The US$11 billion export component of the business American companies do with Chinese electronics giant Huawei is safe for at least 90 days. The U.S. Commerce Department’s Bureau of Industry and Security on Monday announced an extension of the Temporary General License for Huawei and its non-U.S. affiliates so they can continue to buy goods from American companies.
The license is needed because the Commerce Department has placed Huawei and its affiliates on the Entity List, a blacklist for companies the department sees as engaged in activities that are contrary to U.S. national security or foreign policy interests.
“As we continue to urge consumers to transition away from Huawei’s products, we recognize that more time is necessary to prevent any disruption,” Commerce Secretary Wilbur Ross said. “Simultaneously, we are constantly working at the department to ensure that any exports to Huawei and its affiliates do not violate the terms of the Entity Listing or Temporary General License.”
The extension of the Temporary General License does not change the fact that Huawei has been treated unjustly, the company said in response to the move.
The decision won’t have a substantial impact on its business, Huawei maintained, and it intends to continue to focus on providing the best possible products and services to its customers.
Huawei also protested the Commerce Department’s addition of 46 more of its affiliates to the Entity List of banned companies, contending the action was politically motivated and had nothing to do with U.S. national security.
The Commerce Department’s actions violate free market principles and are contrary to the interests of all of the parties involved, Huawei contended.
The company called on the U.S. government to end what it termed “unjust treatment” by removing Huawei from the Entity List.
Huawei isn’t alone in doubting the sincerity of the administration’s rationale for the ban.
“No one has found any evidence that Huawei’s a threat to national security,” said Stphane Tral, a telecommunications technology fellow at IHS Markit, a research, analysis, and advisory firm headquartered in London.
“All vendors are involved in the same standards bodies, are treated the same, and go through thorough evaluation conducted by various agencies,” he told the E-Commerce Times.
Nevertheless, the U.S. has reason to be concerned about doing business with Chinese tech companies, according to Jack E. Gold, principal analyst at J.Gold Associates, an IT advisory company in Northborough, Massachusetts.
“China has done things that they shouldn’t have in the past,” he told the E-Commerce Times. “No doubt they will continue to do so, but if there’s a risk, we have to show it.”
There’s also a danger in playing fast and loose with the term “national security threat.”
“If everything is a national security threat, then when you really have one — after using it 15 times and backing off — then is anyone really going to believe you?” Gold asked.
Prelude to a Tough Deal
There seems to be confusion in the public about the export and import bans on Huawei, suggested Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a public policy think tank based in Washington, D.C.
When President Trump lifted an export ban on Huawei in June, opponents argued that if Huawei equipment introduced systemic cybersecurity vulnerabilities into the United States telecom and Internet system, then an import ban was not enough. The administration also should try to cripple Huawei with export bans.
“If Huawei devices are inherently insecure, especially with regard to Chinese Communist Party spying, the import ban is fully sufficient to address the issue,” Atkinson maintained at the time.
“The export ban was never about cybersecurity,” he pointed out. “It was always about inflicting pain on the Chinese economy so that China might make the kind of deal that would lead them to at least partially act as they should as a WTO member.”
That behavior should include an end to forced tech transfer, reduction in joint venture requirements, and massive reduction in unfair and distorting industrial subsidies, Atkinson said.
“The key question with regard to lifting the ban is whether this is done in the service of a tough, fully enforceable trade agreement — the kind U.S. Trade Representative Robert Lighthizer rightly insists on,” he asserted. “If it is, then the president is right to at least temporarily lift the Huawei export ban.”
Rather than bolster national security, a Huawei ban could have the opposite effect.
The ban would prevent the company from providing proper security and operating system updates to Android users with Huawei phones, according to a June Financial Times report citing unnamed Google officials.
It also would force Huawei to develop its own mobile operating system, which likely would be less secure than Android.
Huawei users would lose access to Google services — services like “Google Play Protect,” which automatically scans for malware, viruses and security threats.
“By doing this to Huawei and others, it’s going to force them more quickly than otherwise to develop their own stuff,” observed Gold. “Three, four, five years down the road, they’ll have everything they need, and they won’t need us anymore — and they’ll be banning our stuff.”
46 Added to Blacklist
In conjunction with extending the Temporary General License, the Bureau of Industry and Security identified 46 additional Huawei affiliates to be blacklisted. Since May, more than 100 persons or organizations have been added to the Entity List in connection with Huawei.
The additions to the blacklist could be a bargaining chip for the administration, said Charles King, principal analyst at Pund-IT, a technology advisory firm in Hayward, California.
“If the 90-day extension is the ‘carrot’ in this scenario, adding 46 additional Huawei subsidiaries to the ban list is the ‘stick’ that the Trump administration is using to show that it still means business,” he told the E-Commerce Times.
“Practically speaking, it adds additional pressure to what Huawei is already experiencing,” King said, “but it’s hard to gauge what the long-term effects will be.”