February 2022 Volume 4

WASHINGTON UPDATE

wholly or in part in the Xinjiang Autonomous Uyghur Region is made with forced labor. Such goods are banned from importation unless the importer can overcome the presumption, which is expected to be a very high hurdle. Indo-Pacific Economic Framework As mentioned above, last fall, with some fanfare, but little detail, the Administration announced that it would be launching talks to establish the Indo-Pacific Economic Framework. Since then, not much more has been shared; what we do know suggests that what is currently contemplated is relatively small ball – likely more akin to a trade and investment framework agreement than a free trade agreement, and certainly not an alternative to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the successor to the Trans-Pacific Partnership. As Commerce Secretary Raimondo said last month, "We absolutely do not envision this to be a traditional trade agreement.” Supply Chain Issues Short- and long-termsupplychain issueswill continue tobea focus for the Administration. Regarding short-term fixes, the Administration will look for various ways to build on their Christmastime success, where the threat of empty store shelves was averted, by identifying and seeking to eliminate supply chain bottlenecks. Given the fact that it is an election year, and this is an issue the public is paying close attention to, you can expect continued high-profile engagement from the President and his cabinet, especially as the topic provides a platform to tout the bipartisan infrastructure deal. As far as long-term supply chain issues, in February, the Administration’s one-year report on supply chain resiliency will be published. This report will build on work from last year’s “Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth” 100-day Administration review of semiconductor chips, lithium-ion batteries, critical minerals, and pharmaceuticals. The one-year report will cover six sectors: defense, public health, information and communications technology, energy, transportation and agricultural commodities and food products. Importantly, the report will make specific policy recommendations designed to bolster supply chain resiliency in each sector. It will be interesting to see how the Administration handles the question of onshoring and in what circumstances and for which sectors/products nearshoring to U.S. allies’ markets will be considered acceptable. You can expect the report and the recommendations to shape the Administration’s approach to supply chain policy for the remainder of President Biden’s term. In the Congress, S.1260, the U.S. Innovation and Competition Act (USICA) is the hot ticket right now. USICA, which passed in the Senate last spring by a vote of 68 – 32, is a multi-faceted China bill designed to give the United States the tools needed to out innovate China and increase the nation’s supply chain resiliency. House consideration of USICA in 2021 was impeded in large part by bandwidth issues attributable to the Build Back Better debate, but the House is now expected to pass an alternative package this

winter, teeing up a negotiation between the House and Senate to draft common text that both chambers would then have to pass.The main threat to passage is election year politics: the longer it takes for the House to pass its alternative bill and for the House and Senate to reconcile their competing versions of the text, and the closer we get to election day, the greater the risk that Republicans may want to avoid giving Democrats a win on an issue that polls so well with voters – getting tough on China – and may try to tank it. It's worth noting that the Senate-passed version of USICA included several trade provisions, including a retroactive extension of Section 301 China tariff exclusions, a reauthorization of the Generalized System of Preferences, and a new Miscellaneous Tariff Bill. House Democratic (and possibly Administration) concerns with all three provisions could jettison the trade title from the final USICA package. However, if the trade title survives, (and even if it doesn’t) expect a push bymembers to include in the final text the Leveling the Playing Field Act, which would strengthen U.S. trade remedy laws and the National Critical Capabilities Defense Act, which would impose new oversight restrictions on outbound U.S. investment. Finally, we could see legislation included in USICA designed to provide some relief on short-term supply chain challenges and associated increased costs, such as H.R. 4996, the Ocean Shipping Reform Act of 2021. So that’s all for now. It may not be the trade agenda that we’re used to, but frankly, at this point we shouldn’t be surprised – we’re five years into this new normal. Regardless, there is a lot going on in the trade space and it’s critical that companies remain engaged. Alex Perkins Principal Mehlman Castagnetti Rosen &Thomas Phone: 202-754-1726 Email: aperkins@mc-dc.com

FIA MAGAZINE | FEBRUARY 2022 5