Trump Administration Will Allow Some Companies to Sell to Huawei

The Trump administration is following through with plans to allow American companies to continue doing business with Huawei, the Chinese telecom equipment giant, just weeks after placing the company on a Commerce Department blacklist.

On Tuesday, Commerce Secretary Wilbur Ross said the administration will issue licenses for American companies that want to do business with Huawei “where there is no threat to national security.” And another top official suggested the move would allow chip makers to continue selling certain technology to Huawei.

The comments confirm President Trump’s surprise announcement last month, after a meeting with Chinese President Xi Jinping, that the United States would relax restrictions on Huawei as part of an effort to restart stalled trade talks with China. Weeks earlier, the Commerce Department said it had placed the company and its dozens of affiliates on a list of firms deemed a risk to national security, effectively barring it from buying American parts and technologies without seeking United States government approval.

Larry Kudlow, the director of the White House National Economic Council, said at a CNBC event on Tuesday that the United States has “opened the door — relaxed a bit, the licensing requirements from the Commerce Department” for companies that sell to Huawei.

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“We are opening that up for a limited time period,” Mr. Kudlow said.

That could offer a reprieve to American companies like Qualcomm, Intel, Broadcom and Google, which sell microchips to Huawei and other specialized parts that go into its smartphones and telecom equipment.

American technology companies have been lobbying the administration, saying that the ban will cut them off from a major source of revenue, while doing little to hold back Huawei’s technological advancement, since Huawei will merely purchase some less-advanced components from competitors in Japan, South Korea or elsewhere instead.

Mr. Kudlow also said negotiations with China, which fell apart in May and seemed on the brink of collapse, are set to resume.

“The most important thing, the headline, is that talks and negotiations will resume, after a couple months of hiatus,” he said.

On Tuesday, Robert Lighthizer, the United States trade representative, and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He and Minister Zhong Shan to continue negotiations aimed at resolving the outstanding trade disputes between the United States and China, according to a senior administration official. Both sides will continue these talks as appropriate, the official said.

Whether those talks can result in a trade deal is not yet clear. Deep differences remain, including whether China will agree to codify changes to its trade practices in Chinese law, as the administration has demanded. And the United States has not yet committed to lifting any of the tariffs it has placed on $250 billion worth of goods.

And while Washington is relaxing its restrictions on Huawei, a broader effort to crack down on China’s ability to buy American technology is continuing.

Mr. Ross, speaking at an export control conference in Washington, said the administration would continue efforts to protect America’s development of advanced technologies, including potentially curbing the ability of other countries to buy sensitive technology.

He said the administration was updating its export control policies to reflect a “fusion” between China’s military and its civilian businesses, which Mr. Ross called a threat to America. And he warned companies not to sacrifice intellectual property and other trade secrets in order to gain access to growing markets like China.

“The future prosperity of the United States depends on our strategic advantage in advanced technologies,” Mr. Ross said. “It is wrong to trade sensitive I.P. or source codes for access to a foreign market,” he said, “no matter how lucrative that market might be.”

Mr. Ross stopped short of announcing long-expected additions to the list of products subject to American export controls, but said the Commerce Department would continue to review which technologies might need protection.

“If new export controls seem necessary, the department seeks public input and strives for multilateral agreements, so that important controls are universally adopted,” he said.

Mr. Ross said that the department would soon announce members of an “emerging technology technical advisory committee to help review those technologies,” whose members would be announced shortly, and who would help “modernize” the department’s export control list.

Commerce was tasked with creating new rules for protecting sensitive American technologies from foreign incursions by a defense bill that Mr. Trump signed into law last August. But the department has found creating the list of sensitive technologies to be a difficult task.

Rules that are too restrictive could weigh heavily on businesses that depend on freely trading components around the world, and ultimately hamstring their ability to design and manufacture products in the United States. Companies could be forced to move their research sites abroad, potentially putting the position of the United States as a hub for research and development at risk.

“This is the dilemma,” said William Reinsch, who led what now is called the Bureau of Industry and Security under the Clinton administration. “You have to constantly walk this line between controlling too loose and letting stuff you want out, and controlling too tight and incentivizing other people to make it.”

Source: New York Times