TR Daily Commerce Dept. Adds Restrictions on Exports Benefiting Huawei
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Monday, August 17, 2020

Commerce Dept. Adds Restrictions on Exports Benefiting Huawei

The Commerce Department’s Bureau of Industry and Security today further restricted the ability of Huawei Technologies Co. Ltd. and its affiliates to access U.S. technology exports by attempting to stop it from “backfilling” its need for semiconductor chips by substituting third-party chips for “native” chips designed by Huawei. Exports of U.S. technology to third parties for use in chips to be used by Huawei are now also covered.

The BIS also added 38 additional entities to the “entity list” of parties for which a Commerce license is required for exports of items subject to the agency’s export administration regulations.

And while the Commerce Department allowed most aspects of a previously issued temporary license aimed at assisting U.S. companies with the transition with respect to wireless devices and network equipment to expire on Friday, it has permanently extended an authorization to “export technology” in the form of cybersecurity information, such as the discovery of zero-day vulnerabilities in Huawei devices or equipment, in order to protect foreign parties already using those devices or equipment, Commerce Department officials explained to reporters during a background conference call today.

“This limited authorization is for the sole purpose of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently ‘fully operational networks’ and equipment,” the department said in a press release.

Last year, BIS added Huawei and its affiliates to the entity list for direct exports, and then earlier this year, BIS announced it would amend its “foreign-produced direct product rule and the entity list to narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology” (TR Daily, May 15).

However, the May action addresses only “indigenous” or “native” Huawei chips, not off-the-shelf chips designed by third parties, Commerce officials said today. They explained that Huawei had been backfilling its chip needs with non-Huawei-designed chips, and BIS is addressing that with today’s amended rule.

In a statement, Secretary of State Mike Pompeo said, “The Department of State strongly supports the Commerce Department’s expansion today of its Foreign Direct Product Rule, which will prevent Huawei from circumventing U.S. law through alternative chip production and provision of off-the-shelf (OTS) chips produced with tools acquired from the United States.”

With regard to the expiration of most aspects of the temporary license, Secretary Pompeo said, “The United States has provided ample time for affected companies and persons—primarily Huawei customers—to identify and shift to other sources of equipment, software, and technology and wind-down their operations. Now that time is up.”

He added, “We will not tolerate efforts by the CCP [Chinese Communist Party] to undermine the privacy of our citizens, our businesses’ intellectual property, or the integrity of next-generation networks worldwide.”

BIS added the following 38 Huawei affiliates to the entity list “because they present a significant risk of acting on Huawei’s behalf contrary to the national security or foreign policy interests of the United States,” the department said in a press release: Huawei Cloud Computing Technology, Huawei Cloud Beijing, Huawei Cloud Dalian, Huawei Cloud Guangzhou, Huawei Cloud Guiyang, Huawei Cloud Hong Kong, Huawei Cloud Shanghai, Huawei Cloud Shenzhen, Huawei OpenLab Suzhou, Wulanchabu Huawei Cloud Computing Technology, Huawei Cloud Argentina, Huawei Cloud Brazil, Huawei Cloud Chile, Huawei OpenLab Cairo, Huawei Cloud France, Huawei OpenLab Paris, Huawei Cloud Berlin, Huawei OpenLab Munich, Huawei Technologies Dusseldorf GmbH, Huawei OpenLab Delhi, Toga Networks, Huawei Cloud Mexico, Huawei OpenLab Mexico City, Huawei Technologies Morocco, Huawei Cloud Netherlands, Huawei Cloud Peru, Huawei Cloud Russia, Huawei OpenLab Moscow, Huawei Cloud Singapore, Huawei OpenLab Singapore, Huawei Cloud South Africa, Huawei OpenLab Johannesburg, Huawei Cloud Switzerland, Huawei Cloud Thailand, Huawei OpenLab Bangkok, Huawei OpenLab Istanbul, Huawei OpenLab Dubai, and Huawei Technologies R&D UK. —Lynn Stanton, [email protected]

MainStory: FederalNews InternationalNews Cybersecurity

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