8 Jan 2019
Senate Bills Would Tighten Restrictions on Mainland China
Sen. Marco Rubio (Republican-Florida) re-introduced legislation on 4 January aimed at correcting the current imbalances in the U.S. trade relationship with mainland China. Most notably, the legislation would prohibit the sale of national security sensitive technology and intellectual property to the mainland and increase taxes on multi-national corporations’ income earned in the mainland at a rate similar to the lost value of stolen intellectual property and technology.
The legislation would also (i) prepare duties on, and impose mainland Chinese investor shareholding caps on U.S. companies producing, goods targeted by the Made in China 2025 plan; (ii) update an income tax treaty signed in the 1980s and tax mainland China on its investments in the United States, including its holdings of national debt; and (iii) prohibit the U.S. federal government or subsidiaries/contractors from purchasing telecommunications equipment or services from Huawei and ZTE. Sen. Rubio originally introduced the so-called Fair Trade with China Enforcement Act in May 2018 but the bill was not considered by the 105th Congress.
Sens. Rubio and Mark Warner (Democrat-Virginia) introduced a separate bill on 4 January to help combat tech-specific threats to U.S. national security by creating an office of critical technologies and security at the White House. This office would be responsible for co-ordinating across agencies and developing a long-term, whole-0f-government strategy to protect against state-sponsored technology theft and risks to critical supply chains.
According to a press release issued by Sen. Warner’s office, the legislation would guarantee that there is a federal entity responsible for proactively co-ordinating inter-agency efforts and developing a national strategy to deal with the aforementioned challenges to U.S. national security as well as long-term technological competitiveness. The new office would be directed to co-ordinate and consult with federal and state tech and telecom regulators, the private sector, non-governmental experts and academic stakeholders, and key international partners and U.S. allies to ensure that every available tool is being utilised to safeguard the supply chain and protect emerging, foundational and dual-use technologies.
The office would also be responsible for raising awareness of these threats and improving the overall education of the American public and business leaders in key sectors about the threats to U.S. national security posed by the improper acquisition and transfer of critical technologies by foreign countries and reliance on foreign products – such as those manufactured by mainland Chinese telecom companies ZTE and Huawei – that the lawmakers claim jeopardise the overall security of private sector supply chains.