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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

New US curb on Huawei in limbo amid pushback from Pentagon

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WASHINGTON: The US Commerce Department has withdrawn a rule aimed at further reducing sales to China’s Huawei Technologies amid concerns from the Defence Department the move would harm US businesses, people familiar with the matter said.


The decision to pull the rule from the formal review process leaves its future in jeopardy and highlights deep divides within the Trump administration over how best to approach the blacklisted telecoms giant and the broader war with China over technological dominance.


President Donald Trump’s administration plans a Cabinet-level meeting next week to discuss the rule, which could be revived, killed or rewritten, one of the sources said, amid pushback from the US Treasury Department as well.


A Commerce Department representative said “if and when” the agency has something to announce, “we will do so.” Commerce in May placed Huawei on a trade blacklist, citing national security concerns. That allowed the US government to restrict sales of American-made goods to the company and a small number of items made abroad that contain US technology.


Under current regulations, key foreign supply chains remain beyond the reach of US authorities, fueling frustration among China hawks within the administration and a push to expand US authority to block more shipments to Huawei.


It reported in November that the Commerce Department was considering broadening the rule that dictates how much American content in a foreign-made product gives the US government authority to regulate exports.


The United States, under current conditions, can require a licence or block the export of many high-tech products shipped to China from other countries, if US-made components make up more than 25 per cent of the value.


Commerce drafted a rule that would lower the threshold only on exports to Huawei to 10 per cent and expand the purview to include non-technical goods like consumer electronics including non-sensitive chips.


The draft rule was then sent to the Office of Management and Budget, where agencies, including the Department of Defence, were given until Wednesday to submit comments, one of the people said. When the Pentagon expressed disagreement with the proposal, Commerce pulled it out of the review process in an unusual move.


US businesses have pushed back against the measure, arguing that enabling the government to regulate more sales to Huawei to include low-tech items made overseas with very little US technology would end up needlessly hurting American companies while encouraging Huawei to source more goods abroad.


But many in Congress and the Trump administration have criticised the Commerce Department for not doing more to thwart Huawei, and for its slow rollout of rules to limit exports of sophisticated technology to China.


Senators Tom Cotton, Ben Sasse and Marco Rubio, all Republicans on the Select Committee on Intelligence, wrote to Defence Secretary Mark Esper to demand a rationale for the department’s reported objections.


“Huawei is an arm of the Chinese Communist Party and should be treated as such. It is difficult to imagine that, at the height of the Cold War, the Department of Defence would condone American companies contracting with KGB subsidiaries because Moscow offered a discount. We are concerned that the Defence Department is not appropriately weighing the risks,” the lawmakers wrote in the letter. — Reuters


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