Huawei tries to overturn ban on purchases with US government funds

Huawei is looking to overturn a ruling by the US Federal Communications Commission (FCC) barring the use of funding from the American government from being used to buy equipment from telecommunications giant.

China's telecommunications equipment champion believed that the FCC ruling, which was handed down in November, banning the use of the $8.5bn a year Universal Service Fund (USF) to purchase equipment and services from it was unlawful.

Included in the ban were purchases of materials from companies that posed a national security threat to the US, which is exactly what the Trump administration deemed Huawei.

Huawei began a legal challenge to try to reverse the decision the day before.

The company filed a so-called “petition for review” in the US Court of Appeals for the Fifth Circuit in Louisiana, claiming that the ruling “exceeds the agency’s statutory authority and violates federal law, the Constitution, and other laws.”

It also argued that the FCC’s ruling had stripped it of “due process protections” by labelling Huawei a national security threat. Huawei therefore asked the court to rule the FCC’s order unlawful.

“This is our opportunity to use one of the legally permissible mechanisms to try to block the United States government from the carpet bombing of Huawei in the United States and trying to destroy us around the world,” Andy Purdy, Huawei USA’s chief security officer, told CNBC’.

“They’ve really gone too far and so this is our way of saying enough,” he added.

Huawei was placed on a US blacklist earlier in 2019, known as the “Entity List”, keeping American firms from trading with it.

Nonetheless, the Chinese outfit had also been granted a number of reprieves, albeit due to the fact that several rural US carriers still relied on Huawei equipment.

Glen Nager, Huawei’s lead counsel, said in a statement that the FCC’s decision to ban the use of the fund to buy equipment from the company exceeds the agency’s “statutory authority”.

“The designation is based on a fundamental misunderstanding of Chinese law and on unsound, unreliable, and inadmissible accusations and innuendo, not evidence,” Nager said. “The designation is simply shameful prejudgment of the worst kind."

Huawei chief legal officer Song Liuping claimed that FCC chairman Ajit Pai and other commissioners had not presented evidence to back their claim that Huawei was a security threat.

“This is a common trend in Washington these days. ‘Huawei is a Chinese company.’ That’s his only excuse,” Song said. He also claimed that the FCC had ignored 21 rounds of “detailed comments” submitted by Huawei to explain how the order would harm businesses in rural areas.

"This decision, just like the Entity List decision in May, is based on politics, not security."