The US on Monday tightened the noose around Huawei, which it considers an arm of the Chinese Communist Party's surveillance state, by adding 38 of its affiliates across 21 nations to its Entity List and taking steps to prevent the company from circumventing American law.
The amendments made in the longstanding foreign-produced direct product (FDP) rule restricts Huawei from obtaining foreign made chips developed or produced from US software or technology to the same degree as comparable US chips. It also added another 38 Huawei affiliates in 21 countries to the Entity List, which imposes a license requirement for all items subject to the Export Administration Regulations (EAR) and modified four existing Huawei Entity List entries. Huawei's affiliates in India have already been added to the Entity List.
"Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from US software and technology in order to fulfill the policy objectives of the Chinese Communist Party, said Commerce Secretary Wilbur Ross. "As we have restricted its access to US technology, Huawei and its affiliates have worked through third parties to harness US technology in a manner that undermines US national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei's ability to do so, Ross said.
In a separate statement, Secretary of State Mike Pompeo said that the United States has provided ample time for affected companies and persons primarily Huawei customers to identify and shift to other sources of equipment, software, and technology and wind-down their operations.
"Now that time is up. We will not tolerate efforts by the CCP to undermine the privacy of our citizens, our businesses' intellectual property, or the integrity of next-generation networks worldwide, he said. "The Trump Administration sees Huawei for what it is an arm of the Chinese Communist Party's (CCP's) surveillance state and we have taken action accordingly. Today, our government enacted several measures to protect US national security, our citizens' privacy, and the integrity of our 5G infrastructure from Beijing's malign influence, Pompeo said.
The Trump Administration, he said, is backing up its words with actions across the US Government. The Department of Justice has indicted Huawei for stealing US technology, conspiracy, wire fraud, bank fraud, racketeering, and helping Iran to evade sanctions, amongst other charges, he added.
The Department of Commerce placed Huawei on the Entity List in 2019. The Department of State has engaged in vigorous diplomacy for more than a year to share what we know about Huawei and other untrustworthy vendors with allies and partners around the world, he said. The new rules amended will prevent Huawei from circumventing US law through alternative chip production and provision of off-the-shelf (OTS) chips produced with tools acquired from the United States. This measure follows the more limited expansion of the Foreign Direct Product Rule in May, which Huawei has continuously tried to evade, he said.