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New Cybersecurity Law Requires Government Agencies Seek Approval for Chinese IT Purchases

A recently signed appropriations bill contained an additional provision that several government agencies will need to get approval from law enforcement officials prior to purchasing IT products from suppliers that are from or have any connections with China. The U.S.-China Business Council has criticized the law saying that it unfairly targets Chinese firms and will cause the U.S. to lose out on foreign investment.

John Frisbie, president of the U.S.-China Business Council wrote a letter to the Senate objecting the provision, stating that the national security of United States is of utmost importance but should “not be used as a means of protectionism.” Proponents of the law argue that the process of requiring approval when a U.S. government agency is purchasing IT systems or services from China is intended to assess whether such purchases would make the United States vulnerable to a cyber attack. This provision included in the Consolidated and Further Continuing Appropriations Act of 2013 would require multiple government agencies, including NASA, the Justice Department and the Commerce Department, to obtain this approval before making IT purchases affiliated with China. Specifically, this includes any IT systems manufactured, assembled, produced or containing parts from China, as well as IT systems made by a firm that is owned, directed or subsidized in China.

This provision was created to address concerns related to cybersecurity threats coming from China, but some have expressed concern that it will have negative impacts on technological advancement as well as on international commerce and relations with China. Obtaining approval for using an IT systems or service company affiliated with China could be time consuming, especially considering the complexity of the information technology supply chain. From an international trade perspective this policy could be considered protectionism, and it is possible that China would retaliate with security provisions against U.S. technology.

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