These two rules will further tighten the screws on Huawei

According to two sources, the U.S. government is likely to fine tune and expand laws that govern sale of U.S. technology and technological products to foreign companies, midst efforts to further tighten the blacklisting of China Huawei.

In May 2019, the U.S. Commerce Department had placed Huawei Technologies on an Entity List citing national security concerns. The blacklisting allowed the U.S. government to restrict the sales of U.S.-made goods to the company as well as U.S. technology.

Under current regulations, key foreign supply chains continue to remain beyond the reach of U.S. authorities prompting authorities to suggest potential changes to two key rules that could expand U.S. authority to block more foreign shipments to Huawei.

Potential changes to the law is expected to give more teeth to Huawei’s blacklisting, said two sources familiar with the matter.

The expansion of the two rules is being considered even as the Trump Administration agreed last week to grant some reprieves on the existing ban and continue to try and deescalate the U.S.-China trade war.

Once the new rules come into play, the U.S. authorities will be in a position to better regulate the sales of non-sensitive items, including smartphone chips manufactured abroad using U.S.-origin technology, software, or components to Huawei.

Neither the Commerce department nor Huawei immediately responded to requests for comments.

The changes would represent “a major expansion of the reach of U.S. export controls and would be poorly received by U.S. allies and U.S. companies,” opined Doug Jacobson, a Washington trade lawyer.

The new laws will target supply chains and is likely to significantly impact Huawei.

According to the sources, one rule that the Commerce Department and other U.S. authorities are focused on, is broadening the De minimis Rule, which oversees how U.S. content in a foreign-made product enables the U.S. government authority to block an export.

U.S. authorities could also expand the Direct Product Rule, which subjects foreign-made goods that are based on U.S. technology or software to U.S. regulations.

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