BIS Renews Huawei General License, Adds to Entity List

Commerce’s Bureau of Industry and Security on Aug. 19 renewed the temporary general license for Huawei and added 46 more of the company’s non-U.S. affiliates to the Entity List, bringing the total number of impacted Huawei affiliates to more than 100.

The changes, which took effect Aug. 19, extended the general license’s expiration date from Aug. 19 to Nov. 18. Despite the extension, Commerce is continuing its review policy of presumption of denial and President Donald Trump on Aug. 18 told reporters he wants to eventually stop all business with Huawei.

Commerce Secretary Wilbur Ross said the announcement is aimed at helping U.S. companies comply with export controls while allowing them to wind down contracts with Huawei. “As we continue to urge consumers to transition away from Huawei’s products, we recognize that more time is necessary to prevent any disruption,” Ross said in a statement.

Commerce’s export restrictions -- including those imposed on the newly announced affiliates -- will continue to apply to all items subject to the Export Administration Regulations. All exports affected by the addition of the 46 Huawei entities may continue to their destination if they were en route on or before Aug. 19, BIS said. The 46 new entries include entities located in Argentina, Australia, China, Costa Rica, Denmark, France, India, Italy, Mexico, Russia, the United Kingdom and more.

Along with adding new entities, Commerce also made technical changes to the list, including adding new aliases and addresses. The agency also said it plans to clarify the scope of the impact of the export controls and better explain which exports are permitted because of the high number of questions it has received. BIS said it will post a set of Frequently Asked Questions and “other guidance to answer the questions received that have broad applicability to exporters, reexporters, and transferors.”

BIS also said it is revising wording in the general license “to improve public understanding of the intended scope of the temporary general license,” including clarifying that the scope of the general license does not include certain transactions related to existing networks, such as “equipment that is not directly related to the support and maintenance of the network," general-purpose computing devices and “equipment for general business purposes … that are not in direct support of an existing and fully operational network,” respectively. BIS also added wording to “conform to Federal Drafting Handbook requirements” and changed “which party to the transaction is required to create the certification statement.”

China may not necessarily retaliate against Commerce’s announcement because “this is essentially just the U.S. extending the existing status quo,” said Nick Marro, a Hong Kong-based China analyst with The Economist Intelligence Unit and a former business advisory services manager with the U.S.-China Business Council. But Marro said the move is unlikely “to inject more goodwill in the relationship” and help convince China to resume purchase of U.S. agricultural exports.

However, a potential retaliatory option remains China’s "unreliable entity list," Marro said, which the country announced in June (see 1906030036). Marro said the possibility of China adding U.S. companies to the list “remains quite high,” particularly because Commerce’s move does little to ease pressure on Huawei. “China still seems to be sitting on this, likely as a measure of goodwill,” Marro said. “But if there’s a further deterioration in trade relations we might see some further action here.”

China has already retaliated for the entity listings by diversifying “away from U.S. products in procurement tenders,” Doug Barry, spokesman for the U.S.-China Business Council, said in an email. “We have seen an impact of the entity listings on U.S. company competitiveness in the China market.”

Although Barry said the extension of the general license was a “necessary step” to ensure the U.S. continues negotiations with China, the council has not yet heard of any companies receiving specific export licenses for Huawei-related sales, which involves submitting an application to Commerce for approval.

It remains unclear if any Huawei export licenses have been approved since the company was added to Commerce’s Entity List, despite top Commerce officials saying last month the agency planned to loosen export restrictions (see 1907090068). And one day before Commerce extended the general license, Trump told reporters the U.S. would not be renewing the license. “Huawei is a company we may not do business with at all,” Trump said.

Marro said “there seems to be a high degree of policy inconsistency in the administration, as well as the U.S. attitude towards Huawei in general.” The inconsistency “does little to reduce uncertainty” for U.S. and Chinese companies “either in terms of maintaining supply chains, or guarding against a potential Chinese retaliatory response against foreign companies in its own market,” Marro said.

In an Aug. 19 statement, Huawei said it opposes Commerce’s decision to add 46 of its affiliates to the Entity List. “It's clear that this decision, made at this particular time, is politically motivated and has nothing to do with national security,” the statement said. “Attempts to suppress Huawei's business won't help the United States achieve technological leadership. We call on the US government to put an end to this unjust treatment and remove Huawei from the Entity List.”

Huawei also said the general license’s extension “does not change the fact that Huawei has been treated unjustly. Today's decision won't have a substantial impact on Huawei's business either way.”