By Katy Stech Ferek
WASHINGTON -- The Trump administration has given permission to some U.S. suppliers to Huawei Technologies Co. to resume shipping to the Chinese telecom giant, easing export restrictions while U.S. negotiators struggle to wrap up the first stage of a trade deal, the Commerce Department said Wednesday.
Commerce officials put Huawei on an export blacklist in May, citing national security concerns. U.S. officials have warned that Huawei products could be used to spy on or disrupt telecommunications networks, which the telecom giant denies.
But President Trump, meeting with Chinese President Xi Jinping on the sidelines of the Group of 20 summit in Osaka, Japan, on June 29, agreed to ease the blacklisting for cases that didn't involve national security.
Commerce Secretary Wilbur Ross said late Tuesday on Fox Business Network that his agency had received nearly 300 requests for exemptions, and that he had begun approving some of those license applications.
"We've now been starting to send out the 20-day intent-to-deny letters and some approvals," he said.
A Commerce spokesperson said Wednesday that the approved licenses "authorize limited and specific activities which do not pose a significant risk to the national security or foreign policy interests of the United States."
While trade talks have largely avoided security-related matters such as those involving Huawei, the approvals were seen as constructive for U.S. negotiators seeking to remove some obstacles in the way of reaching a "phase one" deal that Mr. Trump outlined last month.
"I read Huawei as, 'I want to keep the door open for a deal,' so it's positive right now," said Derek Scissors, a trade expert at the American Enterprise Institute who has advised the Trump administration. "This is a goodwill gesture to the Chinese."
Huawei officials didn't respond to requests for comment Wednesday on the Commerce Department's announcement of the approvals.
Sen. Marco Rubio (R., Fla.) criticized the Commerce action. "Given that Huawei, a Chinese state-directed telecoms company, poses a clear and growing threat to economic and national security of the U.S. and its allies, I strongly believe it's against America's national security interest to grant licenses for U.S. exports that sustain or strengthen Huawei," he said in a statement. "The Commerce Department should be transparent to all U.S. lawmakers about what licenses they are approving with regards to Huawei."
Commerce officials didn't say how many licenses were approved, denied or still awaited clearance by its own application reviewers or those within the Departments of Defense, State or Energy, which also have a say in approvals. A person familiar with the situation said Wednesday that many applications were still awaiting a decision.
The news brought a sigh of relief to the country's semiconductor industry, even though some companies had determined in recent months that they could still sell Huawei certain products made outside the U.S. without violating export controls and risking steep fines. U.S. chip makers and other companies sent $11 billion in components to Huawei last year. Some chip makers had cut revenue forecasts after Huawei's blacklisting.
"Sales of these nonsensitive commercial products help ensure the competitiveness of the U.S. semiconductor industry," John Neuffer, Chief Executive of the Semiconductor Industry Association said Wednesday.
Last year, U.S. semiconductor companies sent $44 billion worth of shipments to overseas buyers, making those products the fourth largest U.S. export behind airplanes and oil. Semiconductor makers have manufacturing operations in 19 states, according to the Semiconductor Industry Association.
The next few months will determine how the temporary blacklisting might have affected the industry's supply chain. In an interview with The Wall Street Journal earlier this month, Huawei Chief Executive Ren Zhengfei said it had found other suppliers to make up for the loss of U.S. chips and other components.
U.S. markets didn't appear to respond favorably to the Commerce announcement. By early afternoon, the Dow had dropped 200 points on news reports that the first stage of a trade deal might not be completed this year.
The license approvals marked the second source of relief for Huawei's business from U.S. regulators this week. On Monday, Commerce officials gave Huawei more time to work with rural telecom providers that have purchased its equipment.
But further restrictions loom. The Federal Communications Commission is expected to vote Friday to designate Huawei a national security threat, which would stop U.S. telecom companies from spending part of an $8.5 billion federal fund designed to expand service in rural areas on Huawei equipment.
Federal officials are also working to tighten security on the country's telecommunications infrastructure through other avenues. In May, Mr. Trump declared a national emergency over the threats posed to that infrastructure, which stores sensitive information and connects first responders to citizens in need.
Commerce officials haven't released the details of how they intend to implement that order, which could impose additional restrictions.
--William Mauldin and Asa Fitch contributed to this article.
Write to Katy Stech Ferek at email@example.com
(END) Dow Jones Newswires
November 20, 2019 18:20 ET (23:20 GMT)
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