The Senate likely will vote on the Endless Frontier Act next week and should pass the bill before the end of the moth, Majority Leader Chuck Schumer, D-N.Y., said May 13. The bill, which would provide more federal funding and incentives for semiconductor research, has “strong” bipartisan support, Schumer said, and will help maintain U.S. technological leadership over trade competitors, including China. “The Endless Frontier Act would right the ship by making one of the largest investments in American innovation in generations,” Schumer told the Senate.
Exports to China
Commerce Secretary Gina Raimondo said she plans to heavily enforce Entity List restrictions and more aggressively tackle the agency's emerging and foundational technology export control mandate. And although the agency’s review of China policies is ongoing (see 2101250049), she again stressed that Commerce doesn’t plan to remove export restrictions from Huawei and is looking for more companies to add to the Entity List.
The top Republican on the House Foreign Affairs Committee urged Commerce Secretary Gina Raimondo to address the agency’s “incomplete” implementation of its emerging and foundational technology export control mandate when she testifies before the House this week. Raimondo -- who will testify May 6 before the House Appropriations Subcommittee on Commerce, Justice and Science -- should also address Commerce’s search for a Bureau of Industry and Security leader and outline the agency's export controls strategy to compete with China, said Rep. Michael McCaul, R-Texas.
As U.S.-China technology competition grows, Congress may consider mandating stronger export controls over U.S. research and semiconductor equipment, the Congressional Research Service said in a report this month. Congress might consider “assessing” whether Chinese efforts to target U.S. research and development capabilities “merits additional government oversight and controls over U.S. basic and applied research,” the report said. Congress might also consider more restrictions over “technical expertise that U.S. industry shares with China over open source technology platforms” and more controls over exports of semiconductor equipment, tools and software. The Commerce Department is reviewing candidate controls for its emerging and foundational technology process (see 2103190037) and has received pushback from universities that are concerned those controls could restrict fundamental research (see 2012020044).
The Justice Department hasn’t yet begun prosecuting cases involving violations of the Commerce’s Department's newly issued end-user restrictions but expects that to soon become a significant part of the agency’s focus, a senior Department of Justice official said.
U.S. universities are opposing the Senate’s Strategic Competition Act of 2021 over a provision that would expand foreign investment screening to include foreign gifts over $1 million given to U.S. universities. In a letter to the Senate Foreign Relations Committee this month, four academic groups said the expanded jurisdiction awarded to the Committee on Foreign Investment in the U.S. would subject “many gifts” received by colleges to a CFIUS review and would make it “harder” for colleges to conduct research.
Clete Willems, a former Donald Trump administration trade staffer, told the Senate Finance Committee that technology sales to China help pay for research and development here, so as Congress considers how to bolster the semiconductor industry, it should also be sure not to put export controls on goods that are not sensitive.
The Senate Foreign Relations Committee passed its comprehensive China bill with several amendments, sending a bill to the Senate floor that could update China-related sanctions, export controls and foreign investment reviews. Senators said they expect the Strategic Competition Act of 2021 -- which would authorize a host of measures to address trade and technology competition issues with China and expand the jurisdiction of the Committee on Foreign Investment in the U.S. (see 2104080066) -- to garner broad bipartisan support before the full Senate.
Despite more scrutiny from the U.S., Chinese foreign direct investment in North America grew by almost half in 2020 compared to 2019, according to an April 19 Baker McKenzie report. But trade and investment experts cautioned industry about placing too much stock in those numbers, saying two-way U.S.-China investment remains “very low” and Chinese firms are still wary about gaining approval from the Committee on Foreign Investment in the U.S.
The U.S. will likely continue to update the regulations for the Committee on Foreign Investment in the U.S., which has created some complications for industry, trade lawyers told the American Bar Association April 15. The recently revised regulations have also severely reduced incoming Chinese investments, which could have long-term implications, one lawyer said.