US threatens to block China Telecom from American market

WASHINGTON: The United States threatened to cut off Beijing-controlled China Telecom from entering the American market because of legal and security risks.

A recommendation by the US government’s top departments, including Defense, State and Homeland Security, said that the Federal Communications Commission should “revoke and terminate” all authorisations for the Chinese giant’s US subsidiary, China Telecom (Americas), to provide international telecommunications services to and from the United States.

“The Executive Branch agencies identified substantial and unacceptable national security and law enforcement risks associated with China Telecom’s operations, which render the FCC authorizations inconsistent with the public interest,” the Justice Department said in a statement.

If approved, the move could mean that China Telecom’s hundreds of millions of phone and internet customers could lose connectivity with or through the United States. The company is China’s second-largest mobile phone operator.

The agencies making the recommendation, including the Justice Department, the Commerce Department, and the US Trade Representative, said China Telecom is vulnerable to “exploitation, influence and control” by the Chinese government.

The agencies also made the recommendation based on “the nature of China Telecom’s US operations,” which they said allow Chinese government actors “to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of US communications.”

The recommendation will be decided by the FCC and will involve the White House, where it could be weighed amid ongoing trade negotiations with Beijing. This comes just five days after President Donald Trump’s administration formed an interdepartmental body to review national security concerns related to foreign telecommunications companies involved in the United States.

In September 2019 two senators, Democrat Chuck Schumer and Republican Tom Cotton, asked the FCC to consider banning China Telecom and another company, China Unicom, from the US market over national security concerns.

The statement did not explain specifically what China Telecom had done to spark the recommendation that it be ousted from US telecommunications services. It said the company has inaccurately reported to US authorities where it stores its US records and how it manages cybersecurity.

It also made specific reference to an undertaking by China Telecom in 2007 to the Justice Department, the FBI, and the Department of Homeland Security to keep accessible for law enforcement all records of its US business, and to cooperate with and not disclose any investigations, wiretaps and subpoenas.