United States: The U.S. Administration Targets Huawei In Actions To Curtail Its Involvement In U.S. Telecommunications Networks And Access To U.S. Business And Technologies

On May 15, 2019, President Trump issued an Executive Order (EO) declaring a national emergency and paving the way for a ban on the use of Huawei equipment and services in U.S. telecommunication networks. On the same day, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued a press release announcing that it would add Huawei and numerous affiliates to its Entity List. The Federal Register notice effectuating this designation is scheduled to be published on Tuesday, May 21, but is drafted to show an effective date of May 16. 

The Entity List designation will have a more immediate impact than the EO. The EO establishes a broad framework to address supply chain risk arising from the use of certain information and communications technology and services but will require the Department of Commerce to issue new rules and regulations in the coming days or weeks to define key terms and implement the new prohibitions contemplated by the EO. By contrast, the Entity List designation will become effective immediately and will impose restrictions on exports, reexports, and transfers of U.S.-regulated goods, technology, and software to Huawei and its designated affiliates. The U.S. administration may adjust course in its confrontation with Huawei—either by tightening or loosening new or potential restrictions—in response to developments in broader U.S.-China trade negotiations.

The Executive Order

Although the EO does not expressly refer to Huawei or China, the EO creates a framework for the U.S. to prohibit U.S. companies and others subject to U.S. jurisdiction from purchasing or using telecommunications services or equipment provided or produced by entities that are owned, controlled, or directed by a “foreign adversary” and directs the U.S. Secretary of Commerce to ban transactions that pose an “undue” or “unacceptable” risk to the national security of the United States. The basis for the EO is the widely-reported concern that Huawei equipment and services expose the United States to significant national security, foreign policy, or economic risks. If China and Huawei are identified as targets of these measures, this will be reflected in a future determination issued by the Department of Commerce.

The EO notes that “foreign adversaries are increasingly creating and exploiting vulnerabilities in information and communications technology and services . . . in order to commit malicious cyber-enabled actions, including economic and industrial espionage against the United States and its people.” It further asserts that these “foreign adversaries” will use such access to U.S. telecommunications systems “to create and exploit vulnerabilities in information and technology or services, with potentially catastrophic effects.”

Specifically, the EO provides a legal basis for the government to issue further orders to prohibit “any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service (transaction) by any person, or with respect to any property” where the Secretary has determined that the transaction (1) involves “information and communications technology or services designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary” and (2) “poses an undue . . . [or] unacceptable risk to the national security of the United States or the security and safety of United States persons.”

The mandate in the EO is very broad, and it directs the Secretary of Commerce to develop comprehensive rules to implement the measures within the next 150 days.

The EO mandates that the resulting prohibitions may cover any transactions that were initiated or pending or will be completed after the date of the EO, but authorizes the Secretary of Commerce to direct “the timing and manner of the cessation of” the prohibited transactions. Indeed, the Department of Commerce’s rules are necessary to establish any effective prohibition on particular transactions, because the EO does not identify any of the targeted “foreign adversaries” or persons owned by, controlled by, or subject to the jurisdiction or direction of such foreign adversaries, or the technologies warranting particular scrutiny.

In effect, the EO establishes a broad new framework for regulating transactions involving certain information and communications technology and services, but delegates authority to the Department of Commerce to define the scope and regulate the proscribed activity. It is not clear yet whether the National Telecommunications and Information Administration or some other part of the Department of Commerce will administer this new regime.

Entity List

Released nearly concurrently with the issuance of the EO, a Commerce Department press release stated that BIS would add Huawei and its affiliates to the Entity List. The Entity List is a list of companies, institutions, and organizations to which exports, reexports, and in-country transfers of U.S.-regulated goods, software, and technology are subject U.S. Government licensing that would not otherwise be required. BIS has indicated that Huawei will be added to the Entity List because the Department of Commerce found that it “engaged in activities that are contrary to U.S. national security or foreign policy interest,” including its alleged violations of U.S. sanctions against Iran and alleged obstruction of justice in connection with the U.S. investigation of those alleged violations.

The Federal Register notice will add Huawei and sixty-eight of its non-U.S. affiliates located around the world (including not only in Asia, but also in North and South America, Europe, Africa, and the Middle East) to the Entity List. The new licensing requirements for items destined for Huawei or these affiliates will apply to all items subject to the U.S. Export Administration Regulations (EAR), in other words, to most U.S.-origin goods. Further, BIS will review applications for licenses with a presumption of denial, and no license exemptions will be available. The Savings Clause exempts from the licensing requirement items that were already en route aboard a carrier pursuant to actual orders for export or reexport to a foreign designation on the effective date.

*     *     *

These actions come at a time of rising U.S.-China tensions. Since January, the two countries have engaged in negotiations to address longstanding trade concerns of the United States, including concerns related to intellectual property theft, forced technology transfers, and government subsidies, among other topics.

WilmerHale continues to monitor these developments closely.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions