Pentagon Objects to New Huawei Sales Restrictions – WSJ Report

The WSJ details how a recently withdrawn regulation highlights the interagency disagreements on what the US should do about Huawei's 5G dominance.

Phil Harvey, Editor-in-Chief

January 24, 2020

2 Min Read
Pentagon Objects to New Huawei Sales Restrictions – WSJ Report

The US government continues to fight itself over just how to curb Huawei's dominance in 5G. One thorny issue in that fight is how to choke back sales of US semiconductors and other technologies to Huawei, even though the revenue those sales provide is helpful to the development and funding of US 5G efforts.In the latest twist to the saga, courtesy of a report in The Wall Street Journal this morning, the Pentagon has objected to a new move by the Commerce Department to further restrict US technology sales to Huawei. Officials told the publication the restrictions would harm the US and its efforts to catch up in 5G development.The Commerce Department's earlier effort to slow down the supply of US tech to Huawei didn't have the desired effect as US companies simply found ways around the restrictions. Back in May, the Commerce Department put Huawei on its export entity list, banning US firms from supplying the Chinese vendor. But the entity list designation simply told companies "you have to move your production offshore to sell to Huawei -- that's all the entity list does," said Derek Scissors, a resident scholar at the American Enterprise Institute (AEI), during a July panel discussion on the US-China trade war. "We took an action that does not preclude US firms from doing business with Huawei -- only the location of that business."It's worth noting, too, that US officials have not been successful in convincing other governments -- especially European allies -- to keep Huawei gear out of their 5G networks, either.Under the entity list designation, if something produced overseas had less than 25% US-made content, it could be sold without a special license to Huawei."Recently, the Commerce Department sent to the Office of Management and Budget a rule that would reduce that percentage to 10% when it comes to Huawei, said administration officials, which would sharply limit the items that U.S. companies could sell without an export license," The Wall Street Journal wrote this morning. The new rule would have required the State, Commerce, Defense and Energy departments to sign on, but Pentagon officials (the Defense Department) objected, The Journal story said, citing unnamed government sources."After the Pentagon's objection, the Commerce Department pulled the rule back from OMB [the Office of Management and Budget], the people familiar with the matter said," The Journal wrote. "Pentagon officials believe the change would harm U.S. companies, as do some officials at the Commerce Department, which is split internally on the proposed rule."Related posts:Huawei's Fate Up for Debate in a Possible US-China Trade DealPodcast: The US Government's $1B Plans to Beat HuaweiLetting Huawei Into 5G Is 'Madness,' US Warns UK – ReportsNo one wants to talk about Huawei's state subsidies— Phil Harvey, US Bureau Chief, Light Reading

About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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