By Alexandra Alper
WASHINGTON (Reuters) – U.S. lawmakers plan to unveil a bill on Thursday that could be used to block Huawei Technologies Ltd from accessing U.S. banks for certain transactions, in a bid to thwart the Chinese telecoms giant amid frustration over the failure of prior sanctions to curb its business.
The bill, with sponsors including top Senate Democrat Charles Schumer, Republican Senator Tom Cotton and House Republican Mike Gallagher, would ban U.S. firms from taking part in “significant” transactions with foreign companies that produce 5G telecommunications technology and engage in industrial espionage.
If the bill were passed and Huawei designated, the company would be shunned by U.S. banks in certain dealings with customers worldwide, since most dollar payments clear through U.S. financial institutions.
“It is time for the Trump administration to take swift and forceful action to block Huawei from accessing the U.S. financial system,” Schumer said in a statement, adding that allowing China to dominate global 5G networks through Huawei poses a threat to national security. Huawei did not respond to a request for comment.
The legislation is part of a broader campaign to crack down on Huawei, the top producer of telecoms equipment, since the company has continued to thrive despite American sanctions.
Citing national security concerns, the Trump administration placed Huawei on a blacklist known as the “entity list” last May, forcing some firms to seek a special license to sell to it.
But under current rules, key foreign supply chains remain beyond the reach of U.S. authorities, fueling a push within the Trump administration to impose tougher regulations on the company, as Reuters revealed in November.
That effort appears to have stalled, as U.S. authorities on Wednesday again postponed a high-level meeting on the matter, sources said, amid deep divisions between China hawks and doves in the administration.
“The entity list is not getting the job done,” Gallagher said, in describing the goals of the legislation.
Still, Gallagher acknowledged that policy differences in the Trump administration could pose challenges to imposing the proposed sanctions on Huawei. “I’m sure there will be a debate in the White House … but my hope is to convince [the President] it is necessary in order to at least fight Huawei to a draw on 5G and preserve the hope that Western firms can compete for 6G and beyond,” he said.
The legislation has plenty of exemptions, such as carve-outs for Huawei to continue engaging in transactions related to 3G and 4G and to participate in international standards setting bodies. It also gives the U.S. president the authority to grant waivers of up to 90 days at a time.
But with no clear definition of “significant” transactions, banks would struggle to implement the rules, in the face of stiff civil and possibly even criminal penalties for violations, sanctions specialists said. That would compel regulators to develop their own more concrete definitions, they added.
“The legislation would result in a much more complex web of prohibited and permitted transactions that would be relatively challenging for an agency to implement and likely very difficult for the regulated public, particularly the banks, to follow,” said Matthew Tuchband, a former Treasury official.
It is not the first time U.S. officials have mulled the concept for addressing Huawei. The White House considered a more sweeping ban on Huawei’s use of the U.S. financial system last year, Reuters reported, though that plan was ultimately shelved.
The U.S. government has brought criminal charges against Huawei, alleging theft of trade secrets, bank fraud, violations of U.S. sanctions against Iran, allegations the company has denied.
Additional sponsors of the bipartisan legislation include Senators Rick Scott and Chris Van Hollen, as well as members of Congress Ruben Gallego, Liz Cheney and Chrissy Houlahan.
(Reporting by Alexandra Alper; Editing by Nick Zieminski and Dan Grebler)