Posts from Elizabeth Brotherton-Bunch

The “phase one” trade deal between the United States and China is… probably done?

President Trump on Friday took to Twitter to announce the deal, which he called “very large” and “an amazing deal for all.” But specific details about the agreement remain unclear — and what is out about it doesn’t seem to be all that great.

But while political pundits are laser-focused on how the deal will impact things like tariff rates and agricultural purchases, evidence is mounting that China is adding “a sickening new dimension” to one of the world’s most serious human rights crises.

And although U.S. trade negotiators have strategically stayed quiet about China’s human rights abuses in an effort to get a trade deal done — and although China really does not like to talk about them — given that these abuses impact the global supply chain and overall trade flows… maybe it’s time to start talking about them?

It’s long been reported that China has placed at least 1 million Uighurs and other Muslim ethnic minorities from the Xinjiang region into concentration camps, which China says are “vocational training centers.”

But in November, The New York Times published a bombshell report that included 400+ pages of internal Chinese Communist Party documents that showcased just how orchestrated this effort is — even Chinese leader Xi Jinping is implicated. Other leaks from inside the camps provide a glimpse into life inside, describing how China uses physical and psychological torture in an attempt to rid the Uighurs and other detainees of their language, religion and culture.

Sadly, it doesn’t appear that things improve for these prisoners once they leave the camps, either. A new paper from Adrian Zenz, a senior fellow in China Studies at the Victims of Communism Memorial Foundation, finds that China is placing “limited but apparently growing numbers of detainees… into different forms of forced labor.” Zenz writes:

“19 cities and provinces from the nation’s most developed regions are pouring billions of Chinese Yuan (RMB) into the establishment of factories in minority regions. Some of them directly involve the use of internment camp labor, while others use Uyghur women who must then leave their children in educational or day care facilities in order to engage in full time factory labor. Another aspect of Beijing’s labor schemes in the region involve the essentially mandatory relocation of large numbers of minority workers from Xinjiang to participating companies in eastern China.

“Soon, many or most products made in China that rely at least in part on low-skilled, labor-intensive manufacturing, may contain elements of involuntary ethnic minority labor from Xinjiang.”

Zenz’s entire paper is worth a read, as it makes clear the extent to which China is using forced labor in many of its factories. But Zenz isn’t the first to highlight this problem — there long has been evidence that China is using forced labor to make many of the products that line our store shelves, particularly in textiles.

The New York Times reported on these forced labor factories about a year ago, and around that time the Associated Press even connected one of the factories to a U.S. sportswear supplier. Companies from Kraft Heinz and Coca-Cola to Adidas and Gap also run supply chains through Xinjiang, meaning that it is plausible, if not certain, that at least some of their products have been made in these factories.  

We’ve been so lost in the hustle and bustle of the holiday season that we didn’t get a chance to talk about an important bipartisan bill introduced last month that aims to improve a key piece of America’s infrastructure — and create good-paying jobs, too.

Reps. Cheri Bustos (D-Ill.) and David McKinley (R-W. Va.) put forth the “Buy America for Drinking Water Extension Act” on Nov. 20. The legislation would permanently ensure that all iron and steel products used for projects in the Drinking Water State Revolving Fund are “made entirely in the United States.”

The revolving fund is a federal-state partnership that is used to finance projects to improve drinking water systems nationwide. Between 1997 and 2018, the fund has given more than $38.2 billion in low-interest loans to more than 14,500 projects, helping provide safe drinking water to millions of Americans.

Still, more needs to be done. Like most of America’s infrastructure, our nation’s drinking water infrastructure is in terrible shape. The American Society of Civil Engineers gave it a “D” rating in 2017, noting that the 1 million miles of pipes that deliver water to our homes in businesses were laid in the early-to-mid 20th century.

Given that these pipes have a lifespan of 75 to 100 years, it’s time to get to work modernizing these systems. And when we do, it’s important to also make sure our tax dollars are reinvested back into our communities, creating jobs and boosting the local economy, which is the goal of the new legislation.

Although they might at first seem like separate issues, jobs and infrastructure are closely linked. It’s no secret, after all, that the places that were hit hardest by manufacturing job loss and industrial flight in the late 20th century also watched their infrastructure crumble.

Perhaps the most famous example of this is Flint, Michigan.

Sens. Tammy Baldwin (D-Wis.), Shelley Moore Capito (R-W. Va.), Debbie Stabenow (D-Mich.) and Bill Cassidy (R-La.) introduced a new bill on Tuesday to “crack down on unfair trade cheating from nonmarket economies like China.”

O.K., we know: We need to be more specific here.

The Senators want to give the Commerce Department more power to hold China and other countries accountable when they evade anti-dumping (AD) and countervailing duties (CVD).

For those unfamiliar with this area of U.S. trade law, the United States issues AD/CVD duties when imported products are found to be sold below market value or to have received significant government subsidies when being produced. The idea is to level the playing field a bit for American workers and companies, who operate in a free and open market.

As the Senators note, AD/CVD rules are pretty common, and most countries follow them without issue. But nonmarket economies — especially China — work overtime to dodge these duties, engaging in “a sophisticated and government-backed effort to avoid the duties required.”

For example, China “alters their products slightly to get around the rules, violating the spirit of the law, if not the letter.” It isn’t individual Chinese companies doing this, remember: China uses “its vast government resources” to ensure these firms are able to evade U.S. trade laws and avoid the duties.

As Congress continues to work on legislation to ban China’s government-owned, controlled or subsidized companies from receiving U.S. tax money to build rail cars and buses, local lawmakers are taking on the issue in their own states.

The latest instance is in New York, where state Assemblymember Michael Cusick (D) is teaming up with state Sen. Diane Savino (D) on a bill to prevent foreign state-owned enterprises, including the China Railway Rolling Stock Corporation (CRRC), from using New York tax money on mass transportation projects.

Like federal lawmakers who have championed this issue, Cusick and Savino say they are worried about the security threats posed by allowing a firm with direct ties to the Chinese state apparatus to build critical infrastructure systems.

They point to recent testimony from former Department of Homeland Security Secretaries Michael Chertoff, Janet Napolitano and Jeh Johnson, who all specifically mentioned critical infrastructure when discussing cyber security threats at a Senate Homeland Security and Governmental Affairs committee field hearing in New York.

“There is wide consensus that allowing CRRC and other state-owned enterprises to have open access to our critical rail infrastructure and mass transportation systems is ill-advised,” Cusick said in a statement. “These contracts create major cybersecurity vulnerabilities in the U.S. The goal should be risk avoidance, not mitigation.”

There’s little doubt about China’s intentions with CRRC.

New research from Radarlock examined the company’s deep ties to China’s government, communist party and military, concluding that CRRC is a key part of China’s plan to dominate global industry. But it’s more than that – CRRC also obtains technology for potentially nefarious purposes, handing everything it gathers from its work abroad to the Chinese state and military.

Cusick and Savino say they are also worried about CRRC’s economic impact, noting that CRRC has nabbed contracts in major cities like Chicago and Los Angeles by “drastically underbidding other railcar manufacturers and using non-market tactics.”

The issue is of critical importance in the Empire State because New York City is looking to upgrade its iconic subway system. CRRC won a 2018 Metropolitan Transit Authority (MTA) contest to design new subway cars – a development that quickly drew the ire of Democratic Senate Leader Sen. Chuck Schumer, who hails from New York.

We cover a lot of ground here at the Alliance for American Manufacturing — Trade! Infrastructure! Tom Cruise! — but there’s nothing that gets us more excited than learning about an American-made product. Whether it’s a small piece of jewelry or a big piece of steel, we love highlighting the amazing workers and companies who manufacture their products in the United States.

After all, a lot of hard work — and often extra expense — goes into that “Made in USA” label. U.S. companies and workers must take care to ensure that “all or virtually all” of their products are made in the United States.

When something is labeled as “Made in USA,” many consumers recognize the effort that is behind it, along with the millions of jobs that American-made products support. The label can be a deciding factor when someone is deciding on what product to buy.

Made in USA means something.

And while nothing gets us more excited than a Made in USA product, nothing gets us more fired up than when a company knowingly mislabels its product as Made in USA. What’s worse is that these cheaters have been getting away with it.

It happens more than you think. In 2018, the Federal Trade Commission (FTC) caught some pretty brazen Made in USA cheats:

• One company sold military-themed backpacks – including on military bases! – with an “American-made” label.  The FTC found that the vast majority of that company’s products were made in China or Mexico.
• Another company made hockey pucks, and even positioned itself as “the all-American alternative to imported pucks.” All of the company’s pucks were imported from China.
• A direct-to-consumer mattress firm advertised its mattresses as assembled in the United States. The mattresses were made in China.

But in all three of these blatant cases of Made in USA cheating, the FTC politely asked these bad actors to stop this deceitful behavior.

The cheaters paid zero fines — they kept every penny they made deliberately deceiving consumers. No notices to consumers were issued. The companies didn’t even have to admit any wrongdoing!

What’s the point in even having a strong “Made in USA” standard if it isn’t enforced?

The International Brotherhood of Teamsters weighed in on the National Defense Authorization Act (NDAA) last week, sending the chairpersons and ranking members of the Senate and House Armed Services Committees a letter outlining their priorities for the legislation.

First thing on the list? Make sure that the final legislation includes language from the Senate version of the bill that would prohibit “the use of tax dollars from supporting Chinese rail car and bus companies.” Here’s General President James P. Hoffa with more:

“As the proud representatives of American workers who both manufacture and operate thousands of American-made buses, we believe that American companies must be allowed to compete on an even playing field, free from Chinese interference into our transit system and manufacturing base.”

The Teamsters’ support for banning both rail cars and buses is significant. The Senate’s version of the NDAA included language prohibiting China’s state-owned, controlled or subsidized companies from receiving taxpayer dollars to build rail cars and buses, but the House version of the bill only applies to rail cars.

If Congress moves forth with the House version, it would be a huge oversight, to say the least. As we’ve discussed in this space before, there’s widespread bipartisan economic and national security concern about China’s role in building both.

First, there’s the threat to 750 companies and 90,000 jobs up and down the transportation supply chain, as China is aiming to dominate rail car and bus manufacturing via its “Made in China 2025” plan. China heavily subsidizes its state-owned and controlled companies, allowing them to severely underbid on government contracts to build these systems. The point isn’t to make money — China’s ultimate goal is to put competitors out of business and monopolize the global industry.

If you don’t think that’s realistic, just look at what has happened to the pharmaceutical industry.

“When you can subsidize, when you can wholly own an enterprise like China does, you can create a wholly unlevel playing field,” Sen. Tammy Baldwin (D-Wis.) recently told the New York Times. “We’re used to that unlevel playing field existing between the U.S. and China, but now it’s happening in our own backyard.”

A little over a year ago, AAM President Scott Paul chatted with health care expert Rosemary Gibson for an episode of The Manufacturing Report podcast. Gibson had just co-authored a new book examining an overlooked part of America’s trade relationship with China.

The book’s title says it all. In “China Rx: Exposing the Risks of America’s Dependence on China for Medicine,” Gibson and co-author Janardan Prasad Singh outline how China now dominates pharmaceutical manufacturing — and why that is such a big problem for the United States.

Along with making a significant amount of medication, China also has a virtual monopoly on many of the essential ingredients that go into the pharmaceuticals that Americans depend on, including everything from over-the-counter vitamins to cancer meds to almost every antibiotic and blood pressure medication.

China’s dominance of the pharmaceutical supply chain means it has the power to cut off access to many of the medications Americans need to, um, live.

Think tariffs on cotton sweaters and bed linens are bad? Think about what would happen If China decided to cut off our medicine.

Pharmacy shelves would sit empty. Hospitals would close. People would die.

“Children and adults with cancer will suffer without vital medicines,” Gibson recently told the U.S.-China Economic and Security Review Commission. “For people on kidney dialysis, treatment would cease, a veritable death sentence.”

It’s all very scary stuff. Keep you awake at night kind of stuff.

An interesting little story from Europe popped up in our news alerts on Tuesday morning.

It seems that Vossloh, a German rail technology company, is divesting its locomotives business so it can focus on rail infrastructure.

Normally, we here at the Alliance for American Manufacturing wouldn’t pay much attention to the business dealings of a German manufacturer like Vossloh. But what caught our eye was who ended up buying Vossloh’s locomotives unit: China Railway Rolling Stock Corporation Ltd (CRRC).

Nikkei Asian Review reports:

“CRRC, the Chinese state company that is the world’s largest train maker, is set to gain a key foothold in Europe by acquiring its first factory on the continent… Vossloh announced Monday that it would sell a locomotive factory it opened last year to CRRC Zhuzhou Locomotive, a subsidiary of Hong Kong-listed CRRC.”

If you aren't familar with CRRC, it is a massive Chinese government-owned conglomerate with deep ties to the Chinese communist party. CRRC is a key player in the government’s “Made in China 2025” initiative, in which China is aiming to dominate sectors of the global industrial economy, including rail manufacturing.

We’ve been sounding the alarm about the risks that come with allowing Chinese government-owned or controlled companies to build U.S. transit systems like rail cars and buses (and with U.S. taxpayer dollars, natch). 

But hey, don’t take it from us. How about you take the word of four Admirals? And 10 Generals? Oh, and also a former Secretary of the Navy?

Fifteen military leaders wrote to the House and Senate armed services committees this week to urge Members to back legislation to ban companies owned or controlled by the Chinese government from building taxpayer-funded rail cars or buses.

The leaders are particularly concerned about China’s growing dominance in the electric vehicle (EV) sector, writing that China “seeks to gain strategic advantages… by providing aggressive government subsidies to Chinese corporations to lower prices to win business, undermining principles of fair competition and competitive markets.”

They continue:

“If China captures the EV market, the United States’ opportunity to enhance energy security by divorcing itself from an unstable global market merely swaps our reliance on one volatile oil market for a dependence on Beijing for our EVs. Moreover, the infiltration of Chinese technology into the EV sector raises substantial cybersecurity risks that may be difficult to assess and address.”

There’s growing concern on Capitol Hill about China’s role in building U.S. transit, and legislation included in the Defense authorization bill (NDAA) passed by both the Senate and the House before the August recess aims to tackle it.

Congress is out of session for the August recess, which means that the nation’s legislative business is on hold for a few weeks.

But Members have a packed agenda waiting for them when they return in the fall, including finalizing the National Defense Authorization Act (NDAA). It’s a massive bill that authorizes the Defense Department, and included in this year’s version is language that could potentially impact hundreds of thousands of good-paying jobs and our national security.

No pressure, Congress.

As we’ve outlined before, there are major security and economic concerns about China’s role in building U.S. transit. The Senate moved to address these threats when it passed its version of the NDAA by including language to ban Chinese government-owned or controlled companies from using U.S. taxpayer dollars to build U.S. rail cars and buses.

When the House passed its version, however, the ban only applied to rail.

The reason? Folks like House Minority Leader Kevin McCarthy (R-Calif.) support bus maker Build Your Dreams (BYD) – a company that maintains strong ties to China’s government (and has ambitious plans to dominate the global auto market, which threatens hundreds of thousandsU.S. jobs).

Now the legislation is headed to conference, and negotiators from the Senate and the House will determine whether to move forward with the Senate version or the House version. Or, they could very well scrap the language all together in order to ensure passage of the NDAA.

That’s what happened earlier this year, in fact, when similar language was included as part of the fiscal 2019 omnibus spending bill (a.k.a., the legislation that avoided another government shutdown). Because of the complaints of McCarthy, the provision was scrapped and not included as part of the final legislation.

It’s important that negotiators get it right this time.