TikTok tit-for-tat: US may finally roll back China’s cyber defenses

China has been barring leading American Internet firms from its market for decades on national security grounds, but America has never retaliated. The news that the Biden administration may force a breakup of TikTok may signal the beginning of a new approach that imposes de facto duplication.

To be sure, the legal issues in the TikTok case have nothing to do with duplication, and the case will not be decided on that basis. The case is pending before the Committee on Foreign Investment in the United States (CFIUS). TikTok is at legal risk of a bankruptcy because the company did not notify the US government of its acquisition of a US company in 2017. The national security concern at issue is that the Chinese government may misuse TikTok user’s sensitive data.

The background to the TikTok case may be different, but the enhanced national security restrictions on TikTok and possibly other Chinese internet companies will have the same effect. The new law Sens. Mark Warner (D-Va.) and John Thune (RS.D.) introduced in the US Senate on March 7 will expand the scope and impact of the national security review to include not only TikTok but applications and other IT. products from China and other hostile foreign nations.

The Restricting the Evolution of Security Threats to Information and Communications Technology (RESTRICT) Act aims to comprehensively address the continuing threat posed by technology from foreign adversaries. The bill, supported by the Biden administration and 17 Senate co-sponsors, authorizes the Commerce Department to “identify, prevent, disrupt, prevent, prohibit and limit” technology from China and other hostile countries to protect national security.

The Commerce Department will have the discretion to assess “an unnecessary or unacceptable risk to the national security of the United States or the safety of the people of the United States.” Commerce’s reluctance so far to regulate “emerging and basic technologies” suggests the department won’t abuse that authority, but it may not apply technology restrictions as aggressively as some lawmakers in Congress.

However, the bill could be strengthened by explicitly adding national security reconciliation as one of the factors Commerce must consider. The law should state that the definition of “national security” includes the same national security restrictions that rival governments have placed on American IT firms. The current draft bill could be over-interpreted to include this approach, but including the language suggested above would clearly prevent the foreign practice of banning US firms from exporting services or products that are very similar to those banned at home.

Onlookers will ask why the US didn’t immediately retaliate. In fact, the US government has said that the Great Firewall of China (an infrastructure adopted to protect the country’s security) is a trade barrier, but it has never brought a case to the World Trade Organization (WTO) due to the uncertainty of fact and law.

Another complicating factor is that traditional WTO law generally allows member states to define their own national security interests without formal review. That doctrine may change, however, thanks to a recent WTO ruling that found US national security claims invalid in the steel case.

The US refused to recognize that decision, defending America’s right to define its national interests. But the case raises the tantalizing prospect that WTO members could challenge China’s blanket assertion of national security concerns over its internet market.

China’s reaction to news of a possible TikTok ban has been hypocritical, if not laughable. A State Department spokesman accused the US government on February 28 of “extending the concept of national security and abusing state power to oppress foreign companies.” In a previous statement, the State Department urged the US to use “a fair and effective approach, and comply with international law that is fair, open and non-discriminatory.” Indeed.

TikTok’s response focused on calls to respect free speech_­­ and claims that demonetization will not solve security problems. TikTok may challenge the CFIUS-ordered classification of the social media app on First Amendment grounds, citing the example of WeChat’s successful constitutional challenge overturning President Trump’s executive order barring that request. But the WeChat case did not implicate CFIUS, which has express authority to order the divestiture on national security grounds of foreign acquisitions not notified to the US government.

It’s too soon to tell how this will all play out. The rules of the national security game are changing, however, and China may eventually face overseas the unfair and protective restrictions it places on foreign firms at home.

Jeff Moon is a former assistant US trade representative to China, US ambassador, business executive and adviser.