U.S. lawmakers call for inclusion of former Huawei sub-brand Honor on economic blacklist

Fourteen U.S. House members asked the U.S. Department of Commerce to put Honor on the government's economic blacklist.

According to Reuters, 14 lawmakers, including Republican Rep. Michael McCaul, vice chairman of the U.S. House Foreign Affairs Committee, wrote in an open letter that if Honor, which was divested from Huawei, is not designated to the entity list, U.S. technology and software could flow to this company that should be restricted. The open letter said Honor was sold to a Chinese state-led consortium, with the Shenzhen government owning a majority stake.

The U.S. government had added Huawei to the entity list in May 2019. Companies on the list are prohibited from purchasing parts or using U.S. technology from U.S. companies without U.S. government approval. The lawmakers claimed that Honor was divested to evade U.S. export control policies.

The open letter stated that the sale of Honor was not the result of market manipulation but was orchestrated by the Chinese Communist Party. The same concerns about exporting Huawei's technology when it is part of Huawei apply to Honor's current state-backed ownership structure. If the U.S. government move too slowly and focus on individual entities rather than the relationships and ecosystems between them, the Communist Party's party-state economy will prevail over U.S. sanctions.

In response, a U.S. Commerce Department spokesperson said they appreciated "the perspective of these members of Congress," adding that the Commerce Department "is continually reviewing available information to identify potential additions to the entity list."

On November 17, 2020, Huawei Investment Holdings Co. announced the sale of the total assets of its Honor cell phone business. Honor's senior management and team will remain stable, and Huawei will no longer hold any shares in Honor after the sale and won't participate in business management and decision-making.

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