Bipartisan Senate Report Calls for Strengthened, Mandatory Federal Oversight of Chinese Telecoms in US

A smartphone in Arlington, Va., on June 9, 2020 (Olivier Douliery/AFP via Getty Images)

Congress should move quickly to strengthen the federal government’s ability to oversee the activities of China’s major telecommunications companies operating in the United States, according to a bipartisan Senate subcommittee report issued June 9.

“Three Chinese state-owned carriers have been operating in the United States since the early 2000s, but only in recent years have the FCC [Federal Communications Commission], Department of Justice (DOJ), and Department of Homeland Security (DHS) focused on potential risks associated with these carriers,” states the report prepared by the Permanent Investigations Subcommittee of the Senate Homeland Security and Government Affairs Committee.

Sen. Rob Portman (R-Ohio) is chairman of the subcommittee, while Sen. Tom Carper (D-Del.) is the ranking minority member.

“The Chinese Communist Party uses its state-owned enterprises to further its cyber and economic espionage efforts against the United States, and they’ve been exploiting our telecommunications networks for nearly two decades while the federal government historically put in little effort to stop it,” Portman said in a statement accompanying the release of the report.

The report describes how the United States has “allowed Chinese government-owned companies to gain a foothold in our telecommunications industry, while their American competitors face significant barriers to entry in China. It makes clear that more has to be done to protect our national security against foreign spies and hackers,” Carper said in the statement.

“This lack of oversight undermined the safety of American communications and endangered our national security,” the report stated.

“Since the subcommittee launched its investigation, the agencies have increased their oversight of the Chinese state-owned carriers.

“The administration also recently issued an executive order establishing [the EO Telecom Committee] to review the national security and law enforcement risks posed by foreign carriers operating in the United States. Still, the new committee’s authorities remain limited, and as a result, our country, our privacy, and our information remain at risk.”

The report focused primarily on three state-owned Chinese telecommunications firms with U.S. operations: China Mobile, China Telecom, and China Unicom.

These three and their subsidiaries have operated in the United States since at least 1999 virtually without oversight, despite repeated warnings over the years that the firms are state-owned and thus controlled by the Chinese Communist Party (CCP), according to the report.

The report said U.S. officials entered security agreements with two of the firms in 2007 and 2009, but then conducted only two site visits at each to monitor compliance. Three of the four total visits were conducted since 2017.

Among the recommendations included in the report were these:

• Congress should give formal authority to the EO Telecom Committee convened by the 2019 executive order to grant, review, and revoke security agreements with the Chinese firms.
• Congress should require the committee to review the activities of Chinese telecommunications on a regular schedule and report the results to the legislative branch. Such reviews are currently done infrequently, irregularly, and inconsistently, according to the report.
• Congress should preserve the role of other federal agencies in the monitoring process overseen by the EO Telecom Committee.

“Historically, the FCC has sought input on a foreign carrier’s application from other executive branch agencies, including the Department of State, Department of Commerce, and the U.S. Trade Representative,” the report stated.

“The recent executive order makes these agencies, and others, advisors to the EO Telecom Committee. These agencies provide invaluable input and their role in the review process must be accounted for in any formal legislation.”

Congress should establish concrete deadlines for completion of all reviews by the EO Telecom Committee.

“The recent executive order imposed certain timelines, but it allows for the EO Telecom Committee to seek extensions, which could draw out the review process, especially if resources remain limited,” the report stated.

• Congress should ensure the EO Telecom Committee has “sustained resources necessary … to effectively assess foreign carriers’ applications and to monitor foreign carriers operating in the United States.”
• Congress should move to require China to grant liberalized and reciprocal access to its domestic markets to U.S. telecommunications companies.

“In those aspects of telecommunications in which China officially permits foreign participation, China requires forced technology transfers and imposes discriminatory regulatory processes and burdensome licensing and operating requirements,” according to the report.

“This results in a highly asymmetric playing field in which U.S. companies face immensely restrictive policies in China, while Chinese companies are not equally restricted in the United States.”

Contact Mark Tapscott at [email protected].