US blacklists Huawei as trade war with China escalates, places it on entity list

Escalating the trade war with China, US President Donald Trump signed an executive order on Wednesday banning American telecom companies from installing foreign-made equipment that could pose a threat to national security. Soon after the executive order—“Securing the Information and Communications Technology and Services Supply Chain”—was signed, the Bureau of Industry and Security (BIS) of the Department of Commerce announced that it will be adding Huawei Technologies Co. Ltd and its affiliates to its Entity List.

The Department of Commerce alleged that Huawei is engaged in activities that are contrary to US national security or foreign policy interest. As a result, sale or transfer of American technology to a company or person on the Entity List requires a license issued by the BIS, and a license may be denied if the sale or transfer would harm US national security or foreign policy interests.

The listing will be effective when published in the Federal Register.

“This action by the Commerce Department’s Bureau of Industry and Security, with the support of the President of the United States, places Huawei, a Chinese-owned company that is the largest telecommunications equipment producer in the world, on the Entity List,” Commerce Secretary Wilbur Ross said.

This will prevent American technology from being used by foreign-owned entities in ways that potentially undermine US national security or foreign policy interests, Ross said, adding that it has been done at the direction of the president.

In the executive order, the president determined that the unrestricted acquisition or use in the US of information and communications technology or services that are subject to the jurisdiction or direction of foreign adversaries augments the ability of those foreign adversaries to create and exploit vulnerabilities in information and communications technology or services and that can have potentially catastrophic effects, and thereby, constitutes an unusual and extraordinary risk to our national security, foreign policy and economy.

Trump “is incredibly” committed to preventing adversaries from turning American information and communications infrastructure into a liability as opposed to an asset, a senior administration official said.

The executive order addresses this imperative by empowering the Secretary of Commerce to prohibit transactions involving information and communications technology or services that are designed, developed, manufactured or supplied by persons owned by or controlled by or subject to the jurisdiction or direction of a foreign adversary, the official said.

Responding to questions, the official said the executive order is company and country agnostic. It is directed at any transaction involving information and communications technology or services and controlled by or subject to the jurisdiction of a foreign adversary that meets the criteria enumerated in the executive order.

Regulations issued by the Department of Commerce in the coming days will detail how determinations will be made on whether a transaction meets the criteria listed in the executive order, the official said.

Cutting across party lines, US lawmakers praised the administration’s announcement.

“This is a needed step and reflects the reality that Huawei and ZTE represent a threat to the security of US and allied communications networks. Under current Chinese security laws, these and other companies based in China are required to provide assistance to the Chinese state,” Senator Mark Warner said.

This executive order places a great deal of authority in the Department of Commerce, which must ensure that it is implemented in a fair and responsible fashion as to not harm or stifle legitimate business activities, he added.

“Huawei is a state-directed instrument of national power used by the Chinese government and Communist Party to destroy their international competitors, undermine US companies, spy on foreign countries and steal intellectual property and trade secrets,” Senator Marco Rubio said.

Strongly supporting the president’s executive order and Ross’s decision to issue a denial of export privileges against Huawei, Rubio said the administration deserves enormous credit for its efforts to comprehensively tackle the threat that Huawei and other foreign state-directed telecommunications companies pose through their efforts to undermine and endanger critical US systems and infrastructure.

“Earlier this year, Congress acted well within our constitutional authority to block Huawei from our telecommunications equipment market due to concerns with the company’s links to China’s intelligence services,” he said.

“As the administration continues to seek a fair and enforceable trade deal with China, I urge them to stand strong on Huawei and hold the Chinese government and its state-owned and state-directed enterprises accountable for their hostile actions threatening US economic and national security,” Rubio added.

“Let’s cut to the chase: China’s main export is espionage and the distinction between the Chinese Communist Party and Chinese ‘private-sector’ businesses like Huawei is imaginary,” said Senator Ben Sasse.

“The Trump Administration is right to recognise this reality and issue this order. Huawei’s supply chain depends on contracts with American companies and the Commerce Department ought to take a careful look at how we can effectively disrupt our adversary,” he added.