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US launches fresh Huawei investigation over trade secrets

US launches fresh Huawei investigation over trade secrets

Huawei faces renewed pressure from the US after prosecutors opened another investigation against the vendor alleging that it stole trade secrets from other companies.

As reported in The Wall Street Journal (WSJ), the probe is almost complete, and focuses on handset testing solutions used by T-Mobile US, a subsidiary of Deutsche Telekom. Huawei has responded by highlighting that it settled a civil court case with T-Mobile relating to trade secrets in 2017, in which it was cleared of any malicious activity.

Hours before the investigation was revealed, US politicians tabled a bill which seeks to prevent Chinese telecoms firms from purchasing US-made components if they are found to have violated export control laws. Both Huawei and ZTE were referred to by name in the text of the bill, although it would apply to any telecom company based in China.

Speaking to Reuters, Chinese foreign affairs ministry spokesperson Hua Chunying said that the bill was a reaction cause by hysteria that would exacerbate tensions. It was introduced a month after Huawei’s CFO Meng Wanzhou was detained in Canada at the request of the US, which maintains that the vendor circumvented US trade sanctions on Iran.

If the bill is passed into law, it impose export denial orders on the company in question and – crucially – prevent them from being rescinded or modified by the President or executive branch “until the President certifies that the company has not violated US laws for one year and is fully cooperating with US investigations”.

This specification is likely aimed at avoid a repeat of the situation that unfolded last April around ZTE. The vendor was hit with a ban for violating trade sanctions, but it was lifted within three months following presidential intervention. Nonetheless, it had a severe impact on ZTE, with the company registering H1 losses of CNY7.8 billion ($1.1 billion).

Senator Tom Cotton, a co-sponsor of the bill, said that it would enable “decisive action to protect US interests and enforce our laws. If Chinese telecom companies like Huawei violate our sanctions or export control laws, they should receive nothing less than the death penalty, which this denial order would provide”.

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