Lawmakers’ concerns about doing business with China could affect some quality of life programs in the military community, if proposed amendments in next year’s defense bill become law.
One proposal would ban the sale of goods in commissaries and exchanges that are made in China, assembled in China, or imported into the United States from China. Another would potentially affect a popular online education program, Tutor.com, which employs many military spouses in addition to educating the military community.
Exchange officials tell the Military Times that the ban on Chinese goods would have a devastating effect on military exchanges. They say if this provision becomes law, it could force the closure of nearly all exchanges on Army, Air Force and Navy bases. It’s expected to have a minimal effect on commissaries.
For example, up to 70% of items in Army and Air Force Exchange Service stores are at least in part manufactured, assembled or sourced from China, said AAFES spokesman Chris Ward.
The China-manufacturing amendment was offered by Rep. Mark Green, R-Tennessee, and passed in the House armed services version of the fiscal 2024 National Defense Authorization bill. Green introduced a similar provision last year, but it failed to become law. House and Senate lawmakers will be hashing out their different versions of the bill to consolidate them in the coming months.
“This provision would deprive military personnel and families of products that are widely available to other American citizens,” wrote Steve Rossetti, president of the American Logistics Association, in a letter to House lawmakers asking them to exclude the amendment.
“They should not be singled out and penalized by virtue of their service. Congress has not chosen to ban these products from off-base retailers and military personnel and their families should be entitled to at least the same rights and privileges as the citizens they defend,” Rossetti wrote.
This would also affect a group of people who have been eligible since 2020 to shop in exchanges and commissaries: veterans with VA service-connected disability ratings; Purple Heart recipients; veterans who are former prisoners of war; and primary family caregivers of eligible veterans under the VA caregiver program.
Effects on military exchanges
Nearly every category of items sold in the exchanges would be affected by a prohibition on Chinese goods, exchange officials said. It’s difficult to determine the exact percentage of goods being sourced, assembled in, or having components made in China, said Kristine Sturkie, a spokeswoman for the Navy Exchange Service Command. But items such as clothing and electronics make up more than 60% of their inventory, and “Made in China” could make up 40% of that inventory. The most affected categories would be clothing and fashion accessories, tech accessories and gadgets, makeup and cosmetics, phones and computers, children’s toys, household and domestic items, pet supplies and outdoor and travel products, she said.
About 70% of products sold by AAFES are at least in part manufactured, assembled or sourced from China, said AAFES spokesman Chris Ward. “A wide variety of products would no longer be available on military installations worldwide, including Apple iPhones, iPads, computers, TVs, headphones, patio furniture, seasonal goods [such as Halloween costumes and Christmas decorations], luggage, watches, appliances, hardware, bicycles, fitness equipment, photo, home décor, housewares, Nike, Adidas, Levi’s and Mattel toys.”
Officials from both exchange systems said if the provision were to become law, it would drive the closure of nearly all the stores, including most overseas and remote locations. “This would have a dramatic impact to patron quality of life, particularly for overseas and remote locations,” Sturkie said. “Out-of-pocket expenses for Navy families, particularly overseas, would rise by 20% or more as they would need to purchase some products and services on the local economy.”
Closures would also result in loss of jobs, officials said. The majority of the 10,000 Navy exchange employees would lose their jobs, which includes more than 2,500 military family members. For AAFES, it would result in the loss of up to 16,000 jobs, and 46% of AAFES employees are veterans, military spouses or dependents.
This would also result in loss of financial support to military quality of life programs. Over the last 10 years, for example, AAFES has provided $3.5 billion in profits to quality of life programs, Ward said.
The proposal would have a “minimal effect” on commissaries, said Marine Sgt. Maj. Michael Saucedo, senior enlisted adviser to the commissary agency director. “We have a small amount of products that might have an ingredient from China.”
Exchange officials have been working to identify alternate merchandise sources. “The retail industry as a whole has been working over the last two years to reduce the amount of goods and materials sourced in China, diversifying into other countries and ‘near sourcing’ where possible,” Sturkie said. “When give the option, NEXCOM has leveraged the progress the retail industry has made to secure goods from non-China sources.”
Marine Corps Exchange officials hadn’t responded by publication time to questions about the effects.
A second provision has been included in both House and Senate versions of that defense policy bill that would prohibit Defense Department officials from entering into contracts for online tutoring services by entities owned or controlled by the People’s Republic of China. The House version resulted from an amendment introduced by Rep. Eric Burlison, R-Missouri, who said he wants to protect the data of American military members and their families from the Chinese Communist Party. The Senate version allows the Secretary of Defense to approve a waiver.
In January, 2022, the company that has provided extensive, popular free tutoring services for troops and families since 2009 through DoD contracts, Tutor.com, was acquired by Primavera Holdings Limited, which is owned by Chinese nationals with a principal place of business in Hong Kong, China.
Tutor.com contends these provisions wouldn’t apply to either Tutor.com or their U.S. military families program. “Tutor.com is neither controlled nor owned by the People’s Republic of China,” said Pamela Brehm, Tutor.com’s senior director for military and government programs. At the time of the acquisition, she said, defense officials were made aware of the change and Tutor.com submitted all required U.S. federal filings and notifications.
Lawmakers and others have raised concerns about how companies in China handle personal information, and whether it is accessible to the People’s Republic of China. “Though the committee understands that the company has taken certain mitigations related to the security of U.S. persons’ data in relation to these services, the committee is aware that technological advances could still allow for rapid exploitation by a sophisticated adversary,” senators wrote in their report accompanying the Senate Armed Services Committee’s proposed legislation.
The committee requires a DoD briefing by Feb. 28, 2024 on how DoD plans to mitigate the risks from foreign ownership, control and influence, and how people’s data can be protected. DoD should also examine alternatives with domestically-owned and operated contractors who may be capable of meeting DoD’s requirements for online tutoring, lawmakers stated.
“Tutor.com abides by all U.S. privacy laws,” Brehm said. “No personal information of students or customers is shared with our parent company, Primavera Capital Group or any foreign government. Primavera does not have — and may not obtain — access to our internal systems.”
Tutor.com initiated a U.S. regulatory review, and as a result instituted additional controls and safeguards to ensure the ongoing protection of personal data, Brehm said. Their commitment to securing personal information “is bolstered by mechanisms that provide for constant monitoring and compliance,” she said.
“These measures were designed and implemented to ensure that no personal information of our students or customers is or will be transferred to the People’s Republic of China.”
Among the active controls is a “binding legal commitment to the U.S. government that Primavera will not have access to any personal data or our IT systems” Brehm said, as well as a U.S. government-approved data security officer who is a U.S. citizen and resident who will continuously monitor compliance; appointment to the Tutor.com board of directors of two U.S. government-approved independent directors who are U.S. citizens and residents, “whose foremost duty is to ensure that personal date is appropriately safeguarded;” and other measures.
“Many of us at Tutor.com are military spouses, veterans, parents, and former military kids ourselves,” Brehm said. “We understand military life, and so it is our great honor to support our military service members and their families. All of us at Tutor.com remain dedicated to safeguarding the personal data of all students we help, including military families.”
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.