Commerce Gives U.S. Companies an Extra 90 Days to Cut Ties with Huawei

The Commerce Department again extended the deadline for U.S. firms to sever ties with Huawei and its affiliates, saying rural companies need more time to extricate the Chinese telecom provider from their IT infrastructure.

In May, the department added Huawei and dozens of affiliates to its Entity List, effectively banning U.S. companies from doing business with the firm without explicit permission from the federal government. The measure was originally set to take effect May 20, but officials quickly issued a temporary general license that extended the deadline by 90 days.

The license was set to expire on Aug. 19, but Commerce Secretary Wilbur Ross announced the department would grant another 90-day extension. That means American businesses now have until Nov. 19 to cut ties with Huawei, a company the intelligence community believes is acting as a conduit for Chinese espionage.

“Some of the rural companies are dependent on Huawei, so we’re giving them a little more time to wean themselves off,” Ross said Monday in an interview on Fox Business. 

Specifically, the extension allows Huawei to continue providing software updates and patches for all “personal consumer electronic devices,” which include smartphones, tablets, smart watches, mobile hotspots and other personal telecom equipment, according to a post on the Federal Register. The measure also permits the company to continue supporting its existing U.S. networks and equipment through Nov. 19, and allows U.S. companies to continue selling certain products to Huawei during that period.

On Monday, the Commerce Department also said it added 46 new Huawei-connected groups to the Entity List, including 19 of the company’s Chinese holdings and 27 of its foreign affiliates. There are now more than 100 organizations and groups linked to Huawei on the list.

The extension comes as government and industry officials voice concerns that U.S. companies, particularly those in rural communities, won’t be able to detach themselves from Huawei in time to meet federal deadlines.

In the 2019 National Defense Authorization Act, lawmakers prohibited the use of federal funds to purchase products from Huawei, ZTE and three other Chinese firms that intelligence officials deemed to be national security threats. The provision gave American businesses until 2021 to detach themselves from the Chinese companies, but in June, Office of Management and Budget Acting Director Russell Vought urged Congress to extend the deadline by two years.

In a letter to Vice President Mike Pence, Vought said that without an extension, there could be “a dramatic reduction” in the number of contractors able to legally do business with the government. Additionally, many federal grant recipients in rural areas rely on Huawei and other Chinese firms for cheap telecom equipment, and “the limited number of market options” may prevent them from meeting the government’s deadline.

The NDAA also prohibited federal agencies from purchasing telecommunications and video surveillance equipment from Huawei and the four other Chinese tech companies. The ban went into effect last week.