Exclusive: U.S. to scale back Huawei trade restrictions to help existing customers

(Reuters) – The U.S. Department of Commerce said on Friday may soon scale back the restrictions on the Huawei Technologies after this week on the black list and it is almost impossible for the Chinese company to its existing customers.

FILE PHOTO: A woman checks her phone as she walks past a Huawei store in Beijing, China-May 16, 2019. REUTERS/Thomas Peter/Photo File

The Ministry of Trade, which was effectively stopped Huawei the opportunity to buy American-made parts and components, is considering issuing a temporary general license to “prevent the interruption of the existing network and equipment,” a spokeswoman said.

Potential beneficiaries of the license can, for example, are internet and mobile phone service providers in sparsely populated places like Wyoming and eastern Oregon, which bought network equipment from Huawei in the past few years.

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

The potential line roll back suggests changes to Huawei’s supply chain can have immediate, far-reaching and unintended consequences.

The black list, officially known as the places of Huawei on the Commerce Department’s entity list, one or two efforts of the Trump management of this week would have been made in an attempt to prevent national security risks. In an executive order, President, Donald Trump also effectively excluded from the use of the equipment in U.S. telecom networks.

The United States believes the Huawei smartphones and network equipment can be used by China to spy on the Americans, allegations the company has repeatedly denied.

The latest Commerce move comes as China has taken a more aggressive tone in the trade war with the United States, suggesting a resumption of talks between the two largest economies would be pointless unless Washington changed course.

A spokesperson from Huawei, the world’s largest telecommunications equipment maker, did not immediately respond to a request for comment.

Of $70 billion Huawei spent for the purchase of parts in 2018, some $11 billion went to US companies, including Qualcomm, Intel Corp and Micron Technology Inc. As the Ministry of Trade of the problems with the license, the AMERICAN suppliers would still need separate licenses to conduct new business with Huawei, which would be extremely difficult to obtain, the spokeswoman said.

The temporary general license last 90 days, she said, and would be published in the Federal Register, as is the rule, the add of Huawei, the entity list will be published in the government publication on Tuesday.

“The goal is to prevent collateral damage to non-Huawei entities that make use of their equipment,” said Washington attorney Kevin Wolf, a former Trade Ministry official.

The entity list banned Huawei and 68 branches in 26 countries from buying American-made goods and technology without licenses that would probably be denied.

The entities list of the companies believed to be involved in activities contrary to the national security or foreign policy interests of the United States.

In a final rule posted on Thursday, the government is also bound Huawei’s entity listing to a pending criminal case against the company in Brooklyn, New York.

U.S. prosecutors unsealed the indictment in January, accusing the company exercise of bank fraud to obtain control of the V. S. of goods and services in Iran and to move money out of the country via the international banking system.

Huawei Chief Executive Officer, Meng Wanzhou, the daughter of the founder of the company, was arrested in Canada in December in connection with the indictment, a move that has led to a diplomatic crisis involving the US, China and Canada.

Mix, who was released on bail, will remain in Vancouver, and is fighting extradition. She has maintained her innocence, and Huawei has entered a plea of not guilty in New York.

Trump injected other considerations in the criminal case after Mix’s arrest, when he told Reuters that he would intervene if it helped conclude a trade agreement.

Reporting by Karen Freifeld; Editing by Leslie Adler, Grant McCool, Chris Sanders and Diane Craft

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