The U.S.-China Economic and Security Review Commission offered 28 recommendations in its annual report to Congress, including those listed below related to bilateral trade. The commission is known for its generally hardline stance on U.S.-China relations and typically calls for relatively aggressive U.S. actions in response to associated challenges (for examples, see last year’s report).
Export controls. To address the evolving national security challenges posed by China’s “systematic and persistent evasion of U.S. export controls and sanctions,” Congress should consider legislation establishing a consolidated economic statecraft entity that incorporates (at a minimum) the Bureau of Industry and Security, the Office of Foreign Assets Control, the Bureau of International Security and Nonproliferation’s Office of Export Control Cooperation, the Defense Technology Security Administration, and other appropriate organizations across the executive branch. This entity should be equipped with enforcement authorities comparable to those wielded by the Treasury Department in the financial sanctions sphere, including authorities to pursue aggressive enforcement against violators, as well as authority to implement robust verification systems and supply chain tracking technologies. (A similar idea was raised during the Obama administration but did not result in any institutional changes.)
Congress should also strengthen the ability of BIS to manage strategic competition with China in ast-moving technology sectors, such as leading-edge semiconductors used in artificial intelligence applications, including by (1) directing BIS to use existing authorities to require tracking technology for export-controlled advanced chips to detect and combat diversion to countries of concern, (2) creating a license exception for renting cloud access (instead of allowing physical access) to export-controlled AI compute infrastructure with performance capabilities above a certain threshold to entities in countries of concern, (3) directing the administration to establish a systemic, integrated intelligence unit embedded at BIS and to report on the additional resources, authorities, capabilities, and subject matter experts needed to anticipate and counter evasion strategies, (4) directing BIS to toughen the license application review standard for export to China or a Chinese entity from “presumption of denial” to “policy of denial,” and (5) establishing a whistleblower incentive program for private citizens providing information on export control violations.
Further, Congress should (1) direct BIS to require heightened due diligence for sales of any common high priority list items to China or Hong Kong, given China’s role as primary provider of such items to Russia, (2) provide additional resources, technology, and staff to BIS and OFAC for enforcement of export controls and sanctions related to Hong Kong, and (3) create a new standing cross-agency enforcement task force with respect to sanctions and export control evasion through Hong Kong, including enforcement personnel relating to money laundering, financial sanctions, and export controls.
Trade preferences. Congress should enact legislation codifying a 2020 executive order determining that Hong Kong is no longer sufficiently autonomous to justify differential treatment in relation to China under U.S. law, including by suspending Hong Kong’s special trade preferences.
Trade remedies. Congress should develop legislation to provide for cooperation on and mutual recognition of unfair trade practices. Procedures could provide for a voluntary, expedited mechanism to support coordinated application of trade remedies against unfair trade practices, including antidumping and countervailing duty orders. Under this procedure, the U.S. and partner countries could recognize that an AD/CVD finding is a finding of an unfair foreign trade practice, and the U.S. could then request that a third-party country take action within its own market to ensure a coordinated response to that practice, and vice versa.
Autonomous systems. To address the challenges from China’s development and deployment of autonomous systems (humanoid robots, industrial automation, and unmanned systems, which “represent the physical embodiment of artificial intelligence”), the Department of Commerce should investigate Chinese robotics dumping under applicable trade remedy laws, lead international standards development, and expand export controls on advanced autonomous technologies to China.
Supply chains. The DOC’s Supply Chain Center should be required to provide an annual report identifying a set of goods and materials deemed critical to national defense and/or the functioning of the civilian economy, detailing trends in U.S. dependence on China for those goods and materials, and reporting on the status of policies and programs intended to limit that dependence.
Drugs. Congress should pursue legislation that (1) expands the authority of the Food and Drug Administration to require drug manufacturers to report volume and ultimate origin of active pharmaceutical ingredients and key starting materials used in drugs consumed in the U.S., including sourcing of Chinese content through third countries, and (2) directs the FDA to identify regulatory authorities and deficiencies to support or incentivize the use of APIs and KSMs from sources with no China origin.
Energy. Congress should prohibit the import of energy storage systems with remote monitoring capabilities that are manufactured by or made with technology licensed from Chinese entities.
Investment. Congress should establish a rebuttable presumption of denial with respect to foreign investment in U.S. companies that could support the acquisition by China or other foreign adversaries of the capabilities necessary to attain self-sufficiency in critical technologies or otherwise impair U.S. economic or national security.
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