The Joe Biden administration plans to allow next month a sweeping Donald Trump-era rule designed to fight Chinese technology threats. The Democrat government has decided to ignore objections from American business houses, a source said.
Originally proposed in November 2020, the rule enables the US Commerce Department to prohibit technology-related business transactions that it believes pose a national security threat. It was part of Trump’s effort to secure US supply chains.
Companies dealing in technology, telecommunications, finance and other industries say the rule could stifle innovation and hurt competitiveness. They had expected it to be delayed as the administration undertakes a broad review of US policy on Chinese technology.
Now the administration is planning to go forward with the rule, sources in the Biden administration said. US officials, however, are concerned that blocking or diluting the rule would send the wrong message about the new administration’s approach to China, potentially fueling criticism that it is taking a weaker approach, the sources said.
One of the US government sources said administration officials had sent a missive to the business community that they would not enforce the rule aggressively. That could soften the impact even as business representatives say the rule will still subject firms, the smaller ones in particular, to significant new compliance costs and uncertainty.
Another source said the US administration had not said it would withhold the enforcement of the rule.
The rule is “unworkable for US businesses in its current form and should not be considered for final publication without significant revisions,” said The Business Roundtable, a group of CEOs of major companies, in a comment filed with the Commerce Department in January.
A US Commerce Department spokesperson said the agency would continue to accept public comment on the rule until 22 March, adding that the rule becomes final then.
“Trustworthy information and communications technology and services are essential to our national and economic security and remain a top priority for the Biden/Harris administration,” the spokesperson said.
The White House did not respond to requests for comment while this report was filed.