Business With Huawei: To Do, Or Not To Do, That Is The Question

Early this year, the United States of America filed a 10-count indictment against Huawei Device Co., Ltd. and Huawei Device USA, Inc., criminally charging them with conspiring to steal trade secrets from T-Mobile. Soon after, 13-count superseding indictment was filed against Huawei Technologies Co., Ltd; Huawei Device USA, Inc.; Skycom Tech Co., Ltd.; and Meng Wanzhou, chief financial officer of Huawei Technologies, the world’s largest telecommunications equipment manufacturer.

Now, U.S. companies must decide whether to do business with Shenzhen, China-based Huawei and its related companies around the world. President Donald Trump has threatened to issue an executive order prohibiting U.S. persons and companies from doing any business with Huawei or its affiliates but, for now, thousands of U.S. and foreign companies have business arrangements with the Chinese telecom giant.

The two criminal cases may take years to be resolved.

In the first set of indictments, both companies entered not guilty pleas, and a March 2, 2020, trial date was set. If found guilty, the maximum fine would be $5 million, or three times the value of the stolen trade secret, whichever is greater.

In the second, Wanzhou and the Huawei companies allegedly conspired to commit bank fraud, and also violated the International Emergency Economic Powers Act (IEEPA) by deceiving banks and the U.S. government about Huawei’s activities in Iran. It is generally illegal for U.S. companies, including banks, to engage in activities in Iran unless licensed by the Treasury Department’s Office of Foreign Assets Control.

Huawei allegedly disguised transactions to avoid any connection to millions of dollars cleared through U.S. banks related to Huawei’s Iran-based business, Skycom.

Wangzhou was detained by Canadian law enforcement authorities Dec. 1, at Vancouver International Airport on a U.S. warrant. She is fighting extradition to the U.S. Whatever the merits of the criminal charges against her, the effort is perceived by the Chinese public as a blatant example of Trump’s international bullying. Wangzhou is seen as a prominent public figure in Chinese business and financial circles. Imagine Howard Shultz (Starbucks), Bill Gates (Microsoft), or Steve Jobs (Apple) being arrested by Chinese authorities for alleged illegal acts in China.

Of course, the backdrop to this whole affair is the U.S.-China trade war that Trump initiated by slapping extra tariffs on Chinese products on July 6, when he declared a “national emergency” against China for allegedly stealing the intellectual property of U.S. companies doing business in China.

I have been a customs and international trade lawyer for 30 years. I was an attorney in the Office of Chief Counsel, U.S. Customs, and part of my job was to work with the U.S. Department of Justice to investigate, arrest, and pursue criminal charges against persons and companies who committed bank fraud, stole intellectual property, and illegally traded with Iran.

Since 1994, I have represented numerous persons and companies accused of illegally doing business with Iran and other sanctioned or embargoed countries. I have never seen the chaos in international trade relations that we now are experiencing as a result of Trump’s actions.

China exports more merchandise to the United States than any other country, and its economy is the world’s second largest.

I don’t pretend to know all the facts about either of the aforementioned criminal cases, but my view is that it is difficult to counter the argument that these cases are not politically motivated. Certainly, T-Mobile and our country’s largest banks have the ability to pursue civil cases against Huawei in the courts.

Also, I cannot understand why U.S. prosecutors cannot work out a bond arrangement with Wangzhou, which would compel her appearance in court, rather than require her to remain behind bars for at least the next year.

As to whether U.S. persons and companies should do business with Huawei or its affiliates despite Trump’s threats of issuing yet another Executive Order based upon a “national emergency,” I believe normal international business relations should continue with Huawei. Even if Trump does issue an Executive Order, it typically provides a wind down time for U.S. companies to stop doing business with Huawei.

The involvement of Huawei in the United States, and with our allies and trading partners, is so extensive that it would be difficult for such an Executive Order to be issued. Moreover, it would inflame the already tense trading relationship between China and the United States. Such an Executive Order would almost inevitably lead to a retaliatory response by the Chinese against one or more American iconic companies (e.g. Microsoft or Apple). For these reasons, I do not believe an Executive Order will be issued, and U.S. companies which decide not to cooperate with Huawei may miss opportunities to do business with one of the world’s largest telecommunications companies.

Peter Quinter chairs the Customs & International Trade Law Group at Florida-wide law firm GrayRobinson, and is chair of the American Bar Association's customs law section.