US may give American companies licences to sell to Huawei if no national security threat

Owen Churchill

The United States will allow American companies to sell technology to the blacklisted Chinese telecommunications giant Huawei Technologies where there is no threat to US national security, Commerce Secretary Wilbur Ross said on Tuesday.

In May, the Commerce Department placed Huawei and 68 affiliates on its Entity List, prohibiting the sale of US technology to the smartphone maker.

The May 16 ruling followed the US government's determination that there was cause to believe Huawei was involved in "activities contrary to the national security or foreign policy interests of the United States".

Following a summit between the two countries' leaders aimed at restarting stalled trade talks, however, US President Donald Trump announced that the US would continue to sell products to Huawei, given certain provisions.

US President Donald Trump and President Xi Jinping at the G20 summit in Osaka in June. Photo: Reuters

"To implement the president's G20 summit directive two weeks ago, Commerce will issue licences [for sales to Huawei] where there is no threat to US national security," Ross said on Tuesday at a conference hosted by the Bureau of Industry and Security (BIS), the Commerce Department arm that oversees export control.

Such a move would help the US government ensure that "we don't just transfer revenue from the US to foreign firms", he said.

But emphasising that Huawei would remain on the Entity List and that the "presumption of denial" for applicants seeking exemptions would remain in place, Ross said the US government was "alert to China's civil-military fusion strategy, and understand[s] China's tenacious pursuit of American technologies it needs to modernise its military".

Ross, who has taken part in many of the principle-level trade negotiations between the US and China over the past year, also confirmed on Tuesday that his department would be issuing regulations in mid-October aimed at safeguarding the US telecommunications supply chain.

Prepared in response to an executive order announced by Trump in mid-May, the regulations " though country- and company-agnostic " are widely considered to function as a tool with which the US can freeze Huawei out of the US 5G market entirely.

Speaking elsewhere on Tuesday, former US Secretary of Defence Ash Carter said restrictions on Huawei and US companies doing business with it were necessary, but called on the US to extend its sights beyond the Chinese company in the race for technological dominance.

"We should be looking to leapfrog," Carter, who served as former US president Barack Obama's defence chief between 2015 and 2017, told an audience at the Council on Foreign Relations in New York. "Huawei is a defensive play. We need an offence."

Beijing has been consistently critical of the US government's treatment of Huawei, including its bid to extradite the company's chief financial officer, Meng Wanzhou, who remains under house arrest in Vancouver, Canada, to face charges of financial fraud.

US Commerce Secretary Wilbur Ross said Washington understands China's "tenacious pursuit of American technologies it needs to modernise its military". File photo: TNS

In late May, China's Ministry of Commerce unveiled a plan to roll out an "unreliable entities list" targeting foreign companies, widely considered to be in response to the US government's blacklisting of Huawei.

White House economic adviser Larry Kudlow, who had said that relaxing restrictions on Huawei after the G20 summit did not amount to a "general amnesty", confirmed in a recent interview with Bloomberg that Trump considered the company to be "part of the general talks regarding trade".

Such an approach would appear to be at odds with remarks by US trade chief Robert Lighthizer, who has repeatedly sought to cast Huawei's predicament as separate from matters of trade.

Any further concessions to Beijing on Huawei are certain to be met with broad opposition in Congress, where there is growing bipartisan consensus for a tough response to behaviour by the Chinese government or companies deemed a threat to US national security.

Following the president's announcement in June that US companies could continue to sell to Huawei, Senator Marco Rubio said that Congress could act to commit the Trump administration to re-tightening restrictions.

"If President Trump has in fact bargained away the recent restrictions on [Huawei], then we will have to get those restrictions put back in place through legislation," the Florida Republican tweeted.

"And it will pass with a large veto proof majority."

Additional reporting by Mark Magnier

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.