Why Trump’s Reversal on Huawei is a Bad Deal

Elizabeth Brotherton-Bunch

Elizabeth Brotherton-Bunch Digital Media Director, Alliance for American Manufacturing

President Trump is back from his big weekend trip to the G-20 summit, where he met with world leaders and even made a quick stop in North Korea!

There’s no shortage of headlines from Trump’s trip, and there’s certainly a lot to unpack. But some Members of Congress are homing in on one in particular: Trump’s announcement that he will loosen restrictions on U.S. companies doing business with Chinese technology giant Huawei.

Schumer and Rubio — not a couple of guys you expect hang out much — aren’t alone in their criticism. A growing list of Republicans are speaking out against Trump’s decision, as are 2020 Democratic presidential contenders like Tim Ryan.

Political pundits don’t seem all that impressed, either. Over at Bloomberg, technology columnist Tim Culpan wrote that “as far as deals go, this is set to be one of Trump’s worst.”

Oof. Apparently feeling the heat, Trump administration officials are already scrambling to downplay Trump’s decision, with White House economic adviser Larry Kudlow saying that the easing of restrictions on Huawei will be for “general merchandise, not national security sensitive” products like chips and software.

There’s a lot of political posturing happening here, and if you aren’t completely tuned into this ongoing saga, you might be justifiably lost. Let’s break things down.

Huawei is Indeed a National Security Threat

Chinese leaders might want everybody to believe otherwise, but Huawei poses a very real threat to America’s national security. For one, although it claims to be 100 percent employee-owned, it’s unclear who owns the company — but actually it’s probably the Chinese government. Given China’s history, that is driving worries from folks like Sen. Mark Warner (D-Va.).

“Allowing Huawei’s inclusion in our 5G infrastructure could seriously jeopardize our national security and put critical supply chains at risk,” Warren told The Verge. “It could also undermine U.S. competitiveness at a time when China is already attempting to surpass the U.S. technologically and economically through the use of state-directed and state-supported technology transfers.”

Nicholas Weaver from the International Computer Science Institute at the University of California, Berkeley, put it this way: “Sabotage can be really, really subtle… A single microscopic difference: the addition of a small sabotage chip, and now you lose all our assurances.”

It’s worth pointing out that while the Trump administration has recently upped the pressure on Huawei, there have been security worries about the company since the 2000s, and many U.S. allies also have raised concern of their own. In January, Polish officials even arrested a Huawei sales director and charged him with conducting espionage on behalf of China.

And just last week it was reported that Huawei employees “worked on Chinese military research projects.”

So yeah, Huawei is a threat.

Trump's National Security Flip-Flop

Back on May 15, Trump issued an executive order that blocked the purchase of technology linked to foreign adversaries, while the Commerce Department on the same day added Huawei to its “entity list.”

As Politico pointed out, the order was “written in a neutral way that is meant to give Commerce flexibility to name any adversaries it identifies — and to insulate the U.S. from Chinese criticisms.” But its intent was clear — the order was designed to address the threat of Huawei and other Chinese state-owned or controlled companies.

Trump’s decision to ban Huawei didn’t happen in a vacuum, of course. The move came as trade tensions between the U.S. and China were high, and there were worries that Trump would use Huawei as a bargaining chip in those trade negotiations.

In fact, Warner and Rubio even got together and sent Secretary of State Mike Pompeo and U.S. Trade Representative Robert Lighthizer a letter urging the administration to hold firm on Huawei, pointing out that many U.S. allies “have publicly expressed fears that the Administration will soften its position on Huawei in the United States to gain leverage in trade talks.”

The duo continued: “Allowing the use of Huawei equipment in U.S. telecommunications infrastructure is harmful to our national security. In no way should Huawei be used as a bargaining chip.”

But with Trump announcing the reversal of at least some Huawei restrictions, that now appears to be exactly what has happened.

“Huawei is a complicated situation. We agreed to leave that — we’re leaving Huawei toward the end. We’re going to see. We’ll see where we go with the trade agreement,” Trump said.

A Bad Deal

Bloomberg’s Tim Culpan pointed out that Huawei has been arguing for months that it is merely a pawn in the trade talks and not a threat. “In just a few minutes, the president said what Huawei’s PR team in Shenzhen has spent months trying to tell the world,” Culpan wrote.

The worst part? It doesn’t even seem like Trump made a good deal! The Washington Post reported that Trump told reporters “in exchange for flexibility on Huawei... China had agreed to large purchases of U.S. farm goods starting ‘almost immediately.’ But he disclosed no specifics and Chinese officials did not confirmed the offer.

Despite Trump’s flip-flopping, there’s still a lot of appetite on Capitol Hill to do something about Huawei.

Rubio still is fired up — he even put out a video! — and pledged to put “restrictions back in place through legislation.” Rubio also predicted that a bill would pass “with a large veto proof majority.”

Stay tuned. There’s still a long way to go before the U.S. and China reach any final trade deal, after all — and the fight over Huawei will likely continue to play a big role in those negotiations.

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Reposted from AAM

Posted In: Allied Approaches, From Alliance for American Manufacturing

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