Sen. Tom Cotton, R-Ark., and Rep. Mike Gallagher, R-Wis., led the Tuesday filing of the Defending America's 5G Future Act in a bid to bar the Trump administration from lifting the Bureau of Industry and Security's addition of Chinese telecom equipment manufacturer Huawei to its export entity blacklist without congressional approval. The measure would also allow Congress to disallow any presidential administration from issuing waivers to any U.S.-based company doing business with Huawei. The bill's filing comes amid congressional ire over Trump's willingness to relax restrictions on Huawei as part of trade talks with China (see 1907020060). “Huawei isn’t a normal business partner for American companies, it’s a front for the Chinese Communist Party,” Cotton said in a news release. “American companies shouldn’t be in the business of selling our enemies the tools they’ll use to spy on Americans.” Five senators are co-sponsors -- Chris Van Hollen, D-Md.; Richard Blumenthal, D-Conn.; Mitt Romney, R-Utah; Marco Rubio, R-Fla.; and Mark Warner, D-Va. The House version has three co-sponsors -- House GOP Conference Chair Liz Cheney, R-Wyoming; Ruben Gallego, D-Ariz.; and Jimmy Panetta, D-Calif. The House last week approved its version of the FY 2020 National Defense Authorization Act (HR-2500), which includes several amendments on Huawei and fellow Chinese telecom equipment makers (see 1907120040). One of the amendments, sought by Gallagher, would impose conditions for the Commerce Department to lift Bureau of Industry and Security addition of Huawei to its entity list (see 1906190054). The Senate passed its 2020 NDAA version (S-1790) in June without language from any of the three proposed anti-Huawei amendments (see 1906270051).
The House voted 220-197 Friday to pass its version of the FY 2020 National Defense Authorization Act (HR-2500), which includes three amendments addressing concerns about Chinese telecom equipment manufacturers Huawei and ZTE (see 1907110037). One, led by Rep. Mike Gallagher, R-Wis., would impose conditions for the Department of Commerce to lift Bureau of Industry and Security addition of Huawei to its entity list (see 1906190054). A second Gallagher-led proposal would direct the president to submit a report to Congress on ZTE's compliance with a 2018 agreement that lifted Commerce's ban on U.S. companies selling telecom software and equipment to ZTE (see 1807130048). “There are many shortcomings in this year's NDAA, but one positive” is inclusion of the anti-Huawei/ZTE amendments, he tweeted Thursday. Commerce officials said at a BIS conference the department plans to issue multiple guidance documents on its blacklisting of Huawei due to the large number of questions from U.S. exporters. Language from Rep. Ruben Gallego, D-Ariz., would restrict use of telecom equipment made by companies originating in countries that are U.S. adversaries at DOD installations in U.S. territories in the Pacific Ocean. The Senate passed its 2020 NDAA version (S-1790) in June without language from proposed anti-Huawei amendments (see 1906270051). HR-2500 also includes an amendment led by Rep. Norma Torres, D-Calif., that would attach language from the 911 Supporting Accurate Views of Emergency Services (Saves) Act (HR-1629/S-1015). It would change the federal government's classification of public safety call-takers and dispatchers to “protective service occupations" (see 1904050054).
The House passed on voice votes Thursday four telecom-related amendments to its version of the FY 2020 National Defense Authorization Act (HR-2500), including three addressing concerns about Chinese telecom equipment manufacturers Huawei and ZTE (see 1907020060). The Senate passed its 2020 NDAA version (S-1790) in June without language from any of the three proposed anti-Huawei amendments (see 1906270051). The House also approved an amendment led by Rep. Norma Torres, D-Calif., that would attach language from the 911 Supporting Accurate Views of Emergency Services (Saves) Act (HR-1629/S-1015). It would change the federal government's classification of public safety call-takers and dispatchers to “protective service occupations" rather than administrative or clerical occupations (see 1904050054). AT&T “enthusiastically supports” the HR-1629 language, Executive Vice President-Federal Relations Tim McKone said. House Rules Committee cleared the Torres and anti-Huawei/ZTE amendments Tuesday. One, led by Rep. Mike Gallagher, R-Wis., would impose conditions for the Department of Commerce to lift Bureau of Industry and Security addition of Huawei to its entity list that would impose export restrictions on the company, including a finding that Huawei and its executives haven't violated U.S. or UN sanctions and haven't engaged in theft of U.S. intellectual property during the preceding five years (see 1906190054). Undersecretary-Industry and Security Nazak Nikakhtar said Tuesday the department is reviewing export license applications to sell to Huawei to “mitigate as much of the negative impacts of the entity listing as possible” and hopes to have decisions “soon” (see 1907100013). A second Gallagher-led proposal would direct the president to submit a report to Congress on ZTE's compliance with a 2018 agreement that lifted Commerce's ban on U.S. companies selling telecom software and equipment to ZTE (see 1807130048). Language from Rep. Ruben Gallego, D-Ariz., would restrict the use of telecom equipment made by companies originating in countries that are U.S. adversaries at Department of Defense installations in U.S. territories in the Pacific Ocean. Commerce plans multiple guidances on its blacklisting of Huawei due to the large number of questions from U.S. exporters, officials told a BIS conference Thursday, to address the most common questions from U.S. industries. “We've gotten a lot of questions and we’ve been funneling them up the chain for clearance,” said Hillary Hess, director of Commerce’s regulatory policy division. Sen. Tom Cotton, R-Ark., meanwhile, criticized Treasury Secretary Steven Mnuchin Thursday after a report Mnuchin is encouraging Huawei's U.S. suppliers to seek licenses that would resume their sales to the company. “I strongly 'discourage' any American company from seeking licenses to deal with Huawei,” Cotton tweeted. The company “is a threat to Americans’ security, privacy, & prosperity. Don’t be the proverbial capitalist who sells the rope the communists will hang us with.”
The Commerce Department is reviewing export license applications to sell to Huawei to “mitigate as much of the negative impacts of the entity listing as possible” and hopes to have decisions “soon,” said Nazak Nikakhtar, Commerce undersecretary-industry and security. Nikakhtar, speaking Tuesday at Commerce's Bureau of Industry and Security’s annual export controls conference, briefly discussed Huawei after Commerce Secretary Wilbur Ross told the conference Huawei won't be removed from BIS’ entity list, confirming July 3 comments from a spokesperson (see 1907050003). Commerce is planning to roll back some restrictions on export licenses to Huawei and evaluate applications based on their U.S. national security impacts. White House Chief Economic Adviser Larry Kudlow said at a Tuesday CNBC event that some Huawei “general merchandise” sales will be permitted. Commerce’s altered approach came from recent feedback from U.S. companies, said Nikakhtar. “We’re moving forward cautiously by recognizing that the right approach is one that allows U.S. businesses to grow while we don’t stifle innovation but importantly while we also protect national security,” she said. President Donald Trump initially made the announcement at the G-20 Summit in Japan, saying the U.S. and China had agreed to resume trade talks (see 1907020060). Nikakhtar said BIS “recognizes the impact our entity listing has on U.S. exporters” and urged companies to make use of the 90-day temporary general license the agency issued in May. She said BIS hopes U.S. industries “consider shifting towards other sources of equipment, software and technology.” Huawei’s inclusion on the entity list “was not taken lightly,” Nikakhtar said. “We should not, nor should we ever, fail to take action because of a company's size or our dependence on export sales.”
The Commerce Department will continue its presumption of denial policy for license applications for exports to Huawei, a Commerce spokesperson said, saying the Chinese company remains on Commerce’s entity list. The department will review export license applications for “their national security impacts” and plans to review licenses “under the highest national security scrutiny,” the spokesperson said. At the G-20 Summit in Japan, President Donald Trump announced the U.S. will loosen restrictions on exports to Huawei and allow U.S. companies to “sell their equipment” as long as “there’s no great national emergency problem.” National Economic Council Director Larry Kudlow said June 30 the U.S. will grant license applications for products that China can easily get elsewhere. There has been uncertainty about which specific products will get export licenses and when the changes will take effect (see 1907020017). “The Department intends to notify companies of decisions on export license applications once the review is complete,” the Commerce spokesperson emailed Wednesday.
With President Donald Trump’s announcement that U.S. companies will be allowed to sell to Huawei (see 1907010070 or 1907010015), it remains unclear how and if the Commerce Department 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 of the Center for Strategic and International Studies and Commerce’s former undersecretary for export administration. Reinsch 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-days and be expanded to cover more items, Reinsch said. “The debate will be about what items will be covered,” Reinsch emailed. “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, noting 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. Semiconductor Industry Association President John Neuffer called the announcement “good news for the semiconductor industry, the overall tech sector, and the world’s two largest economies.” Commerce plans to grant export licenses for products that China can easily get from other countries, including “various chips and software,” said National Economic Council Director Larry Kudlow Sunday on CBS and Fox News. “Anything to do with national security concerns will not receive a new license from the Commerce Department,” Kudlow said on CBS. A U.S.-China Business Council spokesperson said the specifics of the announcement were unclear but the move likely will provide relief for U.S. exporters. The net effect and next steps in Congress are difficult to predict (see 1907020060).
The net effect of U.S. concessions on Huawei is murky, much like U.S. trade policy at present, experts said in interviews this week. President Donald Trump and Chinese President Xi Jinping agreed at the G20 conference in Osaka, Japan, to delay discussion of such U.S. sanctions “until the end” of trade talks (see 1907010070). Such penalties were seen as one of the best U.S. bargaining chips with China (see 1905240038). It’s unclear whether Congress will be able to channel into action bipartisan outcry over President Donald Trump’s move to ease federal restrictions on the Chinese telecom equipment manufacturer, experts said.
Tech and business groups hailed President Donald Trump’s decision postponing the fourth installment of tariffs as his administration tries to negotiate a comprehensive trade deal with China, though three existing rounds of tariffs stay as is. Bipartisan condemnation greeted Trump’s surprise announcement he will let U.S. companies resume shipments to Huawei, though the tech-equipment giant remains subject to Commerce Department export administration regulations and entity list restrictions (see 1905160081).
An internal “review” at Micron Technology found the memory-chip supplier could “lawfully resume shipping a subset of current products” to Huawei because they aren't subject to Commerce Department export administration regulations and entity list restrictions, said CEO Sanjay Mehrotra on a fiscal Q3 earnings call. Micron reinstated those shipments about two weeks ago, he said Tuesday.
The U.S. temporary general license after it added Huawei to its entity list was “almost no relief” for America's semiconductor industry, which has been hurt severely by the move, said Semiconductor Industry Association CEO John Neuffer. At a Washington International Trade Association discussion last week, Neuffer underscored the importance of the Chinese market to U.S. semiconductor exporters and said the Trump administration should more tactfully negotiate with China. “We would like the U.S. government to better balance its national security concerns with its economic security concerns,” Neuffer said. He said there's an inaccurate perception chipmakers were aided by the Commerce Department Bureau of Industry and Security's temporary move (see 1905290036). “It leaves a major hole for us,” Neuffer said, noting Huawei is one of the “world’s biggest” telecom gear and cellphone providers. “There’s basically no reprieve.” If China’s expected June 1 tariff increase affects U.S. consumer goods including computers and cellphones, which had previously been kept off the tariff lists, Neuffer said his industry will suffer significant losses, partly because China is a large portion of that industry's export market. “Because they are our customers,” Neuffer said, “we will get hit and so will the American consumer.” Neuffer said any U.S.-China decoupling is a “folly,” and the Trump administration’s desire to bring all U.S. supply chains back to the U.S. is “not realistic.” The White House didn't comment Friday.