In a report published on August 1, Davis says measures agreed to by both the Senate and House of Representatives would prevent any Federal Transit Administration (FTA) funding from being used to purchase rail or transit assets from an entity owned, directed or subsidised by a country “identified as a priority watch list country by the United States Trade Representative”. While not directly named, Davis says the ban is clearly directed at China.
The Senate ban is more specific than the House ban, and only applies to rolling stock and buses. It also states that the ban applies to urbanised area, rural area, state-of-good-repair and bus facility grant funding, leaving open the possibility that other funding could be used to acquire rolling stock or buses from Chinese suppliers.
While the Senate ban says it “shall be applied in a manner consistent with the obligations of the United States under international agreements”, the Government Procurement Agreement of the World Trade Organization (WTO) states that the WTO rules “shall not apply to restrictions attached to Federal funds for mass transit and highway projects.”
The Senate ban would only apply to contracts signed after the enactment of the 2019 Department of Transport (DOT) Appropriations Act, which is expected to be late September or early October, while Davis says the House of Representative’s language appears to be retroactive. The Senate prohibition also prevents the expansion of existing contracts signed to include any more rolling stock vehicles or railcars, including all options.
Davis says as the ban is included in both the Senate and House versions of the annual Transportation-HUD appropriations bill, it is likely to be included in the final act in some form, although the final wording is expected to be closer to the Senate version.
The United States is a growing market for CRRC and according to IRJ Pro Fleet Monitor, the supplier currently has firm orders for 719 vehicles in the United States with options for a further 584. Its initial success was winning the Orange/Red Line contract in Boston in 2014 with a bid of $US 567m, which prompted it to build a vehicle assembly plant in Springfield, Massachusetts. It then won a $US 1.3bn contract with Chicago Transit Authority, where it is building a second assembly factory. CRRC clinched a third contract for Los Angeles Metro for $US 647m last year as well as a much smaller contract with the Southeastern Pennsylvania Transportation Authority (Septa).
