5/16/2019 Trump orders targeted export ban against Huawei - Nikkei Asian Review

TRADE WAR

Trump orders targeted export ban against Huawei

Chinese tech provider says Washington's moves will leave US 'lagging behind in 5G deployment'

TAKESHI KAWANAMI and ALEX FANG, Nikkei staff writers

MAY 16, 2019 07:02 JST UPDATED ON MAY 16, 2019 11:21 JST

Under a listing by the U.S. Commerce Department, Huawei will be banned from accessing American technology. (Nikkei montage/Reuters)

WASHINGTON/NEW YORK -- U.S. President Donald Trump on Wednesday signed an executive order that
prohibits U.S. companies from using foreign information technology and services deemed a national security
risk, paving the way for a total ban on doing business with Chinese telecom company Huawei Technologies.

The move significantly ratchets up American pressure on China on at least two fronts -- security and trade.
Beijing earlier this month reneged on concessions it had made during five months of trade negotiations with
the U.S.

Washington is also pushing Beijing to end a policy, propped up with export tariffs, aimed at achieving
technological hegemony. Chinese President Xi Jinping in 2015 unveiled a vision of China becoming a major
industrial power by 2025 and dominant in global markets by 2049 -- the 100th anniversary of the foundation
of communist China.

Trump's latest salvo strikes at the heart of Chinese industrial policy. Although administration officials say the
executive order does not single out any country, it effectively targets Huawei, one of the world's primary
suppliers of 5G infrastructure.

This became apparent later on Wednesday, when the Commerce Department said it would add Huawei and its
affiliates to the Entity List. Companies on the list are required to obtain a license before they can buy or
receive U.S. technology. The targeted export ban will "prevent American technology from being used by
foreign-owned entities in ways that potentially undermine U.S. national security or foreign policy interests,"
Secretary of Commerce Wilbur Ross said.

https://asia.nikkei.com/Economy/Trade-war/Trump-orders-targeted-export-ban-against-Huawei 1/3
5/16/2019 Trump orders targeted export ban against Huawei - Nikkei Asian Review

A similar export ban was deployed against ZTE, in April 2018, pushing the Chinese telecom company to the
brink of bankruptcy. But moving against Huawei is far more significant -- its sales are five times those of ZTE
and its imports of high-tech components from the U.S. reach an annual $10 billion.

Huawei issued a statement in Chinese.

"Huawei is the unparalleled leader in 5G," it says. "We are ready and willing to engage with the U.S.
government and come up with effective measures to ensure product security. Restricting Huawei from doing
business in the U.S. will not make the U.S. more secure or stronger; instead, this will only serve to limit the
U.S. to inferior yet more expensive alternatives, leaving the U.S. lagging behind in 5G deployment, and
eventually harming the interests of U.S. companies and consumers. In addition, unreasonable restrictions will
infringe upon Huawei's rights and raise other serious legal issues."

In anticipation of Washington's move, Huawei has been diversifying its supply sources, away from the U.S.
and to places like Japan and Europe. But Chinese telecom companies still heavily rely on U.S. chips and
software. The loss of access to U.S. components could pressure Xi to reach a trade deal with Trump, who
desires a quick outcome.

China, meanwhile, seems to be playing the long game. In a tweet posted on Wednesday, Hu Xijin, editor-in-
chief of the Global Times, a mouthpiece of the Chinese Communist Party, said, "Protracted war is well known
among Chinese as a strategy to exhaust opponent," citing Mao Zedong's 1938 book, "On Protracted War."

Trump's executive order directs relevant U.S. government agencies to provide annual assessments of security
threats from information and communications technologies or services linked to a "foreign adversary," with
an initial assessment to be completed within 40 days.

In addition, the commerce department has been given 150 days to draw up a detailed plan for enforcement.

Washington last year banned the use of equipment made by Huawei and ZTE in American government
agencies and contracts, citing national security risks. The Federal Communications Commission also rejected
market entry by state telecom China Mobile on the same grounds in the first instance of its kind.

Wednesday's executive order came as trade tensions between China and the U.S. reached another high point,
with both sides announcing additional tariffs after Washington accused Beijing of reneging on commitments
made in previous trade talks.

Huawei launched a lawsuit in March against the U.S. government declaring its exclusion of the company from
government contracts is unlawful.

White House Press Secretary Sarah Sanders said the administration will do what it takes to "keep America
safe and prosperous, and to protect America from foreign adversaries who are actively and increasingly
creating and exploiting vulnerabilities in information and communications technology infrastructure and
services" in the U.S.

Nikkei staff writer Mitsuru Obe in Tokyo contributed to this report.

SPONSORED CONTENT About Sponsored Content

https://asia.nikkei.com/Economy/Trade-war/Trump-orders-targeted-export-ban-against-Huawei 2/3
5/16/2019 Trump orders targeted export ban against Huawei - Nikkei Asian Review

https://asia.nikkei.com/Economy/Trade-war/Trump-orders-targeted-export-ban-against-Huawei 3/3