Sarah Sanders, said the order was aimed at stopping transactions that posed an “an unacceptable risk to the national security of the United States”.

The US has been pushing other countries not to use Huawei’s equipment in next-generation 5G networks, calling it “untrustworthy”. In August, Trump signed a bill that barred the US government from using equipment from Huawei and another Chinese provider, ZTE Corp.

The Federal Communications Commission chairman, Ajit Pai, who has called Huawei a threat to US security, said on Wednesday: “Given the threats presented by certain foreign companies’ equipment and services, this is a significant step toward securing America’s networks.”


Credits| Reuters, The Guardian



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