HONG KONG/WASHINGTON (Reuters) – Chinese telecoms equipment maker Huawei Technologies sued the US government yesterday saying a law limiting its US business was unconstitutional, ratcheting up its fight back against a government bent on closing it out of global markets.
Huawei said it had filed a complaint in a federal court in Texas challenging Section 889 of the National Defense Authorization Act (NDAA), signed into law by US President Donald Trump in August, which bars federal agencies and their contractors from procuring its equipment and services.
The lawsuit marks the latest confrontation between China and the United States, which spent most of 2018 slapping import tariffs on billions of dollars worth of each other’s goods. The year ended with the arrest of Huawei’s chief financial officer (CFO) in Canada at US request, to the consternation of China.
Long before Mr Trump initiated the trade war, Huawei’s activities were under scrutiny by US authorities, according to interviews with 10 people familiar with the Huawei probes and documents related to the investigations seen by Reuters.
“The US Congress has repeatedly failed to produce any evidence to support its restrictions on Huawei products. We are compelled to take this legal action as a proper and last resort,” Huawei Rotating Chairman Guo Ping said in a statement.
“This ban not only is unlawful, but also restricts Huawei from engaging in fair competition, ultimately harming US consumers. We look forward to the court’s verdict.”
While Huawei had very little share of the US market before the bill, it is the world’s biggest telecoms gear maker and is seeking to be at the forefront of a global roll-out of fifth generation (5G) mobile networks and services.
In its lawsuit, Huawei said its “equipment and services are subject to advanced security procedures, and no backdoors, implants, or other intentional security vulnerabilities have been documented in any of the more than 170 countries in the world where Huawei equipment and services are used.”
The privately owned firm has embarked on a public relations and legal offensive as Washington lobbies allies to abandon Huawei when building 5G networks, centring on a 2017 Chinese law requiring companies cooperate with national intelligence work.
“The US Government is sparing no effort to smear the company and mislead the public,” said Mr Guo in a news briefing at Huawei’s headquarters in southern China.
The NDAA bans the US government from doing business with Huawei or compatriot peer ZTE Corp or from doing business with any company that has equipment from the two firms as a “substantial or essential component” of their system.
In its lawsuit, filed in US District Court in the Eastern District of Texas, Huawei argues that the section in question is illegal because it could sharply limit the company’s ability to do business in the United States despite no proof of wrongdoing.
The lawsuit also alleges that Huawei has been denied due process and that Congress, by stripping Huawei of commercial opportunities, has violated the “separation of powers” portion of the constitution by doing the work of the courts.
Chinese foreign ministry spokesman Lu Kang said he had no information on whether China’s government may also seek legal action against this US law, but added Huawei’s move is “totally reasonable and totally understandable”.