US Congressman moves to ban Huawei and ZTE

There might have been some optimism from Huawei and ZTE that the US market was about to open up, but Congressman Mike Conaway is looking to kill that ambition off completely.

Chinese companies have long been the target of US politicians when it comes to communications infrastructure, though Conaway’s ambitions would be to write into law a ban from any government employee from using any device or telecommunications equipment from one of the vendors. It certainly has been a rollercoaster week for Huawei, which has gone from trying to announce a partnership with AT&T to potentially being legally banned from government offices.

“Chinese commercial technology is a vehicle for the Chinese government to spy on United States federal agencies, posing a severe national security threat,” said Congressman Conaway.

“Allowing Huawei, ZTE, and other related entities access to U.S. government communications would be inviting Chinese surveillance into all aspects of our lives. This legislation falls directly in line with President Trump’s policy of putting American national security interests first, a policy I’m proud to support.”

This is certainly a very aggressive stance against the Chinese firms. While there have been a lot of passive aggressive comments from politicians to date, as well as limitations on how the companies can operate in the US, we are struggling to think of a comment which is this confrontational.

The bill itself, patriotically known as the Defending US Government Communications Act, is part of greater protectionism trends which fuel the ‘America First’ promises set out by President Trump on the campaign trail. Here is the exact wording from Conaway’s proposal:

“The head of an agency may not procure or obtain, may not extend or renew a contract to procure or obtain, and may not enter into a contract (or extend or renew a contract) with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.”

In short, government agencies cannot purchase any products or services from a company which is deemed too close to the ‘covered foreign country’, which in this case means China. Considering the US’ paranoia surrounding whether the rest of the world is out to get it or not, Huawei and ZTE shouldn’t hold their breath for a positive outcome.

Up until a week ago, signs had been looking positive. Huawei was on course to announce a partnership with AT&T to sell its smartphones into the US, which could have been viewed as a softening of the government’s position against the Chinese giant. The door was only open a crack, but should the smartphones have been accepted, there would have been potential for both the cloud and carrier business to make strides forward. Alas, no.

ZTE also looked like it was making good progress as well after accepting a $1 billion fine to get off the US’ sh*t-list, known officially as the Entity List. Those on the list will find it very difficult to do business in the US, and ZTE found its way there after violating trade sanctions by selling equipment to Iran. Getting off the list was well worth a party, but Conaway is potentially undoing all the good work of yesteryear.

It should be worth noting this is only a proposal at the moment, but considering the precedent and President Trump’s apparent pre-election obsession with China, the American dream does not look like it is in the grasp of Huawei or ZTE.