Huawei sues U.S. government, seeks NDAA ban lift

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HONG KONG (Reuters) – Chinese telecoms equipment maker Huawei Technologies Co Ltd on Thursday confirmed it is suing the U.S. government over a section of a defense bill passed into law last year that restricted its business in the United States.

FILE PHOTO: People walk past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China June 14, 2018. REUTERS/Aly Song/File Photo

Huawei said it had filed a complaint in a federal court in Texas challenging the constitutionality of Section 889 of the National Defense Authorization Act (NDAA), a section signed into law by the U.S. president in August that banned federal agencies and their contractors from procuring its equipment and services.

“The U.S. Congress has repeatedly failed to produce any evidence to support its restrictions on Huawei products. We are compelled to take this legal action as a proper and last resort,” Huawei Rotating Chairman Guo Ping said in a statement.

“This ban not only is unlawful, but also restricts Huawei from engaging in fair competition, ultimately harming U.S. consumers. We look forward to the court’s verdict, and trust that it will benefit both Huawei and the American people.”

While Huawei had very little market share in the U.S. telecoms market before the bill, it viewed Section 889 as a stumbling block to addressing broader problems with Washington as its existence prevented any steps toward reconciliation.

“Lifting the NDAA ban will give the U.S. Government the flexibility it needs to work with Huawei and solve real security issues,” Guo said.

The privately owned firm has embarked on a public relations and legal offensive over the past two months as Washington lobbies allies to abandon Huawei when building fifth-generation (5G) mobile networks, centering on a 2017 Chinese law requiring companies cooperate with national intelligence work.

Founder and Chief Executive Ren Zhengfei has said Huawei, the world’s biggest telecoms gear maker, has never and will never share data with China’s government.

RETRIBUTION

The legal action and public relations outreach compare with a more restrained response in December emphasizing “trust in justice” when its chief financial officer, Sabrina Meng Wanzhou, was arrested in Vancouver at U.S. request.

The United States has accused Meng – Ren’s daughter – of bank and wire fraud related to breaches of trade sanctions against Iran.

Huawei’s legal action comes after Meng appeared in court on Wednesday during which her lawyer expressed concerns that the allegations have a political character, raising U.S. President Donald Trump’s comments on the case.

Separately, Meng, who is fighting extradition, is suing Canada’s government for procedural wrongs in her arrest.

The case had strained relations with China, which this week accused two arrested Canadians of stealing state secrets in a move widely seen as retribution for Meng’s arrest.

While Meng is under house arrest in Vancouver, it is unclear where the two Canadians are being detained in China. Sources previously told Reuters that at least one of the Canadians did not have access to legal representation.

CHANGE OF TUNE

Ren met international media for the first time in several years in mid-January, calling U.S. President Donald Trump “great” and refraining from commenting directly on Meng’s case. Shifting tone, Ren in mid-February said Meng’s arrest was politically motivated and “not acceptable”.

Long before Trump initiated a trade war with China, Huawei’s activities were under scrutiny by U.S. authorities, according to interviews with 10 people familiar with the Huawei probes and documents related to the investigations seen by Reuters.

Reporting by Sijia Jiang and Twinnie Siu; Editing by James Pomfret and Christopher Cushing