China Policy: No Time for Mixed Messages

Today on TAP: With Xi bailing out Putin, the China bill pending before Congress needs to be stripped of special-interest measures that actually help Beijing.

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Yesterday, Commerce Secretary Gina Raimondo issued a tough warning that if China proceeds with its plans to have Chinese supply Russia with products blocked by Western sanctions, China could find itself in violation of those sanctions. But a close look at two China bills headed for House-Senate conference reveals alarming mixed signals.

The Senate bill, which began as industrial-policy legislation, is called the United States Innovation and Competition Act, or USICA. It was cobbled together by Chuck Schumer, to get maximum Republican support.

USICA passed the Senate last June 8, by an impressive 68-32 margin. But to get that support, from Republicans and corporate Democrats, Schumer had to include several objectionable features that actually help China.

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The House-passed counterpart, the COMPETES Act, is much better. For instance, the House version gets rid of a loophole that allows Chinese exports with a declared value of less than $800 to pass into the U.S. inspection-free.

Among the offensive provisions of the Senate bill are sections that roll back labor standards relative to those that Democrats got included in the revised NAFTA deal, and that extend waivers from Section 301 tariffs for U.S. firms that failed to diversify supply chains away from China. The Senate bill also includes the Toomey Amendment, which eliminates all existing tariffs, including on China, on a long list of medical goods, drugs, and PPE.

Big Tech also sneaked into the Senate bill a sly provision that looks like it cracks down on Chinese censorship, but actually blocks EU regulation of excesses by platform monopolies. Much of the Senate bill, in short, is at odds with the Biden administration’s China policy.

Here is a more detailed analysis of the two bills, by the indispensable Lori Wallach of RethinkTrade.org. This is no time to let industry lobbyists festoon a U.S. competitiveness bill with provisions that actually further open U.S. markets to Chinese mercantilism.

If there was any doubt about the fifth column of U.S. lobbyists who serve Beijing’s interests, the maneuvering around this bill proves it. President Biden and his top staff need to play a hands-on role, making clear what he will sign and what he will veto.

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