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Sen. Schumer drops effort to attach China bill to Pentagon measure

United States Senate Majority Leader Chuck Schumer (D-NY) offers remarks following the Democratic Senate luncheon in the Hart Senate Office Building on April 27, 2021, in Washington, D.C. (Rod Lamkey/CNP/Zuma Press/TNS)

Senate Majority Leader Chuck Schumer said he is abandoning efforts to attach his $250 billion legislation aimed at countering China’s rise to the annual defense bill amid stiff opposition from House Democrats and Senate Republicans.

The decision is another twist in the drawn out journey through Congress of the China bill, which includes $52 billion in incentives and grants to foster semiconductor manufacturing in the U.S. The bill passed the Senate in June by a wide bipartisan margin, but it’s been stuck in limbo as the House debated its own approach to bolstering U.S. competitiveness as China’s economic and diplomatic influence has grown.

Schumer and Speaker Nancy Pelosi, pointing to resistance from Senate Republicans, announced plans Wednesday night to negotiate a final bill addressing China that could pass both chambers.

“The House and Senate will immediately begin a bipartisan process of reconciling the two chambers’ legislative proposals so that we can deliver a final piece of legislation to the President’s desk as soon as possible,” they said in a joint statement.

The two Democratic leaders didn’t say how quickly that would happen. They also said in their statement that “while there are many areas of agreement on these legislative proposals between the two chambers, there are still a number of important unresolved issues.”

With the China legislation off the table, the Senate Wednesday night voted to move ahead with the National Defense Authorization Act — Congress’ must-pass defense policy bill.

The China measure’s supporters, in statements, portrayed the development as a victory. Senator Todd Young, an Indiana Republican and a co-sponsor, said despite the delays “we finally took a step forward.” And Mark Kelly, an Arizona Democrat, called it “significant progress” toward “boosting American microchip manufacturing.”

John Neuffer, the president of the Semiconductor Industry Association, praised Pelosi and Schumer in a statement, saying “we are hopeful today’s agreement between leaders in the House and Senate paves the way for swift approval of competitiveness legislation.”

Schumer’s bid to add the China measure to the defense bill as part of a package of non-controversial amendments was an effort to break the logjam with the House over differences with similar legislation in that chamber. But some GOP senators, including James Inhofe of Oklahoma, the top Republican on the Armed Services Committee, wanted a separate vote on the China bill as an addition to the defense measure. That threatened to delay action on both bills.

Schumer’s plan also ran into a procedural obstacles with the House over provisions of the bill, known U.S. Innovation and Competition Act, that deal with trade and finance. Removing that language would cost Republican support for adding it to the defense bill, thus making it impossible to pass the combined legislation.

In addition to impediments in the Senate to passing the competitiveness bill on the defense legislation, key House members also opposed that tactic.

House Foreign Affairs Committee Chairman Gregory Meeks, whose committee has approved a bill to counter China, said Tuesday wanted the House to finish its own version rather than rubber-stamp the Senate’s legislation.

“I am not going to be held to the Senate just coming with their priorities and our priorities not being included therein,” Meeks said. “So therefore we need to pass our bill.”

In addition to $190 billion in authorized spending to bolster U.S. research and development, USICA also includes the $52 billion in emergency appropriations to help bring semiconductor manufacturing back to the U.S.

The incentives for chip production, which are backed by President Joe Biden, have been closely watched by officials at semiconductor manufacturing companies, some of whom say it would be impossible to build new chip plants in the U.S. without those incentives. The discussions in Washington have unfolded as global chip shortages have hindered automobile manufacturers and other industries.

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