Huawei facing US trade secret theft indictment and ZTE-style ban

The US Department of Justice is rumoured to be pursuing charges relating to trade secrets theft against Huawei, while four politicians have tabled a bill for a ban similar to what ZTE faced last year.

Leaving the Department of Justice for the moment, a bi-partisan collection of politicians have tabled the so-called ‘Telecommunications Denial Order Enforcement Act’, a proposed bill which would compel the White House to ban Huawei from using US components and IP within its supply chain. The ban would be the same punishment ZTE faced early last year.

“Huawei and ZTE are two sides of the same coin,” said Democratic Senator Chris Van Hollen. “Both companies have repeatedly violated US laws, represent a significant risk to American national security interests, and need to be held accountable. Moving forward, we must combat China’s theft of advanced US technology and their brazen violation of US law.”

Aside from Van Hollen, Republican Senator Tom Cotton, as well as Representatives Mike Gallagher (Republican) and Ruben Gallego (Democrat) are also supporting the proposed bill. This should hardly come as a surprise as the ZTE ban was imposed for violating the exact same trade sanctions which Huawei has allegedly ignored.

The saga surrounding the ZTE ban was short-lived, incredibly volatile and almost fatal. After being found violating trade sanctions, US Department of Commerce’s Bureau of Industry and Security (BIS) imposed a denial of export privileges order against the firm, denying it access to any US suppliers. President Trump stepped in to save the firm, which looked doomed as a result of the ban, before Congress blocked his efforts. Eventually a resolution was reached, though ZTE has been skating on thin ice since.

If precedent is anything to go by, Huawei should face the same punishment should it be found guilty of the same activities. Last month, Huawei CFO Meng Wanzhou was arrested in Canada, accused of violating the same trade sanctions with Iran using a suspect firm known as Skycom. Meng has been released on bail and awaits trial, though it appears the four politicians are already presuming guilt. Or maybe they are just being prepared.

Perhaps this is a sign the politicians do not believe President Trump is committed to precedent and appropriate action. The actions against ZTE smelt suspiciously like one of Trump’s strategic moves in the on-going trade war with China, though perhaps he did not realise he would have to do the same 12 months later, potentially antagonising the Chinese government with a move which is not in the grand plan.

The politicians might be tabling this bill to make sure Trump can’t find a reason not to ban Huawei. Following the arrest, Trump seemed to suggest in an interview with Reuters that he would be willing to make the Canadian charges go away if it would help him the US in its dispute with China.

“If I think it’s good for the country, if I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security – I would certainly intervene if I thought it was necessary,” Trump stated.

Not only does this completely undermine the standing of the Canadian judicial system, but also suggests Trump is willing to bend (or break) rules to bring the Chinese government to its knees. Perhaps Congress does need to be proactive to make sure the President follows the rules, taking appropriate action instead of whatever ludicrous idea floats in the breadth between his ears.

What is worth noting is the stance of Huawei executives. Clearly, they do not agree with anything which is going on, but both Rotating Chairman Guo Ping and Rotating CEO Ken Hu put across messages stating the resilience of the business. Ping and Hu suggested a ban would not impact the Huawei supply chain in the same manner as it did ZTE.

Heading back to the Department of Justice, the Wall Street Journal has reported the agency is pursing charges against Huawei concerning theft of trade secrets.

An indictment should be heading over to the Huawei offices in the near future, focusing on allegations the firm stole robotic mobile-testing technology from T-Mobile. The technology, known as Tappy, mimics human fingers and is used to test smartphones. A civil case between T-Mobile and Huawei over the technology was filed in 2014, though after a criminal investigation the Department of Justice feels it is appropriate to step in and raise criminal charges.

This case is a separate concern from all the other chaos which has surrounded the firm in recent months, though it will be just as concerning as the punishments can be incredibly severe.

The primary federal law that prohibits trade secret theft is the Economic Espionage Act of 1996, which allows the US the U.S. Attorney General to prosecute a person, organization, or company that intentionally steals, copies, or receives trade secrets. If the case if brought against an individual, the punishment could be as much as 10 years in prison or a $500,000 fine. However, we suspect the government would want to punish the firm not an individual, as Huawei would simply claim that person did not represent the company culture, in-line with White House aggression against China.

If a conviction is made against a company the fine can be increased to $5 million. However, if the Attorney General can prove the theft was made on behalf of a foreign government, this would be considered the silver bullet for the White House, corporate fines can be doubled, imprisonment could be 15 years and proceeds derived from the theft can be seized.

In short, Huawei has found itself in another uncomfortable position in the US. It does not appear 2019 is going to be any better than 2018 on the US side of the pond for Huawei.

Huawei R&D faces export ban in Silicon Valley

The US Commerce Department has refused to renew an export licence at a Huawei subsidy in Silicon Valley, meaning China cannot access new developments at the site.

According to the Wall Street Journal, Huawei R&D outfit Futurewei was informed over the summer that the US Department of Commerce would not be renewing the license meaning some of the technologies developed at the site, but not all, could not be exported back to China. It’s a new strategy in the conflict between the US and China, but it could prove to be an effective one.

Silicon Valley is not the hotspot of the technology world because of the favourable climate or the presence of helpful regulations, it has one of the most talented workforces around the world. There are of course challengers to this claim emerging, India or Eastern European for example, but companies flock to Silicon Valley to open up R&D offices to tap into this resource. Such a ban from the US Commerce Department means Huawei is going to miss out on some of these smarts.

The block will prove problematic to overcome as there does not appear to be any logical way to combat the move. The rationale behind the blockage is quite simple; national security. Seeing as Huawei is currently being trialled and punished without the burden of evidence, there seems to be little the vendor can do to combat such passive aggressive moves by the US.

This is of course just another stage is the incrementally escalating conflict between the US and China. The tension between the pair does seem to have escalated over the last few days following a minor hiatus at Christmas. Rumours are circling the Oval Office concerning an all-out ban on Huawei and ZTE technology in the US, while suspicions will only increase following the arrest of a Huawei employee in Poland on the grounds of espionage.

With all the drama before Christmas and the hullaballoo kicking off again now, perhaps we should expect some sort of retaliation from Beijing. The Chinese governments has not been anywhere near as confrontation as the US, though there might be a breaking point somewhere in the future.

US starts to get twitchy over travel to China

The US Department of State has renewed its warning over citizens travelling to China over fears of retaliation following the arrest of Huawei’s CFO in Canada.

After Washington ordered the arrest of Huawei CFO Meng Wanzhou in Canada last month, China has seemingly retaliated with a spree of its own arrests. Reports suggest as many as 13 Canadians have been held in China, including former diplomat Michael Kovrig and consultant Michael Spavor. Reacting to the news, the US State Department has issued its own warning.

On the State Department website, the caution level has been raised to ‘Level Two’, suggesting citizens ‘exercise increased caution’ when visiting the country. ‘Level Three’ would see the government advising citizens to reconsider travel plans, while ‘Level Four’ suggests the country should be avoided.

“Exercise increased caution in China due to arbitrary enforcement of local laws as well as special restrictions on dual US-Chinese nationals,” the website states. “Chinese authorities have asserted broad authority to prohibit U.S. citizens from leaving China by using ‘exit bans,’ sometimes keeping US citizens in China for years.”

Despite the tension caused by the political conflict between Washington and Beijing, it does not appear to have affected the attitude of executives. Apple CEO Tim Cook has suggested he will not be revising his own plans to travel to China, though it would be tough to see the Chinese government holding Cook considering there are seemingly no grounds to do so. Apple is currently ignoring a ban on iPhone 7 and iPhone 8 sales in the country, thanks to the patent dispute with Qualcomm, but this seem like thin justification to arrest the CEO.

This international conflict is multi-faceted, but technology is one of the key components. Ultimately, the US wants to withstand the challenge the Chinese are making to Silicon Valley’s domination of the technology world and the benefits this brings the entire US economy. Despite these moves from the US State Department, experience suggests the Chinese will not make any drastic moves against the US; it has been much more measured and strategic in its approach to tackling the trade war to date than the White House has been.

That said, it would not surprise us if a couple of US citizens start appearing in jail cells either.

T-Mobile/Sprint edge towards finish line following Huawei snub

T-Mobile US and Sprint are reportedly rubbing regulators the right way, in the continued effort to get the prolonged merger approved, by overtly shunning Chinese kit vendor Huawei.

The statement should be viewed as more symbolic than anything else, as considering the clauses which have been inserted into the Defense Authorization Act during August, it would have been highly unlikely the pair would have considered Huawei for any meaningful work in US networks. What this could be viewed as is a PR move from the pair, allowing the US to demonstrate to the world how serious it is about the espionage claims.

According to Reuters, Deutsche Telekom and Softbank, parent companies of T-Mobile US and Sprint respectively, have confirmed they will not be working with Huawei moving forward. Neither US telco currently has any Huawei kit in its network, though it is hoped this statement from the international telcos will have the bureaucrats hand edging closer to the green button for the $26 billion merger.

For the US government, this is somewhat of a PR win. The Trump administration has been incredibly aggressive in making moves against the Chinese, and this could be viewed as a medal credited to the crusade. Not only can the US government effect change in its own telcos and other governments around the world, it can also influence non-domestic private firms. The long arm of the Oval Office is tickling opinion in places it really shouldn’t be able to.

Unfortunately for the US, each incremental step taken in the trade war against China seems to question how dearly the White House holds principles and values. All of these individual circumstances are starting to look like pawns in President Trump’s game of chess against Beijing. Trump is living up to his reputation as a deal-maker, with the promise of aiding the battle against the Chinese enough for the President to make concessions elsewhere.

The evidence being stacked up against the T-Mobile/Sprint merger was starting to climb pretty high, though perhaps this might be enough of a ‘concession’ to twist the White House’s perspective on the transaction. Trump has already shown he is capable of looking at the big picture, with the recent arrest of Huawei’s CFO another excellent example.

Having been arrested in Canada while in transit back to China, Trump promised to intervene in the court case should it help his pursuit of a more favourable trade relationship with China. This statement from Trump makes somewhat of a mockery of the whole arrest and demonstrates how little he thinks of the Canadian judicial system. If there is a benefit to the US economy, Trump can talk to the right people and make the whole saga disappear. It questions the validity of the arrest in the first place, but also the credibility of the Canadian courts; why does Trump believe they can be convinced to drop the case so easily?

Trump is starting to show his heritage; anything for the deal. This is a businessman in control of the White House, and his ability to ignore small print give the impression of a wheeler-dealer.

USA declares war on Huawei, with a bit of help from ZTE

The arrest of Huawei’s CFO was the culmination of years of investigation by the American government and judiciary, with an apparent helping hand from ZTE.

When Ms. Meng Wanzhou, Huawei’s CFO, was arrested in Vancouver, facing extradition to the US, we remembered a file seized and published by the US Department of Commerce when it was investigating then punishing Huawei’s domestic competitor ZTE early in the year, which detailed some of the ways ZTE had gone about the activities that got it into trouble.

The internal document (in Chinese) from ZTE, dated 25 August 2011 includes detailed proposals on how to circumvent American embargos against Iran, Sudan, North Korea, Syria, Cuba, as well as partial sanctions against Ethiopia and Myanmar. It was approved by ZTE’s C-level executives by the beginning of September. The document was used as an incriminating evidence against ZTE, which, in addition to the fines, also resulted in the wholesale change of management in ZTE.

Part II, Section 5 of the document refers to a company codenamed F7 which was also active in similar business dealings with risky countries. F7 used an IT company with good credibility as the front party to sign contracts with their customers in countries facing US sanctions. ZTE also gathered competitive intelligence on the compliance officers and lawyers hired by F7 in head offices as well as in branches offices to handle export embargo circumvention, including the salary offers. The document then proposed ZTE should use this as a blueprint.

The identity of F7 is not hard to establish. IHuawei was the only other large-scale telecom equipment exporter from China, F7 had been barred by Congress from winning meaningful deals in the US, it had hired a Chinese-American lawyer from TI, and it had a joint-venture with Symantec. If this evidence is still too circumstantial, the document also listed specifically that F7 had run into difficulty in its attempted acquisition of 3Leaf, an American server technology company, in 2010. It was widely covered at the time by media outlets including the Reuters that Huawei decided to pull out of the proposed acquisition of and to divest its assets in 3Leaf.

This ZTE document must have been just one piece on the jigsaw of evidence against Huawei put together by the American law-enforcement, but it no doubt would be an important piece. It suggests that Huawei has been flouting US rules for quite some time, and Ms. Meng, as the CFO (as well as the daughter of the founder of Huawei) may have been presumaed to have had some role to play in the whole ploy.

According to sources inside ZTE, “F7” is ZTE’s internal tongue-in-cheek reference to Huawei. Phonetically F7 reads a slight corruption of the word for “husband and wife” in Chinese. It derives from the urban legend that many Huawei employees, having little time to date outside, would end up marrying their colleagues, so the company was full of couples.

Huawei CFO arrested in Canada, facing extradition to the US

Meng Wanzhou, Huawei CFO, was arrested in Canada at the request of the US judiciary, with suspicions the company violated trade sanctions placed on Iran by the US.

The fallout between Huawei and the US authorities is reaching Shakespearean scale. On 1 December, Meng Wanzhou, Huawei’s CFO, vice-chair of the Board, and the daughter of the founder of the company, was arrested while in transit at the Vancouver airport, while in transit to China. Several media outlets originally reported the arrest, though it has now been confirmed by Huawei.

“She is sought for extradition by the United States, and a bail hearing has been set for Friday,” Justice Department spokesman Ian McLeod said in a statement to the Canadian newspaper. “As there is a publication ban in effect, we cannot provide any further detail at this time. The ban was sought by Ms. Meng.”

Canadian law-enforcement source suggest the arrest was made at the request of the United States, which has alleged Huawei, and Ms. Meng, violated American embargo against Iran. A New York Times report quoted Senator Ben Sasse that the US Treasury and Commerce Department also asked the Justice Department to investigate Huawei for possibly violating the same sanctions.

Huawei denied the allegation in its statement to our sister publication Light Reading, claiming “Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU.”

Referring to the arrest of Ms. Meng, Huawei added that it “has been provided with very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng. The company believes the Canadian and U.S. legal systems will ultimately reach a just conclusion.”

It has been reported that earlier in the year when ZTE was being investigated, documents seized the US prosecutors included Huawei’s files detailing the methods it used to insulate itself through third parties when trading with Iran, which ZTE meant to use as a blueprint but did not quite pull off. The investigators might have been following the lead.

The ZTE dealings with Iran eventually led to the firm being barred from using any US components or IP within its own supply chain, almost destroying the company itself. Logic would suggest the US would use a similar game plan here, though many suggest Huawei supply chain is not as reliant on the US as ZTE’s is.

The timing of the report was also interesting. The arrest took place on the same day as the American and Chinese presidents agreed on the 90-truce to the trade war and a myriad of issues. For four days there was no mention of the arrest in any media or official channels, and the Chinese Embassy in Canada only lodged a complaint, much angrier than the Huawei statement, after the report came out. One can only speculate that efforts to scramble a deal behind the scenes must have failed.

The ultra-nationalistic Global Times went one step further with a call to arms:

The latest episode of the wrangling between Huawei and the US certain will not help Huawei’s business prospect in the western markets, where it has been barred by a few prominent states. Nor will it provide any confidence in the prospect for a truce between the American and Chinese presidents. All Asian stock markets have fallen roughly 2% after the news broke.

US ups the ante on Chinese industrial espionage claims

State-owned Chinese company Fujian Jinhua Integrated Circuit Company (FJICC) and Taiwan’s United Microelectronics have been formally charged with intellectual property theft, targeting a US firm.

FJICC, which is owned by the People’s Republic of China (PRC) and part of the ‘Made in China 2025’ technology development programme, has already had it US supply chain components severed after intervention from the US Department of Commerce earlier this week, though the formality of a lawsuit escalates the conflict between the US and China further. United Microelectronics has already stated it has cut ties with FJICC, seemingly in an effort to avoid similar sanction from the US.

The lawsuit takes FJICC, United Microelectronics and three individuals into the courtroom, accused of using stolen trade secrets in the production of FJICC and United Microelectronics products. According to the lawsuit, the PRC did not possess DRAM technology prior to the events described in the indictment, though it was a segment which was identified as an economic priority. The three accused individuals previously worked at a subsidiary of US firm Micron, before transferring to United Microelectronics and subsequently setting up the relationship between the company and FJICC. At this point, the trade secrets were allegedly transferred to Chinese control.

If convicted, each company faces forfeiture, though how this will be imposed we are not sure, and a maximum fine of more than $20 billion.

“I am announcing that a grand jury in San Francisco has returned a multi-defendant indictment alleging economic espionage on the part of a state-owned Chinese company, a Taiwanese company, and three Taiwan individuals for an alleged scheme to steal trade secrets from Micron, an Idaho-based semi-conductor company,” said Attorney General Jeff Sessions.

“Micron is worth an estimated $100 billion and has a 20 to 25 percent share of the dynamic random access memory industry—a technology not possessed by the Chinese until very recently.  As this and other recent cases have shown, Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly.  I am here to say that enough is enough. With integrity and professionalism, the Department of Justice will aggressively prosecute such illegal activity.”

Intellectual property theft is one of the cornerstones of President Trump’s assault on China, though taking the company to court is escalating the conflict further. After allegations of corporate espionage early this week, cutting out US components from the company’s supply chain was a logical step, though the lawsuit further compounds the battle.

The ban from the Department of Commerce is similar to the economic dirty-bomb the US dropped on ZTE earlier this year, though that only lasted a couple of weeks. The consequences of that action were clear, ZTE was also sent to keep the dodo company, though there was certainly collateral damage for US firms. Acacia Communications was one company who dependence on ZTE as a customer saw share price decline by more than 30% as a result of the ZTE export ban, though whether there are firms who are similarly dependent on FJICC remains to be seen.

The lawsuit itself represents the greater conflict between the US and China, both of which has ambitions to control the 5G ecosystem and subsequently lead the technology industry of tomorrow. Intellectual property theft is rhetoric which we have consistently heard from President Trump, though should the US prove successful in this case, it would not be surprising to see more investigations. Considering the leading positions Huawei and, less so, ZTE have crafted in the telco industry, these firms might find themselves in the crosshairs before too long.

One thing is certain, this will not be the last aggressive move towards China from this administration. If anything, this is justification for every intervention made by President Trump, think back to the Executive Order blocking Broadcom’s acquisition of Qualcomm and also the dreaded tariffs, as well as validation to accelerate towards further conflict.

“No country presents a broader, more severe threat to our ideas, our innovation, and our economic security than China,” said FBI Director Christopher Wray. “The Chinese government is determined to acquire American technology, and they’re willing use a variety of means to do that – from foreign investments, corporate acquisitions, and cyber intrusions to obtaining the services of current or former company employees to get inside information.

“We are committed to continuing to work closely with our federal, state, local, and private sector partners to counter this threat from China.”

Trump takes next step in Chinese trade war

The United States Trade Representative will place a second round of tariffs on roughly $200 billion of imports from China, effective September 24, though it looks like Apple is passing through unscathed for the moment.

The 10% tariffs will be introduced on September 24, rising to 25% on January 1. Should China take retaliatory action, President Trump has promised to move onto phase three of the strategy, placing tariffs on an additional $267 billion of imports. While these tariffs are thought to spread to consumer goods, it seems some tech companies will escape any financial burdens, at least for the moment.

“After a thorough study, the USTR concluded that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property – such as forcing United States companies to transfer technology to Chinese counterparts,” said Trump. “These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy.”

While the White House has attempted to shield the consumer from the negative impacts of the tariff strategy, it was only going to be a matter of time. Not only would the domino effect of the initial tariffs eventually spread through various ecosystems, the US only imports so much from China. Two rounds of tariffs worth $250 billion was bound to hit the consumer pocket before too long. That said, certain products feature on the 300-list of exempt products.

You can see the full list of products on the tariff list here. It is of course incredibly wide ranging, it’s 192 pages long, though the consumer’s back pocket will almost certainly be hit. Seafood features heavily to start, and fans of frogs legs will also suffer. Vegetables are there, as is vinegar. Suitcases, golf bags, baseball mitts, bible paper, carpets, hats and car seats will also be included.

Looking at the technology industry, smart watches, wireless headphones and smart speakers are believed to be on an exempt list, though this is only from the US side. US heavyweights such as Apple might be largely free of collateral damage for the moment, though China will hit back before too long.

Trump might be looking to protect industries and consumers which will largely be in his support camp, though this is not to say Beijing won’t look to inflict damage here. In response to the tariffs imposed in June, China hit back against the farmers, and while iLifers might have been protected thus far it would certainly be a big scalp to claim. Considering the reliance Apple has on China, this would certainly be an effective move.

So far the consumer may not be that concerned about the escalating trade war, as the short-term benefits are a PR win for Trump. Presidential speeches can focus on driving more jobs back onto US shores and the bank accounts are bulging thanks to the tariffs. But this round of tariffs will certainly make life more expensive day to day.

In excluding certain products from tariffs, the Trump administration has simply pointed towards products which it believes could cause political damage. With such an open goal, we imagine the Chinese government will take an incredibly long run up at the consumer technology industry. Look out Apple, Beijing might be eying you up.

Paranoid US politicians urge Google to break ties with Huawei

An open letter signed by a US Senator and three members of Congress to Google CEO Sundar Pichai suggests the internet giant should end its relationship with Huawei on the grounds of national security.

Signed by Senator Marco Rubio of Florida, Congressman Mike Conway of Texas, Congresswoman Liz Cheney of Wyoming, and Congressman Dutch Ruppersberger of Maryland, the letter expresses ‘concern’ about the relationship, and the knock-on effect on national security due to the assumed ties between Huawei and the Chinese Government. Anti-China sentiment is hardly a new development in the US, though the threat to Huawei’s ability to operate is starting to become more dangerous.

“We write to express our concerns about Google’s ‘strategic partnership’ with Huawei Technologies,” the letter states. “Chinese telecommunications companies, such as Huawei, have extensive ties with the Chinese Communist Party. As a result, this partnership between Google and Huawei could pose a serious risk to US national security and American consumers.”

Six US intelligence agencies have already warned American citizens not to use Huawei products or services, FBI Director Christopher Wray has testified expressing concern over Huawei’s influence and the influences on Huawei and recent reports over espionage have also began to emerge. It would appear the US is starting to build a case to take Huawei down the same road as ZTE.

ZTE is one company which has already felt the consequences of getting on the wrong side of the US government. A ban on using US technology or services crippled the companies supply chain, effectively rendering the business useless, and while Huawei is not as dependent on the US as ZTE, any actions which would be deemed even remotely similar would be a very negative turn of events for the vendor.

“We urge you to reconsider Google’s partnership with Huawei, particularly since your company recently refused to renew a key research partnership, Project Maven, with the Department of Defence,” the letter states. “This project uses artificial intelligence to improve the accuracy of US military targeting, not least to reduce civilian casualties. While we regret that Google did not want to continue a long and fruitful tradition of collaboration between the military and technology companies, we are even more disappointed that Google apparently is more willing to support the Chinese Communist Party than the US military.”

The politicians seem to be playing on the patriotic values of Pichai, though we feel this is not the most effective route for the budding public servants to head down. Unlike the Senator and members of Congress, Google is a global company with ambitions to work collaboratively with the international community. They are not pro-isolationist, like many of US politicians seem to be positioning themselves, and are keen to make money. Ending the relationship with Huawei on the grounds of paranoia would not be an effective commercial decision for one of the world’s heavy economic powers. There will need to be a more effective argument, and, above everything else, more evidence.

Such developments however should be quite a worry for Huawei. Aside from ending a relationship with one of the world’s most innovative companies, it would also mean no more access to Google’s products. Some could be replaced, however not being able to access the Android operating system would be crippling for the consumer division. Huawei has been working on an in-house alternative for the worst case scenario, though we worry about the effectiveness of such an alternative.

A couple of weeks ago we ran a poll with the Telecoms.com readers asking whether a Huawei ban on US technology impact your decision to buy a Huawei Smartphone or wearable device. It is not exactly the right question for developments here, though it does provide some insight into the communities thoughts on a Huawei operating system. 27% said they would continue to buy Huawei devices, while 21% said it would depend on how good the OS actually is, but 27% said Android was what made the devices any good and 24% would be worried about influence of Chinese government. Clearly ending the relationship with Google would not be a good move.

The threat of Huawei heading down the same route of ZTE is not imminent, but it is certainly more than a distinct possibility. Politicians seems to be building the case, and considering the current Murica-first rhetoric which seems to be flooding the country, it is certainly something the Huawei executives should be concerned about.

Senate puts stoppers on Trump’s plan to save ZTE

The US Senate has voted 85 to 10 in favour to reinstate penalties on ZTE, despite President Trump’s attempts to ease pressure on the business and effectively save it from extinction.

The move from Trump could be viewed as an olive branch to ease growing tensions between the US and China, some of which can be attributed back to the President itself, though this bipartisan vote effectively side-roads any recovery efforts. The Bill will have to be reconciled with another bill already passed by the House, though it does look like Trump’s grand plan to ease international tension between the US and China starting to unravel.

The measure was included in a wide-ranging Bill focused on national security, known as the National Defence Authorisation Act, was backed by Senators from both sides of the aisle, with Republican Senators Tom Cotton of Arkansas and Marco Rubio of Florida teaming up with Democrats such as Minority Leader Chuck Schumer of New York and Elizabeth Warren of Massachusetts. With the provision being heavily backed by both sides, the Senate faces a showdown with the White House at an uneasy time for international relations.

This news should hardly come as a huge surprise though. When Trump suggested he was keen to save ZTE, and also when the Commerce Department tabled the deal, politicians from both parties were keen to object. A question was asked of the President; how can a company which is a suspected threat to national security be let off the hook so easily? Little seems to have been done to ease concerns, and it would now seem Trump will be powerless to save the struggling vendor.

ZTE found itself in hot water after violating US trade sanctions on Iran and North Korea, before then being caught out lying to US officials. The original seven year ban on using US products, services and IP brought the vendor to the edge of extinction, forcing it to cease operations, though Trump’s call-to-action seemingly brought ZTE back onto the straight and narrow.

For those who feared the escalating trade war between the US and China, this could be considered one of the worst possible developments. Some might have viewed the move to save ZTE as a pragmatic decision to get on friendly terms with China, though the actions of the Senate may well throw the relationship back into disarray. With tariffs set to come into play on July 6, and an the imminent retaliation from China, the situation could be about to get a lot worse.