"The Department is committed to protecting US national security and foreign policy interests by encouraging USA industry to fully engage and advocate for US technologies to become global standards".
The US businesses have been anxious that Huawei would further expand its global share, and that the US would be left behind in 5G.
The British flag and a smartphone with a Huawei and 5G network logo are seen on a PC motherboard in this illustration picture taken January 29, 2020.
However, industry insiders and government officials claim that this rule change is not a sign that the US's determination to limit Huawei has weakened.
"In amending the Huawei Entity Listing, the rule promotes US national security and foreign policy interests by facilitating USA leadership in standards-development bodies", it added.
As per a Reuters report, the prohibition on working with HUAWEI gave the Chinese company a strategic advantage when it comes to setting the standards for futuristic technologies like 5G and AI.
Baccalaureate speaker Ressa '86 found guilty of cyber libel in Philippines
Ressa has denied any wrongdoing in connection with either the tax evasion or cyberlibel charges. Ms Ressa, 56, had earlier described the verdict as "hugely important".
A study published last week found that Huawei holds the most patents on 5G technology, followed by Samsung, LG, Nokia, Ericsson and Qualcomm.
The Department of Commerce declined to comment, while Huawei did not respond to an immediate request for comment.
The Commerce Department publicly announced the move later on Monday.
"This action recognizes the importance of harnessing American ingenuity to advance and protect our economic and national security", U.S. Department of Commerce Secretary Wilbur Ross said in the Monday announcement.
"The Department is committed to protecting USA national security and foreign policy interests by encouraging US industry to fully engage and advocate for USA technologies to become worldwide standards", he added. Huawei Chief Financial Officer Meng Wanzhou, who is fighting her extradition from Canada to the USA on charges of bank fraud, has raised a new argument in her defense, court documents released on Monday show.
Last year Huawei was placed on the United States entity list.
The Commerce Department cited USA charges pending against the company in adding Huawei to the last May list for alleged violations of US sanctions against Iran.