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Dahua Public Policy Regarding FCC Ruling

Dahua Public Policy Regarding FCC Ruling

Dahua Public Policy Regarding FCC Ruling

Dahua Technology is committed to transparency and fact-based, open dialogue among all stakeholders. To advance these goals, we offer several resources; ‘Our Commitments’ states some of our most important values and commitments to uphold those values. The FAQ pages offer more detail on specific areas that are relevant to how we conduct business. We will add additional resources over time to address further questions that may come up, in our continuing effort to explain clearly how we create value, safety, and security for customers.


OUR COMMITMENTS

At Dahua Technology, we design our products, services and solutions to help make the world safer and more secure. Used appropriately, our technologies enable families, businesses and law enforcement services to detect and respond to safety and security risks more quickly, accurately and effectively than ever before. They can also provide value-add beyond security, including enabling cities, businesses and other organizations to incorporate the visual data captured on our cameras as part of their “smart” solutions for everything from reducing traffic congestion, wildlife monitoring, tracking waste streams, to enhancing sales at retail outlets.

At the same time, like all security tools, our technologies are subject to abuse if used inappropriately or illegally to target individuals or communities, or to invade people’s privacy. Ultimately, no security solutions company can fully control how its technologies are used by end users — we need and expect our end users to comply with all applicable local, national and international laws, regulations and conventions, just as we do. At the same time, we accept our responsibility to design our technologies in ways that mitigate the risk of abuse and maximize the likelihood of appropriate use. This includes a commitment to never develop solutions to identify a single ethnic, racial or national group. That commitment extends to every market in which we operate, anywhere in the world.

Law enforcement are among our end users in many of the markets we serve. In all instances, we expect law enforcement end users to use our products appropriately. At the same time, and contrary to allegations that have been made by certain media outlets, Dahua Technology has not and never will develop solutions targeting any specific ethnic group.

We do not make policy for any country. We are a publicly traded corporation that exists to serve our fiduciary duty to our shareholders and our corporate responsibility to our customers, employees and other stakeholders. Central to those efforts is our commitment to the highest standards of data security. Our company has developed and rigorously applies industry best practices related to data protection in all of our solutions and products. In specific regard to the PRC, we have never been asked to share data from a customer outside the PRC with any entity or individual inside the PRC and would decline to do so if asked.

Despite these commitments, we understand that due to the state of relations between the U.S. and China, there may be certain specific limitations on Dahua’s ability to source component parts and technology from the U.S., and on the purchase of our products in the U.S. market for the time being. In particular, Dahua Technology was one of many China-based corporations placed on an Entity List by the U.S. Government, and was named as one of the “Covered Entities” under the NDAA 2019. Neither of these lists prohibit U.S. individuals or businesses from transacting with Dahua Technologies. Rather, our inclusion on these lists restrict Dahua from sourcing component parts and technology from the U.S. for inclusion in our products, and restricts the ability of U.S. Government entities or those who are funded by the U.S. Government from purchasing our products. While these restrictions do create a burden for the company, Dahua has developed plans to avoid supply chain disruptions and our private sector business in the U.S. remains stable.

To be clear, Dahua Technology flatly denies the allegations implied by our inclusion on the Entity List or the NDAA 2019. Nevertheless, we respect the decision of the U.S. Government in this regard and are committed to complying with the limitations imposed on us.

Despite these limitations, going forward, we are committed to growing our presence in the U.S. market. We believe that our products, services and solutions can play a meaningful role in helping the American private sector enjoy the enhanced safety and security our world-leading technologies offer, while fully complying with U.S. law and respecting American values. Our approximately 100 U.S.-based employees are working tirelessly on behalf of distributors, integrators and end-user customers around the country to fulfill that vision. And our hope is that, over time, the U.S.-China relationship will improve and some of the limitations currently imposed upon us may be lifted. Until then, we will do everything we can to earn the trust of our U.S. stakeholders. Dahua will always be open to a reasonable, fact-based dialogue on all issues of concern.



COMMENT LETTER TO THE FCC

Over the past month the FCC has been accepting public comments regarding its proposed rule, which would restrict the ability of Dahua and certain other companies from receiving authorizations for future products in the U.S. market.

As part of that comment period, dozens of Dahua customers and others in the industry stepped forward to express their view that the FCC’s proposal would be bad for their businesses and to urge the FCC to not adopt the rule as proposed. Virtually no voices submitted comments in support of the proposed rule.

To help inform the FCC’s deliberations, Dahua, too, submitted comments for the record in our submission, we have made a number of arguments:

First, we have pointed out that in our view the FCC does not have the statutory authority to refuse authorizations based on considerations unrelated to the integrity of the U.S. telecommunications system. In this case, the proposed rule is clearly about geo-political and national security issues. But the law does not empower the FCC to take such considerations into account when it comes to equipment authorization. FCC’s equipment authorization rules seek to address harmful interference of RF equipment, not national security issues.

Second, we have pointed out to the FCC our view that the proposed rule are “arbitrary and capricious” because they seek to deny authorizations based not any technical considerations relevant to protections against RF interference, but simply on the identity of the company. There is no evidence that Dahua’s equipment causes excessive RF interference or fails to meet any other technical standard considered in the equipment authorization process. In fact, all Dahua’s products sold in the United States have been certified through the Supplier’s Declaration of Conformity (“SDoC”) procedures by FCC-authorized labs or through FCC’s certification procedures, to the extent applicable.

Third, we argued that the FCC’s proposed rules would be unconstitutionally retroactive if they seek to revoke existing authorizations based on non-technical criteria. Such rules run afoul of the U.S. Constitution by violating protected property rights and penalizing companies without any type of hearing.

Lastly, beyond the legal flaws, we have argued that the costs of enforcing the rules would vastly exceed any speculative benefit. The vast majority of Dahua’s equipment is not connected to public communications networks and therefore, is not relevant to FCC’s concerns regarding national security risks to communications networks. Limiting Dahua’s access to the US will result in huge losses. These losses would stem from the potential need to replace existing systems, the inability to upgrade their current systems, and from the decrease of security products supply, diminishment of competition in the U.S. security market, and higher prices for security products ultimately paid by endusers. These losses would far outweigh any potential benefit.

As Dahua has stated many times, we fully respect the right of the U.S. government to regulate its domestic market, and our company will always comply with U.S. law. In this case, we believe the FCC’s proposal goes beyond what U.S. law and the U.S. Constitution allows, and would also be harmful for U.S. businesses and the economy.


FREQUENTLY ASKED QUESTIONS


CORPORATE GOVERNANCE

WHO OWNS DAHUA TECHNOLOGY?

Dahua Technology is a private sector and publicly traded corporation that exists to serve our fiduciary duty to our shareholders, and our corporate responsibility to our customers, employees, and other stakeholders. We are neither owned nor controlled by any government.


DAHUA U.S.A BUSINESS OPERATION

IS DAHUA BANNED IN THE US?

No. Dahua remains authorized to conduct business in this U.S., and we are doing so, providing world-class products and services to our customers and business partners.

In October 2019, the US Commerce Department placed Dahua and 27 other companies on an Entity List that specifies license requirements for certain types of transactions primarily involving the export of technologies from the United States. The Entity List is not a ban. It does not impose restrictions on Dahua’s ability to export, market or sell products into the United States.

Dahua Technology employs over 100 people in the U.S. We are legally authorized to conduct business with any American individuals, businesses or organizations.

WHY DAHUA WAS ADDED TO THE ENTITY LIST?

The Entity list is designed to identify companies that the U.S. Government believes have conducted activities “contrary to the national security or foreign policy interests of the United States.” We respect the right of governments to regulate markets as they see fit. At the same time, we flatly deny the allegations upon which our inclusion on the Entity List was based. Dahua Technology does not and never has represented any type of threat to U.S. interests.

WHAT IS DAHUA’S RESPONSE TO THE ENTITY LIST?

The allegation that Dahua Technology has been implicated in activities contrary to the foreign policy interests of the United States has not been backed up by any specific evidence, Dahua Technology does not and never has represented a threat to the U.S.. Our company does not and has not acted in ways that are contrary to the foreign policy interests of the United States, Our company has not been involved directly or indirectly in promoting human rights violations in any country in which we operate. Our products enable a safer society and we conduct our business operations in full compliance with all applicable laws and rules in every market in which we operate.

Like any other security solutions company, we cannot fully control how our technologies are ultimately used by end users. We need and expect our end users to comply with all applicable local, national and international laws, regulations and conventions, just as we do. We accept our responsibility to design our technologies in ways that mitigate the risk of abuse. This includes a commitment to never develop solutions to identify a single ethnic, racial or national group.

We are a publicly traded corporation that exists to serve our fiduciary duty to our shareholders, and our corporate responsibility to our customers, employees, and other stakeholders. We do not make policy for any country. We are neither owned nor controlled by any government.


DATA SECURITY/CYBERSECURITY

WHAT ARE DAHUA’S STANDARDS FOR CYBERSECURITY?

Dahua maintains extremely high standards to protect the security and privacy protections of its customers’ data. Dahua has an internal, cross-functional team (the Dahua Cybersecurity Committee or DHCC) that has responsibility for reporting security vulnerabilities, providing timely notice of vulnerabilities to customers, and sharing cybersecurity knowledge and best practices with customers. It also maintains a Cybersecurity Lab that has developed a robust 7-module baseline standard of security to provide protection during device operation and remote access. The Cybersecurity Lab also has developed a standard process to design and validate the cybersecurity features of new products with the expert assistance of the highly regarded Synopsys Technology.

As with all technology products, vulnerabilities are sometimes discovered in the products manufactured by Dahua and a limited number of vulnerabilities have been identified in certain Dahua products in the past. These vulnerabilities were of course not intentional, and we have followed best practices in the industry for responding to them. Dahua was quick to publicize the vulnerabilities once they were discovered and has worked cooperatively with the United States Department of Homeland Security to assess the vulnerabilities and provide guidance to the marketplace, and promptly developed and issued patches. Dahua is not aware of any American customer who experienced a data breach in connection with any vulnerability in our products.

For more information, please refer to our dedicated cybersecurity site.


FACIAL RECOGNITION TECHNOLOGY

ARE MEDIA REPORTS IMPLYING THAT DAHUA PRODUCTS SPECIFICALLY IDENTIFY THE UIGHUR ETHNIC GROUP OR ANY OTHER SINGLE ETHNIC GROUP ACCURATE?

No. We have never developed a product or solution designed to identify or otherwise target any specific ethnic group.

DAHUA TECHNOLOGY’S SOLUTIONS ALLOW LAW ENFORCEMENT TO EFFECTIVELY IDENTIFY AND TRACK INDIVIDUALS WITH UNPRECEDENTED PRECISION. ARE SUCH TOOLS CONSISTENT WITH THE PROTECTION OF INDIVIDUAL PRIVACY AND CIVIL LIBERTY?

Emerging technologies like artificial intelligence and particularly facial recognition play important roles in advancing the developments of human society and promoting the safety, security, and prosperity of human beings. At the same time, it is an industry challenge to work to appropriately manage and regulate applications which carry with them potential risks. This requires close international cooperation from all stakeholders.

At Dahua Technology, we attach great importance to this task, which rests equally on our ethics and our compliance processes. We established an ethics and compliance management committee precisely for this purpose.

We design our products, services and solutions to help make the world safer and more secure. Our technologies enable families, businesses, and law enforcement services to detect and respond to safety and security risks more quickly, accurately and effectively than ever before. They also provide value-add beyond security, such as enabling cities, businesses, and other organizations to incorporate the visual data captured on our cameras as part of their “smart” solutions for everything from reducing traffic congestion, wildlife monitoring, tracking waste streams, to enhancing sales at retail outlets.

Like any other security solutions company in the world, we cannot fully control how our technologies are ultimately used by end users. We need and expect our end users to comply with all applicable local, national and international laws, regulations and conventions, just as we do. We accept our responsibility to design our technologies in ways that mitigate the risk of abuse. This includes a commitment to never develop solutions to identify a single ethnic, racial or national group. That commitment extends to every market in which we operate, anywhere in the world.


FCC RULEMAKING PROCESS

WHAT IS DAHUA’S RESPONSE TO THE FEDERAL COMMUNICATION COMMISSION’S PROPOSED RULES TO PROHIBIT FUTURE EQUIPMENT AUTHORIZATION?

As we have stated publicly many times, we respect the right of governments to regulate domestic markets, and we comply as a matter of course with all applicable laws and regulations everywhere we do business.

However, we urge the FCC, and all of our company’s U.S. stakeholders, to recognize that our products and technology pose no threat to the U.S. network or to national security. We are not government owned or directed. Rather, we are a private-sector business, traded on the public markets that adheres to standards for ethical practices in our industry.

We look forward to presenting these facts to the FCC and hope that the Commission will keep an open mind as it embarks on what we expect will be a robust, deliberate process for considering this proposed rule.

WHAT EXACTLY HAS THE FCC DECIDED TO DO?

The FCC has voted to consider proposed rules relating to equipment authorizations for certain devices from certain companies that are on the U.S. Government’s “Covered List”.

The FCC has not enacted any new rules at this time – this is simply the start of a process which includes considering comments from the public about whether or not to implement a new rule.

DOES THIS VOTE MEAN THAT DAHUA NO LONGER HAS FCC APPROVALS?

Dahua’s products all remain authorized at this time. All that has happened is that the FCC has decided to start a process to consider a rule that would deal with authorizations of products from companies on the Covered List.

At this time, nothing at all has changed in terms of our authorizations.

WHAT DOES DAHUA PLAN TO DO TO ENSURE THAT IT DOES NOT LOSE FCC APPROVALS?

We have filed a robust response to this proposal as part of the FCC rulemaking process. The FCC invites all parties to submit comments on proposed rules.

We also intend to explore all possible ways to engage with the FCC and effectively address any potential concerns it might have regarding our technology and products.

WHAT IS THE TIMELINE FOR A FINAL VOTE?

The FCC itself does not set a hard timeline for these proceedings, which sometimes take many months or even years.

The FCC released the draft of proposed rules on August 19th 2021. Various stakeholders and interested parties including Dahua submitted comments on the proposed rules during the 60-day public comment period from August 20th 2021 to October 18th 2021.

The FCC is now expected to take some time to digest those public comments it has received and meet with stakeholders to discuss the rulemaking and comments filed. Given the complexity of the issues in the proceedings, the number of substantive comments the FCC has received, alternative approaches proposed to address the supposed underlying issue, as well as widely shared concerns over the broader impact on the US economy, it is our view that a final ruling may take some time to be decided.

It is not uncommon for FCC rules to be the subject of litigation, which can further delay implementation.

WHAT CAN A DEALER DO TO PLACE A COMMENT TO THE FCC?

The FCC docket was open to comments from any party interested in making their views known from August 20th 2021 through October 18th, 2021. You may go to Commission’s Electronic Comment Filing System (Proceedings 21-232, 21-233) to view comments filed by all interested parties including Dahua’s comment letters (see 1st letter and 2nd letter).

WHAT WILL BE THE FINAL OUTCOME IF DAHUA CANNOT GET FCC APPROVALS FOR NEW PRODUCTS?

We understand the concerns our partners have about this question, but right now we prefer not to speculate about a hypothetical.

Our focus is on making our case to the FCC and doing our part to make sure that any rule reflects the best interests of our customers, business partners and other US stakeholders, and most importantly an accurate and fair assessment of the facts.

We are confident that at the end of this process, we will be in a position to continue to operate in the U.S. and to serve our customers as we always have.

IF THE FCC RULE IS ADOPTED, WHAT WILL HAPPEN TO DAHUA PRODUCTS ALREADY IN SERVICE IN THE U.S.?

The proposed rule that was released for comment would not affect products that were already authorized under the existing rules. Those authorizations would remain valid.

It is possible that the FCC might conduct further proceedings to consider revoking authorization of some previously approved products, but that step would require an additional public notice and a final FCC decision at some point in the future. Our customers and business partners would have ample advance notice if the FCC decided to go down this path.

WHAT HAS CONGRESS DONE THAT IMPACTS THE FCC PROCESS?

The Congress in October 2021 passed a bill titled the Secure Equipment Act, which directs the FCC to adopt within one year from the date the bill becomes law a rule that would prevent companies on the Covered List from securing authorizations for future applications. The act was signed into law on November 11th, 2021.

The law also states that the FCC may not, under this proceeding, revoke existing authorizations. Therefore, our existing products on the market retain their authorization, and all Dahua distributors and customers will be able to rely upon the existing authorizations that their products already have in place.

The FCC has one year as of November 11th, 2021 to adopt final rules on future authorizations. It is possible that the FCC may, in the interim, issue a public notice seeking comments on how the law impacts its proposed rule-making process (as it has done on occasion in the past), which could delay the timeline.

At any point in that process, the Secure Equipment Act itself could be subject to legal challenge.

Notably, Dahua’s comments to the FCC as well as other comments raise substantive questions about the constitutionality of denying a business the right to secure an FCC authorization without any due process or evidentiary proceeding. Should such a challenge take place, it could be additional months or years before the issue is resolved by the courts.

IF THE FCC RULE IS PASSED AS PROPOSED WHAT ARE DAHUA’S PLANS FOR HONORING WARRANTIES AND CONTINUING TO PROVIDE SUPPORT IN THE U.S.?

Regardless of how this process plays out, Dahua will continue to honor warranties and provide support for its customers in the U.S.

IS THERE ANY LIABILITY FOR AN INTEGRATOR SELLING DAHUA PRODUCTS IN THE U.S.?

No. Dahua’s products all remain authorized at this time and therefore, there is no liability for an integrator selling Dahua products in the U.S.

WHAT DOES THIS MEAN FOR BUYING DAHUA EQUIPMENT FOR NEW INSTALLATIONS?

At this time, nothing at all has changed in terms of buying and selling Dahua’s authorized products. Business continues as usual.

All that has happened is that the FCC has decided to start a process to consider a rule that would deal with authorizations of products from companies on the Covered List.

IF THE PROPOSED FCC RULE IS PASSED, WHAT IS THE CHANCE THAT IT WILL BE ALLOWED TO STAND?

We prefer not to speculate about hypotheticals. It is not uncommon for FCC rules to be challenged in courts, which could block or further delay implementation.