The China Question

www.worldecr.com 27 ThE ChInAquESTIOn INSIgHT were First Amendment concerns with respect to the freedom of speech. 6 At the end of President Trump’s term in office, the TikTok and WeChat Bans remained suspended pursuant to preliminary injunctions. However, in the waning days of the Trump administration, the Department of Commerce issued new regulations under the ICTS EO (the ‘ICTS Regulations’), establishing a new ICTS review process to become effective on 22 March 2021 and naming foreign adversaries. 7 The Biden administration ultimately terminated the TikTok andWeChat Bans in June 2021 8 but did not revoke the ICTS Regulations. Instead, it directed the Commerce Department to review software applications in accordance with the ICTS EO and the ICTS Regulations, and to take appropriate action pursuant to those authorities. 9 This broader approach is distinct from the Trump administration’s more targeted application of the ICTS EO. Nonetheless, the aforementioned court cases – which are likely to be dismissed because the TikTok and WeChat Bans will no longer go into effect – demonstrated that the US government’s powers under the ICTS EO and the underlying statutory authority, IEEPA, have limits. Pursuant to the ICTS Regulations, the Department of Commerce will consider the following countries and individuals as foreign adversaries when reviewing ICTS Transactions: China, Russia, North Korea, Cuba, Iran, and Nicolás Maduro of Venezuela. 10 The ICTS Regulations also lay out a broad scope of covered ICTS Transactions, including ICTS used in a sector designated as critical infrastructure; ICTS integral to 5G mobile networks or satellites; ICTS used for cloud-based storage that processes or retains sensitive personal data of US persons; routers or modems; desktop, mobile, or gaming applications; and ICTS integral to artificial intelligence, quantum computing, drones, or advanced robotics. 11 In addition, the Department of Commerce is preparing, but has not yet implemented, a licensing process for entities wishing to obtain pre-approval before engaging in or continuing to engage in ICTS Transactions. 12 The delay in implementing a licensing process – originally intended to be available by 29 March 2021 but now expected in late 2021 at the earliest – is contributing to the significant uncertainty facing potential parties to ICTS Transactions subject to the review process, which encompasses a far wider swathe of ICTS Transactions than those traditionally subject to deemed export rules or review by the Committee on Foreign Investment in the United States. On 17 March 2021, the Secretary of Commerce announced that subpoenas had been served on ‘multiple Chinese companies’ that provide ICTS in the United States, 13 thereby dashing the hopes of many who predicted that the Biden administration would abandon the ICTS Regulations promulgated by the previous administration. On the contrary, the new administration believes that ‘the unrestricted use of untrusted ICTS poses a national security risk’ and is ‘committed to taking a whole-of-government approach to ensure that untrusted companies cannot misappropriate and misuse data’ of US citizens. 14 Nonetheless, the full extent to which the Department of Commerce will exercise its powers under ICTS Regulations remains to be seen, as does the extent to which efforts to do so may provoke court challenges that could curtail its jurisdiction over ICTS Transactions. o Barbara Linney is a partner at BakerHostetler where she serves as the firm’s International Trade and National Security team co-leader. Orga Cadet is an Associate at the firm. Barbara and Orga are based in the firm’s Washington, DC office. www.bakerlaw.com lINKS AND NOTES 1 TikTok and WeChat are mobile applications owned by Chinese persons and widely used in the United States and abroad. 2 Executive Order 13873 of 15 May 2019: Securing the Information and Communications Technology and Services Supply Chain, 84 FR 22689 (17 May 2019). 3 Id . 4 Executive Order 13942 of 6 August 2020: Addressing the Threat Posed by TikTok, and Taking Additional Steps To Address the National Emergency With Respect to the Information and Communications Technology and Services Supply Chain, 85 FR 48637 (11 August 2020); Executive Order 13943 of 6 August 2020: Addressing the Threat Posed by WeChat, and Taking Additional Steps To Address the National Emergency With Respect to the Information and Communications Technology and Services Supply Chain, 85 FR 48641 (11 August 2020); Identification of Prohibited Transactions to Implement Executive Order 13942, 85 Fed. Reg. 60,061 (24 September 2020); Identification of Prohibited Transactions to Implement Executive Order 13943, FR Doc. 2020-20921 (17 September 2020) (withdrawn prior to publication in the Federal Register). President Trump also issued an executive order on 5 January 2021, invoking the ICTS EO to target various other Chinese mobile applications, but no action was taken by the Department of Commerce under this order. See Executive Order 13971 of 5 January 2021: Addressing the Threat Posed by Applications and Other Software Developed or Controlled by Chinese Companies, 86 FR 1249 (8 January 2021). 5 See Int’l Emergency Econ. Powers Act, 50 USC. § 1702 (2001) (IEEPA). 6 See e.g. , TikTok Inc. v. Trump , 490 F. Supp. 3d 73, 75 (D.D.C. 2020); US WeChat Users All. v. Trump , 488 F. Supp. 3d 912, 928 (N.D. Cal. 2020). 7 86 FR 4909 (19 January 2021). See also 15 CFR Part 7. 8 Executive Order of 14034 of 9 June 2021: Protecting Americans’ Sensitive Data From Foreign Adversaries, 86 FR 31423, 31424 (11 June 2021). This executive order also terminated the 5 January 2021 executive order. 9 Id . 10 15 CFR § 7.4. 11 15 CFR § 7.3(a)(4). 12 86 FR 16312 (Mar. 29, 2021). 13 Gina Raimondo, US Secretary of Commerce Gina Raimondo Statement on Actions Taken Under ICTS Supply Chain Executive Order, US Department of Commerce (17 March 2021), https://www.commerce.gov/news/press- releases/2021/03/us-secretary-commerce-gin a-raimondo-statement-actions-taken-under- icts 14 Id . The new administration is ‘committed to taking a whole-of-government approach to ensure that untrusted companies cannot misappropriate and misuse data’ of uS citizens.