The Complex

U.S. lawmakers to American companies: Don't do business with Huawei or ZTE

Representatives Mike Rogers (R-Mich.) and Dutch Ruppersburger (D-Md.) unveiled their report accusing Chinese telecomm giants Huawei and ZTE of spying on American companies for the Chinese government today. Bottom line, the report recommends that U.S. businesses, especially those involved in "critical infrastructure," stop buying Huawei and ZTE products until the companies play by the rules.

Rogers, chair of the House Intelligence Committee, claimed during a press conference to unveil the report that Huawei and ZTE are likely breaking the law in the United States -- doing everything from bribing an unnamed company or official to "beaconing," or passing lots of sensitive data about U.S. companies' back to China in the middle of the night (a claim that a Huawei spokesman denied after the press conference until he was nearly red in the face). 

Rogers and Ruppersburger refused to provide more details or evidence about their allegations of wrongdoing other than saying they came from a thorough investigation.

Rogers said that during the lawmakers' yearlong investigation they spoke with everyone from current American employees of the two telecoms -- who were willing to reveal some of their alleged bad behavior -- to Chinese officials from the companies who weren't exactly cooperative, if you ask Rogers.

Rogers said that these firms are not "private entities" but rather are legally bound to conduct the industrial espionage he accused them of on behalf of the Chinese government.

Apparently, the investigation collected enough dirt on Huawei that the FBI is opening an investigation into "a clear case of bribery to get a contract in the United States," according to Rogers.

Among the key recommendations:

 

  • The U.S. government and government contractors shouldn't use anything made by the two companies and the Committee on Foreign Investments in the U.S. (CFIUS) should block any acquisitions, mergers or takeovers involving Huawei and ZTE given their "threat to U.S. national security."
  • U.S. network providers and systems developers should "seek other vendors for their projects."
  • The U.S. government should investigate unfair trade practices, especially illegal Chinese government subsidies to companies like Huawei and ZTE that allow Chinese businesses to undercut their competitors.
  • Chinese companies should become more transparent and responsive to U.S. legal obligations.
  • The U.S. Congress should consider legislation dealing with the risk posed by telecoms with "nation-state ties or otherwise not clearly trusted to build critical infrastructure." Such legislation could involve increasing private companies ability to share information on cyber threats and increasing the CFIUS' ability to review purchasing agreements.

 

Now, here's the unclassified version of the report.

 

Huawei-ZTE Investigative Report (FINAL)

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