Congressmen Argue There Is a Need for Reshoring, Nearshoring Incentives
Republican Rep. Adam Kinzinger of Illinois and Democratic Rep. Jason Crow of Colorado told an Atlantic Council online audience that the COVID-19 pandemic revealed an overdependence on China and Asia for essentials, and the need to bring more manufacturing back to the U.S. or North or Central America. The two introduced a bill this year that would offer incentives for relocating manufacturing to certain Western Hemisphere countries, and more generous incentives to bring manufacturing back to the U.S. (see 2105200049). Kinzinger said he thinks it has a great chance to become law.
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Kinzinger said his wife is from El Salvador, and he just got back from a visit there. "You recognize this is not just good for the United States, it’s also good for the region," he said June 2 during the webinar. Crow said Kinzinger was the lead on writing the bill, which he was pleased to join. He said China's "predatory economic agenda" is a challenge the U.S. is facing, and that China could create a low-grade conflict by snarling supply chains of certain goods.
Kinzinger noted that China threatened to cut off exports of protective gear if the U.S. accused China of creating the COVID-19 pandemic. He said Chinese officials said "we would drown in a sea of COVID." So, he said, it's important to recognize the national security implications of being dependent on China for essential goods. He said the bill proposes 100% expensing for moving factories to the U.S., and, for industries that cannot afford to produce domestically, 60% expensing if they choose a Western Hemisphere democracy. The bill also proposes a 30% production tax credit for domestic production that used to be in Asia, and 15% for factories in specific industries identified as crucial by a government committee that are located in those Western Hemisphere allies.
Both men said the incentives would not be available in countries where there is Democratic backsliding, such as Nicaragua. Crow said these incentives could influence foreign governments to avoid repression. He said the American message would be "you can have a strong economy," but the benefits of closer economic ties with the U.S. are dependent on anti-corruption measures and democracy.