How does that apply when you're releasing the source code in the jurisdiction where the law requires it? If they sue you there, the law there says they lose. If you're also in the other jurisdiction your subsidiary there doesn't have to release it so they don't. This is like, what happens when a work is in the public domain in one jurisdiction but not another? The answer is different things happen in different places.
Also, obviously companies would then just not license software under terms that would cause legal trouble for them.
>How does that apply when you're releasing the source code in the jurisdiction where the law requires it?
That would depend on what exactly the requirement is and what exactly the third-party code is and is used for. Without the specifics, I'd say it seems plausible that the third party itself is not subject to the requirement but the firmware using the third-party code may be subject for both first- and third-party code.
But then why is that a problem? The entity in the jurisdiction releases the code for the device they sell in the jurisdiction, whether they wrote it or licensed it, and doesn't license it under terms inconsistent with their legal obligation.
Also, obviously companies would then just not license software under terms that would cause legal trouble for them.