Trump Rule on China Tech Transactions to Remain in Place

March 1, 2021 by Reece Nations
Trump Rule on China Tech Transactions to Remain in Place

WASHINGTON — A Trump-era regulation allowing the Department of Commerce to block technology-related business transactions determined to be national security threats will remain in place, against the wishes of some of the country’s business stakeholders.

The rule, scheduled to take effect this month, derives from a 2019 executive order from former-President Donald Trump. The department will hear public comments on the issue through March 22, at which point the rule becomes effective. 

“Trustworthy information and communications technology and services are essential to our national and economic security and remain a top priority for the Biden-Harris administration,” a Commerce Department representative said in a written statement.

The rule was designed to secure domestic supply chains from foreign threats, specifically from China. Previously, the Commerce Department under the Trump administration issued rules prohibiting foreign companies from selling American-made computer chips to the Chinese technology company Huawei without federal approval. 

Business Roundtable, a stakeholder group consisting of CEOs from major U.S. companies, said the rule as it was written was overly broad and would lead to adverse economic consequences without improving supply chain security. The association warned against expanding the Commerce Department’s authority to review and block transactions without a benchmark or notice of what types of transactions fall under the rule. 

“If implemented in its current form, the Proposed Rule will create uncertainty and confusion that could undermine both U.S. competitiveness and national security objectives,” BRT said in a written statement. “Foreign partners will do less business with U.S. companies given the open-ended risk that a wide range of completed transactions could fall within the Proposed Rule regime and be disrupted without notice. Such an approach could weaken U.S. economic leadership and competitiveness in the (information and communications technology and services) sector and undermine the national security benefits of this leadership.” 

BRT, in its comments, suggested the department propose a new rule that would specify the types of transactions that would be covered and excluded, adjust the criteria designating foreign adversaries, and contain an optional safe harbor process to preserve business’s transactional confidence.

Further, the association said the rule should include measures that avoid redundancies with existing national security statutory and regulatory entities and designate which technologies are of concern. 

“IBM strongly urges the incoming Biden administration to suspend immediately the Commerce Department interim rule on IT supply chain security that was issued in the midnight hour of the outgoing administration,” the company said in a written statement. “The Commerce Department ignored volumes of input from the business community. 

“The interim rule would subject hundreds of billions of dollars of legitimate U.S. commerce to vague and arbitrary government regulation without enhancing national security in a meaningful and targeted way. It will damage the U.S. economy, boost foreign competitors and violate due process protections.”

In January, the U.S. Chamber of Commerce submitted a letter to Commerce Secretary Wilbur Ross with similar objections to the rule. In the letter, the chamber contends the rule grants the Commerce Department “nearly unlimited authority” to interfere with commercial transactions and that it lacks substantive measures aimed at transparency and accountability. 

In addition to these objections, the chamber stated the proposed rule does not account for existing national security programs designed to minimize economic harm. The chamber suggested the rule be amended to narrow its scope, ensure accountability, protect confidentiality in the review process and outline more procedures for waivers, appeals, and mitigation. 

“The chamber and our members agree with the department that the ICTS supply chain ‘is an attractive target for espionage, sabotage, and foreign interference activity,’” the text of the letter read. “However, securing the ICTS supply chain cannot be done without the U.S. business community’s involvement, and this proposal leaves U.S. businesses with little in terms of how to plan around potential threats or evaluate their own efforts (which are often done in coordination with other federal efforts) to secure the ICTS supply chain.” 

A+
a-
  • China
  • Commerce Department
  • Donald Trump
  • Joe Biden
  • National Security
  • regulations
  • In The News

    Health

    Voting

    Geopolitics

    Poland's President Calls on NATO Allies to Raise Spending on Defense to 3% of GDP

    WARSAW, Poland (AP) — Poland's president on Monday called on other members of the NATO alliance to raise their spending... Read More

    WARSAW, Poland (AP) — Poland's president on Monday called on other members of the NATO alliance to raise their spending on defense to 3% of their gross domestic product as Russia puts its economy on a war footing and pushes forward with its invasion of Ukraine.... Read More

    US Adults Fracture Along Party Lines in Support for Ukraine Military Funding, AP-NORC Poll Finds

    WASHINGTON (AP) — As Russia makes battlefield advances and Ukrainian soldiers run short on ammunition, U.S. adults have become fractured along party... Read More

    WASHINGTON (AP) — As Russia makes battlefield advances and Ukrainian soldiers run short on ammunition, U.S. adults have become fractured along party lines in their support for sending military aid to Kyiv, according to a poll from The Associated Press-NORC Center for Public Affairs Research. Democrats are more likely... Read More

    At Paris Gathering, Western Leaders to Show Unity for Ukraine and Signal 'Russia Cannot Win'

    PARIS (AP) — More than 20 European heads of state and government and other Western officials are gathering in a... Read More

    PARIS (AP) — More than 20 European heads of state and government and other Western officials are gathering in a show of unity for Ukraine, signaling to Russia that their support for Kyiv isn't wavering as the full-scale invasion grinds into a third year. French President Emmanuel Macron,... Read More

    Harris Repudiates Trump Worldview and Says the US Won't Back Down on Ukraine's Defense

    MUNICH (AP) — Vice President Kamala Harris on Friday warned of the dangers of growing authoritarianism and isolationism in a... Read More

    MUNICH (AP) — Vice President Kamala Harris on Friday warned of the dangers of growing authoritarianism and isolationism in a not-so-veiled repudiation of Donald Trump’s worldview and threats to renege on security guarantees for NATO allies should he return to the White House. Speaking at the Munich Security Conference, Harris offered... Read More

    Biden Warns Opposing Ukraine Funding Plays 'Into Putin's Hands,' but Faces Resistance in House

    WASHINGTON (AP) — President Joe Biden on Tuesday called for House Republicans to urgently bring a $95.3 billion aid package... Read More

    WASHINGTON (AP) — President Joe Biden on Tuesday called for House Republicans to urgently bring a $95.3 billion aid package for Ukraine, Israel and Taiwan to a vote, warning that refusal to take up the bill, passed by the Senate in the morning, would be "playing... Read More

    Biden Tells Congress to 'Show Some Spine' Against Trump as Border Security and Ukraine Aid Collapse

    WASHINGTON (AP) — President Joe Biden on Tuesday urged Congress to “show some spine” and stand up to Donald Trump... Read More

    WASHINGTON (AP) — President Joe Biden on Tuesday urged Congress to “show some spine” and stand up to Donald Trump even as a Senate deal on border enforcement measures and Ukraine aid was rapidly collapsing. The Democratic president has engaged for months with Senate leaders to... Read More

    News From The Well
    scroll top