US Sets New Rules to Block American Purchases of Chinese Telecom Tech

Commerce Secretary Wilbur Ross speaks during a news conference at the US State Department in Washington, on Sept. 21, 2020. Patrick Semansky/POOL/AFP via Getty Images

The U.S. Commerce Department on Jan. 14 announced new rules to allow the federal government to block American companies from buying information and communications technology from five foreign adversaries, including China.

The new rules were made to implement an executive order (E.O. 13873) that President Donald Trump signed in May 2019 to safeguard U.S. supply chains in information and communications technology and services (ICTS) from being exploited by foreign adversaries, including via industrial espionage.

According to the executive order, ICTS included “hardware, software, or other product or service primarily intended to fulfill or enable the function of information or data processing, storage, retrieval, or communication by electronic means, including transmission, storage, and display.”

In other words, the new rules could see the Commerce Department having oversight over American purchases of a broad range of technologies, including tech products used in critical infrastructure and mobile apps that collect user information.

Ajit Pai, chairman of the Federal Communications Commission (FCC), described Trump’s order as a “significant step toward securing America’s networks” in a statement in May 2019.

Aside from China, the new rules apply to imports from Russia, Iran, North Korea, and the Venezuelan regime under Nicolás Maduro, according to a press release from the Commerce Department.

The new rules will come into effect in 60 days.

“Since day one, President Trump has been committed to protecting the national security of all Americans, and the implementation of this rule is a pivotal moment in this Administration’s efforts to put America First and hold bad actors accountable,” Commerce Secretary Wilbur Ross said in the press release.

Ross added: “Aggressively securing the ICTS supply chain will protect American citizens and businesses from vulnerabilities that could undermine the confidentiality, integrity, and availability of their personal information or sensitive data by malicious foreign adversaries and those who wish harm on the United States.”

The announcement came on the same day that the Commerce Department added state-run oil giant Chinese National Overseas Oil Corporation (CNOOC) to its “entity list,” which prevents U.S. companies from doing business with blacklisted companies unless they secure a special government license.

Ross said CNOOC acted as a “bully for the People’s Liberation Army to intimidate China’s neighbors” in the South China Sea, where Beijing has built artificial islands to stake its territorial claims.

Additionally, the Commerce Department also added China’s state-owned aerospace company Skyrizon to its new trade blacklist called the “Military End User” list. Ross said the company’s effort to “acquire and indigenize foreign military technologies poses a significant threat to U.S. national security.”

Known by its full name as Beijing Skyrizon Aviation, the company drew U.S. criticism over its effort to take over Motor Sich, a Ukrainian manufacturer of helicopter and airplane engines.

Skyrizon bought a majority stake in the Ukrainian company in 2017, but the purchased shares were frozen by a local court pending an investigation by Ukraine’s security service. According to Ukrainian newspaper Kyiv Post, Skyrizon filed an arbitration case against Ukraine in December last year for blocking the deal.

Last month, the department had named 58 Chinese and 45 Russian entities on the MEU list.