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Huawei crackdown

US to allow companies to work with Huawei on 5G standards

Rule change comes amid concerns of American tech industry being 'sidelined'

PALO ALTO, U.S. -- The U.S. Commerce Department announced on Monday that it will allow American companies to work with Huawei on setting standards for 5G networks despite Washington's continuing crackdown on the Chinese company.

Since Huawei was placed on the U.S. entity list -- a trade blacklist-- in May 2019, American companies have been required to obtain a special license from the Commerce Department to have any business dealings with Huawei and its affiliates. This rule change allows companies to disclose U.S. technologies to the Chinese telecom giant without a license if it is for the purpose of 5G standards development.

The amendment is meant to ensure Huawei's placement on the entity list "does not prevent American companies from contributing to important standards-developing activities despite Huawei's pervasive participation in standards-development organizations," according to the Commerce Department announcement.

Huawei has emerged as a global leader in setting 5G standards in recent years.

In a study by German patent statistics company IPlytics, Huawei ranked first in the world in contribution to 5G standards development, with 3,147 related patents filed as of January 2020, followed by Samsung, ZTE and LG Electronics.

A similar study was conducted by Boston-based advisory firm Strategy Analytics, in which it analyzed over 600 member companies in 3GPP, an international telecommunications standard development organization, and found Huawei leads in 5G standard-setting contributions.

"According to our assessment, leading infrastructure vendors -- Huawei , Ericsson and Nokia -- made more significant contributions to 5G standards than other studied companies," said Sue Rudd, director at Strategy Analytics.

"Huawei leads in terms of overall contributions to the end-to-end 5G standards," she added.

The Huawei ban put in place last May has effectively suspended technological cooperation between American companies and the Chinese handset giant, a state of affairs that many government officials and tech industry players have warned will hamper the U.S.'s ability to participate in the global 5G standards-setting process.

"Confusion stemming from the May 2019 entity list update had inadvertently sidelined U.S. companies from some technical standards conversations, putting them at a strategic disadvantage," said Naomi Wilson, senior director of policy for Asia at Information Technology Industry Council, a trade organization representing companies including Apple, Qualcomm and Intel.

The Huawei ban amendment announced on Monday is aimed at addressing that disadvantages.

"The United States will not cede leadership in global innovation. This action recognizes the importance of harnessing American ingenuity to advance and protect our economic and national security," U.S. Department of Commerce Secretary Wilbur Ross said in the Monday announcement.

"The Department is committed to protecting U.S. national security and foreign policy interests by encouraging U.S. industry to fully engage and advocate for U.S. technologies to become international standards," he added.

A Huawei spokesperson said in a statement that the company "would like to continue holding sincere discussions in relation to standards for new technologies with our counterparts, including those in the U.S., contributing to the technological advancement of society at large," after the American rule change was announced.

The Commerce Department's announcement comes on the same day as another development in the U.S.-Huawei drama unfolds. Huawei Chief Financial Officer Meng Wanzhou, who is fighting her extradition from Canada to the U.S. on charges of bank fraud, has raised a new argument in her defense, court documents released on Monday show.

Meng, who is also the daughter of Huawei founder Ren Zhengfei, claims that the case the U.S. submitted to Canada is "so replete with intentional and reckless error" that it violates her rights.

Meng was detained in Vancouver on Dec. 1, 2018, at the request of the United States, where she is charged with bank fraud and accused of misleading HSBC Holdings about Huawei's business in Iran.

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