US leaders unveil chips and China competition bill

US President Joe Biden delivers a semiconductor chip as he speaks before signing an executive order, aimed at addressing a global shortage of semiconductor chips, in the State Dining Room of the White House in Washington, United States, February 24, 2021. REUTERS/Jonathan Ernst

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WASHINGTON, Jan 25 (Reuters) – Leaders of the U.S. House of Representatives on Tuesday unveiled a bill aimed at boosting U.S. competitiveness with China and supporting the U.S. chip industry, including 52 billions of dollars to subsidize semiconductor manufacturing and research.

President Joe Biden’s administration is pushing to persuade Congress to approve funding to help boost U.S. chip production as shortages of key components used in automobiles and computers have exacerbated supply bottlenecks. supply chain bottleneck.

House Speaker Nancy Pelosi said the 2,900-page bill, called the America Competes Act, would “invigorate” chip investment and boost U.S. manufacturing and research capacity. while advancing U.S. competitiveness and leadership.

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The Senate last year passed the U.S. Innovation and Competition Act, which provides $52 billion to increase U.S. semiconductor production and authorizes $190 billion to bolster U.S. technology and research to compete with China.

The House bill has key differences from the Senate version. It does not contain the $190 billion for technology and research, but includes $45 billion to support supply chain resilience and the manufacturing of essential goods, industrial equipment and manufacturing technologies.

The funding could be used to “relocate a manufacturing facility out of countries of concern, including countries that pose a significant threat to the economy or national security of the United States,” the Chamber said.

The government could use funds to build up stocks to provide “the necessary reserves to maintain the availability of essential goods during supply chain shocks”.

The House is expected to resume its version next week. If passed, the leaders of the two chambers will negotiate to resolve differences.

“We are in a frantic race for the jobs of the future and to protect our nation’s global technological advantage,” said Senate Democratic Leader Chuck Schumer.

President Joe Biden said the House and Senate proposals represented the “transformational investments in our industrial base and in research and development” that helped propel the United States’ global economic leadership into the 20th century.

The House bill also includes a number of trade provisions and would impose additional sanctions on China for its treatment of Uyghurs and offer refugee status to eligible Hong Kongers. The Chinese Embassy in Washington did not immediately comment.

The bill also reauthorizes and revises trade adjustment assistance programs, which help workers whose jobs or wages are affected by imports, and reforms the Generalized System of Preferences, a preferential tariff system for imports.

In addition, it would create government scrutiny led by the U.S. Trade Representative to potentially block certain overseas investments made by U.S. companies in China and certain other countries.

Opposition from business groups led the Senate to strike out similar language last year. The absence of such a measure, intended as a safeguard to help prevent U.S. taxpayer funds supporting the semiconductor and other critical technology industries from being redirected to foreign competitors, has been considered by some lawmakers. as a serious flaw in the Senate bill.

The House bill would examine “the relocation of critical capabilities and supply chains to foreign adversaries and non-market economies, such as China and Russia.”

It would also authorize $3 billion to fund “a national solar manufacturing supply chain,” supporting the construction of new solar manufacturing capacity.

The bill would also give the Commerce Department the ability to impose tariffs if a government grants subsidies to a company operating in another country, in an effort to respond to the US Belt and Road Initiative. China.

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Reporting by Patricia Zengerle, David Shepardson and Michael Martina; edited by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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