The two houses of Congress are locked in a struggle over a large bill that would pump $52 billion into the American semiconductor industry, giving it a lift at a time when China is striving mightily to catch up. The bill would presumably postpone the day when China could achieve anything approaching parity. It currently imports about $300 billion worth of semiconductors each year.
Commerce Secretary Gina Raimundo is arguing to Reuters, in a story that has not achieved much traction, that China is opposing the legislation. The Chinese Embassy is writing letters to American companies urging them to oppose the legislation. The Chinese government also has summoned business executives in Beijing to persuade them to lobby against the legislation.
Is it possible that American businesses would oppose legislation that is in America’s best national interests so they could curry favor, and sales, in China?
It’s very difficult to tell if that’s happening. Chambers of commerce and industry associations could be lobbying for changes in the legislation that they claim are for domestic business reasons and have nothing to do with China–when in fact, they know China is watching and they could be rewarded if they succeed.
I append an article from today’s Wall Street Journal because it is hidden behind a pay wall. It is a very complicated fight. But I particularly appreciate the quote from a Chinese Embassy spokesman: “We are firmly against the U.S. making an issue out of China and perceiving it as an imaginary enemy.” Really? China is an “imaginary” adversary?
Commerce Secretary Gina Raimondo is urging Congress to act soon on legislation aimed at boosting U.S. competitiveness against China.PHOTO: SAMUEL CORUM/BLOOMBERG NEWS
Many lawmakers say the sprawling, complex package—which even includes a section on kitchen sinks—remains likely to pass this year. But squabbles are emerging over proposed national-security reviews of outbound U.S. foreign investments; waivers of tariffs on Chinese imports; and curbs on the sale of counterfeit goods online, among other provisions.
The flashpoints are worrying those who support the bill’s central goal of boosting U.S. high-tech research and manufacturing to counter advancements by China and other commercial rivals. The legislation would expand federal investment in technologies such as quantum computing and dedicate $52 billion in new subsidies to rebuild semiconductor manufacturing in the U.S., which has been eclipsed by Taiwan and other overseas competitors.
“If they delay too much, America loses out,” said Commerce Secretary Gina Raimondo last week, referring to U.S. lawmakers.
Semiconductor manufacturing in the U.S. is one focus of the legislation.PHOTO: CAITLIN OCHS FOR THE WALL STREET JOURNAL
A spokesperson for the Chinese Embassy in Washington said of the legislation: “How the U.S. intends to develop and strengthen its competitiveness is its own business, but we are firmly against the U.S. making an issue out of China and perceiving it as an imaginary enemy.”
The November elections are also looming, limiting time for lawmakers to hammer out a compromise between House and Senate versions as political pressures mount.
Some Republicans are urging their colleagues to take their time. “Although I hope to see significant progress soon, we should not rush the conference process to meet arbitrary and politically motivated deadlines,” said Sen. Roger Wicker (R., Miss.), the top Republican on the Senate Commerce Committee.
Republican Sen. Roger Wicker of Mississippi is urging colleagues not to rush the process.PHOTO: SARAH SILBIGER/BLOOMBERG NEWS
House Majority Leader Steny Hoyer is helping to shepherd the legislation.PHOTO: WILL OLIVER/SHUTTERSTOCK
If the debate goes on too long, Democrats worry that political motivations will ultimately lead Republicans to oppose the package, to deny an election-year victory to their opponents.
“I think both sides will be able to claim victory,” said House Majority Leader Steny Hoyer (D., Md.), who is helping to shepherd the legislation. But “am I worried about it? Yes, I am worried about it.”
Last Thursday, members of the joint House-Senate committee that will negotiate a compromise—which includes more than 100 lawmakers—held their initial meeting to discuss the legislation in a cavernous, column-lined Senate caucus room.
The task of this so-called conference committee: reconcile an initial Senate version of the bill, passed in a bipartisan vote last year, with a Democratic-backed House version that added major policy proposals on trade, climate change, supply-chain security, labor and workforce development, immigration and online commerce.
Some business lobbyists are calling on Congress to strike a narrow deal. “If you zoom out for a second, the real issue is that we have a fairly narrow bill passed on an overwhelmingly bipartisan basis in the Senate, and we have an everything-but-the-kitchen-sink bill passed on a partisan basis in the House,” said Neil Bradley, executive vice president of the U.S. Chamber of Commerce.
Legislative proposals in the mix aren’t all directly related to China policy and touch on areas as diverse as banking rules for marijuana merchants and domestic mink ranching (which would be effectively banned by the House bill). The legislation includes kitchen sinks, under the heading “Stainless steel handmade kitchen sinks,” in a section seeking lower tariffs on them.
The House version of the bill also included a provision to establish a government mechanism to review and restrict outbound U.S. investments on national-security grounds, despite opposition from industry—and concerns in both parties—about the measure’s potentially broad scope.
Proposals to address these concerns have emerged in recent weeks, but lawmakers haven’t unified behind any one.
Another controversy has arisen over House proposals that sponsors say aim to curb counterfeit imports that can shortchange U.S. businesses and consumers. The measures have drawn fire from the likes of eBay Inc. which has said it could pit small sellers against big brands.
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The bill’s Senate sponsors, Sens. Chris Coons (D., Del.) and Thom Tillis (R., N.C.), said in a joint statement that the bill “provides a balanced approach to address the dangers of counterfeit goods, many of which come from China, that threaten Americans’ health and safety and harm American jobs and intellectual property.” They say the House version of the bill addresses many of the concerns raised, including for small sellers, and they remain open to further changes.
Among the most contentious provisions is a proposed requirement that the U.S. trade representative start a new process to grant tariff waivers, a step that could result in a significant erosion of the scope of goods subject to existing tariffs on $300 billion of Chinese imports.
Critics say the tariffs fall on U.S. businesses that pay duties on imported materials or parts, rather than Chinese exporters they were intended to punish, cutting into their profits and adding to inflation that hurts American consumers.
The debate comes at the same time Biden administration officials and businesses are sharply divided over whether the Trump-era tariffs should be removed as a way to ease inflation.
In Congress, Sen. Pat Toomey (R., Pa.) is leading the Senate effort to push for the provision allowing importers to request to waive certain tariffs. “Failure to allow this remedy will harm our own manufacturers, disadvantaging these companies relative to foreign competitors at a time when we should be enabling their success,” Mr. Toomey said last week.
Pushing against Mr. Toomey is the bipartisan pairing of Katherine Tai, the U.S. trade representative, and Robert Lighthizer, Ms. Tai’s predecessor under the Trump administration. The pair, in favor of maintaining the levies as leverage against Beijing in continuing trade talks, have separately asked senators to oppose the exclusion and successfully persuaded some to withdraw their earlier support, according to people familiar with the situation.
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