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US could ban Chinese connected vehicles or impose restrictions

U.S. Treasury Secretary Janet Yellen in Beijing

By David Shepardson

WASHINGTON (Reuters) -The U.S. could take "extreme action" and ban Chinese connected vehicles or impose restrictions on them, Commerce Secretary Gina Raimondo said on Wednesday, in the first indication a ban could be on the table after a national security investigation.

The Commerce Department is reviewing public comments that were due by April 30, Raimondo told Reuters, on a probe the Biden administration launched in February into whether Chinese vehicle imports pose national security risks.

"We have to digest all the data and then figure out what action that we want to take," Raimondo said without detailing a timeline. "We could take extreme action, which is to say no Chinese connected vehicles in the United States or look for mitigation" including safeguards, guardrails or other requirements.

The White House said in February the Commerce probe was being opened because vehicles "collect large amounts of sensitive data on their drivers and passengers (and) regularly use their cameras and sensors to record detailed information on U.S. infrastructure."

White House officials told reporters in February it was too early to say what action might be taken on connected Chinese vehicles.

Raimondo said at a U.S. House of Representatives hearing she was concerned about Chinese connected vehicles that "could be collecting massive amounts of data on Americans, who they are, what they say in their car, where they go to, their patterns of driving." She added the United States needs "to take the threat much more seriously" of Chinese connected vehicles and other tech issues.

President Joe Biden has repeatedly said he will take action to prevent a flood of Chinese vehicle imports.

There are relatively few Chinese-made light duty vehicles being imported into the United States.

In comments to the Commerce Department, automakers highlighted it may be difficult to overhaul their technology systems to ease national security concerns.

The Alliance for Automotive Innovation, a trade group representing General Motors, Toyota, Volkswagen and nearly all major automakers, said in an April 30 filing automakers are committed to developing a framework for information and communications technology and services systems in connected vehicles that appropriately mitigates the risks associated with Chinese designed systems.

But they warned vehicle systems "including their hardware and software components, undergo extensive pre-production engineering, testing, and validation processes and, in general, cannot be easily swapped with systems or components from a different supplier."

The government of South Korea in a separate filing said the Korean automotive industry "expresses concerns about the broad scope of the investigation into connected vehicle supply chains, uncertainties surrounding the scope of potential regulatory targets and the timing of the implementation, all of which may lead to significant burdens on the industry."

Senate Banking Committee Sherrod Brown said on Wednesday he had urged Commerce in a filing "to ban all Chinese internet-connected vehicles and smart vehicle technology that is designed, developed, manufactured, or supplied from China."

The Biden administration is separately considering imposing new tariffs on Chinese-made vehicles and officials face new pressure to restrict Chinese electric vehicle imports from Mexico.

The Chinese foreign ministry in March said Chinese cars were popular globally not because of "so-called unfair practices" but because they had emerged out of fierce market competition and were technologically innovative.

In November, a bipartisan group of U.S. lawmakers raised alarms about Chinese companies collecting and handling sensitive data while testing autonomous vehicles in the United States.

(Reporting by David Shepardson; Editing by Chris Reese and Sonali Paul)