President Donald Trump on Wednesday signed an executive order laying the groundwork to block Chinese telecommunications companies like Huawei from selling equipment in the U.S., a move aimed at neutralizing Beijing’s ability to compromise next-generation wireless networks and U.S. computer systems.
The order prohibits the purchase or use of any communications technology produced by entities controlled by “a foreign adversary” and likely to create an “undue risk of sabotage” of U.S. communications systems or “catastrophic effects” to U.S. infrastructure.
The Commerce Department has 150 days to produce rules that can identify “particular countries or persons” as foreign adversaries. Those rules are almost certain to name China, Huawei, or both.
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Trump’s long-awaited executive order invokes the International Emergency Economic Powers Act and declares a national emergency to empower the government to block the purchase of technology linked to foreign adversaries.
These rules have great potential to be abused for protectionist purposes, and it is easy to imagine that they will be. In addition, a ban on these products would surely violate various GATT obligations, and presumably the United States would try to justify the ban under GATT Article XXI. I have no idea how a WTO panel would find, but if it found the violation was not justified under Article XXI, I would be shocked if the United States withdrew the ban.
All of this is a way to bring up the forthcoming article I mentioned last week, where I proposed rebalancing for these situations. Some measures of this kind will be justified, so it is not reasonable to expect the WTO to completely prohibit them. What is reasonable, however, is that when governments invoke national security in this way, and upset the balance of the negotiated agreement, they accept some rebalancing, either through compensation or retaliation.
