27 May 2019
Recent Legislative Efforts Target Mainland China, Effectiveness of Federal Regulatory System
U.S. lawmakers recently introduced several bills of potential interest to Hong Kong and mainland Chinese exporters. Two of these bills are aimed directly at mainland China while two additional pieces of legislation seek to improve the effectiveness of the federal regulatory system.
Introduced on 7 May by House Asia, the Pacific and Non-proliferation Subcommittee Chairman Brad Sherman (Democrat-California) and Sen. Chris Coons (Democrat-Delaware), the U.S.-China Economic and Security Review Act (H.R. 2565 and S. 987) seeks to implement certain recommendations of the congressionally-mandated U.S.-China Economic and Security Review Commission. Among other things, the legislation would require the Office of the U.S. Trade Representative to assess whether to bring a complaint against mainland China at the WTO in co-ordination with U.S. allies, require the director of national intelligence to report on the effect of the Silk Road Economic Belt and the New Maritime Silk Road on freedom of navigation and U.S. interests, and require USTR to report on mainland China’s trade practices as well as actions taken by the agency to counteract their impact.
Additionally, the Federal Communications Commission and the U.S. Department of Commerce’s assistant secretary for communications and information would be required to report on steps to protect 5G networks, while the Treasury Department would have to report on mainland China’s co-operation on enforcement of sanctions on North Korea. Moreover, the U.S. Government Accounting Office would have to study U.S. research co-operation with mainland China to ensure the protection of U.S. intellectual property and investigate whether the mainland Chinese military or government are benefiting from U.S. taxpayer-funded research, as well as whether U.S. researchers are subject to cybersecurity attacks. Finally, all federal agencies would be required to attempt to mitigate any supply chain risks posed by mainland China.
Introduced on 14 May by Sen. John Hawley (Republican-Michigan), the China Technology Transfer Control Act (S. 1459) would place all “core technologies” from mainland China’s Made in 2025 strategy on the DOC’s export control list and impose sanctions on foreign entities and individuals that violate these export control restrictions. The bill would also admonish Beijing for intellectual property theft and manipulation of technology transfer to support its military objectives. Sen. Marco Rubio (Republican-Florida) is the only co-sponsor of the legislation at this time, and it is uncertain whether the bill will be considered by the Banking, Housing and Urban Affairs Committee. Certain aspects of the legislation appear to be redundant to activities already undertaken by USTR, the DOC and the Department of Defense.
Additionally, two bills were introduced on 13 May by Sens. James Lankford (Republican-Oklahoma) and Kyrsten Sinema (Democrat-Arizona) on the federal regulatory process. On the one hand, the Early Participation in Regulations Act (S. 1419) would require federal agencies to publish an advance notice of proposed rulemaking for rules costing more than US$100 million annually. Agencies would have to outline the problems these rules intend to solve and consider public input before regulations are finalised. The Setting Manageable Analysis Requirements in Text Act (S. 142), meanwhile, seeks to improve the effectiveness of major rules in accomplishing their regulatory objectives by requiring federal agencies to set metrics for how rules will be measured for success in the future and use those metrics to review the rules within ten years.