The US lifts some Huawei prohibitions for 90 days in order to maintain network functionality

To minimise any disruption for China's Huawei and its global client base, the U.S. government temporarily lifted some trade restrictions on the telecom giant on Monday.

Huawei Technologies Co Ltd is permitted by the U.S. Commerce Department to acquire products made in the United States for the purpose of maintaining current networks and updating software on Huawei devices.

It remains forbidden for the corporation to purchase American materials and components for the production of new products without obtaining licence approvals, which are probably going to be rejected.

The goal of the new authorisation, according to U.S. Secretary of Commerce Wilbur Ross, is to give telecom companies that depend on Huawei equipment more time to find other solutions.

The 90-day authorisation shows that modifications to Huawei's supply chain could have quick, significant, and unexpected effects on its clientele.

"It appears that the objective is to keep computers, cell phones, and the internet from crashing," former Commerce Department official and Washington lawyer Kevin Wolf stated. This isn't a surrender. This pertains to cleaning."

The largest manufacturer of telecom equipment in the world, Huawei, did not immediately reply to a request for comment.

According to the Commerce Department, it will assess whether to prolong the exemptions over 90 days.

Huawei and 68 other companies were placed on an export blacklist by the U.S. Commerce Department on Thursday, making it practically impossible for the Chinese giant to buy products made in the country.

The businesses on the list are thought to be involved in operations that are at odds with US foreign policy objectives or national security.

Citing a government spokesperson, Reuters said on Friday that the department was thinking about a temporary easing.

According to the notice on Monday, the authorisation was made as a temporary general licence that would run out on August 19.

The license permits Huawei to participate in the creation of standards for upcoming 5G networks as well as the report of security flaws.

Citing a source familiar with the situation, Reuters reported on Sunday that Alphabet Inc.'s Google had ceased business dealings with Huawei that necessitated the transfer of hardware, software, and technical services other than those made publicly available through open source licensing.

An inquiry on Google's response to the new authorisation was not answered right away.

About $11 billion of the $70 billion that Huawei spent on component purchases in 2018 went to American companies like Qualcomm, Intel Corp., and Micron Technology Inc. [nL4N22S13G]

Douglas Jacobson, a trade attorney in Washington, stated, "I think this is a reality check." "It shows how pervasive Huawei goods and technology are around the globe and if the U.S. imposes restrictions, that has impacts."

According to Jacobson, the attempt to maintain the functionality of the current networks seems to be directed towards telecom companies in Europe and other regions where Huawei equipment is widely used.

The action may also benefit mobile service providers who recently bought network equipment from Huawei in sparsely populated areas of the United States like eastern Oregon and Wyoming.

The interim licence, according to Wolf, the former official from Commerce, is comparable to the steps the department took in July to keep systems from collapsing following the United States' ban on Chinese rival ZTE Corp, a smaller company to Huawei, from purchasing American-made components in April.

Sources told Reuters at the time that the U.S. trade embargo on ZTE caused chaos at cellphone carriers in Europe and South Asia.

After ZTE and the Commerce Department reached a deal that included a $1 billion fine, $400 million in escrow, and the replacement of its board of directors and top management, the company's ban was removed on July 13. ZTE then started up again after the prohibition caused it to halt its main activities.

(Reporting by Diane Bartz in Washington and Angela Moon; additional reporting by Karen Freifeld in New York and David Shepardson in Washington; editing by Lisa Shumaker and Cynthia Osterman)

By Reuters