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US. can reduce Huawei's trade restrictions to help existing customers by Reuters


© Reuters. PHOTO FILE: A woman looks at her phone as she walks past the Huawei store in Beijing

By Karen Freifeld

(Reuters) – The US Commerce Department said on Friday that it might soon reduce restrictions on Huawei Technologies after this week's blacklist would make it almost impossible for Chinese companies to serve existing customers.

The Department of Commerce, which effectively stopped Huawei's ability to buy American-made parts and components, is considering issuing a temporary general license to "prevent disruption of existing network equipment and equipment," said a spokesman.

Potential beneficiaries of licenses can, for example, include internet access and cellular telephone service providers in thin population areas such as Wyoming and eastern Oregon that have purchased network equipment from Huawei in recent years.

As a result, the Ministry of Commerce will allow Huawei to buy U.S. goods. so that it can help existing customers maintain the reliability of networks and equipment, but Chinese companies will still not be allowed to buy American parts and components to make new products.

The potential backward rules suggest changes to Huawei's supply chain may have direct, broad and unintentional consequences.

The blacklist, officially known as placing Huawei on the Commerce Department entity list, is one or two attempts by the Trump administration this week that were allegedly carried out in an effort to derail national security risks. In an executive order, President Donald Trump also effectively banned the use of his equipment in U.S. telecommunications networks.

The United States believes Huawei's smartphone and network equipment can be used by China to spy on Americans, a charge the company has repeatedly rejected.

The latest trading move comes as China has attacked a more aggressive tone in its trade war with the United States, which suggests the resumption of talks between the world's two largest economies becomes meaningless unless Washington changes direction.

A spokesman for Huawei, the world's largest maker of telecommunications equipment, did not immediately respond to requests for comment.

Of the $ 70 billion Huawei spent on components in 2018, around $ 11 billion went to US companies including Qualcomm (NASDAQ :), Intel Corp (NASDAQ 🙂 and Micron Technology Inc. (NASDAQ :). If the Ministry of Commerce issues a license, U.S. supplier it will still need a separate license to conduct new business with Huawei, which will be very difficult to obtain, said the spokesman.

Temporary general licenses will last for 90 days, he said, and will be posted on the Federal Register, as a rule to add Huawei to the list of entities will be published in government publications on Tuesday.

"The aim is to prevent damage to non-Huawei entities that use their equipment," said Washington lawyer Kevin Wolf, a former Commerce Department official.

The list of entities prohibits Huawei and 68 affiliates in 26 countries from buying American-made goods and technology without a license which is likely to be rejected.

The list of entities identifies companies that are believed to be involved in activities that conflict with national security or the interests of US foreign policy.

In the final rule posted on Thursday, the government tied Huawei's entity list with a pending criminal case against the company in Brooklyn, New York.

U.S. Prosecutor unsealed the indictment in January accusing the company of fraudulent banks to acquire US goods and services embargoed in Iran and move money abroad through the international banking system.

Huawei's Chief Executive Officer Meng Wanzhou, daughter of the company's founder, was arrested in Canada in December in connection with the charges, a move that led to a three-way diplomatic crisis involving the US, China and Canada.

Meng, who was released on bail, remains in Vancouver, and is struggling with extradition. He has maintained his innocence, and Huawei has pleaded not guilty in New York.

Trump injected other considerations into a criminal case after Meng's arrest when he told Reuters he would step in if it helped close the trade deal.

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