US places Huawei and scores of affiliates on export-blacklist

Bloomberg Washington | Updated on May 17, 2019

Companies in China, Europe and Middle East among those on list

The Trump administration said restrictions on Huawei Technologies Co. announced this week will take effect Friday, placing China’s largest technology company and scores of its affiliates around the world on a blacklist that curtails its access to critical U.S. suppliers.

In a Federal Register notice released on Thursday, the Commerce Department said the curbs, apply to Huawei and 67 of its affiliates scattered across 26 countries from Germany to Madagascar. They were mainly private subsidiaries that the networking giant owns and uses to trade or conduct business in different cities or countries, and hence prime targets should the White House decide to pursue export restrictions.

The Trump administration is pulling out the big guns in its push to slow China’s rise, with potentially devastating consequences for the rest of the world. If the U.S. blocks the sale to Huawei of critical components such as semiconductors, it could cripple Huawei’s businesses, depress the business of American chip giants from Qualcomm Inc. to Micron Technology Inc., and potentially disrupt the roll-out of critical 5G wireless networks around the world.

The Commerce Department said Wednesday it will soon put Huawei on an Entity List -- meaning any U.S. company will need a special license to sell products to the world’s largest networking gear maker and second-largest smartphone brand. Commerce Secretary Wilbur Ross told Bloomberg Television the measures limiting its access to U.S. components become official on Friday. Separately, he said President Donald Trump had given his department 150 days to establish a process to screen U.S. companies purchases of equipment from the Chinese firm, and other equipment providers with which officials have concerns.

Pushing Back

China pushed back against the restrictions on Friday, saying they wouldn’t serve U.S. interests.

It’s wrong, it is abusing national security, and targeting specific enterprises with discriminatory policies goes against fair-competition principles, Foreign Ministry spokesman Lu Kang said at a briefing in Beijing.

The threat is likely to elevate fears in Beijing that Trump’s broader goal is to contain China, igniting a protracted cold war between the worlds biggest economies. In addition to a trade fight that has rattled global markets for months, the U.S. has pressured both allies and foes to avoid using Huawei for 5G networks that will form the backbone of the modern economy.

Ross dodged questions about whether the new moves against Huawei could lead to a negotiation with the company or the Chinese government. He insisted the growing campaign against Huawei remained a separate matter from broader trade negotiations between the U.S. and China, which have stalled in recent days.

Long-time Accusations

The purpose we have in mind here is we think there is a significant danger to national security and to our foreign policy of the existing situation at Huawei, Ross said.

In notice published Thursday, the Commerce Departments Bureau of Industry and Security said the U.S. was adding Huawei’s affiliated companies around the world because they pose a significant risk of involvement in activities contrary to the national security or foreign policy interests of the United States.

This decision is in no ones interest, Huawei said in a statement on Thursday. 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.

The U.S. has long accused the telecommunications equipment giant of facilitating Chinese espionage and sought to convince allies not to purchase its equipment for new 5G networks. The Justice Department is prosecuting Huawei over accusations of bank fraud, technology theft and violating U.S. sanctions against Iran.

Published on May 17, 2019

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