Coming to terms with pressure from U.S.-based technology companies and Chinese trade negotiators, President Donald Trump agreed over the weekend at the G20 summit in Osaka, Japan to resume trade talks with China and relax the US ban on companies selling products to Chinese telecommunications giant Huawei.
In a press conference at the summit, Trump said:
“I did agree to allow our companies — you know, jobs, I like our companies selling things to other people. So I allowed that to happen. Very complex things. Not easy — this is not things that are easy to make. Very few companies are able to do it, but a tremendous amount of money. Our companies were very upset. These companies are great companies you know all of them. But they weren’t exactly happy with it. But we’re allowing that, because that wasn’t national security.”
Huawei was placed under a ban after U.S. intelligence experts concluded that the company could be using technology to aid China’s communist regime in its effort to track and silence dissenting opinions. Technology produced by Huawei may allow remote access to data, and in some cases, may allow Chinese agents and hackers worldwide access to live video feeds impacting security systems.
In 2012, U.S. prosecutors announced 23 indictments against Huawei for intellectual property theft, fraud, and obstruction of justice. Trump issued an executive order this year that would have effectively denied Huawei devices access to US cellular phone networks.
Chipset manufacturers and operating system providers ceased doing business with the company, throwing the future into limbo and causing a ripple effect in global stock market values.
Trump acknowledged the importance of ending the ban on American manufacturing companies from the G20 summit in Japan this weekend.
“A lot of people are surprised we send and we sell to Huawei a tremendous amount of product that goes into the various things that they make,” Trump said. “The companies were not exactly happy that they couldn’t sell because they had nothing to do with whatever it was potentially happening with respect to Huawei,” Trump added.
While relaxing the ban will alleviate some of the pressure placed on the world’s largest telecommunications company, some aspects of the ban will continue to be enforced. US regulators will prevent technology that is deemed by US regulators to pose a risk to national security to be sold.
Huawei CEO Ren Zhengfei said earlier that the ban would cause losses of an estimated $30 billion over two years. Huawei reported earnings of $107 billion for 2018. Chinese President Xi Jinping made alleviating the ban a critical first step for US negotiations to resolve an ongoing trade dispute that began last year.
Huawei has been under suspicion for decades and has faced restrictions and bans from numerous nations. Several important tech-immersed nations, like Japan, ban Huawei from access to networks because of the risk posed by the devices. US investigators in 2012 failed to identify intentional backdoor access to Huawei devices but noted that numerous security loopholes allowed easy access to hackers.
Investigators were not able to determine if the loopholes were deliberate or simply sloppy code writing. U.S. Sen. Mark Warner (D-VA) told The Verge in March that he believes no Chinese company is “free” of the Communist Party, and cited Huawei’s status as a “National Champion” as evidence of the role of the government.
“This is not about finding “backdoors” in current Huawei products — that’s a fool’s errand,” Warner said. “Software reviews of existing Huawei products are not sufficient to preclude the possibility of a vendor pushing a malicious update that enables surveillance in the future.
Any supposedly safe Chinese product is one firmware update away from being an insecure Chinese product,” he added.
Warner serves on the Senate Select Committee on Intelligence. He was a vocal supporter of the Trump action to place Huawei on the ‘Entity List’ which prevented the company from doing business with U.S. suppliers but did not require action from the legislature.
Some of the first pushback against the lifting of the ban came from within Trump’s party. Senator Marco Rubio (R-FL) was quick to condemn the easing of restrictions on Huawei.
“If President Trump has in fact bargained away the recent restrictions on #Huawei, then we will have to get those restrictions put back into place through legislation,” Rubio tweeted on Saturday.
“And it will pass with a veto-proof majority,” he added.
Reports indicate that in exchange for lifting aspects of the ban, China will resume purchases of agriculture products. The ongoing trade dispute has hurt American farmers, particularly in states with large soybean and pork production. Growers of nuts, vegetables, and beef, and the myriad businesses that support them have also been impacted by the decline in market availability.
Many American farmers have also dealt with excessive weather this growing season, leading to an even more drastic situation. The Trump administration has authorized bond measures to provide funding for impacted farmers.
The announcement from the G20 that Trump would lift the Huawei ban came largely as a surprise. No official time or date has yet been set for trade negotiations to resume, and it is not clear how prepared either US or Chinese delegations are to get back to the table.