Huawei HQ in Shenzhen, ChinaWASHINGTON: The Commerce Department has expanded its ban on imports from Chinese tech behemoth Huawei by adding 46 affiliate companies in 25 countries — including in a number of US allies — to the black list; while also extending the deadline for consumers to comply with the ban from Aug. 19 to Nov. 18.

“One cannot sanction a large company like Huawei without extending that policy to its subsidiaries and close affiliates. It will have a moderate impact on allied countries, but more specific impact on those affiliate companies exporting to the US,” says Nicholas Eftimiades, a former senior US senior intelligence officer. “The policy is very surgical in its approach.”

The move comes six weeks after President Donald Trump suggested that he intended to lift the ban on US sales to Huawei after meeting with Chinese President Xi Jinping in the margins of the G-20 summit in Osaka — although he did not indicate that he would lift the block on US buying of technologies from Huawei. Huawei, which has the largest worldwide capacity for production of 5-G wireless network hardware and software, is believed by the US Intelligence Community to be a de facto arm of Chinese intelligence.

Prohibiting US firms from buying products from yet more Huawei-related firms incorporated outside the US may further exacerbate the ongoing tensions between Washington and a number of allied nations who do not view trade with Chinese firms as a major security threat. Italy, for instance, has been considering a bid — that includes an offer of $3.2 billion in investments in the economically strapped nation — by Huawei and fellow Chinese corporation ZTE (also subject to the US ban) to provide the country with a 5G network and related equipment.

The new ruling, published today, expands the number of Huawei-related companies on the DoC’s Entity List from the initial 69 listed in May to 115, with the additional affiliate firms located in Argentina, Australia, Bahrain, Belarus, Belgium, Brazil, People’s Republic of China, Costa Rica, Cuba, Denmark, France, India, Indonesia, Italy, Kazakhstan, Mexico, New Zealand, Panama, Portugal, Romania, Russia, South Africa, Sweden, Thailand and the United Kingdom.

The Entity List is the provision under US Export Administration Regulations (EAR) that “identifies entities for which there is reasonable cause to believe, based on specific and articulable facts, that have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States,” the DoC ruling explains.

At the same time, the ruling extends the Temporary General License (TGL) that allows US firms limited “engagements in transactions involving the export, reexport, and transfer of items” to the black-listed firms until November “to afford consumers across America the necessary time to transition away from Huawei equipment, given the persistent national security and foreign policy threat,” according to an accompanying rule by the DoC Bureau of Industry and Security. 

Eftimiades said that as US firms were already on notice of the planned action, “there is enough time to find alternate suppliers.” But, he said, “The question is, at what cost? Rural communications companies are more dependent on inexpensive hardware providers. The hope is that with increased production the market will be able to fill the gap left by Huawei products at a reasonable cost.”