U.S. grants Huawei another 90 days to buy from American suppliers

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WASHINGTON (Reuters) – U.S. Commerce Secretary Wilbur Ross said on Monday the U.S. government will extend a reprieve given to Huawei Technologies that permits the Chinese firm to buy supplies from U.S. companies so that it can service existing customers, even as nearly 50 of its units were being added to a U.S. economic blacklist.

The department said in a statement the 90-day extension “is intended to afford consumers across America the necessary time to transition away from Huawei equipment, given the persistent national security and foreign policy threat.”

“As we continue to urge consumers to transition away from Huawei’s products, we recognize that more time is necessary to prevent any disruption,” Ross said in a statement, confirming an expected decision first reported on Friday by Reuters.

He also said he was adding 46 Huawei affiliates to the so-called “Entity List” – a list of companies effectively banned from doing businesses with U.S. customers – raising the total number to more than 100 Huawei entities that are covered by the restrictions.

The list includes Huawei affiliates in Argentina, Australia, Belarus, China, Costa Rica, France, India, Italy, Mexico and numerous other countries.

Ross said the extension was to aid U.S. customers, many of which operate networks in rural America.

“We’re giving them a little more time to wean themselves off,” Ross told Fox Business Network earlier.

Shortly after blacklisting the company in May, the Commerce Department initially allowed Huawei to purchase some American-made goods in a move aimed at minimizing disruption for its customers.

Huawei did not immediately comment on Monday.

FILE PHOTO: A Huawei company logo is pictured at the Shenzhen International Airport in Shenzhen, Guangdong province, China July 22, 2019. REUTERS/Aly Song/File Photo

The extension, through Nov. 18, renews an agreement continuing the Chinese company’s ability to maintain existing telecommunications networks and provide software updates to Huawei handsets.

The Commerce Department said on Monday it is now requiring the exporter, re-exporter, or transferor to obtain a certification statement from any Huawei entity prior to using the temporary general license.

Asked what will happen in November to U.S. companies, Ross said: “Everybody has had plenty of notice of it, there have been plenty of discussions with the president.”

When the Commerce Department blocked Huawei from buying U.S. goods earlier this year, it was seen as a major escalation in the Sino-U.S. trade war.

The U.S. government blacklisted Huawei, alleging the Chinese company is involved in activities contrary to national security or foreign policy interests.

As an example, the blacklisting order cited a pending federal criminal case concerning allegations Huawei violated U.S. sanctions against Iran. Huawei has pleaded not guilty in the case.

The order noted that the indictment also accused Huawei of “deceptive and obstructive acts.”

At the same time the United States says Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.

Huawei, the world’s largest telecommunications equipment maker, is still prohibited from buying American parts and components to manufacture new products without additional special licenses.

FILE PHOTO: U.S. Commerce Secretary Wilbur Ross looks on as he attends a summit to discuss the political crisis in Venezuela, in Lima, Peru, August 6, 2019. REUTERS/Guadalupe Pardo

Many Huawei suppliers have requested the special licenses to sell to the firm. Ross told reporters late last month he had received more than 50 applications, and that he expected to receive more. He said on Monday that there were no “specific licenses being granted for anything.”

Washington trade lawyer Doug Jacobson said it is not surprising the extension was granted: “It takes time for telecom providers to find alternative equipment suppliers.”

Out of $70 billion that Huawei spent buying components in 2018, some $11 billion went to U.S. companies including Qualcomm, Intel and Micron Technology. Intel declined to comment on Monday.

Reporting by David Shepardson; Editing by Steve Orlofsky and Bill Rigby

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