US President Donald Trump is expected to sign an executive order this week that will prohibit US firms from doing business with Huawei, Reuters reported citing three unnamed US officials.
If signed, the order will not name any specific names or companies, but bars US companies from using telecoms equipment made by foreign firms that pose a national security risk. Washington considers Huawei to be one of these companies, citing its ties with the Chinese government. The order has been in the works for over a year, but has been delayed several times, Reuters reported. It could be delayed again.
In response to the potential ban from the US market, Huawei’s President of ICT Strategy and Marketing Wang Tao stated Wednesday at an event in Beijing, “We are a global company, and we don’t have too much business in the US. Any change in any country won’t affect our global businesses.”
Just over half of Huawei’s total revenue last year was earned in China, with revenue from Europe, the Middle East, and Africa (EMEA) its second-largest region comprising 28% of sales. Revenue from North and South America region were a small but rapidly growing portion of the company’s total revenue in 2018, driven by a boom in “new digital infrastructure” construction in Latin America, according to the company.
The executive order will invoke the International Emergency Economic Powers (IEEP) Act, a federal law that grants the president authority to regulate commercial activity if there is a threat to national security. Invoking the IEEP Act essentially declares a national emergency over an “unusual and extraordinary” foreign threat to the US. It has been used to stop funding to terrorist organizations and prohibit trade with North Korea, among others.
A similar but different order was signed by President Trump in August 2018, banning US government agencies from using Huawei and ZTE equipment. This ruling was part of the National Defense Authorization Act of 2019, a bill that is passed annually by Congress dictating the Department of Defense budget and thus only applies to government agencies and contractors, not all commercial activities. The ban on ZTE was eventually lifted.
The new executive order comes at a sensitive time for US-China relations, only a few days after new tariffs were announced by both sides in lieu of a trade deal that had been in negotiation for months. Washington has been lobbying globally against the deployment of Huawei equipment in 5G networks, citing national security risks.
On the home front, the US government is conducting legal and regulatory efforts against what it perceives as Chinese companies infiltrating key US networks and industries to advance foreign interests. Less than a week ago, the Federal Communications Commission (FCC) voted unanimously to bar China Mobile from offering its services in the US market.
In January 2019, US prosecutors charged Huawei in two separate cases. The first alleges theft of trade secrets from T-Mobile, a cellular network provider that Huawei was providing phones to that is based in Washington state, where the charges were filed. The second case is a 13-count indictment filed against Huawei and its CFO Meng Wanzhou for reportedly planning to circumvent US sanctions on Iran.
Meanwhile, Huawei is trying to build relationships and secure contracts with other governments and companies around the world.
On Tuesday, Huawei’s chairman said that the Chinese telecoms giant is willing to sign no-spy deals with governments, including the UK.
“Cybersecurity is primarily a technical issue… We have seen some governments mislead the public by turning cybersecurity into a political and ideological issue,” Wang said.
Additional reporting by Eliza Gritsi.