May 16, 2019

Chair DeFazio Statement from Hearing on “The Impacts of State-Owned Enterprises on Public Transit and Freight Rail Sectors”

Washington, D.C. — The following are opening remarks, as prepared for delivery, from Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR) during today’s hearing titled: “The Impacts of State-Owned Enterprises on Public Transit and Freight Rail Sectors.”

Today’s hearing is not about one company, one sector, or one nation. It is about how Congress will respond to other nations’ systematically wiping out the U.S. transit and rail manufacturing base and our blue-collar workforce.

I have been fighting similar battles for decades. I opposed multiple Free Trade Agreements that failed to protect U.S. manufacturers and American workers. I opposed China’s ascension into the WTO. And I will continue to wage this battle with every tool in the toolbox to vigorously defend our domestic transportation manufacturing sector from state-subsidized entities.

My views of trade policy are not ideological; they are informed by observing the long run effects that unfair trade has had on my district. For three decades, blue-collar workers have been getting shafted all in the name of free trade. I have watched industries suffer the fate of bad trade deals and foreign incursions into the U.S. marketplace. I have battled to save multiple industries including paper, lumber, furniture, solar, trucking, auto, maritime, and agriculture.

And the hits keep coming. Today, state-owned enterprises and similarly subsidized corporations are beginning to enter the transit rail and bus market, using subsidies from foreign governments to undercut long-established manufacturers and grab American taxpayer dollars. State-owned enterprises are also eyeing the U.S. domestic freight rail market. 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.

Today we will hear from several witnesses raising concern about state-owned enterprises and similar corporations undercutting the U.S. rail and bus rolling stock market, the potential long-term effect on U.S. workers, cybersecurity risks, and reliability problems. I share these concerns.

Currently, U.S. companies produce the majority of the freight rail cars that haul shipments across the country. Nearly 65,000 jobs are supported by the production of these rail cars. But as the Australian domestic manufacturing sector experienced, if left unchecked, state-owned enterprises can enter the market, dominate production, and squeeze-out domestic companies. We cannot let that happen in the U.S. Today’s witnesses will help explain the dangers of letting domestic companies fall victim to state-subsidized companies as well as the security concerns that would be created if that occurred.

I also want to hear today if these state-owned companies are truly complying with federal transit Buy America rules. Federal laws like Buy America protect taxpayer interests in preserving U.S. jobs when local transit agencies use federal funds to purchase rolling stock. In the FAST Act, I strengthened Buy America standards by increasing the domestic content percentage phased-in to 70 percent.

Members of the House and Senate sharing these concerns have introduced the Transit Infrastructure Vehicle Security Act to prevent federal transit dollars from being used to procure transit rail rolling stock and transit buses from Chinese state-owned, controlled or subsidized enterprises. The House bill, H.R. 2739, was introduced by Representative Rouda, a Transportation and Infrastructure Committee member, along with several other Committee members who are original co-sponsors of the bill. I look forward to hearing the views of today’s witnesses on this pending legislation.

I don’t blame transit agencies for seeking cheaper rolling stock. I know they are severely underfunded, and the state of good repair back log continues to grow. That backlog is currently approaching $100 billion nationwide and the federal government only provides approximately $12.5 billion a year to meet all transit needs.

For example, in my district, the local transit agency, LTD, ordered five BYD buses in 2016. After years of delay and delivery of defective buses, they still do not have all five buses. Similar problems are found in several other transit agencies across the U.S. These poorly constructed buses only exacerbate the $100 billion backlog of state of good repair.

I realize most products today are built with the goal of low initial cost, rather than durability. But dollar for dollar, it is cheaper to build for durability over the long run and that principal is enshrined in federal rules that require a bus to remain in service for 12 years.

I also understand that the state-owned enterprises with U.S. contracts have hired U.S. workers, and in some cases these workers even have union contracts. This hearing is not a criticism of those workers, or unions. In fact, I think the number of workers who benefit from a union contract ought to be much higher.

However, nobody today can honestly believe that Chinese companies are pro-labor union. The unionization of these jobs is a tactic to dodge the real issues these state-owned enterprises bring to the table.

State-owned enterprises have a history of using supply chains in low-cost countries and shipping the product to the destination country. Research suggests that for every U.S. transit rail car final assembly job created by a state-owned enterprise, the net loss is 3.5 jobs in the U.S. economy – and that estimate assumes the company complies with Buy America standards.

State-owned enterprises ultimately pose serious risk to U.S. skilled workers, labor unions, and the existing companies who play by the rules. That’s why we’re holding this hearing. I thank the witnesses for being here and look forward to your testimony.