The U.S. Fifth Circuit Court of Appeals rejected Chinese technology company Huawei’s appeal seeking to overturn its Trump-era ‘national security threat’ designation to receive federal government communications grants. The ruling will keep the company on the ‘blacklist’ as long as it maintains ties to the Chinese communist regime.
In late June 2020, the Federal Communications Commission (FCC) designated telecommunications companies Huawei and ZTE as “national security threats,” barring them because of their ties to the Chinese Communist Party from accessing government subsidies to build communications infrastructure.
Ajit Pai chairman of the Trump administration’s FCC stated when the announcement was made in the summer of 2020:
“With today’s Orders, and based on the overwhelming weight of evidence, the Bureau has designated Huawei and ZTE as national security risks to America’s communications networks—and to our 5G future.”
“Both companies have close ties to the Chinese Communist Party and China’s military apparatus, and both companies are broadly subject to Chinese law obligating them to cooperate with the country’s intelligence services. … We cannot and will not allow the Chinese Communist Party to exploit network vulnerabilities and compromise our critical communications infrastructure,” the official added.
In February of this year, with the new Biden administration certainly being more lenient on China, Huawei filed an appeal in the Fifth Circuit Federal Court, seeking to overturn the ‘national security threat’ designation to regain funding from the federal government.
In its argument, the company said the communications agency’s designation “exceeds the FCC’s statutory authority, violates federal law and the Constitution, is arbitrary, capricious, and an abuse of discretion, and not supported by substantial evidence.”
In its ruling, the court composed of one Bush-era and two Trump-era judges, the justices authoritatively rejected the Chinese company:
“The FCC deals with national communications, not foreign relations. It is not the Department of Defense, or the National Security Agency, or the President. If we were convinced that the FCC is here acting as ‘a sort of junior-varsity [State Department]’ … we would set the rule aside. But no such skullduggery is afoot.”
“Assessing security risks to telecom networks falls in the FCC’s wheelhouse. And the agency’s judgments about national security receive robust input from other expert agencies and officials. We are therefore persuaded that, in crafting the rule, the agency reasonably acted within the broad authority Congress gave it to regulate communications,” the ruling explains.
With the federal court’s decision, Universal Service Fund subsidies of $8.3 billion annually may not be used to purchase, obtain, maintain, maintain, improve, modify or support any equipment or services produced or provided by Huawei.
Huawei employees with connections to Chinese military intelligence agencies
As early as 2019, a Henry Jackson Society report revealed that at least 100 Huawei employees worked as agents within China’s Ministry of State Security, projects with the Chinese People’s Liberation Army (PLA), and a military unit linked to a cyberattack on U.S. companies.
Given the nationalist profile of former President Donald Trump, the presence of these Chinese companies spying for the communist regime were hit hard with sanctions, bans to the point where their shares went down and they had large economic losses.