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US to issue rules on Chinese connected vehicles this autumn

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Adds comments by U.S. Commerce secretary, paragraphs 12-14

By David Shepardson

WASHINGTON, May 15 (Reuters) -U.S. Commerce Secretary Gina Raimondo said on Wednesday that her department plans to issue proposed rules on Chinese connected vehicles this autumn, citing national security risks to the data of Americans.

Raimondo said last week the United States could take "extreme action" and ban Chinese connected vehicles or impose restrictions on them after the Biden administration in February launched a probe into whether Chinese vehicle imports pose national security risks.

Connected cars have onboard integrated network hardware that allows internet access, allowing them to share data with devices both inside and outside the vehicle.

"We expect to have a rule out this fall," Raimondo told a U.S. Senate committee on Wednesday, adding: "The national security risks are quite significant ... We decided to take action because this is really serious stuff."

Raimondo said connected vehicles "have thousands of sensors, thousands of chips - they're controlled by software, which is coming from Beijing in the case of Chinese-made cars. They know where the driver goes, what the driving patterns are, what you're saying in your car. It's a lot of data around U.S. persons that goes right back to Beijing."

The Chinese foreign ministry previously urged the United States "to respect the laws of the market economy and principles of fair competition." It argued that 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.

The White House said in February that the Commerce Department's probe was 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."

Raimondo said on Wednesday, "It's not totally different than the threat of TikTok, which Congress took action on," referring to legislation passed last month that seeks to force Chinese parent company ByteDance to divest TikTok's U.S. assets or face a ban.

She reiterated prior comments that "you can imagine the most catastrophic outcome theoretically if you had a couple million cars on the road and the software were disabled."

There are relatively few imports of Chinese-made light duty vehicles in the United States.

The Biden administration announced separately this week that it is quadrupling tariffs on Chinese-made vehicles along with putting new tariffs on EV batteries, parts and critical minerals. U.S. officials also face new pressure to restrict Chinese electric vehicle imports from Mexico.

After the hearing, Raimondo declined to comment on what the rule may look like. Asked if it could cover Chinese automakers' vehicles assembled in Mexico, she said: "We have to figure it out. It's still in the process."

At the hearing, she said Commerce is tracking public reports that Chinese automakers are planning to assemble vehicles in Mexico. She wants to ensure they cannot avoid new U.S. tariffs.

"We are going to do whatever we need to do to make sure China doesn't use Mexico to end run around these new tariffs," Raimondo said.

Reporting by David Shepardson in Washington
Editing by Leslie Adler and Matthew Lewis


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