US tightens export restrictions on Huawei

The US Commerce Department has tightened its restrictions on the supply of technologies and components to Chinese vendor Huawei, closing loopholes that could be used by the vendor to get around the embargo.

The department’s Bureau of Industry and Security (BIS) has added an additional 38 Huawei affiliates to the Entity List, requiring them to obtain a licence for importing all items subject to the Export Administration Regulations (EAR).

According to the bureau, the decision was made after determining “that there is reasonable cause to believe that Huawei otherwise would seek to use [these entities] to evade the restrictions imposed by the Entity List”.

This list has now also been revised to require a licence when a listed entity acts as a purchaser, intermediate consignee, ultimate consignee or end user to a transaction subject to EAR regulations.

Meanwhile, the foreign-produced direct product (FDP) rule restricting Huawei’s acquisition of semiconductors that are the direct product of certain US software and technology has been expanded to apply to technologies built overseas using US software or technology.

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from US software and technology in order to fulfil the policy objectives of the Chinese Communist Party,” US Commerce Secretary Wilbur Ross claimed.

“As we have restricted its access to US technology, Huawei and its affiliates have worked through third parties to harness US technology in a manner that undermines US national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

But Huawei has repeatedly strongly denied any suggestion that it cooperates with the Chinese government to facilitate the state’s cyber-espionage activities.

Australia caught in the crossfire

Meanwhile, Huawei has asserted that Australia could suffer the most from the ongoing proxy trade war between the US and China, which the company has repeatedly asserted is the true motivation behind the decision by the US govt to impose both the restrictions on exporting US components to Huawei and on discouraging the use of Huawei equipment by private companies and allied nations.

Huawei USA CSO and former Bush administration cybersecurity advisor Andy Purdy warned that the US govt’s actions risk creating a global ‘splinternet’ of disparate US and Chinese internets.

The US govt's Clean Networks initiative would create national barriers on the internet, and ignores existing WTO-based free trade agreements by placing bans on telecom hardware, app stores, subsea cables and even cloud-computing services from Chinese companies, Purdy said.

This could cause significant damage to Australia, he added. “Any moves to create a fractured internet split between separate American and Chinese architectures would potentially create huge problems for Australia given that nearly half of Australia’s exports go to the Chinese market,” he said.

“A splinternet would make it extremely difficult for Australia to maintain its currently hugely successful commercial relationship with China given how much commerce is now conducted over the internet — even for physical goods.”

The Internet Society (ISoc) has backed Purdy’s comments, arguing that the Clean Network program would challenge the current decentralised, interconnected nature of the global internet at its very core.

“Having a government dictate how networks interconnect according to political considerations rather than technical considerations, runs contrary to the very idea of the internet,” ISoc said in a statement.

“Such interventions will significantly impact the agility, resiliency and flexibility of the internet. If this approach were to spread further, the ability of the internet to bring the broader benefits of collaboration, global reach, and economic growth will be significantly threatened.”

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