Commerce Department offers temporary exemptions to Huawei blacklisting

Huawei has objected to being banned from providing equipment for Australian 5G rollouts (Image RomanBabakin / iStockPhoto)
The Commerce Department placed Huawei on the entity list last week after the department decided it posed a national security risk. (RomanBabakin / iStockPhoto)

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has said it will allow some companies to continue to do business with Huawei under specific conditions, after last week placing the Chinese company on its "entity list," a move intended to effectively bar Huawei from sourcing components from U.S. companies.

The BIS said it would issue a temporary general license (TGL) to Huawei and its 68 affiliates to authorize some U.S. telecom companies to continue to engage in export transactions with Huawei for the next 90 days. The TGL is designed to support continued operations of existing networks and to support existing mobile services for a limited time, allowing companies that rely on Huawei to continue operations without facing trade penalties.

RELATED: Commerce Dept. bans Huawei, 70 affiliates from sourcing U.S. components

“The Temporary General License grants operators time to make other arrangements and the Department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services,” said Secretary of Commerce Wilbur Ross in a statement. “In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks.”

The announcement comes one day after Google parent Alphabet indicated it would restrict Huawei’s access to the Android platform and Google’s Play Store. However, in light of the Commerce Department’s TGL announcement, Google has reversed its decision. It will now provide Huawei phones with Android updates up until Aug. 19, CNBC reports.

A further restriction by Alphabet would be a huge blow to Huawei’s mobile phone business, which relies on the Android platform. Also, Huawei's blacklisting generally has been seen as having a potentially negative impact on U.S. suppliers.

The Commerce Department placed Huawei on the entity list after the department decided it posed a national security risk for “alleged violations of the International Emergency Economic Powers Act (IEEPA), conspiracy to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged violations of U.S. sanctions.”

The decision came as U.S. President Donald Trump declared a national emergency in relation to telecom equipment, claiming that “foreign adversaries are increasingly creating and exploiting vulnerabilities in information and communications technology and services.”  

RELATED: Trump to ban U.S. carriers from using network gear posing security risk: Reuters

Trump’s executive order declaring the emergency is seen as part of wider trade standoff between the U.S. and China, and as the Trump administration continues to lobby allies to ban Huawei gear.

According to a report from Wall Street Journal, the U.S. has over the past year “sharply slowed” its approvals of hiring Chinese nationals for engineering jobs at U.S. chip companies like Intel and Qualcomm These companies rely heavily on Chinese workers to fill advanced engineering positions due to a dearth of qualified engineers in the U.S.

The WSJ reports the Commerce Department’s approval of hires and job assignments for Chinese nationals has slowed from a couple weeks to up to eight months, which has caused disruptions in chipmakers’ ability to fill positions.