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Huawei vs. USA: national security concerns or 5G leadership?
26 mars 2019

Huawei announced on 7th of March 2019 that the company is suing the United States over the section 889 of the 2018 National Defense Authorization Act.

Huawei’s legal team argues that the provision is a “bill of attainder”. In other words, it means that this legislative act pronounces a specific individual or group guilty of some offense and punishes them without due process. According to Huawei, this act is therefore unconstitutional.

What the section 889 of the 2018 National Defense Authorization Act is about? What are the reasons behind the United States’ battle against Huawei?

Mathias Avocats draws an overview of the case and analyses the impacts it has already had.

USA banned the use of Huawei equipment by its administration

On 13th of August 2018, President Trump has signed the John S. McCain National Defense Authorization Act For Fiscal Year 2019 (NDAA). Section 889 of the Bill specifically concerns “Prohibition on certain telecommunications and video surveillance services or equipment”. The legislation prohibits federal government administration to “procure, obtain, (…) enter into a contract (or extend or renew a contract) with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system”.

 Then, the bill explicitly names the products manufactured by Huawei and ZTE, such as “telecommunications and video surveillance services” behind the term “covered telecommunications equipment or services”. Consequently, U.S government agencies are forbidden from using or buying products and services from those Chinese companies.

When deposing its lawsuit against the NDAA Section 889, Huawei declared that the bill was unconstitutional. For the company, when imposing sales restrictions, the Congress acted as a judiciary without any possibility for Huawei to defend itself. The Federal District Court in the Easter District of Texas, where the lawsuit was filed, will have to decide whether the Section 889 of the Act is constitutional.

What are the reasons behind the United States’ battle against Huawei?

The United States name the risks for national security as the reason behind its battle against Huawei’s products. President Donald Trump’s administration has repeatedly claimed that the company’s equipment could be used for espionage by the Chinese government.

However, according to experts, it is more about who will be the leader in 5G technology. More specifically, this announcement seems to be a part of the United States’ strategy to spur its allies to ban Chinese companies such as the telecommunication equipment leaders Huawei and ZTE. Huawei is a key player in the introduction of 5G wireless networks around the world and a serious competitor of Apple and Samsung in the global smartphone market.

For an example, according to The Wall Street Journal, US Ambassador to Germany, Richard Grenell has recently warned the German government that USA will cooperate less with German intelligence Agency if Germany allows Chinese technology firms to deploy 5G across the country.

As a response, Eric Xu, one of Huawei’s chairman, has denounced the American government’s strategy to keep Huawei out of the 5G market. In the future, the technology is expected to have a great impact in various sector including autonomous cars, artificial intelligence or smart cities. Experts predict that the U.S position will result in a dissociation of 5G network: one built with Chinese technology and one built with American technology.

The expansion of the ban in the Pacific

Huawei’s founders have denied many times the allegations that the products of the company represent a security risk. However, following the adoption of the American bill, Australia and Japan also chose to follow its path, holding security concerns. Despite Huawei’s involvement in Australia’s telecommunications industry, the Australian government made an announcement saying that “the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law, may risk failure by the carrier to adequately protect a 5G network from unauthorized access or interference”.

Without specifying any countries or companies, Australia pointed out China’s internet laws on national intelligence and counter espionage that require technology firms to hand over network data when asked to do so. Indeed, Article 7 of the 2017 National Intelligence Law states that “any organization or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law”. Regarding this provision, experts doubt of the company’s ability to resist such order. Nevertheless, Huawei continues to state that it  will not transfer customer data to the Chinese government if requested. Indeed, Huawei and the Chinese government have close ties as the company’s leader, Ren Zhengfei, is a current Communist Party member.

Mathias Avocats will keep you updated on any further evolutions.