The Drama Around Huawei: Can U.S. Companies Do Business With The Chinese Chipmaker?

Author:Ms Antonia Tzinova, Ronald A. Oleynik, Jonathan M. Epstein, Terry L. Elling and Hwajeong Kim
Profession:Holland & Knight
 
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Antonia Tzinova, Ronald Oleynik, and Jonathan Epstein are Partners in Holland & Knight's Washington D.C. office Terry Elling is a Partner in Holland & Knight's Tysons office

Highlights

President Donald Trump saying at the recent G20 Summit in Japan that American companies could keep selling products to Huawei Technologies Co. Ltd. (Huawei) was another installment in the drama surrounding the Chinese tech giant. More than two weeks later, there still hasn't been any official action by the U.S. Department of Commerce's Bureau of Industry and Security (BIS) regarding removing Huawei from its list of entities that are subject to specific license requirements. There also has been no additional guidance on the Temporary General License allowing certain exports to Huawei to continue until Aug. 19, 2019. This Holland & Knight alert reviews the developments of the past two months and offers practical advice to companies affected by the Huawei confusion. President Donald Trump's remarks during the G20 Summit in Japan in late June were the most recent installment in the drama surrounding Huawei Technologies Co. Ltd. (Huawei), a Chinese tech giant, in the U.S.-China trade war. To quote Trump:

"One of the things I will allow, however, is, a lot of people are surprised we send and we sell to Huawei a tremendous amount of product that goes into the various things that they make. And I said that that's okay, that we will keep selling that product. These are American companies ... that make product and that's very complex, by the way, and highly scientific. And in some cases we're the ones that do it, we're the only ones that do it. What we've done in Silicon Valley is incredible, actually, and nobody has been able to compete with it, and I've agreed and pretty easily, I've agreed to allow them to continue to sell that product. So American companies will continue and they were having a problem, the companies were not exactly happy that they couldn't sell because they had nothing to do with whatever it was potentially happening with respect to Huawei, so I did do that."1

The immediate reaction in the media was that U.S. companies can now sell their products to Huawei, channeling the wishes of many U.S. businesses. A couple of days later, Reuters reported that "In an email to enforcement staff on [July 1] that was seen by Reuters, John Sonderman, Deputy Director of the Office of Export Enforcement, in the Commerce Department's Bureau of Industry and Security (BIS), sought to clarify how agents should approach license requests by firms seeking approval to sell to Huawei. All such applications should be considered on merit and flagged with language noting that 'This party is on the Entity List. Evaluate the associated license review policy under part 744,' he wrote, citing regulations that include the Entity List and the 'presumption of denial' licensing policy that is applied to blacklisted companies."2 Tellingly, the official statement from the Chinese government following the G20 Summit failed to mention the Chinese telecommunications manufacturer.3

Almost two weeks after that report, we haven't seen any official action by BIS regarding removing Huawei from the Entity List or issuing additional guidance on the Temporary General License allowing certain exports to Huawei to continue until Aug. 19, 2019. Secretary Steven Mnuchin at the U.S. Department of the Treasury, which doesn't have...

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