Free and fair trade between nations ensures smooth business. The occurrence of issues that affect these trade agreements leads to various uncertainties. The outcome of these issues affects investors proportionally. The global community as well is provided with an uncertain business environment. The freedom required for nations to conduct trade amongst one another is unassured. The nations’ economies are therefore affected by such issues. There are different free and fair trade issues that affect different countries. Recently, President Trump announced restrictions affecting two Chinese apps.
On August 7, 2020, an article was published by The New York Times by the title, “Trump’s Orders on WeChat and TikTok Are Uncertain. That May Be the Point.” authored by Ana Swanson. This deals with the restrictions that were placed by President Donald Trump on two Chinese owned apps; WeChat and TikTok. According to Swanson (2020), these restrictions follow a nearly similar pattern as with other policy announcements made by Trump administration on China. The Trump administration announced that it would restrict “people and property within U.S. jurisdictions from carrying out ‘transactions’ with WeChat and TikTok … after 45 days” (pp. 3).
The Trump administration cited national security concerns as the basis of barring these apps. According to Peter Navarro, who is the White House director of trade and manufacturing policy, mobile apps can collect information that can be used to monitor movements which can be dangerous (Swanson, 2020). He also questioned whether the communist party could have critical information like where and individual is at a particular time. He as well, approved that various multinationals would question the measures that were placed. While at the same time, the American public is happy with the decision (Swanson, 2020). According to the article, these concerns, however, were not clearly defined. The extent of this ban was also not demarcated, thus causing uncertainty. The companies do not know what will happen to them after the given period expires.
TikTok’s replied that it sought to work with the U.S. government without success. According to Swanson (2020), the company was shocked by the announcement, which they claim was given “… without any due process,” (pp. 10). They claim that the government did not consider facts nor the required legal processes. And that they were still trying to understand the meaning of the executive order. The U.S. and China governments are engaged in an economic fight. This war has seen the U.S. government put tariffs on various Chinese products. According to Swanson (2020), this war also led to, “restrictions on other kinds of Chinese technology, including clamping on exports to the Chinese telecom giant Huawei” (pp. 12).
There is an issue in the hasty and enshrouded way the U.S. administration has handled the matter. The manner in which the U.S. government has given the executive order is questionable. It is damaging to free and fair trade. The government has given an ultimatum of 45 days without any clear plan. The companies do not know what the ban entails. The multinational companies do not have any specifics of the order. According to Swanson(2020), “The sudden, vaguely worded order from the White House which came without further explanation or briefing” (pp. 13), has left multinational companies in suspense.
This issue is important to the global community in that it affects free and fair trade pacts. The executive order is sudden. The companies involved were not engaged in the processes. They do not know the extent to which the order will reach. The various business partners of these companies as well are uncertain of their business deals. It creates a riskier environment for investors from different countries. It posses a challenge to global businesses. It also does not give place for healthy competition amongst various companies from different nations. The U.S. administration cited security concerns and issues of privacy as the reasons for the executive order. However, there are no particular details as to what these concerns are. This creates a gray zone where a nation can cite various reasons for banning businesses from different nations without clear evidence. These issues pose challenges to trade in the global community.
Geopolitical and economic differences are a likely source of this fight. The number of executive orders given in the same format affecting Chinese companies keeps increasing. The war is retaliatory. Each nation is trying to outdo the other. The businesses are the ones who are suffering from this battle. The policies given by the Trump government have seen tariffs on Chinese products rise considerably.
This warfare is dangerous to free and fair trade. Business in the global community is becoming risky. The habit of various administrations to use economic activities to settle political differences is fearful. It removes the freedom from people in their choices to decide what to use. The hasty manner in which this order is actuated instills fear in companies from nations with differences with the U.S. government. The legal process should be followed when solving these issues. This will seal loopholes and ensure both parties are satisfied by the decisions.
Swanson, A. (2020, August 7). Trump’s Orders on WeChat and TikTok Are Uncertain. That May Be the Point. The New York Times. https://www.nytimes.com/2020/08/07/business/economy/trump-executive-order-tiktok-wechat.html
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