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The United States of America has recently unfolded its highly progressive and pioneering act which is named “Competes Act, 2022”. It stands for “America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength Act” which caters to multiple looming economic issues that face the country’s administration. These problems constituted the major reason for crippling the efforts made by the administration during the COVID-19 pandemic. This law is advanced to strengthen the global supply chain of the country and lend more weight to the country's innovation sector as against China and many other international players.

“Today, the House takes action to transport our nation into the future, with the America COMPETES Act: bold, results-oriented legislation that will strengthen America’s national and economic security and the financial security of families, and advance our leadership in the world,” House Speaker Nancy Pelosi said.
This act also addresses the issue of the dwindling number of semiconductor chips in the global market. It also opens up new avenues for artistic and talented individuals from across the world by introducing what they commonly called Start-up Visa. This $250 billion legislative package is focused on investing in domestic research and manufacturing to enhance the country’s global standing as a competitor.

What all this Act incorporates:

The Act is majorly divided into 4 main important heads which are:-

  •  Strengthening Supply Chains
  •  Funding the research and innovation sect
  •  Investment in manufacturing of semiconductors
  •  Changes to Trade-related policy

Let us all discuss them all in detail to get to comprehend this law and its implications in a better way.

  1. Strengthening Supply Chains: It is one of the essential boosters behind this law and is aimed at creating a bulwark against the economy of the country and assisting in developing the national security by preventing shortages of critical goods and ensuring that more of these goods are made right here in the United States. A total allocation of $45 billion will be advanced over six years in form of loans and grants to ameliorate the supply chains and to augment the manufacturing process of goods essential for the security of the nation. An office would be established by the house that would monitor supply chains, pinpoint the flaws, and will then categorize the critical products. Alongside, the office would also ensure that there is enough stock to wend off the chances of the paucity of goods in the market. Further, The Act provides another $3 billion for the country’s solar manufacturing supply chain. This is done to reduce the dependency of the country on China for the parts. A pilot program of $10.5 billion will also be part of the Act that awards grants to states to maintain a strategic stock of particular drugs, medical types of equipment, and personal protective equipment. $1.5 billion is being allocated for Public Welfare Supply Chain Innovation Fund and another $1.5 billion is for enhancing the medical supply chain elasticity. An amount of $500 million will be granted to the office for supply chain mapping also.

  2. Funding the Research and Innovation sect: A hefty amount is devoted to this sect of Research and Innovation by both, the House and Senate bills. The Act includes a suite of bipartisan science, innovation, and the technology-led by: the National Science Foundation for the Future Act, the department of energy office of science for the Future Act, The National Institute of Standards and Technology for the Future Act as well as several provisions to strengthen and expand our nation’s STEM workforce (Science, Technology, Engineering and Math programs) to better represent the diversity of our nation. The federal agency encourages research and education in the non-medical fields of science and technology. It would also increase the total finances of the Office of Science, the lead federal agency which buttresses the scientific research for energy applications. The office sustains around 25000 researchers from industry, universities, national laboratories, and other federal agencies.

  3. Investment in Manufacturing Semi-Conductors: The surging COVID-19 toll around the world led to the dearth of semi-conductors and other important components which hammered the automobile company wretchedly as the manufacturing units were shut down due to lockdown. These semiconductors, also known as chips, are primarily essential for the production of smartphones, medical equipment, cars, etc. This paucity of semi-conductors had pushed the national security of the US at risk as it was very precious for its global competitiveness and national security. Once a leader in the manufacturing of these chips, the US has lost its field as other global giants mounted their production, causing many American manufacturers to import chips from outside the country. The share of semiconductor manufacturing capacity located in the US has decreased from 37% in 1990 to 12% today, according to the Semiconductor Industry Association. Under America’s Competes Act, an amount of $52 billion is invested in the manufacturing of these chips so that the technological leadership of the country in semiconductor fabrications remains incessant. It also invests $2 billion to strengthen critical components in the production of automobiles, consumer electronics, and defense systems.

  4. Changes to trade-related policies: The Competes Act has also called for changes in the trade rules of the United States which are aimed that creating a level playing field for all American businesses and combating China’s surreptitious and market-misguiding trade practices. The Act would reinstate the Generalized System of Preferences which was a tariff program established by the Trade Act of 1974. This program eliminates duties levied on thousands of products from the poorest countries of the world. The Bill has added new eligibility criteria concerning labor standards, environment, and human rights. The program named Trade Adjustment program will also be revived and renewed that will be aimed at providing aid to those who lost their jobs or whose wages were trimmed due to an increase in imports. The country’s Anti-dumping and Countervailing duties would also get stiffened which would invariably target China’s Belt and Road initiative- a plan which connects many countries of the world with china forming a global channel for trade etc. This bill would also empower the office of the US Trade Representative to review and potentially block US companies from shifting manufacturing abroad if the product is critical to the country’s supply chain or a threat to security.

Amendment in Immigration Act: What is Start-up Visa?

The Act, besides the changes in the supply chain, chip production, also amends the Immigration and Nationality Act,1965 (also known as Hart-Celler Act). This Act creates a new classification of “W” nonimmigrants for entrepreneurs with an ownership interest in a startup unit, essential employees, and also for their spouses and children. The Act directs the Secretary of Homeland Security to establish procedures for foreign nationals with an ownership interest in startup to register or self-petition for classification as a W-1 non-immigrant and to receive extensions of such classifications for up to eight years if certain obligations are standards are meted out. A limited number of W-2 visas are also allocated for those who are considered important for the growth and success of the entity. The bill also exempts from the numerical limits on immigrant visas to those foreign individuals and their spouses and children who have acquired a degree to doctorate in science, technology, engineering, and mathematics(STEM) from a qualified research institute of the US or any other foreign institution if it’s degree is pari passu to that of the US research institutions. During the 18 months preceding the filing of the petition, the startup entity must have received at least $250,000 in qualifying investments from one or more qualified investors or at least $100,000 in qualifying government awards or grants, the bill notes .“They will help bring manufacturing jobs back to the United States and they are squarely focussed on easing the sort of supply chain bottlenecks like semiconductors that have led to higher prices for the middle class, ” Joe Biden said in his statement.

What are some other kinds of Visas issued in the USA?

  1. H-1B Visa - These are issued to skilled workers and are most popular among Indian IT companies. It’s for those in a special type of occupation and required educational qualification.
  2. H-2B Visa - It is for a temporary period to hire noncitizens to perform non-agricultural labor or services in the US. These are issued for seasonal needs.
  3. L-1 Visa - An individual is qualified for an L01 visa if the person has been employed outside the US by the sponsoring company for at least one continuous year out of the past three years and is being transferred to the US to work as a manager, executive, or specialized knowledge worker.
  4. H-4 Visa – It is for those who are the dependents of H-1B visa holders.
  5. J-1 Visa It is for anyone outside the US who wishes to take part in study-and work-related exchange programs approved by the Departments of State Bureau of Educational and Cultural Affairs.

Criticism of the Bill

The America Competes Act, 2022 which was introduced recently in the House of Representatives has raised eyebrows of many in the financial sector. Among those who have apprised us of the pernicious effect of this Act is the bro-bitcoin US Senator Cynthia Lummis. According to her, the bill is “a direct attack” on the crypto industry. This act enhances the power of the treasury secretary to ban any type of financial asset that has a foreign link without any notice which is a straightforward attack on the digital asset industry. “I will not stand by and let the heavy hand of the government pick winners and losers,” she stressed. Tom Emmer, a congressman, tweeted: “House Democrats introduced legislation that would give the Secretary of the Treasury dictatorial-level power to prohibit any transactions they deem concerning without due process. This leaves the American people powerless to hold Secretary Yellen accountable”

How does it Impact India?

The newly introduced bill in the United States of America will have a considerable effect on the Indian diaspora. 2.7 million Indian immigrants are residing in the US as of 2019 which makes the US 2nd most popular destination for Indians living abroad, after UAE. A new visa category would undoubtedly mean more opportunities in the US for Indian Talent and skilled workers. Every year, 85000 H-1B work permits are issued by the US out of which 65000 are for everyone and an additional 20000 is for those who graduate with a master’s degree from a US institution of higher learning. Out of these total H-1B visas issued, a massive amount is cornered by Indian People. They now, with this new category, will most likely avail themselves of healthier opportunities. But as said, there is no rose without a thorn. With more opportunities abroad, the issue of Brain Drain would inevitably surge. As of 2018, nearly 7,53,000 Indian students were studying abroad. Several news reports suggest that more than half of the first rankers in Class 10 and Class 12 examinations during 1996-2015 had migrated and were studying or employed overseas, mostly in the US . The reason behind Brain Drain is not only better salaries but the all-inclusive social safety that one avails. This law is a revolutionary one for the US but it doesn’t bode well for India in the long run as it would eventually take all the inventions and innovations of the country abroad which is certainly a point of vexation.

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