Chinese drone maker pushes to defeat US national security ban

China’s blacklisted DJI is fighting to maintain its dominance in the U.S. drone market by lobbying Congress to block a bill banning the federal government from buying its unmanned planes.

The Shenzhen-based company hired two lobbying firms – Squire Patton Boggs and the Vogel Group – to persuade members of Congress not to support the American Security Drone Act, which bars the government from buying drones from Chinese companies or to others considered to present a risk. to national security.

DJI is just one of many Chinese tech companies that have fallen into Washington’s crosshairs over security concerns.

The Trump administration in 2018 placed the group on the “entity list” – a blacklist that effectively bars it from buying American technology. Last year, President Joe Biden added DJI to the list of “Chinese military-industrial complexes”, a group of entities in which Americans are prohibited from investing.

As DJI faces pressure from the administration, it is working to derail congressional efforts that would hurt its business in America. ADSA would also prohibit US local law enforcement agencies, for example, from using federal grants to purchase its drones. According to OpenSecrets, which tracks lobbying spending, DJI has spent nearly $4 million since the start of 2018.

Highlighting the pressure on the group, David Benowitz, head of research at Drone Analyst, said DJI’s share of the US commercial market had fallen from 62% in 2020 to 50% last year. During the same period, Autel, another less scrutinized Chinese drone maker, saw its US market share drop from 7% to 9%.

DJI hired lobbying powerhouse Squire Patton Boggs in April after the House passed the nearly 3,000-page America Competes Act, a bill aimed at boosting US competitiveness against China that included ASDA.

But as lawmakers scramble to reconcile the House and Senate versions of major Chinese bills due to a separate political dispute, the DJI battle has shifted to the annual spending bill. defense that is making its way to Congress.

DJI appeared to score an early victory this week when the Democratic-controlled House rules committee opted out of including drone language in the House version of the defense bill. This angered lawmakers such as Michael Gallagher, a Republican who sponsored the drone amendment.

“The wording of this amendment has not changed since it was passed by the House into the Competition Act earlier this year and neither has the threat posed by DJI drones, but for some reason it seems that Congress’s appetite to debate this issue has increased,” Gallagher said. Financial Times.

“The U.S. government has clearly outlined the threats these devices pose to our national security, and we need to work together to ensure these drones are not in close proximity to the federal government,” he added.

The House Rules Committee did not respond to a request for comment.

Michael McCaul, the top Republican on the House Foreign Affairs Committee, criticized the decision to exclude ASDA from the National Defense Authorization Bill.

“If Congressional Democrats can’t agree that ensuring a blacklisted Chinese drone company doesn’t receive US money is a valid amendment to the NDAA, I’m afraid they don’t understand the basics of ‘national defence,'” McCaul told the FT. .

Adam Lisberg, North America communications manager at DJI, said the company did not know whether its lobbying contributed to the result. But he said the House result reflected “the growing bipartisan consensus that broad restrictions on drone technology would hurt American first responders and small businesses that want to make their own choices.”

According to emails obtained from a congressional office, DJI lobbyists say its drones are essential for local law enforcement and first responders because they are more advanced and much cheaper than their US rivals.

But Alexandra Seymour, a technology expert at CNAS, a think tank, said the benefits of technology were far outweighed by the national security risks.

“We try to protect our technology and our innovation. We don’t want to create an opportunity for competition to come in and steal information or monitor our critical infrastructure,” Seymour added.

In a letter to lawmakers in June, Adam Welsh, DJI’s head of global policy, said DJI could not access user data unless customers choose to share it with the group and denied that it there was a security risk.

But critics counter that China’s national security laws compel companies in China to share data with the central government when coerced by Beijing.

Eric Sayers, a security expert at the American Enterprise Institute, said he was shocked by the move in the House given the bipartisan consensus on DJI, which he attributed to lobbying. He said it was now critical that the Senate, which is drafting its version of the defense bill that will later have to be reconciled with the House version, take up the case against DJI.

“Congress has talked a good game about the People’s Republic of China in recent years, but has repeatedly failed to take decisive action against PRC drones for fear of the short-term but necessary costs it will create. to rip them out of our government ecosystem,” says Sayers.

“This trend will only change if the Senate finds the courage to take bipartisan action to pass ASDA.”

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