The Trump administration has issued an executive order that could see Huawei being banned from US networks. The executive order also subjects the Chinese company to strict export controls.
The executive order, which was released on Wednesday May 15th, makes Huawei the largest business ever to be subjected to such controls. The latest law enforcement measure will require the company to obtain US government approval on the purchases of any US technology. The statement was released by Kevin Wolf, who was the assistant secretary of commerce for export administration during the Obama administration.
"It's going to have ripple effects through the entire global telecommunications network because Huawei affiliates all over the planet depend on US content to function and if they can't get the widget or the part or the software update to keep functioning then those systems go down," he said.
Wolf declined to say if the order would prevent Google from selling its Android operating system, which Huawei uses on its handsets. He added that it would be premature to comment further until he has seen a published order from the Commerce Department's Bureau of Industry and Security. This would allow him to be sure of the scope attached to the executive order.
The executive order declares a national economic emergency. This allows the US government to ban the technology and services of "foreign adversaries" that are deemed to pose "unacceptable risks" to national security. Examples of such risks include cyberespionage and sabotage.
While the newly-signed order does not name specific countries or companies, it comes after months of US pressure on Huawei. According to the order, the Commerce Department will have 150 days to come up with the regulation.
Washington and Beijing are currently locked in a trade war that partly reflects a struggle for global economic and technological dominance. The order that was made public on Wednesday simply ups the ante in the economic battle between the two countries.
The export restriction marks "a grave escalation with China that at minimum plunges the prospect of continued trade negotiations into doubt," said Eurasia Group analysts in a report.
"Unless handled carefully, this situation is likely to place US and Chinese companies at new risk," the report said.
The law invoked in the executive order is the 1977 International Emergency Economic Powers Act. It is also possibly the first time the law has ever been declared in a way that will have an impact on an entire commercial sector. So far, the law has typically been used to freeze the assets of designated terrorists and drug traffickers. Administrations have also called upon this specific law to impose embargoes on hostile former governments.
The order seeks to address concerns from the US government that equipment from Chinese suppliers could pose an espionage threat to US internet and telecommunications infrastructure.
Huawei, which is the world's biggest supplier of network gear, has been deemed a danger in US national security circles for the better part of a decade.
US justice and intelligence officials believe Chinese economic espionage and trade secrets theft are rampant. But, to date, no evidence has been presented that any Huawei equipment in the US or elsewhere has been compromised by so-called backdoors installed by the manufacturer. It would be these backdoors that would be used to facilitate espionage by Beijing.
Huawei has vehemently denied any involvement in Chinese spying.
In response to the order, Huawei said blocking it from doing business in the United States would hamper the introduction of next-generation communications technology. Huawei is regarded as being a world leader in terms of communications technology.
"We are ready and willing to engage with the US government and come up with effective measures to ensure product security," said Huawei in a statement.
The restrictions "will not make the US more secure or stronger," the company said. It said the United States would be limited to "inferior yet more expensive alternatives," which would hurt companies and consumers.
A senior US administration official, who spoke on condition of anonymity, said the order was "company and country agnostic". He added that the order would not be applied retroactively. Officials said "interim regulations" were expected before final rules were set but were vague on what that meant.
Federal Communications Commission Chairman Ajit Pai issued a statement, describing the order as "a significant step toward securing America's networks."
"It signals to US friends and allies how far Washington is willing to go to block Huawei," said Adam Segal, who is cybersecurity director at the Council on Foreign Relations.
According to AP, many European countries have pushed back against sustained diplomatic pressure from the US to institute a wholesale ban on the Chinese company's equipment in their next-generation 5G wireless networks.
Segal added that the move was a "low-cost signal of resolve from the Trump administration," noting that there is little at stake economically.
All major US wireless carriers and internet providers had already sworn off Chinese-made equipment. This was after the House Intelligence Committee published report in 2012 which said both Huawei and ZTE, China's No 2 telecoms equipment company, should be excluded as enablers of Beijing-directed espionage.