By Omar Nashashibi, The Franklin Partnership, LLC
Few issues unite people in Washington, D.C. like a common adversary, and these days China is fitting that mold. Partisanship is rampant in the nation’s capital, with few Republicans and Democrats working together on the issues of greatest importance to manufacturers. Until recently that is, when members of both parties in Congress began falling over themselves to prove their support for manufacturing in America and increased their posturing against imports from China.
An unlikely pair is leading the way in Washington to address domestic supply chain resiliency and counter China’s increasingly aggressive tactics. Leader of Senate Democrats Charles Schumer of New York is teaming up with Republican Senator Todd Young, who recently was in charge of GOP efforts to defeat Senate Democratic candidates, on bipartisan legislation to improve US global competitiveness and increase investment in manufacturing. In April, the Senate Commerce Committee held a hearing focused on the Endless Frontier Act, introduced with 13 Senators and a strong show of bipartisan support from a cross section of the country spanning Arizona to Maine.
And, they are not alone. The Senate Foreign Relations Committee held a hearing on the Strategic Competition Act of 2021, a sweeping 280-page, China-focused bill that addresses issues such as unfair Chinese trade, government subsidies, forced labor, cybersecurity, Chinese investment in the US and corruption. The bill also provides $15 million to help US companies exit the Chinese market, diversify their supply chains and identify alternate markets – as well as $300 million for the “Countering Chinese Influence Fund” to push back against the Chinese Communist Party’s efforts to promote its authoritarian model abroad.
The semiconductor shortage awakened policymakers in Washington to the vulnerabilities in the US supply chain highlighted in the early days of the pandemic. More than 50 lawmakers, including Senate Majority Leader Schumer, have called for President Biden to support “emergency mandatory” funding for semiconductor manufacturing incentives as part of a broader bipartisan sweeping legislative package aimed at China.
As of this writing, Majority Leader Schumer was preparing the Senate for a floor vote on a China-focused bill as the Senate Finance Committee began collecting input from Senators on their priorities.
I first began lobbying on the issue of Chinese currency manipulation and trade enforcement during the George W. Bush administration. Even then, the key sponsor of a Senate bill to enhance and enforce trade laws against China was Chuck Schumer, now Senate Majority Leader. He has a long and vocal track record in Washington as a skeptic toward China, particularly on trade, and his current position as Senate Leader provides him the ability to bring virtually any bill to the Senate floor. On the Republican side, Senator Todd Young is well known among manufacturers as a strong advocate for the sector and has a reputation as a legislator who takes a thoughtful approach to governing.
Other Senators are in on the action as well. US Senators Chris Coons (D-Del.) and Marco Rubio (R-Fla.) introduced the National Manufacturing Guard Act of 2021, bipartisan legislation to invest $1 billion over five years in the ability of the US government to mitigate future supply chain emergencies. Another bipartisan group on Capitol Hill, led by Sen. Amy Klobuchar (D-MN) and Rep. Marcy Kaptur (D-OH), introduced a bill to establish the Office of Manufacturing and Industrial Innovation Policy at the White House and develop a strategic national manufacturing policy.
The AMBA is working with lawmakers in both parties and other stakeholders in Washington to help shape the outcome of these legislative efforts, including guidelines for developing an industrial and innovation policy in the US.
China has taken notice, and they too retain lobbyists and consultants in Washington, with entities spending millions to influence policymakers. A Chinese government spokesperson recently said that China “firmly opposes the relevant motions put forward by relevant legislators.” This is important phrasing by the Chinese and using the term “relevant lawmakers” is a correct observation.
The current China policy review is not undertaken by rank and file members of Congress from the Midwest, who were lonely in voicing concern over China as in the past. Senior members of leadership in both parties, and in both chambers of Congress, now are directly involved.
On the other side, we are seeing increased pressure on the Biden administration to reopen or create some type of new Section 301 tariff exclusion process. Shortly after imposing the tariffs on China, former President Trump created a process for US importers to request an exclusion from paying the tariffs on imports. Companies could apply with a process allowing the public to object to the tariff exclusion. Fewer than 100 exclusions remain in place as of today, with tariffs on thousands of Chinese imports in place.
The Trump administration, in December 2018, granted one such exclusion from paying the 25% tariffs on Chinese plastic injection molds. Working with the AMBA, we successfully convinced the USTR in December 2019 to reinstate the tariffs on the imported molds, helping protect the industry from surging imports. However, as predicted, the threat to molds and dies made in the US from Chinese imports is returning.
Recently, several Senators drafted a bipartisan letter to USTR calling on the Biden administration to “institute a new, transparent, process-based exclusions system for Section 301 tariffs.” This follows a similar bipartisan letter from several members of the powerful US House Ways and Means Committee. These public actions confirmed what we had long heard around Washington – namely, that pressure is continuing to mount on the Biden administration to allow importers to request an exclusion from paying tariffs on Chinese goods, including lifting the tariffs on imported molds and dies.
The supply chain legislation making its way through Congress is an important step for Washington in understanding the challenges China presents not only to US manufacturers, but also to supply chain and national security. We also do not believe the recent attention and bipartisan unity is fleeting. While the Biden administration has raised concern over legislation that may tie the hands of this and future presidents, the administration is directly involved in the ongoing negotiations with Capitol Hill and is making it a priority to counter China globally.
Members of the AMBA stand to gain – or lose – in the current debate, depending on the action or inaction from Washington. However, the approach the US takes today will have consequences not just for today’s manufacturers but for future generations. When the US and Chinese officials met for the first time under the Biden administration, the Chinese delivered a specific message – they view the US and China as equals now on the world stage.
The question we now face is whether Washington can put partisanship aside and speak with a unified voice to protect manufacturing in America and address China’s actions.
Omar Nashashibi is a founding partner at The Franklin Partnership, LLC, a bipartisan government relations and lobbying firm retained by the American Mold Builders Association in Washington, D.C.
