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The Huawei logo outside its factory campus in Dongguan in March. Photo: Reuters

US Commerce Department places China’s Huawei and 70 affiliates on trade blacklist

  • Being put on US ‘Entity List’ will make it much harder for telecoms giant to buy parts and components from US companies
  • Commerce secretary says Trump backed decision to prevent US technology from being used by foreign entities to ‘potentially undermine US national security’

The US Commerce Department said on Wednesday it is adding Huawei Technologies Co Ltd and 70 affiliates to its so-called “Entity List” – that bans the telecom giant from buying parts and components from US companies without US government approval.

US officials said the decision would also make it difficult if not impossible for Huawei, the largest telecommunications equipment producer in the world, to sell some products because of its reliance on US suppliers.

US Commerce Secretary Wilbur Ross at a conference in Beverly Hills in April. Photo: Bloomberg

Under the order that will take effect in the coming days, Huawei will need a US government licence to buy American technology. Huawei did not immediately comment.

Commerce Secretary Wilbur Ross said in a statement that US President Donald Trump backed the decision that will “prevent American technology from being used by foreign owned entities in ways that potentially undermine US national security or foreign policy interests”.

Trump declares national emergency, laying ground for US ban on Huawei

Separately on Wednesday, the president signed an executive order declaring a national emergency barring the use of telecommunications equipment made by companies that are deemed a threat to national security. While the order did not name China or Chinese companies specifically, it clears the way for an outright ban on products made by Huawei.

The Trump administration has aggressively lobbied other countries not to use Huawei equipment in next-generation 5G networks and the blacklisting takes place in the wake of new tariffs on Chinese goods amid an escalating trade war.

The Commerce Department said the move comes after the US Justice Department unsealed an indictment in January of Huawei and some entities that said the company had conspired to provide prohibited financial services to Iran. The department said it has a reasonable basis to conclude that Huawei is “engaged in activities that are contrary to US national security or foreign policy interest”.

Huawei reported first-quarter revenue of US$27 billion last month and said it had shipped 59 million smartphones in the first quarter.

In March 2016, the Commerce Department added ZTE Corp to the entity list over allegations it organized an elaborate scheme to hide its re-export of US items to sanctioned countries in violation of U.S. law.

The restrictions prevented suppliers from providing ZTE with US equipment, potentially freezing the Huawei rival’s supply chain, but they were short-lived. The US suspended the restrictions in a series of temporary reprieves, allowing the company to maintain ties to US suppliers until it agreed to a plea deal a year later.

Huawei’s supply chain depends on contracts with American companies
Ben Sasse, US senator

In August, Trump signed a bill that barred the US government itself from using equipment from Huawei and ZTE.

Senator Ben Sasse, a Republican, said “Huawei’s supply chain depends on contracts with American companies” and he urged the Commerce Department to look “at how we can effectively disrupt our adversary”.