[CTC] Senate Plans Vote Focused on Semiconductor Portion of China Bill

Fri Jul 15 06:50:16 PDT 2022

https://www.wsj.com/articles/senate-plans-vote-focused-on-semiconductor-portion-of-china-bill-11657827655?mod=Searchresults_pos3&page=1 <https://www.wsj.com/articles/senate-plans-vote-focused-on-semiconductor-portion-of-china-bill-11657827655?mod=Searchresults_pos3&page=1>

Senate Plans Vote Focused on Semiconductor Portion of China Bill
Talks on broader competitiveness legislation have stalled as administration urges quick action

Siobhan Hughes & Eliza Collins 
Updated July 14, 2022 7:42 pm ET

WASHINGTON—Senate Majority Leader Chuck Schumer (D., N.Y.) is telling colleagues to expect a floor vote as early as Tuesday on a stripped-down China competition bill that would include more than $50 billion and investment tax credits to encourage semiconductor production in the U.S. but exclude other provisions, a person familiar with the matter said Thursday.

The decision to hold the vote comes after a briefing from administration officials Wednesday pushing lawmakers to pass semiconductor funding as negotiations over a larger competition bill have stalled, and it remained uncertain whether Republicans would allow a slimmed-down bill to advance in the evenly divided Senate. Republicans have demanded that Democrats end their efforts to pass a partisan prescription-drug and climate bill as a condition for moving the China legislation.

Administration officials urged senators Wednesday to quickly enact legislation boosting U.S. spending on high-tech research and manufacturing. Commerce Secretary Gina Raimondo said that the most important component was about $52 billion to rebuild the domestic semiconductor industry.

Lawmakers “absolutely have to focus on the chips investments,” Ms. Raimondo told reporters after a nearly two-hour closed-door meeting with senators. After the meeting, also attended by Director of National Intelligence Avril Haines and Deputy Secretary of Defense Kathleen H. Hicks, Ms. Raimondo said she thought senators were “coalescing around a ‘chips-plus’ kind of a bill, and if that were to happen, we would be very supportive.”

At a similar meeting Thursday with House lawmakers, Ms. Hicks said she detailed the risks posed by reliance on overseas makers for chips. She said that the Javelin antitank missile systems the U.S. is sending to Ukraine each require over 200 semiconductor chips, while the Columbia-class nuclear submarines, which she described as a critical part of U.S. nuclear deterrence, also rely on advanced chips.

Officials said the U.S. must offer incentives now before companies decide to go elsewhere.

Ms. Raimondo said Intel <https://www.wsj.com/market-data/quotes/INTC> Corp. has grown “squishy” on its plans to build advanced chipmaking facilities in Ohio, announcing last month that it would delay the planned groundbreaking <https://www.wsj.com/articles/intel-delays-groundbreaking-ceremony-for-ohio-plant-amid-uncertainty-over-chips-legislation-11656004874?mod=article_inline>, citing the holdup in Congress. She also noted that GlobalFoundries <https://www.wsj.com/market-data/quotes/GFS> recently announced plans to build a semiconductor factory in France <https://www.wsj.com/articles/chip-giants-to-build-factory-in-france-as-global-supply-race-rolls-on-11657548481?mod=article_inline> after getting incentives from the French government.

“We are out of time,” Ms. Raimondo said. “And if we don’t pass this, we’re gonna wake up. Other countries will have these investments. And we will say why didn’t we do it?”

The larger China competition bill, known in shorthand as USICA in the Senate and “Competes” in the House, has been in flux for the better part of a year, in part because of differences between the Senate and House approaches.

The Senate last June approved a bipartisan $250 billion bill <https://www.wsj.com/articles/senate-approves-250-billion-bill-to-boost-tech-research-11623192584?mod=article_inline> boosting government spending on technology research and development amid rising competition from China and other countries. The House passed its own bill, which included other proposals including a $45 billion program to help boost other supply chains and $2 billion annually to the Global Climate Change Initiative. Negotiators have been trying to blend them.

Negotiations ground to a halt recently after Senate Minority Leader Mitch McConnell (R., Ky.) threatened to block the legislation if Democrats didn’t abandon their separate efforts to pass a partisan economic-policy plan focused on climate change, prescription-drug prices and taxes that Republicans opposed.

This week, Mr. McConnell said that the House should pass the Senate version of the China bill or a stand-alone semiconductor bill. His remarks were taken by Democrats as a sign that he was opening a pathway for the legislation, but it wasn’t known Thursday how many Republicans would support the Schumer proposal. Mr. McConnell’s office declined to comment on where Mr. McConnell stood on a narrower proposal until the details of any bill were released.

Sen. John Cornyn (R., Texas), a McConnell ally, indicated that many Republicans would be inclined to oppose moving forward with any new bill until Democrats ran out of time to pass their economic package. Democrats have until the end of the fiscal year, or Sept. 30, to advance that package through a process called reconciliation that allows legislation to move with a simple majority, rather than the 60 typically required in the Senate.

“We have to pass…at least the Chips Act and I’d be amenable to Chips plus other noncontroversial portions,” Mr. Cornyn said, referring to the semiconductor portion of the legislation. But he said Republicans aren’t going to vote to advance a bill “as long as the Sword of Damocles of reconciliation is hanging out there.”

At least two Republicans, Sen. Shelley Moore Capito of West Virginia and Susan Collins of Maine, said they would vote for a narrower bill. Sen. Dan Sullivan (R., Alaska), who had voted for the version that passed the Senate, indicated that he was open to supporting a narrower measure.

“I’m a big believer that we’ve got to focus a lot on outcompeting China,” said Mr. Sullivan, who said he discussed the proposal with some colleagues during lunch Thursday. “I’d have to see the details,” but “in general, the national security component of this is very important to me.”

House Speaker Nancy Pelosi <https://www.wsj.com/topics/person/nancy-pelosi> (D., Calif.) on Thursday opened the door to advancing a narrower bill centered on semiconductors, provided that some additional elements were included.

Noting that Ms. Raimondo had referenced “chips plus,” Mrs. Pelosi said “that’s what we’re more interested in.”

House Majority Leader Steny Hoyer (D., Md.), coming out of the House briefing, said that “it’s very important for us to get something done. And hopefully we will.”

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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