The U.S. Department of Commerce confirmed that it is adding Chinese vendor Huawei Technologies and 70 affiliates to its so-called “Entity List”, a decision that effectively bans the Chinese company from buying parts and components from U.S. companies without U.S. government approval.
The decision was adopted amid a recent escalation in the trade war between the the U.S and China.
Under the order, that is expected to take effect once it is published in the Federal Register, Huawei will need a U.S. government license to buy components from U.S suppliers.
The DoC said that a license may be denied if the sale or transfer would harm U.S. national security or foreign policy interests.
The DoC said it has a “reasonable basis” to conclude that Huawei “is engaged in activities that are contrary to U.S. national security or foreign policy interest.”
This information includes the activities alleged in the Department of Justice’s public indictment of Huawei, including alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions, the DoC said.
“This action by the Commerce Department’s Bureau of Industry and Security, with the support of the President of the United States, places Huawei, a Chinese owned company that is the largest telecommunications equipment producer in the world, on the Entity List,” said Secretary of Commerce Wilbur Ross. “This will prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests,” he said.
“This decision is in no one’s interest. It will do significant economic harm to the American companies with which Huawei does business, affect tens of thousands of American jobs, and disrupt the current collaboration and mutual trust that exist on the global supply chain,” Huawei said in a statement.
“Huawei will seek remedies immediately and find a resolution to this matter. We will also proactively endeavor to mitigate the impacts of this incident,” Huawei added.
The Chinese government expressed its opposition to the blackisting of Huawei saying that it would take the necessary actions to protect Chinese companies.o
In April 2018, the DoC had banned Chinese vendor ZTE to buy components from U.S companies, after the company allegedly did not live up to the terms of an agreement that had been worked out after it illegally shipped telecom equipment to Iran and North Korea. In early May, ZTE said it had ceased its major operating activities due to the export ban. The Trump administration had lifted the ban in July 2018 after the company had reached a settlement with the government.
Also, President Trump signed an executive order yesterday declaring that threats to the information and communications technology and services supply chain are a national emergency.
The executive order “prohibits transactions that involve information and communications technology or services designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary whenever the Secretary of Commerce determines that a transaction would pose a threat to national security.”
The order also gives the DoC 150 days to establish a process for reviewing such deals.
“This Executive Order addresses the threat posed by foreign adversaries to the nation’s information and communications technology and services supply chain,” said Secretary of Commerce Wilbur Ross.
In August 2018, Trump had signed the National Defense Authorization Act, or NDAA, which included new regulations that ban government agencies doing business with Chinese vendors Huawei and ZTE. The bill prohibits the U.S. government and its contractors from buying certain telecommunications and video surveillance equipment from Huawei, ZTE and other Chinese communications companies.
