Huawei chip supply diminishing due to US export sanctions, may soon halt production of their Kirin chipset.

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As you are aware, in May 2019 the US Government added Huawei and its affiliated entities to the entity list – preventing US firms from selling technology to Huawei without a license. Huawei was to remain on the list until 2021. However, in May 2020, the US Department of Commerce changed the export rule to stop any shipment of semiconductors chips to Huawei from any company that produced chips using US software and technology, unless they applied for a license.

The May 2020 revised rule had an immediate impact on Huawei. For example, Taiwan Semiconductor Manufacturing Company (world’s largest semiconductor manufacturer) stopped accepting any orders for Huawei in May following the new rule.

Huawei’s consumer business unit CEO Richard Yu, said the chips purchased from foreign semiconductor manufacturers that use US software and technology will stop production on September 15th. Without chips from foreign manufacturers, Huawei will no longer be able to manufacture their Kirin chips.

If you have any questions about Huawei or want to ensure you are not violating any export controls, contact David Hsu by phone/text anytime at 832-896-6288 or by email at attorney.dave@yahoo.com.

Hong Kong could lose special status and trade benefits.

Last year, the US passed a law that requires Hong Kong to retain independence to qualify for the continued favorable trading terms with the US. I mentioned this in my blog post on June 15th, 2019 here.

The bill requires the US Secretary of State to certify each year that Hong Kong remains autonomous from China. If Hong Kong does not pass the certification of independence from China, then Hong Kong would lose trade privileges with the US (goods from Hong Kong will now be subject to duties on goods from China).

Fast forward almost a year later – where in late May China’s central government passed a national security law to apply to Hong Kong (as Hong Kong has not been able to pass such a law since they were handed back to China in 1997). The new security law would ban secession, subversion of state power, terrorism, foreign intervention and allows mainland China’s state security agencies to operate in the city.

After passage of the security law, Secretary of State Mike Pompeo told Congress that Hong Kong was no longer independent from China – signaling a potential move towards Hong Kong not passing certification.

If Hong Kong loses it’s special status a big impact would be on tariffs on goods from Hong Kong would now apply. This would impact over $66 billion in trade according to 2018 trade numbers. In 2018, Hong Kong was America’s third-largest market for wine, 4th largest for been and seventh largest for agricultural products.

If you have any questions how your imports or exports to and from Hong Kong may be impacted, contact David Hsu 24/7 by phone/text to 832-896-6288 or by email at attorney.dave@yahoo.com.

Will new US export controls block Huawei’s 5G ambitions?

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As previously posted on my blog, the May 19th Commerce Department export rules are part of the US effort to limit Huawei’s access to semiconductor chips needed to build components in their 5G infrastructure. The new rules prohibit chipmakers located mostly in Taiwan and South Korea from using U.S. origin machines and software to produce semiconductors for Huawei.

Huawei relies on Taiwan and South Korean chipmakers to make the actual chips – however the chipmakers are now subject to the US export rules since the machines and software used are based off American machines from US companies and technology.

These new rules were meant to close a loophole that allowed semiconductor foundries to manufacture chips for Huawei as long as the manufacturing occurred outside of the U.S.

The U.S. government views Huawei as a national security threat because their hardware could potentially allow them to access sensitive information and hand it over to the Chinese government – a claim denied by Huawei.

If you have any questions how the new US export control regulations will impact your ability to do business with Huawei or one of its entities, contact export control attorney David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

UK planning to remove Huawei equipment from its 5G networks.

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According to a Financial Times article, the UK is going to remove Huawei from their 5G network and make efforts to remove all Huawei components in the next 3 years. The move by the UK should be welcome news for the US, as Trump administration officials have been pressuring the UK to not use Huawei for their 5G network.

The US has argued that Huawei could build backdoors into network infrastructure and assist in spying efforts by the Chinese government. In the past, the US threatened intelligence efforts between the two countries could be limited if the UK does proceed with the Huawei 5G network.

The recent news developments shifts away from previous UK policy limiting how much Huawei equipment could be used in the 5G networks. Yesterday’s announcement signals a significant shift away.

Other online sources reporting the news also claim the UK response is partially due to public sentiment about China and their handling of the corona virus pandemic.

If your company exports to Huawei and have any questions about compliance with the changing export rules, contact David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com.

US pork exports to China increase while US faces meat shortage.

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As part of Phase 1 of the US/China trade deal, China agreed to purchase more US goods and one such product has been pork to replace 1/3 of China’s hog population that was decimated in mid-2018 due to African swine fever. Besides pork, China also imported more US beef and poultry products after lifting a prior ban on US poultry. However, one downside of the Phase 1 trade deal has been exasperated by the meat processing plant closing as a result of COVID-19 infections. This has created the issue of too much meat being exported and not enough fresh meat being stocked in US grocery stores.

The U.S. meat shortage and the Phase 1 goals of increasing exports to China seem to be opposing forces, raising the question of whether sales and shipments will or should be limited. Some restrictions would not be surprising given U.S. President Donald Trump’s more combative tone in his recent comments on trade with China.

March 2020 saw the second highest volume of pork to China with the US exporting 95,892 tons, with a combined total of 280,507 tons of pork and pork product exported so far in 2020 (an increase of 300% over the first three months of 2019) with chicken feet being the largest exported US poultry item to China. The combined value of all pork, beef and poultry exports to China for January to March of 2020 totaled $781 million.

If you have any questions about the China trade deal or the 301 duties, contact David Hsu anytime by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com.

Bill introduced to ban government employees from using Huawei, ZTE products.

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Senators Ted Cruz and Josh Hawley will introduce a bill banning US officials from using projects from Chinese companies that have been deemed to be national security threats. In the past, Chinese companies such as Huawei and ZTE have been deemed to be national security threats.

The proposed legislation is named the “Countering Chinese Attempts at Snooping Act” and would prohibit federal employees from conducting official business through technology from companies deemed by the State Department to be under the control of the Chinese government.

If passed, the bill would also require the State Department to create a list of companies supported by the Chinese company that could pose a threat and be used to conduct espionage.

This proposed legislation comes one month after President Trump signed into law legislation that barred the use of federal funds to purchase equipment from Huawei and ZTE.

If you have any questions about export compliance or think it’s time to revisit your compliance program, contact experienced compliance attorney David Hsu for a no-cost consultation by/phone or text at 832-896-6288 or by email at attorney.dave@yahoo.com.

New rules on exports to China, effective June 29, 2020.

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Yesterday, the Federal Register published new guidelines by the Bureau of Industry and Security governing the export, reexport and transfer of goods to the People’s Republic of China (PRC).

The Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to expand license requirements on exports, reexports, and transfers (in-country) of items intended for military end use or military end users in the People’s Republic of China (China).

The first major change will require U.S. companies to obtain a license before selling certain items in China that can support the military, even if the products are for civilian use. Previously, a loophole allowed an exception for civilian technology to be exported with a license.

The new regulations will impact several industries in the US, such as the semiconductor industry.

The second major change will require U.S. companies to file declarations for all exports to China, regardless of value.

A third proposed rule change will require foreign companies shipping American goods to China to seek approval from the US prior to export.

There will be a brief comment period to collect information on the proposed changes.

If you would like to submit a comment, or if you would like an evaluation of your company’s export (and import) compliance program, or have any trade questions – contact experienced trade law attorney David Hsu by phone/text at anytime: 832-896-6288 or by email at attorney.dave@yahoo.com

Corona virus’ January and February impact on trade.

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According to the Financial Times, global trade dropped 2.6 percent in February compared to the same time in 2019. This February drop also follows a 1.5 percent drop from January 2020. Specifically, China had a 7.3 percent fall in imports in January 2020 due to parts of the country shutting down in response to the Corona virus. For February, China had another 3.2 percent drop for the month.

The US did not show any impact in trade volume while the EU trade volume dropped 1.5 percent for February 2020. Will be interesting to see March and April numbers when reported.

General importing/exporting questions? Contact experienced trade attorney David Hsu by phone/email at: attorney.dave@yahoo.com.

Port Laredo #1 in two-way trade.

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They say everything is bigger in Texas and Port Laredo is no exception.

According to census data analysis by WorldCity, for the second time in a year, Port Laredo has occupied the number 1 spot out of 450 international gateways, with a recorded 18.6 billion in two-way trade for the month of February. At the number 2 spot for recorded trade of $17.2 billion, the Port of Los Angeles. Port Laredo also surpassed the Port of Los Angeles in March 2918.

World City attributed LA’s second place ranking to the US-China trade war and corona virus pandemic impacting LA and the state of California.

Port Laredo is located in South Texas along the U.S. Mexico border and includes four vehicle bridges, international rail bridge and an international airport. World City expects Port Laredo to continue holding the lead as the Port of Los Angeles seaport will be impacted by the corona virus and ongoing trade war.

Questions about importing/exporting? Contact experienced trade law attorney David Hsu by phone/text at 832-896-6288 for a no cost or obligation consultation. Email attorney.dave@yahoo.com.

COVID-19 victim? Huawei dropped as UK 5G vendor.

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One fallout of the COVID-19 pandemic is the United Kingdom’s recent decision to move away from China-based Huawei as the company to help build the UK’s 5G infrastructure. Last year, Prime Minister Boris Johnson (who is currently recovering from COVID-19) gave Huawei the lead in building the UK’s 5G infrastructure.

UK lawmaker Tom Tugendhat, the Conservative Party’s chairman of the House of Commons Foreign Affairs Committee, is quoted as saying: “It’s a shared realization of what it means for dependence on a business that is part of a state that does not share our values,” Tugendhat said.

This is likely welcome news to the US which was very critical of Johnson’s decision last year to go with Huawei – raising concerns by the US that China could use Huawei technology to collect intelligence.

The US viewed Johnson’s decision on Huawei as a major blow to the “five eyes” electronic surveillance alliance among the US, the UK, Canada, Australia and New Zealand. US officials fear China could use Huawei to collect intelligence.

If you or your company does business with Huawei, and you  have concerns about your export compliance, contact experienced import/export compliance attorney David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com.