The Senate’s USICA bill could undo Section 301 tariffs on many Chinese products; the House version (rightly) does not include this language.
We’ve been busy this week examining H.R. 4521, the America COMPETES Act of 2022. It’s the House version of the United States Innovation and Competition Act (USICA), which passed the Senate last year. My colleague Matt McMullan took a look at what’s in the House legislation on Wednesday – but today we’re going to talk about something that thankfully is not in the House bill.
And by the way — it should stay that way.
First, a bit of background. Right now, there’s a big fight brewing over the future of the “Section 301” trade action on Chinese imports. The Trump administration originally issued the Section 301 tariffs to counter China’s litany of unfair trade practices, including distorting industrial subsidies, intellectual property theft and forced technology transfers.
The Section 301 action put enough pressure on Beijing that it signed a “Phase 1” agreement to buy an additional $200 billion worth of U.S. goods and services and begin reforming its predatory policies. Yet, China has not even fulfilled its commitments in this lackluster deal, making it abundantly clear that China’s government is aiming to use its state-directed economy to dominate global industries. Even Hollywood is changing how it’s doing business with China.
As a result, Congress is working on a legislative package designed to counter China’s influence while strengthening our own industrial capabilities in semiconductors and other strategically important sectors. The Senate took the first pass at this effort with USICA in 2021, and now the House is taking the ball farther down the field.
But, here’s where things get strange. Despite the policy shift on China, despite China’s continued trade malpractices, despite China’s increasing suppression of freedoms and human rights violations, despite China’s use of the pandemic to gain further global influence, there are still some Members of Congress who are trying to give China’s imports a break from the Section 301 tariffs.
And they are trying to undo these tariffs in legislation designed to counter China. Remember, the whole point of the two China competitiveness bills is a desire to ensure that the United States can, uh, compete with China.
USICA — the Senate version of the bill — had language in it that would have mandated that the U.S. Trade Representative (USTR) reinstate all exemptions and exclusions to the 301 tariffs through the end of 2022. Doing so would have completely taken the fact-based review process out of USTR’s hands, which doesn’t make a ton of logical sense, since USTR is the government agency tasked with handling these types of trade issues.
Fortunately, the COMPETES Act – the House version of the bill – doesn’t include this language at all. And as the Mandalorian say, THIS IS THE WAY.
It makes absolutely zero sense for Congress to go out of its way to mandate tariff relief for a whole bunch of Chinese-made products, especially without first knowing whether any individual exclusions or exceptions are even justified. Doing so would only undermine American workers and companies at a time when we need to be doing everything we can to strengthen and support them. On top of that, it would unilaterally disarm the Biden administration in its trade fight with China.
For example, we’ve written about the exclusions granted to face mask imports at the start of the pandemic. At the time, there were critical shortages. But, now that there’s an array of American-made face masks, the policy should not be adjusted to benefit China’s predatory imports. American mask manufacturers already face a litany of challenges dealing with China’s unfair trade practices; the U.S. government shouldn’t give an even greater edge by exempting China’s already artificially cheap masks from the Section 301 tariffs. That puts those manufacturers and their employees at risk, but more importantly, puts people’s health in jeopardy.
Which brings us to the present. Just last week, a group of House members led by Reps. Ron Kind (D-Wis.) and Suzanne DelBene (D-Wash.) wrote to U.S. Trade Representative Katherine Tai seeking to expedite the removal of many of the Section 301 tariffs, which they argued were bad for the country.
So, as the House continues deliberating over the America COMPETES Act, we’ll be watching to see if Kind, DelBene, and their anti-301 allies make a play for the Senate’s bizarre handout to Beijing. They’ve made it clear that not only do they want to see all 301 exemptions and exclusions restored, they’d like to expand them.
Right now, Tai is examining the exclusions and exemptions to Section 301 tariffs. It is important that determinations on individual products be driven by facts, and there are undoubtedly situations where some exclusions and exemptions should be granted. USTR should be allowed to examine exemption and exclusions.
Let’s not forget that the sole purpose of USICA or COMPETES or whatever legislation eventually passes Congress must be to invest in the long-term success of American industry. We need to give American workers and companies the tools they need to make the critical products our country needs, now and in the future. No part of the legislation should give an edge to Chinese imports.
As lawmakers on Capitol Hill work to combine the two bills, they should ditch the Senate language and leave the 301 exclusions process to the experts at USTR — which is already at work on it anyway! It’s time to focus on passing a robust, comprehensive legislative package that will help the United States win the fight for the 21st century.