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The United States can scale back Huawei trade restrictions to help existing Reuters customers

© Reuters. FILE PHOTO: A woman looks at her phone as she walks past a Huawei store in Beijing

By Karen Freifeld

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

The trading department, which effectively halted Huawei's ability to buy US components and components, is considering issuing a temporary general license to "prevent interruptions in existing network operations and equipment," a spokesman said.

For example, potential license beneficiaries may include ISPs and mobile phone service providers in thin populated locations such as Wyoming and Eastern Oregon who purchased Huawei's networking equipment in recent years.

In fact, the trading department would allow Huawei to buy US merchandise so it could help existing customers maintain network and equipment reliability, but the Chinese company would still not be able to buy US parts and components to manufacture new products.

The potential regulatory roll-out suggests that changes in Huawei's supply chain may have immediate, far-reaching and unintended consequences.

The black list, officially known as placing Huawei on the trading department's device list, was one or two efforts of the Trump administration this week allegedly made in an attempt to counter national security risks. In an executive order, President Donald Trump also effectively prevented the use of his equipment in US telecommunications networks.

The United States believes that Huawei's smartphones and networking equipment could be used by China to spy on Americans, claims the company has repeatedly denied.

The recent trading movement comes as China has hit a more aggressive tone in its trade war with the United States, suggesting a resumption of talks between the world's two largest economies would be meaningless unless Washington changes its course.

A spokesman for Huawei, the world's largest manufacturer of telecom equipment, did not immediately respond to a request for comment.

Of the $ 70 billion spent by Huawei to buy components in 2018, about $ 11 billion went to US companies, including Qualcomm (NASDAQ :), Intel Corp. (NASDAQ 🙂 and Micron Technology Inc. (NASDAQ :). "If the trading department issues the license, US suppliers would still need separate licenses to run new business with Huawei, which would be extremely difficult to obtain," said spokesman.

The temporary general license lasts for 90 days, she said and would be published in the federal register, just as the rule that adds Huawei to the business list is published in the government's publication on Tuesday.

"The aim is to prevent security damage to non-Huawei devices that use their equipment," said lawyer Kevin Wolf, a former trade department official.

The listing of devices prohibits Huawei and 68 affiliates in 26 countries from purchasing US goods and technology without licenses that are likely to be denied.

The device list identifies companies believed to be involved in activities that violate US national security or foreign policy interests.

In a final rule published on Thursday, the government tied Huawei's company listing to a criminal case against the company in Brooklyn, New York.

US prosecutors revealed the allegation in January and accused the company of conducting bank fraud to get embargo on US goods and services in Iran and to move money out of the country through the international banking system.

Huawei's CEO Meng Wanzhou, daughter of the company's founder, was arrested in Canada in December in connection with the prosecution, a move that has led to a three-way diplomatic crisis with the United States, China and Canada.

Meng, who was released on the castle, remains in Vancouver and fights extradition. She has kept her virginity, and Huawei has entered into an accusation that he is not guilty of New York.

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

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