BREAKING: More Shots Fired in U.S. – China Tech War, Implications for Commercial Drone Industry

The U.S. – China tech war has had major implications for the commercial drone industry.  Now, AirForce veteran and aerospace attorney Dawn Zoldi of P3 Tech Consulting explains the impact of the latest development, an Executive Order signed on January 5, 2021.

Written by Dawn M.K. Zoldi, Guest Contributor*

 Additional shots have been fired in the ever-expanding U.S. – China tech war, with potential implications to the commercial drone industry.

On January 5, 2021, the President signed Executive Order (EO) 13971, Addressing the Threat Posed by Applications and Other Software Developed or Controlled by Chinese Companies, which prohibits persons subject to the jurisdiction of the United States (U.S. citizens/residents and corporations) from transacting with persons that develop or control Chinese connected software applications or their subsidiaries. These prohibitions kick in 45 days from publication.

This latest order is based on a national emergency: the threat posed by “Chinese connected software applications” (software, a software program, or group of software programs, designed to be used by an end user on an end-point computing device and designed to collect, process, or transmit data via the internet as an integral part of its functionality) through which the Government of the People’s Republic of China and the Chinese Communist Party have allegedly been accessing personal electronic devices (smartphones, tablets, and computers). According to the Order, they are doing so to cull “vast swaths of information from users, including sensitive personally identifiable information and private information.” This could allow China to, among other things, “track the locations of Federal employees and contractors, and build dossiers of personal information.”

While the EO specifically names Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office, it directs the Secretary of Commerce (USDOC) to identify other “transactions and persons that develop or control the Chinese connected software applications” which would also be subject to the prohibition.  DJI develops both apps and software. Will the popular commercial drone company be on that list?

The order directs USDOC to do a couple of other things too, including to recommend how to prevent the sale or transfer of U.S. foreign adversaries’ access to user data, whether through export control regulations, policies or otherwise and to continue to “evaluate Chinese connected software applications that may pose an unacceptable risk to the national security, foreign policy, or economy of the United States, and to take appropriate action in accordance with Executive Order 13873.”

Executive Order 13873 of May 15, 2019, Securing the Information and Communications Technology and Services (ICTS) Supply Chain, prohibited transactions and use of certain “information and communications technology or service” (any hardware, software, or other product or service primarily intended to fulfill or enable the function of information or data processing, storage, retrieval, or communication by electronic means, including transmission, storage, and display) involving any property in which any foreign country or a national thereof has any interest and where USDOC and several other federal agency heads has determined:

the transaction involves ICTS designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary and the transaction:

(A)  poses an undue risk of sabotage to or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of information and communications technology or services in the United States;

(B)  poses an undue risk of catastrophic effects on the security or resiliency of United States critical infrastructure or the digital economy of the United States; or

(C)  otherwise poses an unacceptable risk to the national security of the United States or the security and safety of United States persons.

 Both EOs were issued pursuant to the International Emergency Economic Powers Act (IEEPA), the National Emergencies Act, and statutory delegation authorities. Implementation of both orders remains pending. USDOC published a notice of public rulemaking on the original ICTS order on November 27, 2019. The thirty-day comment period was extended through early January 2020. Although only sixty-eight comments were received, a year later, that rule remains unfinalized. (https://www.regulations.gov/docket?D=DOC-2019-0005). Given that timeline, and the imminent transition of power, it is unlikely that much action will occur in the short-term.

In the last several years, the feds have targeted DJI  through various Chinese drone policy bans, grant tethers and, more recently, by black-listing the company.  The ultimate impacts of this latest maneuver – and the collective impact of these others – remains to be seen. In the meantime, it’s business as usual…but standby for incoming.

*The views and opinions in this article are those of the author and do not reflect those of the DOD, do not constitute endorsement of any organization mentioned herein and are not intended to influence the action of federal agencies or their employees.

Dawn M.K. Zoldi (Colonel, USAF, Retired) is a licensed attorney and a 25-year Air Force veteran. She is an internationally recognized expert on unmanned aircraft system law and policy, the Law-Tech Connect™ columnist for Inside Unmanned Systems magazine, a recipient of the Woman to Watch in UAS (Leadership) Award 2019, and the CEO of P3 Tech Consulting LLC.