US holds off on Huawei licences as China halts crop-buying

Washington: The White House is holding off on a decision about licenses for US companies to restart business with Huawei Technologies Co. after Beijing said it was halting purchases of US farming goods, according to people familiar with the matter.

Commerce Secretary Wilbur Ross, whose department has vetted the applications to resume sales, said last week he’s received 50 requests and that a decision on them was pending. American businesses require a special license to supply goods to Huawei after the US added the Chinese telecommunications giant to a trade blacklist in May over national-security concerns.

Huawei suppliers Micron Technology Inc and Western Digital Corp declined as much as 2.2 per cent after the news on the delay in license approvals. The Australian dollar and offshore yuan fell versus the greenback and the yen gained.

Trade Truce

President Donald Trump said in late June after agreeing to a now-broken trade truce with Chinese President Xi Jinping in Japan that some restrictions on Huawei would be loosened. But that promise was contingent upon China beefing up its purchases from American farmers, which Trump has complained the country has failed to do.

In the past week tensions have escalated further as Trump said he would impose a 10 per cent tariff on $300 billion of Chinese imports as of Sept. 1 and his Treasury Department formally labelled China a currency manipulator.

Still, Trump said last week there were no plans to reverse the decision he made in Japan to allow more sales by US suppliers of non-sensitive products to Huawei. He said the issue of Huawei is not related to the trade talks.

The White House had no immediate comment, and the Commerce Department declined to comment.

Tech Pitch

Technology companies have already made their pitch to the White House for a rapid granting of licenses that would allow them to resume some shipments of components to Huawei.

The Chinese company is one of the world’s biggest purchasers of semiconductors. Continuing access to that market is crucial to the fortunes of chipmakers such as Intel Corp, Qualcomm Inc and Broadcom Inc who sent their chief executives to meet with Trump in July.

Companies such as Xilinx Inc and Micron have publicly said they’ve applied for licenses and called on the US to allow them to resume doing business with Huawei. They argue that many of their products are easily obtainable from their overseas rivals, making a ban ineffective and also harmful to the industry that the trade dispute with China is supposed to be helping.

Some US-based makers of electronic components have already reported earnings and given forecasts that show the negative effects of the trade dispute.