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    Wednesday, June 26, 2019-12:46:17P.M.

     

     

     

     

     

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US eases restrictions on Huawei; founder says US underestimates Chinese firm

WASHINGTON (Reuters) — The U.S. government has temporarily eased trade restrictions imposed last week on China’s Huawei, a move aimed at minimizing disruption for its customers but dismissed by its founder who said the tech firm had prepared for U.S. action.

The U.S. Commerce Department will allow Huawei Technologies Co Ltd to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.

The world’s largest telecommunications equipment maker is still prohibited from buying American parts and components to manufacture new products without license approvals that likely will be denied.

The U.S. government said it imposed the restrictions because of Huawei’s involvement in activities contrary to national security or foreign policy interests.

The new authorization is intended to give telecommunications operators that rely on Huawei equipment time to make other arrangements, U.S. Secretary of Commerce Wilbur Ross said in a statement on Monday.

“In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks,” Ross added.

The license, which is in effect until Aug. 19, suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences for its customers.

“The goal seems to be to prevent internet, computer and cell phone systems from crashing,” said Washington lawyer Kevin Wolf, a former Commerce Department official. “This is not a capitulation. This is housekeeping.”

Huawei founder Ren Zhengfei on Tuesday said the temporary reprieve move bore little meaning for the company as it had been making preparations for such a scenario.

“The U.S. government’s actions at the moment underestimate our capabilities,” Ren said in an interview with CCTV, according to a transcript published by the Chinese state broadcaster.

He said Huawei was at odds with the U.S. government, not U.S. firms, and that Huawei is capable of making the chips it buys from the United States though that does not mean it will stop buying American chips.

The U.S. Commerce Department said it will evaluate whether to extend the exemptions beyond 90 days.

On Thursday, the Commerce Department added Huawei and 68 entities to an export blacklist that makes it nearly impossible for the Chinese company to purchase goods made in the United States.

The government tied Huawei’s addition to the “entity list” to a pending case accusing the company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and move money out of the country via the international banking system. Huawei has pleaded not guilty.