110 HRES 730 IH: Expressing the sense of the House of
U.S. House of Representatives
2007-10-10
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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—
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.