AFL-CIO says lawmakers should remove 'pro-China' provisions from chips bill

© Reuters. FILE PHOTO: A researcher plants a semiconductor on an interface board during a research work to design and develop a semiconductor product at Tsinghua Unigroup research centre in Beijing, China, February 29, 2016. REUTERS/Kim Kyung-Hoon

By David Shepardson

WASHINGTON (Reuters) - The largest U.S. labor organization said on Monday it wants lawmakers negotiating a measure to boost funding for semiconductor chips production and U.S. competitiveness to remove "pro-China provisions."

The AFL-CIO trade federation, representing 12.5 million workers, took aim at the Senate version of the bill in a letter to lawmakers, saying it "would benefit China's economy more than ours by lowering tariffs and continuing our over-reliance on China in key sectors."

The Senate and the House of Representatives have passed separate versions of the bill, and are now negotiating to reach a final deal. Both versions provide $52 billion to subsidize U.S. semiconductor research and production, which the AFL-CIO supports.

A persistent industry-wide shortage of chips has disrupted production in the automotive and electronics industries, forcing some firms to scale back production, and there have been growing calls to decrease reliance on other countries for semiconductors.

The AFL-CIO calls for the removal of several trade provisions in the Senate version, including reforming a tariff exclusion process and granting tariff-free access for Chinese personal protective equipment, medicines and other medical goods.

A group of more than 100 House and Senate lawmakers met Thursday to open negotiations, but aides say it could be months before a final deal on a bill is reached.

Last week, Commerce Secretary Gina Raimondo said the Chinese government opposes ramping up U.S. semiconductor manufacturing because it would give the United States more of a competitive punch.

The U.S Chamber of Commerce backs the Senate trade provisions, including its tariff exclusion process reforms and reinstating previously granted expired tariff exclusions. It urged rejecting "misguided and problematic provisions" in the House version.

Former President Donald Trump's administration imposed "Section 301" tariffs on an initially estimated $370 billion in annual Chinese imports. In March, the Biden administration reinstated some tariff exclusions.

The AFL-CIO said the Senate bill "would unnecessarily tie the administration's hands with regard to China 301 tariffs and weaken U.S. enforcement of trade laws that are necessary to stop China's illegal trade practices."