Huawei says US moves against it are ‘unconstitutional’ as it fights trade embargo

29 May 2019 | Alan Burkitt-Gray

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Huawei has stepped up its fight back against the embargo imposed by President Donald Trump by challenging the legal basis under the US constitution.

The company says the National Defense Authorization Act (NDAA), that approved military funding for 2019, is wrong to ban US government agencies from using Huawei equipment or phones.

Song Liuping (pictured), Huawei’s chief legal officer, said: “Politicians in the US are using the strength of an entire nation to come after a private company. This is not normal. Almost never seen in history.”

The company has already started a legal claim that the NDAA is unconstitutional and last night asked the court for a summary judgement.

The Chinese company argues that the NDAA singles out Huawei by name and not only bars US government agencies from buying Huawei equipment and services, but also bars them from contracting with or awarding grants or loans to third parties who buy Huawei equipment or services – even if there is no impact or connection to the US government.

Since the NDAA was passed the US has also added Huawei to its entity list, a list of companies that US companies, US citizens and even people in the US cannot sell to or buy from. That will eventually stifle supplies of chips and other hardware, software updates and intellectual property from US companies or companies with a US presence, such as SoftBank’s wholly owned UK subsidiary, ARM.

Song said in a press conference in Shenzhen, Huawei’s headquarters, this morning: “This sets a dangerous precedent. Today it’s telecoms and Huawei. Tomorrow it could be your industry, your company, your consumers.”

However, behind all this is the long-running trade war between China and the US, and the US campaign to strengthen its embargo against Iran.

Last year, when rival Chinese telecoms supplier ZTE admitted smuggling equipment containing US technology to Iran it paid a fine of $1.4 billion – just under 10% of its annual turnover – and accepted US legal oversight for 10 years.

It could be that these legal moves are essentially sabre-rattling between the US and Huawei and that in time Huawei will also pay a fine and accept oversight. If it is calculated on a similar basis, given that Huawei’s annual sales are more than $100 billion, that would put a fine in the $10 billion range.