Editors Note: This is a great development.
Rule requires companies to show they do not use certain Chinese groups’ products
[Demetri Sevastopulo | July 10, 2020 | Financial Times]
Companies that provide the US government with goods and services must certify that they do not use Huawei equipment or products from other controversial Chinese groups, according to a new Trump administration rule.
The Trump administration on Friday issued a rule requiring companies to prove that they have no commercial ties with several Chinese companies, including Huawei and Hikvision, a maker of surveillance cameras used in the camps where China is detaining 1m Uighur Muslims.
Congress passed a law in 2018 introducing the measure, which comes into effect next month. The administration has been working to create the rule to help companies understand the scope and implementation of the law.
“All the largest tech companies in the world do business with the federal government and will have to take stock,” said Eric Crusius, partner at Holland & Knight, adding that it was incredibly expansive.
Companies that want to secure contracts with the US government will now have to examine their businesses around the world to ensure that they are in compliance with the law.
“This is in a different league because it covers every government agency and covers acquisitions of all sizes,” said Mr Crusius, who said it could even apply to companies that supply run-of-the-mill products such as staplers.
The measure illustrates how Congress and the Trump administration are increasingly united over the need to take a tougher stance on China and Chinese companies viewed as a security threat.
Some government agencies and companies had asked the administration to take more time to implement the rule because of concerns over how it would impact supply chains, but the White House decided to move ahead with it.
“This is a rule that the Department of Defense wanted to delay and industry wanted to delay,” said Mr Crusius. “Usually that is enough but here the government went full steam ahead anyway.”
While Donald Trump, president, has at times taken a softer stance on China in order to facilitate trade talks, he has adopted a harsher approach more recently, as he blames Beijing for the global spread of coronavirus.
His team has become increasingly critical of China over everything from the detention camps in Xinjiang to the recent Chinese move to impose a security law on Hong Kong to stamp out the pro-democracy movement.
Earlier this week, the US administration imposed sanctions on several top Chinese officials over the situation in Xinjiang, and it has also announced a number of restrictions on officials obtaining US visas in recent weeks.
Mr Trump on Friday said the US-China relationship was “severely damaged” as he blamed Beijing for the spread of the virus, which he has increasingly done as he has been castigated for his handling of the crisis.
Earlier this week, Wang Yi, China’s foreign minister, also said China-US ties were facing their most serious challenge since diplomatic relations were established more than four decades ago.
Speaking to reporters as he flew to Florida, Mr Trump suggested he had abandoned hope of a phase two trade deal with China after the limited “phase one” deal earlier this year. While few experts thought the current environment would be conducive to talks, Mr Trump now appears resigned to that fact.
“I don’t think about it now,” Mr Trump said about an issue that he had previously touted as being important as he gears up to compete against Joe Biden in November’s election. “Honestly, I have many other things in mind.”
Follow Demetri Sevastopulo on Twitter: @dimi
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