Huawei store (JHVEPhoto/Shutterstock.com)

For global U.S. companies with ties to China, it's more imperative now than ever to ensure strict adherence to Chinese law, according to international trade lawyers.  

The Justice Department unveiled indictments on Monday accusing Huawei Technologies Co. of fraud, money laundering, obstruction of justice and sanctions violations, pouring fuel on an already tense situation that threatens to sour renewed U.S.-China trade talks ahead of a March 1 deadline to negotiate a deal. If the talks crumble, the U.S. could raise tariffs from 10 percent to 25 percent, affecting $200 billion of Chinese goods.

“It would begin a vicious circle that could lead to a global recession and political instability,” said Peter Quinter, a shareholder at GrayRobinson in Miami who chairs the firm's customs and international trade law group.

 Federal prosecutors have accused Huawei of violating U.S. trade sanctions against Iran and stealing trade secrets from T-Mobile for a robot that quality tests cellphones. 

Huawei asserted in a statement sent Tuesday to Corporate Counsel that federal prosecutors “rejected without explanation” the company's request to discuss the investigation, which led to the Dec. 1 arrest of Huawei Chief Financial Officer Meng Wanzhou in Canada at the request of U.S. authorities. The company also argued that the allegations at the center of the T-Mobile trade secret case “were already the subject of a civil suit that was settled by the parties after a Seattle jury found neither damages nor willful and malicious conduct on the trade secret claim.”

“The Company denies that it or its subsidiary or affiliate have committed any of the asserted violations of U.S. law set forth in each of the indictments, is not aware of any wrongdoing by Ms. Meng, and believes the U.S. courts will ultimately reach the same conclusion,” Huawei added in its statement.

After the indictments against Huawei were unsealed, international trade lawyers said they began fielding calls from clients who wanted to know whether they could still do business with Huawei, a telecom giant and one of the most iconic companies in China.

“The answer is that the indictments have no specific legal impact on the ability to do business with Huawei,” said Richard Matheny, a litigation partner at Goodwin Procter in Washington, D.C., who heads the firm's global trade practice.

The possibility of retaliation is another widespread concern.

“China could easily pick any number of areas of its domestic laws to conveniently target U.S. citizens and businesses,” said Adams Lee, an international trade lawyer at Harris Bricken in Seattle who represents American and Chinese companies.

U.S. businesses that export food products could face heightened scrutiny over compliance with China's Food Safety Law, while other exported goods could be targeted for possible violations of consumer protection laws, Lee said. He added U.S. companies that have operations on the ground in China should make sure that they're following Chinese employment laws.

“You really should be worried about complying with the Chinese laws,” Lee said.

Telling clients to abide by the law seems like obvious advice, but Lee said that “in China you get a lot of pressure from local Chinese handlers who … recommend a looser way of doing business. They say, 'Don't worry. This is how we do business here. It's all about who you know. They'll turn a blind eye if you pay them some favors.'”

That might be true for Chinese companies, Lee warned, but not so much for foreign businesses, especially in the current climate.

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