US tightens conditions around 5G relating to Huawei suppliers

Washington — The Biden administration has informed some suppliers to China’s Huawei Technologies of tighter conditions on previously approved export licences, prohibiting items for use in or with 5G devices, according to people familiar with the move.

The 5G ban is effective as of this week, according to the people, who asked not to be identified to discuss nonpublic communications.

The rules create a more explicit prohibition on the export of components like semiconductors, antennas and batteries for Huawei 5G devices, making the ban more uniform among licensees. Some companies had previously received licences that allowed them to keep shipping components to Huawei that the Chinese company may have then used in 5G equipment, while other companies were already subject to tighter restrictions.

Companies had complained about confusing rules after former President Donald Trump’s administration added Huawei to the Entity List, requiring that US firms obtain government licences if they want to sell US tech and intellectual property to the Chinese telecommunications-equipment giant. US officials had deemed the company a national security threat.

The move is also a sign that the Biden administration plans to move forward on the tighter export controls implemented under Trump and more broadly indicates officials are following through on pledges to be tough on China. In an interview with MSNBC earlier in March, commerce secretary Gina Raimondo promised to use the Entity List “to its full effect.”

“From one perspective, it’s cleanup and correcting mistakes from the previous administration,” said William Reinsch, who served as undersecretary of commerce for export administration in the Clinton administration and is now senior adviser at the Center for Strategic and International Studies. “There’s bipartisan support for a tough line on technology transfer to China, and this reflects that.”

Chinese-listed telecom equipment stocks such as Fiberhome Telecommunication Technologies and Shennan Circuits fell more than 1%, while rival ZTE  was largely unchanged in Hong Kong and down about 1.8% in Shenzhen.

Protecting interests

The US commerce department’s bureau of industry and security, which oversees the Entity List, said in an e-mailed statement that it could not comment on “specific export licensing questions.” The bureau said it “works with its inter-agency partners to apply consistently the licensing policies set forth in the Export Administration Regulations to protect US national security and foreign policy interests.”

The Trump administration used export controls, prohibitions and executive orders to block companies including Huawei, chipmaker Semiconductor Manufacturing International, ByteDance’s TikTok and Tencent Holdings from US goods and consumers. Now, it’s up to Biden whether to maintain, remove or deepen those measures.

US secretary of state Antony Blinken and National Security Advisor Jake Sullivan will meet their Chinese counterparts in Alaska next week. It would represent the highest-level in-person exchange between the two sides since President Joe Biden took office in January. Biden and Chinese President Xi Jinping spoke by phone on February 10.

Trump slapped tariffs on hundreds of billions of dollars of imports from China, sparking a trade war that hurt US manufacturing and agriculture even as it protected some slices of industry like steelmakers.

While Biden criticised Trump’s strategy and promised to work with global allies to confront China on issues including intellectual property theft, he’s also indicated that he won’t immediately remove the tariffs, taking time to review US policy.

In late February the Biden administration also signalled that it intends to go ahead with a Trump administration-proposed rule to secure the information-technology supply chain, a move that gives the commerce department broad authority to prohibit transactions involving “foreign adversaries”.

The interim rule, which will allow the department to monitor transactions of governments including China’s, was first proposed by the previous administration in January — days before Biden’s inauguration — and follows an executive order Trump signed in 2019. The department said it would accept public comments on the plan until March 22, the same day it becomes effective.

Bloomberg