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The US semiconductor industry argues that further tightening of sales to Huawei Technologies, the world’s largest telecommunications equipment supplier, could reduce its competitiveness and ability to innovate. Photo: Agence France-Presse

Huawei gets reprieve as Trump aides disagree on restrictions

  • The Treasury Department and the Pentagon are said to have opposed further tightening of US tech sales to Huawei

A United States proposal to further restrict sales to Huawei Technologies has encountered objections within the Trump administration and is being held up as officials debate whether the step could harm exporters, a person familiar with the process said.

US Commerce Secretary Wilbur Ross on Thursday said new rules coming soon will put more limits on technology sales to Huawei, which American officials suspect of making telecommunications equipment that could be used for espionage – an allegation the Chinese company has denied.

The proposal, however, has foundered at least temporarily amid objections, said the person who spoke on condition of anonymity because the discussions are not public.

The Wall Street Journal reported on Friday that the Treasury Department and the Pentagon opposed the tightening. Asked on Friday about the matter, Defence Secretary Mark Esper seemed to acknowledge the administration’s discussions.

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Esper did not specifically address Huawei, but said there is always a “back-and-forth” during inter-agency talks about proposed rule changes.

At issue are rules to make it harder for American companies to sell to Huawei from their overseas facilities. Some US companies have kept selling to Huawei by using exemptions if most work to create the products happens outside the US.

The current threshold permitting sales effectively kicks in when 75 per cent of the work occurs overseas. The administration is debating raising this to 90 per cent.

The US semiconductor industry argues that further tightening could reduce its competitiveness and ability to innovate.

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Such issues are “never black and white”, Esper said in remarks at the Centre for Strategic and International Studies, but restrictions generally must consider “second- and third-order effects” on American companies and “sustaining those companies’ supply chains and those innovators”.

The Commerce Department did not respond to a request for comment. Rob Manfredo, a spokesman for Huawei, declined to comment.

Huawei, the world’s largest telecoms equipment supplier, is one of the biggest purchasers of chips. US semiconductor makers have argued that a complete clampdown is counterproductive as many of the parts Huawei needs can be bought from non-US providers. Huawei also buys software and other products from US companies.

Three Republican senators in a letter on Friday asked Esper to explain the Defence Department’s stance.

“Huawei is an arm of the Chinese Communist Party and should be treated as such,” the lawmakers said in the letter, which was distributed by email. “We are concerned that the Defence Department is not appropriately weighing the risks.”

Signatories to the letter were Nebraska’s Ben Sasse, Tom Cotton of Arkansas and Marco Rubio of Florida.

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