Trump signs order effectively banning Huawei telecom equipment in US

Lester Mason
May 18, 2019

He has not ruled out imposing punitive levies on all of China's imports to the United States.

China on Thursday slammed a decision by the U.S. government to put telecom equipment giant Huawei on a blacklist and said it will take steps to protect its companies, in a further test of ties as the economic heavyweights clash over trade.

The missive, which could ultimately become a blanket ban, will "prohibit transactions posing an unacceptable risk to the national security of the United States or the security and safety of United States persons", according to a White House statement.

The Commerce Department first gave notice on Wednesday that it was adding Huawei to the list. Just $5 a month.

Huawei would be the largest business ever subjected to the controls, a law enforcement measure that requires it to obtain USA government approval on purchases of United States technology, said Kevin Wolf, a former U.S. assistant secretary of commerce for export administration.

China responded angrily, as it has to other US accusations and threats against Huawei - a private company, but much revered as a national champion.

Asked whether the government would reconsider its stance on Huawei, Prime Minister Theresa May's spokesman said: "As you know, in relation to Huawei, we are reviewing the right policy approach for 5G and when an announcement is ready the culture secretary will update parliament".

"We are ready and willing to (talk to) the USA government and come up with effective measures to ensure product security", the company said in a statement. Similar comments were repeated in a separate Ministry of Commerce press conference later the same day.

The U.S. has not directly responded to this economic argument, but has maintained for a long time that Huawei's business activities pose a threat to national security.

Commerce Secretary Wilbur Ross on mounting concerns over Huawei, U.S. trade negotiations with China, steel and aluminum tariffs, USMCA and auto tariffs.

The company also tried a bit of de-escalation diplomacy, saying it was willing to "communicate with the ensure product security".

The steps taken against Huawei this week raise obvious parallels to last year's "death sentence" on another Chinese ICT firm, ZTE.

"Unless handled carefully, this situation is likely to place US and Chinese companies at new risk", the report said.

"Under President Trump's leadership, Americans will be able to trust that our data and infrastructure are secure". Accordingly, there's some speculation that the Huawei gambit is meant mostly as a negotiating card - that Trump is hoping he can do Xi another "favor" (as he described the ZTE reversal) in exchange for concessions in the trade negotiations.

The US Commerce Department followed up with a more direct hit on the tech giant, adding it to a blacklist that will make it much harder for the firm to use crucial US components in its array of phones, telecom gear, databases and other electronics. Plus, as my colleague Ankit Panda noted, the Trump administration could keep Huawei on the Entity List even while rendering the designation toothless by simply granting whatever licenses are requested.

The pain for Huawei's supply chain would be redoubled if the trade war were to send shock waves through the larger Chinese technology industry.

USA agricultural goods have been targeted by China's retaliatory tariffs, and American farmers, a key political constituency for Trump, are anxious.

"What these trade negotiations could mean for us is that maybe then the USA government would be willing to talk with us", he said.

He said that to place China in a potentially advantageous exploitative position in the UK's future telecommunications systems "is a risk, however remote it may seem at the moment, we simply do not need to take". The worldwide community bears witness to all this.

Now just because Huawei is on that list doesn't necessarily mean the company will actually be banned from acquiring components from US companies, but that scenario is now much more likely and can at the very least be leveraged over China as the trade war between the two countries escalates. Huawei has repeatedly denied this.

Other reports by Iphone Fresh

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