[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H. Res. 730 Introduced in House (IH)]







110th CONGRESS
  1st Session
H. RES. 730

  Expressing the sense of the House of Representatives regarding the 
  planned acquisition of a minority interest in 3Com by affiliates of 
                                Huawei.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 10, 2007

 Ms. Ros-Lehtinen (for herself, Mr. McCotter, Mr. Hoekstra, Mrs. Boyda 
 of Kansas, Mr. Burton of Indiana, Mr. Culberson, Mr. Rohrabacher, and 
Mr. Calvert) submitted the following resolution; which was referred to 
the Committee on Financial Services, and in addition to the Committees 
    on Foreign Affairs and Energy and Commerce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                               RESOLUTION


 
  Expressing the sense of the House of Representatives regarding the 
  planned acquisition of a minority interest in 3Com by affiliates of 
                                Huawei.

Whereas, on September 28, 2007, 3Com Corporation announced it had signed a 
        definitive merger agreement to be acquired by affiliates of Bain Capital 
        Partners, LLC;
Whereas, as part of that transaction, affiliates of Huawei Technologies would 
        acquire a minority interest in the company and become a commercial and 
        strategic partner of 3Com;
Whereas Marlborough, Massachusetts-based 3Com sells a broad range of data-
        networking equipment, including ``Federal Information Processing 
        Standards'' (FIPS)--certified security local area network solutions for 
        the Federal Government, including the Department of Defense and civilian 
        agencies, military organizations, and contractors;
Whereas Huawei is headquartered in Shenzen, China, is a privately held company 
        that was established in 1988 by Ren Zhengfei, a former People's 
        Liberation Army officer, and is currently the largest telecommunications 
        supplier in China;
Whereas Huawei lines of business include research, development, manufacturing, 
        and marketing of telecommunication equipment, including switches, 
        optical access networks, mobile and wireless communications, data 
        communications, and intelligent networks;
Whereas, since 1988, the company has rapidly expanded from a small enterprise to 
        become a global provider of telecom services, with over 61,000 employees 
        and over $8.5 billion in revenues, including 12 research and development 
        centers around the world such as in the Silicon Valley and Dallas, 
        Texas, Bangalore, India, Stockholm, Sweden, and Moscow, Russia;
Whereas, since 2001, Huawei has actively sought entry into international 
        markets, reportedly using government subsidies to support aggressive 
        pricing needed to help capture market share;
Whereas the ownership structure of Huawei, including possible links to the 
        Government of the People's Republic of China, including the People's 
        Liberation Army, is so opaque that the company has been described as 
        ``one of the least transparent in China'';
Whereas Huawei was identified by United States intelligence agencies as the 
        supplier of fiber optic equipment to Iraqi air defense systems during 
        the late 1990s;
Whereas a March 17, 2001, Washington Post article stated that ``Pentagon 
        officials have accused the company of laying optical communications 
        cables between Iraqi antiaircraft batteries, radar stations, and command 
        centers, which they say could significantly aid Baghdad's efforts to 
        shoot down U.S. warplanes patrolling the `no-fly' zones over northern 
        and southern Iraq'';
Whereas, according to a November 16, 2005, article in the Asia Times, India's 
        Research and Analysis Wing (RAW) reportedly charged in August 2002 that 
        Chinese engineers at the Bangalore office of Huawei were involved in 
        developing state-of-the-art telephone surveillance equipment for the 
        former Taliban regime in Afghanistan;
Whereas, according to that same article, an official with India's Ministry of 
        External Affairs was quoted as saying that Huawei's operations in India 
        ``have come to the adverse notice of India's security agencies, which 
        have expressed reservations regarding the company's links with the 
        Chinese intelligence and military establishments'';
Whereas, on August 26, 2007, the German news magazine Der Spiegel reported 
        recently that computers in the German chancellery and the foreign, 
        economic, and research ministries had been infected with Chinese spyware 
        software, and German officials say they believe the hackers were linked 
        to China's People's Liberation Army;
Whereas, on September 3, 2007, the Financial Times reported that the Chinese 
        military hacked into a Pentagon computer network in June, 2007, in the 
        most successful cyber attack ever on the Department of Defense;
Whereas, on September 6, 2007, London's The Times Online reported that China 
        leads the list of countries hacking into government computers that 
        contain Britain's military and foreign policy secrets;
Whereas the Committee on Foreign Investment in the United States (CFIUS) is an 
        interagency committee, originally created by executive order, that 
        serves the President in overseeing the national security implications of 
        foreign investment in the economy;
Whereas the proposed acquisition of commercial operations at six United States 
        ports by Dubai Ports World in 2006 caused the CIFUS process to come 
        under intense scrutiny by Members of Congress and the American public;
Whereas the Foreign Investment and National Security Act of 2007 (Public Law 
        110-49) established CFIUS by statutory authority and further clarifies 
        and enhances United States Government scrutiny of acquisitions of 
        critical infrastructure assets by non-United States investors;
Whereas the Foreign Investment and National Security Act of 2007 formalizes 
        prior CFIUS practice of considering ``critical infrastructure'' 
        transactions to be within the scope of its review;
Whereas the economic and national security of the United States relies, in large 
        part, on the security and reliability of information systems and 
        networks that increasingly are linked to consumer and investor 
        confidence;
Whereas, without appropriate mitigation, foreign ownership of United States 
        telecommunications service providers could multiply opportunities for 
        espionage, hinder law enforcement, and disrupt critical infrastructure 
        and related services;
Whereas Presidential Decision Directive 63 on Critical Infrastructure 
        Protection, the creation of the Department of Homeland Security, and the 
        publication of both the National Strategy for the Physical Protection of 
        Critical Infrastructures and Key Assets and the National Strategy to 
        Secure Cyberspace, establish an evolving policy framework for protecting 
        the critical infrastructure of the United States; and
Whereas, as part of Huawei's and Bain Capital Partners' proposed merger 
        agreement with 3Com, Bain announced its intention to voluntarily submit 
        to the CFIUS process: Now, therefore, be it resolved--
    Resolved, That it is the sense of the House of Representatives 
that--
            (1) the planned acquisition of a minority interest in 3Com 
        by affiliates of Huawei triggers a number of statutory factors 
        to be considered by the President and members of the CFIUS 
        Committee and which are necessary to block a foreign 
        acquisition, including--
                    (A) the control of domestic industries and 
                commercial activity by foreign citizens as it affects 
                the capability and capacity of the United States to 
                meet the requirements of national security;
                    (B) the potential effects of the transaction on the 
                sale of equipment, or technology to a country that, 
                among other things, proliferates missile technology or 
                chemical and biological weapons, as well as 
                transactions identified by the Secretary of Defense as 
                ``posing a regional military threat'' to the interests 
                of the United States;
                    (C) the potential effects of the transaction on 
                United States technological leadership in areas 
                affecting United States national security;
                    (D) whether the transaction has a security-related 
                impact on critical infrastructure in the United States;
                    (E) the potential effects on United States critical 
                technologies; and
                    (F) whether the transaction is a foreign 
                government-controlled transaction; and
            (2) the preponderance of publicly available evidence 
        clearly suggests that as currently structured, the proposed 
        transaction involving Huawei threatens the national security of 
        the United States and should not be approved by the Committee 
        on Foreign Investment in the United States.
                                 <all>