House Republican Bill Would Require Sanctions, Restrict Outbound Investments

House Republican conservatives introduced a bill to restrict outbound investment in Chinese tech companies, require the administration to impose sanctions "on entities knowingly engaging in a pattern of theft of American IP," and impose sanctions on "Chinese officials and entities until they have stopped the flow of deadly fentanyl, and we’ve determined that fentanyl overdoses/deaths have dropped by 98%." It also said the administration must sanction "Chinese apps that steal U.S. citizens’ data and protect personal health data from China."

The Countering Communist China Act, introduced late last week by Reps. Kevin Hern, R-Okla., and Joe Wilson, R-S.C., has 43 Republican co-sponsors.

Along with new sanctions, the bill calls for prohibitions and notification requirements for U.S. outbound investments in certain technology sectors of several "countries of concern" -- China, North Korea and Iran. The restrictions would apply to investments in an initial set of seven foreign technology sectors: the semiconductor, artificial intelligence, quantum technology, hypersonics, supercomputing, biotechnology and satellite communication industries. The current outbound investment restrictions being drafted by the Treasury Department focus just on semiconductors, AI and quantum (see 2402080013).

The bill also addresses import issues, such as ending Permanent Normal Trade Relations with China and urging the U.S. trade representative to negotiate free trade agreements with Taiwan, the Philippines, Indonesia, Thailand, Malaysia, New Zealand and the U.K. so that importers can have alternatives to Chinese suppliers at a lower cost.

"Because of China’s rapid rise on the global and economic stage, and their refusal to stop committing disgusting and well-documented human rights abuses, it’s time to readdress our trade relationship with Beijing," Hern said in a summary of the bill. Wilson said he wants to "root out [the Chinese government's] malign influence in our education system and our economy.”

Although the bill is unlikely to move in Congress this year, given the two-seat majority for Republicans in the House, and differing views about how much the U.S. and Chinese economies need to be detangled, outside think tanks that praised the proposal are aligned with former president Donald Trump's foreign policy views, so it may be a preview of how policy could change in a second Trump administration.

The America First Institute's China Policy Initiative Director Adam Savit said the institute supports the legislation. "The measures in this bill represent a comprehensive approach to combating the CCP’s relentless efforts to undermine American security and prosperity at home and abroad," he said, noting that it would end normal trade relations with China, hold China accountable for "malicious and unfair trade practices that hurt American companies" and creates new authorities "to hold Chinese officials personally accountable for the fentanyl poisoning of Americans."

The summary of the bill also notes that its passage would prohibit the USTR "from supporting, allowing, or facilitating TRIPS waivers at the World Trade Organization to waive intellectual property rights."

James Edwards, executive director of Conservatives for Property Rights, praised that element of the bill in the press release announcing its introduction. He said the bill "acknowledges that America’s industrial competitiveness is at stake when adversaries -- namely China -- can freely break the rules, conduct espionage and plunder American private property -- particularly intellectual property." The legislation also "reins in the Patent Trial and Appeal Board from serving as a weapon for Chinese and Big Tech’s repeated attempts to invalidate patents," Edwards said. "These measures would improve patent reliability. Reliable U.S. patents would curb China’s ability to vacuum up U.S. IP."

Several think tanks said the U.S. and China are in a Cold War. Hern, who leads the conservative Republican Study Group, said: "For years, Congress has been operating under the guise of friendship with -- and dependence on -- China, but the reality is that the CCP [Chinese Communist Party] poses a greater threat to American sovereignty than any modern adversary."

Morgan Ortagus, a State Department spokesperson during the Trump administration, said: "America cannot be complacent about the rising threats from the Chinese Communist Party. Urgent action is needed on every facet of the U.S.-China relationship, and this initiative provides a roadmap to once again give America the upper hand."