Huawei finds some friends in the US senate

When President Donald Trump imposed restrictions last spring on US exports of sensitive technology to Huawei, China hawks in Washington were both relieved and apprehensive. Now they have considerably more cause for worry.

They were initially pleased because they saw the sanctions, along with an executive order banning the Chinese telecom giant from US networks, as long overdue. The US intelligence community has warned for nearly a decade that Huawei is effectively an arm of the Chinese security state. Its gear serves as a beacon for its spy services to capture and monitor traffic that travels over Huawei's circuits and networks. To do business with Huawei is to help China to spy on the US and its allies.

Their anxiety stemmed from Trump's reputation as a deal maker. There was some fear that he would negotiate away the tough measures on Huawei to get a trade deal with Beijing — a fear that was heightened last week with the news that China and the US have agreed to the first phase of such a bargain.

So China hawks in Congress wanted some kind of insurance against a weakening of the restrictions in a trade deal. In July, Senators Tom Cotton and Chris Van Hollen, Republican and Democrat, introduced legislation to make the Huawei ban permanent. Under that legislation, Huawei's removal from the Commerce Department's "entities list," which requires US companies to have a license to sell goods and services to Huawei, would require an act of Congress. That same week, Senators Mitt Romney, Marco Rubio and Susan Collins introduced a bill that would prevent Huawei's removal from the list unless the Commerce secretary certified for five consecutive years that it was no longer engaged in activities that threaten US national security.

The approach garnered significant support. A version of the Huawei legislation appeared destined to be included in the National Defense Authorization Act, or NDAA, the annual bill that sets military spending. After the August recess, a "motion to instruct" the Senate to include the Cotton-Van Hollen provision in the Pentagon spending measure passed 91 to 4.

But the Huawei measures had one very powerful opponent: Senator Mike Crapo of Idaho. The Republican chairman of the Senate Banking Committee argued that his committee should have jurisdiction over the Huawei amendments, because his committee traditionally deals with matters such as export control. Beyond procedural grounds, Crapo also feared the measures would hurt US microchip makers that did a lot of business with Huawei. (Micron Technology, one of those companies, is based in Crapo's home state.)

The Trump administration itself was also divided. While it broadly supported efforts to limit Huawei's reach, the Commerce Department as well as many in the White House feared the Huawei measures would impinge too much on the president's prerogative to negotiate a trade deal with China.

Despite all these concerns, the China hawks were able to get a watered-down version of the Huawei legislation into the NDAA. The conference bill is expected to pass the Senate this week by a wide margin.

The bill includes a provision that the Commerce secretary cannot remove Huawei from the list unless he certifies that Huawei is in compliance with sanctions and no longer poses a threat to national security — but he does not have to show that the company has been compliant for five consecutive years. The compromise also says the Commerce Department must provide relevant committees in Congress with an annual report on US companies that receive licenses to trade with Huawei.

On the bright side, it's better than nothing. At the same time, it counts as a missed opportunity. US microchip makers should be using this period of trade tensions with China to find new markets. Their success in helping nudge Congress to strip out the Huawei insurance policy will only delay their day of reckoning.

Disclaimer: This article first appeared on Bloomberg.com, and is published by special syndication arrangement."