House Republicans Question Raimondo on Semiconductors, China Trade Relations

U.S. Secretary of Commerce Gina Raimondo speaks about semiconductor chips subsidies during a press briefing at the White House on Sept. 6, 2022. Kevin Lamarque/Reuters

House Republicans have pushed for assurances that the Biden administration’s Commerce Department is keeping U.S. interests at the forefront in dealing with technological advancements and the use of semiconductors in national defense technology.

In a Sept. 19 hearing held by the House Committee on Science, Space, and Technology, U.S. Commerce Secretary Gina Raimondo was questioned by lawmakers about the Department of Commerce’s work in implementing provisions related to semiconductors under the CHIPS and Science Act.

Rep. Michael Garcia (R-Calif.) initiated the discussion, emphasizing the significance of addressing the ongoing trade disputes with China.

“China being the biggest threat to the United States right now as a pure adversary, we have to figure out how to get to some sort of reciprocal trade agreement,” Mr. Garcia said.

“China is doing to us right now things that we should not tolerate. But if we’re going to allow them to do it, we should at least be able to do it to them and have access to their markets, their intellectual property; the agreement should be fair and balanced and reciprocal.”

Ms. Raimondo also emphasized the need for reciprocity with China. She cited examples of disparities, such as that Alipay and UnionPay are free to do business in the United States while Visa and MasterCard face restrictions in China. Additionally, autonomous vehicle companies from China operate on U.S. roads, and U.S. media companies struggle to gain access to the Chinese market.

The commerce secretary conveyed her determination to level the playing field in U.S.–China trade relations, saying, “Enough is enough.”

During Ms. Raimondo’s opening statement, she pointed out that her department is committed to the national security in the CHIPS program, which she asserted is reflected in their efforts to “implement strict guardrails to ensure that the investments made in research and innovation are not used to benefit the People’s Republic of China’s military efforts.”

She said that the Department proposed a rule, “Preventing the Improper Use of CHIPS Act Funding,” that would impose guards by “limiting the expansion of semiconductor manufacturing in foreign countries of concern” and “limiting joint research or technology licensing efforts with foreign entities of concern.”

According to Ms. Raimondo, her department intends to finalize the rule later this year.

The discussion also touched on the importance of aligning semiconductor chip production with the defense industrial base. Mr. Garcia raised concerns about ensuring that the semiconductor industry supports defense requirements.

“[I want to] make sure that we’re porting over the requirements list to the DoD applications because it would be a terrible thing to build semiconductor chips for refrigerators and cars, only to find out that we have no industrial base to service the hypersonics—the exotic weapons that we need in a fight against China,” he said.

Ms. Raimondo said a memorandum of understanding had been executed between the Department of Commerce and the Department of Defense, which facilitates information sharing and collaboration to ensure that semiconductor chip production aligns with defense needs.

Russia Sanctions

The conversation briefly shifted to Russia sanctions, with Mr. Garcia seeking Ms. Raimondo’s views on the effectiveness of the Treasury in enforcing sanctions against Russia, particularly concerning the conflict in Ukraine.

Ms. Raimondo commended U.S. Treasury Secretary Janet Yellen and her department for their efforts under challenging circumstances. She said that her focus was on export controls and acknowledged the ongoing battle against Russian attempts to circumvent sanctions.

Ms. Raimondo highlighted the vigilance required to counter Russia’s efforts.

“The thing I’m focused on is the export controls,” Ms. Raimondo said. “I'll be honest, it is a brutal day-to-day fight. Every time we find out that they’re going around ... export controls, we come down on them, but it’s a little like a whack-a-mole.

“Russia has been putting these net global networks together for decades there. They’re good at getting around us. And I'd like to think we’re even better about stopping it.”