Last week, the U.S. Bureau of Industry & Security (BIS) added Chinese telecommunications giant Huawei and its non-U.S. affiliates to the U.S. Entity List. The move by the U.S. export control regulator broadly prohibits U.S. and non-U.S. persons from providing the listed Huawei entities with any “items” that are “subject to” BIS’s Export Administration Regulations (EAR).

The sanctions could have a serious impact on Huawei and on companies that supply and do business with the firm. Similar sanctions temporarily imposed on ZTE, another Chinese telecommunications firm, last year were referred to as a “death penalty” ban due to the crippling impact it had on ZTE’s operations.


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In a move certain to inflame the ongoing trade dispute between the United States and China, Justice Department officials announced criminal charges against Chinese telecommunications equipment manufacturer Huawei, several of its affiliates, and its chief financial officer for alleged theft of trade secrets from U.S. telecommunications providers, bank fraud, obstruction of justice, and other violations. The two indictments issued on January 28, 2019, represent just the latest pushback against foreign telecommunications interests by U.S. officials, citing national security concerns and unfair trade practice claims. The FCC already proposed rule changes last year that would prohibit the use of Universal Service Fund support to purchase equipment or services from foreign companies deemed national security threats, primarily targeting companies from China and Russia. Congress also recently passed legislation prohibiting federal agencies and those working with them from using components provided by Huawei and other Chinese manufacturers. With the Trump Administration reportedly poised to issue an executive order effectively barring American companies from using Chinese-origin equipment in critical telecommunications networks, domestic service providers should keep a close eye on their supply chain security and potential liability when working with foreign entities. A criminal conviction on these charges could lead to broader restrictions on trade in U.S. export-controlled products with the company. Given the presence of encryption in telecom equipment, export controls on such products are relatively widespread
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