The New Tech Bans With China: What You Need To Know About The Huawei Situation
As the trade war with China heats up, the federal government has taken some rather significant measures in recent days that will undoubtedly have a huge impact on any company that relies on global technology supply chains.
Here are the facts you need to know.
What Just Happened In The Technology Sector?
Essentially, the United States recently issued an export control rule that added Huawei Technologies Co. and a number of its affiliated companies to the "Entity List." The impact of the automatic restrictions on exports, imports, and transfers between U.S. companies and the Chinese companies on the Entity List is going to be felt throughout the international trade market wherever technology is concerned.
What Should You Know About Export Administration Regulations (EAR)?
Export Administration Regulations (EAR) are basically bans that the government has slapped down on imports and exports that are deemed a threat to the United States' foreign policy and national security.
Huawei depends on numerous United States companies for the components it uses in the 5G equipment it produces. Blocking the sale of those components to Huawei and its affiliates will have an effect that is going to be felt both by large industry leaders and smaller tech companies alike.
Under the de minimis rule, any foreign-made commodity is subject to EAR if that commodity's "controlled" content (anything subject to legal restrictions) is 25% or more from U.S. origin. This has created a lot of confusion for tech companies that supply parts overseas, which is why the Bureau of Industry and Security has provided a free service to help companies determine when their non-U.S.-made items may be subject to EAR.
How Can You Make Sure That You Aren't In Violation Of The New Rules?
If you engage in any kind of international trade with technological goods, you run a serious risk of violating the new rules. These rules have largely taken many companies by surprise, and even large manufacturers are suspending all exports to Huawei and its affiliates while they sort out what they can and cannot do. This even includes chipmakers like Intel Corp. and Qualcomm Inc.
If you're involved in import/export with Chinese companies, the smartest thing you can do at this time to protect your business is to be proactive. It might be wise to quickly schedule a consultation with an international trade attorney. This could be important not only to address the current restrictions but also to get some advice about what's likely to come in the future.