New U.S. curb on Huawei in limbo amid pushback from
Send a link to a friend
[January 25, 2020] WASHINGTON
(Reuters) - The U.S. Commerce Department has withdrawn a rule aimed at
further reducing sales to China's Huawei Technologies amid concerns from
the Defense Department the move would harm U.S. businesses, people
familiar with the matter said.
The decision to pull the rule from the formal review process leaves its
future in jeopardy and highlights deep divides within the Trump
administration over how best to approach the blacklisted telecoms giant
and the broader war with China over technological dominance.
President Donald Trump's administration plans a Cabinet-level meeting
next week to discuss the rule, which could be revived, killed or
rewritten, one of the sources said, amid pushback from the U.S. Treasury
Department as well.
A Commerce Department representative said "if and when" the agency has
something to announce, "we will do so." Huawei declined to comment. The
Pentagon and Treasury did not immediately respond to requests for
Commerce in May placed Huawei on a trade blacklist, citing national
security concerns. That allowed the U.S. government to restrict sales of
American-made goods to the company and a small number of items made
abroad that contain U.S. technology.
Under current regulations, key foreign supply chains remain beyond the
reach of U.S. authorities, fueling frustration among China hawks within
the administration and a push to expand U.S. authority to block more
shipments to Huawei.
Reuters reported in November that the Commerce Department was
considering broadening the rule that dictates how much American content
in a foreign-made product gives the U.S. government authority to
The United States, under current conditions, can require a license or
block the export of many high-tech products shipped to China from other
countries, if U.S.-made components make up more than 25% of the value.
Commerce drafted a rule that would lower the threshold only on exports
to Huawei to 10% and expand the purview to include non-technical goods
like consumer electronics including non-sensitive chips.
[to top of second column]
Huawei's first global flagship store is pictured in Shenzhen,
Guangdong province, China October 30, 2019. REUTERS/Aly Song
The draft rule was then sent to the Office of Management and Budget,
where agencies, including the Department of Defense, were given until
Wednesday to submit comments, one of the people said. When the Pentagon
expressed disagreement with the proposal, Commerce pulled it out of the
review process in an unusual move.
U.S. businesses have pushed back against the measure, arguing that
enabling the government to regulate more sales to Huawei to include
low-tech items made overseas with very little U.S. technology would end
up needlessly hurting American companies while encouraging Huawei to
source more goods abroad.
But many in Congress and the Trump administration have criticized the
Commerce Department for not doing more to thwart Huawei, and for its
slow rollout of rules to limit exports of sophisticated technology to
Senators Tom Cotton, Ben Sasse and Marco Rubio, all Republicans on the
Select Committee on Intelligence, wrote to Defense Secretary Mark Esper
to demand a rationale for the department's reported objections.
"Huawei is an arm of the Chinese Communist Party and should be treated
as such. It is difficult to imagine that, at the height of the Cold War,
the Department of Defense would condone American companies contracting
with KGB subsidiaries because Moscow offered a discount. We are
concerned that the Defense Department is not appropriately weighing the
risks," the lawmakers wrote in the letter.
Separately, Cotton said he was "deeply troubled" by the reports.
They additionally asked how the Defense Department's position affected
its efforts to stop allies from using Huawei in their networks and asked
for a briefing on the matter within 60 days.
(Reporting by Alexandra Alper, Karen Freifeld, David Shepardson and Mike
Stone in Washington; Additional reporting by Diane Bartz; editing by
Jonathan Oatis and Tom Brown)
[© 2020 Thomson Reuters. All rights
Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.