Lawmakers introduce measure to freeze out Huawei from financial system

Lawmakers in the House and Senate on Thursday introduced legislation to effectively freeze out Chinese telecom group Huawei from the U.S. financial system.

The Networks Act would require the president to add foreign 5G equipment manufacturers to the Treasury Department’s Specially Designated Nationals (SDN) list if the companies engage in espionage against the U.S. sanctions violations. 

The primary concern cited by lawmakers around Huawei has been a 2017 Chinese intelligence law that requires Chinese companies and citizens to participate in state espionage activities if requested. American prosecutors also recently charged Huawei with conspiracy to commit racketeering, which followed previous charges of stealing intellectual property, wire fraud and obstruction of justice.

Placing a company on the SDN list effectively freezes it out from accessing the American financial system. Companies and individuals currently on the list include Iranian banks, Russian oligarchs and drug traffickers. 

Senate Minority Leader Charles Schumer (D-N.Y.), one of the bill’s sponsors, said in a statement that “China-based companies like Huawei cooperate heavily with the Chinese Communist Party and the Chinese government in political and economic espionage.”

“Allowing China to dominate global 5G networks threatens America’s national security,” Schumer added. “It is time for the Trump administration to take swift and forceful action to block Huawei from accessing the U.S. financial system.”

The legislation would also limit the ability of U.S. companies to do business with or interact with Huawei. Transactions with Huawei involving existing equipment for 3G or 4G networks would be exempt from the limitations so as not to interfere with telecom networks. 

Sen. Tom Cotton (R-Ark.), the lead Senate sponsor, said it was “time to sanction Huawei,” pointing to Chinese companies stealing American intellectual property.

Rep. Mike Gallagher (R-Wis.), the lead House sponsor of the legislation, said in a statement that “we need a full court press against malevolent actors like Huawei.”

Other sponsors of the legislation in the House and Senate include Reps. Liz Cheney (R-Wyo.), Ruben Gallego (D-Ariz.) and Chrissy Houlahan (D-Pa.) and Sens. Rick Scott (R-Fla.) and Chris Van Hollen (D-Md.).

A spokesperson for Huawei declined to comment on the bill. 

Concerns over Huawei have been a rare area of bipartisan agreement over the past year, and limiting Huawei’s ability to do business in the U.S. has been a priority of the Trump administration.

Huawei was added to the Commerce Department’s “entity list” in 2019, effectively blacklisting the company, while the Federal Communications Commission (FCC) unanimously voted in November to ban U.S. telecom companies from using FCC funds to purchase Huawei equipment. 

Multiple bills have been introduced on Capitol Hill in relation to Huawei, with one measure that would ban the use of all federal funds to buy equipment from telecom groups deemed a national security threat on the verge of being signed into law by President Trump.