National Emergency vs. Huawei

President Trump Takes Aim At Huawei, Paves Way For Ban Of Chinese Telecom Equipment

By RICHARD GONZALES

President Trump signed an executive order Wednesday designed to bar U.S. telecommunications networks from using equipment from foreign suppliers, a move apparently targeting Chinese telecom giant Huawei.
The order declares a "national emergency" and says that "foreign adversaries are increasingly creating and exploiting vulnerabilities in information and communications technology and services" and committing economic and industrial espionage against the U.S.
Trump's order directs Commerce Secretary Wilbur Ross to draft rules to restrict the purchase of information and communications technology from companies "owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary."
A senior administration official says the order is not directed at any particular country or company, but the order appears to be aimed at Chinese telecom manufacturer Huawei.
Separately, the Commerce Department said Wednesday it was adding Huawei to its "Entity List," preventing it from buying components from American companies without U.S. government approval.
The administration says Huawei's technology could become a conduit for snooping or sabotage by the government in Beijing. 

The U.S. federal government itself is already barred from doing business with Huawei and another Chinese telecom firm, ZTE. 

The administration has also been discouraging allies from using Huawei equipment as they build out 5G networks.
The executive order gives the Commerce Department 150 days to write regulations implementing it.
The Trump administration "will do what it takes to keep America safe and prosperous, and to protect America from foreign adversaries" targeting vulnerabilities in American communications infrastructure, White House press secretary Sarah Sanders said in a statement.
The president's action was described by a senior administration official as "company and country agnostic." 

Even so, it was greeted with bipartisan endorsements on Capitol Hill as strong action against China amid American fears of technological vulnerability.
"This is a needed step, and reflects the reality that Huawei and ZTE represent a threat to the security of U.S. and allied communications networks," said Virginia Sen. Mark Warner, the top Democrat on the Senate Intelligence Committee, in a statement. 

"Under current Chinese security laws, these and other companies based in China are required to provide assistance to the Chinese state."
Republican Sen. Ben Sasse of Nebraska, also a member of the Senate Intelligence Committee, said in a statement, "Let's cut to the chase: China's main export is espionage, and the distinction between the Chinese Communist Party and Chinese 'private-sector' businesses like Huawei is imaginary. The Trump Administration is right to recognize this reality and issue this order."
The president's executive order comes as the U.S. and China are locked in a trade war, with both nations imposing tariffs on products from the other.

Spying Company

President Trump expected to sign order paving way for U.S. telecoms ban on Huawei
By David Shepardson

WASHINGTON -- President Donald Trump is expected to sign an executive order this week barring U.S. companies from using telecommunications equipment made by firms posing a national security risk, paving the way for a ban on doing business with China’s Huawei, three U.S. officials familiar with the plan told Reuters.
The order, which will not name specific countries or companies, has been under consideration for more than a year but has repeatedly been delayed, the sources said, asking not to be named because the preparations remain confidential. 

It could be delayed again, they said.
The executive order would invoke the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency that threatens the United States. 

The order will direct the Commerce Department, working with other government agencies, to draw up a plan for enforcement, the sources said.
If signed, the executive order would come at a delicate time in relations between China and the United States as the world’s two largest economies ratchet up tariffs in a battle over what U.S. officials call China’s unfair trade practices.
Washington believes equipment made by Huawei Technologies Co Ltd, the world’s third largest smartphone maker, could be used by the Chinese state to spy. 

Huawei did not immediately comment.
The White House and Commerce Department declined to comment.
The United States has been actively pushing other countries not to use Huawei’s equipment in next-generation 5G networks that it calls “untrustworthy.” 

In August, Trump signed a bill that barred the U.S. government itself from using equipment from Huawei and another Chinese provider, ZTE Corp.
In January, U.S. prosecutors charged two Huawei units in Washington state saying they conspired to steal T-Mobile US Inc trade secrets, and also charged Huawei and its chief financial officer with bank and wire fraud on allegations that the company violated sanctions against Iran.
The Federal Communications Commission in April 2018 voted to advance a proposal to bar the use of funds from a $9 billion government fund to purchase equipment or services from companies that pose a security threat to U.S. communications networks.
Federal Communications Commission chairman Ajit Pai said last week he is waiting for the Commerce Department to express views on how to “define the list of companies” that would be prohibited under the FCC proposal.
The FCC voted unanimously to deny China Mobile Ltd’s bid to provide U.S. telecommunications services last week and said it was reviewing similar prior approvals held by China Unicom and China Telecom Corp.
The issue has taken on new urgency as U.S. wireless carriers look for partners as they rollout 5G networks.
While the big wireless companies have already cut ties with Huawei, small rural carriers continue to rely on both Huawei and ZTE switches and other equipment because they tend to be cheaper.
The Rural Wireless Association, which represents carriers with fewer than 100,000 subscribers, estimated that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in an FCC filing in December.
At a hearing Tuesday, U.S. senators raised the alarm about allies using Chinese equipment in 5G networks.
The Wall Street Journal first reported in May 2018 that the executive order was under review. 

Reuters reported in December that Trump was still considering issuing the order and other media reported in February that the order was imminent.

Administration Readies Order to Keep China Out of Wireless Networks

By Julian E. Barnes

The executive order is aimed largely at preventing Chinese telecom firm Huawei from gaining access to the fifth-generation — or 5G — wireless networks.

WASHINGTON — The Trump administration is moving closer to completing an executive order that would ban telecommunications companies in the United States from using Chinese equipment while building next-generation wireless networks, according to American officials.
President Trump has been briefed on the proposed ban, which would prevent the use of equipment from “adversarial powers,” and the order could be issued in the coming days, American government and industry officials said.
The executive order, which has been under discussion for months, is aimed largely at preventing Chinese telecom firms like Huawei from gaining access to the fifth-generation — or 5G — wireless networks that companies are beginning to build in the United States. 

American intelligence officials have grown increasingly concerned about Huawei and other Chinese telecom companies, saying their inclusion in American networks pose security risks that could jeopardize national security.
5G is expected to be far faster than today’s wireless networks, allowing a broad range of devices like autonomous vehicles to be connected to and controlled by wireless networks.
The executive order has been expected for months and news reports have repeatedly predicted its imminent rollout, only for the order to be delayed.
But American officials are increasingly ratcheting up pressure on Huawei, which is China’s largest telecom equipment company. 

The United States recently brought criminal charges against Huawei’s chief financial officer, Meng Wanzhou, and is seeking her extradition from Canada, where she was arrested at Washington’s behest.
Top American officials, including Secretary of State Mike Pompeo, are in Europe this week pressing allies to take their own steps to ban Chinese companies, including Huawei, from their next-generation networks. 

The executive order would help strengthen the United States’ case to other nations, according to American officials.
Government and industry officials have expected the executive order to be announced this month before a mobile technology trade event in Barcelona. 

But other people briefed on the effort said the administration wanted to complete its trade negotiations with China before introducing the order. 

American trade negotiators are in Beijing this week trying to hammer out a trade deal before a March deadline agreed to by both China and the United States.
American officials have repeatedly emphasized that the executive order — and its concerns about Huawei — is separate from the trade talks.
But Mr. Trump has allowed trade and security issues to be intertwined before, even when security officials have tried to keep them separate.
During an Oval Office meeting last month with top Chinese trade officials, Mr. Trump said he expected Huawei to come up during the talks. 

And Trump previously stepped in to end a ban on another Chinese telecom company, ZTE, which was prevented from buying American technology for seven years. 

Security officials are still smarting from Trump’s capitulation to a request by Xi Jinping that the United States drop that ban.
Mr. Pompeo is visiting Hungary, Poland and other European countries this week and has been making the case to allies that they should avoid using Chinese telecom companies in their 5G networks, saying it is a security risk.
American officials have been privately telling European allies that decisions about troop presence and bases could be predicated on which countries have 5G networks free of Chinese equipment. 

This week, Mr. Pompeo issued a public version of that warning, telling allies to steer clear of Chinese-built 5G networks.
“We have seen this all around the world. It also makes it more difficult for America to be present,” Mr. Pompeo said. 

“If that equipment is co-located where we have important American systems, it makes it more difficult for us to partner alongside them.”
Mr. Pompeo also called out Huawei while in Budapest, warning other nations about “risks that Huawei’s presence in their networks present — actual risks to their people, to the loss of privacy protections.”
The acting secretary of defense, Patrick M. Shanahan, is scheduled to be in Brussels for meetings on Wednesday and Thursday and will travel to Munich on Friday for the annual security conference there. 

He is also expected to raise the dangers of using Huawei and other Chinese telecom firms in foreign networks.
Some European officials have considered enlisting the North Atlantic Treaty Organization in the debate, arguing that decisions about what companies to use to build wireless networks are a matter of national sovereignty. 

While some European countries, like Poland, have embraced the United States’ point of view, Huawei is intertwined in European networks and many countries have made heavy use of its equipment. 

Britain has allowed the company to build equipment outside its core networks, but has an oversight board that closely examines Huawei’s equipment and software.
Australia was one of the first allies to move against Huawei, announcing a ban last year.
Some members of Congress have been skeptical of banning Chinese companies by executive order, including Senator Richard M. Burr, Republican of North Carolina, who leads the Senate Intelligence Committee.
Mr. Burr has said discussions with telecom companies could prompt them to voluntarily block Huawei. 

Indeed, big carriers like Verizon and AT&T have said they will not use Huawei equipment. 

But administration officials have said that without an executive order, smaller companies that serve large parts of the rural United States might use Chinese equipment.
Government and industry officials have said the move to 5G networks will be more revolutionary than evolutionary. 

Unlike earlier generations of wireless networks, they will run more on software than hardware, allowing the possibility that companies that control the networks to divert information without being detected.
This capability comes as Washington and its allies have become more suspicious of Beijing, arguing that a series of new laws gives it unfettered access to data that crosses networks built and maintained by companies based in China.
Much of the attention has been on Huawei, because it makes some of the least expensive equipment that can go into a 5G network. 

It has also been the subject of Department of Justice indictments accusing it of stealing competitors’ trade secrets and is at the center of a spy scandal in Poland.
But administration officials said the executive order would ban a broad array of foreign equipment, not just Huawei. 

It would also prevent any Russian software from telecommunications networks. 

It would not ban European equipment makers like Ericsson or Nokia.
Blocking only Huawei, according to government officials, would simply result in capital, personnel and know-how shifting to another Chinese company.
In commercial terms, the effect of the executive order on Huawei and ZTE is likely to be small. 

Large American cellular operators, such as AT&T and Verizon, have been effectively banned from buying from the Chinese vendors since a 2012 congressional report said that they could not be trusted to be free of interference from Beijing. 

That has left Huawei and ZTE with small, regional wireless operators as the only customers for their network equipment in the United States, despite being a large presence in Europe, Asia and elsewhere.
But the executive order has symbolic value amid the Trump administration’s broad and aggressive campaign to stymie the Chinese telecom equipment makers.
A Huawei spokesman did not immediately respond to a request for comment. 

American officials had mulled a broader ban that would also prevent the export of American technology to Huawei and other Chinese telecom companies.
Such a ban could have set back Huawei’s ability to compete for 5G contracts at a critical time. 

In the next six months, many allies and partners will be deciding what technology to use in their next-generation networks, American officials said.
But the White House rejected the export ban, officials said, believing that it would hurt American companies who depend on sales to Chinese companies, threaten high-paying jobs and simply force Huawei and other companies to make their own competing components on a faster timetable.

President Trump could declare a national emergency barring US companies from using equipment made by China's Huawei and ZTE

• President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China's Huawei and ZTE.
• The two companies work at the behest of the Chinese government and their equipment is used to spy on Americans.
• It would be the latest step by the Trump administration to cut Huawei and ZTE, two of China's biggest network equipment companies, out of the U.S. market.
• The issue has new urgency as U.S. wireless carriers look for partners as they prepare to adopt next generation 5G wireless networks.

By David Shepardson and Diane Bartz

WASHINGTON -- President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China's Huawei and ZTE, three sources familiar with the situation told Reuters.
It would be the latest step by the Trump administration to cut Huawei and ZTE, two of China's biggest network equipment companies, out of the U.S. market.

The two companies work at the behest of the Chinese government and their equipment could be used to spy on Americans.
The executive order, which has been under consideration for more than eight months, could be issued as early as January and would direct the Commerce Department to block U.S. companies from buying equipment from foreign telecommunications makers that pose significant national security risks, sources from the telecoms industry and the administration said.
While the order is unlikely to name Huawei or ZTE, a source said it is expected that Commerce officials would interpret it as authorization to limit the spread of equipment made by the two companies. 

The sources said the text for the order has not been finalized.
The executive order would invoke the International Emergency Economic Powers Act, a law that gives the president the authority to regulate commerce in response to a national emergency that threatens the United States.
The issue has new urgency as U.S. wireless carriers look for partners as they prepare to adopt next generation 5G wireless networks.
The order follows the passage of a defense policy bill in August that barred the U.S. government itself from using Huawei and ZTE equipment.
Huawei and ZTE did not return requests for comment. 

The White House also did not return a request for comment.
The Wall Street Journal first reported in early May that the order was under consideration, but it was never issued.

A security guard keeps watch at the entrance of the Huawei global headquarters in Shenzhen in China's southern Guangdong province on December 18, 2018.

Chinese are using the American countryside to encircle and finally capture the cities

Rural operators in the United States are among the biggest customers of Huawei and ZTE, and fear the executive order would also require them to rip out existing Chinese-made equipment without compensation. 

Industry officials are divided on whether the administration could legally compel operators to do that.
While the big U.S. wireless companies have cut ties with Huawei in particular, small rural carriers have relied on Huawei and ZTE switches and other equipment because they tend to be less expensive.
The company is so central to small carriers that William Levy, vice president for sales of Huawei Tech USA, is on the board of directors of the Rural Wireless Association.
The RWA represents carriers with fewer than 100,000 subscribers. 

It estimates that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in a filing to the Federal Communications Commission earlier this month.
The RWA is concerned that an executive order could force its members to remove ZTE and Huawei equipment and also bar future purchases, said Caressa Bennet, RWA general counsel.
It would cost $800 million to $1 billion for all RWA members to replace their Huawei and ZTE equipment, Bennet said.
Separately, the FCC in April granted initial approval to a regulation that bars giving federal funding to help pay for telecommunication infrastructure to companies that purchase equipment from firms deemed threats to U.S. national security, which analysts have said is aimed at Huawei and ZTE.
The FCC is also considering whether to require carriers to remove and replace equipment from firms deemed a national security risk.
In March, FCC Chairman Ajit Pai said "hidden 'back doors' to our networks in routers, switches — and virtually any other type of telecommunications equipment - can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more."
In the December filing, Pine Belt Communications in Alabama estimated it would cost $7 million to $13 million to replace its Chinese-made equipment, while Sagebrush in Montana said replacement would cost $57 million and take two years.

The China Telecom Threat Is Patently Obvious

A justified fear underlay the Broadcom-Qualcomm rejection.
By Tim Culpan
The word China didn't appear once in President Donald Trump's executive order prohibiting Broadcom Ltd.'s takeover of Qualcomm Inc.
It did pop up a lot in the public and private lobbying that led to his sudden decision late Monday. 

The fear is that China is a rising force, and a merger of the two big telecom firms would undermine U.S. dominance in the industry, especially heading into the next generation of mobile technology known as 5G.
World Intellectual Property Organization data show the U.S. is right to be wary. 

The numbers from the UN agency also indicate that China's technological ascent probably won't be stopped by one executive order.
To smooth the process of patent applications worldwide, inventors can file for an international grant through the Patent Cooperation Treaty, to which 152 states are signatories -- including the U.S. and China. 

This type of filing is a little esoteric, but is becoming increasingly important in global markets.
While the U.S. leads the world in such applications, the two largest single corporate grant holders are Chinese. 

And they're both telecom companies.
ZTE Corp. filed for a record 4,123 patents through the PCT in 2016, the latest year for which figures are available, followed by Huawei Technologies Co. at 3,692. 

Third came Qualcomm, with 2,466.
This situation isn't new. 

ZTE and Huawei have regularly been among the top three PCT applicants over the past few years. Yet the massive increase in their filings -- they more than doubled in 2016 compared with 2010 -- indicates an aggressive push as the world races toward the next round of technology.
To be clear, patent applications aren't a perfect measure of prowess. 

The ability to successfully implement technology and win over clients is important, and Qualcomm is a master at that. 

But China's commitment to taking ground from the U.S. is, well, patently obvious.

Theft Empire

Treasury and Justice officials pushed for economic sanctions on China over cybertheft
By Ellen Nakashima

Obama noted at a news conference this month that the United States has seen “some evidence” that Chinese government hackers have reduced their pilfering of U.S. companies’ intellectual property and sensitive data.
But, he added, they have “not completely eliminated these activities.”
Although some researchers say the hacking activity has plummeted, officials at the Treasury and Justice departments and at the National Security Council have been pushing to impose economic sanctions on Chinese firms that have benefited from past thefts of U.S. firms’ commercial data.
Over the past year, they have advocated the use of a 2015 executive order on cyber-sanctions that would allow the government to sanction individuals and companies that were enriched by material hacked from the computer networks of American businesses.
“It’s about specific justice for specific victims,” said one U.S. official, who like others interviewed requested anonymity to discuss internal deliberations.
A sanctions package that names specific Chinese companies has been ready for more than a year. 

But pro-China senior officials in the State Department and within the National Economic Council have been opposed.

The administration was close to pulling the trigger on the sanctions last year but drew back after Xi Jinping reached an agreement with Obama that his country would not conduct such activity, and would set up a high-level joint dialogue on cybercrime and cooperate in investigations.
Dmitri Alperovitch, co-founder of the cybersecurity firm CrowdStrike, said China’s commercial hacking dropped over the past year after the agreement. 

Others note, however, that the indictments of five Chinese military hackers for economic espionage also played a role in changing China’s behavior.
But Beijing’s cooperation in law enforcement matters has not been optimal, officials said. 

And the Chinese government has not taken action against those who hacked U.S. companies and stole their intellectual property or pricing information.
If the Obama administration were to impose economic sanctions on Chinese companies, that would be a gift to President Donald Trump, said James A. Lewis, a cyber-policy expert at the Center for Strategic and International Studies. 

“It would be a chit he could trade in talks with the Chinese,” he said. 

“He could offer to lift sanctions in exchange for some economic or trade concession.”
At this point, the use of the order against China is highly unlikely, officials said.
“It’s hard to see the administration picking that fight with China with so few days left in the administration,” a second senior official said.
The Trump administration, however, could choose to use it.