White House seeks delay on Huawei ban for contractors

WASHINGTON (Reuters) – The White House Office of Management and Budget has asked the U.S. Congress for more time to phase in a ban on federal contracts with companies that do business with Chinese telecom giant Huawei, part of a defense law passed last year.

FILE PHOTO: Workers sit a the Huawei stand at the Mobile Expo in Bangkok, Thailand May 31, 2019. REUTERS/Jorge Silva/File photo

The ban is one part of a multifaceted U.S. push against Huawei Technologies Co Ltd, the world’s largest telecoms network gear maker, which Washington has accused of espionage and stealing intellectual property.

Huawei has repeatedly denied it is controlled by the Chinese government, military or intelligence services. It has filed a lawsuit against the U.S. government over the restrictions in the defense policy bill.

The defense law, called the National Defense Authorization Act (NDAA), placed a broad ban on the use of federal money to purchase products from Huawei, citing national security concerns.

It included a ban on direct federal purchases of Huawei equipment, which will take effect this year.

But the White House said the government needed two additional years to work out rules for another part of the law, which requires third-party suppliers and contractors to restrict their purchases and use of Huawei equipment.

“This is about ensuring that companies who do business with the U.S. government or receive federal grants and loans have time to extricate themselves from doing business with Huawei and other Chinese tech companies listed in the NDAA,” Jacob Wood, a spokesman for the White House OMB, said in a statement.

Acting OMB Director Russ Vought asked congressional leaders and Vice President Mike Pence for the delay in a letter earlier this week. The letter was first reported by the Wall Street Journal.

Vought said the delay would “ensure the effective implementation of the prohibition without compromising desired security objectives,” and said there would be a “dramatic reduction” in the number of contractors able to sell to the U.S. government without a delay.

Vought asked that restrictions against purchasing Huawei equipment imposed on government contractors begin in four years, rather than two years. The delay would allow “additional time to think through the associated potential impacts and possible solutions,” he said.

The requested delay would not stop or affect the timing of a separate Commerce Department rule that added Huawei to its “Entity List,” a blacklist that bans the company from buying parts and equipment from American firms without U.S. government approval.

President Donald Trump also signed an executive order last month that bars U.S. companies from using telecommunications equipment made by firms deemed to post a national security risk.

Reporting by Roberta Rampton and Joel Schectman; Editing by Peter Cooney

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