Post by the Scribe on May 19, 2020 0:22:54 GMT
U.S. mulls paying companies, tax breaks to pull supply chains from China
www.yahoo.com/now/u-mulls-paying-companies-tax-050230070.html
Andrea Shalal, Alexandra Alper and Patricia Zengerle, Reuters•May 17, 2020
WASHINGTON (Reuters) - U.S. lawmakers and officials are crafting proposals to push American companies to move operations or key suppliers out of China that include tax breaks, new rules, and carefully structured subsidies.
Interviews with a dozen current and former government officials, industry executives and members of Congress show widespread discussions underway - including the idea of a "reshoring fund" originally stocked with $25 billion - to encourage U.S. companies to drastically revamp their relationship with China.
President Donald Trump has long pledged to bring manufacturing back from overseas, but the recent spread of the coronavirus and related concerns about U.S. medical and food supply chains dependency on China are "turbocharging" new enthusiasm for the idea in the White House.
On Thursday, Trump signed an executive order that gave a U.S. overseas investment agency new powers to help manufacturers in the United States. The goal, Trump said, is to "produce everything America needs for ourselves and then export to the world, and that includes medicines."
But the Trump administration itself remains divided over how best to proceed, and the issue is unlikely to be addressed in the next fiscal stimulus to offset the coronavirus downturn. Congress has begun work on another fiscal stimulus package but it remains unclear when it might pass.
The push takes on special resonance in an election year. While anti-China, pro-American job proposals could play well with voters, giving taxpayer money or tax breaks to companies that moved supply chains to China at a time when small business is flailing may not.
BIPARTISAN APPEAL
Both Republicans and Democrats are crafting bills to decrease U.S. reliance on China-made products, which accounted for some 18% of overall imports in 2019.
"The whole subject of supply chains and integrity of supply chains... does have a greater place in members' minds," Representative Mac Thornberry, the top Republican on the House of Representatives Armed Services Committee, told reporters May 7.
The medical supply chain and defense-related goods are top of the list.
"Coronavirus has been a painful wakeup call that we are too reliant on nations like China for critical medical supplies," said U.S. Senator Lindsey Graham in a press release on Friday. He is expected to issue a new bill this week.
Republican Senator Josh Hawley is pushing for local content rules for medical supply chains, and "generous investment subsidies" to encourage increased domestic production of a range of goods and components. Republican Senator Marco Rubio introduced a bill May 10 that would bar sale of some sensitive goods to China, and raise taxes on U.S. companies' income from China.
A bipartisan bill introduced by Democratic Representative Anna Eschoo and Republican Representative Susan Brooks would commission a panel to recommend ways to cut drug supply reliance on China.
Republican Representative Mark Green's "SOS Act" proposes funding takeovers of vulnerable U.S. companies that are critical to our national security.
Lawmakers also hope to include reshoring provisions in the National Defense Authorization Act, or NDAA, a $740 billion bill setting policy for the Pentagon that Congress passes every year.
PAY TO STAY
A controversial idea being floated in Washington would allocate as much as $25 billion to companies that make essential goods to move production home, ensuring that even products far down the supply chain were sourced domestically, according to two administration officials.
No lawmaker has publicly embraced it, but several congressional aides acknowledged it is part of the broader discussion in Congress. One of the administration officials said states could administer the funds through their separate economic development organizations.
That would be a boon for states that are struggling to pay their own bills after widespread lockdowns, plummeting tax revenues, and a huge surge in COVID-related costs, one state official said.
But given longstanding concerns about the government setting "industrial policy", the notion of subsidizing industry directly is polarizing, even among Trump's top advisers.
Outright subsidies are a non-starter, said one of the two administrative sources. "Internally some are questioning why we should be providing funds to companies that have left in recent years."
White House economic adviser Larry Kudlow has talked publicly about using tax incentives instead to prod U.S. companies to move some manufacturing home.
White House trade adviser Peter Navarro wants the federal government to buy more U.S.-made medical goods and drugs, but Trump has not signed an executive order Navarro is promoting.
Treasury Secretary Steven Mnuchin and others favor building trusted networks of drug and medical suppliers, said two officials familiar with the discussions.
Giving federal dollars directly to companies to shift supply chains away from China would likely run afoul of World Trade Organization rules, and could discourage foreign companies from doing business in the United States, critics of the idea say.
The State Department, meanwhile, is working with other agencies and foreign governments to diversify American supply chains from China. "This includes returning manufacturing to the United States and expanding our base of international manufacturing partners," said a spokesperson.
(Additional reporting by Humeyra Pamuk. Editing by Heather Timmons, Chris Sanders and Diane Craft)
COMMENTS
Rob 16 seconds ago
What happened to the FREE MARKET FREE TRADE FREE ENTERPRISE scam that RepubliCONServatives have been pushing since Reagan against the wishes of Dems and Liberals? Seems the Left was correct in their assumption that closing down factories here and shipping them offshore not only hurts US labor but is a national security issue. Wait until China decides to hold out shipping all the prescription meds earmarked for the USA. Read ChinaRX for that one. Tons of examples. THANK YOU CONSERVATISM AND YOUR BILLIONAIRE OVERCLASS FOR WHAT YOU HAVE DONE TO THIS COUNTRY.
Miss Me 12 hours ago
I’m 53. The first commercial I remember was the garment union begging the nation to save their jobs. Didn’t happen. As a teen I watched several small factories close and move ops overseas. And now the factories left here are owned by foreign investors. We did this to ourselves.
Will 11 hours ago
Global trade is very important to ensure a diversified ecenomy which helps limit exposure to economic downturns in one region. However we must, as intelligent and thoughtful people, not have the production and manufacturing of critical items, either in whole or part, offshore as part of a supply chain. Doing so not only limits our ability to have such critical items when needed but it truly makes us subservient to a nation (China) that is no particular friend. America must return the research, production and manufacturing of all medical grade equipment, devices, compounds and resources to our shores, including OTC medications. Yes, this will result in more jobs in America and will most likely resort in an increased cost. I believe companies should recieve tax incentives to return and that the average American ought to have a higher medical tax write off in an effort to minimize the impact. What we must recognize is that medical items are not plastic toys or t-shirts but a national security concern and must be treated as such. While there are no guarantees in any venture, the truth is that the entire world is angry with China at this moment and has also been suffering from China's near monopoly on the production of medical supplies, do to this world-wide displeasure, we maybe able to create new markets from within our NATO allies and others. In fact as a strategic measure, I would suggest that the USA, along with our NATO allies, strictly prohibit the purchasing and use of any product by our NATO aligned military forces. Finally we must stop the spread of the CCP backed 5G network as failing to do so would turn over control of untold amounts of information to the CCP which could be weaponized against us. Sadly its past time that we acknowledge the CCP is not a friendly government that seeks to participate fairly on the world markets.
www.yahoo.com/now/u-mulls-paying-companies-tax-050230070.html
Andrea Shalal, Alexandra Alper and Patricia Zengerle, Reuters•May 17, 2020
WASHINGTON (Reuters) - U.S. lawmakers and officials are crafting proposals to push American companies to move operations or key suppliers out of China that include tax breaks, new rules, and carefully structured subsidies.
Interviews with a dozen current and former government officials, industry executives and members of Congress show widespread discussions underway - including the idea of a "reshoring fund" originally stocked with $25 billion - to encourage U.S. companies to drastically revamp their relationship with China.
President Donald Trump has long pledged to bring manufacturing back from overseas, but the recent spread of the coronavirus and related concerns about U.S. medical and food supply chains dependency on China are "turbocharging" new enthusiasm for the idea in the White House.
On Thursday, Trump signed an executive order that gave a U.S. overseas investment agency new powers to help manufacturers in the United States. The goal, Trump said, is to "produce everything America needs for ourselves and then export to the world, and that includes medicines."
But the Trump administration itself remains divided over how best to proceed, and the issue is unlikely to be addressed in the next fiscal stimulus to offset the coronavirus downturn. Congress has begun work on another fiscal stimulus package but it remains unclear when it might pass.
The push takes on special resonance in an election year. While anti-China, pro-American job proposals could play well with voters, giving taxpayer money or tax breaks to companies that moved supply chains to China at a time when small business is flailing may not.
BIPARTISAN APPEAL
Both Republicans and Democrats are crafting bills to decrease U.S. reliance on China-made products, which accounted for some 18% of overall imports in 2019.
"The whole subject of supply chains and integrity of supply chains... does have a greater place in members' minds," Representative Mac Thornberry, the top Republican on the House of Representatives Armed Services Committee, told reporters May 7.
The medical supply chain and defense-related goods are top of the list.
"Coronavirus has been a painful wakeup call that we are too reliant on nations like China for critical medical supplies," said U.S. Senator Lindsey Graham in a press release on Friday. He is expected to issue a new bill this week.
Republican Senator Josh Hawley is pushing for local content rules for medical supply chains, and "generous investment subsidies" to encourage increased domestic production of a range of goods and components. Republican Senator Marco Rubio introduced a bill May 10 that would bar sale of some sensitive goods to China, and raise taxes on U.S. companies' income from China.
A bipartisan bill introduced by Democratic Representative Anna Eschoo and Republican Representative Susan Brooks would commission a panel to recommend ways to cut drug supply reliance on China.
Republican Representative Mark Green's "SOS Act" proposes funding takeovers of vulnerable U.S. companies that are critical to our national security.
Lawmakers also hope to include reshoring provisions in the National Defense Authorization Act, or NDAA, a $740 billion bill setting policy for the Pentagon that Congress passes every year.
PAY TO STAY
A controversial idea being floated in Washington would allocate as much as $25 billion to companies that make essential goods to move production home, ensuring that even products far down the supply chain were sourced domestically, according to two administration officials.
No lawmaker has publicly embraced it, but several congressional aides acknowledged it is part of the broader discussion in Congress. One of the administration officials said states could administer the funds through their separate economic development organizations.
That would be a boon for states that are struggling to pay their own bills after widespread lockdowns, plummeting tax revenues, and a huge surge in COVID-related costs, one state official said.
But given longstanding concerns about the government setting "industrial policy", the notion of subsidizing industry directly is polarizing, even among Trump's top advisers.
Outright subsidies are a non-starter, said one of the two administrative sources. "Internally some are questioning why we should be providing funds to companies that have left in recent years."
White House economic adviser Larry Kudlow has talked publicly about using tax incentives instead to prod U.S. companies to move some manufacturing home.
White House trade adviser Peter Navarro wants the federal government to buy more U.S.-made medical goods and drugs, but Trump has not signed an executive order Navarro is promoting.
Treasury Secretary Steven Mnuchin and others favor building trusted networks of drug and medical suppliers, said two officials familiar with the discussions.
Giving federal dollars directly to companies to shift supply chains away from China would likely run afoul of World Trade Organization rules, and could discourage foreign companies from doing business in the United States, critics of the idea say.
The State Department, meanwhile, is working with other agencies and foreign governments to diversify American supply chains from China. "This includes returning manufacturing to the United States and expanding our base of international manufacturing partners," said a spokesperson.
(Additional reporting by Humeyra Pamuk. Editing by Heather Timmons, Chris Sanders and Diane Craft)
COMMENTS
Rob 16 seconds ago
What happened to the FREE MARKET FREE TRADE FREE ENTERPRISE scam that RepubliCONServatives have been pushing since Reagan against the wishes of Dems and Liberals? Seems the Left was correct in their assumption that closing down factories here and shipping them offshore not only hurts US labor but is a national security issue. Wait until China decides to hold out shipping all the prescription meds earmarked for the USA. Read ChinaRX for that one. Tons of examples. THANK YOU CONSERVATISM AND YOUR BILLIONAIRE OVERCLASS FOR WHAT YOU HAVE DONE TO THIS COUNTRY.
Miss Me 12 hours ago
I’m 53. The first commercial I remember was the garment union begging the nation to save their jobs. Didn’t happen. As a teen I watched several small factories close and move ops overseas. And now the factories left here are owned by foreign investors. We did this to ourselves.
Will 11 hours ago
Global trade is very important to ensure a diversified ecenomy which helps limit exposure to economic downturns in one region. However we must, as intelligent and thoughtful people, not have the production and manufacturing of critical items, either in whole or part, offshore as part of a supply chain. Doing so not only limits our ability to have such critical items when needed but it truly makes us subservient to a nation (China) that is no particular friend. America must return the research, production and manufacturing of all medical grade equipment, devices, compounds and resources to our shores, including OTC medications. Yes, this will result in more jobs in America and will most likely resort in an increased cost. I believe companies should recieve tax incentives to return and that the average American ought to have a higher medical tax write off in an effort to minimize the impact. What we must recognize is that medical items are not plastic toys or t-shirts but a national security concern and must be treated as such. While there are no guarantees in any venture, the truth is that the entire world is angry with China at this moment and has also been suffering from China's near monopoly on the production of medical supplies, do to this world-wide displeasure, we maybe able to create new markets from within our NATO allies and others. In fact as a strategic measure, I would suggest that the USA, along with our NATO allies, strictly prohibit the purchasing and use of any product by our NATO aligned military forces. Finally we must stop the spread of the CCP backed 5G network as failing to do so would turn over control of untold amounts of information to the CCP which could be weaponized against us. Sadly its past time that we acknowledge the CCP is not a friendly government that seeks to participate fairly on the world markets.