China takes TikTok-WeChat ding-dong to World Trade Organization, accuses US, India of breaking global rules

One person still believes forced sale is a good idea. Hint: He’s in hospital

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China has accused the United States of breaking international trade rules by threatening to block the TikTok app unless the Chinese biz sells its operations to a US company.

Speaking at a closed door meeting of the World Trade Organization (WTO), a representative of the Chinese government argued that the Trump administration's recent efforts, and a ban in India, “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 a trade official quoted in media reports.

That same official said that the Chinese rep pointed out that the US had failed to provide any evidence the app – and Middle Kingdom chat app WeChat – represented a threat to national security; the official reason given for blocking the apps in America. The US was engaging in a “clear abuse” of the rules, the Chinese government argued.

The saga of TikTok has remained unchanged for a week: a federal judge stopped the Trump administration’s order that the TikTok and WeChat apps be banned, following petitions from both companies. The US government is planning to appeal that decision, although it’s unclear whether it will push for a quick decision or allow the brouhaha to wind its way through the legal process.

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TikTok’s parent company ByteDance requested the halt after its effort to do what the Trump Administration has asked – to sell its American operations to US entities – was seemingly approved and then rejected by President Trump during a phone-in to a morning TV show.

Art of the deal

The company proposed separating everything but its China business into a new TikTok Global company, selling 20 per cent of it to US corporations Oracle and Walmart, and then within a year going public, putting control of the company into shareholders’ hands.

While that approach appeared to have gained approval from the US Treasury, it was then dismissed by the President who appeared to believe that Oracle and Walmart should jointly have a controlling stake. It’s not clear Trump understood the details of the deal as he conflated and confused several other details, including future tax payments and an unrelated educational program.

However, since the President appears to hold a veto over the block on TikTok and WeChat as it derived from an executive order, his questioning of the deal led TikTok to apply to the courts for an injunction against the ban a few days before it was due to come into effect.

Justice Carl Nichols in Washington DC granted the injunction though his reasons for doing so are in a sealed document and not public. All parties met last Wednesday to discuss how to move forward; details of which have been limited.

If the US government does insist that a majority stake in TikTok Global be given to a US entity, rather than shareholders based in the US, it seems likely that the deal will fail. Both ByteDance and the Chinese government have made it plain that they will not allow the company’s key assets – primarily, its algorithms for selecting videos to highlight – to be moved outside China. China has passed a new law that would require any company making such a sell to gain the government’s approval first.

In the meantime, the TikTok saga has become another stick to hit the US with in the world of global diplomacy and international organizations. ®


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