Update (1645ET): Confirming what we previewed earlier, and amid a deepening trade war with China, President Trump has declared a “national emergency” to protect U.S. communications networks in a move that WaPo reports would give the federal government broad powers to bar American companies from doing business with certain foreign suppliers.
The order authorizes the commerce secretary to block transactions involving communications technologies built by firms controlled by a foreign adversary that puts U.S. security at “unacceptable” risk — or poses a threat of espionage or sabotage to networks that underpin the day-to-day running of vital public services… which would include the Chinese firm Huawei.
As WaPo details, Trump’s executive order instructs the commerce secretary to develop an enforcement regime and permits the secretary to name companies or technologies that could be barred, according to officials.
The order acknowledges that, although an open investment climate is generally positive, the United States needs to do more to protect the security of its networks.
The national emergency declaration comes a day after a congressional hearing in which senators from both parties joined administration officials in calling out the risks of doing business with a company like Huawei. They emphasized that the problem was less about the company than the authoritarian country whose system of laws, which lacks due process and transparency, it must obey.
“It’s not about overseeing Huawei. It’s about overseeing China,” said Sen. Lindsey O. Graham (R-S.C.), chairman of the Senate Judiciary Committee during the hearing on 5G security.
But, of course, “The executive order is company and country agnostic,” replies a senior White House official when asked if the executive order targets Huawei and China (h/t @W7VOA)
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As we detailed earlier, in what appears to be the US government’s latest salvo in its war against Huawei, President Trump is reportedly preparing to sign an executive order that would prohibit American firms from using equipment made by foreign telecom companies that pose a ‘security threat’, according to Bloomberg, which sourced its report to administration insiders.
The official who spoke with Bloomberg insisted the order wasn’t intended to single out any country or company, but anybody who has been following the ongoing spat with Huawei should instantly recognize that this simply isn’t true (though, with the trade negotiations at a very delicate impasse, we understand why the administration needs to maintain this pretense). Though Huawei and its fellow Chinese telecoms giant ZTE already face serious restrictions on selling their products in the US, Huawei still maintains a US subsidiary in Texas.
The order, which could be signed as soon as Wednesday, wouldn’t outright ban sales to US entities, but it would grant the Commerce Department more authority to review products and purchases made by firms with connections to adversarial countries (we doubt that’s directed at Ericsson and Sweden).
China’s foreign ministry has already lashed out at the US over reports of the executive order.
“This is neither graceful nor fair,” ministry spokesman Geng Shuang said at a news briefing in Beijing. “We urge the U.S. to stop citing security concerns as an excuse to unreasonably suppress Chinese companies and provide a fair and equitable and non-discriminatory environment for Chinese companies to operate in the U.S.”
Washington has been campaigning for months to stop its allies around the globe from allowing Huawei products to be used in their 5G networks, but to little avail. Yesterday, Huawei promised to sign a “no spy” pledge to governments like the UK that are still deciding how much reliance on Huawei they are willing to stomach.
As Huawei pushes to assume a global leadership position in 5G, the US’s efforts to try and discredit the company have included successfully pushing for the arrest of its CFO, Meng Wanzhou, in Canada, on charges she helped the company violate US sanctions on Iran.
American lawmakers suspect Huawei’s equipment could be used for spying – and not without reason.
Just last month, Ars Technica found a backdoor like vulnerability in Huawei’s Matebook laptop series which could have allowed remote hackers to gain access to the system. Chinese law also could technically compel companies like Huawei to cooperate with authorities.
But even if the order is signed on Wednesday, it might not take effect for six months, as it would take time for the Commerce Department to “fashion an approach” to the order.
In the meantime, Verizon and other US telecoms firms are still way behind in the war to dominate the global market for 5G networking equipment.
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Author: Tyler Durden