https://www.congress.gov/118/bills/hr815/BILLS-118hr815enr.pdf
On 24 April 2024, President Biden signed into law a comprehensive legislative package that included PAFACAA. This followed approval by the House of Representatives on 14 March 2024. PAFACAA addresses long-standing concerns about TikTok’s potential threats to US national security due to its Chinese ownership and data collection practices. The law compels ByteDance, TikTok’s parent company, to divest its stakes or face operational restrictions in the US.
PAFACAA’s Legal Framework:
PAFACAA establishes a specialized framework within US economic security law, building on existing laws like the International Emergency Economic Powers Act (IEEPA) and the Defense Production Act (DPA). This new framework aims to overcome the legal constraints highlighted in previous attempts to regulate TikTok under these laws. PAFACAA combines elements of IEEPA’s broad restriction capabilities and the DPA’s foreign investment limitations, enabling more direct action against FACAs.
US Economic Security Law:
The US has led the shift towards a geoeconomic order, with IEEPA and §4565 of the DPA as pivotal tools. IEEPA grants the President extensive powers to impose economic restrictions in response to external threats, while FIRRMA’s 2018 reform of §4565 strengthened the review of foreign investments on national security grounds. Both laws were controversially invoked by the Trump administration to restrict TikTok, revealing their limitations and setting the stage for PAFACAA.
In 2020, the Trump administration issued orders under IEEPA and §4565 to restrict TikTok, which faced significant legal challenges. Courts found that these orders exceeded presidential authority under IEEPA and questioned their applicability under §4565. These legal battles underscored the need for a more robust legal framework, leading to PAFACAA’s enactment.
PAFACAA allows the US government to impose restrictions on FACAs, particularly targeting their distribution, maintenance, and updating within the US digital infrastructure. The law aims to induce divestiture of foreign stakes in these applications, nudging them towards compliance with US security requirements. However, its effectiveness remains uncertain, especially given potential resistance from foreign governments like China.
PAFACAA marks a significant shift in US economic security law, allowing more decisive action against FACAs by addressing legal constraints identified in previous litigation. Its broader implications suggest a move towards a fragmented global digital environment, with regional digital ecosystems shaped by geopolitical considerations.
Follow