Outlook Dims for Huawei and US Suppliers
Any hope of a resumption of normal business with Huawei dimmed today, as the Bureau of Industry and Security (BIS) within the U.S. Commerce Department added 46 additional Huawei affiliates to the “entity list,” meaning exporting products from the U.S. to any of these organizations and individuals requires an export license — with BIS warning the going-in presumption is that any license application will be denied.
Recognizing that Huawei equipment is already used in U.S. telecommunications networks and Huawei handsets are used by U.S. consumers, BIS is extending temporary licenses — the Temporary General License (TGL) — for another 90 days “to afford consumers across America the necessary time to transition away from Huawei equipment, given the persistent national security and foreign policy threat.”
“As we continue to urge consumers to transition away from Huawei’s products, we recognize that more time is necessary to prevent any disruption.” — Secretary of Commerce Wilbur Ross
The TGL, which will run until November 17, authorizes “specific, limited engagements in transactions involving the export, reexport, and transfer of items.” When the TGL was first announced, BIS said the license would allow exports necessary to “maintain and support existing and currently fully operational networks and equipment, including software updates and patches.” For handsets, BIS authorizes exports “necessary to provide service and support, including software updates or patches, to existing Huawei handsets that were available to the public on or before May 16, 2019.” This provision allowed Huawei to receive and implement Android updates, the operating system used on Huawei’s handsets.
The restrictions on these new affiliates are effective today, August 19th. According to the Department of Commerce press release announcing these changes, BIS has added over one hundred persons or organizations related to Huawei to the Entity List since May.
Huawei was first added to the Entity List on May 16, 2019, based on BIS claiming the Chinese company is engaged in activities “contrary to U.S. national security or foreign policy interests, including alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions, among other illicit activities.”
Whether the export ban is cause or effect, Huawei has been part of the negotiation in President Trump’s discussions with China, aiming for a trade deal which he views as more favorable to the U.S.