Business interests take aim at China competitiveness bill
Business interests are lobbying lawmakers to strip provisions out of a bill aimed at increasing U.S. competitiveness with China that they say could undermine American corporations.
They’re pushing to ensure that several key measures in House Democrats’ proposal, including a government system to review private U.S. investments in China and new tariffs on Chinese shipments, aren’t included in the final package.
House leaders hope to hold a Friday vote on the America Competes Act, which would invest $52 billion in U.S. semiconductor manufacturing and provide new funding for science research and domestic supply chain resilience. A version of the bill passed the Senate last year, and it’s emerged as a priority for a White House hoping for a win after the collapse of negotiations over President Biden’s social and climate spending bill.
The House bill includes far more aggressive trade provisions favored by labor unions and opposed by business groups, which were left out of the bipartisan Senate version, the U.S. Innovation and Competition Act.
Differences between the two proposals will be ironed out in a conference committee, where corporate lobbyists hope to help shape the final bill that goes to Biden’s desk.
The U.S. Chamber of Commerce, the nation’s largest corporate lobbying organization, warned lawmakers Wednesday that some of the trade measures in the House bill would hurt U.S. businesses and pass on additional costs to American consumers.
The group is targeting a bipartisan proposal in the House bill that would establish a new government committee to ensure that U.S. firms don’t offshore the production of key supplies, including military equipment and medical gear, to adversarial nations such as China and Russia.
“This provision would establish an ill-defined new bureaucracy to review certain outbound investments, which would complicate efforts by U.S. businesses to compete, grow, and expand in global markets,” Neil Bradley, the Chamber’s top lobbyist, wrote in a letter to lawmakers.
A recent report from the Rhodium Group and the National Committee on U.S.-China Relations, a nonprofit backed by large multinational corporations, found that 43 percent of U.S. foreign direct investment in China over the past two decades would have been covered by the measure.
The report said that the proposed system would slow U.S. investment in China and force those with an existing footprint in China to reassess their operations, while also potentially hurting the global competitiveness of U.S. companies if other nations don’t implement a similar review process.
House lawmakers say U.S. reliance on increasingly hostile foreign powers for key supplies like respirators and semiconductors poses a national security threat. Senators left a similar proposal out of the Senate-passed bill following pressure from the Chamber and American corporations that have a significant footprint in China, according to Senate aides.
Corporate lobbyists also have their sights set on a measure in the House bill that would prevent China from taking advantage of America’s $800 de minimis threshold, which stipulates that imports worth less than that number aren’t subject to inspection or duty fees.
Rep. Earl Blumenauer (D-Ore.), the architect of the proposal, said last month that China and other nations are “splitting up their shipments to evade tariffs and oversight.”
“This loophole also makes it easier for people to import illegal goods and harmful products, because there is virtually no way to tell whether these packages contain products made through forced labor, intellectual property theft, or are otherwise dangerous,” he added.
A coalition of business groups including the Chamber, National Association of Manufacturers and Express Association of America, which represents DHL, FedEx and UPS, are warning that the import exemption affects hundreds of millions of packages entering the U.S.
Removing the limit for Chinese imports would cause the price of common products to skyrocket, further fueling inflation, the groups said. They added that the additional administrative burden of processing millions more packages would exacerbate current supply chain congestion.
“Restrictions on the use of de minimis would constitute one of the most regressive taxes possible because the cost would fall equally on everyone, regardless of their ability to pay for it,” the groups wrote in a letter to lawmakers Tuesday.
The proposal is backed by the AFL-CIO, along with several top labor unions and textile industry groups, who said that because Chinese de minimis shipments bypass U.S. retailers to go directly to consumers, the current system encourages the flow of counterfeit goods produced by forced labor at the expense of American workers.
“As every day goes by and another two million shipments enter our country without scrutiny, or paying applicable taxes or tariffs, our economic and national security are further hollowed out,” the groups wrote in a letter to lawmakers last week.
The China competition legislation is pitting the nation’s largest labor federation against big business groups once again. The AFL-CIO and the Chamber are also at odds over proposals in the House bill to bolster antidumping rules and raise minimum standards for a U.S. program that promotes trade with developing nations, among other measures.
Business groups have flexed their influence over this Congress, fighting off Democratic legislation to raise corporate taxes and regulate powerful industries. Business interests shelled out $3.1 billion on federal lobbying in 2021, a new record, while labor unions spent just $49 million, according to estimates from nonpartisan research group OpenSecrets.
Biden, who sees the China competitiveness legislation as a cornerstone of his push to bolster U.S. manufacturing and fix clogged supply chains, has urged lawmakers to finish the bill quickly rather than fixate on smaller policy debates.
The White House has praised both the House bill and the bipartisan Senate package. In a recent speech celebrating Intel’s $20 billion semiconductor plant in Ohio, Biden called on Congress to get the bill to his desk “right away.”
“Let’s get another historic piece of bipartisan legislation done,” Biden said. “Let’s do it for the sake of our economic competitiveness and our national security.”
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