Commerce to Expand Scope of Permitted Exports to Huawei, Trump Administration Official Says

The Commerce Department will approve more temporary licenses to U.S. exporters selling “general merchandise” to Huawei, U.S. National Economic Council Director Larry Kudlow said on CBS and Fox News on June 30, potentially providing relief to both U.S. firms and China’s telecommunications tech giant. Although specific details have not yet been released, Commerce plans to grant export licenses for products that China can easily get from other countries, including “various chips and software,” Kudlow said.

“This is not a general amnesty, if you will. Huawei will remain on the so-called Entity List,” Kudlow said on Fox News Sunday. “But the Commerce Department will grant some temporary additional licenses where there’s a general availability.”

Kudlow’s comments came about one day after President Donald Trump announced at the G-20 Summit in Japan that the U.S. and China will resume trade negotiations and that U.S. companies will be allowed to sell to Huawei. Kudlow tempered some of Trump’s comments, saying the U.S. will only grant temporary export licenses for goods that have no impact on U.S. national security. “Anything to do with national security concerns will not receive a new license from the Commerce Department,” Kudlow said on CBS' “Face the Nation.” “What's happening now is simply a loosening-up for general merchandise.”

Although Kudlow said the Trump administration is loosening restrictions, it remains unclear how and if Commerce will amend its May notice that added Huawei to the agency’s Entity List and banned all exports of items subject to the Export Administration Regulations with a review policy of presumption of denial. “That does not appear to be decided yet,” said William Reinsch, the Scholl Chair in International Business at the Center for Strategic and International Studies and Commerce’s former undersecretary for export administration. Reinsch said he expects Commerce to keep its “presumption of denial” policy “but manage it by adding and subtracting to the” temporary general license. The temporary general license will likely be extended past the original 90-day mark and be expanded to cover more items, Reinsch said. “The debate will be about what items will be covered,” Reinsch said in an email. “Everything else will be subject to a presumption of denial, which means you can apply but don’t hold your breath waiting for a ‘yes.’”

Alternatively, Commerce could change its review policy to a case-by-case basis, Reinsch said, adding that it’s more likely the agency simply expands its temporary general license. “I think it’s easier for them administratively,” Reinsch said. “If they change it, it would require another” Federal Register notice.

While Kudlow did not provide specifics on how Commerce would approach its existing export policy on Huawei, he said the agency will likely review and grant more export applications and cases. “I think Commerce will probably go back after the president’s decision and take another look at that, maybe open it up,” Kudlow said. “I think there's a good chance the Commerce Department, Secretary [Wilbur] Ross will open the door on that and grant new licenses.”

A spokesman for the U.S.-China Business Council also said the specifics of the announcement were unclear, but said the move will likely provide relief for U.S. exporters. “Based on the still scant details ... it appears that U.S. companies that were suppliers to Huawei should be pleased at least in the short run,” spokesman Doug Barry said. In a statement, Semiconductor Industry Association President John Neuffer praised Trump’s announcement. “Good news for the semiconductor industry, the overall tech sector, and the world’s two largest economies,” Neuffer said. “We look forward to getting more detail on the president’s remarks on Huawei.”

But the move faces opposition from Congress. The morning after Trump's announcement, Sen. Marco Rubio, R-Fla., tweeted, "If President Trump has in fact bargained away the recent restrictions on #Huawei, then we will have to get those restrictions put back in place through legislation. And it will pass with a large veto proof majority."