Industry pushes back on Schumer and Cornyn’s Chinese chip crackdown

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Nov 23, 2022 View in browser   By Caitlin Oprysko With Daniel Lippman PROGRAMMING NOTE: We'll be off for Thanksgiving this Thursday and Friday but back to our normal schedule on Monday, Nov. 28. INDUSTRY PUSHES BACK ON PROPOSED CHINESE CHIP BAN IN NDAA: A coalition of defense, tech and business trade groups is pushing back on an effort by Senate Majority Leader Chuck Schumer and Sen. John Cornyn (R-Texas) to include a ban on U.S. government business with Chinese chipmakers in the final version of the annual defense policy bill. — In a letter Tuesday to the top lawmakers on the Senate Armed Services Committee, Jack Reed (D-R.I.) and Jim Inhofe (R-Okla.), the groups argued the amendment is vaguely worded and would impose "tremendous compliance burdens" on government contractors and grant or loan recipients. — They took issue primarily with how targeting Chinese chipmakers would impact an existing ban on agencies "contracting with a provider that 'uses' … any covered equipment or services in its supply chains even if the provider does not know that the covered technology is being used for governmental or commercial work," the coalition wrote, contending there is no federal or regulatory definition for the term. The coalition warned that there is insufficient time to fix those issues. — The letter's signatories, which include the Aerospace Industries Association, Alliance for Automotive Innovation, National Defense Industrial Association, CTIA, U.S. Chamber of Commerce, and the NCTA, wrote that issues with the amendment are compounded by semiconductors' ubiquitousness. Under Schumer and Cornyn's amendment, they claimed, "a company with both federal and nonfederal customers would be barred from selling to the government because it 'uses' a coffee service that 'uses' the covered semiconductors." — The letter asserts the language also "could require entities that do business with the U.S. government to trace their entire supply chain … regarding every item of equipment used anywhere in a contractor's enterprise," placing burdensome compliance and certification requirements on both contractors and the government. — A Senate source countered that the amendment is a logical next step to the chip research and development subsidies signed into law earlier this year aimed at reducing dependence on foreign-made and especially Chinese-made semiconductors, legislation the business coalition notes in its letter that it supported. The amendment also won the backing of a group of former national security aides around Washington, some of whom have ties to groups that signed onto the industry letter. — The industry push has drawn the ire of the upstart American Free Enterprise Chamber of Commerce, which supports the amendment and singled out the U.S. Chamber in particular, accusing the group of "doing the bidding of Davos CEOs who are more interested in globalism than promoting American security" and of being too close to China. — "The letter speaks for itself and addresses a clear concern we have about U.S. government overreach in public procurement," a U.S. Chamber spokesperson told PI about the swipe at its lobbying efforts. They maintained that the Chamber supports broader efforts "to build supply chain resilience, minimize critical dependencies, and respond to China's discriminatory policies" and "address the serious national security concerns we have with China." Good afternoon and welcome to PI , where your host is grateful each and every day for readers like you. We'll be off for the holiday tomorrow and Friday, but we'll be back in your inboxes Monday. We hope you have a wonderful holiday and an even better rivalry week (unless you went to Georgia Tech). In the meantime, keep sending those K Street tips: coprysko@politico.com . And be sure to follow me on Twitter: @caitlinoprysko .   POLITICO APP USERS: UPGRADE YOUR APP BY DECEMBER 19! We recently upgraded the POLITICO app with a fresh look and improved features for easier access to POLITICO's scoops and groundbreaking reporting. Starting December 19, users will no longer have access to the previous version of the app. Update your app today to stay on top of essential political news, insights, and analysis from the best journalists in the business. UPDATE iOS APP – UPDATE ANDROID APP .     HERITAGE MOBILIZES TO SINK SAME-SEX MARRIAGE BILL: The Heritage Foundation will drop seven figures on a new ad campaign opposing legislation to codify same-sex and interracial marriage rights ahead of a vote on the bill when lawmakers return from the Thanksgiving recess next week. — The legislation overcame its first procedural hurdle in the Senate last week with 12 Republicans joining all Democrats in support following an agreement to include protections for religious liberty that Heritage skewered as not going far enough. "Republican senators claiming the bill protects religious liberty are misleading the public," Roger Severino, the think tank's vice president of domestic policy, said in a statement pointing to Democratic leaders denying a vote on an amendment from Sen. Mike Lee (R-Utah). — The last-minute effort to derail the bill includes putting $1 million behind a TV spot that will air until next week on Fox News and on Thanksgiving weekend NFL and college football games in Iowa, Indiana, West Virginia and Wyoming — the home states of four Republican senators who voted to advance the bill last week — and another $300,000 in digital ads from Heritage Action, the organization's lobbying arm. — The 30-second TV ad accuses "a few Republican senators'' of aiding Democrats in attempting to "cram through their far left agenda" before the GOP takes control in the House next year. It goes on to claim lawmakers are "sneaking in a new law that would expose religious schools and nonprofits to lawsuits and attacks on the IRS just because they believe in traditional marriage," casting the effort as an "attack on people of faith" despite support from some religious denominations. — Conservatives are not the only ones mounting a lobbying push on the same-sex marriage bill. Scores of corporations have been vocal supporters of LGBTQ rights more broadly and around a dozen reported lobbying Congress in support of same-sex marriage for the first time this year — a dynamic that has fueled a rift between Republicans and the business community. YOUR DAILY FTX: The New York Times' Ken Vogel, Emily Flitter and David Yaffe-Bellany have a new look at how former FTX chief executive Sam Bankman-Fried and "a network of political action committees, nonprofits and consulting firms funded by FTX or its executives worked to court politicians, regulators and others in the policy orbit , with the goal of making Mr. Bankman-Fried the authoritative voice of crypto, while also shaping regulation for the industry and other causes." — "In some ways, FTX followed the playbook of larger and more established corporations that spend years carefully spreading money through the political system to cultivate relationships and build clout. But FTX's influence operation launched faster and was more frenzied." — "It blurred the lines between corporate affairs and political activity, and prompted concerns among some involved about whether the money was being spent effectively and in compliance with strict campaign finance laws, while leaving some potential beneficiaries feeling like there was a quid pro quo." — In the present day, Guarding Against Pandemics , the pandemic preparedness nonprofit seeded by Bankman-Fried and run, until recently, by the FTX founder's brother, has been dropped by its final outside lobbying firm, Monument Advocacy, according to termination paperwork filed today, concluding K Street's scramble to distance itself from Bankman-Fried's empire. MERCHANTS TWEAK VISA OVER SWIPE FEES: A trade group representing convenience stores and fuel retailers is using Visa's sponsorship of the World Cup to rib the card giant over fees it and fellow card issuers like Mastercard charge merchants to run card transactions. — The National Association for Convenience Stores, a member of the Merchant Payments Coalition of retailers, supermarkets, restaurants, drug stores and more that has pushed Congress to rein in card companies over so-called swipe fees, is funding a soccer-centric ad buy promoting legislation aimed at diluting the market dominance of just a few card companies. — In a statement, NACS general counsel Doug Kantor accused Visa, the "official payment technology partner" of FIFA, of "spending untold millions of dollars to promote competition in soccer even though it refuses to allow competition over swipe fees and how transactions are routed." — The group's ad contends that "Americans pay the highest swipe fees in the world," which add up to nearly $1,000 in "unfair hidden fees for families." It touts the Credit Card Competition Act, which would direct the Federal Reserve to issue rules requiring large card-issuing banks or credit unions to offer at least one alternate network that isn't affiliated with Visa or Mastercard. The ad will run on cable and broadcast TV in the D.C. market and other targeted markets across the country. — The bill has been fiercely opposed by banks, credit unions and card issuers and while its authors failed to get it inserted into the Senate version of the NDAA last month, wrangling over the measure has continued as opponents work to keep it out of any year-end spending package. MIDTERM RESULTS SPUR URGENCY ON CANNABIS BANKING: "Urgency is building in the Senate to get cannabis legislation passed before the year is over ," POLITICO's Natalie Fertig reports. "The specter of a Republican-led House has lit a fire under proponents of cannabis banking legislation, according to three House and Senate staffers involved in discussions on both sides of the aisle." — "Lawmakers and staffers all said a concerted effort is underway to find common ground between Republicans and Democrats," which would involve striking the right balance between "financial services and criminal justice reform-centered cannabis legislation that progressive Democrats and conservative Republicans can all accept." — Despite past pushes for the banking bill falling short, "it's now the eleventh hour, and Republicans are starting to come around to … a states-rights-focused expungement bill." On the left, progressive groups like the influential Drug Policy Alliance are demanding tweaks to the package coming together, threatening to alienate Republicans at the last minute. Still, "the overall mood on this banking bill, however, is entirely different from the last Congress," per Natalie.   GO INSIDE THE MILKEN INSTITUTE FUTURE OF HEALTH SUMMIT: POLITICO is featuring a special edition of our "Future Pulse" newsletter at the 2022 Milken Institute Future of Health Summit from Dec. 6 to 8. The newsletter takes readers inside one of the most influential gatherings of health industry leaders and innovators solving the biggest global health issues to ensure a healthier, more resilient future for all. SUBSCRIBE TODAY TO RECEIVE EXCLUSIVE COVERAGE .     Jobs Report — Ted Monoson is now director of government affairs at the Corporation for Public Broadcasting. He most recently was a principal at 4th Street Communications. — Pioneer Public Affairs has added Pierson Stoecklein as a partner. He was most recently head of policy & regulatory counsel at Mainspring Energy and serves as executive director of the Microgrid Resources Coalition. New Joint Fundraisers None. New PACs Committee for Protection of Election Workers (PAC) Common Good USA (PAC) End Game Now (Super PAC) EXP PAC (PAC) Patriotic Freedom Coalition (Super PAC) We The People Consulting LLC (Super PAC) New Lobbying Registrations Cornerstone Government Affairs, Inc.: Raytheon Technologies Corporation Cornerstone Government Affairs, Inc.: Syracuse University Fgs Global (US) LLC (Fka Fgh Holdings LLC): Phreesia, Inc. Forbes-Tate: Sorare Sas Reston Strategy Group, LLC: 535 Group, LLC On Behalf Of Technology Service Corporation New Lobbying Terminations Avanir Pharmaceuticals: Avanir Pharmaceuticals Monument Advocacy: Guarding Against Pandemics   Follow us

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