Leading Chinese electronics and cell-phone manufacturer Huawei is reportedly preparing to sue the government of the United States of America over the latest development in an ongoing trade war between the US and China.
The US recently banned national federal agencies from using Huawei phones or products, alleging that the products are “backdoored” by the Chinese state, allowing the government to covertly monitor any communications on the devices.
The US government also alleges that Huawei misled the US about the company’s relationship with two subsidiaries regarding business with Iran, which is under US sanctions, and that Huawei stole intellectual property from T Mobile and conducted wire fraud and obstruction of justice.
While both nations have always struggled behind closed doors to gain a competitive edge through any means necessary, the trade war began in earnest in January 2018. US President Donald Trump placed a 30% import tariff on foreign solar panels, severely impacting China which is the world’s leading manufacturer of the technology.
By making Chinese solar panels 30% more expensive in the US, Trump effectively fired the first shot in a trade war that had been brewing for some time, with China accused of stealing US intellectual property by reproducing counterfeit products and patented technologies said to cost the US an estimated $255 – $600 billion in losses each year.
The US response to what its administration labeled China’s unfair trading practices resulted in a flurry of punitive tariffs which have harmed industries in both nations as well as internationally. Chinese solar panels, steel, and aluminum were all subject to heavy tariffs, leading to China placing tariffs on US soy, satellites, weaponry, and a host of other products, impacting US manufacturing which has performed very poorly in recent months.
After getting on the wrong side of the EU during the dispute, the US government received notice that big motorcycles were subject to a 31% import tax in the EU, likely aimed to directly impact US motorcycle manufacturer Harley Davidson. The iconic motorbike company is one of many US companies suffering the effects of the conflict, taking a 10% nosedive in sales and now shutting down US plants to move abroad.
Huawei is due to file a lawsuit in Texas where the company’s US headquarters are located, with more details to come this week. The lawsuit may be part of a wider plan designed to force the US to make its case against Huawei more public, escalating the matter and applying pressure on the US. The US has been outspoken against the dangers of allowing Huawei to gain a US foothold for years, labeling the company a security threat backed and controlled by the Chinese state.
The concerns that Huawei products double as tools for Chinese espionage have now been made official, with major wireless carriers like Verizon and AT&T prohibited from using the equipment. The US Justice Department also filed criminal charges against both Huawei and its CFO regarding the evasion of US sanctions imposed on Iran and has publicly encouraged other national governments to boycott Huawei goods to preserve their own national security.
The move has been very widely criticized as transparently hypocritical, as the US is arguably the world’s worst offender when it comes to illegal espionage and interference in the sovereignty of other nations, something which both Huawei and the Chinese government have eagerly brought up at every opportunity. Anti-democratic coups and the notorious PRISM surveillance scandal are among the many examples being touted in the international media.
A Canadian hearing due to begin later this week will determine the fate of Meng Wanzhou, the finance chief of Huawei who may be extradited to the US to face criminal charges. Ms. Meng’s lawyers have already taken legal action against the Canadian police and government, stating that her arrest and subsequent detention was unlawful and in violation of her civil rights.
She was arrested on suspicion of fraud and breaching trade sanction agreements at Vancouver airport, and claims that the Royal Canadian Mounted Police (RCMP) detained her under false pretenses. It’s possible that the case will take years to resolve.
Meanwhile, The lawsuit being prepared by Huawei is likely to challenge a defense spending authorization law prohibiting federal agencies from using equipment manufactured by Huawei or ZTE. The lawsuit could potentially argue that the law is a “bill of attainder”, a piece of legislation designed to punish an individual or group without trial. Such acts of legislation are forbidden by the US constitution.
The case is reminiscent of that of Kaspersky Lab, a Russian cybersecurity firm targeted by US Congress on suspicion that the firm was acting as an intelligence branch of the Russian state, conducting espionage within the US. Like with Huawei and ZTE, the US directed federal agencies to remove Kaspersky Lab products from their systems, leading to two lawsuits accusing the US of drafting and passing a bill of attainder against the cybersecurity firm.
The suits were dismissed in May 2018, with the presiding judge Hon. David Tatel stating that Congress was geniunely acting in the interests of national security and not seeking to target Kaspersky Labs unfairly, and the ruling was later upheld in a court of appeals.
Given the not insignificant probability that Kaspersky’s products could have compromised federal systems and the magnitude of the harm such an intrusion could have wrought, Congress’s decision to remove Kaspersky from federal networks represents a reasonable and balanced response, wrote Judge Tatel.
It does not seem unlikely that the Huawei case could be headed in a similar direction, although the stakes are perhaps higher and more complicated given the wider context of the ongoing trade war which has no firm conclusion in sight, despite negotiations.