Sen. Marco Rubio (R-Fla.) was sharply critical of the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, which has been approved by the Senate and House of Representatives and was sent to President Joe Biden for his signature.
Proponents say the bill is designed to boost America’s semiconductor manufacturing and research, but Rubio said needed protections were not put in place to prevent China from exploiting it.
Rubio’s press secretary, Ansley Bradwell, provided a statement to Commerce Newswire.
“America needs to make things again, especially critical chips and other tech, but we need to do it in a way that benefits our country and our workers," Rubio's statement said. "Unless we add meaningful safeguards in this package, we should call this for what it is: the China investment bill.”
The bill was pulled from a larger package and presented to Congress as a stand-alone bill.
Axios reported that the Biden administration favored passing the CHIPS Act on its own and separating it from broader legislation. On June 30, Senate Minority Leader Mitch McConnell (R-Ky.) made it clear the larger package was at a standstill, but indicated he would not block the CHIPS Act on its own.
Commerce Secretary Gina Raimondo said the CHIPS Act is too necessary and urgent to wait for the House and Senate to resolve all differences on the larger China competitiveness bill.
“Cleave off the CHIPS and pass it,” she told Axios. “There’s a real time urgency there because these chip companies are making their decisions right now about where to expand. Obviously, we want more. The president supports a robust Bipartisan Innovation Act.”
On Wednesday the Senate advanced the CHIPS Act by a vote of 64-33. The House of Representatives approved it Thursday by a vote of 243-187, sending it to Biden.
“While we still have a lot of work to do to boost U.S. competitiveness with China, the Senate passage of this legislation represents an important step in bringing back American manufacturing, shoring up U.S. innovation, and reducing costs for families,” said Sen. Mark Warner (D-Va.).
Rubio proposed three amendments to the CHIPS Act, saying that the bill failed to adequately protect U.S. interests from Chinese Communist Party (CCP) espionage.
He called for fully funding the Federal Communications Commission's “rip and replace” program, requiring the Department of Commerce to get approval before changing the definition of “legacy chips,” and establishing a counterintelligence screening process to protect against CCP espionage attempts.
Rubio's amendment seeks:
- Fully Fund Rip-and-Replace. The amendment would fully fund the FCC’s underfunded “rip and replace” program. Without approximately $3 billion in additional funding, the FCC will not be able to thoroughly remove dangerous Chinese hardware (including from blacklisted companies like Huawei and ZTE) from America’s telecommunications infrastructure.
- Congressional guardrails on CHIPS. The amendment will require the Department of Commerce to secure approval from the Senate and House committees on intelligence, commerce and armed services before altering the definition of “legacy chips.”
- In the current text, recipients of CHIPS funding cannot expand certain chip production in China. “Legacy chips” are exempt from that prohibition, but the bill allows Commerce to revise the definition. Rubio's amendment seeks to ensure the executive branch could not unilaterally allow CHIPS funding recipients to expand higher-tech chip production in China.
- In addition the amendment tightens language elsewhere in the bill to ensure no loopholes exist allowing certain categories of expansion or transactions in China.
- Protect critical U.S. research and development. The amendment would establish a counterintelligence screening process involving the director of national intelligence, the director of the national counterintelligence and security center, and the director of the FBI to protect against Chinese and others’ efforts to engage in economic espionage and misappropriate our intellectual property, R&D and innovation efforts.
- This counterintelligence screening process would protect U.S. research and innovation by requiring those IC agencies to certify that anyone receiving funds under the bill has sufficient protections against foreign government threats. It would also require that before obtaining certification to receive funds, the applicant must disclose any foreign funding over the last decade or any financial support from China, as well as any participation in a foreign talent recruitment program.
“What I want you to understand is that this is not a minor security threat," he said last year. "This is their No. 1 priority. This is what all of their agencies and all of their government is geared toward doing. And we are going to put all this money in there in the hope that the safeguards we are going to put in place are going to work. I hope they do. But what if they don’t?
“What if a year from now we find out — you’re going to read an article two years from now, whenever — that says, ‘The Chinese have stolen a quarter — 25, 30% — of the IP developed by the money that’s put forward in the bill that was passed,’” he said. “We’re all going to feel pretty stupid around here.”
This is not a new issue for the Florida senator.
On Feb. 12, 2019, he released a report titled “Made in China 2025 and the Future of American Industry.” It focused on the challenges posed by China’s whole-of-state industrial planning for U.S. prosperity and productivity, including the jobs and wages of American workers and small businesses.
The report also offered policy recommendations to strengthen the U.S. economy against its rivals by increasing high-value, high-labor production in the United States. The report was produced by the Project for Strong Labor Markets and National Development from the Senate Committee on Small Business and Entrepreneurship, which Rubio chaired at the time.
“Changes in the 21st Century economy have upended the working lives of millions of Americans,” he said. “Americans understand that something has gone wrong, and the failure of Washington to respond is one of the underlying currents in our nation’s disunity. Something needs to change.
“The Senate Small Business Committee’s report on ‘Made in China 2025 and the Future of American Industry’ is the beginning of that conversation,” Rubio said. “Our report highlights the challenges posed by China’s blatant industrial espionage and coercion — actions that threaten our economic framework and our national prosperity. The report will also offer policy recommendations to strengthen the American system against its rivals. Markets and trade are tools for good, and they are essential for overcoming the challenges we face, but they respond to policy incentives and restrictions.
“The role of government is to align our economic policies with the right national priorities," he added. "Right now, we have the wrong priorities. Our most important priority should be creating dignified work through investment and through innovation. That will require the hard work of forming a new consensus, but we can build an America that is better for the future generations to come, as Americans have always done.”
