By Ted Mann
WASHINGTON -- A broad push by Trump administration hard-liners
to stem the flow of high-tech exports to China -- even if doing so
means limiting the market access of major U.S. companies -- hit a
hurdle Tuesday: President Trump himself.
In a series of tweets, Mr. Trump denounced efforts promoted by
some within the White House and Commerce Department to halt the
export of controlled technologies -- including jet engines and
semiconductors -- to China, out of concern the products could be
pirated and used to undermine U.S. commercial advantage in those
sectors.
"We don't want to make it impossible to do business with us,"
Mr. Trump tweeted. "That will only mean that orders will go to
someplace else."
The tweets followed a Wall Street Journal report over the
weekend that officials within the administration were pushing to
halt shipments of jet engines co-produced by General Electric Co.
to China. The engines were designed for the Comac 919, a new
commercial airliner that China hopes will grow to rival offerings
from Boeing Co. and Airbus SE.
Officials are also considering changes to what is known as the
foreign direct product rule, aimed at limiting the use of U.S.
technology in military and national-security functions. The changes
would require semiconductor manufacturers to obtain export licenses
to use U.S. equipment when producing chips for Huawei Technologies
Co. of China, people familiar with the discussions said.
The proposals have triggered a vigorous debate within the
Commerce Department and the White House, which had originally
planned to address the matter during a cabinet meeting on Feb. 28.
The meeting has been canceled, according to a person familiar with
the discussions.
Until Tuesday, Mr. Trump hadn't weighed in on the matter. But in
tweets and remarks before boarding Air Force One, he was dismissive
of the proposals to limit those exports, and questioned what he
called the use of "a fake term of national security" to justify new
restrictions.
"I think people are getting carried away with it," Mr. Trump
said on the tarmac at Joint Base Andrews, en route to a fundraiser
in Los Angeles.
"I mean, things are put on my desk that have nothing to do with
national security, including with chip makers and various others,"
Mr. Trump said. "So we're going to give it up, and what will
happen? They'll make those chips in a different country or they'll
make them in China or in someplace else."
Mr. Trump's intervention roiled an internal debate over how to
handle China's rising technological capability. It was a blow to
hard-liners in the administration, but good news for companies such
as GE, which had privately argued in favor of continuing the engine
shipments, according to people familiar with the discussions.
A senior administration official said the Commerce Department
intended to comply with Mr. Trump's wishes and issue GE the license
it needs to continue exporting engines.
While Mr. Trump's tweets seemed to preclude further action, the
president has shifted his stance on issues before, including
backing away from restrictions on vaping and alternating between
hard-line and conciliatory positions on Chinese telecom company
Huawei.
The White House press secretary didn't respond to a question
about whether Mr. Trump had specifically ordered the Commerce
Department to grant GE a new export license for the LEAP 1C engines
that are supplied to the C919 program by CFM International, GE's
joint venture with Safran SA of France.
GE has contended fears that the engines could be
reverse-engineered were overblown because of the relative
complexity of their materials and design, people familiar with the
discussions said.
Officials who pushed to block the engine shipments did so in
part because they hoped to cripple the development of the C919
passenger jet, the people familiar with the discussions said. The
narrow-body airliner is scheduled to enter service in 2021.
But blocking the engine exports would have come as a shock to a
major U.S. manufacturer that has invested for years in a global
footprint, including in China. GE has received licenses from the
Commerce Department since 2014 for the engine-export program. The
Comac engines are a variant of the LEAP jet engine made by CFM
International, the GE-Safran joint venture. The variant used on the
C919 accounts for a fraction of the total production of LEAP, which
has been a commercial success for GE amid a surge in global orders
for single-aisle airliners.
A GE spokeswoman declined to comment on the Trump tweets.
"GE has provided products and services in the global marketplace
for decades," a GE spokeswoman said over the weekend, after the
Journal reported on the proposal to halt engine shipments. "We
aggressively protect and defend our intellectual property and work
closely with the U.S. government to fulfill our responsibilities
and shared security and economic interests."
John Neuffer, the chief executive of the Semiconductor Industry
Association, praised Mr. Trump's comments in a written statement,
saying "sales of non-sensitive, commercial products to China drive
semiconductor research and innovation, which is critical to
America's economic strength and national security."
At a panel discussion in Washington on how to limit U.S. exports
to China, sponsored by the Information Technology and Innovation
Foundation, former Commerce Department official Kevin Wolf halted
the discussion to read the tweets aloud. There was laughter from
the audience as Mr. Wolf read aloud a Trump tweet calling the
proposed restrictions "ridiculous."
"That's the problem with the absence of a coherent policy and
with all seriousness intended, uncertainty is death to trade," Mr.
Wolf said. "This constant bouncing back and forth between what the
policy or the objective is, or...what national security does or
doesn't mean, actually in my view does more harm than good."
In his tweets Tuesday morning, Mr. Trump suggested that he had
told members of his cabinet that he had decreed that new
restrictions on foreign sales wouldn't be imposed. "I want to make
it EASY to do business with the United States, not difficult," the
president tweeted. "Everyone in my Administration is being so
instructed, with no excuses... THE UNITED STATES IS OPEN FOR
BUSINESS..."
--Katy Stech Ferek and Alex Leary contributed to this
article.
Write to Ted Mann at ted.mann@wsj.com
(END) Dow Jones Newswires
February 18, 2020 20:00 ET (01:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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