The Trump administration has issued a licence that will allow US companies to keep doing business with Huawei for the next three months in a bid to contain the fallout from the export restrictions on the Chinese telecoms equipment maker.
The licence would enable operations to continue for existing Huawei mobile phone users and rural broadband networks in the US, Wilbur Ross, commerce secretary, said in a statement on Monday.
“The temporary general licence grants operators time to make other arrangements and the [commerce] department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services,” said Mr Ross.
Ren Zhengfei, Huawei’s founder, said the reprieve “doesn’t mean much” to the company because it had already prepared for a potential blacklisting, and warned that the US was underestimating Huawei.
“We will not easily and narrowly exclude US chips . . . but if there is a supply shortage, we have a back-up,” Mr Ren said in an interview with Chinese state media on Tuesday. “The current practice of American politicians underestimates our strength.”
On Tuesday, Abraham Liu, president of Huawei’s EU office, said the “founding fathers of the US constitution would be alarmed when confronted with the actions of the Trump administration”.
“Huawei is becoming the victim of the bullying by the US administration,” he added. “This is not just an attack against Huawei. It’s an attack on the liberal rules-based order.”
Earlier on Monday, Google said it would stop providing Huawei with its Android software in order to comply with the export restrictions imposed by President Donald Trump. One industry source said the reprieve meant that Google could now resume providing the software. Google and Huawei declined to comment.
Last week, as US-China trade tensions flared, the Trump administration abruptly announced that it was placing Huawei on the commerce department’s export blacklist, known as the entity list. This requires US companies wanting to sell to Huawei to obtain a special licence from the US government under a “presumption of denial”, meaning that Washington’s default position would be that any application would be rejected.
As well as dealing a blow to Huawei in the US and around the world, the move by the Trump administration triggered a sell-off in shares of US technology companies, including chipmakers, who are big suppliers to Huawei.
John Neuffer, president and chief executive of the Semiconductor Industry Association, which represents nearly 95 per cent of the US semiconductor industry, said: “We hope to work with the administration to broaden the scope of the license so it advances US security goals in a manner that does not undermine the ability of the . . . industry to compete globally and ensures [its] economic security.”
In a notice in the US government’s federal register on Monday afternoon, the commerce department’s Bureau of Industry and Security said it was authorising “engagement in transactions” with Huawei and its affiliates under certain conditions.
Those included deals “necessary to maintain and support existing and currently fully operational networks and equipment, including software updates and patches” as well as those contracts “necessary to provide service and support, including software updates or patches to existing Huawei handsets”.
Michael Allen, managing director at Beacon Global Strategies, a Washington-based national security consultancy, said the significance of the temporary licence was that it gave companies affected by the order a “stay of execution”.
“This gives time to US business to adapt or consult with the US government and, if convincing, possibly win changes to a final order,” said Mr Allen. “The Chinese may also view this move as an opening to win changes in the trade talks, if they are resuscitated.”
In its statement, the US commerce department said that after three months it would evaluate whether to extend the temporary licence any further, but it reiterated the reasons Huawei had been placed on the export blacklist in the first place.
“The department concluded that the company is engaged in activities that are contrary to US national security or foreign policy interests, including . . . providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of US sanctions, among other illicit activities,” it said.
The move by Mr Trump to slap Huawei with such wide-ranging and damaging restrictions in its ability to engage in business with US companies further dented hopes that the US and China could patch up their negotiations on trade.
Those talks broke down earlier this month after Mr Trump accused Chinese officials of reneging on key aspects of the proposed agreement, particularly US demands that it codify structural reforms, including protections for American intellectual property, into Chinese law.
The US then proceeded to increase tariffs on $200bn of Chinese imports from 10 per cent to 25 per cent — and to threaten to impose levies of 25 per cent on a further $300bn of Chinese imports as early as the end of June, dramatically raising the stakes in the trade war.
Steven Mnuchin, the US Treasury secretary, said last week that plans were under way for a trip to Beijing to engage in further discussions with Chinese officials, but none had been planned as of early this week.
Mr Trump is expected to meet Xi Jinping, the Chinese president, at the G20 summit in Japan next month, which could offer a window for a new detente.
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