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U.S. eases restrictions on the Huawei; founder says the U.S. underestimates Chinese company

(Reuters) – The U.S. government has temporarily eased trade restrictions imposed last week on the chinese Huawei, a move aimed at minimising disruption for its customers, but rejected by the founder, who said that the tech firm had prepared for the AMERICAN action.

FILE PHOTO: The logo of Huawei is seen on the high-profile high-tech startups, and leaders of the meeting, Viva-Tech,in Paris, France-May 16, 2019. REUTERS/Charles Platiau/File Photo

The U. S. Commerce Department will allow that Huawei Technologies Co Ltd to purchase American-made goods in order to maintain existing networks, and software updates for existing Huawei phones.

The world’s largest telecommunications equipment maker is still prohibited from buying American parts and components for the manufacture of new products without license approvals, which will probably be denied.

The AMERICAN government said that the restrictions imposed because of Huawei’s involvement in activities contrary to the national security or foreign policy interest.

The new authorisation is intended to telecommunications companies that are dependent on the Huawei equipment time to make other arrangements, the U.S. Secretary of Commerce Wilbur Ross said in a statement on Monday.

“In short, this license allows operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross added.

The license is valid until Aug. 19, proposes changes to Huawei’s supply chain can have immediate, far-reaching and unintended consequences for its customers.

“The purpose seems to be to avoid the internet, computer and mobile phone systems to crash,” said Washington attorney Kevin Wolf, a former Trade Ministry official. “This is not a capitulation. This is housekeeping.”

Huawei founder Ren Zhengfei on Tuesday, said the temporary delay move bore little significance to the company, as it had in the preparations for such a scenario.

“The U.S. government’s actions at the time underestimate our capabilities,” Ren said in an interview with CCTV, according to a transcript issued by the Chinese state broadcaster.

He said Huawei was in conflict with the AMERICAN government, not AMERICAN companies, and that Huawei is capable of making the chips, buy the United States, but that does not mean that it will stop buying Us chips.

The U. S. Commerce Department said it will evaluate whether to extend the exemptions than 90 days.

On Thursday, the Commerce Department added Huawei and 68 entities to an export blacklist that makes it almost impossible for the Chinese company to purchase goods made in the United States.

The government is also bound Huawei’s next to the “entity list” to a pending case accusing the company exercise of bank fraud to obtain control of the V. S. of goods and services in Iran and moving money out of the country via the international banking system. Huawei has pleaded not guilty.

Reuters reported Friday that the ministry was considering a temporary easing, citing a government spokeswoman.

The temporary license can also receive notifications of vulnerabilities in the security and for Huawei to engage in the development of standards for the future 5G networks.

Reuters reported Sunday that Alphabet Inc Google discontinued with Huawei, which requires that the transfer of the hardware, software and technical services, except that is publicly available through open source licenses, citing a source familiar with the matter.

Google did not immediately respond to a request for comment on the new permit.

Of $70 billion, Huawei is spent on the purchase of components in 2018, some $11 billion went to US companies, including Qualcomm, Inc., Intel Corp. and Micron Technology Inc.

“I think that this is a reality check,” said Washington trade lawyer Douglas Jacobson. “It shows how pervasive Huawei goods and technology all over the world and if the united states imposes restrictions, that has consequences.”

Jacobson said the effort to existing networks appeared aimed at telecom providers in Europe and other countries where Huawei equipment is ubiquitous.

The movement could also help with the mobile service providers in the sparsely populated areas of the United States, such as Wyoming and eastern Oregon, which bought network equipment from Huawei in the past few years.

John Neuffer, the president of the Semiconductor Industry Association, which represents the AMERICAN chipmakers and designers, said in a statement that the association wants the government to ease the restrictions further.

“We hope to work with the administration to broaden the scope of the license,” he said, so that it advances U.S. security goals, but not at the expense of the ability of the industry to compete globally and to remain technological leaders.

A report on Monday on the possible impact of the stricter export controls on technologies that U.S. companies could lose up to $56.3 billion in export revenue over five years.

The report of the Information Technology & Innovation Foundation, said the missed opportunities threatened as many as 74,000 jobs.

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Wolf, the former Commerce official, said the Huawei stay of execution was similar to the action taken by the department in July to prevent systems from crashing after the USA banned in China ZTE Corp, a smaller rival Huawei, the purchase of American-made components.

The AMERICAN ban on ZTE wreaked havoc with wireless carriers in Europe and South Asia, sources told Reuters at the time.

The ban on ZTE was closed July 13 after the company struck an agreement with the Ministry of Trade that has a $1 billion fine plus $400 million in escrow and the replacement of the board of directors and the senior management. ZTE, which had ceased operations as a result of the ban, then back to business.

Reporting by Karen Freifeld in New York, and David Shepardson in Washington; Additional reporting by Diane Bartz in Washington and Angela Moon, Ryan Woo and Ayslu Zhang in Beijing, Brenda Goh in Shanghai; Editing by Cynthia Osterman Cushing and Christopher

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