H.R.1081 - Preventing SBA Assistance from Going to China Act (119th Congress)
Summary
H.R.1081, the "Preventing SBA Assistance from Going to China Act," aims to amend the Small Business Act to prevent businesses with significant ties to the People's Republic of China (PRC) from receiving assistance from the Small Business Administration (SBA). Specifically, it prohibits businesses located and incorporated in the PRC, or those with more than 25% of their voting stock owned by PRC citizens or entities, from being considered small business concerns eligible for SBA programs. The bill was introduced in the House of Representatives and referred to the Committee on Small Business.
The primary goal is to ensure that SBA resources are not used to support businesses that could be influenced by or aligned with the interests of the Chinese government. This is achieved by adding a new subsection to Section 3(a) of the Small Business Act, which defines the criteria for ineligibility based on location, incorporation, and ownership ties to the PRC.
The bill seeks to protect American small businesses by preventing competition from entities potentially backed by the Chinese government, and to safeguard taxpayer dollars by ensuring they are not used to support foreign interests.
Expected Effects
The bill, if enacted, would change the eligibility criteria for SBA assistance programs. Businesses with strong connections to the PRC would be excluded. This could lead to a shift in the distribution of SBA resources, favoring businesses with less or no affiliation with the Chinese government.
It could also prompt businesses with PRC ties to restructure their ownership or operations to meet the new eligibility requirements, or seek funding from alternative sources. The long-term effect could be a reduction in Chinese influence in the U.S. small business sector and a strengthening of domestic businesses.
Potential Benefits
- Protects American Small Businesses: Prevents unfair competition from businesses potentially supported by the Chinese government.
- Safeguards Taxpayer Dollars: Ensures SBA funds are used to support American businesses and not foreign interests.
- Enhances National Security: Reduces potential economic influence of the PRC within the U.S.
- Promotes Economic Independence: Encourages domestic business growth and reduces reliance on foreign entities.
- Maintains Integrity of SBA Programs: Reinforces the focus of SBA assistance on genuinely American small businesses.
Potential Disadvantages
- Potential for Unintended Consequences: Some legitimate small businesses with minor PRC ties might be unfairly excluded.
- Risk of Retaliation: The PRC could potentially retaliate with similar restrictions on American businesses operating in China.
- Increased Administrative Burden: The SBA may face increased administrative costs to verify businesses' affiliations.
- Limited Impact: The bill might not fully address all avenues of Chinese economic influence in the U.S.
- Possible Legal Challenges: The definition of "affiliation" could be subject to legal challenges.
Constitutional Alignment
The bill appears to align with the Constitution, particularly Article I, Section 8, which grants Congress the power to regulate commerce with foreign nations. By restricting SBA assistance to businesses with ties to the PRC, Congress is exercising its authority to manage international economic relations and protect domestic industries.
There are no apparent violations of individual rights or freedoms protected by the Bill of Rights. The bill does not discriminate based on race, religion, or other protected characteristics, and it does not infringe on freedom of speech or assembly. The focus is on economic ties to a foreign government, which falls under the purview of congressional authority over commerce and national security.
However, due process concerns could arise if the implementation of the law leads to arbitrary or unfair denial of SBA assistance. Clear and transparent procedures for determining affiliation with the PRC would be necessary to ensure constitutional compliance.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).