White House Is Said to Extend Huawei Reprieve for a 3rd Time

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FILE -- A Huawei advertisement in Shanghai, on May 28, 2019. The Trump administration is set to extend a license that will allow American companies to continue doing business with the Chinese telecom giant Huawei. (Lam Yik Fei/The New York Times)

Ana Swanson

c.2019 The New York Times Company

WASHINGTON — The Trump administration is set to once again extend a license that will allow American companies to continue doing business with Huawei, the Chinese telecom giant, people familiar with the deliberations said. 

The fate of Huawei has hung in the balance for many months, as the Trump administration has deliberated over how to treat a company many American officials consider a national security risk, but the Chinese government views as central to its technology ambitions. While the company’s future is not technically a part of trade talks between the two countries, President Donald Trump has brought Huawei up as a potential bargaining chip in a long-running trade war.

In May, the Commerce Department placed Huawei, which constructs advanced 5G networks that will be central to the next generation of wireless communication, on a blacklist that banned the firm from buying American products without government approval.

The ban posed problems for rural telecommunications companies in the United States, which rely on Huawei for parts and equipment as well as American companies that depend on selling to the Chinese firm. To give them time to adjust to the new order, the Commerce Department issued a general reprieve that allowed companies to continue to do business with Huawei for a short time.

That reprieve is set to expire on Monday, but the administration is expected to extend it for a period of time. It would be the third time an extension is granted. However, the decision could change given continuing trade discussions between the United States and China.

Chinese negotiators have repeatedly pressed their American counterparts to lift sanctions on Huawei, and are likely to view a temporary reprieve as a good will gesture in the trade talks, which are at a critical point.

Washington and Beijing are trying to reach a “Phase 1” trade agreement that would resolve some of the administration’s concerns about China’s economic practices. Trump announced last month that the United States had reached a preliminary agreement with the Chinese. But in recent weeks, the countries now appear further from signing an agreement than he initially suggested.

The administration is also under pressure from companies that sell components to Huawei, and the telecommunications companies that buy Huawei equipment. In an interview on Monday with Fox Business Network, the commerce secretary, Wilbur Ross, said past reprieves were intended to allow rural telecom companies in the United States “to continue to function.”

“They unfortunately are very dependent on Huawei for 3G and 4G,” he said. “There are enough problems with telephone service in the rural communities; we don’t want to knock them out. So, one of the main purposes of the temporary general licenses is to let those rural guys continue to operate.”

Huawei declined to comment. The news of the license’s extension was first reported by Politico.

The Trump administration is also separately considering product-specific licenses that would allow select companies to supply nonsensitive goods to Huawei, despite the blanket ban.

People familiar with the matter said Trump had given the green light in early October for those licenses to be approved. But progress toward a Phase 1 trade deal between the United States and China stalled in subsequent weeks, and those licenses were not issued.

Their timing is now the subject of internal debate in the Trump administration, and likely contingent on China and the United States signing a Phase 1 trade deal that is still uncertain.

The Federal Communications Commission is expected to vote next week on a measure that would ban companies from spending federal subsidies on equipment made by Huawei or ZTE, another Chinese telecom company. Carriers serving rural areas, which have bought Huawei gear because it is cheaper than non-Chinese alternatives, have said they are worried that the proposal will harm their businesses.

Ajit Pai, the commission’s chairman, said in a statement last month that as providers put into place the next generation of wireless technology, the agency could not ignore the chance “that the Chinese government will seek to exploit network vulnerabilities in order to engage in espionage.”

When asked last month about Huawei’s relationship to the Phase 1 trade deal he had announced with China, Trump said, “We haven’t discussed Huawei, relative to this deal.” A few minutes later, he added: “Well, we’re going to see what happens. We’re going to be discussing that in Phase 2.”