July 22, 2020 / 4:57 PM / in 13 days

Rail lobbyists seek tough U.S. sanctions for China's CRRC

WASHINGTON, July 22 (Reuters) - A railway lobbying group is calling on the Trump administration to use its most powerful sanctioning tool against China's CRRC after the Pentagon announced the world's largest maker of passenger trains was backed by the Chinese military.

In a letter sent on Tuesday, the Rail Security Alliance urged U.S. Treasury Secretary Steve Mnuchin to invoke the International Emergency Economic Powers Act (IEEPA) against the company, which has clinched key passenger rail contracts in Boston, Philadelphia, Chicago and Los Angeles by underbidding rivals.

The law allows the administration to kick a company out of the U.S. banking system, bar American firms or citizens from trading or conducting financial transactions with the sanctioned party, and freezes assets held in the United States.

"We write to encourage the imposition of immediate, meaningful, and permanent sanctions on CRRC for the continued protection of the economic and national security of the United States," the group stated.

The U.S. Defense Department last month released a list of 20 companies, including CRRC, allegedly owned or controlled by the Chinese military, or People's Liberation Army. The list was mandated by a 1999 law that gives the president the option of imposing IEEPA penalties against listed firms.

"Now is the time for the Administration to take immediate action against CRRC, which has been declared to be under the control of the PLA and which has demonstrated itself to be working against our national interests," the Rail Security Alliance said.

The lobbying group, made up of manufacturers, suppliers, and steel workers, was formed 4-1/2 years ago to oppose CRRC’s rapid expansion in the U.S. passenger rail market.

CRRC representatives and the Treasury Department did not immediately respond to requests for comment.

While there are no U.S. passenger-car builders, CRRC’s success has fueled fears the company will encroach on the country’s far bigger freight car market.

A law passed last year bars federal funds from going to Chinese state-owned companies such as CRRC. (Reporting by Alexandra Alper; Editing by Tom Brown)

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