U.S. Rep. Erik Paulsen (R-MN) led 39 members of the U.S. House of Representatives in urging the removal of almost $3 billion worth of Chinese medical device products from a list of proposed tariffs set to be imposed on the country.
Section 301 tariffs were proposed in April on a total of $50 billion worth of imported Chinese goods following the United States Trade Representative’s (USTR) Section 301 investigation into China’s unfair trade practices related to the forced transfer of U.S. technology and intellectual property. The proposed list covers approximately 1,300 separate tariff lines and is undergoing review in a public notice and comment process, including public hearings held May 15-17.
However, Rep. Paulsen and his colleagues are concerned the proposed tariffs would harm America’s booming medical device industry. Among those joining Rep. Paulsen in signing the bipartisan letter were U.S. Reps. Leonard Lance (R-NJ), Darin LaHood (R-IL), Jackie Walorski (R-IN), Barbara Comstock (R-VA), Ryan Costello (R-PA), Tom Emmer (R-MN), John Katko (R-NY), Larry Bucshon (R-IN), Fred Upton (R-MI), Randy Hultgren (R-IL), Susan Brooks (R-IN), and Scott Peters (D-CA).
“As you know, the U.S. medical technology industry is an American success story,” according to a May 15 letter the lawmakers sent to USTR Robert Lighthizer. “This U.S. industry has been historically competitive on a global level and is one of the few with a consistent trade surplus.”
In 2017, U.S. global exports of medical technology products totaled $52.5 billion, while imports were $51.4 billion – a surplus of $1.1 billion, according to the letter.
At the same time, the leading suppliers of medical devices to China are U.S. companies, which hold a 33 percent share of all medical device imports, or roughly $5 billion of the total China medical device market, the members wrote.
And the estimated $25 billion Chinese market is expected to continue flourishing, representing a large growth opportunity for American manufacturers, they wrote, because China has a “growing economy and middle class, rapidly aging population, and increased demand for medical technology.”
Additionally, they pointed out, while it’s warranted for the United States to address current threats posed by China, the USTR’s 183-page, March 22 report from its Section 301 investigation did not mention the medical technology industry.
“The report contained no evidence of intellectual property theft involving U.S. medical technology manufacturers and included no mention of forced technology transfers in this sector,” according to the lawmakers’ letter. “More importantly, the report did not cover what the industry has identified to the Administration as its priority issues with China, such as the need for regulatory and payment reforms.”
With these reasons in mind, the lawmakers warned that if China’s imported medical devices are included on any final USTR Section 301 tariff list, retaliation from China could jeopardize future opportunities for American businesses.
For instance, the representatives noted that the Chinese Government could retaliate through tariffs on U.S. medical technology products, or through non-tariff barriers, such as setting new regulatory and payment hurdles. “These actions would only benefit China’s domestic manufacturers at the expense of U.S. manufacturers,” they wrote.
Likewise, such retaliatory measures could negatively impact the ability of U.S. manufacturing “to compete globally and potentially increase healthcare costs, which would limit patient access to life-saving technology,” the letter said.
The members told Ambassador Lighthizer they appreciated his continued leadership in representing the United States with its allies, and acknowledged that “promoting our trade policy is a difficult challenge in an ever-changing global environment.” They said they “stand ready to work with you to address the challenges presented by China’s role in global trade.”
But they also said they don’t “believe that imposing additional tariffs on medical technology products would advance the policy objective you have articulated, which is to target products that benefit from China’s industrial and economic plans while minimizing the impact on the U.S. economy.”