Huawei asks court to throw out US telecom funds ban

SHENZHEN, China (AP) — Chinese tech giant Huawei is asking a United States (US) federal court to throw out a rule that bars rural phone carriers from using government money to purchase its equipment on security grounds.

The lawsuit announced yesterday is Huawei Technologies Ltd’s second legal challenge this year to Trump administration efforts to reduce its already minimal US market presence. The company is scrambling to preserve its global sales of smartphones and network gear following sanctions announced in May that limit access to US components and technology.

Huawei, which said it is employee-owned and has no government ties, denies US accusations it is a security risk and might facilitate Chinese spying.

Huawei is at the centre of US-Chinese tension over Beijing’s technology ambitions and complaints the communist government steals or pressures foreign companies to hand over know-how.

Huawei’s lawsuit in US federal court in New Orleans said the Federal Communications Commission (FCC) acted improperly when it voted last month to bar rural carriers from using government subsidies to buy equipment from Huawei or its Chinese rival, ZTE Corp.

Chief Legal Officer of Huawei Song Liuping. PHOTO: AP

The decision “is based on politics, not security,” Huawei’s Chief Legal Officer, Song Liuping, told a news conference.

The lawsuit says the FCC exceeded its authority by making national security judgments, designated Huawei a threat without evidence and violated its own procedures by adopting a rule without citing a legal basis.

American courts have traditionally been reluctant to second-guess government judgements about national security.

In a separate lawsuit filed in March, Huawei is asking a federal court in Texas to strike down a ban on the US government using its equipment or dealing with any contractor that does.

Meanwhile, US prosecutors are trying to extradite Huawei’s chief financial officer from Canada to face charges she lied to banks about dealings with Iran.

Chinese authorities said the US is exaggerating security concerns to block a potential competitor. Huawei warned the FCC rule will hurt rural American carriers, which buy the Chinese vendor’s equipment because other major suppliers such as Nokia and Ericsson are more expensive.

Song said that while potential lost sales are minimal, if the rule is allowed to stand, Huawei might suffer “reputational losses” that will “have a further impact on our business.”

Huawei’s US sales plunged after a congressional panel warned in 2012 the company and ZTE were security risks and told carriers to avoid them. However, its sales in Europe and developing markets in Asia and Africa have risen steadily.

Huawei earlier reported its global sales rose 24.4 per cent in the first nine months of 2019 over a year earlier to CNY610.8 billion (USD86 billion).