Business & trade, Lobbying law, New in Lobbying, US-China tensions

Barr threatens to treat US companies as Chinese agents

Attorney General Bill Barr put US businesses on notice today that the Justice Department will treat them as Chinese agents under US law if they lobby for policies favored by China.

Speaking at the Gerald R. Ford Presidential Museum in Grand Rapids, Michigan, Barr denounced the “significant threat” posed by the Chinese Communist Party (CCP) capturing American companies hungry for access to the world’s largest market. The remarks are part of the Donald Trump administration’s mounting pressure campaign against China.

“The CCP has long used public threats of retaliation and barred market access to exert influence. More recently, however, the CCP has also stepped up behind-the-scenes efforts to cultivate and coerce American business executives to further its political objectives efforts that are all the more pernicious because they are largely hidden from public view,” Barr said.

“As China’s government loses credibility around the world,” he added, “the Justice Department has seen more and more PRC [People’s Republic of China] officials and their proxies reaching out to corporate leaders and inveighing them to favor policies and actions favored by the Chinese Communist Party. Their objective varies but their pitch is generally the same: The business person has economic interests in China, and there is a suggestion that things will go better or worse for them depending on their response to the PRC’s request.”

“America’s corporate leaders might not think of themselves as lobbyists […] But you should be alert to how you might be used, and how your efforts on behalf of a foreign company or government could implicate the Foreign Agents Registration Act.”

Attorney General Bill Barr

Barr went on to accuse China of “hiding” behind American voices as part of an undeclared influence campaign.

“The legislator or the policymaker who hears from these American businessmen is properly more sympathetic to that constituent than to a foreigner,” he said. “And by masking its participation in our political process, the PRC avoids accountability for its influence efforts and the public outcry that might result if its lobbying were exposed.”

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He went on to warn US businesses to “be alert” lest they find themselves on the wrong side of the law.

“America’s corporate leaders might not think of themselves as lobbyists you might think for example that cultivating a mutually beneficial relationship is just part of guanxi, the system of influential social networking necessary to do business in the PRC,” he said. “But you should be alert to how you might be used, and how your efforts on behalf of a foreign company or government could implicate the Foreign Agents Registration Act.

“FARA does not prohibit any speech or conduct,” he added. “But it does require those who are acting as agents of foreign principals to publicly disclose that relationship and their political and other similar activities by registering with the Justice Department, allowing the audience to take into account the origin of the speech when evaluating its credibility.”

Barr’s remarks comes the same time that China’s official Xinhua News Agency published a summary of a letter President Xi Jinping wrote to the Global CEO Council urging business leaders to stick with China despite tensions with the United States and economic fallout from COVID-19.

“[China] will provide a better business environment for Chinese and foreign enterprises [to help them] explore new opportunities and new prospects”, Xi reportedly wrote in the letter dated Wednesday. “You’ve made the correct choice of putting down your business roots in China to seek development.”

The Chinese Embassy in Washington did not respond to a request for comment. Asked for more details regarding the potential impact of Barr’s remarks, the Department of Justice for its part pointed to guidance it first released in May.

Barr singled out technology companies for criticism in his remarks. But he also accused Hollywood of censoring scripts for access to the Chinese box office and warned of increasing Chinese sway over US colleges and universities.

The remarks come as the Justice Department and its FARA office have been increasingly aggressive in their interpretation of the law. In recent months the department has notably demanded that the Chinese communist party’s China Daily to disclose how much it was paying US publishers to distribute its content.

And it’s not just China. The Turkish Embassy’s decades-long law firm has also had to register, as have US non-governmental organizations that get funding from foreign development agencies.

Update: This story was updated at 6 p.m. on July 16 with reference to President Xi Jinping’s letter to global CEOs.