Huawei set to get 90-day extension to buy from US suppliers

The US Commerce Department is expected to extend a reprieve given to Huawei Technologies that permits the Chinese firm to buy supplies from US companies so that it can service existing customers, two sources familiar with the situation said.
Huawei Technologies is still prohibited from buying American parts and components to manufacture new products without additional licence approvals.
Huawei Technologies is still prohibited from buying American parts and components to manufacture new products without additional licence approvals.PHOTO: AFP

This will renew agreement set to lapse on Mon, allowing Chinese firm to maintain telecoms services

SINGAPORE/WASHINGTON • The United States Commerce Department is expected to extend a reprieve to Huawei Technologies that permits the Chinese firm to buy supplies from US companies so that it can service existing customers, two sources familiar with the situation said.

The "temporary general licence" will be extended for Huawei for 90 days, the sources said.

The Commerce Department initially allowed Huawei to purchase some American-made goods in May, shortly after blacklisting the company in a move aimed at minimising disruption for its customers, many of which operate networks in rural America.

An extension will renew an agreement set to lapse tomorrow, continuing the Chinese company's ability to maintain existing telecommunications networks and provide software updates to Huawei handsets.

The situation surrounding the licence, which has become a key bargaining chip for the US in its trade negotiations with China, remains fluid, and the decision to continue the Huawei reprieve could change ahead of tomorrow's deadline, the sources said.

US President Donald Trump and his Chinese counterpart Xi Jinping are expected to discuss Huawei in a call this weekend, one of the sources said.

Meanwhile, the Trump administration is sparing some Chinese-made household furniture, baby items and Internet modems and routers from its next rounds of 10 per cent tariffs, it said on Friday.

The US Trade Representative's office released a complete list of the items that were removed from US$300 billion (S$415 billion) in tariffs scheduled to go into effect on Sept 1 and Dec 15, some of which have already been hit with 25 per cent tariffs.

Mr Trump last Tuesday delayed more than half of the proposed tariffs until December, saying it would help shield businesses and consumers from the US-China trade war fallout during the Christmas selling season.

 
 

The new list of 44 categories of spared imports, worth about US$7.8 billion, according to US Census Bureau data, also includes some chemical compounds used in the manufacture of plastics.

When the Commerce Department blocked Huawei from buying US goods earlier this year, it was seen as a major escalation in the trade war between the world's two top economies.

The US government blacklisted Huawei, alleging that the Chinese company is involved in activities contrary to national security or foreign policy interests.

As an example, the blacklisting order cited a criminal case pending against the company in federal court, over allegations that Huawei violated US sanctions against Iran.

Huawei has pleaded not guilty in the case.

The order noted that the indictment also accused Huawei of "deceptive and obstructive acts".

At the same time, the US says Huawei's smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.

The world's largest telecommunications equipment maker is still prohibited from buying American parts and components to manufacture new products without additional special licences.

Many Huawei suppliers have requested the special licences to sell to the firm. Commerce Secretary Wilbur Ross told reporters late last month that he had received more than 50 applications, and that he expected to receive more.

Out of US$70 billion that Huawei spent buying components last year, some US$11 billion went to US firms, including Qualcomm, Intel and Micron Technology.

The Commerce Department late on Friday declined to comment, referring to Mr Ross' comments to CNBC television earlier last week in which he said the existing licences were in effect until tomorrow.

Asked if they would be extended, he said: "On Monday, I'll be happy to update you."

A version of this article appeared in the print edition of The Sunday Times on August 18, 2019, with the headline 'Huawei set to get 90-day extension to buy from US suppliers'. Print Edition | Subscribe