The United States drafted new rules that will allow American companies and Huawei to jointly develop 5G standards

The U.S. Commerce Department is about to sign a new rule that will allow U.S. companies to work with China's Huawei to jointly set standards for next-generation 5G networks, Reuters reported, citing people familiar with the matter.

Engineers at some U.S. technology companies stopped working with Huawei on standards after the U.S. Commerce Department blacklisted the company last year. The blacklist makes it harder for U.S. companies to determine what technology and information their employees can share with Huawei. Industry and government officials say it puts the U.S. at a disadvantage, giving Huawei a bigger voice in standards-setting meetings.

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The U.S. Commerce Department added Huawei to its “Entity List” last May, citing national security concerns. The listing restricts sales of U.S. products and technology to Huawei and raises questions about how U.S. companies can participate in industry standards organizations.

After nearly a year of uncertainty, the Commerce Department has drafted a new rule to address the issue, two sources told Reuters. The rule would essentially allow U.S. companies to participate in standards bodies of which Huawei is a member, the sources said. The rule could still change, though.

The Commerce Department is conducting a final review of the draft and, if approved, will submit it to other agencies for approval, the people said. It is unclear how long the process will take or whether there will be objections from other agencies.

Naomi Wilson, senior director of Asia policy at the Information Technology Industry Council, said the U.S. government wants U.S. companies to maintain their competitive advantage over Huawei. "But their policies have inadvertently caused U.S. companies to lose out to Huawei and other companies on the Entity List."

People familiar with the matter said the new rules are expected to target only Huawei and not other companies on the entity list, such as Hikvision.