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Trade war

Huawei sues US over equipment ban and security risk claims

Chinese tech giant's legal fight seen as buying time for negotiations

Huawei Rotating Chairman Guo Ping explains the decision to sue the U.S. in Shenzhen on March 7.   © AP

TAIPEI/NEW YORK -- China's Huawei Technologies is suing the U.S. government over the ban on sales of its equipment to public agencies, as the world's biggest telecom equipment maker combats allegations that it poses a security risk.

Filed in Texas, where the company's American headquarters is located, the lawsuit claims Washington's ban violates the U.S. Constitution.

Announcing the legal challenge on Thursday from the company's base in Shenzhen, Guo Ping, Huawei rotating chairman, slammed U.S. efforts to bar it from doing business in America and other countries as "unlawful." It was also hypocritical, he suggested.

"The U.S. government has long branded Huawei as a threat. It has hacked our servers and stole our emails and source codes. Despite this, the U.S. government has never provided any evidence supporting the accusation that Huawei poses a cybersecurity threat," he said. The legal action was a "last resort" in the face of a sustained and illegal U.S. campaign. 

The lawsuit against the U.S. marks the company's second legal battle in North America in less than a week, following Chief Financial Officer Meng Wanzhou's law suit against Canada's government over her treatment by law enforcement there. Meng faces extradition to the U.S. after her arrest on suspicion of violating American sanctions against Iran.

The latest lawsuit seeks to overturn part of last year's National Defense Authorization Act, which prohibits U.S. government agencies from buying kit made by Huawei and Chinese peer ZTE, and further restricts foreign investment proposals.

The company claims the restrictions in the American military spending law constitute a legislative act that singles out a person or group for punishment without trial. The U.S. Constitution prohibits Congress from passing such acts, known as bills of attainder. Beijing condemned the law as targeting China's rising global presence in technology.

The U.S. Justice Department has charged Huawei with stealing trade secrets from American wireless carrier T-Mobile and violating sanctions against Iran.

Huawei's legal counterpunch follows a public-relations campaign by the company against Washington's effort to persuade allies to block its 5G network technology on espionage concerns. The maker of smartphones, routers and servers has repeatedly denied that it serves as a tool for spying by Beijing.

The lawsuit also comes as the U.S. and China negotiate a deal to end their yearlong trade war.

Legal analysts say Huawei's case has little chance of victory, but that the lawsuit could buy the Chinese company time for further talks with Washington.

"Even if Huawei wins such a lawsuit, by the time that occurs the industry in the U.S. and possibly in other countries will have already purchased equipment from other suppliers; thus, such a victory would be symbolic at best," said Ross Darrell Feingold, an American lawyer and political risk analyst who advises clients on the U.S. and China.

Julian Ku, a professor at Maurice A. Deane School of Law at Hofstra University in New York, said the lawsuit signaled that Huawei did not think its public relations or lobbying efforts would move Congress.

"Lawsuits are pretty much the last resort, with low chances of success," the professor said.

Precedent also suggests the chances of victory are slim. Russian cybersecurity company Kaspersky Lab also launched a legal challenge after Federal agencies were ordered to remove its products from government systems in 2017, amid suspicions that its software could be used by Moscow to collect intelligence. 

Kaspersky challenged the ban, but its lawsuits were dismissed. 

But if a judge delays, even in part, the implementation of U.S. laws or executive actions that restrict Huawei's ability to do business, the company gains more time to negotiate a settlement with Washington, Feingold said.

"Given Huawei's enormous financial resources, and the risks it faces from procurement bans in the U.S. and in other countries, it is understandable that Huawei would deploy lawyers across multiple jurisdictions to try to... delay implementation of bans [and] extradition orders for Ms. Meng," the lawyer added.

Zhang Yesui, spokesperson for China's National People's Congress, on Tuesday slammed Washington for applying a "typical double standard" to Huawei that was "neither fair nor ethical." American moves to persuade other countries to bar Huawei from their telecom networks breach World Trade Organization rules, he alleged.

Also this week, Huawei opened a cybersecurity center in Brussels. "Trust needs to be based on facts, facts must be verifiable, and verification must be based on common standards," Huawei rotating Chairman Ken Hu said in his remarks in the Belgian capital. "We believe that this is an effective model to build trust for the digital era."

The company competes with Nokia, Ericsson and Samsung Electronics in the global market for network equipment.

K.D. Shull, director of legal affairs at Huawei Technologies USA, declined to comment for this article. Law companies Jones Day and Morgan, Lewis & Bockius, both of which have represented Huawei in the U.S., did not respond to the Nikkei Asian Review's request for comments.

Meng's lawyers David Martin, Reid Weingarten and Richard Peck also did not respond to the Nikkei Asian Review's questions.

The White House communications office could not be reached for comment. The Department of Justice declined to comment for this article.

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