Businesses and conservative groups are aggressively pushing back against a Trump administration proposal that they fear would give the Commerce Department sweeping new powers to block any international transaction on national security grounds.
“There’s no due process. [Commerce Secretary] Wilbur Ross can terminate a transaction with a snap of his fingers, even retroactively, with this proposal,” said Brandon Arnold, the executive vice president of the National Taxpayers Union, a right-of-center taxpayer advocacy group.
“It’s an Infinity Gauntlet to do anything without an explanation,” said Arnold, referring to the metal gauntlet from a Marvel comic book series that gives the wearer godlike powers. “There’s no checks on this power from Congress or Judiciary. It’s an enormous power grab.”
The National Taxpayers Union and 20 other taxpayer and business groups have filed comments with the department, asking it to withdraw the rule.
The proposed regulation is part of the Trump administration’s larger effort, begun last May, to block Huawei, ZTE, and other Chinese companies from entering the U.S. market on the basis that they could aid the Chinese government in spying on the United States.
The department proposes to use the new power to pursue a “case-by-case, fact-specific approach,” intended to avoid overly restricting entire classes of transactions. Business groups like the U.S. Chamber of Commerce, however, say the proposal “is of little comfort to U.S. companies that would now operate in an environment where all [international] transactions may be subject to review.”
“This will make it harder for U.S. businesses to enter into relationships with foreign businesses out of fear that these relationships could suddenly and unexpectedly be severed, thereby eroding trust in conducting business with U.S. businesses and marking companies as unreliable,” the Chamber added in a letter of comment sent to the department last week.
Large software providers and IT companies like IBM, Adobe, and Microsoft, along with those in the film and television industry, could be hardest hit by the proposal’s powers.
The department’s proposed rule is intended to evaluate potential security threats posed by foreign-owned or foreign-operated companies wanting to do business with American companies that involve the information and communications technology and services supply chain.
Last October, there was an effort by a bipartisan group of senators to address such supply-chain risks by asking the relevant branches of government to share information on such threats. The department’s proposed rule was then issued in November. The lawmakers have yet to weigh in on the proposed rule.
The business and taxpayer groups have pushed back against the proposal specifically because they believe the department has taken an expansive view of both the “transactions” the department is allowed to evaluate under this proposal and who it determines is considered a “foreign adversary.”
The groups complained in their joint comment that the department could regulate any business activity that involves the use of technology, which “in the 21st century, this plainly means any business activity.”
“Because it’s very broad, even companies in Canada, UK, [and] Europe that are allies could be blocked before a transaction or retroactively after because it’s a national security matter,” said Arnold.
“They just have to use the magic words ‘national security,’ and they can do what they want. Companies would just have to just live through it. They wouldn’t know even know why Commerce made that determination,” Arnold said.
Kathryn Waldron, a national security fellow at the R Street Institute, a libertarian think tank, said that another concern with the proposal is that companies could request or lobby the department to misidentify certain companies, including their competitors, as risks.
“Economic protectionism disguised as national security could definitely have a negative impact on the economy at large, including limiting opportunities for economic growth, depress innovation, and even hinder national security,” said Waldron.
The comment period for the proposal closed on Friday. Critics are hoping that after seeing the negative comments, the agency will change course.
Congress could block the rule using the Congressional Review Act, but it would be unusual and unlikely for a Republican Senate to block a Trump administration rule.
The department said it didn’t have any comment on the proposal while the rule-making is in process.
