US takes Chinese cyber rule frustration to WTO

The U.S. is taking its concern over China’s looming cybersecurity regulations to the World Trade Organization (WTO), Reuters reported.

The Obama administration has argued the rules could lock out foreign companies.

In a document published Thursday, the U.S. argues that China’s banking regulations would discriminate against foreign tech firms.

WTO rules prohibit countries from favoring domestic companies over foreign competitors.

Beijing officials have been moving forward with a number of new technology regulations.

One set of rules would restrict Chinese banks’ use of foreign information technology. A broader series of counterterrorism rules would require all foreign companies operating in China to install Beijing-approved encryption and submit private source code for government inspection.

European and Japanese officials have also expressed concerns the measures would hurt global trade.

The proposal has tested the already strained cybersecurity relationship between Washington and Beijing.

Obama administration officials, from Secretary of State John Kerry to President Obama himself, have raised their concerns directly with their Chinese counterparts.

But going to the WTO raises the stakes further.

The U.S. submission requested clarification on what China meant by saying its banking security rules are intended to ensure “secure and controllable” banking technology. It argued such a definition could cut out many foreign products.

The document also took issue with rules encouraging banks to use “indigenous” products.

“The requirement for a product to be ‘indigenous’ would allow for little involvement by foreign companies,” the document said.

The U.S. requested China clarify the term “indigenous.”

“Does China exclude the possibility that foreign-developed technology may provide a better security solution than a technology developed indigenously?” the document asked.

Despite widespread criticism of the laws, China has shown few signs of slowing their implementation.

— Updated 5:04 p.m.

Tags John Kerry

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