Commerce Secretary Embraces a Beefier Industrial Policy to Combat China and Russia
WASHINGTON—As a $52 billion bill to bolster semiconductor manufacturing in the U.S. approached a critical juncture, Commerce Secretary
Gina Raimondo
reached out to some unusual figures to cultivate support in Congress: former Trump administration national security officials.
A member of her security detail told her that
H.R. McMaster,
national security adviser to former President
Donald Trump,
praised her on Joe Rogan’s podcast. Ms. Raimondo brought in Mr. McMaster and three other former Trump officials to talk up the importance of semiconductors to national defense alongside Democratic and Republican lawmakers.
The event “defined competition with China as a nonpartisan issue,” Mr. McMaster recalled. The legislation passed the Senate four months later with 17 Republicans in support.
The Commerce Department has been called the “hall closet” of the federal government with an eclectic mix of responsibilities including business promotion, patents and weather forecasts.
But Ms. Raimondo, 51 years old, has positioned the department as a driver of administration efforts to confront China’s geopolitical ambitions and Russia’s aggression in an era when supply chains, advanced technology and economic alliances are major battlegrounds.
“The most important thing we can do to compete with China is invest in America,” Ms. Raimondo said in an interview. “We need America to dominate in certain areas of technology—critical minerals, electric vehicle batteries, semiconductors, artificial intelligence.”
It amounts to a level of industrial policy that the U.S. government has traditionally eschewed. And Ms. Raimondo’s pursuit of it has stoked unease among progressives in her own party, who view her as too cozy with business, with political opponents and with some foreign leaders. But it is a role she has embraced with some early signs of success.
Following Russia’s invasion of Ukraine, the Commerce Department launched a regime of export controls with friendly nations to cut off shipments of semiconductors, telecommunications and other key products aimed at crippling Russia’s ability to build and repair weapons.
And Ms. Raimondo has taken the lead in lining up partners for
President Biden’s
signature foreign economic initiative, the Indo-Pacific Economic Framework, which aims to boost cooperation in areas such as digital trade and supply chains to counter China’s influence. Trade agreements in the past would have been the primary responsibility of the U.S. Trade Representative.
The Biden administration’s USTR, led by
Katherine Tai,
has declined to pursue traditional trade agreements that it considers at odds with the president’s focus on bolstering workers and unions, limiting the USTR’s role in Mr. Biden’s overseas economic engagement.
“USTR has worked relentlessly to rebuild our economic ties around the world, and we are pursuing an ambitious agenda with our colleagues across the Biden administration,” said USTR spokesman
Adam Hodge.
With the semiconductor bill and last year’s infrastructure law, Ms. Raimondo is set to control more than $100 billion in additional funding, more than any of her predecessors. The Commerce Department also is seeking the largest departmental budget increase in the government.
A former venture capitalist and Rhode Island governor, Ms. Raimondo has a history of being at odds with progressives in her own party.
After being elected Rhode Island treasurer, Ms. Raimondo championed a pension fund overhaul that improved its financial position but angered public employee unions for reducing benefits and shifting money into hedge funds. During her 2014 gubernatorial campaign, her Democratic opponents branded her a “Wall Street” candidate.
SHARE YOUR THOUGHTS
How do you assess Gina Raimondo’s tenure as Commerce secretary? Join the conversation below.
Her leading critic today is Sen.
Elizabeth Warren
(D., Mass.), a fellow New Englander with presidential aspirations. During Ms. Warren’s pursuit of the 2020 Democratic presidential nomination, Ms. Raimondo (who backed Michael Bloomberg initially) was critical of Ms. Warren. “I worry about free this, free that, Medicare for all,” she said in 2019.
Ms. Warren contends Ms. Raimondo is too close to Big Tech companies, and has sent her a series of letters (which Ms. Warren made public) citing specific objections.
Ms. Warren criticized Ms. Raimondo for a video message she delivered to the U.S. Chamber of Commerce last December, in which she voiced concerns that a European Union proposal on tech regulation would harm U.S. tech companies.
The message was “a rush to defend the market share and profits of giant multinationals,” Ms. Warren said in her Dec. 14, 2021, letter to Ms. Raimondo.
In a July letter, Ms. Warren called the presence of former technology executives within Ms. Raimondo’s senior ranks evidence of “Big Tech Revolving Door” at her department.
Ms. Raimondo brushed off the criticism. “I’m the Commerce secretary,“ she said in the interview. ”It is my job to work with business, and to listen to business and to partner with the private sector.”
Rep.
Pamila Jayapal
(D., Wash.), the leader of the House progressive caucus, was for a time among lawmakers vowing to sink the semiconductor bill once it reached the House, worrying that taxpayer funds would be used for stock buybacks to enrich executives at semiconductor companies.
The day before the House was scheduled to vote, Ms. Raimondo agreed to have Commerce closely monitor companies that received money and include a clawback rule for excessive executive compensation. “This will get us there,” Ms. Jayapal recalls telling Ms. Raimondo.
The House passed the bill 243-187 on July 28, with support of all but one Democrat and 24 Republicans.
There are other friction points. Commerce is responsible for ensuring that advanced U.S. technologies don’t go to adversarial countries. China hawks say that under Ms. Raimondo, the department has given priority to U.S. commercial interests over national security.
Commerce was also asked to revise federal rules to address potential security risks from TikTok and other foreign-owned apps, but more than a year later no such rules have been issued.
Ms. Raimondo said her team has worked aggressively to protect American technology and intellectual property, including through adding more than 100 Chinese companies to the entity list for export restrictions.
On several fronts, Ms. Raimondo has used personal diplomacy to advance the administration’s causes. She lobbied
Piyush Goyal,
India’s minister for commerce, industry, consumer affairs, food and public distribution, to join the Indo-Pacific Economic Framework despite India’s protectionist history. “Gina is very, very committed to outcomes. She likes speed. She is frank and she speaks her mind,” Mr. Goyal said in an interview, noting that they text each other to have conversations on short notice.
A few weeks after Taiwan’s
GlobalWafers Co.
gave up a $5 billion expansion plan in Germany and started seeking an alternative site in February, her team launched a campaign to woo it. She weighed in with a one-hour call in June with GlobalWafers Chief Executive Doris Hsu. Ms. Hsu said that without U.S. aid, its new plant would have to go to South Korea where construction costs would be one-third, rather than the U.S.
“We will make the math work,” Ms. Raimondo assured the CEO. Two weeks later, GlobalWafers announced a new plant in Texas with up to $5 billion in investment and 1,500 jobs.
Analysts see the Commerce secretary role as a stop on Ms. Raimondo’s political ascent. She is seen as popular with Mr. Biden and attends Mass weekly at Holy Trinity Catholic Church in Georgetown, sometimes alongside the president and Speaker
Nancy Pelosi
(D., Calif.) with whom she claims a bond as “small Italian women in public service.”
“I would expect that, for as long as Democrats are in power in Washington, she’ll always be somewhere in the line of succession for the presidency,” said
Robert Walsh,
former executive director of the National Education Association of Rhode Island, who says he used to argue frequently with her as a labor leader in the state.
Ms. Raimondo says she is committed to using her post to advance the cause of workers and women. One example: Her next initiative is to roll out apprenticeship and workforce diversification programs supported by companies receiving funds through the Chips Act.
Raimondo’s Resume
- Born in Smithfield, R.I., to Italian-American parents. Her father worked at Bulova watch factory but was laid off at age 56 when his job moved overseas.
- Graduated from Harvard College and Yale Law School, received a Rhodes scholarship to Oxford University where she later earned a sociology doctorate with a thesis on single motherhood.
- Founded Rhode Island’s first venture-capital firm, called Point Judith Capital.
- Became the state’s first female governor in 2015 after serving as state treasurer for four years. During her six years as governor, her signature policies included tax cuts, deregulation, minimum wage increases and free community college.
- Confirmed as Commerce secretary in March 2021 by a 84-15 Senate vote.
Write to Yuka Hayashi at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
WASHINGTON—As a $52 billion bill to bolster semiconductor manufacturing in the U.S. approached a critical juncture, Commerce Secretary
Gina Raimondo
reached out to some unusual figures to cultivate support in Congress: former Trump administration national security officials.
A member of her security detail told her that
H.R. McMaster,
national security adviser to former President
Donald Trump,
praised her on Joe Rogan’s podcast. Ms. Raimondo brought in Mr. McMaster and three other former Trump officials to talk up the importance of semiconductors to national defense alongside Democratic and Republican lawmakers.
The event “defined competition with China as a nonpartisan issue,” Mr. McMaster recalled. The legislation passed the Senate four months later with 17 Republicans in support.
The Commerce Department has been called the “hall closet” of the federal government with an eclectic mix of responsibilities including business promotion, patents and weather forecasts.
But Ms. Raimondo, 51 years old, has positioned the department as a driver of administration efforts to confront China’s geopolitical ambitions and Russia’s aggression in an era when supply chains, advanced technology and economic alliances are major battlegrounds.
“The most important thing we can do to compete with China is invest in America,” Ms. Raimondo said in an interview. “We need America to dominate in certain areas of technology—critical minerals, electric vehicle batteries, semiconductors, artificial intelligence.”
It amounts to a level of industrial policy that the U.S. government has traditionally eschewed. And Ms. Raimondo’s pursuit of it has stoked unease among progressives in her own party, who view her as too cozy with business, with political opponents and with some foreign leaders. But it is a role she has embraced with some early signs of success.
Following Russia’s invasion of Ukraine, the Commerce Department launched a regime of export controls with friendly nations to cut off shipments of semiconductors, telecommunications and other key products aimed at crippling Russia’s ability to build and repair weapons.
And Ms. Raimondo has taken the lead in lining up partners for
President Biden’s
signature foreign economic initiative, the Indo-Pacific Economic Framework, which aims to boost cooperation in areas such as digital trade and supply chains to counter China’s influence. Trade agreements in the past would have been the primary responsibility of the U.S. Trade Representative.
The Biden administration’s USTR, led by
Katherine Tai,
has declined to pursue traditional trade agreements that it considers at odds with the president’s focus on bolstering workers and unions, limiting the USTR’s role in Mr. Biden’s overseas economic engagement.
“USTR has worked relentlessly to rebuild our economic ties around the world, and we are pursuing an ambitious agenda with our colleagues across the Biden administration,” said USTR spokesman
Adam Hodge.
With the semiconductor bill and last year’s infrastructure law, Ms. Raimondo is set to control more than $100 billion in additional funding, more than any of her predecessors. The Commerce Department also is seeking the largest departmental budget increase in the government.
A former venture capitalist and Rhode Island governor, Ms. Raimondo has a history of being at odds with progressives in her own party.
After being elected Rhode Island treasurer, Ms. Raimondo championed a pension fund overhaul that improved its financial position but angered public employee unions for reducing benefits and shifting money into hedge funds. During her 2014 gubernatorial campaign, her Democratic opponents branded her a “Wall Street” candidate.
SHARE YOUR THOUGHTS
How do you assess Gina Raimondo’s tenure as Commerce secretary? Join the conversation below.
Her leading critic today is Sen.
Elizabeth Warren
(D., Mass.), a fellow New Englander with presidential aspirations. During Ms. Warren’s pursuit of the 2020 Democratic presidential nomination, Ms. Raimondo (who backed Michael Bloomberg initially) was critical of Ms. Warren. “I worry about free this, free that, Medicare for all,” she said in 2019.
Ms. Warren contends Ms. Raimondo is too close to Big Tech companies, and has sent her a series of letters (which Ms. Warren made public) citing specific objections.
Ms. Warren criticized Ms. Raimondo for a video message she delivered to the U.S. Chamber of Commerce last December, in which she voiced concerns that a European Union proposal on tech regulation would harm U.S. tech companies.
The message was “a rush to defend the market share and profits of giant multinationals,” Ms. Warren said in her Dec. 14, 2021, letter to Ms. Raimondo.
In a July letter, Ms. Warren called the presence of former technology executives within Ms. Raimondo’s senior ranks evidence of “Big Tech Revolving Door” at her department.
Ms. Raimondo brushed off the criticism. “I’m the Commerce secretary,“ she said in the interview. ”It is my job to work with business, and to listen to business and to partner with the private sector.”
Rep.
Pamila Jayapal
(D., Wash.), the leader of the House progressive caucus, was for a time among lawmakers vowing to sink the semiconductor bill once it reached the House, worrying that taxpayer funds would be used for stock buybacks to enrich executives at semiconductor companies.
The day before the House was scheduled to vote, Ms. Raimondo agreed to have Commerce closely monitor companies that received money and include a clawback rule for excessive executive compensation. “This will get us there,” Ms. Jayapal recalls telling Ms. Raimondo.
The House passed the bill 243-187 on July 28, with support of all but one Democrat and 24 Republicans.
There are other friction points. Commerce is responsible for ensuring that advanced U.S. technologies don’t go to adversarial countries. China hawks say that under Ms. Raimondo, the department has given priority to U.S. commercial interests over national security.
Commerce was also asked to revise federal rules to address potential security risks from TikTok and other foreign-owned apps, but more than a year later no such rules have been issued.
Ms. Raimondo said her team has worked aggressively to protect American technology and intellectual property, including through adding more than 100 Chinese companies to the entity list for export restrictions.
On several fronts, Ms. Raimondo has used personal diplomacy to advance the administration’s causes. She lobbied
Piyush Goyal,
India’s minister for commerce, industry, consumer affairs, food and public distribution, to join the Indo-Pacific Economic Framework despite India’s protectionist history. “Gina is very, very committed to outcomes. She likes speed. She is frank and she speaks her mind,” Mr. Goyal said in an interview, noting that they text each other to have conversations on short notice.
A few weeks after Taiwan’s
GlobalWafers Co.
gave up a $5 billion expansion plan in Germany and started seeking an alternative site in February, her team launched a campaign to woo it. She weighed in with a one-hour call in June with GlobalWafers Chief Executive Doris Hsu. Ms. Hsu said that without U.S. aid, its new plant would have to go to South Korea where construction costs would be one-third, rather than the U.S.
“We will make the math work,” Ms. Raimondo assured the CEO. Two weeks later, GlobalWafers announced a new plant in Texas with up to $5 billion in investment and 1,500 jobs.
Analysts see the Commerce secretary role as a stop on Ms. Raimondo’s political ascent. She is seen as popular with Mr. Biden and attends Mass weekly at Holy Trinity Catholic Church in Georgetown, sometimes alongside the president and Speaker
Nancy Pelosi
(D., Calif.) with whom she claims a bond as “small Italian women in public service.”
“I would expect that, for as long as Democrats are in power in Washington, she’ll always be somewhere in the line of succession for the presidency,” said
Robert Walsh,
former executive director of the National Education Association of Rhode Island, who says he used to argue frequently with her as a labor leader in the state.
Ms. Raimondo says she is committed to using her post to advance the cause of workers and women. One example: Her next initiative is to roll out apprenticeship and workforce diversification programs supported by companies receiving funds through the Chips Act.
Raimondo’s Resume
- Born in Smithfield, R.I., to Italian-American parents. Her father worked at Bulova watch factory but was laid off at age 56 when his job moved overseas.
- Graduated from Harvard College and Yale Law School, received a Rhodes scholarship to Oxford University where she later earned a sociology doctorate with a thesis on single motherhood.
- Founded Rhode Island’s first venture-capital firm, called Point Judith Capital.
- Became the state’s first female governor in 2015 after serving as state treasurer for four years. During her six years as governor, her signature policies included tax cuts, deregulation, minimum wage increases and free community college.
- Confirmed as Commerce secretary in March 2021 by a 84-15 Senate vote.
Write to Yuka Hayashi at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8