PAT PILCHER looks at signs America’s stance on Huawei may indeed be softening. And he examines evidence that the ban is unworkable.
For Huawei fans its been a tough few weeks. As the US tech sector was forced to shun Huawei after the trump administration added the Chinese telco to what it calls the “Entity list”, which requires that all US businesses must get a license from the US government before they can supply Huawei with hardware, software or intellectual property.
This also saw three key tech standards groups, the Wi-Fi alliance, the SD association and JEDEC cutting ties with Huawei. The significance of this is that while being excluded from these groups won’t prevent Huawei from using their technologies, it will prevent Huawei from having a say in the future development of standards, and most importantly of all, gaining a chunk of the lucrative intellectual property that this entails.
The news comes as an earlier emailed statement from a spokesperson of the SD Association confirmed that, “Huawei’s membership was never cancelled, it has been temporarily modified to ensure compliance with the US Department of Commerce.”
Even more significantly, Google, which had removed Huawei from their Android Q beta programme, has suddenly re-added Huawei into the programme. The move could signal good news for Huawei, which has faced a huge consumer backlash over media reports that they would no longer be receiving Android updates from Google.
Good news aside, it’s been tough for Huawei. But they have not taken the ban lying down. They are about to take the whole mess to court. Huawei has filed legal proceedings; challenging the US government’s ban on its equipment, saying this is unconstitutional.
Here’s how it works. Prior to the ban, US Congress had barred Huawei products from use in the government, saying that they were a potential security threat. This not only barred US government agencies from using Huawei gear, but contractors seeking to secure government contracts also had to ditch Huawei equipment. Because of this, Huawei filed its original lawsuit against the US government in March.
“Huawei has filed legal proceedings challenging the US government’s ban”
Now, in the latest legal motion filed by Huawei, they are arguing that the ban should be ended. And as such, they are asking for a summary judgment. It appears that Huawei will argue that the ban is what is known in legalese as a “a bill of attainder”.
The long, short and tall of this is that under the US constitution, Congress cannot pass laws that target specific groups of people. Huawei argue that because of this, the ban flouts a key part of the US constitution. Huawei alleges that US Congress was running afoul of the Constitution when it imposed the ban. As Huawei was specifically named in the defence budget, which incorporated the ban.
There are some very real precedents that underlie Huawei’s legal argument. These go back as far as the US Civil War, when courts reversed and struck down legal rulings against former Confederate soldiers. Huawei argues that it has been targeted. And it has not been given a chance to make its case in a US court, and that this is depriving them of due process.
As compelling as Huawei’s case may sound, it isn’t perfect. In an earlier and similar case, when the US government banned Russian cyber security company, Kaspersky Labs, it also went to court. The same bill of attainder argument was used, but the US won as US courts tend to favour US national security over constitutional arguments involving non-US companies.
“China is rumoured to be creating an “unreliable entities list of non-Chinese companies”
Now It also appears that the Chinese government may be about to retaliate.
The current scuttlebutt has it that China is rumoured to be creating an “unreliable entities list” of non-Chinese companies that it believes are harmful to Chinese businesses.
China has yet to disclose how this would work. But it could deliver a sizeable blow to the US tech sector, which is heavily reliant on China to keep manufacturing costs down and for access to their massive consumer electronics market.
US companies such as Apple could quickly feel the burn if they were affected as 19 per cent – a sizeable chunk in anyone’s books – of their global revenue comes from the Chinese market.
There are downsides for China with this approach too. There is potential for damage to the Chinese economy, as manufacturing operations such as Foxconn would be forced to lay off a sizeable chunk of their workforce if they had to cease manufacturing iPhones. It would be significantly worse for Apple though. As it could add additional cost to Apple’s already expensive iPhone range, and this could lead to already slowing sales … falling even further.
“The US/China trade bunfight is likely to be ongoing and a lose-lose for all involved”
Then there’s the other ‘not so inconsiderable’ issue of rare earth elements. These are vital in the manufacture of electronics. And China owns the lion’s share of these. If their supply were to be restricted, further pain could be inflicted on the US tech sector.
Either way, the US/China trade bunfight is likely to be ongoing. And a lose-lose for all involved. With countries beyond the US and China likely to come off as collateral damage, should the economic mayhem resulting from this ridiculous spat continue.
Let’s hope that sanity will eventually prevail. And that the US government will get back around the negotiating table to end this silliness.