Exclusive: U.S. companies can work with Huawei on 5G standards - Commerce Department

(Reuters) - The United States on Monday confirmed a Reuters report that it will amend its prohibitions on U.S. companies doing business with China’s Huawei [HWT.UL] to allow them to work together on setting standards for next-generation 5G networks.

The U.S. Commerce Department and other agencies signed off on the rule change, and it is awaiting publication in the Federal Register, Reuters reported, citing people familiar with the matter. The rule is set to be published as early as Tuesday.

U.S. Commerce Secretary Wilbur Ross confirmed in a statement to Reuters that the agency is taking action.

“The United States will not cede leadership in global innovation,” Ross said. “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.”

A public announcement was expected on Monday.

A Huawei spokeswoman, Michelle Zhou, had no immediate comment.

Last year, the United Stages placed Huawei on the Commerce Department’s so-called “entity list,” which restricted sales of U.S. goods and technology to the company, citing national security.

Industry and government officials said the rule change should not be viewed as a sign of weakening U.S. resolve against Huawei, the world’s largest telecommunications equipment maker. They said the Huawei entity listing put the United States at a disadvantage in standards settings, where companies develop specifications to allow equipment from different companies to function together.

With U.S. companies uncertain what technology or information they were allowed to share, engineers from some U.S. firms reduced their participation, giving Huawei a stronger voice.

The amendment by Commerce is to ensure U.S. companies “full participation” in voluntary standards setting bodies, a person briefed on the matter said, and is in response to concerns from U.S. companies and lawmakers.

“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 the Information Technology Industry Council, which represents companies including Amazon Inc, Qualcomm Inc and Intel Corp.

“This much-needed clarification will allow companies to once again compete and lead in these foundational activities that help enable the rollout of advanced technologies, such as 5G and AI, across markets,” she said.

The amendment “will be a significant help to U.S. companies maintaining leadership in international standards groups without affecting the government’s objectives regarding Huawei,” said Washington trade lawyer Kevin Wolf.

In the telecommunications industry, 5G, or fifth-generation wireless networks, are expected to power everything from high-speed video transmissions to self-driving cars.

Reuters exclusively reported last month that the amendment had been drafted and was awaiting approval.

U.S. Secretary of State Mike Pompeo heads to Hawaii this week to meet with Chinese officials amid increased tensions between the two countries, according to another person familiar with the matter.

Reporting by Karen Freifeld; additional reporting by Humeyra Pamuk in Washington.; Editing by Chizu Nomiyama, Jonathan Oatis and David Gregorio

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