What are the legal justifications for the U.S. to impose a ban on Huawei?
What are the legal justifications for the U.S. to impose a ban on Huawei?
Trying to dissect this from a legal perspective misses the forest for the trees
If the U.S. wants to put a de facto ban on a company and prevent them from doing business here, coming up with a legal or regulatory justification is probably the easiest part of the job. The same thing, by the way, can be said about China and Google’s experience there is a good analogy of Huawei’s experience in the U.S.
Huawei & America not exactly BFFs
The U.S. telecom sector is regulated by the Federal Communications Commission (FCC). You cannot function in the telecom sector without obtaining their blessing. If they want to target a company, it is fairly simple to come up with a litany of regulations that you know the company cannot comply with and/or enforce existing regulations selectively such that it would make no economic sense for the company to heavily market itself here.
And it is pretty clear that while Huawei may not technically be “banned” [1] ... for all intents and purposes, they [2] really are. Huawei surpassed Ericsson as the largest supplier of telecom equipment worldwide in 2012 and their lack of any substantial market presence in the United States stands in sharp contrast to the fact they are #1 or #2 in nearly every other major market. There is really no market or product reason for this – it is almost entirely due to the de facto ban that Chinese telecom equipment suppliers face in the United States.
There are clear strategic reasons for this that others have pointed out. But there are economic reasons as well. The loudest voices against Huawei are its main competitors in the telco equipment supply industry – companies like Alcatel-Lucent and Cisco. They have every economic incentive to oppose Huawei and have spent plenty of money directly and indirectly lobbying for more restrictions on Chinese equipment companies.
Tit for tat
Turning the tables now, the same exact thing happens in China as well. A good example is Google’s experience in China.
Google was not technically banned either – they made a decision that they could could not comply with certain Chinese regulations requiring them to cooperate with the country’s Great Firewall, release specific information requested by the Chinese government etc. Did Chinese companies such as Baidu lobby for these rules that they knew would put them in an advantageous position? You betcha. You’d be extremely naive to think that they did not: When there are hundreds of billions of dollars of wealth at stake, people act in fairly predictable ways.
I am broadly supportive of less friction in trade and allowing market competition to drive economic progress but at the same time, I understand why policymakers in both countries make these types of strategic decisions at times. Would Chinese people really have been holistically better off if Google had ended up dominating its Internet as opposed to a Baidu or Alibaba? Are Americans really that much worse off by installing Ericsson switches instead of Huawei?
Instead of getting caught up in debating legal minutiae or turning these things into moral/ethical debates, I think the best thing to do is to step into the other side’s shoes and think about it from their perspective every once in a while.
Notes
[1] There are actually very few outright bans on companies. The only ones I know of are when entire countries are sanctioned like Iran or North Korea.
[2] By “they” I am referring only to Huawei’s original/main business as a supplier of telecom equipment. Their consumer products (primarily mobile handsets) division is sold freely in the U.S. and in fact, doing quite well.
This was originally published on Quora in April 2016.