The threat from Huawei is real and the Chinese company holds a commanding position “in the competition for baseline 5G equipment,” American Enterprise Institute's Claude Barfield blogged Monday. Last year, Huawei’s revenue topped $120 billion, “more than double that of Ericsson and Nokia combined,” he said. For years, Huawei has invested 20% percent of revenue in R&D, Barfield said: “After being exposed for a major theft of intellectual property from Cisco in 2003, the company built a large patent portfolio." Chinese companies are "working to bend the international 5G standards process to their interests,” he wrote: The emergence of open radio access networks won’t erase the importance of equipment makers. Huawei didn't comment.

The Commerce Department announced increased restrictions on foreign-made chips exported to and made by Huawei. The department said Friday it doesn't expect to issue another temporary general license extension for the Chinese telecom gearmaker after its latest 90-day renewal expires Aug. 13. The agency is amending the direct product rule to apply restrictions to foreign-produced semiconductor designs and items, such as chipsets, that are direct products of controlled U.S. software and technology, and will require a license when the exporter has “knowledge” that the item’s destination is Huawei. To mitigate impact on the industry, Commerce said the rule change won't affect foreign-produced items as long as they're re-exported, exported from abroad or transferred within 120 days from the rule’s effective date. The company didn't comment.

Sen. Marsha Blackburn, R-Tenn., urged colleagues to “refuse meetings with any representatives of Chinese companies,” including telecom equipment makers Huawei and ZTE and app TikTok. The Commerce Department said Friday it’s increasing restrictions on foreign-made chips exported to and made by Huawei. The department also doesn’t plan to issue another temporary general license extension for the Chinese telecom gearmaker after its latest 90-day renewal expires Aug. 13 (see 2005150027). Lawmakers should refuse meetings with Chinese companies “regardless of whether they are state owned or claim to be privately run entities, and to exercise caution when accepting meetings with Chinese officials,” Blackburn said in a letter: The ban “is a long overdue sanction” after an existing ban on sales of Huawei and ZTE equipment to federal agencies and a block on TikTok’s use on government-issues devices of military and some federal personnel. The companies’ “representatives likewise cannot be trusted to lobby members of Congress with the best of U.S. intentions in mind,” she said: “Blacklisting China in Congress mirrors punitive steps the executive branch has already taken. The Committee on Foreign Investment in the United States routinely blocks Chinese acquisitions of American companies to guard against national security risks,” while Commerce “blacklists Chinese companies that enable human rights abuses or act contrary to U.S. foreign policy or national security.” Blackburn is among the lawmakers who helped shape anti-Huawei/ZTE legislation (see 1907220053).

Sonos and Tile landed List 4 tariff exclusions for wireless devices imported from China under the Harmonized Tariff Schedule’s 8517.62.0090 subheading. Sonos won exemption for its wireless mesh network audio components. Tile’s exclusion was for a Bluetooth tracking device that meshes with a smartphone app for finding misplaced keys and other common household articles. The exclusions are retroactive to Sept. 1 when List 4 took effect and expire Sept. 1. About 50 exclusion requests were filed for 8517.62.0090 goods, mostly for Bluetooth devices, of which 45 remained in a stage 1 or stage 2 administrative hold when we checked the docket Monday. Sonos landed an exemption on its wireless network speakers in March, as did the Apple Watch and Fitness activity trackers.

The U.S. needs a clearer strategy for leading 5G and artificial intelligence standards setting to counter China’s growing tech leadership, technology experts said. The Trump administration should define a strategy and work with allies to set global standards, the experts said, or risk forcing its companies out of global markets because of restrictions placed on China. “We're behind. I can't say it enough to U.S. legislators,” said Nicol Turner Lee, a Brookings Institution fellow, speaking during a Friday webinar hosted by the think tank. “That should be disconcerting to companies who will be told by the U.S. that they cannot do business [in China] even though there are other European companies that can.” At the center of the issue is China’s dominant presence at global standards setting bodies for emerging tech, said Sheena Chestnut Greitens, nonresident Brookings fellow. International bodies are seeing more rules written by Chinese companies, she said. “About half of the standards that [China has] proposed have been adopted by the U.N. as the global standard,” Greitens said, noting those standards include facial recognition technology. U.S. restrictions on Huawei blocked the U.S. from participating in bodies in which the company is a member, although the Commerce Department drafted a rule to address the ability of U.S. companies to participate in 5G bodies (see 2004290066). The White House declined to comment Monday, referring us to the State Department Bureau of Economic and Business Affairs. The bureau wouldn't provide an on-the-record comment.

The Office of the U.S. Trade Representative wants comment by June 8 whether to extend by up to another year 11 sets of tariff exclusions granted on List 3 Section 301 Chinese import. The exclusions being considered for extensions are all the List 3 exemptions granted through March 26 that are set to expire Aug. 7, it said. “USTR is not considering product exclusion notices issued after March 26,” That includes one granted April 22 to iRobot (see 2004230045). Each extension request will be evaluated independently, said the notice.

Duplicates of customs broker records may be stored on servers outside the U.S. as long as the originals are stored on U.S. servers, Customs and Border Protection said. The March 10 ruling was disclosed by a stakeholder last week and confirmed to us by the recipient. The ruling requested by Craig Seelig at WiseTech Global examined WiseTech's use of a foreign server in Australia as a secondary site. The primary site would be in the U.S. CBP requires that for broker records stored on a server, the server must be located in the customs territory of the U.S., the agency replied. “This is where CBP has jurisdiction to issue a summons and inspect records.” There’s “no rule applicable to duplicate records,” the agency said. “It seems logical then that once the recordkeeping regulations are met, including 19 C.F.R. § 111.23(a), requiring that records be retained at any location within the customs territory of the United States, that duplicates of these records may be maintained outside the territory of the United States." Grunfeld Desiderio lawyer Alan Klestadt, who told a webinar of the ruling, said that, with a coming update to customs broker regulations, more cloud-based recordkeeping could come to be OK’d.

The Office of the U.S. Trade Representative granted iRobot an exclusion Wednesday to the List 3 Section 301 tariffs on the robotic vacuum cleaners it imports from China under the 8508.11.00.00 product code. IRobot applied for the exemption July 1 and based its argument partly on plans to shift production to Malaysia from China. It began producing entry-level vacuums in Malaysia in November, and said it will source additional models there later in 2020. The exclusion is retroactive to Sept. 24, 2018, when the List 3 tariffs took effect at 10%, and is valid through Aug. 7. The Trump administration hiked List 3 to 25% on March 2, 2019. IRobot estimated it incurred $37.9 million in 2019 tariff costs but had no “material” tariff expenses for 2018. It’s scheduled Tuesday to report Q1 results. IRobot’s was one of 107 exemptions granted for “specially prepared product descriptions” covering 157 “separate exclusion requests,” said USTR. IRobot is "pleased that the USTR determined that our rationale for an exclusion was appropriate, particularly in light of the tangible steps we have taken to establish our manufacturing activities in Malaysia," emailed CEO Colin Angle Thursday. "As the largest American pure-play robotics company, with over 800 U.S.-based employees and roughly half of our revenue generated domestically, we believe that an exclusion not only further supports iRobot's ability to maintain its technological and category leadership but it also helps ensure that robotics is an industry in which the U.S. continues to lead the world."

To counter China's "stark techno-economic challenge" to vital tech industries, the U.S. should aggressively support industries that are “too critical to fail,” such as semiconductors and computing, and software and transportation, the Information Technology and Innovation Foundation said Monday. Support would include R&D and a competitiveness screen for regulation. ITIF said those efforts should be aligned with those of U.S. allies.

Technology and semiconductor trade groups objected last week to increased export restrictions under consideration by the Trump administration, saying the controls could lead to uncertainty. BSA|The Software Alliance, CompTIA, the Information Technology Industry Council, Semiconductor Industry Association, Software & Information Industry Association, U.S. Council for International Business and others wrote Commerce Secretary Wilbur Ross, asking the administration to seek input before finalizing the rule. If approved by President Donald Trump, the measures could block Huawei and other Chinese companies from buying U.S. semiconductors. “Initially, there was some talk about a generic change in de minimis” threshold, said Richard Sawaya, vice president of the National Foreign Trade Council, one of nine groups that signed the letter to Ross. “I think the effort within the interagency process is to narrow that and tailor it as much as possible so that it is Huawei-specific,” Sawaya said in an interview. The Commerce Department didn't comment Friday.