Huawei on Entity List

Huawei Logo

Huawei Logo

[Update 03 July 2019] The sanctions against Huawei could be lifted shortly. Donald Trump hinted at this at least during the talks with the Chinese head of government, Xi Jinping, at the G20 summit. Provided that “no major problem for national security would arise”. What this means in concrete terms and when Huawei will be officially removed from the Entity List has not yet been determined, however. [7]

On 15 May 2019, the Bureau of Industry and Security (BIS) announced that Huawei Technologies Co. Ltd. would be added to the Entity List.

This action is being taken because the BIS has information that Huawei is involved in activities contrary to national security or U.S. foreign policy interests. In addition, it is alleged to violate the International Emergency Economic Powers Act (IEEPA) by providing financial services to Iran and obstructing justice in connection with the investigation.

By listing on the Entity List, the BIS prevents American products from being used for such activities. A license is required for all products subject to the Export Administration Regulations (EAR). [1]

On the same day, U.S. President Donald Trump makes another statement that Chinese technology can be used by Huawei for espionage and sabotage. It is generally assumed that these measures are being taken in order to have another option in the negotiations in the trade war between the USA and China and to strengthen American companies that are in competition with Huawei. [2]

One day before the extension is published in Federal Register document 84 FR 22961, it is announced that there is a temporary general license for certain products. The license will be valid for 90 days from May 20 until August 19, 2019, and is intended to provide an opportunity for companies currently dependent on Huawei for critical services to find an alternative. This involves the operation of existing networks and mobile services, including cyber security research. [3]

The BIS also includes non-American subsidiaries of Huawei on its Entity List as these represent a considerable risk for the participation in the activities. In addition to Huawei’s headquarters in China, subsidiaries at 26 locations around the world are also listed. Huawei Technologies Deutschland GmbH is also included on the Entity List. [4]

The listing hits Huawei hard because you no longer receive important components from your main suppliers. For example, the Android operating system from the American company Google or the chip from the British company ARM can no longer be supplied. The British company is bound by the export regulations of the USA, as the chip partly contains American technology. [5] In the current annual forecast, Huawei is correcting its previous prediction due to the US sanctions and is assuming a 30 billion dollar drop in sales. [6]

[1] Department of Commerce Announces the Addition of Huawei Technologies Co. Ltd. to the Entity List (Status: 18.06.2019)

[2]  Trump dreht Huawei den Saft ab: Ist das eine moderne Form der Kriegserklärung? (Status: 18.06.2019)

[3] Department of Commerce Issues Limited Exemptions on Huawei Products (Status: 18.06.2019)

[4] Addition of Entities to the Entity List (Status: 18.06.2019)

[5] So hart treffen Huawei die amerikanischen Sanktionen (Status: 18.06.2019)

[6] Huawei rechnet mit Umsatzeinbruch von 30 Milliarden Dollar (Status: 18.06.2019)

Alexander Haun

Alexander Haun

Bei BEX bin ich im Bereich Produktmanagement tätig. Exportkontrolle, Warenursprung und Präferenzen gehören zu meinen Schwerpunktthemen. Für die fachlichen Beiträge zu den genannten Themengebieten bin ich im BEXblog verantwortlich. Haben Sie Fragen zu unseren Lösungen oder einem meiner Beiträge? Zögern Sie nicht uns zu kontaktieren.