U.S. Senate Prepares China Competitiveness Package
- The U.S. Senate is developing comprehensive legislation that seeks to counter China’s global influence while also addressing alleged trade and intellectual property violations, a topic that is top-of-mind for both Democrats and Republicans. Earlier this year, Senate Majority Leader Chuck Schumer (D-NY) instructed relevant committees to work in a bipartisan fashion to develop and mark up legislation for consideration on the Senate floor by the end of April 2021.
- Base text of the China competitiveness package will likely include a modified version of The Endless Frontier Act, as well as components from other legislation including The Strategic Competition Act of 2021 and The America LEADS Act. Senate Majority Leader Chuck Schumer signaled the package may include “emergency funding” to address the global shortage of semiconductors.
- While the package is still under development, it may come together very quickly in the following weeks. The Senate Foreign Relations Committee marked up legislation on April 21, 2021 and we expect other committees including the Senate Commerce, Science, and Transportation Committee and the Senate Finance Committee to follow suit. However, cracks are beginning to emerge in the bipartisan process, with some Senate Republicans expressing concern with the overall price, and requesting additional time to review legislation and prepare amendments. This could delay the process indefinitely or result in a scaled back version of the legislation.
- The package’s scope could be far-ranging, which presents both challenges and opportunities for businesses. For example, while the legislation may include a significant boost in funding for Research & Development (R&D) in critical technologies and additional federal support to increase semiconductor production, it may also include additional export restrictions and heightened scrutiny of supply chains in the Asia-Pacific region.
The Endless Frontier Act
- The 160-page bill was re-introduced on April 21, 2021. Its lead sponsors include Senate Majority Leader Chuck Schumer and Senator Todd Young (R-IN). A companion version of legislation was introduced in the House of Representatives by Representatives Ro Khanna (D-CA) and Mike Gallagher (R-WI).
- Similar to last year’s version, the legislation would establish a new Technology and Innovation Directorate within the National Science Foundation and authorize $100 billion in federal spending over five years for the purpose of investing in critical technologies including artificial intelligence, quantum computing, robotics, automation, and advanced manufacturing. Additionally, the legislation would set up a supply-chain resiliency program through the Commerce Department to examine how to build and maintain secure supply-chains within the U.S. and allied countries.
- The Senate Commerce, Science, and Transportation Committee held a hearing on the Endless Frontier Act on April 14, 2021. The Committee was originally scheduled to mark up the bill on April 28, 2021, but it has been postponed indefinetly.
The Strategic Competition Act of 2021
- The 280-page bill was introduced on April 8, 2021. Its lead sponsors include Senate Foreign Relations Committee Chairman Bob Menendez (D-NJ) and Ranking Member Jim Risch (R-ID).
- The legislation seeks to better understand methods Chinese companies are using to increase overall competitiveness. Specifically, the legislation includes measures to track intellectual property (IP) violators, monitor China’s alleged use of Hong Kong to circumvent existing U.S. export controls, and better track the presence of Chinese companies in U.S. capital markets.
- Notably, the legislation imposes new sanctions on China for alleged human rights abuses in Xinjiang, which continues to be a flashpoint for tensions between Washington and Beijing that are disrupting supply chains and creating intense cross-pressures for international companies doing business in the region. To strengthen regional partners – and to ensure security and stability along vital shipping lanes through the South China Sea – the bill calls for a total of $655 million in Foreign Military Financing and $450 million for the Indo-Pacific Maritime Security Initiative.
- The Senate Foreign Relations Committee approved the bill in a mark up session on April 21, 2021.
America LEADS Act
- A modified version has not yet been introduced. However, last year’s 610-page bill was introduced on September 17, 2020 and its lead sponsors included Senate Banking, Housing, and Urban Development Committee Chairman Sherrod Brown (D-OH) and Senate Majority Leader Chuck Schumer.
- The legislation aims to increase American competitiveness with China by increasing federal funding for R&D in emerging technologies like 5G, while also ensuring the U.S. is well-positioned – alongside its allies – to better establish global strategies to curb and contain China’s influence, and address alleged human rights abuses. Importantly, the legislation includes provisions to strengthen intellectual property, supply chain, currency manipulation, and counterfeit goods enforcement mechanisms.
- The Senate Finance Committee held a hearing on U.S.-China relations on Thursday, April 22, 2021.
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