Huawei and ZTE face more issues in American telecom market

Telecom Lead America: Huawei
Technologies and ZTE are facing fresh rounds of issues in the U.S. telecom

A congressional panel has given the green signal to a
measure designed to search and clear the U.S. nuclear-weapons complex of
technology produced by Chinese telecom equipment makers that have been accused
of working closely with China’s government and military.

If approved as a law, the measure may become a fresh blow to
Huawei Technologies and ZTE in their efforts to overcome national-security
concerns in the U.S. market.

Huawei and ZTE were mentioned in the measure, adopted by the
Republican-led House of Representatives’ Armed Services Strategic Forces
subcommittee, as part of the 2013 defense authorization bill.

The full House Armed Services Committee is to consider the
legislation on May 9. It will have to be reconciled with a companion bill
expected to be taken up next month by the Armed Services Committee in the
Democratic-led Senate, according to a Reuters report.

The Reuters report said it was not immediately clear whether
the Obama administration would support the proposed action. The Energy
Department will continue to work with Congress and other federal agencies on
this important national security issue.

The House panel’s measure would order the secretary of
energy, in consultation with U.S. counter-intelligence, to report to
congressional committees that oversee defense issues by August 31 on risks to
the department’s information-technology supply chain.

The measure calls for special attention to the department’s
bomb-building enterprise and a determination whether the department or any of
its big contractors has a supply chain that includes technology produced by
Huawei or ZTE.

It also calls for procedures to curb supply-chain risks, as
recommended last month by the Government Accountability Office, Congress’s
investigative and audit arm.

The panel cited work by the congressionally created
U.S.-China Economic and Security Review Commission that raised concerns about
such threats in a report last month.

A document drafted for the House panel maintained that
Huawei and ZTE had been and were likely to continue to be provided billions of
dollars in Chinese government support, a charge the companies deny.

Huawei spokesman William Plummer said the measure’s intent
was “unclear.”

All major information-technology venders – including
Ericsson, Alcatel-Lucent, Nokia Siemens and Cisco rely on common global supply
chains and globalized operations, he said by email.

This entails significant research and development,
software-coding and manufacturing in China.

“If the intent is to address supply-chain concerns
based on geography, then it would seem that any meaningful report or effective
solution would have to be as broadly and globally crafted as the industry is
transnational, which would in turn demonstrate that such geography-based
approaches are illusory,” Plummer said.

ZTE did not respond to a query from Reuters.

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