US senators warn on Huawei deal with South Korea

Richard McGregor
Kiyoshi Ota/Bloomberg | Bloomberg | Getty Images

A deal signed in South Korea by Huawei Technologies, the Chinese telecommunications giant, could undermine Washington's defense ties with Seoul, according to two powerful U.S. senators.

Dianne Feinstein and Robert Menendez, respectively the chairs of the Senate's intelligence and foreign affairs committees, said in a letter that "maintaining the integrity of telecommunications infrastructure" was critical to the alliance.

(Read more: Cyber security questioned after UK Huawei deal)

Congress has long objected to Huawei expanding its business in the U.S. but the letter is a rare example of political leaders in the country making an issue of the Chinese company's investments offshore.

U.S. suspicions about Huawei could also rebound on American technology companies abroad in the wake of documents leaked by former intelligence contractor Edward Snowden outlining their co-operation with Washington's spy agencies.

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The letter, sent in late November, was addressed to John Kerry, the secretary of state, Chuck Hagel, the defense secretary, and James Clapper, the director of national intelligence.

The letter's timing dovetails with a planned trip by Joe Biden, U.S. vice-president, to China and South Korea, a visit taking place in the shadow of Beijing's announcement last week of an extension of Chinese-regulated air space.

(Read more: Biden urges Japan, China to lower tensions)

Beijing's move, primarily aimed at chief regional rival Japan, also impinged on the so-called air defense identification zone of South Korea. Mr Biden is in China on Wednesday.

The letter from Senators Feinstein and Menendez expresses concerns about Huawei's selection to build a broadband network for a subsidiary of South Korea's LG Corporation.

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"An essential feature of our alliance are the numerous steps our militaries and our intelligence agencies are taking together to advance training and information sharing," it says.

The Huawei deal, the letter goes on, "raises serious questions and potential security concerns" and asks its recipients to assess any possible threat.

In recent years, U.S. lawmakers have objected to Huawei's acquisition of patents from 3 Leaf, a small U.S. company, and forced Japan's SoftBank to limit the use of the Chinese company's technology as a condition for buying a U.S. carrier.

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But Washington's hardline could provoke a backlash against U.S. companies offshore. Documents leaked by Mr Snowden revealed U.S. intelligence has forced U.S. telecommunications carriers to hand over phone records and also tried to infiltrate their systems to gain access to their private records.

"Hounding Huawei really sets a precedent that will eventually be used against U.S. companies abroad," said Christopher Soghoian, principal technologist of the American Civil Liberties Union. "All the things that Huawei has been accused of, U.S. companies do."

Huawei has long considered exiting the U.S. market altogether because of the political barriers to doing business there.

In a rare interview with the western media this week, Ren Zhengfei, the Huawei founder and chief executive, said if the company got caught in the middle of U.S.-China tensions, "it's not worth it".

(Read more: Is a Snowden effect stalking US telecom sales?)

He added: "Therefore, we have decided to exit the U.S. market, and not stay in the middle," without elaborating.

Huawei is a private company and insists its close ties with China's ruling communist party do not affect its commercial decisions.

Both the UK and Australia, intelligence partners of the U.S., have restricted Huawei's business in their countries or subjected them to greater oversight.