US government staff told to treat Huawei as blacklisted

Huawei sued the US government in early March, in a complaint filed in federal court in Texas.
Huawei sued the US government in early March, in a complaint filed in federal court in Texas.PHOTO: REUTERS

WASHINGTON (REUTERS) - A senior US official this week told the Commerce Department's enforcement staff that China's Huawei should still be treated as blacklisted, days after US President Donald Trump sowed confusion with a vow to ease a ban on selling to the firm.

Mr Trump surprised markets over the weekend by promising Chinese President Xi Jinping on the sidelines of the G-20 summit in Japan that he would allow US companies to sell products to Huawei Technologies.

In May, the company was added to the so-called Entity List, which bans American firms from selling to it without special permission, as punishment for actions against US national security interests.

Mr Trump's announcement on Saturday - an olive branch to Beijing to revive stalled trade talks - was cheered by US chipmakers eager to maintain sales to Huawei, the world's largest telecoms equipment maker and a key US customer.

But Mr Trump's comments also spawned confusion among industry players and government officials struggling to understand what Huawei policy he had unveiled.

In an e-mail to enforcement staff on Monday (July 1) and seen by Reuters, Mr John Sonderman, Deputy Director of the Office of Export Enforcement, in the Commerce Department's Bureau of Industry and Security (BIS), sought to clarify how agents should approach licence requests by firms seeking approval to sell to Huawei.

All such applications should be considered on merit and flagged with language noting that "This party is on the Entity List. Evaluate the associated license review policy under part 744," he wrote, citing regulations that include the Entity List and the "presumption of denial" licensing policy that is applied to blacklisted companies.

He added that any further guidance from BIS should also be taken into account when evaluating Huawei-related licence applications.

 
 
 
 

Huawei told Reuters earlier on Wednesday that founder and CEO Ren Zhengfei had said Mr Trump’s statements over the weekend were “good for American companies”. 

“Huawei is also willing to continue to buy products from American companies. But we don’t see much impact on what we are currently doing. We will still focus on doing our own job right,” a Huawei spokesman said in an e-mail.

The Commerce Department did not immediately respond to request for comment.

A person familiar with the matter said the letter was the only guidance that enforcement officials had received after Mr Trump's surprise announcement on Saturday. A presumption of denial implies strict review and most licenses reviewed under it are not approved.

It is unclear when Commerce will provide its enforcement staff with additional guidance, based on Mr Trump's promises, and how that might alter the likelihood of obtaining licenses.

The internal memo, not previously reported, came as White House advisers also scrambled to shed light on Mr Trump's announcement.

White House trade adviser Peter Navarro noted on Tuesday that the government would allow "lower tech" chip sales to the company, which don't impact national security.

The United States has accused Huawei of stealing American intellectual property and violating Iran sanctions.

It has launched a lobbying effort to convince US allies to keep Huawei out of next-generation 5G telecommunications infrastructure, citing concerns the company could spy on customers. Huawei has denied the allegations.