America COMPETES: Boosting U.S. Production of Semiconductors & Technological Research (H.R. 4521)

What is H.R. 4521?

(Updated March 21, 2022)

This bill — known as the America COMPETES Act of 2022 — would aim to bolster U.S. economic and technological competitiveness through investments in manufacturing, research, and innovation. It would aim to accelerate U.S. production of semiconductors, strengthen supply chains, and expand research capacity while supporting labor standards and human rights. It would also enact a number of other provisions, such as extending a healthcare coverage tax credit and fostering research related to coral reefs. A breakdown of its various provisions can be found below.

Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America: This section would establish the CHIPS for America Fund and provide it with $50.2 billion in appropriations for fiscal years 2022 through 2026. It would advance research and innovation in semiconductors through partnerships with industry, federal scientific agencies, National Labs, and academia. It would also:

• Provide funding to create the National Semiconductor Technology Center, expand semiconductor manufacturing research and development under the Manufacturing USA Program, and establish an advanced packaging research and development (R&D) program.

• Provide financial assistance to incentivize investment in facilities and equipment for semiconductor fabrication, assembly, testing, advanced packaging, and R&D. Financial assistance could be used for the construction, expansion or modernization of semiconductor facilities; support workforce development; and pay the reasonable costs of operating a semiconductor facility.

• Invest $2 billion to support critical components in the production of many automobiles, consumer electronics, and defense systems.

Research & Innovation: This section would authorize, reform, and expand research activities at federal scientific and technological agencies. Specifically, it would:

• Authorize the Dept. of Energy’s Office of Science, which accounts for over half of the agency’s non-defense R&D and supports research activities that enable clean energy technologies.

• Support research into the next generation of energy storage, solar, hydrogen, critical materials, fusion energy, manufacturing, carbon removal, and bioenergy technologies.

• Support the National Institute of Standards and Technology’s research and standards support for industries like quantum information science, artificial intelligence, cybersecurity, privacy, engineering biology, advanced communications technologies, semiconductors, and more.

• Authorize an increase in funding to expand the Hollings Manufacturing Extension Partnership (MEP) program to address the resilience of domestic supply chains, and authorize two new competitively awarded Manufacturing USA Institutes.

• Comprehensively reauthorize the National Science Foundation and establish a new Directorate for Science and Engineering Solutions to accelerate solutions to societal challenges such as climate change; environmental sustainability; global competitiveness; cybersecurity; national security; science, technology, engineering, math (STEM) education and workforce; and social and economic inequality.

• Support the next generation of STEM teachers, researchers, scientists, and professionals by establishing a new initiative to scale effective pre-K-12 STEM innovations; improve the alignment of undergraduate STEM education and training with workforce needs; and expand the requirement for funding proposals to include a mentoring plan for graduate students and help such students explore workforce opportunities in STEM fields.

Supply Chains: This section would establish a new office in the Dept. of Commerce to lead a government-wide effort to strengthen supply chains that are critical to the nation’s economic vitality and national security. It would be specifically tasked with:

• Monitoring supply chains to identify vulnerabilities or gaps that may disrupt the availability of critical goods;

• Supporting the availability of critical goods to prevent shortages that could imperil U.S. national security and the economy;

• Preparing for and responding to supply chain shocks;

• Reducing reliance on critical goods from countries of concern and encouraging the relocation of manufacturing facilities out of these countries;

• Supporting the creation of jobs with competitive wages, including by preserving existing collective bargaining agreements and supporting union organizing efforts; and

• Promoting the health of the economy and competitiveness of American manufacturing by creating the marketing conditions necessary to improve supply chain resilience and allow American manufacturers to compete on a level playing field.

Additionally, this section would authorize $45 billion for grants, loans, and loan guarantees to support supply chain resilience and manufacturing of critical goods, industrial equipment, and manufacturing technology. This would include:

• Support for the manufacturing or acquisition of critical goods or industrial equipment that are essential for national security and economic vitality. Critical goods may include key components and products for public health and biological preparedness, information and communications technology, the energy and transportation sector’s industrial base, and agricultural commodities and food product supply chains.

• Development or acquisition of manufacturing technology that improves the ability of manufacturers to produce critical goods, such as information technology needed to optimize manufacturing efficiency, flexibility, speed, quality, and sustainability.

• Construct or enhance critical infrastructure or a manufacturing facility, which may include factories, telecommunications infrastructure, and water systems necessary to support production of critical goods.

• Relocation of manufacturing facilities out of countries of concern, such as those that pose a significant economic or national security threat to the U.S.

• Manufacturing or acquisition of a substitute for critical goods, industrial equipment, or manufacturing technology to provide a viable alternative to scarce or vulnerable critical goods.

• Establish or preserve surge capacity or stockpiles to provide the redundancies and reserves necessary to maintain the availability of critical goods during supply chain shocks.

• Establish diverse and secure sources and locations for the production of critical goods to ensure that regional conflicts or disasters -- such as tsunamis, hurricanes, or cold waves -- don’t incapacitate the nation’s ability to produce and acquire critical goods. 

Additionally, the new office at the Dept. of Commerce would have a program to map and monitor supply chains, identify supply chain gaps and vulnerabilities, and identify opportunities to address supply chain risk. This bill would authorize $500 million for supply chain mapping and monitoring to designate critical industries, supply chains, and critical goods that have a significant effect on U.S. national security or economic security.

This section of the bill would also provide:

• $10.5 billion for a pilot program to award grants to states to expand or maintain a strategic stockpile of commercially available drugs, medical equipment, PPE, and other products deemed by the state to be essential in the event of a public health emergency.

• $1.5 billion for a supply chain manufacturing pilot to enhance medical supply chain elasticity and maintain domestic reserves of critical medical supplies.

• $3 billion to establish a domestic solar supply chain that incentivizes new construction of solar manufacturing capacity and providing grants and direct loans to retool, retrofit, or expand existing solar facilities.

• $1.5 billion for the Public Wireless Supply Chain Innovation Fund to deploy Open Radio Access (Open RAN) network equipment to spur movement toward open architecture, software-based wireless technologies, and funding leap-ahead technologies in the U.S. mobile broadband market.

Foreign Policy: This section would undertake a number of initiatives to promote U.S. geopolitical competitiveness, including:

• Authorizing $90 million over six years for a State Dept. program that allows U.S. embassies to hire contracts to assist interested U.S. persons and businesses with supply chain management issues related to China.

• Directing the president to develop a strategy using federal resources to counteract Chinese assistance and financing to foreign governments. The State Dept. would coordinate with USAID on the establishment of a Infrastructure Transaction and Assistance Network to boost capacity of partner countries, which would receive $375 million in funding.

• Requiring the State Dept. and Treasury Dept. to submit a report to Congress that lists and examines benefits from U.S. global finance leadership to American foreign policy and identify steps to preserve America’s status as the world’s leading financial center.

• Requiring the State Dept. to submit a report to Congress on the agency’s efforts to facilitate access among the National Technology and Industrial Base to defense articles and services subject to the U.S. munitions list.

This bill would include a statement of policy reiterating the U.S. commitment to Taiwan and recognize Taiwan as a vital part of the U.S. approach to the Indo-Pacific, and a statement of policy of U.S. interests in maintaining the peace and stability through deterrence of military acts or other forms of coercive behavior in the Indo-Pacific. It would also add that United Nations recognition of the People’s Republic of China didn’t address the issue of Taiwan representation at the UN or related organizations, nor did it take a position on the relationship between the PRC and Taiwan or Taiwan’s sovereignty, and that the U.S. opposes any initiative that seeks to change Taiwan’s status without the consent of the people.

This section of the bill would include a statement of policy to increase funding and diplomatic personnel dedicated to the Indo-Pacific region, with $2 billion authorized under the Foreign Assistance Act and $1.25 billion for diplomatic engagement. 

Further, this section would:

• Authorize $500 million for the U.S. Agency for Global Media for ongoing and new programs to support local media, build independent media, and combat PRC disinformation inside and outside of China, invest in technology to subvert censorship, and monitor and evaluate these programs.

• Direct the president to submit a report that assesses the most likely source or origin of the COVID-19 virus, the level of confidence in the assessment, and challenges identified in the U.S. government’s ability to make such an assessment.

• Establish the Liu Xiaobo Fund for Study of the Chinese Language to fund alternatives to Confucius Institutes at U.S. universities.

• Require a report on bilateral efforts to address Chinese fentanyl trafficking to report on U.S. government efforts to gain a commitment from the Chinese government to submit unregulated fentanyl precursors to controls and a plan for future steps the U.S. government will take to urge China to combat illicit fentanyl production and trafficking originating in China.

• Authorize $225 million for the State Dept. international military education and training assistance in the Indo-Pacific.

The State Dept. and other federal agencies would be required to submit strategies to counter China’s attempts to gain influence in the Caribbean, Europe, South and Central Asia, Africa, the Middle East and North Africa, the Arctic, Oceania, and the Pacific islands.

Congress would put forward findings on the PRC’s abrogations of its obligations and commitments under international law and agreements and the erosion of Hong Kong’s autonomy, undermining the democratic norms and human rights, and the use of violence and excessive force after the imposition of the national security law. The bill would authorize $10 million for the State Dept.’s Bureau of Democracy, Human Rights, and Labor to promote democracy in Hong Kong. Qualifying Hong Kong residents would be provided with temporary protected status and refugee status for the 18-month period beginning after enactment. It would stipulate that Hong Kong will continue to be considered a foreign state separate and apart from the PRC for purposes of the numerical limitations on immigrant visas.

This bill would designate non-citizens who were Chinese nationals and Xinjiang residents; aliens who fled Xinjiang after June 30, 2009, and reside in other Chinese provinces or a third country where they are not firmly resettled; and the spouses, children, and parents as Priority 2 refugees of special humanitarian concern. Additionally, this section would:

• Amend the Global Magnitsky Human Rights Accountability Act to express the sense of Congress that the president should establish and regularize information sharing and sanctions-related decision making with like-minded governments possessing human rights and anti-corruption sanctions programs; to make modifications to the president’s sanctions authority; add additional criteria to the reporting requirements to Congress, and to repeal the sunset.

• Amend the Uyghur Human Rights Policy Act to impose sanctions based on systematic rape, coercive abortion, forced sterilization, or involuntary contraceptive implantation policies and practices in Xinjiang.

• Express the sense of Congress that the U.S. must adopt policies to expose the detrimental aspects of the PRC’s nonmarket policies, provide options for those affected by unreasonable and discriminatory industrial policies, ensure that PRC companies face costs and consequences for anticompetitive behavior, and strengthen the protection of critical technology and sensitive data.

• Require the Treasury Dept. to issue a report analyzing risks to U.S. financial stability and the global economy from the PRC and provide recommendations to Congress.

• Modernize Financial Crimes Enforcement Network (FinCEN) authorities by adding a special measure to allow it to pursue bad actors, like those laundering the proceeds of Chinese ransomware, or are declared a Primary Money Laundering Concern due to their actions to evade sanctions against North Korea.

Miscellaneous

• This bill would strengthen oversight and governance related to the use of Artificial Intelligence (AI) technologies by giving the Privacy and Civil Liberties Oversight Board access to the AI-enabled programs in use at federal agencies.

• Prohibit the Dept. of Homeland Security from operating, procuring, or providing financial assistance for an unmanned aircraft system (UAS) that’s manufactured in a foreign country; uses devices made in a foreign country; use a ground control system or operating software developed in a foreign covered country; or use network connectivity or data storage located in a covered foreign country.

• Expand federal authority to withhold or revoke U.S. port privileges for fishing vessels from nations that have been identified for illegal or unreported fishing.

• Establish new programs and funding opportunities for states and territories for coral research, conservation, and restoration.

• This bill would make the health coverage tax credit permanent, thereby removing the uncertainty of annual extensions, and increase the amount of the qualified health insurance premium covered by the credit from 72.5% to 80%.

Argument in favor

This bill would help ensure U.S. innovation and global leadership in emerging technologies while taking steps to relocate supply chains and manufacturing out of countries that pose a threat to America’s economic and national security.

Argument opposed

Rather than taking a page out of the Senate’s book and working in a bipartisan manner on this bill, House Democrats’ legislation is a missed opportunity that does nothing to counter China’s military ambitions and malign influence around the world.

Impact

Federal agencies; private industries; and the U.S. workforce.

Cost of H.R. 4521

A CBO cost estimate is unavailable.

Additional Info

In-Depth: House Democrats introduced this bill to bolster U.S. competitiveness in high-tech industries like semiconductor production and address supply chain issues. House Oversight and Reform Committee Chairwoman Carolyn Maloney (D-NY) said:

“To ensure U.S. innovation and global leadership in emerging technology, we must develop and foster programs within the federal government to attract top cyber talent. At the same time, we must protect the privacy and civil liberties of Americans as we explore new technological frontiers.  The Oversight Committee’s provisions in the America COMPETES Act of 2022 will help our nation meet those challenges.”

House Energy and Commerce Chairman Frank Pallone (D-NJ) added:

“The America COMPETES Act helps put us on course to lead the pack in creating the strongest and most advanced economy of the future. This legislation strengthens our nation’s supply chains so more critical goods are manufactured here in the United States instead of China.  It also bolsters our Strategic National Stockpile and invests in the next generation of cutting-edge technology.  This comprehensive legislation brings together many bills that have garnered strong bipartisan support in the past, and I’m hopeful it will pass with that same bipartisan spirit.”

The White House released a statement of administration policy in support of the bill which emphasized the impact on supply chains, innovation, and domestic manufacturing but made no mention of competition with China:

“The Administration supports House passage of H.R. 4521, the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act of 2022. This legislation is an important step to strengthen our supply chains, revitalize domestic manufacturing, and reinvigorate the innovation engine of our economy to ensure that the United States remains globally competitive in the 21st century. H.R. 4521 is aligned with the President’s vision to enhance American economic and scientific competitiveness; build a stronger, more diverse, and more inclusive innovation ecosystem; and invest in strengthening critical supply chains, our domestic industrial base, and regional economic growth and development”

House Rules Committee Ranking Member Tom Cole (R-OK) criticized Democrats for not taking a bipartisan approach to drafting this bill like the Senate did when it considered its own version of the bill:

“Unfortunately, today’s legislation is a real missed opportunity, both for the House of Representatives and the nation. Communist China continues to pose significant challenges on the international stage. These challenges include, but are not limited to, China’s ongoing genocide against its Uyghur Muslim minority; China’s threat to Taiwan, its democratic neighbor; China’s ongoing adventurism in the South China Sea; China’s unfair trade practices, including currency manipulation and the use of subsidies to undercut American businesses; and China’s relentless quest for natural resources worldwide. These and other practices present clear challenges to the United States and the global community. As such, Democrats and Republicans and the Senate should have spoken together with one voice on a bipartisan bill with real teeth that repositions the United States to confront China’s lust for hegemony. But instead of doing so, Democratic leadership has once again decided to put forward a partisan bill, drafted behind closed doors in the Speaker’s office. While portions of the package may have been marked up in the committees of jurisdiction in other forms, the entire package has not received a markup before it came to us today. Democratic leadership has also failed to even ask for any Republican input before putting it together…

What is most disturbing is that the package before us consists of toothless policies that will do nothing to stem China’s global lust for power. No new policy provisions to combat Chinese military ventures, and no new economic policies to reposition America to better compete. Instead, we get a laundry list of requests for a "strategy" and requirements to file "reports," none of which will actually address the real problem.”

Republican Study Committee Chairman Jim Banks (R-IN) blasted this bill:

“Pelosi’s new bill, the COMPETES Act, is no exception. It is weak and fails to properly confront the China threat, and it throws billions at unrelated issues that have nothing to do with our national security. For example, it includes millions to study coral reefs and gives billions to the United Nations Green Climate Fund. At the same time, there is no money to enforce our sanctions laws or increase our military strength. This is why conservatives wrote our own China bill last summer that is just 0.5% the cost of the USICA and includes tough measures like sanctions that would limit the Chinese Communist Party’s ability to subvert our nation’s institutions and steal our intellectual property. If Congress really wanted to confront the China threat, we’d pass the RSC’s Countering Communist China Act.”

The Senate passed its own version of legislation to compete with China in economic and geopolitical domains last summer on a 68-32 vote. If the House passes a different bill as expected, lawmakers will attempt to negotiate a compromise that can pass both chambers.

Media:

• House Democrats Committee Chairs Press Release

• House Democrats Fact Sheet

• House Rules Committee Section-by-Section 

• White House Statement of Administration Policy (In Favor)

• Rep. Tom Cole (R-OK) Remarks (Opposed)

• Republican Study Committee (Opposed)