February 2024 Volume 6

WASHINGTON UPDATE

House China Committee Releases Policy Recommendations By Omar S. Nashashibi

When the new 118th U.S. Congress convened in early 2023, the House of Representatives created the Select Committee on the Strategic Competition between the United States and the Chinese Communist Party. The Committee on China, as it is known around Capitol Hill, has held more than a dozen hearings in 2023 on a range of issues from forced labor to Taiwan and emerging technologies. Thirteen Republican and eleven Democratic members of the U.S. House serve on the temporary Select Committee, though members of both parties largely took nonpartisan positions in their approach to policy towards China. The Forging Industry Association worked with members of the Committee over the past year, including with its Chairman, Mike Gallagher (R-WI). FIA continues to press lawmakers to keep pressure on the Biden administration to retain the tariffs on imported Chinese forgings and the Committee continues to play an important role in that effort. This is not a typical Standing Committee or a permanent committee. It does not have the authority to draft and pass legislation that would go to the floor of the U.S. House. The Committee can hold hearings, call witnesses, request information from federal agencies, but it cannot move a bill to the floor. This important distinction has led the Committee to issue a series of reports and recommendations over the past year. The most recent, and most far reaching, is a report released December 12, 2023, containing nearly 150 policy recommendations. Titled, “Reset, Prevent, Build: A Strategy to Win America's Economic Competition with the Chinese Communist Party,” the Committee members moved to adopt the recommendations in the report after several months of deliberation and input.

The report calls for three key pillars: • RESET: Reset the Terms of Our Economic Relationship with the People's Republic of China • PREVENT: Stem the Flow of U.S. Capital and Technology Fueling the People's Republic of China's Military Modernization and Human Rights Abuses • BUILD: Invest in Technological Leadership and Build Collective Economic Resilience in Concert with Allies Among the premises of the report is an issue that is sure to receive the most attention in the coming months – China’s accession to the World Trade Organization and the U.S. Congress in 2000 granting of Permanent Normal Trade Relations Status. While the Committee stopped short of calling for an immediate recission of China’s PNTR status, sources in Washington, D.C. indicate that Committee members held extensive discussion over whether to recommend such an immediate move and its impact on farmers among other sectors. Instead, they recommended a slower implementation rather than immediate withdrawal. Permanent Normal Trade Relations, or PNTR, allows imports from that nation to enter the U.S. either duty-free, at a lower duty rate, or be listed in the Special Column 1 category with a specific low duty rate or no duty applied. When reading the Harmonized Tariff Schedule tables, Column 2 under Rate of Duty currently applies to Belarus, Cuba, North Korea, and Russia which can face tariffs reaching 90%. The Committee’s report says that “Congress should move the People’s Republic of China to a new tariff column,” and that “this shift should be phased in over a relatively short period of time to give our economy the time necessary to adjust without avoidable disruptions.”

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FIA MAGAZINE | FEBRUARY 2024