The United States has asked China not to implement its new cyber security law over concerns it could damage global trade in services, a U.S. document published by the World Trade Organization showed on Tuesday.
China ushered in a tough new cyber security law in June, following years of fierce debate around the move that many foreign business groups fear will hit their ability to operate in the country.
The law requires local and overseas firms to submit to security checks and store user data within the country.
The United States, in a document submitted for debate at the WTO Services Council, said if China’s new rules enter into full force in their current form, as expected by the end of 2018, they could impact cross-border services supplied through a commercial presence abroad.
“China’s measures would disrupt, deter, and in many cases, prohibit cross-border transfers of information that are routine in the ordinary course of business,” it said.
“The United States has been communicating these concerns directly to high level officials and relevant authorities in China,” the U.S. document said, adding it wanted to raise awareness among WTO members about the potential impact on trade.
“We request that China refrain from issuing or implementing final measures until such concerns are addressed.”
China’s Ambassador to the WTO Zhang Xiangchen spoke on Tuesday at a WTO conference panel on trade protectionism, which he said was an underestimated problem that was causing a crisis at the WTO.
Asked by Reuters if the U.S. filing showed China was guilty of protectionism, he said:
“There’s no definition of protectionism and each member has his own legitimate right to adopt a trade policy legally in the WTO system. But we have to be cautious to say which one is (legal within the (WTO) … and which is illegal.”
The two-page U.S. document said the measures causing concern included the Cybersecurity Law adopted in November 2016 … and the July 2015 National Security Law.
China is seeking to require companies to store all data within China and pass security reviews, fitting China’s ethos of “cyber sovereignty” — the idea that states should be permitted to govern and monitor their own cyberspace, controlling incoming and outgoing data flows.
“The impact of the measures would fall disproportionately on foreign service suppliers operating in China, as these suppliers must routinely transfer data back to headquarters and other affiliates,” the U.S. document said.
“Companies located outside of China supplying services on a cross-border basis would be severely affected, as they must depend on access to data from their customers in China.”
China maintains a strict censorship regime, banning access to foreign news outlets, search engines and social media including Google (GOOGL.O) and Facebook (FB.O).