The China Question

www.worldecr.com 6 ThE ChInAquESTIOn CHINA by US courts and on 9 June President Biden issued a new EO revoking the string of orders his predecessor signed to target TikTok, WeChat and eight other China- linked apps. President Biden’s EO instructs the Commerce Department to launch a new review to identify possible security threats from those apps and others. Because of its ambiguity and potential reach, there was speculation as to whether Biden would make adjustments to the powerful ICTS tool handed to him by Trump. Companies and compliance lawyers have been keeping a close watch on the current administration to understand how it intends to enforce many of the Trump-era regulations targeting China. On 26 March, the Commerce Department said it wanted fresh public input on establishing licensing or other procedures to help companies comply with the ICTS rule. But it made that announcement four days aer allowing Trump’s interim ICTS regulations to automatically come into force. Even before they officially came into effect, Commerce Secretary Gina Raimondo disclosed on 17 March that subpoenas had been served on multiple Chinese companies that provide ICTS services in the United States. Businesses and compliance experts saw that as an indication of the vigour with which the Biden administration is expected to go forward on China. ‘We are seeing upward trends in sanctions and export controls both in the US and the EU,’ Egan says. ‘e Biden administration has so far continued an aggressive use of these tools, which leads to a very complicated regulatory landscape for companies doing business on both sides of the Pacific Ocean.’ But he advises that businesses should be looking at ‘compliance opportunities’. ‘In a lot of the regulations there’s at least limited room for continued activity or for authorisations for activities that may be otherwise prohibited. For example, a US company that is doing business with a Chinese party that’s been added to the US Entity List may say to itself, “What can I continue doing today in compliance with US law, and what could I seek approval to do, even if it’s not authorised, but where I think the US government actually may not have a problem with me continuing certain activities?”’ Egan explains. Meredith Rathbone, also a partner at Steptoe, advises that in this uncertain terrain companies should be engaging in ‘a compliance-mapping exercise, so that if new restrictions come into place companies are ahead of the game in identifying pressure points.’ She says this would give companies ‘an opportunity to quickly assess whether or not they can proceed with business as usual.’ Rathbone notes that one of the biggest challenges companies face now is monitoring all the changes and anticipating future ones. ‘We’re getting more and more requests to monitor what’s going on and what might happen next, not just actual pieces of legislation or regulation but things like: What are key members of Congress doing? What are key members of the administration saying? Who’s been appointed to which position and what’s perspective?’ In the US Congress, the mood of Biden’s fellow Democrats about China can perhaps be gleaned by the EAGLE Act (‘Ensuring American Global Leadership and Engagement’, see box below). e bill was introduced on 25 May by Gregory W. Meeks (D-NY), chairman of the House Committee on Foreign Affairs. e 470- page legislation calls for ‘the revitalization of American diplomacy, leadership, and investments globally in response to the policy challenges posed by China.’ Among other things, it seeks increased investment to promote US manufacturing, working with allies on China policy, re-engagement in international organisations and recognition of China’s treatment of its Uyghur Muslim minority as genocide. Mao’s vision: ‘surpass the US’ ‘Given 50 or 60 years, we certainly ought to surpass the United States,’ China’s revolutionary leader Chairman Mao said in a 1956 speech. ‘To surpass the United States is not only possible, but absolutely necessary and obligatory,’ he ordered. at duty has not been lost on President Xi Jinping, who has laid out the same objective for Chinese tech: ‘catch up and surpass’ the United States in global leadership. e goals of ‘Made in China 2025’, the 10-year plan launched by the Chinese Communist Party (‘CCP’) in 2015, include leaving the United States and the world behind in key technologies, from next- generation wireless networks to artificial intelligence. On 10 June, US Secretary of Defence Lloyd Austin issued an internal directive to ‘laser focus’ US military ‘efforts to address China as the nation’s number one pacing challenge.’ ‘The Military Intelligence End-User rule applies to all products that are subject to US export controls, even the least sensitive, EAR99 products.’ Tahlia Townsend, wiggin and Dana EAglE Act: key elements n ‘Emphasizes the power of multilateralism and boosts American leadership in international organisations such as the United Nations, as well as regional ones like APEC; n Reinforces US commitment to engagement with partners and allies through bilateral and trilateral engagement as well as through the Quadrilateral Dialogue; n Spurs US strategic and economic competitiveness on the world stage through climate action, vaccine diplomacy, development finance, and digital and cyber partnerships; n Holds China, the world’s largest emitter of greenhouse gasses, accountable on climate, to ensure that it plays a constructive role in the climate fight; n Reinforces commitment to American values by responding to the PRC’s human rights violations, imposing costs on China for its use of Uyghur forced labour, and providing temporary protected and refugee status for qualifying Hong Kongers; and n Strengthens America’s economic diplomacy and statecraft in order to shape the economic rules that govern global commerce, empower American workers and businesses, and invest in the technologies of the future.’ Amongst its many sanctions-related provisions, the act calls upon the President to urge the United Nations Security Council to invoke ‘multilateral sanctions’ against China for ‘genocide and crimes against humanity against Uyghurs and members of other ethnic and religious minority groups’.