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Legislation Would Bar Federal Purchases of Mainland Chinese Railcars and Buses

Legislation introduced on 14 March would prohibit the use of federal funds to purchase transit railcars and buses made in mainland China. Sens. John Cornyn (Republican-Texas) and Tammy Baldwin (Democrat-Wisconsin) introduced the bill with co-sponsorship by Senate Banking Committee Chairman Mike Crapo (Republican-Idaho) and Ranking Member Sherrod Brown (Democrat-Ohio). Having the support of the leadership of the key committee of jurisdiction should increase the chances of this bill moving forward.

Cornyn had sponsored a similar provision in the form of a fiscal year 2019 appropriations amendment that passed the Senate but was not included in the final legislation even though a similar amendment had also passed the House of Representatives. This year’s bill, known as the Transit Infrastructure Vehicle Security Act (S. 846), would make the purchasing restriction permanent and would also apply to railcar purchases made by local transit agencies even when not using Federal Transit Administration funds.

While the legislation mentions no country by name, the sponsors acknowledge that it will only apply to mainland China. In particular, it would prevent purchases from CRRC, the world’s largest supplier of rail transit equipment with annual revenue of US$30 billion, which recently won contracts for railcars in Boston, Chicago, Los Angeles and Philadelphia. There are no longer any American transit railcar manufacturers and other foreign bids were much higher. However, Cornyn decried CRRC’s low bids as the result of “a range of state subsidies and predatory practices.”

The bill would create a certification process for transit agencies to ensure that their funds are not used for contracts or subcontracts with mainland Chinese firms receiving state support. A “grandfather” clause would make an exception for rail purchase contracts agreed upon prior to the date of enactment of the legislation. Another provision would require the legislation to be applied “in a manner consistent with the obligations of the United States under international agreements.” In this regard, industry experts point out that the pluri-lateral Government Procurement Agreement states that it “shall not apply to restrictions attached to Federal funds for mass transit and highway projects.”

Moreover, the legislation would require any transit operator that operates rail transit service to develop and execute a plan for identifying and reducing cybersecurity risks. Recipients of federal transit assistance, meanwhile, would be required to review best practices and identify any hardware and software components of new rolling stock assets that should undergo third-party testing.

Sen. Baldwin, a key backer of Buy America provisions in the Senate, stated that mainland China “has made clear its intent to dismantle U.S. railcar manufacturing in its ‘Made in China 2025’ plan”, adding that U.S. economic and national security “demands that we address Chinese attempts to dominate industries that build our nation’s critical infrastructure.” Sen. Cornyn, for his part, emphasised that mainland China “poses a clear and present danger to our national security and has already infiltrated our rail and bus manufacturing industries.”

Content provided by Picture: HKTDC Research
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