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Sen. Cotton, Rep. Gallagher introduce bill to stop Chinese companies from exploiting lobbying exemptions

China's President Xi Jinping. (Alexei Nikolsky/Russian Presidential Press and Information Office/TASS/Abaca Press/TNS)
May 21, 2021

On Friday, Sen. Tom Cotton (R-AR) and Rep. Mike Gallagher (R-WI) introduced a bill that would close exemptions that have allowed lobbyists to provide “private and nonpolitical representation” of trade and commercial interests for Chinese companies.

The bill specifically states that it would close a provision in the 1938 Foreign Agents Registration Act (FARA) that exempts those lobbying on behalf of foreign businesses in a non-political capacity. The draft bill, states that exemption will no longer apply to “an agent of a covered Chinese business organization.” The two Republican lawmakers reasoned with their bill, that because Chinese businesses often operate on behalf of the ruling-Chinese Communist Party (CCP), they should not be treated differently from Chinese government agencies, which are not exempted from lobbying registration rules.

Cotton said, “Chinese companies—particularly powerful ones—are all arms of the Chinese Communist Party and remain ultimately under state control. It’s time our laws recognize that reality. Our bill will close legal loopholes and force lobbyists for Chinese companies to register as foreign agents.”

“Any Chinese company important enough to register lobbyists in Washington, D.C. is significant enough to be co-opted at will by the Chinese Communist Party,” said Gallagher. “This bill helps close existing loopholes that allow lobbyists to avoid the enhanced scrutiny that comes with the Foreign Agents Registration Act and will reduce the ability of the Chinese Communist Party to use the swamp against us.”

In 2020, Cotton and Gallagher wrote to the Department of Justice under then-President Donald Trump’s administration, raising concerns that lobbyists for Chinese companies are only subjected to the less stringent disclosure requirements of the Lobbying Disclosure Act (LDA) rather than the stricter FARA rules.

“A number of individuals and firms representing these Chinese military companies in our nation’s capital have registered under the Lobbying Disclosure Act (LDA), not the Foreign Agents Registration Act (FARA),” the lawmakers wrote then-Attorney General Bill Barr in September of 2020. “These lobbyists may claim that they do not represent a foreign government or foreign political party, and therefore are eligible for the LDA exemption to FARA. However, the U.S. government has determined that these Chinese firms are extensions of the armed forces of the People’s Republic of China. That begs the question: Does the LDA exemption to FARA still apply in this case? “

“Alternatively, these lobbyists for Chinese military firms may be relying on FARA’s ‘commercial exemption’ to justify registration only under the LDA,” the lawmaker’s continued. “The Department of Justice’s (DOJ) materials on FARA note that the ‘commercial exemption’ does not apply when the lobbying activities ‘are directed by a foreign government or political party, or they directly promote the public or political interests of the foreign government or political party.’ With the formal U.S. government determination that these firms are Chinese military companies, does FARA’s ‘commercial exemption’ clause still apply to these firms?”

Chinese companies operating within the U.S. have been drawing increased scrutiny in recent years. A provision of the 2019 National Defense Authorization Act (NDAA) barred U.S. government offices from using technologies developed by China’s Huawei and ZTE. The Trump administration pursued additional steps to prevent U.S. investments with Huawei, and Trump even blocked the U.S. chipmaker Intel from selling its products to Huawei.