TikTok tit-for-tat: US may finally reciprocate China’s internet protectionism

China has for decades banned leading American internet firms from its market on national security grounds, but America has never reciprocated. News that the Biden administration may force a TikTok divestiture could mark the beginning of a new approach imposing de facto reciprocity.

To be sure, the legal issues in the TikTok case have nothing to do with reciprocity, 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 legally vulnerable to divestiture because the company did not notify the U.S. government of the 2017 acquisition of a U.S. company. The specific national security concern at issue is potential Chinese government misuse of sensitive TikTok user data. 

The background of the TikTok case may be unique, but enhanced national security restrictions on TikTok and perhaps other Chinese internet firms would nonetheless have reciprocal impact. New legislation that Sens. Mark Warner (D-Va.) and John Thune (R-S.D.) introduced in the U.S. Senate on March 7 would broaden the scope and impact of national security reviews to include not just TikTok but apps and other IT products from China and other foreign adversary nations. 

The Restricting the Emergence of Security Threats that Risk Information and Communications Technology (RESTRICT) Act purports to comprehensively address the ongoing threat posed by technology from foreign adversaries. The bill, which has the support of the Biden administration and 17 Senate co-sponsors, authorizes the Commerce Department to “identify, deter, disrupt, prevent, prohibit and mitigate” technologies from China and other adversary nations to defend national security. 

The Commerce Department would have discretion to evaluate “undue or unacceptable risk to the national security of the United States or the safety of United States persons.”  Commerce’s reluctance thus far to regulate “emerging and foundational technologies” suggests that the department will not abuse that authority, but it may not apply technology restrictions as aggressively as some in Congress advocate.

Nevertheless, the bill could be strengthened by explicitly adding national security reciprocity as one of the factors Commerce should consider. The legislation should state that the definition of “national security” includes the same national security restrictions that adversary governments impose on American IT firms. The current draft bill could be interpreted expansively to incorporate this approach, but including language suggested above would explicitly prevent the foreign practice of banning U.S. firms and then exporting services or products substantially similar to those banned at home. 

Observers will ask why the U.S. has not introduced reciprocity sooner. Actually, the U.S. government has claimed that China’s Great Firewall (infrastructure adopted to defend national security) constitutes a trade barrier, but has never brought a World Trade Organization (WTO) case due to uncertainties of fact and law.

One complicating factor is that traditional WTO law generally permits member countries to define their own national security interests without further legal review. That doctrine may be changing, however, in light of a recent WTO decision that found U.S. national security claims invalid in a steel case.  

The U.S. has refused to recognize that decision, defending America’s right to define its own national interests. But the case raises the interesting prospect that WTO members might challenge China’s overbroad assertion of national security concerns in its internet market.

China’s response to news of a possible TikTok ban has been hypocritical, if not comical.  A Foreign Ministry spokesperson accused the U.S. government on Feb. 28 of “overstretching the concept of national security and abusing state power to suppress other countries’ companies.” In a previous statement, the Foreign Ministry urged the U.S. to adopt a “responsible and practical approach, and abide by fair, open and non-discriminatory international rules.” Indeed.

TikTok’s response has focused on calls to respect free expression_­­ and claims that divestiture will not resolve security concerns. TikTok may challenge the CFIUS-ordered divestiture of a communications app on First Amendment grounds, citing the precedent of WeChat’s successful constitutional challenge overturning President Trump’s executive order banning that application. But the WeChat case did not involve CFIUS, which has explicit authority to order divestiture on national security grounds of foreign acquisitions not notified to the U.S. government.

It is too soon to tell how all of this will play out. The rules of the national security game are changing, however, and China may finally be confronted overseas with the unfair and protectionist restrictions it imposes on foreign firms at home.

Jeff Moon is a former assistant U.S. trade representative for China, an American diplomat, business executive and consultant.