China’s tech giant Huawei has been encouraging its suppliers to violate US law by telling them to move operations offshore in a bid to avoid US sanctions, Commerce Department Secretary Wilbur Ross told told journalists.
In May, the US government placed Huawei on a trade blacklist known as the entity list, over national security concerns, forcing some suppliers to apply for special licenses to sell equipment to the company.
But the US government has become frustrated by the limitations of the blacklisting to keep overseas suppliers from selling to the company, the world’s largest telecoms equipment supplier, journalists at our partner news agency reported last week.
On Tuesday, Ross said in an interview that those frustrations extended to a push from Huawei to move its supply chain overseas.
Huawei has “been openly advocating companies to move their production offshore to get around the fact that we put Huawei on the list,” Ross said.
“Anybody who does move the product out specifically to avoid the sanction… that’s a violation of US law. So here you have Huawei encouraging American suppliers to violate the law,” he added.
Huawei spokesman Rob Manfredo declined to comment.
Reuters reported last week that the US government may expand its power to stop more foreign shipments of products with US technology to Huawei Technologies, by broadening the reach of two key rules to capture more products.
One of those regulations, known as the De minimis Rule, dictates how much US content in a foreign-made product gives the US government authority to block an export. Currently the de minimis threshold for China is set at 25%, meaning that if American content constitutes more than a quarter of the value of the item, US rules apply to its export to China.
Ross declined to say whether such rule changes were imminent. However, he said Huawei’s advocacy of suppliers moving offshore “has flagged an issue we’ve been starting to deal with,” that is, whether the 25% threshold is right for China.
“Whether 25% is forever and all time the right ratio, that’s something to be resolved,” Ross said, adding that the agency was always considering such moves.
The team at Platform Executive hope you have enjoyed the ‘[post_title]’ article. Automatic translation from English to a growing list of languages via Google AI Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Additional Reporting by David Shepardson. Editing by Chris Sanders and Edward Tobin.
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