Huawei pushes back as pressure on Chinese companies grows

[WASHINGTON] Huawei Technologies Co. said a proposed ban on selling its gear to some US mobile providers isn't lawful, pushing back against assertions it poses a risk as the Trump administration increases pressure on China over trade and national security.

The Shenzhen-based company's presence in the US "has been artificially restricted by unfounded allegations and suspicions based solely on misperceptions" about its relationship with China's government, Huawei said in a filing with the Federal Communications Commission (FCC) that was made public on Tuesday.

The agency under Chairman Ajit Pai, an appointee of US President Donald Trump, has proposed barring telecommunications companies from using a federal subsidy to buy gear from companies such as Huawei and ZTE Corp. that are judged to be a national security risk.

On Monday, another federal agency asked the FCC to block China Mobile Ltd. from entering the US market, citing national security grounds. A spokesman for China's foreign ministry said the US "should stop groundless speculation and intentional suppression against Chinese companies."

The US is set to impose tariffs on US$34 billion of Chinese goods on Friday, with China vowing to retaliate. Mr Trump has also threatened additional tariffs on US$200 billion of Chinese imports that could be implemented if China imposes counter-measures.

Talks between the US and China have stalled in part over American demands that Beijing reduce government support for high-tech industries.

Huawei, in its comments that became available Tuesday, said it's an independent, privately-owned business. Letting Huawei compete freely could yield savings, while restrictions "will result in excessive profits for a handful of other equipment suppliers in this highly concentrated market," Huawei said.

The result would leave the US falling behind other countries, with harm concentrated in remote and poor areas, according to the filing said. "The US cannot afford to become the only country in the world that lacks access to the best communication technologies," Huawei said in the filing.

The FCC's authority over the subsidy, the Universal Service Fund, doesn't encompass national security concerns, Huawei said.

CTIA, a Washington-based trade group with members including US mobile providers AT&T Inc. and Verizon Communications Inc., didn't express outright support or opposition to the measure. It said in a filing that the FCC should proceed cautiously and consult with the Department of Homeland Security and other agencies before acting.

FCC action could have the "inadvertent effect" of inhibiting investment in secure equipment by creating uncertainty over which suppliers can be used, the CTIA said.

The Competitive Carriers Association, with members including regional and rural mobile providers, opposes the FCC's rule which will "devastate impacted rural carriers," according to an emailed statement from the Washington-based trade group.

The Telecommunications Industry Association, a trade group for gear makers, said it supports the FCC's proposal.

The FCC in April cast a 5-0 vote to advance the restriction, which won't be final until a second vote that hasn't been scheduled. The agency in its draft order said Congress scrutinised Huawei and ZTE as possible security threats.

Huawei, China's largest maker of telecommunications equipment, was founded in 1988 by former Chinese army officer Ren Zhengfei.

BLOOMBERG