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May 16, 2019 1:30 PM, EDT

Transportation Leaders Examine Market Concerns in Freight Rail Industry

Rep. Peter DeFazio (D.-Ore) Rep. Peter DeFazio by Susan Walsh / Associated Press

The leaders of the transportation policy panel of the U.S. House of Representatives expressed concern about possible unfair trade practices in the freight rail and transit sectors.

The concerns stem from market practices state-owned enterprises have exhibited. These enterprises, such as several Chinese firms, are readying advancements in the domestic freight rail market, a move that could displace a significant segment of the workforce, the lawmakers argued.

“Tens of thousands of U.S. jobs are supported by this domestic manufacturing sector, but it could be decimated by unfair foreign competition. Not on my watch,” Rep. Peter DeFazio (D-Ore.), chairman of the Transportation and Infrastructure Committee, said at a hearing May 16. “State-owned enterprises ultimately pose serious risk to U.S. skilled workers, labor unions and the existing companies who play by the rules.”

The panel’s top Republican, Rep. Sam Graves of Missouri, emphasized the merits of reviewing the likely effects to the infrastructure network from state-owned enterprises. The enterprises are partially or fully subsidized by a government, and they routinely underbid domestic firms.

“We are focused on entrants to the rolling stock market and the impacts of these entrants on the public transit and freight rail sectors,” Graves said. “Concerns have been raised about these recent entrants, in particular whether or not their ownership or access to government subsidies gave them an unfair advantage.”

Chinese companies misrepresent themselves as benevolent actors, but let's be clear: This is an attack on our economy and national security.

Rep Harley Rouda (D-Calif.)

Rep. Harley Rouda (D-Calif.)

In response to such state-owned enterprises, Rep. Harley Rouda (D-Calif.) introduced legislation this month designed to prevent transit agencies from using federal transit funds when procuring Chinese rail assets. The legislation also would task transit agencies with developing and carrying out cybersecurity plans.

“Chinese companies misrepresent themselves as benevolent actors, but let’s be clear: This is an attack on our economy and national security,” Rouda said. “I thank my colleagues on both sides of the aisle for coming together to stop the flow of Americans’ taxpayer dollars to Chinese state-owned or state-supported companies.”

The legislation garnered bipartisan support. Co-sponsors include Republican Reps. Randy Weber of Texas, Rick Crawford of Arkansas, Scott Perry of Pennsylvania, and Kay Granger of Texas. Democrats co-sponsoring the bill include Reps. Tim Ryan of Ohio, Eleanor Holmes Norton of Washington, D.C., and John Garamendi of California.

A group of senators, led by Texas Republican John Cornyn, introduced companion legislation in March.

“China poses a clear and present danger to our national security and has already infiltrated our rail and bus manufacturing industries,” Cornyn said in a statement. “The threat to our national security through the exploitation of our transportation and infrastructure sectors is one we should take seriously. This legislation will help safeguard against this threat.”

During a hearing of the transportation committee in the House on May 16, Scott Paul, president of the Alliance for American Manufacturing, took issue with China Railroad Rolling Stock Corp.

The corporation’s transit procurements should be viewed as their way of entering the domestic freight rail market, Paul said, adding that national security interests should be considered, as well.

“CRRC’s ascent also raises alarming questions about Beijing’s access to, or operational control over, critical technology embedded in our rail infrastructure, such as GPS, sensors and other safety features,” Paul said. “This is a clear security risk.”