The U.S. Commerce Department has begun to break the logjam of pending export license applications related to Huawei Technologies Co. Ltd. of China by announcing some approvals this week, according to news reports.
“The licenses that were approved related to consumer products that were deemed noncontroversial and to have no potential security threat,” The Washington Post reported Nov. 21.
Commerce Secretary Wilbur Ross has stated publicly in recent weeks that there are about 290 pending license applications related to Huawei.
The department first added Huawei Technologies and 68 of its overseas affiliates and subsidies to the Entity List on May 16, citing national security concerns with the company’s technology and close ties to the Chinese government. Another 46 Huawei overseas affiliates were added to the list on Aug. 19.
The Entity List imposes significant restrictions on U.S. goods and technology exports to Huawei and requires a U.S. company or organization to obtain an export license from the Commerce Department’s Bureau of Industry and Security (BIS).
“We have several clients with pending Huawei license applications,” said Doug Jacobson, a Washington, D.C.-based attorney who specializes in U.S. export controls. “The approvals will largely depend on the nature of the products.”
Jacobson advises his clients that if they have not yet received denial letters from Commerce regarding their export license applications to hold on. “The challenge with Huawei of being on the Entity List is for U.S. companies to overcome the presumption of denial,” he said.
In cases in which license applications have been approved, BIS will issue the licenses via the electronic SNAP-R system. Applicants receive an email advising them to log into their accounts and the PDF versions of the licenses will there.
If an exporter receives a letter of “intent to deny” via email from Commerce regarding an export license application, it then has 20 days to try to persuade the department to change its mind.
“BIS rarely approves licenses in such cases, unless some new information can be provided to change the U.S. policy decision,” Jacobson said.
“Recall that the standard for issuing licenses to parties on the BIS Entity List is ‘presumption of denial,’ so parties must overcome the presumption, which will not be easy in this case,” he added.
Once the license is denied, the applicant receives the denial via SNAP-R.
“Remember, anything that is of U.S. origin that is exported or reexported to the sanctioned Huawei parties needs Commerce approval, which means The Washington Post article does not identify what level of items are being approved. For all it matters, it could be paper clips,” said Paul DiVecchio, a 40-year export compliance consultant based in Boston. “It is important to put into proper perspective since your Chinese affiliates or distributors will be pressing every day for export licenses to be issued.”
On May 20, BIS established a 90-day temporary general license, which it has subsequently extended twice, for a narrow scope of exports to Huawei and its overseas affiliates on the Entity List.
So-called “authorized transactions” include the continued operation of existing networks and equipment, support to handsets acquired before Huawei’s placement on the Entity List, cybersecurity research and vulnerability disclosure, and “engagement as necessary for development of 5G standards by a duly recognized standards body.”
BIS is prohibited by law from announcing the names of parties that receive export licenses.
“BIS is not likely to announce the standard that they are using to issue the licenses,” Jacobson said, “although the types of licenses granted may become more clear when some publicly traded companies make announcements (to the extent that such information should be disclosed).”
