Alibaba Gets A Reprieve From US Chinese Military Ban

A judge has ruled that the Pentagon must not treat Chinese online retailer Alibaba as a Chinese military company with respect to new lobbying restrictions, Bloomberg reported. The decision comes after Alibaba sued the US government for being placed on the Pentagon’s 1260H entity list, asserting that the decision had no “basis in fact or law” and violated its right to speech and constitutional due process. 

The 1260H list is not the same as the US government’s OFAC sanctions list that completely prevents companies like DJI from doing business in America, but it now has greater consequences than before. A recent legislative change prevents the DoD from entering into contracts with any company that engages lobbyists or lobbying firms representing any 1260H list company.

That new clause, said Alibaba, is preventing it from hiring representation that that could help it challenge the government, in turn violating its constitutional right to free speech. On Sunday, US District Judge Eumi K. Lee ordered the Pentagon not to treat Alibaba as a Chinese military company with regard to the lobbying rule, until she resolve’s the company’s motion or 60 days after a court hearing on the matter, whichever comes first. Her decision could affect current and future companies placed on the list.

In its lawsuit, Alibaba said it didn’t work with the Chinese military and should be removed from the list. The company argued that the new restrictions caused it to lose “its voice across the whole of its dealings with the federal government — on legislation, on regulation, on the policies that shape its business.” Alibaba noted that all of its more than two dozen registered lobbyists withdrew their registrations in recent after it was added to 1260H. 

While arguing that the lobbying restriction was constitutional, the Pentagon recognized that “it will benefit both the parties and the court to enter into a stipulation for a limited period of time so the court can assess” the complaint. At the same time, US House China select committee members recently urged defense chief Pete Hegseth to carry out “strict implementation” of the lobbyist ban. “It is critical that the Department’s contractors avoid partnering with firms and lobbyists that simultaneously advance the interests of companies executing the military ambitions of the Chinese Communist Party,” representatives John Moolenaar and Elise Stefanik wrote.