As I write these words, Huawei and 68 of its affiliates around the world are set to be added tomorrow to the Bureau of Industry and Security’s Entity List, an action which will trigger the need for a license for the export, reexport, and transfer of all items subject to the EAR to these companies. The consequences are already piling up. In the past few days we have learned that Google will limit Huawei’s access to the Android software which runs its smartphones. Multiple semiconductor manufacturers have told their employees to stop business with Huawei.
We have known since, at least 2016, that the US Government was investigating Huawei. Not coincidentally, 2016 was the year BIS first sanctioned a different Shenzhen-based telecommunications firm, ZTE. BIS took the unusual step of publishing evidence obtained during a search of a ZTE executive and his assistant at the Boston airport. The documents demonstrated ZTE’s intent to circumvent export controls on components it was buying from US suppliers and no doubt contributed to the decision by BIS to place ZTE on the Entity List. But the documents also identified a company called “F7” who ZTE seemed to regard as a sort of role model for US sanctions evasion. According to reporting, F7 is Huawei.
It’s been nearly five years since that border search at Logan International Airport. Nonetheless, we may be closer to the beginning of the Huawei export enforcement story than the end. It’s instructive to recall the sequence of events involving ZTE:
- Added to the Entity List
- Temporary general license issued
- Temporary general license extended (a total of four times)
- Removed from the Entity List as part of settlement agreement including payment of penalties
- Suspended denial order activated following false statements by ZTE to BIS
- Denial order lifted with new settlement agreement and additional penalties