President Trump signs the Defense Authorization Act 2019 into law and with it leaves Chinese companies including Huawei and ZTE out in the cold when it comes to supplying government agencies or any company working for them.
Every year a new National Defense Authorization Act is signed into law which specifies the annual budget and expenditure of the US Department of Defense. But it aso specifies certain rules as to how expenditure can happen, and this year a number of Chinese companies have been effectively banned from supplying US government agencies.
As TechCrunch reports, the Defense Authorization Act for Fiscal Year 2019 has been signed into law by President Trump. Within the text of the act is Section 889, which is entitled “Prohibition of Certain Telecommunications and Video Surveillance Service or Equipment.” Many of the companies listed as prohibited aren’t well known names and include Hytera Communications, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company. However, two certainly are well know: Huawei Technologies Company and ZTE Corporation.
By having their names included in this section, US government agencies are now forbidden from buying or using certain products, components, or services from these Chinese companies. The act goes into effect over the next two years, but the ban is effective today as no agency would consider new equipment or services from these companies now the act is signed into law.
Although it’s not an outright ban, it will severely limit the scope Huawei and ZTE have for sales within the US. That’s because although the act relates to government agencies, any company wanting to deal with and/or supply one of those agencies also won’t touch products from these companies. Why would they if it meant potentially not securing a contract?
ZTE especially has been making the headlines repeatedly in recent months. Following Trump’s trade war kicking off with China, the Pentagon banned the sale of ZTE and Huawei phones on military bases. President Trump then vowed to help ZTE “get back into business” followed by the US lifting sanctions against ZTE in June after it paid $1.4 billion. However, earlier this month the DNC told candidates to avoid using ZTE and Huawei products.