Presumption of Denial Status for Huawei Licenses May No Longer Apply, Lawyers Say

The Commerce Department’s presumption of denial for Huawei-related export licenses may no longer apply, Akin Gump lawyers said during a July 18 webinar.

Commerce officials, including Secretary Wilbur Ross and Acting Undersecretary for Industry and Security Nazak Nikakhtar, recently suggested the agency would be loosening restrictions on Huawei-related export licenses. Both said during July 9 sessions at the Bureau of Industry and Security annual export controls conference in Washington that BIS plans to approve license applications that have no national security impacts but that the agency is not changing the application’s presumption-of-denial status (see 1907090068). Nikakhtar said then that decisions on license applications would be coming in weeks.

While Akin Gump lawyers Mac Fadlallah and Tristan Denour are not yet “aware” of approved Huawei export licenses, they said they’re expecting more licenses to be approved. “There have been some indications that the presumption of denial is not going to apply anymore to Huawei,” Fadlallah said during the webinar. If an export does not impact national security, Fadlallah said, there is a “probable chance” the license application gets approved.

“What we’re seeing and what we’re hearing, and we’ve been advising a number of companies that are actively seeking licenses now, is that the presumption of denial might not be as much of a presumption of denial as we had traditionally thought it to be,” Fadlallah said.

Fadlallah said the comments from Ross were a “positive sign” and he is telling clients to submit license applications. “If you are able to make a compelling argument that the transactions that your company is engaging in are not a threat to U.S. national security,” Fadlallah said, “then I think there's a really realistic, probable chance that you will be issued that license.”

Fadlallah said he’s advising clients that there is no risk in applying. “You don’t know until you ask,” he said. “Worst case scenario, you get declined and you're back to where you are now.”

Despite the Trump administration’s plans to ease the export license restrictions, U.S. companies are receiving a conflicting message from Congress, Denour said. He referenced a bipartisan bill that was introduced in both the House and Senate on July 16 that would prohibit the administration from removing Huawei from the Entity List without congressional approval (see 1907160051). The bill would also allow Congress to block any Huawei-related export license approved by Commerce. “Congress is acting differently on this issue,” Denour said during the webinar. “It’s something we’re monitoring and something we’re interested in, but nothing to act on at this point.”

Ultimately, Fadlallah said, companies should take Ross at his word and actively seek out licenses. “It may be worthwhile to put forward a colorful argument that the transactions you’re seeking to engage in are not inconsistent with U.S. national security,” he said.