Security ban on Chinese firm advances in US

Apple could soon find itself caught in the middle of a quickly escalating trade scrum between the U.S. and China. The U.S. Federal Communications Commission (FCC) on Tuesday moved forward with plans to limit sales of certain Chinese telecommunications products, a move that leaves America's high-tech industry open to tit-for-tat retaliation.

The FCC is considering additional steps in the wake of growing concerns in Washington that Chinese firms could act as conduits for espionage and pose a security threat to the country's communications networks, a charge they have consistently denied.

"Hidden 'backdoors' to our networks in routers, switches, and other network equipment can allow hostile foreign powers to inject viruses and other malware, steal Americans' private data, spy on U.S. businesses, and more," said FCC Chairman Ajit Pai, who introduced the proposal.
Technologies Co. and ZTE Corp. are sources of concern for US officials.

The body is leveraging access to the Universal Service Fund, a set of subsidies meted out to American telecommunications firms in a bid to expand access to connectivity services including phone and internet. Administered by the Universal Service Administrative Co., the program collects and pays out more than $8.5 billion a year. The proposed new rules are expected to be finalised later this year.

The FCC voted 5-0 on Tuesday in favour of banning federal funds from being spent with companies determined to be a risk to U.S. national security. The ban won’t be final until a second vote by the FCC, which in a draft order noted congressional scrutiny of Huawei and ZTE as possible security threats.

Chinese firms Huawei and ZTE are widely thought to be targets of the regulations, which are pending until the FCC finalizes the motion with a second vote. Both companies have been scrutinized by U.S. government bodies as potential security threats. An ongoing examination into Huawei and ZTE business practices, as well as those of other foreign firms, was noted in an FCC draft order related to Tuesday's vote, according to Bloomberg.