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The US can reduce Huawei trade restrictions to help existing customers

WASHINGTON: The US Department of Commerce announced on Friday that it might soon reduce its restrictions on Huawei's technology after this week on the blacklist of the Chinese company was almost impossible to service its existing customers.

The Commerce Department, which has effectively halted Huawei's ability to buy US parts and components, is considering the issuance of a provisional general license to "prevent the interruption of existing network operations and equipment," the spokeswoman said.

Potential licensees could include, for example, Internet access providers and mobile phone service providers in low-lying areas such as Wyoming and eastern Oregon who have purchased networking equipment from Huawei in recent years.

In fact, the Commerce Ministry would allow Huawei to buy American goods so that it can help existing customers maintain the reliability of networks and equipment, but Chinese companies would still not be allowed to buy US parts and components for the production of new products.

The potential withdrawal of the rules suggests changes in Huawei's supply chain, which may have immediate, far-reaching and unwanted consequences.

The black list, officially known as placing Huawei on the Entity List of the Ministry of Commerce, was one or two efforts that the Trump administration made this week allegedly in an effort to hinder the risks of national security. In an executive order, President Donald Trump also effectively banned the use of his equipment in US telecommunications networks.

The United States believes that Huawei's smartphones and network equipment could be used in China to spy on the Americans.

The latest move by Commerce comes when China hit an aggressive tone in its trade war with the United States, suggesting that the continuation of talks between the two largest world economies would be meaningless if Washington did not change.

A spokesman for Huawei, the world's largest telecommunications equipment manufacturer, did not immediately respond to a comment request.

Of the $ 70 billion that Huawei spent on purchasing components in 2018, about $ 11 billion went to American companies, including Qualcomm, Intel Corp, and Micron Technology. If the ministry of trade issues a license, US suppliers would still need special licenses to perform new deals with Huawei, which would be extremely difficult to obtain, a spokeswoman said.

The temporary general license would last 90 days, she said, and will be published in the Federal Register, just as the rule that Huawei adds to the entity's list will be published in a government publication on Tuesday.

"The goal is to prevent collateral damage to entities that do not use Huawei and use their equipment," said Washington lawyer Kevin Wolf, a former trade ministry official.

The entity says Huawei and 68 subsidiaries in 26 countries can not buy goods and technology manufactured in America without licenses that are likely to be rejected.

The Entity List identifies companies that are believed to be involved in activities that are contrary to the interests of national security or foreign policy of the United States.

In a final rule released on Thursday, the government linked the Huawei Entity List to a criminal case against the company in Brooklyn, New York.

US prosecutors sealed the indictment in January charging the company to deal with bank frauds to get an embargo on US goods and services in Iran and to transfer money from the country through an international banking system.

Chief executive Huawei Meng Wanzhou, the company's founding founder, was arrested in December in December in connection with the indictment, leading to a triple diplomatic crisis involving the US, China and Canada.

Meng, who was released on bail, remains in Vancouver and fights for extradition. She kept her innocence, and Huawei pleaded not guilty in New York.

Trump injected other considerations into a criminal case after Meng's arrest, when he told Reuters he would intervene if he would help close the trade deal.

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