To me, TikTox and WeChat highlight the growing ‘national securitization’ of trade and business transactions in U.S. foreign policy. ‘Trade, Technology, Telecommunications and Transaction’ (T4) has become the newest foreign policy focus of the Trump administration.
This focus on business and government intervention is in the context of a rapidly changing global and digital environment with increasingly unilateral and mercantilistic state actions, often challenging the international legal and multilateral institutional systems, as well as the notion of free markets. Foreign policy is not what it used to be; it is not your father’s foreign policy.
This has been a growing development and now includes reregulating the Internet. This reverses decades of US policy toward an open and unregulated Internet.
To some degree, we are now emulating the Chinese control of the web. Of course, the European Union, Russia, India and other countries are also regulating Internet access, localization of data storage, user information, encryption and cybersecurity by private and state actors. There has been an incremental and growing Balkanization of the global web. We really need to look at this carefully. Better national, international and diplomatic actions are clearly needed.
The battle over the use of national security as a rationale or as a cover for global trade actions by the U.S. administration is under increasing federal court scrutiny. Who would have thought that user data, source codes, algorithms and technology transfers of all sorts would become matters of national security and judicial review?
For example, a federal district court in California recently reviewed (Sept. 19, 2020) WeChat’s claim for a temporary nationwide injunction (which it granted) because the Trump administration’s actions violated the president’s delegated authority under the International Economic Emergency Powers Act (IEEPA).
While the court concluded that the plaintiff would probably not be successful on its IEEPA claim, it did grant WeChat’s request for an injunction on other constitutional grounds (First Amendment). Nevertheless, the court caustically stated, “Certainly the government’s overarching national security interest is significant. But on this record … it has put in scant little evidence that its effective ban of WeChat for all U.S. users addresses those concerns.” Of course, the court can review this question at trial.
TikTok has also sued the Trump administration, raising issues of national security over proceedings of the Committee on Foreign Investment in the United States (CFIUS) concerning restriction of its transactions. TikTok’s subsequent deal involving Oracle and Walmart has caused TikTok to file even a more recent legal action. This is a highly unusual attempt by the Trump administration to force transfer of business ownership. This case just resulted in the issuance of a temporary injunction against the Trump administration’s download ban. The federal district court in Washington, D.C., concluded that the “Plaintiffs have demonstrated that they are likely to succeed on their IEEPA (national security) claims.”
Recently, 3,400 companies asked the U.S. Court of International Trade to declare $300 billion of Trump’s tariffs on imports from China illegal. The Trump administration has asked this case to be delayed. The Commerce Department has continued to restrict exports and reexports to Chinese firms by including them on the “Entity List” that prohibits sales to foreign firms for reasons of national security.
The Trump administration has continued now to impose even newer restrictions on Chinese firms. For example, it has recently imposed export restrictions on China’s largest semiconductor manufacturer, SMIC, relying upon national security as its rationale. The Trump administration has also recently declared reliance on imports of critical minerals is a national security issue. Chinese firms continue to react against the growing intrusiveness of the Trump administration into its global business and trade transactions. For example, Chinese firms are listing more today in Hong Kong and Shanghai and moving away from New York. Chinese direct investment in the United States has plunged dramatically.
In conclusion, data transfer, privacy, data storage, telecommunications and national security are complex and intertwined legal issues that involve technology, public policy, business, trade and legal issues. Moreover, these critical issues are growing internationally. The expanding use of the national security rationale to address these issues by the United States is a critical newer development becoming ever more ominous every day.