House Appropriations Bill Targets China Issues

US-China Business Council

The US House of Representatives is expected next week to vote on FY15 Commerce-Justice-Science (CJS)appropriations bill, which will fund many of the United States’ trade and commercial functions. The House Appropriations Committee report on the measure included several China-specific provisions, some of which repeat previous funding restrictions, but others of which are new.
 
Returning restrictions proposed by House appropriators include limits on the Office of Science and Technology Policy’s (OSTP) bilateral activities with China and restrictions on procurement of IT systems manufactured or assembled in countries deemed to be “cyber threats,” particularly China. The report also includes a requirement that bars SelectUSA, which works to promote foreign investment in the United States, from conducting “outreach activities to state-owned entities,” a restriction imposed in FY14 appropriations – the first year SelectUSA received a specific appropriation for its work.
 
The report also includes a new requirement that the International Trade Commission conduct a study on how a bilateral investment treaty (BIT) with China would “help increase production by US-invested enterprises in China to serve the US market,” with a particular focus on “the impact that a treaty will have on the current estimate that 60 percent of Chinese exports to the U.S. are produced by foreign-invested enterprises operating in China.” US Bureau of Economic Analysis data indicates that only 7% of sales by US-majority owned affiliates in China come back to the US, so such a study would do little to assess the impact of a US-China BIT since only a small portion of those exports comes from American companies, nor would such an assessment evaluate the potential for market openings in China’s services sector. 
 
The US Senate’s Appropriations Committee has not yet considered FY15 CJS funding, but its versions of the measure frequently do not include similar provisions to those from the House. Many of these measures remain in final funding bills after the House and Senate versions are reconciled during conference committee work.
 
The US-China Business Council has regularly raised concerns about China-specific provisions in appropriations bills. USCBC will be working to address these concerns, particularly in trying to ensure that any analysis of a US-China BIT provide an accurate, balanced assessment of its potential impact on the US economy.