Biden reportedly to push for rules against Chinese tech companies during Trump presidency

The Wall Street Journal reported Feb. 26, citing people familiar with the matter, that the Biden administration plans to allow a wide-ranging rule enacted during the Trump presidency aimed at addressing the Chinese technology threat to take effect next month. Despite opposition from the U.S. business community, Biden Administration officials fear that blocking or watering down implementation of the rule would send the wrong message about the new administration’s approach to China and fuel domestic criticism of its weak policy toward the country, the sources said.

The rule, originally proposed last November, allows the Commerce Department to ban technology-related business transactions it considers a threat to U.S. national security, the report said. It is part of the Trump Administration‘s efforts to secure the U.S. supply chain. But companies from the U.S. technology, telecommunications, financial and other industries say the rule could stifle innovation and hurt competitiveness. The companies had expected that the provision could be delayed as the Biden administration was conducting a broad review of U.S. policy on Chinese technology.

The sources said Biden administration officials are concerned that blocking or watering down the rule would send the wrong message about how the new administration will handle China and could also spark domestic criticism and political pressure on the Biden administration for being weaker compared to its China Policy. Republican lawmakers and camps in the U.S. Congress have long questioned whether the Biden administration will actually take firm steps to address the various threats and challenges from China. Republican U.S. Senator Ted Cruz (R-Texas) on April 4 requested a stay of the confirmation process for President Biden’s nominee for Commerce Secretary Gina Raimondo because of Raimondo’s refusal to commit to keeping Chinese telecommunications giant huawei on the Commerce Department’s list of entities.

Raimondo later responded in a written statement that the Biden administration may not be in a hurry to remove Huawei from the Commerce Department’s list of entities. She told Republican senators who raised questions, “I understand that parties are placed on the entity list and the military end-user list generally because they pose a risk to U.S. national security or foreign policy interests.” She stated, “I have no reason at this Time to believe that the entities on these lists should not be there. If confirmed, I look forward to briefings on these and other entities of concern.” It is reported that the U.S. Senate plans to hold a preliminary vote on Raimondo’s nomination next Monday to conclude debate and pave the way for confirmation of the nomination.

It is worth noting that in response to the news that the Biden administration has decided to continue this policy under Trump, a source also signaled to the U.S. business community that the authorities will not aggressively enforce the provision. While this may mitigate the impact on U.S. businesses, some business representatives still said the rule will still expose businesses, especially smaller ones, to significant new compliance costs and uncertainty, the report said. Another person familiar with the matter said the Biden administration has not indicated it would have reservations about implementing the rule.

The Business Roundtable, a group of U.S. business giants that includes CEOs of major companies from and Citigroup to Wal-Mart Stores Inc., is known to have said in comments submitted to the Commerce Department in January that the rule “is unworkable for U.S. businesses in its current form and should not be considered for final publication without significant changes.” International Business Machines Corp. also said the rule, as written, is “massively overbroad” and would hurt the economy while failing to strengthen U.S. national security.

For its part, a U.S. Department of Commerce spokesman stressed in a statement on the 26th that it will continue to accept public comments on the rule until it takes effect on March 22. “Trustworthy information and communications technologies and services are critical to our national and economic security and remain a top priority for the Biden-Harris administration,” the statement said. It comes after Biden signed an executive order on March 24 to review the global supply chain for four key products, including semiconductors, to reduce reliance on overseas suppliers, particularly from China.