President Donald Trump arrives to speak on energy infrastructure at the Cameron LNG export facility. Image Credit: AP

Washington: Amid a deepening trade war with China, President Donald Trump on Wednesday declared a “national emergency” to protect US communications networks in a move that gives the federal government broad powers to bar American companies from doing business with certain foreign suppliers — including the Chinese firm Huawei. Trump declared the emergency in the form of an executive order invoking the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency that threatens the United States.

What does the order say?

The order directs the Commerce Department, working with other government agencies, to draw up a plan for enforcement within 150 days. Members of Congress said the order was squarely aimed at Chinese companies like Huawei that US intelligence officials say could be used by the Chinese state to spy. “China’s main export is espionage, and the distinction between the Chinese Communist Party and Chinese ‘private-sector’ businesses like Huawei is imaginary,” Republican Senator Ben Sasse said. Senator Ted Cruz said the order would help protect 5G networks from Huawei.

Under President Trump’s leadership, Americans will be able to trust that our data and infrastructure are secure.

- Wilbur Ross, Commerce Secretary

The order, which has been under review for more than a year, is aimed at protecting the supply chain from “foreign adversaries to the nation’s information and communications technology and services supply chain,” said Commerce Secretary Wilbur Ross. “Under President Trump’s leadership, Americans will be able to trust that our data and infrastructure are secure,” he said.

What will happen as a result?

The order authorises the commerce secretary to block transactions involving communications technologies built by firms controlled by a foreign adversary that puts US security at “unacceptable” risk — or poses a threat of espionage or sabotage to networks that underpin the day-to-day running of vital public services.

“The President has made it clear that this Administration will do what it takes to keep America safe and prosperous,” White House press secretary Sarah Sanders said in a statement, “and to protect America from foreign adversaries who are actively and increasingly creating and exploiting vulnerabilities in information and communications technology infrastructure and services in the United States.”

Is the timing right for such an order?

The announcement was expected nearly a year ago, and it comes as neither Washington nor Beijing appears willing to back down in their ongoing economic dispute. The National Economic Council, which had blocked the move for months, dropped its objection as trade talks hit an impasse, said one official. Trump’s executive order does not immediately exclude any specific firms or countries, but it will not lessen tensions with Beijing. It is consistent with Trump’s increasingly aggressive tack against China in which he has used tariffs as economic weapons, a tactic that he believes to be popular with his political base.

What will be the impact outside US?

The move also boosts the administration’s somewhat uphill effort to persuade allies and partners in Europe to ban Huawei, which officials say is beholden to the Chinese government, from their next-generation 5G wireless networks.

The order is not restricted to any one technology, such as 5G; instead, it covers a swath of information communications technologies. That could invite a legal challenge from companies who believe it is overly broad, officials and analysts say.

Trump declared the emergency under the International Emergency Economic Powers Act, a 1977 law used by every president since Jimmy Carter to impose sanctions on countries such as Iran or Russia. It gives the president broad authority over economic activity.

But won’t those ‘foreign companies’ take action?

Trump’s executive order instructs the commerce secretary to develop an enforcement regime and permits the secretary to name companies or technologies that could be barred, according to officials. Should that happen, said Paul Rosenzweig, a former homeland security official in the George W. Bush administration, the banned firm “would assuredly sue.” Rosenzweig, now a senior fellow with the R Street Institute, a policy group that advocates for free markets, said that congressional action to bar a specific firm likely would have a better chance at withstanding legal scrutiny.

How has Huawei responded?

Huawei said its work does not pose any threats and that it is independent from the Chinese government. “Restricting Huawei from doing business in the US will not make the US more secure or stronger,” the company said in a statement.

“Instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers.”

Why are Chinese telecom companies popular in US?

A number of rural carriers use Huawei in their networks as a lower-cost alternative to European firms such as Nokia and Ericsson. The Federal Communications Commission is preparing a rule that likely would restrict federal subsidies to carriers that use Huawei gear and the rural carriers have told the government that replacing Huawei is a cost they cannot afford.

Restricting Huawei from doing business in the US will not make the US more secure or stronger. This will only serve to limit the US to inferior yet more expensive alternatives.

- Huawei statement

A number of European officials in recent months have expressed consternation that the United States is pressing them to block Huawei from their planned 5G networks while not having officially banned the firm. This order helps counter that objection, officials said. Security officials say the issue is one of national security, not trade. But the two inevitably have become linked as China’s quest to dominate advanced technologies in the global market has prompted significant concerns about the potential for espionage or sabotage.

Will these steps really protect US networks?

The order acknowledges that, although an open investment climate is generally positive, the United States needs to do more to protect the security of its networks. The idea is to have an “in case of emergency, break glass” authority, said one US official, who spoke on condition of anonymity to discuss the order before it was released.

And though the president already may veto proposed acquisitions of American companies by foreign buyers if he believes they endanger national security, the government lacks the authority to intervene in specific transactions deemed to pose such a risk. “There are other levers we have, based more on contracting influence and power of the purse, but this would be more of an explicit exclusionary authority,” said an official familiar with the matter.

— Washington Post