Background

The Bureau of Industry and Security announced Feb. 13 that it will extend for 45 days, through April 1, a temporary general license authorizing certain exports to Huawei Technologies Co. Ltd. and 114 of its non-U.S. affiliates on the Entity List. The announcement came as the Department of Justice announced new criminal charges against Huawei and legislation that would further restrict exports to Huawei was introduced in the Senate.

Temporary General License. The TGL covers certain activities necessary for the continued operations of existing networks and equipment as well as the support of existing mobile services, including cybersecurity research critical to maintaining the integrity and reliability of existing and fully operational networks and equipment. BIS states that the extension of this TGL is necessary to allow existing telecommunications providers, particularly those in rural U.S. communities, to continue to temporarily and securely operate existing networks while they identify alternatives to Huawei for future operation.

Exporters, reexporters, and transferors that qualify to use the TGL must maintain certifications and other records regarding their use of it that must be made available to BIS upon request. In addition, any exports, reexports, or in-country transfers of items subject to the EAR to these entities that are not explicitly authorized by this TGL continue to require a license and license applications will continue to be reviewed under a presumption of denial.

 

Given the extent of Huawei’s supply chain in the U.S., companies should be screening or re-screening their customer, vendor, and other third-party data against the list of Huawei affiliates to identify any potential ongoing or pending transactions with these parties and set up appropriate controls to ensure compliance with U.S. export control laws. Violations can result in significant financial penalties, denial of export privileges, and reputational damage.

ST&R’s export controls and sanctions team is positioned to support companies in their screening efforts and help them mitigate the risks of doing business in this ever-evolving geopolitical climate. Please contact export attorney Kristine Pirnia for more information.

Criminal Charges. A Feb. 13 indictment in federal court adds to a case filed in 2019 charges that Huawei and four U.S. subsidiaries conspired to steal trade secrets and violate the Racketeer Influenced and Corrupt Organizations Act.

A Department of Justice press release states that the new charges relate to the alleged decades-long efforts by Huawei and several of its subsidiaries, in both the U.S. and China, to misappropriate intellectual property from U.S. companies, including trade secret information and copyrighted works such as source code and user manuals for internet routers, antenna technology, and robot testing technology. Huawei also allegedly made repeated misstatements to U.S. officials regarding this misappropriation and engaged in obstructive conduct to minimize litigation risk and the potential for criminal investigations. DOJ states that as a consequence of this campaign Huawei was able to drastically cut its research and development costs and associated delays, giving it a significant and unfair competitive advantage. 

The indictment also includes new allegations about the involvement of Huawei and its subsidiaries in business and technology projects in countries subject to U.S., European Union, and United Nations sanctions, such as Iran and North Korea, as well as the company’s efforts to conceal the full scope of that involvement. The activities at issue included arranging for shipment of Huawei goods and services to end-users in sanctioned countries, typically through local affiliates in the sanctioned countries. 

Legislation. Sen. Rick Scott, R-Fla., introduced Feb. 13 legislation (S. 3316) that would require a license for the reexport to an entity on the Entity List of certain foreign-made items incorporating more than 10 percent of controlled U.S.-origin content, up from 25 percent currently. This bill would impact shipments to Huawei as well as other companies listed on the BIS Entity List.

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