According to the U.S. Commerce Department, general merchandise with no “national security influences or consequences” can be sold to Huawei, which continues to remain in the Entity List.
In a significant development, the U.S. Commerce Secretary Wilbur Ross stated, the U.S. government will issue licenses to companies seeking to sell goods to China’s Huawei where there is no perceived threat to national security.
The statement comes in the wake of the United States placing Huawei on an Entity List in May 2019 over national security concerns.
Although many industry and government officials welcomed the move, there are others who are confused on how the new policy will play out.
While speaking at a conference in Washington, Ross confirmed that Huawei will continue to remain on the Entity List, which means winning licenses would require overcoming a presumption of denial, and that the scope of items requiring licenses would not change. However, following this new arrangement, the door could open for some deals.
“To implement the president’s G20 summit directive two weeks ago, Commerce will issue licenses where there is no threat to U.S. national security,” said Ross. “Within those confines, we will try to make sure that we don’t just transfer revenue from the U.S. to foreign firms”.
Following the U.S. government’s placement of Huawei on the Entity List, the semiconductor industry had lobbied the U.S. government saying by not allowing to sell nonsensitive items to Huawei, items which the Chinese company can easily buy abroad, American business interest is being hurt.
According to industry observers, Ross’ comments lacked the clarity and relief many hoped for after Trump’s announcement.
“The actual policy, of what is not going to endanger U.S. security, is not clear,” said Washington trade lawyer Doug Jacobson. “The only way that industry can determine the line is by submitting (license) applications and knowing what types will be approved and which types will be denied.”
According to Larry Kudlow, the economic adviser to the White House, relaxed U.S. government restrictions on Huawei could help the technology giant but would only be in place for a limited time.
He went on to add, U.S. 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.”
This means that chipmakers would be allowed to sell their wares to Huawei, on a limited basis; especially those items that are generally found on the global market, including from vendors in South Korea, Taiwan and Vietnam.
“We are opening that up for a limited time period,” said Kudlow. “So that’s important and, I guess, does provide some relief to Huawei” while not being specific on how long the relaxed licensing guidelines would be in effect.
In 2018, the United States had passed a law that required the Commerce Department to draft new rules to increase oversight on certain foundational technology sales abroad.