WCA September 2020

From the Americas

or other vendors that use routers, switches or other components made by prohibited companies. The lawyers cite several examples: a US company with a London office, using the UK’s Royal Mail service to ship products, could find itself falling foul of the act because the UK’s national mail carrier can use Huawei technology. As would a pharmaceutical company that sells medicines to the USA that were made by an Indian manufacturing plant using Bharti Airtel for mobile devices. Airtel relies on Huawei to operate its mobile phone services. Ms Clark who, as deputy staff director and general counsel on the US Senate Armed Services Committee, managed the passage of the 2018 defence bill, said Congress had omitted definitions of “use” and “entity” so broadening the scope of the law, allowing US intelligence agencies to tailor the law to address specific national security threats. Before the law can take effect, the administration has to issue regulations to implement it – an opportunity for businesses to voice their concerns. The process is with the Office of Management and Budget and has, it is said, been “stuck there for months”, although a senior official said the administration is working through the inter-agency process to meet the August deadline and implement the law. The law allows for government agencies to grant companies a one-time waiver, but the business community is asking Congress to write wording into the next coronavirus stimulus package to delay the implementation of the law, and to clarify the scope of the law when the next defence authorisation bill is debated. If all else fails, some lawyers are advising clients to draw up waiver applications, and to analyse what their business would be without government contracts. As Ms Clark suggested, “If it’s so complicated, maybe it’s not worth it to keep working with the government.” The US Commerce Department revealed in early June that new orders for American-made products had dropped in April, reflecting the depressed business investment plans already seen early in the second quarter as a result of continuing uncertainty. Factory orders dropped 13 per cent in April, following the 11 per cent drop seen in March, though at least a little better than the 14 per cent drop predicted in a Reuters poll. The year-on-year fall was 8 per cent for April. In early June it was believed that the slump in manufacturing (which accounts for 11 per cent of economic activity in the USA) was probably nearing its lowest point, following a report from the Institute for Supply Management revealing that in May its measure of national factory activity had eased from an 11-year low. Manufacturing remains hampered by supply chain disruptions caused by worldwide business closures and suspensions, and by social distancing measures in those factories that are operating or reopening. Cheaper crude oil eroded profits in the energy sector and reflected on the profits of manufacturers of drilling and offshore equipment. Declines were seen in factory orders as the lockdown continued

US industry US companies anticipate the looming Huawei ban A law that bans US government contractors from using Huawei Technologies Co equipment (Section 889, part B, of the National Defense Authorization Act) will come into force in August. The defence law could implicate most, if not all, companies working with the federal government, including global subsidiaries and service providers. According to a Bloomberg report, over 100,000 companies provided $598 billion in goods and services directly to the US government during 2019, not counting subcontractors. Up until now, the measures taken by the Trump administration against Chinese technology companies have aimed to put an end to their access to American components and networks; this new law pushes the responsibility onto government contractors to certify that their entire supply chain – not just the part that deals with the government – has no involvement whatsoever with Huawei, ZTE Corp, Hangzhou Hikvision Digital Technology Co, or any Chinese surveillance company. David Hanke, previously a member of Capitol Hill staff and now a partner at the law and lobbying firm Arent Fox, said, “Congress is deadly serious about eliminating Chinese technology from our critical infrastructure and related systems. As written, this statutory provision doesn’t offer federal agencies all that much flexibility so, come August, some companies that want to continue doing business with the government may find themselves in a tight spot.” Huawei and ZTE have little market share in the USA, but are dominant elsewhere in the world. Samantha Clark, special counsel at law firm Covington & Burling LLP, added, “It’s inevitable to find Huawei prevalent in systems across China, Europe and Africa. Some companies that might sell products that eventually get bought by the US government [down the line] don’t even realise just how much they are involved in the US procurement chain.” Trade groups that represent companies such as Lockheed Martin Corp, 3M, Ford, Amazon and Apple have tried to push lawmakers to fix the wide-ranging provision, and to delay its implementation to ensure firms can comb through their supply chains to ensure compliance, a task made even more difficult by the current pandemic. As far back as April, ten groups, including the US Chamber of Commerce and the Aerospace Industries Association, wrote to members of Congress, saying that “if part B is implemented as written, many businesses with international and domestic operations will be forced to halt their work [of] providing key products and services to agencies, including equipment that is needed to fight the coronavirus pandemic today and in the coming months.” Lawyers claim that the law, taken at face value, could mean that none of a company’s suppliers, service providers or international outposts will be able to use any Internet service providers, cloud networks, shipping companies

BigStockPhoto.com Photographer: Aispl

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Wire & Cable ASIA – September/October 2020

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