The US Adds More Sanctions On Huawei


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Comserve Inc.

Aug 20, 2020, 12:00 EST


Bronx, United States, Aug 20, 2020, 12:00 /Comserve / -- The US administration to further limit Huawei’s access to computer chips and other technologies expanded its sanctions on the tech giant.

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Washington D.C., 18, Aug 2020- The US administration to further limit Huawei’s access to computer chips and other technologies expanded its sanctions on the tech giant. The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) has further restricted Huawei Technologies (Huawei) and its non-U.S. entities on the Entity List from access to a list of items that are being produced domestically as well as abroad using US technology and software. It has also included another 38 affiliates of Huawei to the Entity List.

This expansion in sanctions imposes a license requirement for all the items subject to the Export Administration Regulations (EAR). It also modified 4 existing Huawei Entity List Entries. License requirements have also been imposed on any transaction which involves items subject to Commerce export control jurisdiction where an Entity List party is involved, for instance where Huawei or any other entity from the Entity List will act as end-user, intermediate or a purchaser. These instructions have been put into effect immediately and will prevent Huawei‘s attempt in circumventing U.S. export controls and obtain electronic components being produced or developed using U.S. technologies. It also restricts Huawei from obtaining any foreign-made chips which are produced or developed using U.S. software or technology comparable to the same degree as U.S. chips.

Earlier, in May 2020 BIS had amended the Foreign Produced Direct Product(FDP) rule which targeted Huawei’s acquisition of the semiconductors which were made with the use of certain U.S. software and technologies. This latest amendment further refined the FDP rule by applying the control of transactions for a foreign item made with the help of U.S. software or technology, which will be used or incorporated into or be used in the development or production of equipment, part or component produced or ordered by Huawei or any entity on the Entity List. Also, control to transactions has also been applied when any Huawei entity within the Entity List will be a party to a transaction such as an end-user, purchaser, intermediate consignee or ultimate consignee.

These 38 Huawei affiliates have been added to the Entity List because they present a significant risk of acting on behalf of Huawei which is contrary to the foreign policy and the national interests of the United States. These sanctions come at a time when there are already heightened US-China tensions regarding the privacy policy of Chinese apps in the US. President Trump is looking to ban TikTok unless its operations in the US are bought by a US company.

The USA is the world’s largest economy but it also got hit severely the coronavirus pandemic with a total of 5,382,125 cases as of 17, Aug 2020 with about 169,250 deaths. Its real GDP in the first quarter of 2020 decreased at an annual rate of 5% and for the second quarter, it is speculated to decrease at an annual rate of 32.9% according to the estimates released by the Bureau of Economic Analysis.

Huawei is a Chinese tech giant with the company’s global sales revenue at CNY858.8 billion (rounded off) in 2019 which is a 19.1% increase year-on-year. The net profit reached CNY62.7 billion with a cash flow topping CNY91.4 billion from operating activities. It also led the commercial rollout of 5G networks in 2019 and it has been chosen by over 700 cities and 228 Fortune Global 500 companies around the world.

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Comserve Inc.
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