(Reuters) – China’s Huawei has mounted a legal challenge against the U.S. Federal Communications Commission (FCC) after the physique designated the expertise large as a safety menace and moved to bar it from a authorities subsidy program.

The FCC final month voted unanimously to designate Huawei Technologies and peer ZTE as nationwide safety dangers, barring their U.S. rural carrier customers from tapping an $8.5 billion authorities fund to buy Huawei or ZTE telecommunications gear.

Huawei mentioned on Thursday it filed a petition with the Fifth Circuit Court in New Orleans difficult the FCC choice.

The FCC argued the businesses’ ties to China’s authorities and army equipment, and Chinese legal guidelines requiring that such corporations help the Chinese authorities with intelligence actions, pose a U.S. nationwide safety threat.

It additionally voted to suggest requiring carriers take away and substitute gear from Huawei and ZTE in current networks.

“Banning a company like Huawei, just because we started in China – this does not solve cyber security challenges,” Huawei’s Chief Legal Officer Song Liuping mentioned at a information convention on the agency’s headquarters in Shenzhen.

He mentioned the FCC has not supplied proof to indicate Huawei is a safety menace and that “this choice, similar to the entity checklist in May, relies on politics, not safety.”

The Huawei doc was not but out there within the U.S. court docket submitting system. It shouldn’t be clear when the FCC choice will come into impact.

FCC spokesman Brian Hart declined to remark. On Wednesday, the physique’s chairman mentioned he’ll suggest $9 billion in funding over the subsequent decade to spice up fifth-generation (5G) wi-fi telecommunications protection in rural U.S. areas.

U.S. President Trump in May positioned Huawei on the nation’s commerce blacklist, citing nationwide safety issues, which banned corporations from supplying Huawei with U.S. elements with out particular licenses.

The transfer got here after Washington introduced legal costs against Huawei, alleging theft of commerce secrets and techniques, financial institution fraud and violation of U.S. sanctions against Iran. It has additionally sought to persuade allies to ban it from the 5G networks over spying fears – rising pressure with Beijing amid a tit-for-tat commerce warfare.

The United States is now contemplating technique of stopping extra international shipments of merchandise with U.S. expertise to Huawei, Reuters reported final week.

Karl Song, vp of Huawei’s company communications division, mentioned the FCC rule threatened enhancing connectivity in rural America, and would price a whole bunch of tens of millions of {dollars} and even pressure some small carriers to go bankrupt.

Asked to remark on Huawei’s gross sales to rural carriers, Song mentioned the agency’s U.S. income was “minimal” in contrast with the $11 billion in items that it procured from the United States.

Alan Fan, Huawei vp of IP technique and worldwide legal coverage, mentioned U.S. rural carriers and teams submitted 90 feedback to the FCC, 58% of which opposed motion against it.

The Chinese telecoms large has additionally in latest days confronted a public backlash at residence after particulars of the dismissal and wrongful detention of a former worker went viral. Chinese media have additionally reported on at the very least one different related case.

Asked concerning the matter, Song mentioned it was not a labour dispute and the corporate was obligated to report back to authorities if it discovered any suspicious, illegal act.

(Reporting by David Kirton; Additional reporting by David Shephardson in Washington; Writing by Brenda Goh; Editing by Christopher Cushing)