August 20, 2019

US ban on govt contracts with Huawei & other Chinese tech firms comes into force

The interim rule titled ‘Federal Acquisition Regulation: Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment’ was published on the US Federal Register website.

From now on, US state agencies, namely the Defense Department, General Services Administration, and NASA, are prohibited from buying products or services, as well as extending or renewing contracts with certain Chinese tech companies unless granted a waiver.

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The ban takes aim at the world’s largest telecommunications network equipment maker, Huawei, and another Chinese corporation, ZTE, and their subsidiaries and affiliates. It also covers video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company.

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Comments on the ruling will be accepted for 60 days before it comes to a final version. So the heads of the agencies may apply for one-time waivers through August 13, 2021, and in other circumstances, exemptions can authorized by the director of national intelligence.

The broader ban, which will apply to contracts with any company that uses equipment from the Chinese firms, will take effect in August 2020 and will be implemented by a separate ruling.

Tuesday’s ban implements the provisions laid out by the National Defense Administration Act (NDAA) of 2019. The NDAA, which was passed last year, prohibits government agencies receiving federal funding from doing business with certain telecom companies, citing national security concerns.

Neither of the Chinese firms has commented on today’s implementation of the ban, but Huawei has repeatedly rejected Washington’s allegations of spying for the Chinese government. In an earlier media statement, Huawei said that the move is rather “a trade barrier based on country-of-origin” and has nothing to do with ensuring US national security.

“Ultimately, it will be rural citizens across the US that will be most negatively impacted as the networks they use for digital connectivity rely on Huawei,” the company said last week.

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US President Donald Trump separately targeted Huawei in May. The company was added to the Commerce Department’s ‘Entity List’, barring American businesses from selling technology and equipment to Huawei. Despite allowances to companies to sell some products to the tech giant, it still remains blacklisted amid the trade rift between the two countries.

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