On June 8, 2021, the Senate voted 68 to 32 to approve The American Innovation and Competition Act. The Act is an omnibus package of bills that took over a year to negotiate.

Major pieces of Legislation include:

  1. The Endless Frontier Act;
  2. the Strategic Competition Act;
  3. the Trade Act of 2021;
  4. the USA Telecommunications Act; and
  5. other supplemental appropriations bills

Next Steps and Procedural Hurdles

The legislation will now move to the House for consideration. Notably, The American Innovation and Competition Act, will be met in the House with a similar piece of legislation from the Subcommittee of the House Science, Space, and Technology Committee, The NSF for the Future Act. Both the American Innovation and Competition Act and the more narrowly focused NSF for the Future Act provide expanded funding for the National Science Foundation’s budget, however, the NSF for the Future Act does not include the additional pieces of legislation listed above. Both pieces of legislation are expected to advance this summer but the differing legislative texts will need to be resolved in conference.

Additionally, the Trade Act of 2021 renews the Generalized System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB). Since GSP and MTB are revenue measures, they are required to originate in the House. Due to this requirement, House Members could decide to adopt a privileged resolution sending the revenue legislation back to the Senate without taking action. Senators Wyden and Crapo have both stated that they intend to address the issue with their House counterparts.

While the American Innovation and Competition Act has received broad bipartisan support and provisions within the package have been endorsed by both chambers, procedural hurdles relating to revenue legislation and differing bill text will need to be resolved in conference before a vote can be expected.

The full text of the American Innovation and Competition Act is available here.

The full text of the NSF for the Future Act is available here.

Details as provided by the Senate Majority Leader and Senate Finance Committee are outlined below:

 

1. The Endless Frontier Act:

The Endless Frontier Act, as reported by the Senate Commerce Committee, seeks to maintain and build on U.S. science and technology leadership through investments in research and 5 development and strengthening regional economic development, manufacturing, and supply chains. The legislation would authorize roughly $120 billion over 5 years for activities at the National Science Foundation (“NSF”), Department of Commerce (“DOC”), the Department of Energy (“DOE”), and the National Aeronautics and Space Administration (“NASA”). The Endless Frontier Act advances priorities including to reduce undue geographic concentration of R&D funding, encourage broader participation of populations underrepresented in STEM, and increase collaboration across federal agencies and with non-governmental partners on innovation.

Notable Provisions:

  • Technology Directorate: The Endless Frontier Act would create a new Directorate of Technology and Innovation at the NSF to support research and technology development in key technology focus areas, such as artificial intelligence and quantum science, in order to strengthen the global leadership of the United States in innovation. Major activities would include funding research and development at collaborative institutes, supporting academic technology transfer and intellectual property protection, establishing technology testbeds, and awarding scholarships and fellowships to build the relevant workforce. The Directorate would be authorized at $29 billion over fiscal years 2022 to 2026, including a transfer of $2.9B to existing NSF divisions to support basic research collaboration.
  • NSF Research and Development Programs: The Endless Frontier Act would authorize $52 billion over fiscal years 2022 to 2026 for existing NSF activities, representing a seven percent increase each year. The legislation would also create a Chief Diversity Officer at NSF and increase STEM education to enhance the domestic STEM workforce. The legislation also incorporates a series of new programs, including programs for precision agriculture, rural STEM education, quantum information science, skilled technical education, critical minerals, and bioeconomy R&D.
  • Regional Technology Hubs: The Endless Frontier Act creates a regional technology hub program at DOC to support regional economic development in innovation. Technology hubs would carry out workforce development activities, business and entrepreneur development activities, technology maturation activities, and infrastructure activities related to the technology development. The technology hubs program would be authorized at $10 billion over fiscal years 2022 to 2026.
  • Manufacturing: The Endless Frontier Act would authorize close to a quadrupling of the DOC Manufacturing Extension Partnership and create a new track within the program for public benefit activities like workforce development and cybersecurity services. The Manufacturing Extension Partnership would be funded at $2.4B over fiscal years 2022 to 2026. The substitute would also authorize the Manufacturing USA program, at $1.2B over fiscal years 2022 to 2026, and add workforce and coordination provisions.
  • Supply Chain Resiliency: The Endless Frontier Act would establish a supply chain resiliency program at the Department of Commerce to work with the private sector, for the purpose of identifying and recommending opportunities to mitigate or address supply chain vulnerabilities in the United States and in allied and partner countries. It would also amend the recently-enacted CHIPS Act to provide $2 billion in incentives for domestic production of mature semiconductor technologies, such as for the automotive industry.

 

2. The Strategic Competition Act

The Strategic Competition Act is a bipartisan effort to enable the United States to effectively confront the challenges posed by the People’s Republic of China (PRC). The bill provides a unified, strategic response that:

Increases U.S. strategic focus on the Indo-Pacific and prioritizes alliances, partnerships, and U.S. global leadership by:

  • Advancing an Indo-Pacific strategy centered on strengthening U.S. alliances and partnerships and supporting regional cooperation that solves problems.
  • Expanding cooperation with Indo-Pacific allies and partners on technology, defense, and infrastructure, increasing security assistance to allies and partners, and fostering enhanced cooperation in the face of China’s growing military capabilities.
  • Promoting U.S. leadership within international organizations and other multilateral fora, including to counter malign PRC and Chinese Communist Party (CCP) influence in those organizations.

Confronts China’s malign political influence and predatory economic practices, and energizes U.S. diplomatic and economic statecraft by:

  • Countering PRC and CCP influence campaigns by requiring the Committee on Foreign Investment in the United States to review certain foreign gifts and contracts to universities.
  • Countering China’s predatory sovereign lending in the Western Hemisphere by authorizing the U.S. Governor to the Inter-American Development Bank to vote in favor of a 10th general capital increase.
  • Addressing China’s intellectual property theft and subsidies, and prioritizing technical assistance to countries working to counter foreign corrupt practices.
  • Bolstering U.S. economic statecraft by increasing the Development Finance Corporation’s maximum liability to $100 billion and investing in supply chain security, infrastructure development, and digital connectivity and cybersecurity partnerships.

Upholds U.S. values by:

  • Authorizing a broad range of human rights and civil society measures including sanctions for forced labor, forced abortion and sterilization, and other abuses in Xinjiang, and measures to stand with the people of Hong Kong, Tibet, and China’s civil society.
  • Including critical provisions to increase transparency for Congress and the American public related to international agreements and arrangements.

 

3. The Trade Act of 2021

The “Trade Act of 2021” provides a comprehensive approach to combat China’s manufacturing imbalances, threats to free and fair trade, and illicit activity which undermine America’s leadership in innovation. The Bill:

  • Bolsters efforts to prohibit goods made with forced labor from reaching the United States by strengthening Customs and Border Protection (CBP) enforcement efforts, and by expanding the Seafood Import Monitoring Program (SIMP).
  • Provides modernized trade enforcement tools to U.S. Trade Representative (USTR) to address anti-competitive digital trade and censorship practices like China’s Great Firewall, including by requiring USTR to identify trading partners that disrupt digital trade; allows for the investigation of unreasonable digital trade measures detrimental to Americans; and provides for an expedited review of discriminatory digital trade proposals.
  • Requires a review of trade in essential supplies, including the sources of imports and an analysis of any vulnerabilities, as well as additional tools for businesses in the United States seeking reliable suppliers.
  • Strengthens oversight over U.S. trade policy by providing an Inspector General to USTR and by ensuring the application of Section 301 tariffs related to China are calibrated to provide leverage, while ensuring U.S. competitiveness and manufacturing.
    • More information on Section 301 provisions is available here.
  • Reauthorizes the Miscellaneous Tariff Bill (MTB) and an improved Generalized System of Preferences (GSP) that will promote human rights, the environment, women’s economic empowerment, the rule of law and digital trade.
    • More information on MTB and GSP renewal is available here.

 

4. The USA Telecommunications Act

The Utilizing Strategic Allied (USA) Telecommunications Act was enacted in the FY2021 NDAA. It fosters U.S. innovation in the race for 5G and invests in Western-based alternatives to Chinese equipment providers Huawei and ZTE.

The USA Telecom Act plays to American strengths by capitalizing on U.S. software advantages, accelerating development of an open-architecture model (known as OpenRAN) that would allow for alternative vendors to enter the market for specific network components, rather than having to compete with Huawei end-to-end. OpenRAN not only has the support of US carriers, it has the support of US vendors of all sizes, along with a range of non-traditional vendors and technology firms. In order to further support the implementation, Senators Warner and Rubio are proposing an amendment which would provide $1.5 billion in emergency supplemental appropriations to implement the USA Telecom Act, including:

  • $1.5 billion for the Public Wireless Supply Chain Innovation Fund to spur movement towards open-architecture, software-based wireless technologies, funding innovative, ‘leap-ahead’ technologies in the U.S. mobile broadband market. The fund would be managed by the National Telecommunications and Information Administration (NTIA), with input from the NIST, DHS, and IARPA, among others.
  • The $500 million CHIPS for America International Technology Security and Innovation Fund will also support activities authorized in the USA Telecommunications Act, through the Fund’s support of international information and communications technology security and semiconductor supply chain activities, including supporting the development and adoption of secure and trusted telecommunications technologies, semiconductors, and other emerging technologies.

 

5. Supplemental Appropriations

Supplemental appropriations include:

  • $49.5 billion allocated over 5 years for a CHIPS for America Fund. Funding must be used to implement the Commerce Department semiconductor incentive and R&D programs authorized by the FY21 NDAA (Sec. 9902 & 9906). Within the fund, the following appropriations are available:
  • Incentive Program: $39 billion appropriated upfront and allocated over 5 years to implement the programs authorized in Sec. 9902. $2 billion is provided to solely focus on legacy chip production to advance the economic and national security interests of the United States.
    • $19 billion in FY22, including the $2 billion legacy chip production funding
    • $5 billion each year, FY23 through FY26
  • Commerce R&D programs: $10.5 billion appropriated upfront and allocated over 5 years to implement programs authorized in Sec. 9906, including the National Semiconductor Technology Center (NSTC), National Advanced Packaging Manufacturing Program, and other R&D programs authorized in Sec. 9906.
    • $5 billion in FY22
    • $2.5 billion for advanced packaging
    • $2 billion for NSTC
    • $500 million for other related R&D programs

For use across the advanced packaging, NSTC, and other related R&D programs, the following would be provided:

  • $2 billion in FY23
  • $1.3 billion in FY24
  • $1.1 for FY25 and FY26
  • $2 billion for a CHIPS for America Defense Fund: Funding is appropriated up front and $400 million is allocated each year, over 5 years for the purposes of implementing programs authorized in Sec. 9903(b), providing support for R&D, testing and evaluation, workforce development, and other related activities, in coordination with the private sector, universities, and other Federal agencies to support the needs of the Department of Defense and the intelligence community.
  • $500 million for a CHIPS for America International Technology Security and Innovation Fund: Funding is appropriated upfront and $100 million each year, allocated over 5 years to the Department of State, in coordination with the U.S. Agency for International Development, the Export-Import Bank, and the U.S. International Development Finance Corporation, for the purposes of coordinating with foreign government partners to support international information and communications technology security and semiconductor supply chain activities, including supporting the development and adoption of secure and trusted telecommunications technologies, semiconductors, and other emerging technologies.

An additional $1.5 billion is provided for implementation of implement the USA Telecommunications Act that was also passed as part of last year’s NDAA to foster U.S. innovation in the race for 5G.

For more information on the omnibus package of legislation please contact our team or review our posts on specific issue areas linked in the above text.