WASHINGTON—The U.S. Department of Commerce will issue licenses to U.S. companies seeking to sell to Chinese telecoms equipment giant Huawei Technologies Co Ltd where there is no threat to national security, Commerce Secretary Wilbur Ross said on July 9.
Seeking to revive trade talks with China, U.S. President Donald Trump announced late last month that American firms would be allowed to sell products to Huawei, which was placed on the so-called Entity List in May over national security concerns. U.S. companies generally cannot sell goods to those on the list without special licenses.
While American chipmakers welcomed Trump’s announcement, many industry and government officials were confused about what the new policy would be.
Speaking at an annual department conference in Washington, Ross affirmed that the company would remain on the Entity List, meaning that licenses would likely be denied, but also offered an opening for some to be approved.
“To implement the president’s G20 summit directive two weeks ago, Commerce will issue licenses where there is no threat to U.S. national security,” Ross said, referring to a meeting of world leaders in Japan.
“Within those confines, we will try to make sure that we don’t just transfer revenue from the U.S. to foreign firms,” he said.
After Huawei was added to the Entity List, the semiconductor industry lobbied the U.S. government for carveouts to sell non-sensitive items that Huawei could easily buy abroad, arguing that a blanket ban would harm American companies.
The United States has accused Huawei of stealing American intellectual property and violating Iran sanctions.
It has launched a lobbying effort to convince U.S. allies to keep Huawei out of next-generation 5G telecommunications infrastructure, citing concerns the company could spy on customers.
Tenacious Pursuit of American Technology
Any softening of the U.S. stance on Huawei’s entity listing may not spell the end of troubles for the company. In May, Trump also signed an executive order declaring a national emergency and barring U.S. companies from using telecommunications equipment made by firms posing a national security risk.
The move, which required the Commerce department to draw up an enforcement plan, was seen as paving the way to ban doing business with Huawei, at a time when U.S. wireless carriers are looking for partners as they rollout 5G networks.
On Tuesday, Ross said that agency would issue an “interim final rule” in mid-October to implement Trump’s executive order. Interim final rules go into effect immediately, even as they seek public comment that could be used to modify regulations going forward.
The United States has engaged Beijing in a tit-for-tat trade war over accusations that China steals American intellectual property (IP) and forces U.S. companies to transfer their technology to Chinese firms to gain access to markets.
Ross on Tuesday warned American firms against putting their technology at risk in order to boost profits.
“The private sector must act responsibly and protect technologies with national security ramifications,” Ross warned American firms. “It is wrong to trade secret or sensitive IP or source code for access to a foreign market, however lucrative that market might be.”
Ross also called out China directly, pointing to “China’s tenacious pursuit of American technologies” to modernize its military. “This cannot be tolerated,” he said.
By Karen Freifeld and Alexandra Alper