- Associated Press - Tuesday, May 28, 2019

SHENZHEN, China (AP) — Fighting to maintain its access to major markets for next-generation communications, Chinese tech giant Huawei is challenging the constitutionality of a U.S. law that limits its sales of telecom equipment.

Huawei’s chief legal officer, Song Liuping, said Wednesday that Huawei filed a motion asking a court in Plano, Texas, for a summary judgment on whether a U.S. military spending provision that bars the government and its contractors from using Huawei equipment is constitutional.

The lawsuit comes as the U.S. and China are embroiled in a broader trade war in which both sides have imposed billions of dollars of punitive tariffs against each other’s products. Chinese state media suggested Wednesday that the country’s rich supply of rare earths — key elements for high-tech manufacturing - could be used as leverage against the U.S. in the dispute.

Huawei is the biggest global maker of network equipment and enjoys a lead in 5G, or fifth-generation, technology. It also is the No. 2 maker of smartphones. The Trump administration says the company could use its equipment to spy on behalf of the Chinese government and is thus a threat to international cybersecurity.

“This decision threatens to harm our customers in over 170 countries, including more than 3 billion customers who use Huawei products and services around the world,” Song said at a news briefing.



Huawei, whose U.S. headquarters is in Plano, launched a lawsuit in March against the U.S. national defense law, calling the provision a “bill of attainder” that selectively punishes Huawei and violates its due process by presuming its guilt without a fair trial. The summary judgment motion seeks to accelerate the legal process to give U.S. customers access to Huawei equipment sooner, Huawei said in a statement.

Song said the “state-sanctioned campaign” against the company will not improve cybersecurity.

“Politicians in the U.S. are using the strength of an entire nation to come after a private company,” he said. “This is not normal.”

Apart from the defense law provision, the U.S. Commerce Department recently placed Huawei on its “Entity List,” effectively barring U.S. companies from selling their technology to it and other Chinese firms without government approval. Huawei relies heavily on U.S. components, including computer chips, and about one-third of its suppliers are American.

The dispute centers on China’s longstanding huge trade surplus with the U.S. and complaints that Beijing and Chinese companies use unfair tactics to acquire advanced foreign technologies.

The most recent round of negotiations between Beijing and Washington ended earlier this month without an agreement after Trump more than doubled duties on $200 billion in Chinese products. China responded by raising tariffs of 5% to 25% on $60 billion worth of American goods.

At least three Chinese state media outlets on Wednesday suggested the country’s supply of rare earths could be used as a weapon.

People’s Daily, the official newspaper of the ruling Communist Party, said in an editorial that the U.S. is a major buyer of China’s rare earth materials and “highly dependent” on such resources. The editorial was titled “The U.S. should not underestimate China’s ability to enact countermeasures.”

Rare earths are chemical elements that are crucial to many modern technologies, such as consumer electronics.

Chinese President Xi Jinping visited rare earth-related businesses in southeastern Jiangxi province earlier this month. He called rare earths “an important strategic resource” while stressing the importance of owning independent core technologies, the state-run China Daily reported.

As a weapon, the nationalistic Global Times said, rare earths “convey that China will not succumb to U.S. pressure.” If the U.S. does not exercise restraint, it will see that “China is far from running out of cards, and we have the will and determination to fight the U.S. to the end,” the editorial said.

An official of China’s top economic planning agency did not rule out using rare earths as a countermeasure against “the U.S.’s unwarranted suppression.”

The actions against Huawei have already affected the company’s U.S. partnerships. Google said it would continue to support existing Huawei smartphones, but future devices won’t include its flagship apps and services, including maps, Gmail and search - a change that will likely make Huawei phones less appealing.

Song said the U.S. has not provided any evidence to show that Huawei is a security threat.

“There is no gun, no smoke, only speculation,” he said, accusing the U.S. of setting a “dangerous precedent.”

“Today it’s telecoms and Huawei,” he said. “Tomorrow it could be your industry, your company, your consumers.”

Song said Huawei was asking FedEx about four packages containing paperwork that were found to have been diverted to FedEx headquarters in the U.S. instead of being delivered to Huawei offices in Asia.

FedEx apologized and said the packages were misrouted accidentally. It said the company wasn’t told by anyone to divert the packages.

Song said Huawei was aware of FedEx’s apology over the incident. But the company has questioned if the diversions were purely accidental.

“I don’t think it is right for any company to intercept or detain individual documents or information. If our rights were truly infringed upon, we have the legal rights to defend ourselves,” he said.

___

Associated Press video producer Olivia Zhang in Shenzhen and writer Chris Bodeen in Beijing contributed to this report.

Copyright © 2019 The Washington Times, LLC.

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