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The US may reduce Huawei's trade constraints to help existing Reuters customers

© Reuters. PHOTO: A woman watches her phone as she passes a Huawei store in Beijing

By Karen Friedheim

(Reuters) – The US Department of Commerce said on Friday that it could soon reduce the restrictions on Huawei Technologies after this week's blacklist would make it almost impossible for the Chinese company to serve its existing customers.

The Department of Commerce, which has practically stopped Huawei's ability to buy parts and components produced in America, is considering issuing a temporary general license to "prevent the disruption of existing network operations and equipment," a spokeswoman said.

Potential beneficiaries of the license may, for example, include Internet access providers and mobile phone services in sparsely populated areas such as Wyoming and East Oregon who have purchased Huawei network equipment in recent years.

Indeed, the Department of Commerce will allow Huawei to buy goods in the US so it can help existing customers maintain network and equipment reliability, but the Chinese company will still be unable to buy US parts and components to produce new products.

Potential withdrawal of the rules implies changes in Huawei's supply chain, which may have immediate, distant and unintended consequences.

The black lists, officially known as putting Huawei on the list of the Sales Department, were one or two of the Trump administration's efforts this week, allegedly made in an effort to defuse national security risks. In an executive order, President Donald Trump has also effectively banned the use of his equipment in US telecommunication networks.

The United States believes Huawei's smartphones and network equipment can be used by China to spy on Americans.

The latest trade move comes when China reaches a more aggressive tone in its trade war with the United States, suggesting that the resumption of negotiations between the two largest economies in the world will be meaningless if Washington does not change its course.

A spokesman for Huawei, the world's largest telecoms maker, did not respond immediately to a request for comment.

Of the $ 70 billion Huawei spent on purchasing components in 2018, about $ 11 billion went to US companies, including Qualcomm (NASDAQ :), Intel Corp. (NASDAQ 🙂 and Micron Technology Inc. (NASDAQ :). If the Department of Trade issues the license, US suppliers will still need separate licenses to conduct a new business with Huawei, which will be extremely difficult to obtain, the spokeswoman said.

The temporary General License will last 90 days, she said, and will be published in the Federal Register, just as the rule adding Huawei to the list of individuals will be published in the government's publication Tuesday.

"The aim is to prevent collateral damage to people who do not use Huawei using their equipment," said Washington lawyer Kevin Wolf, a former Sales Department official.

The company blames Huawei and 68 affiliates in 26 countries to buy US goods and technology without licenses that are likely to be denied.

The list of entities identifies companies that are believed to be involved in activities that conflict with national security or the interests of United States foreign policy.

In the latest rule, published on Thursday, the government bind Huawei's structure with a criminal case against the company in Brooklyn, New York.

US prosecutors have filed the indictment in January accusing the company of committing bank fraud to get banned US goods and services in Iran and export money from the country through the international banking system.

CEO Huawei Meng Wanzhou, daughter of the founder of the company, was arrested in Canada in December in connection with the indictment, which led to a trilateral diplomatic crisis involving the US, China and Canada.

Monk, who was released on bail, stays in Vancouver and is fighting for extradition. She has maintained her innocence and Huawei has ruled that he is not to blame in New York.

Trump injected other considerations into the criminal case after Meng's arrest when he told Reuters he would intervene if he helped to close a trade deal.

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