Some United States (US) officials claimed on Wednesday, May 20, 2020, the new rules passed by American regulators that aimed at curbing global chip sales to blacklisted Chinese telecoms equipment maker Huawei Technologies Co. Ltd. (Huawei) were found some loopholes in the regulations. The officials observed a view that the Chinese tech might push some political leverage to work around the rules.
New Regulations against China’s Huawei
China’s tech giant was added to the US Commerce Department’s “entity list” last year with concerns related to US accusations that the company was a threat to American national security since the Chinese government was allegedly using the company to monitor national security of other countries. However, the tech giant denied the US allegation, which also included accusations that it violated US sanctions on Iran, stole intellectual policy, and could spy on customers.
In November, Reuters firstly reported the growing pressure from the US officials who questioned that the entity listing was not doing enough to cut off Huawei’s access to supplies. As part of its crackdown effort, a new regulation was introduced by the Commerce Department on Friday that would expand US authority to impose the requirement of licenses for sales to Huawei.
Under the new rules, the US authority could put a halt exporting semiconductors made abroad with American technology to the world’s No. 2 smartphone maker. Nonetheless, the officials found certain loopholes in the rule, such as it only applies to include chips designed by Huawei but does not cover shipments if they are sent directly to Huawei’s customers.
Loopholes in the US New Rules
An industry lawyer, who spoke on the condition of anonymity, said one way to change the rule and fill the loophole would be to change the language to capture chips sold “to the benefit of” Huawei, but noted such a change would pose its own challenges.
In response to a question about the potential for adjusting the rule to close that gap, a State Department official Christopher Ashley Ford said on Wednesday the rule itself would provide regulators with the insight to determine if it should be altered.
However, Ford claimed that the rule would “give us a great deal more information upon which to base export control decisions as we move forward and try to find the right answer to these challenges including by adapting if we need to if Huawei tries to work around our rules in some way.”
He added that regulators would watch and “certainly make any changes that we think are necessary.” In a similar briefing with Ford, Cordell Hull, a Commerce Department official, said the agency’s enforcement arm “will be looking at efforts to circumvent the rules.
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