A new bill introduced by Sen. Kelly Loeffler, R-Ga., would reward American firms that move medical manufacturing into the U.S. from overseas, a bid to reduce a perceived dependence on supplies of drugs and devices from overseas.
The move is targeted at China and is one of many calls Washington for the U.S. to “decouple” the economies as their geopolitical rivalry heats up amid tiffs over the pandemic and growing trade tensions.
Part of the Georgia Republican’s economic recovery plan and introduced with fellow Republicans Ted Cruz of Texas and Joni Ernst of Iowa, the bill would allow companies accelerated depreciation of capital goods purchased for American factories and would exempt them from taxes on gains from the sale of equipment overseas.
Companies would have to maintain the same level of manufacturing in the U.S. as they had in the original country to qualify for the incentives. It’s unclear whether from the language whether that would be measured by output or value.
The BEAT China Act — Bring Entrepreneurial Advancements to Consumers Here In North America — is based on the growing consensus, heightened by the scramble for PPE in the early days of the pandemic, that the country is too reliant on overseas manufacturers for sensitive drugs and medical items.
By some estimates, China accounts for 97 percent of pain medications and antibiotics in the U.S., with some 80 percent of active pharmaceutical ingredients used in U.S.-bound medicines coming from overseas.
Fears were fanned when Xinhua, the Communist Party of China’s main newspaper, noted that the U.S. COVID-19 response would be crippled if China were to designate items like masks and biotechnology products as “strategic” assets and restrict exports.
Ms. Loeffler’s bill calls out China’s emphasis on government support of its biotechnology industry as part of the controversial Made in China 2025 plan.
“The COVID-19 pandemic has shown us just how dangerous it is to rely so heavily on other countries, including China, for critical, life-saving products like drugs and medical devices as well as supplies like gowns, masks and swabs. It is time we incentivize companies to bring those factories and jobs back to the United States,” Ms. Loeffler said in a statement.
Some countries, including allies like Ireland and partners like India, have taken issue with the assertion that global supply chains equate to an unhealthy dependency.
Ireland’s ambassador to the United States recently told a Southern U.S. audience that exports from Ireland to the U.S. have continued unabated throughout the pandemic, growing the global revenues of American firms selling into markets from Ireland that it would be hard to reach from here.
Others point out that proposed “Buy American” provisions could trigger shortages of critical drugs, especially in the short term, since the U.S. only accounts for 28 percent of active ingredients for FDA-regulated drugs. It can also be extraordinarily costly to move pharmaceutical factories, especially to a place that may not have the skilled workforce needed to run them, according to the San Francisco-based Pacific Research Institute.
Republicans including President Trump have grown more bold in attacking China in recent weeks, blaming the country for covering up the origins of the pandemic and failing to share information with the international community early on.