Huawei Before Intelligence Committee

Posted by Sam Churchill on

China’s biggest telecommunications equipment maker, Huawei Technologies, charged today that their entry into the United States market has been blocked by unsubstantiated allegations that threatened to harm ties between the world’s two biggest economies, reports Reuters.

The complaint was spelled out on the eve of the company’s scheduled testimony Thursday at a rare public hearing of the U.S. House of Representatives’ Intelligence Committee (live video coverage).

The committee is completing a nearly year-long investigation of security threats allegedly posed by equipment sold by Huawei, as well as ZTE Corp, also frustrated by challenges entering the U.S. market.

The concern is that their products may be booby-trapped and provide the Chinese “an opportunity for greater foreign espionage, threaten our critical infrastructure, or increase the opportunities for Chinese economic espionage,” the Republican-led House Intelligence panel said in a notice about the hearing.

The world’s five largest telecommunications equipment vendors measured by 2011 revenues are Sweden’s Ericsson, China’s Huawai, France Alcatel-Lucent, Finland/Germany Nokia Siemens Networks and China’s ZTE.

Huawei, second only in telecom gear sales worldwide to Sweden’s Ericsson, pushed back with an 81-page paper titled “The Case for Huawei in America,” published on the web site of its U.S. subsidiary Wednesday night.

“Much of the evidence fueling lawmakers’ concerns remains classified,” said the heavily footnoted paper by Dan Steinbock, described as an authority on trade and investment and U.S.-Chinese relations.

“However, when one set of allegations are substantiated with another set of allegations, the line between investigation and maltreatment grows thin,” the Huawei-commissioned paper said, decrying “allegations based on allegations.”

Huawei and Bain Capital Partners were forced to give up their bid in 2008 for computer-equipment maker 3Com after the Committee on Foreign Investment in the United States raised objections. Last year, Huawei dropped plans to buy certain assets from 3Leaf Systems, a computer services company, after more problems with the foreign investment panel. Sprint eliminated Huawei as vendor in its massive Network Vision upgrade, after pressure from the government.

An unsuccessful outcome for Huawei in the United States would have “adverse implications” for U.S.-Chinese relations far beyond Huawei, the paper paid for by Huawei said. Continued rebuffs of Huawei in the United States, the document added, “is giving rise to a de facto blueprint for mirror-like Chinese measures to protect perceived strategic industries in the mainland.”

The timing by the Intelligence Committee hearing could make it impossible to avoid political posturing. The timing may work for Huawei, however. It’s only a day after the iPhone 5 announcement and before the Presidential elections. Huawei is wisely keeping its cards close to their chest.

The FISA Amendments Act expires at year’s end. The Obama administration hopes for a congressional reauthorization, despite promises to make the act more privacy-friendly, notes Wired.

Posted by Sam Churchill on Thursday, September 13th, 2012 at 7:34 am .

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