US to approve sales it deems safe to blacklisted Huawei

The US has accused Huawei of stealing American intellectual property and violating Iran sanctions.
The US has accused Huawei of stealing American intellectual property and violating Iran sanctions.PHOTO: REUTERS

WASHINGTON (REUTERS) - The United States government will issue licences to companies seeking to sell goods to China's Huawei where there is no threat to national security, Commerce Secretary Wilbur Ross said on Tuesday (July 9), leaving industry observers unsure about which products will pass muster.

Seeking to revive trade talks with China, US President Donald Trump announced last month that American companies would be allowed to sell products to Huawei Technologies Co, the world's largest telecommunications equipment maker.

Mr Trump's comments came after the US placed Huawei on the Commerce Department's so-called Entity List in May over national security concerns.

US parts and components generally cannot be sold to those on the list without special licences.

While American chipmakers welcomed Mr Trump's announcement, many industry and government officials were confused about the new policy.

Speaking at a conference in Washington, Mr Ross affirmed that Huawei would remain on the Entity List, meaning winning licences would require overcoming a presumption of denial, and said the scope of items requiring licences would not change.

However, he opened the door to some approvals.

 
 

"To implement the President's G-20 summit directive two weeks ago, Commerce will issue licences where there is no threat to US national security," Mr Ross said, referring to Mr Trump's announcement at the meeting of world leaders in Japan. "Within those confines, we will try to make sure that we don't just transfer revenue from the US to foreign firms," he said.

After Huawei was added to the Entity List, the semiconductor industry lobbied the US government to be allowed to sell non-sensitive items that Huawei could easily buy abroad, arguing that a blanket ban would harm American companies.

Industry observers said Mr Ross' comments lacked the clarity and relief many hoped for after Mr Trump's announcement.

"The actual policy, of what is not going to endanger US security, is not clear," Washington trade lawyer Doug Jacobson said. "The only way that industry can determine the line is by submitting (licence) applications and knowing what types will be approved and which types will be denied."

Separately, White House economic adviser Larry Kudlow told an event hosted by CNBC that relaxed US government restrictions on Huawei could help the technology giant but would be in place only for a limited time.

He said US government purchases of Huawei parts, components or systems would remain off-limits, as would any transactions involving 5G, but the licensing requirements had been relaxed for so-called general merchandise that involved "no national security influences or consequences".

That meant some chip companies would be permitted to sell to Huawei, on a limited basis, items generally available on the global market, including from vendors in South Korea, Taiwan and Vietnam, he said.

"We are opening that up for a limited time period," Mr Kudlow said. "So that's important and, I guess, does provide some relief to Huawei."

He did not specify how long the relaxed licensing guidelines would be in effect.

Speaking at the same conference as Mr Ross, Mr Nazak Nikakhtar, Commerce's assistant secretary for industry and analysis and nominee to lead the department's Bureau of Industry and Security, said the agency hoped to have decisions soon on export licence requests from companies seeking to sell to Huawei.

The US has accused Huawei of stealing American intellectual property and violating Iran sanctions. It also has launched a lobbying effort to persuade allies to keep Huawei out of next-generation 5G telecommunications infrastructure, citing concerns that the company could spy on customers.

 
 

Huawei has denied the allegations.

TENACIOUS PURSUIT OF AMERICAN TECHNOLOGY

Shortly after Huawei was added to the Entity List, the Commerce Department issued a temporary general licence allowing the company to buy equipment to maintain existing networks and provide software updates to existing Huawei handsets.

That licence expires on Aug 19, but may be extended. Any further relief granted on Huawei's entity listing still may not spell the end of troubles for the company.

In May, Mr Trump signed an executive order barring US firms from using telecommunications equipment made by companies posing a national security risk.

The move, which required the Commerce Department to draw up an enforcement plan, was seen as paving the way to ban US companies from buying from Huawei, at a time when US wireless carriers are looking for partners as they roll out 5G networks.

On Tuesday, Mr Ross said Commerce would issue an "interim final rule" in mid-October to implement the executive order.

Interim final rules go into effect immediately, even as they seek public comment that could be used to modify regulations going forward.

The US has engaged Beijing in a tit-for-tat trade war over accusations that China steals American intellectual property and forces US companies to transfer their technology to Chinese firms to gain access to markets.

The US last year passed a law that required Commerce to draft new rules to beef up oversight of certain foundational technology sales abroad. Commerce will "very soon" seek formal comment on that rulemaking, Mr Nikakhtar said.