US to ease Huawei trade restrictions with heavy caveats

The Trump administration has clarified how it plans to ease the restrictions on US companies trading with Huawei. Officials said that the Chinese tech giant would remain on the Entity List, but that licenses to trade with the company would be issued under certain circumstances. Huawei was placed on the Entity List back in May, which means US companies are unable to sell technology to the company without government approval.

In a speech given yesterday reported by the New York Times, US Commerce Secretary Wilbur Ross said that his department “will issue licences where there is no threat to US national security.” However, he clarified that “Huawei itself remains on the Entity List, and the announcement does not change the scope of items requiring licenses.”

At a separate event the director of the White House National Economic Council, Larry Kudlow, said the US had “opened the door — relaxed a bit, the licensing requirements from the Commerce Department.” He said that the US government will not purchase Huawei parts, but non security critical components would be allowed, according to Reuters. However, Kudlow also caveated that the intention was only to relax the requirements “for a limited time period” according to the Financial Times, creating the possibility that the restrictions could be re-imposed if trade talks falter.

The speeches add some much needed clarity to President Trump’s comments following his meeting with Chinese President Xi Jinping last month. At the same event, Trump also said that the two countries would resume their trade talks and that the rollout of additional tariffs had been paused. The announcement created the uncomfortable implication (that’s also cropped up in other Trump speeches) that the Huawei ban has been motivated more by the ongoing trade dispute than by national security concerns.

Questions still remain about exactly which components or technology pose national security concerns, and which do not. For example, is providing a license to use an operating system like Android a problem? Google is one of the highest profile companies to have cut ties with Huawei, and the loss of Android is a significant blow to Huawei’s smartphone ambitions outside of China. Along with Google, chip designer ARM has also cut ties, and it’s unclear whether this relationship would be allowed under the new rules.

US companies including Intel and Qualcomm have reportedly been quietly lobbying for the US government to ease the restrictions placed on companies selling to Huawei. They have claimed that consumer products like smartphones and computer servers do not present security issues in the same way as critical equipment infrastructure. Huawei reportedly paid as much as $11 billion to US component suppliers in 2018 according to Reuters.

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