Republican, Democratic Senators Join Forces to Keep Sanctions on Huawei

Rubio spearheads bill to counter plan to loosen curbs on government-linked Chinese telecom

Sen. Marco Rubio (R-FL) / Getty Images
July 17, 2019

A bipartisan group of senators on Tuesday introduced legislation to codify in law an export control ban on the use of telecommunications products made by China's Huawei Technologies Ltd, the government-linked telecommunications giant.

The planned legislation, along with a companion bill in the House, reflects growing bipartisan support for American policies designed to protect against aggressive Chinese cyber and economic espionage operations.

The bill would strengthen in federal law a recent presidential executive order banning the importation and use of Huawei telecommunications products and those from "adversary nations."

The legislation also would prohibit the Commerce Department from removing Huawei from the entities list—a roster of banned companies that are required to obtain export licenses before U.S. products can be sold to them—without an act of Congress.

A third feature of the bill would give Congress the power to block waivers that the Trump administration or a future administration could grant to American companies seeking to sell or buy goods to or from Huawei.

The legislation is directly aimed at countering President Trump's announced plan last month to loosen sanctions on Huawei as part of trade talks with the Chinese.

Trump tweeted June 29 after meeting with Chinese president Xi Jinping in Japan that he will loosen the recently-imposed controls on doing business with Huawei.

"At the request of our High Tech companies, and President Xi, I agreed to allow Chinese company Huawei to buy product from them which will not impact our National Security," Trump said.

China's economy is declining as a result of U.S. pressure and tariffs aimed at ending Beijing's unfair trade practices and cyber theft of U.S. technology. The controls placed on Huawei also have negatively impacted the telecommunications company.

"This bill codifies Huawei's addition to the Commerce Department's banned entity list, and thus protects one of the Trump administration's most important moves in America's long-term strategic competition with the totalitarian Chinese government and Communist Party," said Sen. Marco Rubio (R., Fla.), one of several cosponsors for the bill.

"Huawei, a malign Chinese state-directed telecommunications company that seeks to dominate the future of 5G networks, is an instrument of national power used by the regime in Beijing to undermine U.S. companies and other international competitors, engage in espionage on foreign countries, and steal intellectual property and trade secrets," the senator added.

Huawei Technologies Ltd. is a Chinese government-linked telecommunications firm said to be the largest in the world. It is also leading the Chinese government's program to corner the market in developing infrastructure around the world for 5G next-generation Internet.

The threat posed by Huawei was highlighted by private security firm Finite State in a report made public last month.

The company surveyed Huawei telecom gear and uncovered numerous cases of the products containing secret access points that could allow Chinese intelligence agencies to conduct cyberattacks through the equipment.

The survey discovered that 55 percent of Huawei hardware devices it tested contained at least one backdoor access point.

The Washington Free Beacon reported in January that U.S. intelligence agencies have linked Huawei to both the Chinese military and intelligence services.

In December, Canadian authorities arrested Huawei's company's chief financial officer, Meng Wanzhou, as part of an indictment into charges of violating American sanctions law prohibiting financial dealings with Iran.

China retaliated by arresting or detaining more than a dozen Canadians who are being held on questionable criminal or spying charges in what appears to be hostage-taking in a bid to pressure Toronto into releasing Meng, who is the daughter and heir apparent of Huawei founder Ren Zhengfei, a former People's Liberation Army (PLA) electronic warfare specialist.

The Trump administration has begun cracking down on Chinese cyberattacks and cyber espionage operations. Nine Chinese nationals were indicted in December for cyberattacks against American companies.

So far, U.S. intelligence agencies have not made public the bulk of the intelligence they have on Huawei's links to the PLA and Ministry of State Security, the main intelligence agency.

The FBI has identified Huawei and a second telecom firm, ZTE, as private companies that are reliant on Chinese government funding and resources.

Huawei has been dubbed a "national champion" by the Chinese government, making the company a key element in the government-directed economic policies, including acquiring foreign technology.

The FBI said Huawei and ZTE are engaged in economic espionage on behalf of Beijing.

A National Security Agency document made public by renegade former contractor Edward Snowden states that Huawei's widespread telecommunications infrastructure will allow Chinese intelligence to conduct signals intelligence operations, or to carry out denial-of-service cyberattacks.

Huawei's access to the global supply chain in selling routers, switches, and other equipment has increased the danger of what NSA called "persistent, stealthy subversions" of electronic networks.

The presidential order issued in May did not directly name Huawei, ZTE, or other Chinese firms but instead is designed to restrict American companies from importing Huawei equipment.

Several rural telecommunications companies have invested heavily in Huawei equipment already. Under the order, they are not prohibited from purchasing more.

The placement of Huawei on the entities list has a more biting impact. The listing severely limits American microchip companies from exporting parts to Huawei.

The export controls are considered very effective because if any company sells products to Huawei outside of the export licensing process it could be with hit sanctions, fines, or other criminal action.

Commerce's Bureau of Industry and Security said in announcing the addition of Huawei to the entities list that the company was founded to be engaged in activities "contrary to the national security or foreign policy interests of the United States."

The Senate bill is being sponsored by Rubio and fellow Republican senators Tom Cotton of Arkansas and Mitt Romney of Utah. Democrat sponsors included senators Chris Van Hollen of Maryland, Mark Warner of Virginia, and Richard Blumenthal of Connecticut.

House sponsors include Republican representatives Mike Gallagher of Wisconsin and Liz Cheney of Wyoming. House Democrats backing the measure include representatives Jimmy Panetta of California and Ruben Gallego of Arizona.

Cotton called Huawei a "front for the Chinese Communist Party."

"Our bill reinforces the president's decision to place Huawei on a technology blacklist," he said. "American companies shouldn’t be in the business of selling our enemies the tools they'll use to spy on Americans."

Van Hollen said the United States needs to stop retreating from China's pressure to end sanctions on Huawei.

"By prohibiting American companies from doing business with Huawei, we finally sent an unequivocal message that we take this threat seriously and President Trump shouldn't be able to trade away those legitimate security concerns," Van Hollen said. "This legislation will make sure he doesn't by codifying the president's original executive order on Huawei and prohibiting the administration from relieving penalties on Huawei without the approval of Congress."

Mark Esper, the nominee for defense secretary, was asked by the Senate Armed Services Committee on Tuesday about rural American telecommunications carriers using Chinese equipment near U.S. military bases.

Esper said he was not familiar with reports of the Chinese equipment but noted he was not surprised by Chinese electronic targeting of military bases.

The acting secretary said he was told last summer during a visit to the U.S. missile defense base at Fort Greely, Alaska, that a "Chinese tourist somehow wandered" on the base.

"Look, the Chinese have a grand plan out there to collect data on us whether it is physical collection, whether it is collection over the Internet, you name it and we need to be aware of that," he said.

Asked about the threat posed by Huawei equipment, Esper said: "My understanding is that Huawei would remain on the entities list, that there would be a presumption of denial of course and that [any U.S. sales of goods] would only be for non-national security items. So that is where I think the DOD needs to participate with Commerce as we do in these fora to make sure that clearly nothing has a dual-capable national security nexus."

In his prepared statement, Esper said China and Russia are conducting malicious cyberattack campaigns to erode U.S. military advantages, threaten infrastructure, and reduce American economic prosperity.

"DoD is taking the initiative to deny, disrupt, degrade, and expose these malicious cyber activities, which threaten the department, U.S. interests, and the American people," said Esper, currently acting defense secretary.

The Pentagon and other U.S. government agencies and the private sector have adopted a "defend forward" strategy, he said, that will preempt and disrupt cyber threats.