Laura Fraedrich, senior counsel at Lowenstein Sandler LLP, discusses the prospects for passage of the Risk Information and Communications Technology (RESTRICT) Act, currently before Congress.

Introduced in the U.S. Senate, the RESTRICT Act is a bipartisan effort to address vulnerabilities arising from foreign ownership of technology in the information and communications industries. The proposed law would establish a mechanism for review by the Commerce Department, which would have 180 days to examine any transactions involving the use of foreign-owned technology that are considered to pose threats to national security. Currently the bill identifies six foreign adversaries whose technology is deemed suspect: China, Cuba, Iran, North Korea, Russia and Venezuela, although it allows for the inclusion of additional countries as deemed appropriate by Commerce.

Given recent headlines, the obvious motivator behind the bill is the controversy over TikTok, the social media platform owned by Chinese interests. But Fraedrich says U.S. concerns extend across all technology emanating from China, as well as the five other identified countries. 

While TikTok is in the process of being banned for government use by several countries, the act would apply to the use of suspect foreign technology by businesses and individuals as well, Fraedrich says. It would give Commerce the ability “to ban transactions or mitigate any concerns related to national security. The effect would be that you never get access to that foreign technology to use in the first place.”

Fraedrich says the act, if enacted, would have a major impact on U.S. business. “It’s going to hinder the globalization of information and communications technology. We’re going to have to be looking for places other than China to get software [and] hardware, and anything related to the communications infrastructure of the U.S.”

She noted criticisms that the targeted technology “has never yet been accused of having some sort of incident related to national security. Whereas domestic systems have been used for cybersecurity [attacks] and espionage.”