Huawei recharged as trade talks resume

Top News | BLOOMBERG, REUTERS 11 Jul 2019

Washington says it will grant licenses allowing companies to export goods to Huawei but will not remove the Chinese technology giant from an export blacklist as talks between the world's two biggest economies resume.

The Department of Commerce will "issue licenses where there is no threat to US national security," though Huawei will continue to face export controls, Commerce Secretary Wilbur Ross said.

The move clarifies President Donald Trump's remarks that he would allow US companies to resume supplying some of their products to Huawei, after meeting President Xi Jinping in Japan last month.

Top negotiators from both countries talked by phone yesterday for the first time since the two leaders agreed to a truce.

"Within those confines we will try to make sure that we don't just transfer revenue from the US to foreign firms," said Ross. "Huawei itself remains on the entity list, and the announcement does not change the scope of items requiring licenses from the Commerce Department, nor the presumption of denial."

Like Trump and other high-level US officials, Ross did not specify a time frame or elaborate on what constitutes a national security threat. The entity list is often reserved for rogue regimes and their associated companies as a way to prevent US-origin items from flowing to them. Even before Trump's announcement, a number of American suppliers - including Micron Technology and Intel - had already resumed selling certain products to Huawei after concluding there are legal ways to bypass the ban.

The chipmakers are taking advantage of certain exceptions to the US export restrictions. If less than 25 percent of the technology in a chip originates in the United States, for example, then it may not be covered by the ban, under current rules.

White House economic adviser Larry Kudlow said the phone conversation between the two sides were "constructive."

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Vice Premier Liu He and Commerce Minister Zhong Shan in a further effort to resolve outstanding trade disputes, a US official said earlier.

Kudlow said the talks "went well" and were constructive. He said the two sides were talking about a face-to-face meeting, but warned that there was not a magic way to reach what has so far been an elusive deal.

"There are no miracles here," Kudlow said. "There was headway last winter and spring, then it stopped. Hopefully, we can pick up where we left off, but I don't know that yet."

Kudlow's comments suggested it was still unclear whether the two sides would resume work from the draft text agreed before the pullback, as US officials want, or whether they will use a different starting point.

A face-to-face meeting between the two negotiating teams would be a good thing and could take place in Beijing, Kudlow said. The talks picked up after a two-month hiatus, but a year since a tit-for-tat tariff battle began between the two nations.

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