— Congress has been sitting on legislation for months that proponents say will make the U.S. more competitive against China, and some lawmakers are growing frustrated that there’s still no clear path toward passage.

— U.S. Trade Representative Katherine Tai and her G-7 counterparts pledged to push back against forced labor and digital authoritarianism. Their big (unnamed) target: China.

— Air shipping companies say the Biden administration’s vaccine mandate will cause them to lose much-needed workers ahead of the holidays. Read more in the Supply Chain Watch section.

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CHINA COMPETITION BILL STALLED IN CONGRESS: There’s no shortage of legislation struggling to eke its way through a narrowly divided Congress at the moment. But there’s growing frustration that Congress has yet to approve a bipartisan package that aims to make the U.S. economy more competitive against China and address crippling supply chain challenges, POLITICO’s Andrew Desiderio and Gavin Bade report.

The U.S. Innovation and Competition Act (S. 1260 (117)) got the green light from the Senate back in June, but its companion legislation has been sitting idle in the House. It’s a sweeping measure that lawmakers contend will bolster domestic investment in manufacturing and technology, including the production of hard-to-obtain semiconductors.

All about chips: The legislation contains $52 billion to fund the CHIPS for America Act, which would provide incentives to companies that make high-end microchips in the U.S. The global semiconductor shortage has snarled a wide range of industries, from automobiles to electronics, and exposed U.S. dependence on foreign producers in Taiwan and South Korea.

Some lawmakers have suggested that the semiconductor funding could be cleaved off and passed as part of the National Defense Authorization Act. But doing so would be risky: As one of the broader package’s bipartisan provisions, it serves as a carrot to move the full bill along.

“There’s some urgency to that part,” Sen. Chris Van Hollen (D-Md.) said of the semiconductor funding. “I don’t object to [CHIPS] moving on a faster track, so long as it doesn’t jeopardize the chances of the overall package.”

Bridging the bills: House trade policy leaders are still hopeful they can pass their legislation before the end of the year. But they have yet to decide how to deal with a host of broadly supported Senate provisions that aren’t yet in their version of the bill.

Those include the reauthorization of three expired tariff exemption programs put in the Senate bill to prevent a GOP filibuster, as well as corporate-friendly changes to how Customs and Border Protection enforces trade blockades.

Domestic politics: Democrats say the legislation would attract bipartisan support and give the party a much-needed political win, especially as consumers grow increasingly concerned about rising prices and supply chain challenges.

G-7 TRADE LEADERS TARGET DIGITAL ISSUES, FORCED LABOR: Trade leaders from the G-7 economies left London on Friday with a joint call to oppose forced labor around the globe and the rise of “digital protectionism and authoritarianism.” They pledged to work together on those issues as a group and through global bodies such as the World Trade Organization.

That commitment was easier to make given that the G-7 grouping excludes China, which political leaders in both the U.S. and Europe have accused of using forced labor. As POLITICO Europe’s Sarah Anne Aarup notes, Friday’s joint statement specifically references the agricultural, solar and garment sectors in a thinly veiled knock at Beijing.

The leaders also adopted principles that aim to make digital markets open to international trade and investment by combatting data localization requirements, facilitating the movement of data over borders and protecting intellectual property rights, among other actions. They also support setting global technology standards that adhere to values like transparency, openness and effectiveness.

Talking through Europe: The G-7 gathering allowed Tai to huddle individually with her counterparts from the U.K., Germany and France on Friday. Per readouts of those meetings, the conversations hit similar notes with a major focus being the need to address global steel excess capacity — with China being the world’s primary offender.

She has also emphasized the importance of trans-Atlantic trade and efforts to streamline export controls and other regulations through the U.S.-EU Trade and Technology Council. The council’s first meeting nearly did not happen and doubts remain about what can be accomplished.

Big picture: Tai has made rebuilding trade relations with Europe a key focus of her first months in office. Those overtures have picked up steam of late, as Tai has made trips this month to Paris, London, Brussels, Geneva and Sorrento, Italy, for various summits.

SENATE PANEL TO TACKLE USTR NOMINATIONS: The Senate Finance Committee meets Tuesday morning to consider the nominations of María Pagán for deputy U.S. trade representative and Christopher Wilson for chief innovation and intellectual property negotiator.

If confirmed, Pagán will represent the nation’s trade interests at the WTO in Geneva, which has suffered from a lack of U.S. support. Tai expressed her commitment to the WTO and called for reform in a speech earlier this month.

Meanwhile, Wilson would be the first person to fill the IP negotiator role, which has remained vacant since it was created in 2015. He would be charged with negotiating and enforcing deals that ensure global IP protections, an increasingly important aspect of digital trade.

Waiting for a hearing: No word yet on when the panel will host Elaine Trevino, Biden’s nominee for chief agricultural negotiator. Trevino is the president of the Almond Alliance of California and previously served as deputy secretary of California’s food and agriculture department.

REPUBLICANS SLAM BIDEN’S DIGITAL TAX AGREEMENT: The top Republicans on the Senate Finance and House Ways and Means committees are rebuking the Biden administration’s decision to terminate tariffs on European trading partners before those countries have eliminated their own digital services taxes.

Sen. Mike Crapo (R-Idaho) and Rep. Kevin Brady (R-Texas) criticized the White House for “surrendering once again to our foreign competitors” after reaching an agreement that rescinded retaliatory tariffs on Austria, France, Italy, Spain and the U.K.

In return, those countries committed to end their unilateral taxes on tech giants after the adoption of a global tax reform proposal. That process is expected to take at least a couple of years, and taxes collected in the meantime will be applied to companies’ future tax bills.

Not good enough: The Republican lawmakers have opposed Biden’s approach to global tax negotiations at the Organization for Economic Cooperation and Development. But they noted Friday that even USTR has determined that the digital services taxes harm American companies.

“Instead of taking action, however, the Biden administration retreated by failing to demand immediate repeal of discriminatory taxes, which will continue for years, if not indefinitely,” the pair wrote in a joint statement. “The administration simply settled for an empty promise — if we reform our tax laws to these countries’ satisfaction, then they will grant U.S. businesses tax credits against future taxes.”

CARGO SHIPPERS DECRY VACCINE MANDATE: Companies that transport consumer products, medical supplies and other goods say there’s yet another reason to expect U.S. supply chains will be in turmoil ahead of the holidays: the Biden administration’s plan to enforce a vaccine mandate for federal workers and contractors starting Dec. 8.

POLITICO’s Natasha Korecki reports that the Cargo Airline Association, which represents UPS, FedEx Express and others, told the Biden administration in a new letter that its members are struggling to meet the deadline — and they want it pushed to next year.

“This problem is further exacerbated by the fact that we are already experiencing a worker shortage, both in the air and on the ground, and any loss of employees who refuse to be vaccinated will adversely impact needed operations,” the association’s president, Stephen Alterman, wrote in the letter.

Biden’s labor problem: The loss of workers in the shipping industry could hamper Biden’s efforts to relieve supply chain congestion ahead of the busy holiday shopping season. The White House is leaning heavily on companies to expand their hours to move more cargo, fearing that empty store shelves will leave customers and retailers disgruntled going into Christmas.

But White House press secretary Jen Psaki told reporters Friday that the administration doesn’t expect the mandate will lead to worker shortages. She pointed to private companies in the airline industry that already have vaccine requirements in place.

A significant loss of workers “is not actually what we’ve seen at companies that have implemented these vaccine requirements that are not even part of federal law yet,” she said.

As for the National Guard: Biden garnered headlines Thursday night when he said he would “absolutely” consider calling on the National Guard to address congestion at the ports. On Friday, Psaki offered some clarity: “It is something that any president would have the capacity to do, the authority to do, but it is not something under active consideration,” she said.

— The U.K. and EU remain “far apart” on key issues related to trade with Northern Ireland, POLITICO Europe’s Laurens Cerulus reports.

— Mexican authorities are investigating allegations of forced labor after U.S. Customs and Border Patrol banned two tomato exporters, per Reuters.

— Long Beach, Calif., will allow shipping containers to be stacked higher in an effort to ease port congestion, Bloomberg reports.

— The coronavirus pandemic has caused a surge in Chinese exports, which have been a boon for its economy but also made it more dependent on global trade, according to The Wall Street Journal.

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