US poised to block more sales to Huawei

The United States government is about to publish a rule to expand its powers to block shipments of foreign-made goods to Chinese telecommunications company Huawei, despite the two countries’ leaders being expected to sign a Phase One trade deal on Wednesday, after an 18-month-long trade war, The Millennial Source reported.

Members of the Trump administration and Congress views Huawei Technologies as a national security threat and placed the company in May on a trade blacklist, restricting sales to Huawei, of US-made goods and some items made abroad containing US technology.

In November, Reuters reported that the US Commerce Department was weighing up broadening up rules to extend US authority to block shipments to Huawei, amid the US government’s frustration that the company’s blacklisting failed to cut key supply chains that are beyond the reach of US authorities.

Current regulations and possible future changes

One of the rules the Commerce Department focused on broadening is the De minimis rule, which dictates how much US content in a foreign-made product gives the US government authority to regulate an export.

Under current regulations, the US can require a license or block the export of high-tech products shipped to China from other countries if US-made components make up more than 25 percent of a product’s value.

According to Reuters, two people familiar with the matter said that the Commerce Department has drafted a rule that would lower the threshold only on exports to Huawei to 10 percent and expand the purview to include non-technical goods like consumer electronics, including non-sensitive chips.

One of the people mentioned in Reuters’ report claimed that following an interagency meeting last week, the Commerce Department sent the rule to the Office of Management and Budget.

If other government agencies sign off on the measure, the rule could be issued in a matter of weeks as a so-called final rule, with no opportunity for public comment before it goes into effect, the people said.

Reuters also reported that the Commerce Department has drafted regulation allowing for the expansion of the Foreign Direct Product rule, which subjects foreign-made goods that are based on US technology or software to US oversight. The rule would be broadened to include low-tech items made abroad that are based on US technology and are shipped to Huawei.

US’s network battle with Huawei over 5G

The Trump administration has been trying to dissuade US allies from upgrading to 5G mobile telecommunication networks with Huawei equipment, claiming that Huawei could potentially include “backdoor” security vulnerabilities that could allow China to spy on these countries.

The United Kingdom is one of the allies that the Trump administration has been trying to convince, amid the UK pondering whether to allow Huawei to supply “non-core” parts for the UK network, Al Jazeera reported.

Speaking to the BBC on Tuesday, UK Prime Minister Boris Johnson said that he would not risk Britain’s national security when upgrading the nation’s communications network, but Huawei’s critics would have to come up with an “alternative” provider.

“The British public deserve to have access to the best possible technology,” Johnson told the BBC. “I have talked about infrastructure and technology. We want to put in gigabit broadband for everybody.”

“Now, if people oppose one brand or another, then they have to tell us which is the alternative,” Johnson said.

“On the other hand, let’s be clear,” said Johnson. “I don’t, as the UK prime minister, want to put in any infrastructure that is going to prejudice our national security or our ability to cooperate with Five Eyes intelligence.”

Victor Zhang, Huawei’s vice president, said he strongly agrees with the prime minister that “the British public deserve to have access to the best possible technology,” adding that this is why Huawei invested more than $15 billion last year in research and development, to ensure their customers received just that.

“Huawei has worked with the UK’s telecoms companies for 15 years and looks forward to supplying the best technologies that help companies like BT and Vodafone fulfill the government’s commitment to make gigabit broadband available to all,” Zhang said.

Zhang also said: “We are confident that the UK government will make a decision based upon evidence, as opposed to unsubstantiated allegations. Two UK parliamentary committees concluded there is no technical reason to ban us from supplying 5G equipment and this week, the head of MI5 said there was ‘no reason to think’ the UK’s intelligence-sharing relationship with the US would be harmed if Britain continued to use Huawei technology."

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