On May 16, the U.S. House of Representatives Homeland Security Committee’s Emergency Management and Technology and Counterterrorism, Law Enforcement, and Intelligence Subcommittees held a hearing titled: “Unmanned Aerial Systems: An Examination of the Use of Drones in Emergency Response.”
This hearing was held one day after the introduction of the “Drones for First Responders (DFR) Act,” a new bill that would place an escalating tax (starting at 30%) on drones manufactured in China and ban drones made with Chinese parts from import to the U.S. by 2030. Supporters of this bill and some witnesses suggest it is necessary to enhance public safety and the American drone industry, but as the hearing demonstrated, it will functionally ban the drones that public safety chooses to use to save lives day in and day out.
Although some at the hearing tried to raise concerns about the drones public safety agencies use today and drum up support for the DFR Act, listening to the end users testifying told a different story. They told captivating stories of how drones bring increasing value to public safety, from delivering critical items including defibrillators in times of emergency, to providing a safe and extended line of sight in erratic or dangerous environments such as wildfires.
Witnesses also explained how they take appropriate mitigations to effectively protect the data they collect, and that there is a lack of competitive and comparable domestic alternatives on the market. Ultimately, the testimony of public safety witnesses demonstrated that the DFR Act is a solution in search of a problem that would prevent their access to secure, operationally superior, cost-effective and life-saving tools.
Below we outline why country of origin-based legislation, such as the DFR Act, is problematic and harmful to public safety and the drone industry in the U.S.
GET THE FACTS
FACT 1: Security goes beyond borders; just because a drone is manufactured in the U.S. does not mean it's secure. Instead of measuring a product’s security on country-of-origin, Congress should call on experts to establish a clear list of technology-based performance standards that apply to all drone manufacturers. This would raise the bar on security overall. DJI has invested in security initiatives since 2017 and over time has expanded its range of privacy controls available to both consumer and commercial drone operators. Visit the DJI Trust Center for more information.
FACT 2: The DFR Act’s proposal to increase taxes and eventually ban drones manufactured in China is xenophobia wrapped inside a national security cover. As outlined by the Drone Advocacy Alliance (DAA) in its own response to the DFR Act, this action will eventually force first responders to purchase drones that limit their operational capabilities. It was acknowledged several times at the hearing that the U.S. industry is not yet ready to provide comparable quality or features, and that the reality on the ground is that drones fulfill a critical need of public safety end users, and that appropriate steps are already being taken to fly existing drones in a secure manner.
FACT 3: The DFR Act does not factor in the negative impact increasing taxes would have on the hundreds of thousands of U.S. businesses who use DJI drones for work and countless more who fly them for fun. A survey of drone service providers showed that two-thirds believe they would go out of business if they did not have access to drones manufactured in China. These are American small business owners that will be burdened with the tax increases imposed by the DFR Act. Under the proposed bill, the tax structure starts at 30% and climbs to 50% of the drone price plus $100 in four years before banning the import of these products in 2030. This will devastate the American drone ecosystem risking at least $116 billion in economic activity and 450,000 American jobs supported by the use of DJI products. To add, it is not clear how adding a new tax burden on small businesses and hobbyists creates a more competitive market in terms of operational capabilities, reliability and production capacity.
FACT 4: DJI has been the drone of choice for public safety in the U.S. for years for a reason. DJI innovated its way to being the industry leader from the very beginning, and was the first company to assemble a drone with an unprecedented combination of stability, power and reliability. It was this first-mover advantage and commitment to innovation, research and development that allowed DJI to lead the industry. Despite claims of subsidization from our critics, in reality, DJI is able to offer its products in more than 100 countries at competitive prices because we manufacture at scale. Like any manufacturer, DJI meets our customer expectations - not just in the public safety community but overall - thanks to the combination of mass production, supply chain integration, global price competition and continual investment in research and development. In fact, 25% of DJI’s workforce is focused on product development.
FACT 5: A broad definition of subsidization like the one employed by DJI’s critics applies to most manufacturers. DJI’s critics allege that DJI has been unfairly subsidized. However, companies around the world benefit from friendly macroeconomic practices in their home countries, including in the United States, which offers tax credits for small businesses, hiring, research and development, manufacturing and more. Many states and municipalities also offer separate incentives to local businesses in their area. Under the definition employed by DJI’s critics, virtually any company could be considered ‘subsidized.’
DJI’s critics often cite one story in the media as proof of direct subsidy for the company. To be clear, DJI’s majority ownership rests with our founding partners. The remaining investor group, which owns less than a 6% stake with under 1% voting rights, comprises several banks, a state-owned insurance company, two municipal funds, and a state-owned investment fund. These enterprises are the same as any institutional investor that purchases stock in a private company, regardless of where that company is headquartered. The equivalent investment in the United States would be a state backed pension fund investing in U.S. based technology companies. The investment is neither subsidy nor control and represents the same investor goal as every other interest. No government entity or representative sits on DJI’s board or has any role in its operations.
FACT 6: Public safety agencies have adequate protections in place for drone and data security. In the hearing, a U.S. Representative referenced dialogue with public safety officials, stating: “These men and women who are out there putting their lives on the line for us everyday have told us…they take preventative measures to make sure if there are security issues, they are minimized, but at the end of the day these foreign made drones seem to hit the sweet spot: cost, performance, being able to replace them.” One agency further testified that they are “100%” confident that none of the data their DJI drones collect is compromised, and detailed their process of sending data from the drone into their secure system.
DJI encourages drone operators to practice good security hygiene and to perform regular reviews and training to ensure their protocols remain up to date with industry standards. Our drones also offer a wide range of privacy controls. For example, they do not need to be connected to the internet to conduct their operations, and they can create firewall-like environments or use SD cards to control how and where their data is saved and stored.
FACT 7: DJI supports the development of the U.S. drone industry. We have supported the local commercial drone industry for years, in particular U.S. drone software start-ups and service providers. We also believe that competition breeds innovation, and kicking DJI out of the U.S. market on baseless allegations does not benefit anyone - especially not the first responders who need reliable, safe and robust drone platforms the most.
Ultimately, what is clear is the critical need for public safety agencies to maintain access to the best products available to them. They need to be able to rely on the drone platforms they bring to critical operations. As such, to achieve a secure, competitive and thriving U.S. drone ecosystem, we advocate:
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