One day after the Pentagon and, by extension, the White House sent an unmistakable warning to the UK, Germany, the rest of America’s European allies and – most importantly – Huawei and the Chinese regime, it appears the Pentagon is already moving to make it much more difficult for American manufacturers to sell their products to Huawei.
Last summer, the Trump Administration loosened restrictions on Huawei stemming from the Commerce Department’s decision – made earlier in the year – to add Huawei to a “black last” barring American firms from selling their products to the company. The company has technically remained on the blacklist, but the export ban was, for the most part, not enforced (Commerce only intervened if it was a matter of important national security).
The decision comes not long after the UK decided to allow Huawei parts in “non-core” elements of its national 5G network.
Pentagon undersecretary of policy John Rood is reportedly overseeing the new policy, and has overruled concerns about potential blowback to American semiconductor firms.
The Defense Department’s undersecretary for policy, John Rood, has overruled those concerns, the people said.
Defense and Commerce did not immediately respond to requests for comment.
U.S. semiconductor companies found other ways around the blacklisting, including supplying Huawei through subsidiaries or partners in foreign countries.
Currently, a foreign-produced good that contains 25 percent U.S.-origin content can be exported to a company on the entity list. The Commerce rule would cut that threshold down to 10 percent for any goods exported to Huawei or its in-house semiconductor business HiSilicon.
Politico doesn’t go into great detail on the policy, but it does say that it would reduce the threshold for companies on the Commerce Department’s “entities list” – that is, the blacklist. Under current rules, they can buy products that contain up to 25% American-made components. The new rule would lower that threshold to 10%.
The Commerce Department reportedly withdrew the plan at some point in the not-too-distant past because of these objections.
Further restricting sales of American made components and products to Huawei might hurt American tech firms and ultimately give China an advantage as the two countries battle for the best chip technology. But cutting Huawei off from the American market would create serious complications for the companies supply chain.
If anything, it shows us that Washington believes protecting the Five Eyes Intelligence Alliance – the intelligence-sharing pact between the US, UK, Canada, Australia and New Zealand – might be worth destabilizing trade relations with Beijing and allowing American semiconductor producers to take a serious shellacking.
Most importantly, readers should remember that this report follows a series of reports yesterday claiming the German legislature is on track to follow the UK – and its conservative Trump ally leader PM Boris Johnson – and reject Washington’s arguments about Huawei being a national security threat.