According to recent reports, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) has stopped granting export licenses to Huawei Technologies Co. Ltd. (“Huawei”).
The U.S. government has long sought to restrict Huawei’s access to advanced U.S. computer chips used to power 5G networks and related technological applications. Under the current export restrictions against Huawei, BIS still had been granting certain export license requests for items falling below the 5G capability threshold, such as items designed for 4G application, WiFi 6 and 7, and certain cloud-computing items. For example, BIS previously permitted companies such as Qualcomm and Intel to sell certain chips to Huawei in 2020.
Now, U.S. suppliers likely can expect most, if not all, Huawei-related license applications to be denied, as the Biden Administration seeks to completely close off the Chinese telecom’s access to U.S. technology.
BIS originally added Huawei to its Entity List in May 2019 based on its determination that it had reason to believe Huawei was engaged in activities contrary to U.S. national security or foreign policy interests. The Entity List designation imposed a license requirement on exports, re-exports, or in-country transfers to Huawei and its worldwide, non-U.S. affiliates for of all items “subject to the EAR.” BIS issued a temporary general license for certain Huawei shipments in May 2019 as previously reported here. BIS reviews any license requests under a presumption of denial.
Following the Entity List designation, BIS also enacted its Foreign Direct Product Rule (15 C.F.R. § 734.9) in May 2020, and amended in August 2020, aimed specifically at cutting off Huawei’s access to foreign items produced abroad using U.S. technology or software. BIS has since expanded its Foreign Direct Product Rule beyond Huawei and China to Russia and Belarus.
The policy shift regarding certain export licenses for Huawei, which the U.S. government suspects to be an arm of the Chinese Communist Party, appears part of the ongoing trade tensions with China and the U.S. government’s larger efforts to maintain its technology advantage. Indeed, this latest move also follows reports earlier in the week that the Biden administration is weighing entire sector-wide bans on U.S. investment in certain high-tech industries in China.
Husch Blackwell’s Export Controls and Economic Sanctions Team continues to closely monitor all international trade and export controls developments concerning China and will provide further updates as conditions change. Should you have any questions or concerns, please contact Cortney Morgan, Grant Leach, Eric Dama or Emily Mikes of our Export Controls and Economic Sanctions Team.