Huawei’s latest license extension cut in half by US government, 45 instead of 90 days.

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Since May of 2019, Huawei has been placed on the US entity list and therefore unable to conduct business with US companies. However, the Trump administration did permit companies to do business with Huawei through license extensions.

The most recent 90-day extension was granted in November 2019, allowing companies to do business with Huawei until the expiration of 90 days.

Last week, an 45-day extension was granted. After 45 days, and if no further extensions are granted, then American companies can no longer do business with Huawei.

Contact experienced export compliance attorney David Hsu by phone/text if you have any questions how the current prohibitions against Huawei and ZTE will impact your business. Email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

Federal Court rules against Huawei.

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Yesterday, a federal judge in Texas ruled in favor of the United States, concluding Congress acted within its powers by including contract prohibitions against ZTE and Huawei in the 2019 National Defense Authorization Act.

Also earlier this week, the government also charged Huwei and a couple of their subsidiaries with federal racketeering and conspiracy (RICO) charges to steal trade secrets from US companies.

The recent decision stems from a Huawei lawsuit filed in March 2019, in which they claim Section 889 of the National Defense Authorization Act was unconstitutional because it limited Huawei’s business in the US. Huawei’s main argument was the NDAA overbroad in restricting sales to Huawei and violated Huawei’s due process.

Contact experienced export compliance attorney David Hsu by phone/text if you have any questions how the current prohibitions against Huawei and ZTE will impact your business. Email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

Huawei challenging constitutionality of US ban.

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Yesterday, Huawei filed a motion in court to challenge a ban against Huawei in the most recent National Defense Authorization Act (NDAA) passed last August 13, 2018.

The NDAA language banning US government agencies is found here:

SEC. 889. PROHIBITION ON CERTAIN TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SERVICES OR EQUIPMENT.

(a) Prohibition On Use Or Procurement. – (1) The head of an executive agency may not—

(A) procure or obtain or extend or renew a contract to procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system; or

(B) enter into a contract (or extend or renew a contract) with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.

Huawei’s main argument is the ban is unlawful because it targets a specific person – Huawei and its entities.

The NDAA (defense budget) does specifically mention Huawei and ZTE when it included:

(3) COVERED TELECOMMUNICATIONS EQUIPMENT OR SERVICES.—The term “covered telecommunications equipment or services” means any of the following:

(A) Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities).

The government claims the ban is for national security reasons. Previous bans included a federal ban on software from Russia-based Kaspersky Lab. Kapersky also filed a legal challenge but the government prevailed in court due to national security issues. It is unclear whether this court will rule similarly.

Will update as soon as more information becomes available.

ZTE deal is good to go – House bill does not include Senate language “undoing” ZTE deal.

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Last Thursday, the US House of Representatives (“House”) passed its version of the defense appropriations bill, formally known as the the “John McCain National Defense Authorization Act for Fiscal Year 2019”, or “NDAA” for short.

The House bill passed on a 359-49 vote and authorized $675 billion in defense spending for next year. The final bill does include the Senate language prohibiting ZTE and Huawei from selling goods or services to the Pentagon.

More importantly, the final bill does not include Senate language that would have “undone” ZTE’s deal ($1 billion in fines, US government oversight, $400k in escrow, etc.) Despite bipartisan support in the Senate for amended language that would have prevented a deal with ZTE, the House did the right thing and removed this amendment from the final bill.

News of this final bill probably won’t make it to the news outlets, but this final bill is a win for President Trump and the administration – and will be the first time the US Government has had oversight of a large Chinese company.

With the ZTE deal saved and ZTE now eligible to buy hardware and software from US companies – companies such as Qualcomm, Lumentum, Oclaro, Broadcom, Intel, MACOM, Semtech, and other U.S.-based vendors in the ZTE supply chair are probably breathing a sigh of relief.

Check back for more ZTE news, if you have any questions about ZTE, trade or customs law, contact David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com.