The Wall Street Journal reported that the Pentagon has put the brakes on the U.S. Commerce Department’s plan to toughen sanctions on Chinese telecom equipment maker Huawei. Signaling internal dispute over Huawei ban.
This means that there are differences over Huawei’s sanctions in the Donald Trump administration’s plan. The U.S. is urging its key allies not to use Huawei’s equipment. And attention is focusing on what repercussions such “uncompromise” in the Trump administration will have.
According to the WSJ report, the U.S. Department of Commerce tried to create a rule that would make it difficult for U.S. companies to sell parts to Huawei through overseas facilities. But withdrew the plan as the Defense Ministry expressed opposition to it. The Commerce Department previously put Huawei and its major affiliates on the blacklist in May last year. Limiting transactions between the U.S. company and Huawei in principle.
Huawei ban: Commerce Department vs Ministry of Defense
However, companies found “blank spots” in the sanctions measures. It was the overseas facilities. If chips and other electronic goods were produced outside the United States, less than 25 percent of U.S. parts and technologies, which are restricted to exports, used a “welcome route” that could be supplied to Huawei without a separate permit.
The Commerce Department was aware of the problem. And planned to further strengthen the standard from 25 percent to 10 percent. The move meant to further tighten Huawei.
The U.S. Office of Budget and Management asked related departments such as the Defense Ministry and the Treasury for their opinions. The Huawei sanctions require signatures from the State Department, the Commerce Department, the Ministry of Defense and the Energy Department. And the Treasury Department have a say.
In the process, the Ministry of National Defense voiced opposition. And as a result, the Commerce Department withdrew the plan, the WSJ reported.
The ministry’s counter logic was that the Commerce Department’s initiative could deal a heavy blow to U.S. companies.
Huawei is a key customer of U.S. state-of-the-art technology companies. For example, chipmaker Micron Technology Inc. even said in its 2019 annual report that Huawei accounts for 12% of its sales.
Such a clash between the Commerce Department and the Defense Department proves that while the Trump administration externally speaks with one voice, there is internal confusion over the methodology.
Regarding this, attention is focusing on how the confusion within the Trump administration will affect Huawei.
