House Passes China Competition Bill With Sanctions, Export Control Amendments

The House voted 222-210 last week to pass its China competition bill, which includes a variety of provisions that could expand U.S. export controls, sanctions and investment screening authorities. Although the America Competes Act faced objections from Republicans who argued it wasn’t tough enough on China and didn’t include strong enough export control measures (see 2202020039), several provisions could lead to more China sanctions and further restrict exports of critical American technologies.

The House and Senate will next seek to work out differences between the House bill and the Senate's U.S. Innovations and Competition Act. “We look forward to expeditiously going to conference and hope to hear from the Senate soon,” House Speaker Nancy Pelosi, D-Calif., told reporters Feb. 4.

Both President Joe Biden and Commerce Secretary Gina Raimodo urged the conference to work quickly. Raimondo said she was told last week by committee leaders in both chambers that negotiations shouldn't take long. "I'm urging Congress in the strongest possible terms to move quickly, immediately, now, to start negotiations and work out the differences," Raimondo said during a Feb. 4 call with reporters. "There is no reason that they should drag on for months."

Raimondo also praised the semiconductor provisions in the bill, which includes $52 billion in funding for domestic chip production for the Chips Act. The Senate passed similar funding as part of its China competition bill (see 2112010023). "I cannot overstate how necessary and important this funding is to revitalize our domestic semiconductor manufacturing and shore up our national security," Raimondo said.

The House bill includes several other trade-related measures already included in the Senate version, including new sanctions against people involved in human rights abuses in China’s Xinjiang region and a repeal of the sunset provision of the Global Human Rights Accountability Act (see 2201260035). House Foreign Affairs Committee Chairman Gregory Meeks, D-N.Y., said the bill “incorporates strong prohibitions on human rights, including sanctions related to China's genocide in Xinjiang.”

Other measures would place new export controls on electronic waste items to stop those goods from reentering supply chains in the U.S. via China, urge the Biden administration to better harmonize its export control and sanctions policies with allies and call for a review of controls over exports that may enable human rights abuses.

The House also voted Feb. 3 to attach several trade and sanctions-related amendments to the bill, including a set of measures that could improve shipping opportunities for U.S. exporters, expand investment screening efforts and study the impact of U.S. sanctions.

Lawmakers voted 367-59 to attach the full text of the bipartisan Ocean Shipping Reform Act, which passed the House in December and would look to hold ocean carriers more accountable for unfair shipping practices (see 2112080075). One of the bill’s original sponsors, Rep. John Garamendi, D-Calif., said the legislation will specifically aid exporters facing unfair shipping practices.

“Many exporters cannot get a container to ship their goods. And for those who can get a container, they cannot get it on a ship,” Garamendi said on the House floor Feb. 3. "The Ocean Shipping Reform Act is the solution to this problem.”

Rep. Dusty Johnson, R-S.D., said dried peas and lentil producers told him last month that foreign ocean carriers are still canceling 30% to 40% of their shipments. He called on the Senate to quickly take up the bill. “The Senate has not yet acted, and let's be clear: Action is needed,” Johnson said.

The chamber also voted to attach an amendment that would direct the Treasury and State departments to study the management of sanctions against “specific Afghan individuals” in order to “operate a foreign trade zone in Afghanistan" and an amendment to study the impact of U.S. and "multilateral regulations and sanctions, including the environmental and public health impacts of natural resource exploitation."

Other amendments included in the House bill would "right-size" the Commerce Department’s authority to regulate U.S. exports to foreign military, security and intelligence agencies, require the departments of State and Agriculture to submit yearly reports on Chinese foreign investments in the American agriculture sector and require the director of national intelligence to report on Chinese government investments in port infrastructure since 2012.

Another investment provision would establish a review process for certain outbound transactions. The measure would create a Committee on National Critical Capabilities, similar to the Committee on Foreign Investment in the U.S., which would screen outgoing investments that could shift certain "national critical capabilities" to a foreign country. It would also work closely with the Office of the U.S. Trade Representative, the Bureau of Industry and Security and CFIUS.

The idea of an outbound investment screening mechanism has proven polarizing, and former CFIUS officials expect it to draw significant pushback from industry (see 2201140038). "I think it's fair to say that the trade title portions of both of these bills are the most contentious" and the areas "where there's the least bipartisan agreement," Raimondo said. "And while trade is of course an incredibly important part of our competition strategy, we have to find common ground, however limited that might be, and not let those controversial pieces of the trade title bog down this whole negotiation."