Daily Management Review

Little Clarity For US Firms About What It Could Sell To Huawei


Little Clarity For US Firms About What It Could Sell To Huawei
Even after a month after the United States president Donald trump announcing the American companies would be able to do business with the Chinese telecom giant Huawei, there is little clarity about the kind of sales to the Chinese firm would be  permitted by the Trump administration.
Analysts fear that the latest round of US-China trade talks in Shanghai, China could be shadowed by the Huawei issue as US companies have very little idea about what products could be supplied by them to the Chinese firm which is the largest manufacturer of telecommunication products and has been placed in the so called “entity list” of the US Commerce Department.
Allowing American companies to sell products to Huawei is considered to be a goodwill gesture to Chinese president Xi Jinping during the meeting of the two leaders at the end of last month as they agreed to resume negotiations on trade to potentially end the trade war between the two countries that has been going for more than a year. On its part, China reciprocated by agreeing to purchase agricultural on a large scale.
The decision of Trump to allow sale of products to Huawie by US companies was more than welcomed by US chipmakers. The Trump administration later explained the meaning of Trump’s announcement was that the government would be issuing export licenses in selling products that do not pose any threat to the country’s national security and in cases where the products to be sold are of "non-sensitive" nature and can be replaced easily by rivals.
So far the Commerce Department has received about 50 license requests from about 35 companies but is yet to respond to any of them. That has created a sense of uncertainty among the companies in the US as well as in China. William Reinsch, a former Commerce official, said: "at this stage, there is mass confusion" and added that the uncertainty has been maximized by plan of the US government for a case by case licensing. The trade war between the tow largest economies of the world has seen each imposing import tariffs on the other’s goods worth billions of dollars which has rattled he global market, upended global supply chains and slowed down global trade.
In the meantime, a meeting between US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin and their Chinese counterparts began in Shanghai on Tuesday.
According to reports quoting sources close to the negotiations, the talks could be clouded by a number of issues which includes that failure of China to make increased agriculture purchases from the US and the issue of the ban on Huawei. Analysts and sources fear that such issues would divert the attention and focus of the negotiators away from the core sticking issues between the two countries attempting to strike a trade agreement.
"By making the meeting public, the U.S. was trying to send a signal, 'we're moving on Huawei, we need you to move on agriculture'," said Wendy Cutler, a former U.S. trade negotiator and Vice President of the Asia Society Policy Institute.