Consolidated and Further Continuing Appropriations Act

In 2013, the US congress passed an act: the Consolidated and Further Continuing Appropriations Act. This act contains bans or strictly supervises the purchase of telecommunication equipment from Chinese companies Huawei and ZTE. It is strictly stated in section 516 that the money brought forward from this act is not allowed to buy equipment or systems that have been “produced, manufactured or assembled” by companies “owned, operated or subsidized” by the Chinese. This may seem reasonable; the US is scared of having to deal with cyber espionage that Chinese companies could possibly put into their equipment. However, there are also crucial underlying economic reasons.
Since 2012, the US government has spread rumors regarding the Chinese government putting spy equipment in the products of China-based companies (Schmidt, Bradsher, and Hauser). Such companies can be as large as Huawei, the global leader of ICT (information and communications technology) solutions. The rumors suggest that these China-based companies pose a risk to national security, and because of their ‘intimate link’ to the Chinese government, it is very dangerous for American companies to conduct business with them. Due to these accusations and the risk assessments for every exchange, Huawei immediately chose to exit the US market (Blagdon). This does not to reflect that the accusations are true. Rather, Huawei simply did not want to waste time while they have many opportunities around the globe. The US government is trying to save local ICT companies that are slowly going out of business because of high competitiveness, by increasing protectionism in this area would insure that jobs are kept now, but not for long. The government put out statements of possible national security threats, but never showed any evidence of spying or any sort of espionage. A probe into the issue uncovered no proof at all.
The problem the US government is facing is an economic take over, losing our spot as the number one economic power. Specifically, our standard of living has been above what we can afford, our education is no longer top notch and government regulations are setting us back. With having a minimum wage system, US low level workers are entitled to live to ‘normal’ American life, which to some extent is extremely wasteful. Examples of our wastefulness can be seen in our everyday lives: driving everywhere when there could be better public transport, households and restaurants throwing away tons of food every day, and not shutting off lights as a habit. Our standard of living has always been high, since becoming a major world power; we have gone over our heads in spending, which is reflected not only on the national debt level, but average household debt levels. Now with more and more people losing jobs, we still cannot get rid of our habituated state of living; we are like a frog in water about to be boiled. The US education has significantly been outmatched by developing nations such as China and India, the level of competition is no longer there in a way that most work can be outsourced very cheaply, sometimes just a small fraction of what it would cost in the US. So what has the government been doing in the midst of this about to be chaos, it has been subsidizing large loans out to giant cooperation’s so they can keep doing what is failing, it has encouraged huge companies to merge in order to stop competition and it has allowed unemployment to become more beneficial than working through supplement programs (Propublica). Long story short, the government has not been improving our country as a whole, but trying to delay the fact that it has many problems to deal with.
This incident of blocking Huawei, and many other Chinese telecommunication companies, is a sign of the US feeling insecure. Not only insecure by the potential spying by the Chinese government, but the insecurity that if they allowed these companies to enter this market, the US-based companies would fall. Simply put, the Chinese companies have a comparative advantage in most areas of this market; their labor force is less-expensive, technology is more advanced and marginal cost to produce is far less because of their size. The US government has gone out of its way, but very smartly, violated free trade, although we as a country were the strongest supporters of free trade a decade ago. There is still a sense of confidence in the US based companies, which is powered by being part of the strongest economy in the world, but it is slowly slipping away. The emerging sense is to delay being put up to innovative challenges, while it is going to happen sooner or later. With more than 30 percent of the world’s carrier business in the US, it will always be a target of Huawei (Blagdon), and the US should not be afraid to open our market to competitors if their product is truly better than ours. A group of tech firms from Silicon Valley have even brought up some issues of this ban, stated that these rules have “drifted off course” from cyber security policy. Without the ability to upgrade to the newest equipment, companies will be left vulnerable to fast-forming security hacks (Welch). What Chris Welch implied in his report is exactly what policy makers are missing: the cost of putting up barriers. How much does it cost the US for blocking Huawei, does it make sense to reject a company that has more advanced equipment and is much more innovative? While this is a huge debate, Welch says that China and possibly other countries will follow US actions and put strict barriers on US imported equipment. With the US trying to recovering from the 2008 crisis, we do not need a trade war with any country that offers huge investments and trade benefits.
This act is a start to US strict barriers of trade, and thus could be seen by other countries as offensive and unfair. It has certainly given China a just right to retaliate and implement the same regulations against US companies that are trying to expand markets in China. Which will potentially hurt us more than what we were trying to gain at first. Anyhow, rejecting Huawei is already a known mistake. Due to their advanced R&D and low pricing, it will leave the US out of becoming competitive (Suciu). While US companies like Cisco can relax with the government on their side, they cannot for long, as it can only act as a delay and gain precious time to regain focus. Just recently in October, an effect from this act has resulted in the ban of Chinese researchers from attending a conference on exoplanets hosted at NASA’s Ames research center within a month. The ridicule of this fact is that some of these researchers even work at American Universities, but because of their nationality, they cannot attend this conference. Another point would be, what is even possible to spy at a conference on exoplanets, which means alien planets, since all the data that are going to be discussed are already free to anyone who is interested, no part discussed affects national security. Already, many big names in the research have boycotted the conference as a protest against the discrimination in this way (Baber).
This policy has been debated on its fairness, rationales and most importantly effectiveness. Although it is only in effect for one year, the message it has sent to foreign governments and businesses is very controversial to its main goal, which is to improve US companies and their competitiveness. The message shows the ungenerous attitude government policy makers have towards foreign companies, and will take advantage of any chance to shut them out of the US market. Without openly increasing protectionism will only bring more attention to this issue, foreign businesses may start doubting the US economy if they have not already have. Whether the economy is regaining focus or is it just struggling to survive. With policies like this, I am geared towards that the economy is not recovering, but becoming more and more desperate to stay competitive. The US has always been at the top of innovating and promoting leadership, great examples are Apple and Microsoft. But the innovation is only welcome if it is US-based or has been trusted over long periods of time. When will we start trusting innovative companies that are based in developing nations? We may never know if we do not give them a chance.
The protectionism procedures the US government has taken should be more cautiously put into legislation. Stopping the competitiveness from free trade will only hurt more in the long run. With the right idea to give US companies room to breathe, there could have been a less paradoxical solution. The Consolidated and Further Continuing Appropriations Act will not show its effects till years later. It may act as a benchmark for major barriers of trade, or it may have eliminated a major national security threat.

Citations:
Schmidt, M. S., K. Bradsher, and C. Hauser. N.p.. Web. 13 Nov 2013. .
Propublica, . N.p.. Web. 13 Nov 2013. .
Blagdon, Jeff. "Huawei backs out of US network equipment market, citing ‘geopolitical reasons’." www.theverge.com.N.p. Web. 13 Nov 2013. .
Suciu, Peter. "US Biz Groups Rail Against China-Focused 'Cybersecurit 'y Law." http://www.ecommercetimes.com. N.p., 04 Sept 2013. Web. 13 Nov 2013. .
Baber, Shaun. N.p.. Web. 13 Nov 2013. .
Welch, Chris. "Silicon Valley voices opposition to China cyber-espionage provision." www.theverge.com. N.p., 05 Apr 2013. Web. 13 Nov 2013. .

Citations: Schmidt, M. S., K. Bradsher, and C. Hauser. N.p.. Web. 13 Nov 2013. . Propublica, . N.p.. Web. 13 Nov 2013. . Blagdon, Jeff. "Huawei backs out of US network equipment market, citing ‘geopolitical reasons’." www.theverge.com.N.p. Web. 13 Nov 2013. . Suciu, Peter. "US Biz Groups Rail Against China-Focused 'Cybersecurit 'y Law." http://www.ecommercetimes.com. N.p., 04 Sept 2013. Web. 13 Nov 2013. . Baber, Shaun. N.p.. Web. 13 Nov 2013. . Welch, Chris. "Silicon Valley voices opposition to China cyber-espionage provision." www.theverge.com. N.p., 05 Apr 2013. Web. 13 Nov 2013. .