Law proposed to ban US chip sales to Huawei, ZTE

The Bills specifically cite ZTE and Huawei, both of which are viewed with suspicion in the United States because of fears that their switches and other gear could be used to spy on Americans.
The Bills specifically cite ZTE and Huawei, both of which are viewed with suspicion in the United States because of fears that their switches and other gear could be used to spy on Americans. PHOTOS: AFP, REUTERS

Move, which China describes as hysteria, adds fuel to trade war

WASHINGTON/BEIJING • A bipartisan group of US lawmakers has introduced Bills that would ban the sale of US chips or other components to Huawei Technologies, ZTE Corp or other Chinese telecommunications companies that violate US sanctions or export control laws.

The proposed law drew sharp criticism from China, intensifying a bitter trade war between Beijing and Washington. China's Foreign Ministry spokesman Hua Chunying called the US legislation "hysteria".

The Bills were introduced on Wednesday, shortly before the Wall Street Journal reported that federal prosecutors were probing claims that Huawei had stolen trade secrets from T-Mobile and other US businesses.

The report said an indictment could be coming soon on allegations that Huawei stole T-Mobile technology, called Tappy, which mimicked human fingers and was used to test smartphones.

Huawei, in a statement, said the company and T-Mobile settled their disputes in 2017 after a US jury verdict that found "neither damage, unjust enrichment nor wilful and malicious conduct by Huawei in T-Mobile's trade secret claim".

Ms Hua urged US lawmakers to block the Bills, saying: "I believe the action of these few representatives are an expression of extreme arrogance, and an extreme lack of self-confidence... the whole world can see very clearly that the real intent of the United States is to employ its state apparatus in every conceivable way to suppress and block out China's high-tech companies."

The legislation is the latest in a long list of actions taken to fight what some in the Trump administration call China's cheating through intellectual property theft, illegal corporate subsidies and rules hampering US corporations that want to sell their goods in China.

 
 
 

Last November, the US Justice Department unveiled an initiative to probe China's trade practices with a goal of bringing trade secret theft cases. At the time, Washington had announced an indictment against Chinese chipmaker Fujian Jinhua Integrated Circuit for stealing trade secrets from US semiconductor company Micron Technology, relating to research and development of memory storage devices.

Jinhua, which has denied any wrongdoing, was put on a list of entities that cannot buy goods from US firms.

On Capitol Hill, Senator Tom Cotton and Representative Mike Gallagher, both Republicans, along with Senator Chris Van Hollen and Representative Ruben Gallego, both Democrats, introduced the Bills that would require President Donald Trump to ban the export of US components to any Chinese telecom firms that violate US sanctions or export control laws.

The Bills specifically cite ZTE and Huawei, both of which are viewed with suspicion in the US because of fears that their switches and other gear could be used to spy on Americans. Both have also been accused of failing to heed US sanctions on Iran.

"Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People's Liberation Army," Mr Cotton wrote in a statement.

"If Chinese telecom companies like Huawei violate our sanctions or export control laws, they should receive nothing less than the death penalty - which this denial order would provide," he added.

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 18, 2019, with the headline 'Law proposed to ban US chip sales to Huawei, ZTE'. Print Edition | Subscribe