Managing Director & Chair of Advocacy, Charles Cooper discusses the significant focus in the 117th Congress on China competition legislation and the position it holds to be prioritized by policymakers on both sides of the aisle who could benefit from a major policy win this year.
There has been significant focus in the 117th Congress on finding a legislative solution for addressing the U.S.’s ability to compete with China on a more level playing field – both economically and in terms of national security. The Senate introduced the U.S. Innovation & Competition Act in April last year, which was then passed by a bipartisan vote of 68-32 in June. The House introduced the America COMPETES act in July last year, which was then passed by a party-line vote of 222-210 in February this year. House and Senate leadership remain optimistic that they will be able to reach a consensus on a final package by July 4th.
China competition legislation is the most likely near-term bipartisan “win” of significance in Congress. With few other major bills on the horizon that have a chance of reaching the President’s desk (the National Defense Authorization Act being an exception), this legislation is well-positioned to be prioritized by policymakers on both sides of the aisle who could benefit from a major policy win this year.
Why This Legislation Has Momentum
Bipartisanship Rules in DC: Other than reconciliation (which has yet to be a successful strategy for legislation this Congress), virtually all other bills require bipartisan support to reach the President’s desk. In an era where partisanship is at an all-time high, the fact that a version of this legislation passed with 68 votes in the Senate is significant and an advantage of many competing bills.
Big Funding Opportunities and Industry Wins: For those that follow the money, there are literally billions for programs that would increase U.S. supply chain resiliency, boost domestic manufacturing, strengthen the U.S. economy, and improve resources for innovation across all sectors. Furthermore, reforms to the Section 301 tariff process will help create additional certainty and transparency around tariffs on products imported from China, which has been a major priority for industry.
A Focus on China: Policymakers that are on the far right and the far left (and many in between) share a common focus around concerns related to China and an interest in spurring more domestic job growth, rebuilding a domestic manufacturing sector, and strengthening national security. From manufacturing incentives to export controls, this legislation seeks to strengthen our position domestically through many programs that are broadly supported across Congress.
The President is Engaged: The President appreciates the potential for this legislation to be a signature “win” to pair with the bipartisan infrastructure package he previously signed into law. The White House remains engaged and is using the same platform they did to get the infrastructure bill over the finish line.
Why This Legislation May Face Hurdles
It’s Political Season: It goes without saying that a “win” with only 200 days left until the election may not be something all policymakers are willing to give to the President. Given that this is increasingly a time of political risk and opportunity, this legislation (like every major bill) will be viewed, in part, through a political lens.
Some Provisions Will Be Tough to Reconcile: The bills include provisions that are both controversial and not universally supported. Negotiations will be tough and require significant compromise. The emergence of factions within each party adds complexities to an already delicate legislative dance. From labor provisions to technical trade reforms, the potential for a provision(s) to slow down the process (or stop it altogether) is real.
Other Bills May Weigh It Down: Without question, there are many sponsors of bills that have less potential for movement that are looking at China competition legislation as a potential legislative vehicle for their initiatives. While this is not unusual (especially when there are not many big bills moving) and often works seamlessly, it does bring additional risk to China competition legislation.
Other Priorities Could Take Focus Away From China Competition Legislation: There is no shortage of challenges that Congress and the White House will need to focus on, including the war in Ukraine, Fiscal Year 2023 funding, and the COVID Pandemic. It is entirely possible that one of these (or others not yet on the radar) could cause a significant shift in the agenda, which would create a significant hurdle for China competition legislation.
As negotiations continue for this legislation, policies are being ironed out in real time. For those seeking to influence the process, it is not too late…but the process is already crowded and noisy. While the July 4th timeline is certainly guiding negotiators, deadlines are aspirational and are likely to be extended.