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New Rule Banning Huawei, Other Firms from U.S. Government Contracts Announced

The U.S. government announced on 7 August the forthcoming publication of a rule to implement a ban on federal purchases of telecommunications equipment from mainland Chinese firms Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company and Dahua Technology Company. Mandated by the National Defense Authorization Act of 2018, the rule precludes any U.S. government agency from purchasing telecom or technology equipment from those firms “as a substantial or essential component of any system, or as a critical technology as part of any system,” beginning on 13 August.

The rule is being described as an interim rule because there was not enough time to have a 60-day comment period prior to its publication. The U.S. government will accept comments on the interim rule for 60 days and will publish a final version sometime thereafter.

Specifically, the rule forbids the purchasing of:

  • telecom equipment produced by Huawei Technologies Company or ZTE Corporation, or any subsidiary or affiliate of such entities;
  • for the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure and other national security purposes, video surveillance and telecom equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company or Dahua Technology Company, or any subsidiary or affiliate of such entities;
  • telecom or video surveillance services provided by such entities or using such equipment; and
  • telecom or video surveillance equipment or services produced or provided by an entity that the Secretary of Defence, in consultation with the Director of National Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the mainland Chinese government.

The rule adopts the definition of critical technologies included in the Foreign Investment Risk Review Modernization Act of 2018. Waivers to the rule may be granted for a maximum of two years by the head of a federal agency or the Director of National Intelligence. Other provisions of the NDAA covering the establishment or renewal of U.S. government contracts with firms that themselves use covered equipment will be effective on 13 August 2020 and will be announced separately.

Huawei has filed a lawsuit against the U.S. government over the restrictions in the NDAA and said in a statement that it “continues to challenge the constitutionality of the ban in federal court.”

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