The Federal Communications Commission concluded that five Chinese telecommunications companies, including Huawei, pose a risk to U.S. national security, a significant move early in the Biden administration after the Trump administration’s all-out effort to limit the Chinese tech company’s reach in the United States and abroad.
The FCC’s Public Safety and Homeland Security Bureau released a list of communications equipment and services “that have been deemed a threat to national security” that included Huawei, ZTE, Hytera Communications, Hangzhou Hikvision Digital Technology, and Dahua Technology, which the FCC said all “produce telecommunications equipment and services that have been found to pose an unacceptable risk to U.S. national security or the security and safety of U.S. persons.” The blacklist from the FCC also extends to subsidiaries and affiliates of the Chinese firms.
“This list is a big step toward restoring trust in our communications networks. Americans are relying on our networks more than ever to work, go to school, or access healthcare, and we need to trust that these communications are safe and secure,“ acting FCC Chairwoman Jessica Rosenworcel said on Friday. “This list provides meaningful guidance that will ensure that as next-generation networks are built across the country, they do not repeat the mistakes of the past or use equipment or services that will pose a threat to U.S. national security or the security and safety of Americans.”
The Justice Department and U.S. intelligence agencies believe that Huawei, ZTE, and other Chinese companies are working hand-in-hand with the ruling Chinese Communist Party, potentially giving China’s surveillance state access to hardware and networks around the world. The U.S. has sought to limit Huawei’s global reach, especially in the area of 5G, pushing its “Five Eyes” partners of Australia, Canada, New Zealand, and the United Kingdom to reject Huawei technology in their communications networks.
The designations of Huawei and the others on Friday were made in accordance with the Secure Networks Act, which became law in March 2020. The FCC noted that the law “established a process to prohibit the use of federal subsidies to purchase equipment or services deemed to pose national security risks, as well as a reimbursement program that provided for the replacement of communications equipment or services that posed such risks.”
The FCC’s listing covered “telecommunications equipment produced or provided by” Huawei and ZTE, “including telecommunications or video surveillance services produced or provided by such entity or using such equipment.” The designation covered “video surveillance and telecommunications equipment produced or provided by” Hytera, Hangzhou Hikvision, and Dahua “to the extent it is used for the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes, including telecommunications or video surveillance services produced or provided by such entity or using such equipment.”
The FCC initially designated Huawei and ZTE as “national security threats” last summer, banning the two Chinese Communist Party-linked companies from accessing U.S. government subsidies to build communication infrastructure. The FCC noted then that the companies would now fall under the FCC’s November 2019 rule that bans the “purchase of equipment or services from companies posing a national security threat.” The FCC said that government subsidies from its $8.3 billion annual Universal Service Fund “may no longer be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by” Huawei or ZTE.
Last month, Huawei filed an appeal with the U.S. Court of Appeals for the 5th Circuit in an effort to push back against the FCC designating the Chinese telecommunications company as a national security threat.
“Petitioners seek review of the Final Designation Order on the grounds that it exceeds the FCC’s statutory authority; violates federal law and the Constitution; is arbitrary, capricious, and an abuse of discretion, and not supported by substantial evidence, within the meaning of the Administrative Procedure Act; was adopted through a process that failed to provide Petitioners with the procedural protections afforded by the Constitution and the Administrative Procedure Act; and is otherwise contrary to law,” Huawei’s lawyers contended.
The Justice Department unveiled a superseding indictment of previous 2019 charges against Huawei in February 2020, charging it with racketeering and conspiracy to steal trade secrets. The 16-count indictment charged Huawei and its U.S.-based subsidiaries with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act and outlined new claims about Huawei’s deceptive efforts to evade U.S., European Union, and United Nations sanctions when doing business in North Korea and Iran.
The Commerce Department explained in December 2020 that Huawei was added to the entity list in May 2019 because the company and its affiliates “engaged in activities that are contrary to U.S. national security or foreign policy interests.” The Bureau of Industry and Security amended its foreign-produced direct product rule in May 2020 to “target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology” and in August 2020 announced even broader restrictions.
Some Republican senators voted against confirming Commerce Secretary Gina Raimondo because she declined to promise to keep Huawei on the blacklist, though she did testify that she would use the “full tool kit at [her] disposal to the fullest extent possible to protect Americans and our network from Chinese interference or any kind of backdoor influence into our network.”