After US plans steeper tariffs on Chinese goods, Congress approves defence spending bill targeting China

The US Congress has passed the $716 billion defence spending bill which has provisions that bar China from participating in the Rim of the Pacific Exercise (RIMPAC), the world's largest international maritime warfare drill, and prevent its companies from accessing certain telecom equipment for defence and security establishments.

The bill not only seeks to strengthen American defence in the Indo-Pacific region and take a number of restrictive measures against China, but also strengthens its military ties with countries such as India, Australia and Japan to collectively address the "aggressive" Chinese military behaviour.

"No country has been more aggressive than China in going after American technology in sectors like aviation, robotics, new energy vehicles, and others where the US has established itself as a global leader," Senator Sherrod Brown said after the John S McCain National Defense Authorization Act (NDAA) for financial year 2019 was passed by the Senate by 87 to 10 votes on Wednesday.

 After US plans steeper tariffs on Chinese goods, Congress approves defence spending bill targeting China

File image of US president Donald Trump and Chinese president Xi Jinping. AP

The bill, which was passed by the House of Representatives in July, and now heads to the White House for President Donald Trump to sign into law, has a bipartisan measure that seeks to strengthen the tools the US uses to block national security threats posed by investments from China and other countries. This provision will ensure that the Committee on Foreign Investment in the United States (CFIUS) is better equipped to handle "emerging threats" from China. "Our bipartisan bill will give CFIUS and our export control agencies tools they need to ensure that these types of investments don't slip through the cracks," Brown said. "We have arrived at a new era where China is now in a leading position in terms of technological strength, defence capabilities, composite national strength and with a military which can fight and win," Senator Marco Rubio said on the Senate floor.

"And you see evidence of these beliefs. You see it in their impressive and massive military buildup and quantum leaps in technological advances. You see how they're working to destroy the current world order that was built by America and our allies, and now seek to replace it with one that they build and one that will be led by them," he said. "That's how they offer loans, not just to get their companies more business, but to give them leverage and footholds in countries and they do so with no questions asked about democracy or human rights," Rubio said.

The NDAA-2019 has Rubio's move that denies Chinese companies access to American small business programmes and "prevents taxpayer dollars from being awarded to the US' biggest economic competitor". Prominent among the several legislative moves which strengthened US posture toward China include provision requiring the Department of Defense to publish photos of Beijing's "offensive military forces deployed on their fake islands", to ensure Americans have the resources to understand the "dangerous role" being played by the Chinese government. It also has a provision to protect the Department of Defense from China's lobbying efforts and impose a prohibition on it from funding Confucius Institutes "used by the Chinese Communist Party to infiltrate American universities for influence and espionage operations".

The provision in NDAA-2019 that bars China from participating in the RIMPAC naval exercises until they cease a range of activities "threatening" US security, was moved by Senator Ted Cruz. It reverses a policy set by former president Barack Obama. The bill preserves the US Commerce Department's export control authority and prohibits the federal government from purchasing products manufactured by Chinese firms ZTE and Huawei in order to ensure security of US military communication systems. It also protects critical technologies necessary for national security from being accessed by US' global competitors and requires further investigation into industrial espionage and cyber theft allegedly conducted by China.

An accompanying conference report expressed concern that sufficient information has not been made publicly available in a timely manner regarding China's reclamation and militarisation activities in the South China Sea. It alleged that China has engaged in provocative military activities elsewhere throughout the Indo-Pacific Region, including the East China Sea, the Taiwan Strait, and the Indian Ocean. As such, it urged the Secretary of Defense to give full consideration to the strategic and public interest in selective declassification of China's activities in the South China Sea and elsewhere in the Indo-Pacific region.

However, the Chinese Embassy in Washington said such provisions in NDAA would undermine the mutual trust between US and Beijing. "We urged the US side to discard the outdated Cold-War and zero-sum mentality," a spokesperson for the Chinese Embassy told The Wall Street Journal.

Whereas, on the other hand, on President Donald Trump's direction, his administration is considering to increase the proposed tariff of 10 percent on import of Chinese products to 25 percent, a top trade negotiator has said. Such a move would more than double its proposed tariff on import of Chinese products worth $ 200 billion.

"The bottom line is the president is going to continue to hold China responsible for their unfair trade practices. This has gone on for long enough and he is going to do something about it," White House Press Secretary Sarah Huckabee Sanders told reporters at her daily news conference on Wednesday.

On 18 June, Trump had directed US Trade Representative Robert Lighthizer to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent, in response to China's decision to cause further "harm" to US workers, farmers, and businesses by imposing retaliatory duties on US goods. This process was initiated on 10 July.

"This week, the president has directed that I consider increasing the proposed level of the additional duty from 10 per cent to 25 percent. The 25 percent duty would be applied to the proposed list of products previously announced on 10 July," Lighthizer said. He said the Trump administration continues to urge China to stop its "unfair practices", open its market, and engage in true market competition. "We have been very clear about the specific changes China should undertake. Regrettably, instead of changing its harmful behaviour, China has illegally retaliated against US workers, farmers, ranchers and businesses,” he alleged.

Lighthizer said the increase in the possible rate of the additional duty is intended at providing the Trump administration with additional options to encourage China to change its "harmful" policies and behaviour, and adopt policies that will lead to fairer markets and prosperity for all of Americans. "The United States has joined forces with like-minded partners around the world to address unfair trade practices such as forced technology transfer and intellectual property theft, and we remain ready to engage with China in negotiations that could resolve these and other problems detailed in our Section 301 report," he said.

Sanders said the United States would like to see the playing field level. "The president, as both he and about 15 members of his administration have said repeatedly, we'd like to see the unfair trade practices stop," she said. "But until that happens, the president is going to hold their feet to the fire. He is going to continue to put pressure on China and he is not going to sit back and allow American industries and American workers to be taken advantage of," Sanders asserted.

With inputs from PTI

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Updated Date: Aug 02, 2018 09:40:45 IST