Defense bill limits commerce secretary's ability to remove Huawei from Entity List

By Charlie Mitchell / December 12, 2019 at 3:37 PM

The fiscal year 2020 defense authorization conference bill includes language requiring congressional notification before the commerce secretary can remove Huawei from the "Entity List" restricting sales of U.S. components to the Chinese telecom, a procedural hurdle added to the bill amid congressional concerns over the Trump administration's commitment to maintaining a hard line on the cyber threat from China.

The House approved the bill Wednesday evening and the Senate is expected to follow shortly. President Trump tweeted on Wednesday that he would sign it into law.

The package contains extensive cybersecurity provisions, including acquisition reforms targeting foreign adversaries such as China and Russia, and a requirement that the Defense Department develop a strategy for securing next-generation 5G networks.

Language requiring certification before Huawei could be removed from the Entity List was in the House-passed version of the defense policy bill but not the Senate version. Conferees also added a requirement for regular reports on licenses issued for sales to Huawei.

Section 12601 of the conference bill says:

"The Secretary of Commerce may not remove Huawei Technologies Co. Ltd. or any of its affiliates (in this section collectively referred to as 'Huawei') from the entity list unless and until the Secretary certifies to the appropriate congressional committees that -- (1) Huawei has sufficiently resolved or settled the charges that were the basis for the addition of Huawei to the entity list in a manner that is consistent with the standards for the removal of an entity from the entity list under the Export Administration Regulations; (2) Huawei has sufficiently resolved or settled any other charges that Huawei violated sanctions imposed by the United States; (3) regulations have been implemented that sufficiently restrict exporting to, and importing from, the United States items that would pose a national security threat to telecommunications systems in the United States; and the Department of Commerce has mitigated, to the maximum extent possible, other threats to the national security of the United States posed by Huawei."

More broadly, the Commerce Department is accepting comments on a proposal establishing a case-by-case process for evaluating and prohibiting transactions that pose a cybersecurity risk to the U.S. information and communications technology supply chain.

Huawei is also in a legal fight over the Federal Communications Commission banning use of the Universal Service Fund for purchases of the company's products based on national security concerns.

The Chinese Foreign Ministry in late November said security policies targeting Huawei and other firms based in China constitute "economic bullying," will damage constituencies within the United States and run against U.S. principles.

Members of Congress from both parties have expressed concerns that the Trump administration might reverse course on restrictions aimed at China as part of trade negotiations with Beijing.