The White House’s acting budget chief is pushing for a delay in implementing key provisions of a law that restricts the U.S. government’s business with Huawei Technologies Co., citing the burdens on U.S. companies that use its technology.
The request was made in a letter by Russell T. Vought, the acting director of the Office of Management and Budget, to Vice President Mike Pence and nine members of Congress, a copy of which was reviewed by The Wall Street Journal.
The U.S., citing national security concerns related to Huawei’s growing clout in sensitive technologies, implemented the restrictions to blunt the dominance of the Chinese tech giant, a powerful force in the global telecommunications market. But the pushback by a senior administration official shows the difficulty in ordering a quick halt to companies’ business with Huawei.
The request from Mr. Vought, dated June 4, asks for a delay in the implementation of portions of the National Defense Authorization Act. Signed by President Trump last year, the defense policy law contains several provisions targeting Huawei and other Chinese tech companies. They include a ban on U.S. agencies, and on recipients of federal grants and loans, from doing business with the Chinese companies or with contractors that make substantial use of the companies’ products.
The delay, if enacted, would be a reprieve for Huawei, which has been the target of a series of U.S. actions that threaten its dominance in telecommunications technology. In addition to the law targeting its business, they include last month’s Commerce Department order placing Huawei on a blacklist preventing the sale of American technology to the company, as well as an executive order that paves the way for a ban on Huawei from doing business in the U.S.
The letter says the NDAA rules could lead to a “dramatic reduction” in the number of companies that would be able to supply the government, and would disproportionately affect U.S. companies in rural areas—where Huawei gear is popular—that rely on federal grants. The letter asks for the restrictions on contractors and on federal loan and grant recipients to take effect four years from the law’s passage, instead of the current two years, to give affected companies time to respond and give feedback.
“While the Administration recognizes the importance of these prohibitions to national security,” the letter states, “a number of agencies have heard significant concerns from a wide range of potentially impacted stakeholders who would be affected” by the rules as written.
In addition, the letter said “rural Federal grants recipients may be disproportionately impacted by the prohibition.”
A spokesman for the OMB said Sunday the letter didn’t represent a change in U.S. policy on Huawei and wouldn’t affect restrictions on Huawei doing business with the U.S. government or on the sale of U.S. technology to the firm.
“This is about ensuring that companies who do business with the U.S. government or receive federal grants and loans have time to extricate themselves from doing business with Huawei and other Chinese tech companies listed in the NDAA,” the spokesman said.
In a statement, a Huawei spokesman said the company is “aware of the discussions and is carefully watching the situation.” It added: “we remain committed to supporting our existing U.S. customers.” Representatives of Mr. Pence and the members of Congress to whom the letter was addressed, including House Speaker Nancy Pelosi, didn’t immediately respond to requests for comment.
The NDAA has become a flashpoint in the U.S. campaign against Huawei, which has sought to block its implementation. Earlier this year the privately held Shenzhen-based company filed a lawsuit arguing that the provisions of the law are an unconstitutional “bill of attainder,” in which a person or entity is found guilty of a crime via an act of legislation. The lawsuit is continuing and Huawei last month filed a motion for a quick judgment in the case. The U.S. hasn’t formally responded to the suit.
U.S. officials have long said that Huawei is a national security threat, and have been arguing to U.S. allies that its equipment could be used by Beijing to spy or disrupt communications. Huawei, the world’s largest maker of telecommunications equipment and the second-largest vendor of smartphones after
, has vehemently denied it would ever do so.
Huawei has a limited business footprint in the U.S. since a 2012 Congressional report effectively blocked it from selling its equipment to major American telecom carriers. But small carriers in rural parts of the U.S. have been longtime customers, and have spoken out against U.S. measures to block Huawei, including a separate order under consideration by the Federal Communications Commission that would bar federal subsidies to carriers that use Chinese gear and services.
More damaging to Huawei is the Commerce Department’s decision to place Huawei on its entity list, which bans companies from supplying it with American technology without a license. Huawei, like many tech companies, relies heavily on U.S. technology, from microprocessors to Google’s Android smartphone operating system. A similar action last year against Huawei’s main Chinese rival
forced that company to essentially shut down until the measure was reversed.
In recent weeks, a number of major companies said they were halting business with Huawei under the order. On Friday,
became the latest company to curtail its business, with its apps no longer coming preloaded on Huawei smartphones, according to a person familiar with the matter.
China has responded to the action by saying that it would create a blacklist of its own for foreign entities that harm Chinese businesses, deepening the brewing trade war between the U.S. and China.
Meanwhile, some Japanese and European carriers have suspended plans to launch Huawei phones over concerns about the future stability of their apps and services following the U.S. actions.
Write to Dan Strumpf at firstname.lastname@example.org