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Just Before Talks, Trade Tensions Between U.S-China Renewed By Huawei Investigation

Just Before Talks, Trade Tensions Between U.S-China Renewed By Huawei Investigation
Even as a couple of senior officials of Donald Trump administration are all set to go to Beijing to talk issues on trade, tensions over trade between the United States answer China were renewed following news of a broad U.S. investigation on Huawei Technologies Co. related to potential contravention of the Iran sanctions.
According to media reports quoting two people familiar with the investigation, transactions by Huawei, China’s largest maker of telecommunications equipment, are being investigated by agents from the Federal Bureau of Investigation which is under the direct control of the U.S. Justice Department. Also part of the investigations are the Department of Commerce that are also examining the transactions conducted by the Shenzhen, China-based mobile and telecommunications giant and the Treasury Department’s Office of Foreign Assets Control, or OFAC which is responsible for enforcing sanctions.
According to one of the sources, earlier, another Chinese company – ZTE Corp., was penalized for violation of sanctions and the present criminal inquiry against Huawei emerged out of that previous investigation.
There were no comments made about the probe by a spokesman for Huawei in Shenzhen. Instead it has said that wherever where it operates, the company always adheres to all applicable laws and regulations. and that includes maintaining U.S. export controls and sanctions laws and regulations.
According to Bloomberg Intelligence technology analysts Woo Jin Ho and Anand Srinivasan, if the investigations against Huawei finds it on the wrong side of the law and a ban on U.S. suppliers is enforced, it "would have wide ramifications on various suppliers on a larger scale than peer ZTE, in our view." 
"Chip suppliers such as Skyworks and Qorvo, each with about 10 percent sales exposure to Huawei, would be affected. Optical suppliers including NeoPhotonics, Oclaro and Lumentum may also be exposed," they said.
Huawei ‘s plan of a dollar-denominated bond sale was dropped on Wednesday along with delaying of pricing a European offering.
Whether Huawei had sent any U.S. technology to any of the countries against which the U.S. had imposed sanctions – including Iran, was asked of the Chinese company through an administrative subpoena issued by the Commerce Department in 2016.
A rival of ZTE mentioned as “F7” in its internal documents that were later posted on the Commerce Department website and stated that the rival had also violated U.S. export controls while conducing sales of equipment to Iran.
Following that, Trump was pushed to investigate and identify who F7 was by a group of Republican lawmakers. They cited news reports whjch found similarities between the sop-called F7 - rival of ZTE, and Huawei. According to reports, it was in early 2017 that investigations against Huawei had been initiated by the FBI and OFAC.
A Huawei spokesman, said those allegations aren’t true. “We pose no security threat in any country,” he said. “U.S. authorities should not base government decisions on speculation or rumor. In 30 years, not a single operator has experienced a security issue with our equipment.”

Christopher J. Mitchell

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