US-China business group cries foul over protectionist legislation

09 Apr 2013


The US-China Business Council yesterday objected to a law that restricted parts of the federal government from purchasing technology equipment produced by entities tied to the Chinese government.

The restrictions were introduced by lawmakers last month in a six-month stopgap bill for funding the federal government, arguing they were needed to protect national security.

However, according to John Frisbie, the president of the China-focused business group, the new rules were misguided, and urged House and Senate leaders to ensure the provision was kept out of future appropriations bills.

"The national security of the United States is critical, but it must not be used as a means of protectionism," Frisbie wrote in a letter to leaders. "Imposing a country-specific risk assessment creates a false sense of security if the goal is to improve our nation's cybersecurity."

He encouraged lawmakers to work with American tech companies on ensuring the security of their supply chains. The US-China Business Council represents over 200 American companies across industries doing business with China, including Google, Oracle and Best Buy.

The provision opposed by the council barred several government entities from purchasing an information technology (IT) system unless the FBI or a similar agency reviewed whether there was any "associated risk of cyber-espionage or sabotage" with the system, including if it is "produced, manufactured or assembled by one or more entities that are owned, directed or subsidized by the People's Republic of China."

The bill has come in for flak from commentators for its potential ability to damage technology firm's governmental sales. Some point out that the bill could hurt domestic firms that bought components from businesses abroad.

According to commentators the recent spending bill formed part of a continued assault on China's technology industry. In the letter, Frisbie cited the recent Huawei case as another attempt by US officials to disparage private Chinese businesses.

Late last year, Congress formed a committee to probe potential collusion between Huawei and the Chinese government after allegations that the private company was assisting the Chinese government's attempts to hack into US systems.

The probe revealed, no proof of collusion, while Huawei executives claimed the investigation had hurt the company's quarterly US sales.

US - China relations have come under increased strain following the release of a recent report by cyber espionage group Mandiant, that alleged that the Chinese government carried out cyber attacks on over 141 private companies. China has denied all allegations  stemming from the report.

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