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New rule may soon allows U.S. to block more sales to Huawei

In December last year, there were reports that U.S. is looking to toughen their trade restriction on Chinese telecommunication giant Huawei.

Back then, it was reported that the U.S. was considering to broaden the Deminimis Rule which currently allows US companies to trade certain products with Huawei as long as they are able to prove that 75% of the work occurs overseas.

Huawei MWC 2019
Huawei’s MWC 2019, credit: Huawei Press Center

The U.S. officials however, see this provision as a form of loopholes that allow American companies to resume their business ties with Huawei and are therefore looking to tighten the current limit.

Under the newly drafted rule, the threshold of the Deminimis Rule will be raised from 75% to 90%, meaning U.S. companies can only trade with Huawei if their products contain less than 10% U.S.-made components.

Furthermore, the new rule will also broaden the purview to include non-technical goods; making it even more difficult for U.S. companies to trade with Huawei.

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According to the latest report from Reuters, the Commerce Department had already sent the newly drafted rule to the Office of Management and Budget last week.

In the event that other government agencies sign off on the measure, “the rule could be issued in a matter of weeks as a so-called final rule, with no opportunity for public comment before it goes into effect,” according to Reuters.

However, despite the ongoing U.S. trade ban, Huawei still managed to forge ahead and shipped approximately 230 million smartphones last year.

Source: Reuters
Featured Image: Huawei Press Center

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Anvinraj Valiyathara