House China bill includes aggressive trade provisions

U.S. House legislation to confront China economically includes trade provisions that differ from the Senate’s, setting the stage for a high-stakes negotiation over how to handle commerce between the world’s two largest economies.

House lawmakers released their bill — dubbed the America COMPETES Act— on Tuesday evening as they pushed to finalize a version to compete withSenate legislation passed last year.

As expected, the bill’s centerpiece is $52 billion in semiconductor funding sought by the White House and congressional leaders to combat the computer chip shortage, along with a litany of funding provisions for science and technology research aimed at enhancing American competitiveness against China.

The Biden administration and Senate Majority Leader Chuck Schumer praised the bill Monday, saying it brings them one step closer to passing those incentives into law.

“We have no time to waste in improving American competitiveness, strengthening our lead in global innovation, and addressing supply chain challenges, including in the semiconductor industry,” Schumer said in a statement.

But contentious debates lie ahead. The House bill also contains a grab bag of Democratic priorities designed to strengthen American trade laws and strike out at China’s economy. Whether to include a trade title — and what should comprise it — had been a key reason that the House has not finalized its China legislation, even as leaders of each chamber agreed to convene a conference committee to resolve differences between their bills late last year.

Tariff reform: One provision sure to spark discord is a bill from Ways and Means trade chief Earl Blumenauer (D-Ore.) thatwould end the so-called de minimis provision for low-value packages that arrive in the U.S. from non-market economies like China. That could increase duties on hundreds of millions of packages each year, even after House lawmakers removed a provision that would have ended duty-free treatment for goods subject to Section 232 national security tariffs or Section 301 duties imposed due to trade law violations.

Outbound investment screening: The House will also include a contentious provision to set up a government screening protocol for American investments in unfriendly nations like China. That bill, the National Critical Capabilities Defense Act, was left out of the Senate bill after a last-minute lobbying blitz from the Chamber of Commerce gave some senators cold feet.

GSP, MTB (House’s versions): House members will also include bills from Blumenauer to reauthorize the Generalized System of Preferences and Miscellaneous Tariff Bill, two expired tariff exemption programs.

The Senate also passed GSP and MTB reauthorization bills in its package, but the House legislation includes more stringent labor and gender rules for countries seeking tariff-free treatment, which some Senate lawmakers worry will push developing nations out of the programs altogether.

AD/CVD updates: And House members also included a bill from Rep. Terri Sewell (D-Ala.) that would strengthen theCommerce Department’s ability to punish serial trade offenders with anti-dumping and countervailing duties. A companion bill from Ohio Sens. Rob Portman (R) and Sherrod Brown (D) was left out of the Senate bill.

It’s about leverage: All of those bills are expected to be contested by Senate lawmakers in the coming conference committee, whose schedule and members has still not been set. But a Capitol Hill official with knowledge of House lawmakers' thinking said they understand they won’t get everything they want out of the cross-chamber meeting, and so they put together an ambitious bill to maximize leverage.

White House pressure: Inclusion of a trade title in the House bill had been in doubt since late last year, with some House lawmakers not wanting to include revenue-raising provisions that they fear the Senate could alter later. But that thinking has changed in recent weeks as the Biden administration, led by the Commerce Department, has pushed the lower chamber to finalize its legislation quickly.

“This is an issue with bipartisan support and I look forward to doing what I can to get this bill to the President’s desk,” Commerce Secretary Gina Raimondo said of the semiconductor incentives in a statement welcoming the House bill. “Today’s bill introduction brings us one step closer to getting the job done.”