Chinese companies like Huawei and SMIC have been on the U.S trade black list for a while now. However, documents provided to Congress show that suppliers of the two companies received billions worth of licenses between November 2020 and April 2021.
The documents were first accessed by Reuters, revealing the approval of 188 licenses valued at $42 billion for suppliers of SMIC. Meanwhile, 113 export licenses ($61 billion) were provided to suppliers of Huawei. Around 69% of the requests to ship to Huawei were greenlit. Around 9 of the 10 license applications from SMIC suppliers went through.
The U.S. House Foreign Affairs committee received the data in May from the Commerce Department. Last Thursday, the committee voted to release the licensing data.
“It’s clearly in our national interest to increase transparency and public scrutiny on how our nation transfers its technology to an adversary,” Republican member of the committee, Michael McCaul said in a subsequent statement.
Republican Senator Marco Rubio sharply criticized the government over the approval of licenses. He also sought an explanation from President Biden on these licensing “waivers.”
“It is just another example of President Biden not taking the economic and security threat posed by the Chinese Communist Party seriously,” Rubio said.
The Commerce Department said that approvals of applications don’t translate to actual shipments
The Commerce Department holds a slightly different view of the issue. The agency said that releasing an “arbitrary snapshot” of licensing information could risk “politicizing the licensing process and misrepresenting the national security determinations” of the government.
The department said that license application approvals do not reflect actual shipments. The agency said that the applications of SMIC and Huawei suppliers went through as per the policies set up by the Trump administration. These policies are now continuing under the Biden administration.
An unnamed former senior Commerce Department official during the Trump administration agreed with the department’s stance. “This very small period of license activity is not an accurate window into the Huawei and SMIC license process,” he told Reuters (via). “This [document release] seems designed to mislead people and generate headlines,” he added.
Huawei was first put on the U.S. trade blacklist in May 2019 with the administration citing national security concerns. Semiconductor Manufacturing International Corporation or SMIC is China’s top chipmaker. SMIC went on the entity list in December 2020, though it was sanctioned in September.
Reuters mentions that a bulk of the licenses did not authorize shipments of sensitive items. Moreover, 80 of the 113 licenses provided to Huawei suppliers were reportedly used for non-sensitive goods. Similarly, 121 of the 188 licenses awarded to SMIC were for non-sensitive items.