Huawei store. Photo: JHVEPhoto/Shutterstock.com

Companies in the U.S. are scrambling to understand their compliance responsibilities in the wake of the Commerce Department's announcement last week that it was adding Huawei Technologies Co. Ltd and nearly 70 of its affiliates in 26 countries to a trade blacklist.

“We're fielding literally dozens of calls on the topic of compliance,” Rich Matheny, a partner in Goodwin Procter's Washington, D.C., office who heads the firm's global trade practice, said Tuesday.

The clamor for compliance answers isn't surprising considering Huawei's reach and the strict penalties that U.S. companies face for violating the export ban: $300,000 for each civil violation and a $1 million fine or up to 20 years in prison for each criminal violation.

There's also concern that the action against Huawei could spur other Chinese companies to sever their ties with stateside businesses, said Kevin Wolf, a partner in the international trade practice at Akin Gump Strauss Hauer & Feld in Washington, D.C., and former assistant secretary of commerce.

“There are foreign competitors that exist now or could exist soon,” Wolf said. “I'm not denying the national security issues here, but from an economic perspective this could motivate a move away from U.S. suppliers.”

While grappling with the implications of the restrictions on Huawei, which were announced May 16, stakeholders learned Monday that the U.S. had granted the Chinese telecom giant a temporary general license that carves out some exceptions in the export ban.

The license, which was slated to be published Wednesday and expire Aug. 19, lifts the ban on certain exports that Huawei needs to “maintain and support existing and currently fully operational networks and equipment.” The 90-day license also applies only to legally binding contracts that Huawei and third parties finalized on or before May 16.  

At this point, companies need to stop exporting products to Huawei until they can determine whether what they're sending fits within the terms of the temporary license, according to Matheny.

Companies that decide to resume business with Huawei need to abide by the terms of the license, which requires, among other things, that exporters draft a certification explaining how their products qualify for the exception.

Matheny also advised companies to prepare for the eventuality of a full trade ban on Huawei rather than banking on the temporary license being renewed or a deal being reached.  

As for Huawei, the company appears to be digging in its heels. Huawei founder Ren Zhengfei told Chinese state media that the firm was “fully prepared” for a conflict with the U.S. as it pursued its goal to “stand at the top of the world.”

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