Foreign Investment and National Security – Restricting Huawei’s Contracts & Investments – Wrong Signal?

Various attempts to acquire business opportunities in the U.S. by the Chinese telecom company, Huawei, have been blocked by the federal government. These federal actions have been based upon national security concerns over technology transfer and cybersecurity.
 Global mergers and foreign investment are essential to the economic prosperity of the U.S. While there is a “security exception” under the WTO rules governing trade relations it has never been relied upon or adjudicated. 
The U .S. needs to clarify its dealings with Huawei. It should fully address the issues of technology security and foreign government ownership. This clarification would help ensure that U.S. policies are sound and are consistent with its general policy of  attracting foreign investment.
 Greater transparency that encourages foreign investment is good for jobs, economic development, and global transactions.
National security restrictions need to be justifiable and not provide cover for protectionist actions. We do not want foreign governments to use national security as an excuse to preclude U.S. investment into their markets. Global investment into the U.S. should be welcomed and not scared away.
During this presidential election season the clash of interests in Washington between national security and global trade is obvious. But this domestic political debate cannot become self-destructive. Sensible policies should be formulated and implemented to encourage direct investment but also to protect our national interests.
It is a tricky balance to engage in the global trading system, to manage important bilateral economic relations, and to provide for the national defense in the 21st century.
 It is a globalized world, hyper-charged by technology and greater connectivity. We need to embrace this global environment in order compete aggressively to succeed. But we also need to be safe.

About Stuart Malawer

Distinguished Service Professor of Law & International Trade at George Mason University (Schar School of Public Policy).
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