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Supply Chain Risk

China Tells World Trade Organization U.S. Violating Rules With Bans on WeChat, TikTok

The Chinese government said during a World Trade Organization closed-door meeting Friday that U.S government attempts to ban Tencent Holdings’ multi-purpose chat app WeChat and ByteDance’s short-form video app TikTok are in violation of the Trade body’s rules. Two separate U.S. federal courts blocked bans on both apps in September, granting preliminary injunctions for different reasons. Both rulings seemed to indicate that the government had not provided adequate proof that the apps were a threat to national security – the impetus for both being banned by the Trump administration. 

A representative for China said during the meeting that the actions “are clearly inconsistent with WTO rules, restrict cross-border trading services and violate the basic principles and objectives of the multilateral trading system,” according to what a trade official familiar with the matter, told the Financial Times. The official who did not wish to be identified.

The official added that China said that the U.S. failed to provide concrete evidence for the action it was taking, a “clear abuse” of the rules.

China is likely seeking relief from the WTO after finding success with the global trade body in September, when a panel ruled that Trump administration tariffs on $200B USD worth of Chinese goods were illegal. While the ruling would allow China to apply retaliatory tariffs on the U.S., the Trump administration could simply take the ruling to an appeals court for a final determination. The problem is that the court is essentially non-functional because two of its last three judges’ terms expired and were not replaced by the administration, making it a non-functioning body as of this moment.

The U.S. and China have been sparring for the last several years over trade issues, the independence of Hong Kong from mainland China, and concerns by both over issues of national security. These tensions have escalated in 2020, with the U.S. taking aim at Chinese companies with investments in America such as Tencent.

In addition to WeChat, politicians such as Senator Marco Rubio (R-Florida) have called on the president to look into other Tencent-owned properties and apps such as QQ. In addition, the Treasury Department’s Committee on Foreign Investments in the U.S. (CFIUS) has sent letters to video game companies with financial ties to Tencent including Riot Games and Epic Games.

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