The Competition before the Competition. House Releases America COMPETES Act of 2022, countering the U.S. Innovation and Competition Act.

Feb. 1, 2022

The legislative efforts at reinvigorating the U.S. tech industry and bolstering domestic development in the face of an increasingly competitive China advanced this week, with the House releasing the America COMPETES Act of 2022.

The America COMPETES Act of 2022, which stands for the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act, is the House counterpart to the U.S. Innovation and Competition Act (USICA), passed by the Senate in June 2021. The competing legislative proposals, which after House vote, are likely to be the subject of conferences between the two chambers in the near future, are largely united in purpose though predictably differ in approach. Commonalities include $52 billion in funding for the recent semiconductor legislation (the CHIPS Act) and funding for the National Science Foundation, and trade provisions renewing the Generalized System of Preferences (GSP) and authorizing a new Miscellaneous Tariff Bill.

The House included in the trade bill various provisions that are certain to provoke partisan debates. The House Democrats have proposed modernizing and reauthorizing the “politically sensitive” Trade Adjustment Assistance (TAA), providing for certain automatic extension of income support under the program and more expansive outreach of the program to historically underserved communities. While TAA seems to be a priority for the trade subcommittee in House Ways & Means, no such modernization or reauthorization is included in the trade title of the USICA.

Additionally, House Dems proposed a renewed Generalized System of Preferences with updated eligibility criteria addressing labor violations, environmental concerns, human rights issues, and equitable economic development. The updated eligibility criteria put forward by the House goes far and beyond criteria envisioned by the Senate and faces severe push back from House Republicans. Such debates as to the scope and strategy of preferential programs are not new. Last time we really heard the issues fleshed out though, it was in the context of a Republican majority. The Democratic majority does not guarantee but makes it more likely that the progressive criteria for preferential entry under GSP materializes.

Notably, in contrast to the USICA, the House trade bill does not include any language that would require the U.S. Trade Representative to promptly re-open a broad-product exclusion process for Section 301 duties on Chinese goods. This is curious given that a large bipartisan group within the House urged USTR Katherine Tai to immediately take such measures in a letter dated January 20, 2022. The trade bill from the House also seeks to reform the de minimis program, with an eye towards low-value goods coming from non-market economies and calls for additional barriers to digital trade and increased reporting requirements on Chinese trade practices. Some House Republicans have argued that the bill does not go far enough to address China’s unfair trade practices and acquisition of critical technologies.

The full House of Representatives is expected to vote on the new proposal following the members’ return from recess on Jan. 31. Ultimately, the Democratic majority does not need Republican support to send the America COMPETES Act to a conference committee, though such report will be crucial for the Bill overcoming any potential filibuster in the Senate when up against USICA. For a more detailed summary of the America COMPETES Act, beyond the trade related provisions, see the fact sheet released by the House.

For any questions on legislative efforts of America COMPETES Act or USICA, and updates to trade practices, please contact an attorney at Barnes, Richardson & Colburn LLP.