[Senate Hearing 117-847]
[From the U.S. Government Publishing Office]
S. Hrg. 117-847
THE PRESIDENT'S 2022 TRADE POLICY AGENDA
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
MARCH 31, 2022
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
__________
U.S. GOVERNMENT PUBLISHING OFFICE
54-949--PDF WASHINGTON : 2024
COMMITTEE ON FINANCE
RON WYDEN, Oregon, Chairman
DEBBIE STABENOW, Michigan MIKE CRAPO, Idaho
MARIA CANTWELL, Washington CHUCK GRASSLEY, Iowa
ROBERT MENENDEZ, New Jersey JOHN CORNYN, Texas
THOMAS R. CARPER, Delaware JOHN THUNE, South Dakota
BENJAMIN L. CARDIN, Maryland RICHARD BURR, North Carolina
SHERROD BROWN, Ohio ROB PORTMAN, Ohio
MICHAEL F. BENNET, Colorado PATRICK J. TOOMEY, Pennsylvania
ROBERT P. CASEY, Jr., Pennsylvania TIM SCOTT, South Carolina
MARK R. WARNER, Virginia BILL CASSIDY, Louisiana
SHELDON WHITEHOUSE, Rhode Island JAMES LANKFORD, Oklahoma
MAGGIE HASSAN, New Hampshire STEVE DAINES, Montana
CATHERINE CORTEZ MASTO, Nevada TODD YOUNG, Indiana
ELIZABETH WARREN, Massachusetts BEN SASSE, Nebraska
JOHN BARRASSO, Wyoming
Joshua Sheinkman, Staff Director
Gregg Richard, Republican Staff Director
(II)
C O N T E N T S
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OPENING STATEMENTS
Page
Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee
on Finance..................................................... 1
Crapo, Hon. Mike, a U.S. Senator from Idaho...................... 3
ADMINISTRATION WITNESS
Tai, Hon. Katherine C., United States Trade Representative,
Executive Office of the President, Washington, DC.............. 5
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Crapo, Hon. Mike:
Opening statement............................................ 3
Prepared statement........................................... 47
Tai, Hon. Katherine C.:
Testimony.................................................... 5
Prepared statement........................................... 48
Responses to questions from committee members................ 52
Wyden, Hon. Ron:
Opening statement............................................ 1
Prepared statement........................................... 89
Communications
American Apparel and Footwear Association........................ 91
American Farm Bureau Federation.................................. 93
Americans for Free Trade......................................... 95
Center for Fiscal Equity......................................... 99
Coalition for Economic Partnerships in the Americas.............. 104
Consumer Technology Association.................................. 109
Embassy of the Republic of Mauritius............................. 112
National Electrical Manufacturers Association.................... 114
Outdoor Industry Association..................................... 115
(III)
THE PRESIDENT'S 2022
TRADE POLICY AGENDA
----------
THURSDAY, MARCH 31, 2022
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:06
a.m., via Webex, in Room SD-215, Dirksen Senate Office
Building, Hon. Ron Wyden (chairman of the committee) presiding.
Present: Senators Stabenow, Cantwell, Menendez, Carper,
Cardin, Brown, Bennet, Casey, Warner, Whitehouse, Hassan,
Cortez Masto, Warren, Grassley, Thune, Portman, Toomey,
Cassidy, Lankford, Daines, Young, and Barrasso.
Also present: Democratic staff: Michael Evans, Deputy Staff
Director and Chief Counsel; and Sally Laing, Chief
International Trade Counsel. Republican staff: James Guiliano,
Policy Advisor; John O'Hara, Trade Policy Director and Counsel;
Mayur Patel, Chief International Trade Counsel; and Gregg
Richard, Staff Director.
OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM
OREGON, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The committee will come to order. Today we
are focused on Russia and China, because those are the big
national security and economic developments in our world. Their
governments, Russia's and China's, are united in putting up
barriers to American values and our products.
Since Putin launched his invasion of Ukraine, the United
States and our allies hit Russia, Putin, and the oligarchs with
the most powerful sanctions in history. It is not just about
yanking away super-yachts and private jets; Putin is now the
head of a pariah state. The Senate, and my colleague Senator
Crapo, the ranking member, and I are working very hard to
formally designate Russia as a pariah state by revoking
permanent normal trade relations.
Our country is showing Russia that taking this abusive,
totalitarian road is a bad bet. The United States and our
allies must prove the same to China. China's Government is a
human rights-abusing, jobs- and tech-stealing behemoth, and the
government is the head of this economic superpower.
One of my top concerns about the Chinese Government's
economic model is censorship. When the Internet took off,
America's innovators were first out of the gate with big ideas.
The Chinese Government responded by using the Great Firewall to
block those companies and allowed Chinese firms to rip off
their ideas. Even worse, Chinese tech comes with Chinese
censorship, and China censors the American people and our
businesses as well.
The China model of censorship is now popping up all over
the world. It fractures the Internet, and it certainly is
something we see in Russia, where the people are being fed lies
about what is going on in Ukraine.
The United States has to stand up to this kind of
censorship, and USTR has a big role in fighting for a free and
open Internet through smart digital trade policy. The Chinese
Government obviously wants to dominate the technologies that
will dominate the rest of the 21st century, such as
semiconductors, EV batteries, and artificial intelligence as it
continues its horrendous record of abusing human rights and
trampling on workers.
Again, this is where USTR comes in. USTR has the
responsibility to take on China's anticompetitive and anti-
freedom practices, and we are going to be working closely with
them as they do.
The United States and our allies have recently shown, with
Russian sanctions, that our collective economic power is
certainly anything but soft. A big reason why the United States
is able to marshal such strength is because the Biden
administration and USTR have worked to mend our relationships
in Europe.
The United States has racked up significant wins that
always are important but do not seem to get a lot of
discussion. USTR finally brokered a deal in an aircraft trade
dispute with the EU and the UK that had been unresolved for
nearly 2 decades. USTR and the Commerce Department reached
deals with the EU, the UK, and Japan on steel and aluminum, and
will help us remove existing tariffs, bring down prices for
Americans, and fight carbon emissions.
Before resolving these disputes, the American firms had
been in the crossfire, with tariffs on everything from
airplanes to cranberries to wine. EU tariffs on distilled
spirits endangered Oregon's thriving craft beverage industry.
Ambassador Tai's work eliminated significant tariff threats and
helped to ensure that Americans could grow good-paying jobs and
more exports.
Last week, USTR persuaded Japan to allow in more U.S. beef
at lower tariff levels. That is big news for ranchers. In a new
agreement with the EU, American fishers are exporting live
oysters and clams and mussels to Europe for the first time in a
decade. Resolving these issues brings the U.S. and our
traditional economic allies closer together.
Finally, the committee held a hearing on the Indo-Pacific
Economic Framework. This was another opportunity to strengthen
our economic ties and marginalize the Russia-China model. The
Indo-Pacific effort is especially important to folks in our
part of the world, the Pacific Northwest, because the Pacific
Northwest in our country is the gateway to the Pacific.
A good agreement will bulldoze overseas barriers to Oregon
products from Columbia Gorge pears to Wallowa beef. Reducing
barriers means better market access for farmers and
manufacturers. This is so important in our State, where the
trade-related jobs--as you and I have talked about, Ambassador
Tai--often pay better than the non-trade jobs because there can
be a higher value-added component.
It is also an important opportunity to raise standards for
labor rights, environmental protections, and a free and open
Internet. And I am going to close with one last point that is
especially important to Senator Crapo and me.
This is a positive development, also with respect to
transparency in government. Ambassador Tai has made it clear to
us that there are going to be new transparency and consultation
efforts to make sure that there is a broader debate about how
to get more American workers and small businesses in the
winner's circle.
Ambassador, thank you for joining us.
[The prepared statement of Chairman Wyden appears in the
appendix.]
The Chairman. My friend, Senator Crapo.
OPENING STATEMENT OF HON. MIKE CRAPO,
A U.S. SENATOR FROM IDAHO
Senator Crapo. Thank you, Mr. Chairman. And welcome,
Ambassador Tai.
I agree with the concerns and issues that Senator Wyden
raised and the progress that he has identified. But I am going
to issue kind of a strong statement today.
On your drive here, Ambassador Tai, you probably passed an
inscription engraved on the National Archives that says ``past
is prologue.'' An enduring piece of past wisdom is President
Reagan's 1982 address to the Nation on international free
trade, which was founded on his personal commitment to free
market principles both at home and abroad.
He explained that as Americans, we must ``insist on sound
domestic policies at home that bring down inflation and provide
opportunity for free world countries to go forward and sustain
the drive toward more open markets,'' such as the meeting he
organized in Geneva that eventually led to the creation of the
World Trade Organization. And most importantly negotiate--
particularly for free trade agreements--like the United States'
first two free trade agreements with Israel and Canada that
were led by President Reagan's administration.
President Reagan's policies helped to break inflation and
restore American leadership on trade. But it seems President
Biden's trade policy takes the opposite stance. At a time when
inflation has soared to 7.9 percent, President Biden says he
will not pursue trade agreements until his domestic agenda is
complete.
If ever enacted, this reckless spending agenda would not
only make inflation worse, it would undercut U.S. leadership on
trade by promoting a China-styled industrial policy. The
proposed electric vehicle provisions, for example, will
discriminate against 48 of the 50 models available for sale in
the United States. It is no wonder why 25 foreign ambassadors
told Congress these provisions breached our international trade
obligations.
I am disappointed that the administration continues to
pursue this agenda, instead of focusing on negotiations for new
trade agreements. This is a shame, because the Biden
administration knows better. Its 2022 trade agenda opens on the
very point, and I quote: ``The Biden administration recognizes
that trade can and should be a force for good.''
Absolutely. My home State of Idaho is proof positive of
that proposition. In 2019, international trade supported over
200,000 jobs in Idaho--almost 20 percent of the State's
employment. Trade liberalization also saves the average Idaho
family of four more than $10,000 per year.
The problem here is that President Biden's recognition of
trade's overall importance is not matched with an agenda that
contains the requisite ambition to succeed. There is not a
single free trade agreement under consideration in this agenda.
Free trade agreements open opportunities. We have seen it
over and over, and the past really is prologue. Idaho's dairy
exports to Korea have increased by more than 250 percent since
our free trade agreement entered into force in 2012. But in
lieu of trade agreements, this administration is proposing
dialogues and frameworks, including the new Indo-Pacific
Economic Framework, or IPEF. IPEF may be a positive first step
to engagement in Asia, but it is no substitute for
comprehensive trade agreements.
The Center for Strategic and International Studies will
soon release its upcoming analysis on IPEF. Based on
conversations with over a dozen governments in the Indo-
Pacific, two points from its analysis are instructive.
First, U.S. engagement is welcome in the Indo-Pacific. One
diplomat stressed in particular that his country wants the
United States to lay out an affirmative economic strategy that
complements its security presence in the region.
Second, our partners see the IPEF as a proposal with many
U.S. asks, few U.S. offers, and a variety of credible regional
alternatives to the framework that could provide more tangible
benefits. If the U.S. is to meet and exceed China's challenge,
then the U.S. must make stronger commitments than China.
Regrettably, if the administration's negotiating ambitions
are low, its consultations with Congress on the few
negotiations actually taking place are even lower. At last
year's trade agenda hearing, Ambassador Tai, you stated that
you would brief this committee before and after each
negotiating session with respect to a waiver of the WTO TRIPS
Agreement.
That has not happened. USTR recently issued a press release
confirming that it had reached a compromise outcome on the
TRIPS waiver in discussions with South Africa, India, and the
European Union. USTR refuses to share the text of that outcome
with this committee.
While members may have different views on the merits of
this waiver, every member here should agree with me that the
administration cannot withhold documents concerning U.S. rights
under a congressionally approved trade agreement. We need to
see the document, and we need to ask questions, because that is
what respect for the Constitution requires.
There are serious questions to be asked. For example, last
week South Africa and India joined with Russia and China to
establish the BRICS Vaccine R&D Center on vaccine cooperation.
Congress should know whether the text permits South Africa and
India to share insights on U.S. intellectual property with
Russia and China.
USTR's transparency with the public is also poor. The
American innovators who developed the vaccines provided plenty
of evidence on why a waiver is unnecessary, including that 20
billion doses will be produced this year, more than enough to
achieve the World Health Organization's vaccination target.
The administration, however, has not shared with the public
any evidence as to why a waiver will get shots into arms any
faster. I am disappointed about negotiations and congressional
consultations, but I also have concerns about enforcement.
Americans need to compete on a level playing field, and I
appreciate the administration's prosecution of two USMCA labor
disputes under the Brown-Wyden mechanism. Yet much more can be
done.
With respect to the USMCA, agricultural market challenges
remain. Mexico continues to restrict potatoes and delay
approval of biotech crops. Discriminatory practices targeting
our technology companies are also increasing. Rather than
launch cases, the administration appears to be in retreat.
For example, the trade agenda highlights that USTR reached
agreements to terminate our section 301 investigations against
various countries over discriminatory digital service taxes.
Let's be very clear about what this means.
Those countries are going to continue imposing
discriminatory taxes on U.S. firms. They may give a credit one
day, but only if Congress approves the Biden administration's
international tax deal. The Biden administration is blessing
foreign governments which discriminate against Americans as
long as Congress refuses to go along with its plan to cede
taxing rights and revenue to foreign competitors.
Let me close with where I started: past being prologue.
History proves that Americans do not fear competition but rise
to it. And now is the time to seize on that history and go
further on trade, not shrink from it.
Thank you, Mr. Chairman.
[The prepared statement of Senator Crapo appears in the
appendix.]
The Chairman. Thank you, Senator Crapo. I know we will be
working closely together on many of these issues.
Ambassador, welcome. Please proceed.
STATEMENT OF HON. KATHERINE C. TAI, UNITED STATES TRADE
REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON,
DC
Ambassador Tai. Thank you, Chairman Wyden, Ranking Member
Crapo, and members of this committee. I appreciate the
opportunity to be here today to discuss the President's trade
agenda.
President Biden believes that trade can be a force for
good; that it grows the middle class and addresses inequality.
And he believes we are at our strongest when we work with
others around the world.
Over the last year, in coordination with my colleagues
across the Biden administration, we have worked to repair
strained relationships and recommitted the United States to the
world's institutions. These partnerships have led to the united
response to Russia's unjustified attack on Ukraine.
Turning specifically to our work at USTR, our agenda begins
with putting workers at the center of our trade policy. When we
defend the rights of workers at home and abroad, labor
standards go up, and we drive that race to the top.
Farmers, ranchers, fishers, and food manufacturers are key
to our trade agenda, and we have delivered real, economically
meaningful wins for them. The 232 tariff arrangements and large
civil aircraft frameworks with the EU and UK lifted retaliatory
tariffs on billions of dollars of U.S. agricultural exports.
The agreement with Japan will allow our exporters to meet
Japan's growing beef demand. We regained access to the EU for
our shellfish industry, and we have opened access for U.S. pork
exports to India.
We are also realigning the U.S.-China trade relationship.
We launched a conversation with the PRC about its Phase One
purchase commitment shortfalls and broader nonmarket practices.
Those discussions have been unduly difficult, and it is time
for us to turn the page on the old playbook. That starts with
developing new domestic tools and making strategic investments
to maintain our global competitive edge.
We have made progress on this effort through the American
Rescue Plan, the administration's focus on supply chain
resilience, and the bipartisan infrastructure law. Passing the
bipartisan innovation act will build on this significant
progress.
We have renewed our engagement with partners and allies and
are developing innovative arrangements that strengthen our
resilience and address the China challenge. For example, the
global arrangement we are negotiating with the EU will be the
world's first sectoral arrangement on steel and aluminum trade
to tackle both emissions and nonmarket excess capacity.
Beyond this cooperation, we have deepened our engagement
with key trading partners through other avenues. We launched
the U.S.-EU Trade and Technology Council to promote shared
economic growth. We relaunched the United States-India Trade
Policy Forum to enhance our bilateral relationships. And we
hosted the first dialogue on the future of Atlantic trade in
Baltimore last week with the United Kingdom. We will meet again
in Scotland next month to consider what concrete, economically
meaningful steps we can take to deepen our trade relationship.
We are also committed to intensifying economic engagement
in the Indo-Pacific. USTR will lead efforts to craft a trade
arrangement with our Indo-Pacific partners that includes high-
standard labor commitments, environmental sustainability, the
digital economy, sustainable food systems and science-based
agricultural regulation, good regulatory practices, and trade
facilitation.
On the multilateral front, the Biden administration has
continued efforts to make the WTO a force for good. We are
working towards an intellectual property outcome to help end
the pandemic. We will continue to engage with WTO members to
get safe and effective vaccines to as many people as possible,
and we are committed to bringing reform to the organization.
The Biden administration also knows that enforcement is key
to trade policy delivering on its promises. We have used the
USMCA rapid response mechanism twice to defend workers' rights
in Mexico, which helps workers here by driving a race to the
top. We pursued dispute settlement with Canada to ensure that
U.S. dairy farmers are treated fairly. We also initiated
environmental consultations with Mexico to prevent unreported
and unregulated fishing.
A final important part of our trade agenda is promoting
trade policy that is equitable, inclusive, and durable. And the
President's trade agenda includes objectives to advance racial
and gender equity. We will continue to pair these values with
sustained stakeholder engagement.
I want to close with one final point. Congress is our
constitutional partner on trade, and collaboration is critical
to our agenda and America's success. In an increasingly
complicated world, I am more confident than ever that we can
walk, chew gum, and play chess at the same time. I look forward
to continuing this work with you in the year ahead.
Thank you, and I look forward to answering your questions.
[The prepared statement of Ambassador Tai appears in the
appendix.]
The Chairman. Ambassador, thank you very much. We
appreciate your being here. Let me start by focusing on what
you said in your trade agenda with respect to environmental
issues being front and center.
You highlighted your goals of promoting sustainability,
addressing carbon emissions, and enforcing the environmental
commitments in trade agreements. So I want to focus on a
concern that hits on all of these issues.
Mexico is a key partner in the USMCA, and it sure looks to
me like they are slamming the brakes on renewable energy
reform. In recent years, Mexico made substantial efforts to
modernize and green the electricity market. They gave the green
light to foreign investment, and they opened their market,
particularly to innovative American providers of renewable
electricity. But as I just indicated, now it looks like they
are in retreat. They are considering laws that concentrate
market power and regulatory authority in the hands of the
state-owned electric company.
That result will mean a bigger focus on fossil fuels and
limit opportunities for clean energy providers. So Mexico's new
reforms are a one-two punch against environmental progress in
America. Not only are they a setback in the fight against the
climate crisis, but they are denying American companies--
companies in the Pacific Northwest, for example--a fair shake
in the Mexican market.
And my view is, what Mexico is doing now looks to me like
it is running opposite from the promises Mexico made in the
USMCA.
So, Ambassador, as we talked about, the United States needs
to make sure that every chapter of the USMCA is fully
implemented and pays off for American workers and businesses
and a cleaner climate in the Americas. That is what was pursued
in USMCA.
What are you doing to address Mexico's actions in the
energy market that I have described?
Ambassador Tai. Chairman Wyden, thank you for asking this
very, very important question. Let me begin by affirming my
agreement with you and my commitment that the USMCA must be
enforced and implemented across all of its chapters. And we
will be--that is an organizing principle of our work.
I am also deeply concerned with the legislative and
regulatory developments in the Mexican energy industry that we
have seen in recent months. My team and I at USTR, along with
much of the U.S. Government, have expressed these concerns
regularly and directly to our counterparts in the Mexican
Government.
Just last week I convened a roundtable with members of
Congress, with members from our environmental organization
community, from our energy industry that includes renewable
energy companies, as well as our more traditional energy
companies. And the testimony I heard from them was powerful.
They have been unified in expressing concerns with what is
happening in Mexico, specifically with respect to the
competitiveness of the North American energy market, as well as
the competitiveness of Mexico's own energy industry.
I have informed Mexico, and I assure you that we at USTR
are looking at all available options under the USMCA to address
these issues so that the USMCA can work for our stakeholders
and protect our environment across all three countries.
The Chairman. Well, we will want to work very closely with
you, because it seems to me that you have Mexico on one area
after another as it relates to greener energy, and the
challenge of environmental reform, walking back what they
pledged in USMCA. And we cannot sit by and abide that.
Let me ask you one other question, if I might. It deals
with Russia and China and the challenge of today. We all
remember the searing image at the opening ceremony at the
Olympics of President Xi and President Putin standing there
together asserting that their friendship has, quote, ``no
limits.'' And obviously, Xi was flexing his power to expand his
authoritarian orbit, and basically kind of thumbing his nose at
the American-led international order. And that was before
Putin's brutal invasion of Ukraine.
So how are you working with our allies to ensure that when
the United States confronts China's anticompetitive behavior
and theft of home-grown innovation, it has the allies onboard?
Ambassador Tai. Well, Chairman Wyden, let me begin by
saying that working with our allies is a key component of the
Biden administration's approach to a smarter and a more
effective strategy towards China. And this has been the case
since day one of this administration.
I have invested a lot of time personally, as have my
colleagues in the Cabinet, to rebuild relationships and trusts
that were, at the beginning of our administration, badly
damaged. This has involved finding creative, sometimes
unconventional, but ultimately effective solutions to
longstanding problems and irritations that we have had with our
strongest partners and allies. Like, for example, the WTO
aircraft disputes, or the steel and aluminum tariffs.
We have also worked to establish new cooperative mechanisms
like the U.S.-EU Trade and Technology Council, as well as
frameworks and dialogues so that we can focus with our allies
on effectively addressing the massive distortions being caused
by other economies like China, but frankly, in more recent
weeks, like the challenges that we are facing with Russia's
invasion of Ukraine.
As I have mentioned, it is high time for us to turn the
page on the old playbook with respect to China. That old
playbook had us focused exclusively on changing China's
behavior. We must now expand our work to include a strategy to
vigorously defend our values and economic interests.
The Chairman. Senator Crapo?
Senator Crapo. Thank you very much.
I want to follow up first, Ambassador Tai, with regard to
the issue which Senator Wyden raised--namely, the enforcement
in Mexico of our USMCA agreement.
You have indicated, and Senator Wyden pointed out, that on
the environmental and labor front you are actively pursuing
efforts to try to enforce the agreement. But I see no activity
to try to enforce the market access parts of the agreement. And
let me focus my question specifically on potatoes.
I think it was a little over a year ago now both you and I
were in Mexico, and both you and I raised the potato issue. And
both you and I got a response from the Mexican Government that
they were going to resolve it. The Mexican Supreme Court even
is ruling in our favor on this issue.
Yet, I do not see any enforcement action against Mexico on
USMCA with regard to potato access. Could you respond to that?
Ambassador Tai. Well, Mr. Crapo, I know how important the
potatoes are to you, and you know how much I love potatoes.
With respect to USMCA enforcement, again let me reiterate my
commitment to enforcing all aspects. And on market access, I
want to also raise the dairy case that we have prosecuted.
Senator Crapo. Exactly.
Ambassador Tai. On potatoes in particular, I just spoke to
USDA Secretary Vilsack last night about this issue. We have not
given up hope, even though we have been taking two steps
forward and one step backwards for many months now. I just want
to let you know how high on our radar this is, and how focused
we are on trying to secure a win here, and to let you know that
all options are on the table if we are not able to secure that
win.
Senator Crapo. All right; thank you. I appreciate that.
With regard to the IPEF, the administration is very clear
that IPEF will not include market access initiatives. Given
that the administration wants to raise our trading partners'
labor and environmental standards through IPEF, with which I do
not disagree, why take the carrot of market access off the
table?
Ambassador Tai. So I appreciate this opportunity to talk a
little bit more about the approach that we are contemplating,
and consulting with you all on, with respect to the Indo-
Pacific Economic Framework.
It is true that market access, strictly speaking as a trade
terminology, is not on the table at this time in the framework.
But I want to distinguish between what we mean by ``market
access'' in trade vocabulary versus market access in ordinary
English.
Market access, as we talk about it in trade discussions and
negotiations, typically means tariff liberalization. And that
is true. We are not starting these conversations with tariff
liberalization, in large part because our traditional trade
models and traditional FTAs have led us to a place where we are
facing a considerable backlash that we are listening to from
our own people about concerns regarding the offshoring and
outsourcing of American jobs and opportunities through these
types of arrangements.
That does not mean, however, that we are not bringing an
economic engagement to this region that does not have
economically meaningful outcomes. So, in the sense of market
access in ordinary English, which is to enhance our access to
each other's markets, that is very much a part of what we are
doing.
In terms of the high labor and environment standards, I
really want to thank you for affirming your commitment to the
standards in U.S. trade policy practice, because that is
exactly the kind of practice that we want to bring to our
trading partners in order to counteract those forces that have
tended to bleed out our industries to other regions. We would
like to use trade to raise standards around the world, to raise
standards to the standards that we have here, so that we can
all enjoy the kinds of lives and opportunities that we would
like.
Senator Crapo. Well, I understand. And as I said, I agree
with that. But I define ``market access'' as free trade
agreements. And I just do not see why we cannot engage and
develop--and we have nations in the Indo-Pacific that are
crying out for free trade negotiations with us so that they can
strengthen their relationship to us economically rather than
being tied to China.
And so, I just wanted to state that I believe that we need
to engage in free trade negotiations in terms of market access
and not define market access as some kind of a framework or
something else.
One last quick question. This is regarding our China
policy. In your opening statement you report that China failed
to meet its Phase One agreement. It is easier for the public to
see China's unfulfilled purchase commitments, but it is much
harder for anyone to know where China fell short on these
structural commitments.
Why doesn't the USTR provide this committee with its
assessment on which obligations China failed to comply? And how
do you plan to redress China's failure to meet these
commitments?
Ambassador Tai. Well, Ranking Member Crapo, you are right
in terms of the purchase commitments. Those are the most
transparent because everybody has access to the trade data. I
would be happy to engage with you beyond the public statements
that I have already made with respect to our assessment of
China's performance under the Phase One agreement.
One point I would like to make, however, is that with
respect to the commitments that China signed up for, there are
a number of different kinds. Obviously, there are the purchase
commitments. There are commitments on laws and regulations that
China had to pass. And then over time, especially with respect
to the intellectual property and forced tech transfer
commitments, China's compliance is going to need to be measured
by the experience of our own industries that are seeking to do
business in China.
So, it is a dynamic picture, but I am all for having that
conversation with you and others, and I believe that we have
been having that conversation as well.
Senator Crapo. Thank you.
The Chairman. I thank my colleague.
Senator Stabenow and Senator Grassley are involved in a
discussion, and the order would, under normal circumstances, go
to Senator Cantwell. Thank you.
Senator Cantwell. Thank you, Mr. Chairman, and thank you
and the ranking member for holding this hearing. And,
Ambassador Tai, thank you for being here. I know you are a
representative of the Biden administration, and you are
reflecting the views of the Biden administration.
I would just like to say I agree with my colleagues from
the Northwest, but particularly my colleague from Idaho. I do
not find where we are--and we had a conversation with you, a
roundtable discussion with our members, and you said, ``Well,
we are trying to reset the table here with China.'' So we gave
you more time.
And now we are here, and we are hearing this focus where we
are not saying that opening market access and getting rid of
tariffs is a priority. And that is what the people in my State
want to hear. As a very trade-dependent State, they want to
know that we are fighting to increase market access. When you
think about wheat, when you think about potatoes, when you
think about some of these other products, it is more than 70
percent of the product that is for an export market. And when
you look at the impacts of the 301 tariffs and how bad apples
have been hurt, we want resolution to these issues.
I mean, we are not even getting the exclusion at this
point. So it is very hard to look at this equation--and this is
not specific to the Biden administration. I did not agree with
the last administration's approach on this. I do not agree that
just throwing down tariffs, as we did on the solar industry--
and now we are 10-plus years later and we have no resolution of
this issue--I do not think that is the path forward.
So I have wholeheartedly supported enforcement. I got USTR
a bunch of money out of the Customs agency so you could hire
more lawyers and we could beef up USTR so that it could go
around the globe and do enforcement. And guess what: it is
working.
I led the charge on getting more money for capacity
building in Mexico, something nobody really wants to say. They
do not want to say that our government is paying to help build
capacity in Mexico so we can enforce trade agreements. I will
say that because I believe in trade.
So I am just trying to understand this notion that somehow
trade agreements are 20th-century tools, and that they are some
sort of, you know, recluse or something we are not going to do
anymore, and that the Indo-Pacific agreement will not have a
mechanism that is specifically focused on opening up markets.
So my people believe, the people in the State of
Washington--doing business, growing crops--want to know always,
always, what are we doing to increase market access? That is
what they want to know.
So I just want to understand exactly how this--I hear what
you are saying to my colleague here. You are saying, ``Well, it
is kind of on the table, but it is not really on the table.''
And right now, with these tariffs and the impacts in India, in
other places--there was no place to go. There was no place to
go. This whole effort--I blame a lot on the Trump
administration and their policies. It is easy to throw down. It
is easy to throw down around here. And then, guess what? Do you
get any bills done? No. So, it does take the negotiation.
So I really want to understand. I am for the labor rights.
I am for enforcement. I am for capacity building. But why can't
we be for opening market access right now and getting rid of
tariffs, or at least getting the exclusions done on time?
Ambassador Tai. Well, Senator Cantwell, your views on trade
are well known to me, and I know that, for the State of
Washington--you are an export powerhouse. And I understand your
views.
Let me just clarify some of my remarks. We have been
opening markets. When we began our administration, we began our
administration in what I would describe as a tariff-rich
environment. In the last year, we have either lifted or averted
over $20 billion of tariffs just between the U.S. and Europe,
$7 billion of which was applied or going to be applied to
agricultural products.
So, we are--we are--opening markets. We are also opening
markets in other ways in our work with our trading partners
through trade and investment framework agreements through the
TPF with India. Is there more work to do? Absolutely there is.
On my comments about free trade agreements being 20th-
century tools, that really is just a statement of fact, that
free trade agreements are something that we did a lot of in the
late 1900s, 1980 to 2010 or 2012 or so. There is a place for
free trade agreements in our toolbox, but even there I feel
like our approach to free trade agreements needs to be updated.
We need to update our toolbox to reflect the realities of
today. And that has to do with bringing along all of our
economy for the United States in these trade policies so that
we can continue to trade.
I take very seriously the lessons that we have learned in
the past 5 to 7 years around trade agreements that we have
pursued that have been so big and have been so uneven in terms
of the wins and losses they are going to deliver for our
economy that they have collapsed under their own weight.
Our approach is guided by the principle that we need to be
able to trade in a way where we bring along our stakeholders
instead of pitting them against each other. And so, your
stakeholders are absolutely important to me, as are the
stakeholders of your colleagues on this committee.
Senator Cantwell. I see my time has expired. I would just
say that I do not see these issues as an exclusion to one or
the other, and people here have been working to update the
tools that we have. I see the difference here is we have a
President who has a great global presence. He should be
advocating a global economic opportunity for the United States.
We are working hard to get a bill to increase our export
capacity as it relates to the supply chain that we are going to
build here in the United States to build great products. So we
are going to do everything that we can, but trade changes
culture. Trade helps us build partnerships around the globe.
But it is not just us.
The biggest economic opportunity for the United States is
to sell things outside of the United States. That means you
have to have market access, and you have to have trade.
Thank you, Mr. Chairman.
The Chairman. I thank my colleague, who knows so much about
this subject. And let me see if I can kind of bring the two
points together, and then we will go quickly on to Senator
Grassley.
I am all in in the fight for market access. And Senator
Cantwell makes important points about why that is so urgent to
folks in the Pacific Northwest. Part of our challenge is
building a modern market access toolbox, and it needs to have
all of these tools that we are all talking about, and then we
work on a bipartisan basis to apply that appropriate tool to
the appropriate situation.
So we will have a lot of conversations about this in the
days ahead, but certainly my Northwest colleagues know an awful
lot about trade, and we are going to be working together.
Okay; next is Senator Grassley.
Senator Grassley. Thank you, Mr. Chairman.
And thank you for coming, Ms. Tai, and particularly it has
not always been easy to get people in your position to come and
do what the law requires by being here for these sort of
oversight hearings.
When you met with us last year, you were just getting
started. I am happy to have you as our Trade Representative.
However, I am extremely concerned that more than a year into
this administration it seems to me--and you will probably
protest this--that the White House is not allowing you to use
your talents to be an advocate for free and fair trade.
You probably heard me say that agriculture market access is
the locomotive that drives any trade negotiations. I believe
this administration is falling behind China and other
competitors by not negotiating market access in the Indo-
Pacific. On top of this, we also see the administration falling
behind on confirming very important key trading posts,
particularly Chief Agricultural Negotiator, and even outside of
your department we do not have an Under Secretary for Trade and
Foreign Affairs and Agriculture.
So my first question is--and I have at least three
questions I want to ask you. You could eat up all the time on
this question, but try to save some time. Could you tell us if
you have a strategy to increase market access for U.S.
agricultural products?
Ambassador Tai. Yes, Senator Grassley. And let me just
begin with a statement of values. I think our American farmers
are some of the most admirable Americans and hardest workers
that I have ever met.
Market access for our farmers is absolutely important to me
and important to our ability to conduct trade policy. I work
with Secretary Vilsack extremely closely. I consider him to be
an exemplar of leadership at the USDA, and also a very good
personal friend. And so, I want you to know that I care deeply
about our farmers and about allowing them to have opportunities
to compete and also to diversify their opportunities.
Senator Grassley. Thank you.
We have all seen the suffering from Russia's invasion of
Ukraine. A byproduct of this invasion is a disruption in our
trade markets. Apart from the Ukrainians, President Biden has
said that this invasion will lead to rising food prices and
human suffering in the poorest countries.
The President also said that the administration has been
talking to the EU about ending trade restrictions. The EU has
said that they are considering it.
What engagement has your agency had with the EU on issuing
an important waiver for biotech crops? And will your agency
engage with the EU moving forward to enable science-based
regulations for biotechnology so farmers in our country and
around the world can use biotech to increase production?
Ambassador Tai. We are continually engaging with our EU
counterparts on ag trade issues between the U.S. and the EU,
including biotech trade. This has been a traditionally
difficult area between the United States and the European
Union. I saw that through the course of last year as well,
working with Secretary Vilsack.
I do believe that the current disruptions to trade created
by Russia's invasion of Ukraine may provide us new
opportunities and windows for collaboration with the EU, which
we are also seeking to capitalize on.
Senator Grassley. While it appears that the EU might be
moving in the right direction along this line, it also appears
that Mexico is going the other way. It seems like Mexico is
blatantly violating the commitments made under USMCA regarding
the treatment of biotech products.
What is your strategy to encourage Mexico to implement a
transparent science-based risk-assessment process for
agricultural biotechnology? And do you plan to use the USMCA to
engage with the Mexican Government and resolve its treatment of
agricultural biotechnology?
Ambassador Tai. This is another area where I have been
closely coordinating and cooperating with Secretary Vilsack.
And just to get to the bottom line on your question, yes, we
are looking at all of our tools under the USMCA and thinking
through our strategy.
Senator Grassley. In regard to what you said to Senator
Crapo about potatoes, I know that the Secretary of Agriculture
is very committed to doing what you want done, Senator Crapo.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Grassley.
Next will be Senator Stabenow.
Senator Stabenow. Well, thank you very much, Mr. Chairman
and Ranking Member.
Welcome back. We were so glad to have you and so
appreciate, Ambassador Tai, all of your hard work. Thank you
for being with us today. I know you were at Ways and Means
yesterday, so it is a busy week on the Hill.
And I first want to mention, I know that my friend, Senator
Grassley, has stated it, and maybe others, but it is critical
we get a Chief Agricultural Negotiator at USTR. It is just
absolutely important, as you know. Markets are critical for
agriculture, and so we really need to get this across the
finish line as soon as possible. Please let me know how I can
help to be able to make that happen.
I also know you have been very focused on a number of
fronts, including USMCA enforcement, as well as your ongoing
negotiations with China, as well as new challenges we face
holding Russia accountable for their brutal invasion of
Ukraine. So, a lot of important work to do.
Let me first start with USMCA though. Thank you for your
leadership and your team's leadership to hold Canada
accountable for failing to meet their dairy market access
commitment under USMCA. This is something I worked hard on as
part of this USMCA, and congratulations on the first successful
dispute settlement panel verdict you secured earlier this year.
It is critical for our dairy farmers in Michigan and around
the country that we also make sure that Canada comes into
compliance. It is just absolutely critical. And I hear concerns
all the time that Canada is going to continue to play games in
their recent proposal allowing them to limit dairy market
access. And so, we really need your continued focus in this
area.
So could you speak just a little about your plan for
ensuring that Canada lives up to their original commitments
under USMCA so that our dairy farmers see the full benefits
that were promised?
Ambassador Tai. Senator Stabenow, yes, my view on Canada's
commitments under the USMCA with respect to dairy is that
Canada promised increased access to its market for American
dairy farmers. And until we are able to accomplish that, we
will continue to pursue the tools and avenues available to us
under USMCA, hard tools and soft tools. I have a very
collaborative and good relationship with my Canadian
counterpart, and I have raised these issues in my conversations
with her. But we will not give up until we see those promises
realized.
Senator Stabenow. Thank you so much. And of course, coming
from Michigan, we have wonderful relationships and friendships
with our Canadian friends. This is an area that is really so
important for us to push back on.
I think you have also been asked about biotech issues, and
so let me just say, and agree with colleagues, that
biotechnology has enormous potential to help us increase
productivity while farmers address the climate crisis. And as
you know, we need regulatory systems that are effective, that
are science-based, and that are transparent.
So I am very concerned that Mexico seems to be making
decisions that are not founded in science and causing long
delays in biotech approvals that could have real-world
consequences on farmers and future innovation in the industry.
And importantly, these decisions are in violation of the
commitments that Mexico made under the USMCA.
So what is your strategy to engage with Mexico and
encourage them to implement transparent, science-based approval
processes for agriculture biotechnology that they already
agreed to?
Ambassador Tai. So, Secretary Vilsack and I have been
working hand in glove on the Mexico agriculture challenges, and
we have been pursuing the strategy of cooperation and
consultation with our counterparts in Mexico.
I do think that, at this point, we are reassessing where we
are, and the kind of tools that we need to bring to bear at
USTR. And we are looking at the full range of tools, in close
coordination with our partners at USDA, and with you and others
here, we will look at next steps.
Senator Stabenow. Thank you. I appreciate that.
And then finally, let me just say the race to be a leader
on research and manufacturing of next-generation technology is
an important part of our future economy, and it is not just
limited to agriculture. So we need to make things and grow
things, and in my opinion we have not lost the future to China
or any place else.
And so, we are working to pass important investments in
clean energy and advanced manufacturing through competition and
innovation, and important legislation is in front of us right
now. Senator Manchin and Senator Daines and I have legislation
to invest in clean energy domestic manufacturing, which is so
important.
Could you speak at all about what we need to do here in
this competition, and what role that our trade policies can
play?
Ambassador Tai. Senator Stabenow, I am delighted to hear
about all of the efforts that are being undertaken up here in
the Congress. We have been tracking them closely. They are
sometimes inside of the trade lane and oftentimes adjacent to
trade. In order to continue to be the competitive powerhouse
that the United States has been and wants to continue to be, we
are going to need to coordinate our trade policies with these
types of investments, and we are going to need to do it on a
sustained basis.
So I want to commend you and your colleagues for doing this
work. And I look forward to continuing our work and connecting
your efforts with our trade policies.
Senator Stabenow. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Stabenow.
Next will be Senator Thune.
Senator Thune. Thank you, Mr. Chairman. Ambassador, welcome
back to the committee.
Just when does the administration plan to nominate a Chief
Agricultural Negotiator?
Ambassador Tai. Senator Thune, we have nominated one, and I
am very grateful for Elaine Trevino's willingness to serve, and
I look forward to working with her in another capacity that she
will take on in the Biden administration. At the moment, I am
working very hard with our administration to name a new Chief
Agricultural Negotiator nominee as soon as possible. I want to
assure you here that your interests and mine are absolutely
aligned.
Senator Thune. Okay.
Well, you are in the administration, and it is an
expression I think of priorities, and I can tell you that there
are a lot of farmers and ranchers and agricultural producers
and growers around this country who are very, very concerned
that the promotion of agricultural exports be a priority. And
it does not seem like it is.
Is the administration planning to submit Trade Promotion
Authority, the proposal request?
Ambassador Tai. Well, Senator Thune, with all due respect,
in terms of Trade Promotion Authority, that is legislation. And
I am happy to speak with you and to work with you on it, if it
is something that you are interested in.
Senator Thune. Well, I am interested in it, but typically
what happens is that it is an administration's request. And in
the Obama administration, there were many of us here,
Republicans, who were willing to work with the President from
another party on something that is a big priority, I think, for
America's economic vitality, obviously economic security, and I
would argue--in parts of the world--we are talking here about
national security.
Is the administration right now pursuing any trade
agreements in the Indo-Pacific, specifically the CPTPP, which
would more strongly promote American interests and leadership?
Ambassador Tai. We are pursuing economic engagement in the
Indo-Pacific right now. That does not mean the CPTPP. And let
me just draw together a point on CPTPP and the TPA, which is, I
also lived through the fights up here in the Congress over TPA
and TPP back in 2014, 2015, and 2016. I feel very strongly that
American trade policy is at its best, strongest, and most
durable when we are acting in the most bipartisan way.
And so my commitment to you is--with respect to trade
policy, promoting trade, and also working with the Congress--
that I am looking for strong bipartisanship and a unified
American voice, and I am happy to engage with you on those
issues from that viewpoint.
Senator Thune. Well, and I am not--and that is great, and
you know your subject well. And because you know your subject
well, I just think that the 2022 trade policy agenda that
supports a worker-centered trade policy may be a convenient
political slogan, but it is not a serious trade strategy. And
you know, we are the leading economy in the world for a reason,
and a major part of that is because American exporters--and by
that I mean farmers, businessmen and women, innovators, and
entrepreneurs--boldly go into global markets and oftentimes
succeed.
And just as an example, U.S. farm and food product exports
grew from $46 billion in 1994 to more than $177 billion last
year. The U.S. exports support a lot of good-paying jobs at
home and help spread the reach of American influence abroad.
So I am just trying to get you all to focus. I understand
this framework, but because there is not market access in
there, because there are not, you know, tangible benefits
delivered, it is a lot of really flowery rhetoric, but I am
trying to see where this does anything to open markets for our
farmers and ranchers in areas of the world where America just
flat needs to be a presence, needs to be competitive, and needs
to be leading the way.
If we are going to isolate China, doing business with a lot
of countries in that region just seems like it makes a lot of
sense. So let me just ask a fairly direct question.
Do you agree that farmers, producers, and others that rely
on exports and lower-cost imports are part of the backbone of
our economy?
Ambassador Tai. I do agree that they are.
Senator Thune. And will the administration work to build
upon the success of U.S. exports in the context of any new
trade agreements or initiatives?
Ambassador Tai. We are doing so across everything in trade
policy that we are pursuing right now.
Senator Thune. And I think a lot of us would differ with
that, and I would hope that your clear-eyed focus would be
market access, creating opportunities that are real, that are
meaningful, that are tangible, and working with us in a
bipartisan way to do that. You expressed a willingness to do
that, and I certainly hope that you would, and starting with
nominating an Ag Negotiator. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Thune. You and I have
worked together often on trade issues, and I look forward to
doing that again.
Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman.
As chairman of the Foreign Relations Committee, I regularly
hear from ambassadors in some of the countries that may
participate in IPEF that it is not sufficiently ambitious. What
has been the administration's response to that criticism? And
how, if at all, has the scope of the negotiations changed based
on requests from other potential partners?
Ambassador Tai. Well, Senator Menendez, I disagree with the
sense that it is not sufficiently ambitious. In a lot of our
interactions and conversations with our trading partners in the
Indo-
Pacific, we have been making the case that what we are trying
to do in the Economic Framework for the Indo-Pacific is new. It
will include innovative elements, some innovative for the
region, some innovative for the trade policy conversation
overall, because of the evolving challenges that we are facing.
So that is where I would begin, which is that new things
require some time for socialization and for people to
appreciate where the economic meaning is going to come. But we
are committed to this region, to our partners, and to engaging
and enhancing our economic relationships.
Senator Menendez. Well, I appreciate that. Let me just say,
as my own observation, not theirs, I do not think it is as
robust as I think we need. I think we missed an opportunity in
TPP, and that has happened, and we are not going to revisit it.
But at the same time, when we are thinking about our challenge
with China--which the administration has adopted as their
number one geo-strategic challenge, the geo-economic strategy
to compete with China--you certainly, I hope, will pursue an
ambitious agreement that sets high standards across the breadth
of our economic relationships within the region.
And it is critical that the IPEF make real progress in
setting strong standards across the Indo-Pacific to further
solidify a democratic rule of space trading regime.
Let me ask you. Taiwan is a key trading partner of the
United States, one with whom we have a strategic relationship
that is intimately intertwined with our economic security,
particularly as it relates to trade in semiconductors. It is a
key stakeholder in the Indo-Pacific economic community. It is a
vibrant democracy that respects the rule of law. It is exactly
the type of partner whom we should work with to strike high-
standard trade agreements.
Several weeks ago, the Taiwan Government officially
requested to be part of the IPEF negotiations. What has been
the administration's response to that request?
Ambassador Tai. Senator Menendez, I completely agree with
you that Taiwan is an essential trading partner for us, and
also an essential partner overall.
The Indo-Pacific Economic Framework--and I want to
emphasize this for everyone on this committee and publicly as
well--is a framework that we are developing, and it is
something that must reflect also the views of all of you and
our stakeholders.
So, on the point of Taiwan, we are, in general, in
conversations with those who are interested in joining this
framework. I do also want to emphasize and recall that in the
last year we have revived the trade and investment framework
agreement engagements with Taiwan, including at my level, which
had been idle for 5 years. And we will continue to look at
all----
Senator Menendez. So let me get back to my original
question. What has been the administration's response to that
request? Are you going to invite Taiwan to be part of the IPEF
negotiations or not?
Ambassador Tai. Participation in the IPEF is still under
consideration, and as far as I am aware, no decisions have been
made.
Senator Menendez. Okay. Well, I hope--and I get a sense
from that answer that we will not include Taiwan within the
IPEF, which is missing an opportunity both for the vision we
have for Taiwan and also for the regional and trade economic
architecture.
If it is not invited to join the negotiations, I hope the
administration considers an agreement with Taiwan that extends
the benefits on a bilateral basis, which would certainly be the
next runner-up.
Finally, at last year's trade agenda hearing, I asked you
to commit to brief the committee before and after each
negotiating session with regards to the TRIPS waiver, and you
agreed to do that. Do you believe you have kept that
commitment?
Ambassador Tai. I do.
Senator Menendez. Well, about 3 weeks ago the press
reported on a proposed text that appeared to be a detailed
compromise on the issue, and USTR in fact released a statement
confirming that a compromise had been reached. Yet no one on
this committee appears to have known anything about the details
of that agreement before it was announced. We were kept in the
dark.
And so, to me this is an example--you know, there is a
difference between notification and consultation. Notification
is when we got that. Consultation is when there is an
engagement about what it is that you may be considering
agreeing to so that you can have input from Congress. And that
is why, you know, I have real concerns.
In your testimony you said Congress is your constitutional
partner on trade, but from my perspective, you have not acted
that way.
Thank you, Mr. Chairman.
Ambassador Tai. Chairman Wyden, if I may respond to that,
because I think it is important for the overall conversation,
and for a sense of my integrity as the U.S. Trade
Representative.
Senator Menendez, in my testimony yesterday at the House
Ways and Means Committee, I made the point, and I want to make
it here for all of you as well, that there have been no
agreements made at the WTO. And so, with respect to whatever
may be on the table, I consider these hearings to be a part of
a consultation process, and I continue to want to hear from all
of you.
In fact, you and others on this committee have made
yourselves very clear to me in terms of your positions. And I
want you to know that I have heard your concerns, and I have
also heard the concerns of the other members of the committee.
Senator Menendez. Mr. Chairman, I'm sorry, but to say--USTR
put out a statement that there had been a compromise agreement
before anybody was involved. So having come to talk to us after
you had the compromise agreement is not input, because I do not
think you are going to change the compromise agreement based
upon anything you hear. So I do not think it is the
fulfillment, and I hope we can get to a better place.
Thank you, Mr. Chairman.
The Chairman. My colleague is raising this issue of
consultation, and I think the point, Ambassador, is it can
bring us all together. We need consultation apart from
hearings. In other words, it needs to be ongoing. So, thanks.
All right; we are now at Portman, Carper, Toomey, and
Cardin, who will be the next four in order of appearance.
Senator Portman?
Senator Portman. Thank you, Mr. Chairman. And Ambassador,
it is good to have you back before us.
As you know, I feel strongly that you need to have the
ability to negotiate trade-opening agreements. That would make
your job a lot more interesting, as well as the jobs of your
associates. So that is a broader topic, I think, in the context
of the COMPETES Act, also known as USICA, also known by a lot
of other names. I think there is an opportunity for us to do
something, and you and I have talked about it. I have talked to
the Secretary of Commerce about it. So I hope you will be
working with us on that. If there is going to be Trade
Adjustment Assistance, typically that is with Trade Promotion
Authority. And my view is that these agreements that are right
before us, including the UK agreement, which has virtually no
issues as it relates to labor or the environment, are low-
hanging fruit, and it would be great to get America back in the
game.
With regard to China and your discussion in your testimony
about the need to use existing tools, you refer to the Phase
One agreement as part of the old playbook because China has not
lived up to its commitments. And I get that. It is frustrating
when China does not live up to its commitments.
But I do not think we can just move along and say, let's
start to work on other ways in which we can open more
opportunities. Instead, I think we have to stick with that
agreement and use what is in the agreement, which is dispute
resolution.
I think if we just say we are going to forget that and make
that part of the old playbook, I think it sends a terrible
message. Because I think, when China makes an agreement with us
and they do not fulfill their obligations, we have to exercise
our legal rights under that. And I think it is going to be much
more difficult to make progress with China on the subsidies, on
state-run enterprises, on suppression of labor rights, and
other things, if we do not insist that the agreement be adhered
to.
So I guess my question to you would be, are you willing to
move forward with dispute resolution? Are you willing to commit
to utilizing the dispute resolution process that the United
States enjoys as part of that Phase One agreement, possibly
culminating in restrictions on trade with China as necessary to
enforce the agreement?
Ambassador Tai. Senator Portman, it is always a pleasure to
see you. On your question on China, I appreciate the
opportunity to clarify my position and what I said, because I
have seen it reported, perhaps inaccurately, which is to say,
it is the time to turn the page on the old playbook which
focused exclusively on pressuring China and seeking China to
change its ways or pressing China for compliance.
We are not giving up on pressing China on compliance or on
changing its ways. And yes, all tools remain on the table with
respect to dispute settlement and enforcement.
But my main point is that that is not the only thing we can
do now. And we have to expand our strategy to include
developing the tools that we need to defend the interests of
our economy. So in fact what I am saying is, we are committing
to doing more work, and our strategy needs to expand.
Senator Portman. Okay. Well, thank you. I appreciate that.
And using those existing tools we have is important. Again,
setting a precedent of not using the dispute resolution tools
that we have, I think would be problematic for China and
others.
Let me talk to you about new tools, because that is the
other point that you make. You and I have talked about this a
lot. We just do not have the tools to keep up with China, in my
view, as they undermine our national competitiveness. They are
subsidizing manufacturing in many countries through their Belt
and Road Initiative, and yet our trade enforcers are powerless
to combat those subsidies.
Our bipartisan legislation with Senator Brown, called
Leveling the Playing Field 2.0, contains new tools to deal with
that reality. It is what is happening out there, the
transshipments and particularly the Belt and Road subsidies.
That bill is something I am pushing very hard, as you know, to
have included, as it is, in the House version of the U.S.
Innovation and Competition Act we talked about earlier.
Thank you for your support of this approach. Can you
explain to the committee how this legislation would help to
combat China's unfair trade practices?
Ambassador Tai. Well, Senator Portman, let me begin by
commending you and Senator Brown for working in a bipartisan
way and bicamerally on this legislation and this initiative.
In terms of how it would help us, I just want to emphasize
that most of our trade enforcement tools date back to the 1970s
and the 1980s, and it is critical that we retain those tools.
But over time, as the global economy has evolved around us, our
tools have not kept up. And so, the updates and the
enhancements that are in the Leveling the Playing Field Act 2.0
are exactly in the spirit of what we need right now, which is
the tailoring of the tool set and expansion of the tool set
that is going to be up to the task of meeting the challenges
that we are facing today.
Senator Portman. And with China, in particular. Would you
agree?
Ambassador Tai. Yes.
Senator Portman. Thank you, Mr. Chairman.
The Chairman. I thank my colleague. I always like the
exchanges of you kind of NBA All Stars of U.S. trade history.
Senator Toomey is next.
Senator Toomey. Thank you, Mr. Chairman. Ambassador Tai,
welcome.
You know, I supported your nomination because I knew you
had the knowledge and the competence and the ability to do the
job, but also because you stated in your nomination hearing,
and I quote, your intention to ``pursue trade policies that
support American innovation and enhance our competitive edge,''
unquote.
A year later, I am still kind of waiting to see that. And
one of the reasons I say that is because I just do not see a
focus on expanding market access. One of the major areas of
responsibility for the USTR, according to your own website, is,
and I quote, ``expansion of market access for American goods
and services.''
And of course, that is a two-way street. The phrase
``expanding market access'' is not in your testimony today. It
is not a part of the IPEF. And aside from dialing back some of
the previous administration's most counterproductive trade
wars, to my knowledge you really have not been pursuing tariff
reductions.
Every single presidential administration since Reagan has
initiated negotiations on a new FTA. They have done this to
increase market access and to help U.S. industries and workers
grow and thrive.
The UK, Kenya, Taiwan, the Indo-Pacific countries, are just
a few of the countries that have reached out to us. They want
to strengthen their trading relationship, and that includes
having more market access. And yet, thus far we are not taking
them up on it.
Now I get that President Biden ultimately makes this
decision; it is not yours. But you are the U.S. Trade Rep. You
are the President's primary trade advisor.
Let me ask you this: do you think it is in America's best
interest to pursue free trade agreements with other countries?
Ambassador Tai. So, Senator Toomey, if you will allow me to
back up just a little bit----
Senator Toomey. But we have to do it quickly, because I am
going to run out of time.
Ambassador Tai. Okay. If by ``market access'' you mean
economically meaningful outcomes, and if by ``market access''
you mean the removal of tariffs, we have accomplished quite a
bit of that in the first year.
And I mentioned this to Senator Cantwell, but we began in a
very, very tariff-rich environment, and we have removed $20
billion worth--or avoided $20 billion worth of tariffs in our
first year.
To your point about free trade agreements, let me say this.
I encounter this quite a bit, including from many members of
Congress on these two committees, which is that trade policy,
market access, trade enforcement take lots of different forms.
And I know that trade agreements are maybe the most fun form,
and our traditional trade agreements--let me put it this way.
We are interested in pursuing trade agreements with our
partners. But we are also interested in ensuring that, just
like our toolbox on enforcement, we are committed to ensuring
that our trade agreements practice evolves with time.
Senator Toomey. Okay. Here's the thing. My understanding is
the U.S. currently has 14 FTAs with 20 countries. You recently
seem to be suggesting that you think FTAs are a 20th-century
tool. But the fact is, China has 8 currently being negotiated.
The EU has 14 in the process of being negotiated. You may think
this is a 20th-century tool, but it looks like the rest of the
world thinks this is a 21st-century tool. And what this means
is that China and the European Union are expanding market
access for their producers and competition for their consumers,
and they are getting market share that we are going to miss out
on. I think the data is very, very clear--there are all kinds
of studies that show that trade agreements lead to more jobs,
higher pay, increased economic growth, more options, and lower
costs for consumers. It is all kinds of great net outcomes.
Foreign trade supports over 40 million U.S. jobs. I think
you know this data. But without putting market access on the
table, and lowering tariffs, and eliminating barriers, we are
just not going to make the progress we could be making, that
other countries want to make, that we should want to make.
In my understanding, in the 40 years since the U.S. began
negotiating our first free trade agreement with Israel, every
single U.S. Trade Rep has worked on or completed negotiations
of an FTA. My concern is that you might be on track to be the
first Trade Rep not to continue that streak, and that would
come at a big cost to our country. I just hope that you will be
an advocate for this really important tool to expand trade.
The Chairman. The time of the gentleman has expired. I
think Senator Carper is online, and then Senator Cardin.
Senator Carper, are you online?
Senator Carper. I am right here.
The Chairman. Great. So, Senator Carper, and then Senator
Cardin.
Senator Carper. Trade Rep Tai, welcome aboard. It is great
to see you, and thank you for your leadership and service in
this capacity.
I have three points. One is, I want to talk about a worker-
centric approach to a digital trade policy. Second, reform of
the 301 trade exclusion process, a thing that Senator Portman
and I have been focused on. And third would be the intellectual
property waiver.
The first is the worker-centric approach to the digital
trade policy. Ambassador, I want to thank you for testifying
not just before our committee today, but thank you for your
service way, way back, going back to the Ways and Means
Committee before that.
I applaud the Biden administration's commitment to engage
with our allies for the creation of an Indo-Pacific Economic
Framework. And one area of bipartisan interest is the
development of standards to promote openness and transparency
in the digital economy, something we have talked about. Through
digital trade rules, we have the opportunity to uplift workers,
to help small businesses compete, and support American
innovation and entrepreneurship.
Here is my question. Ambassador Tai, what approach should
the United States take when negotiating digital trade
standards? How can this approach advance the Biden
administration's vision for a worker-centered trade policy?
Ambassador Tai. Senator Carper, thank you so much. It is
always a pleasure to see you. And I appreciate this question,
in particular because I think it gets lost in the shuffle some.
When we are talking about digital trade, that is actually a
really inclusive topic, because so much of our economy is
becoming digitalized every single day. So, in terms of an
approach to digital trade, it is absolutely critical that we
bring a comprehensive approach, a holistic one with respect to
how we think about digital trade, and the fact that digital
trade at this point effects everyone. And therefore, our
engagement with our stakeholders needs to be holistic, robust,
and comprehensive.
The concerns that we hear from our stakeholders around the
offshoring and outsourcing of our jobs extends increasingly
beyond the manufacturing sector to the services sector. And we
take very seriously at USTR the necessity to conduct our trade
policy in a way that brings along all of the U.S. economy and
our stakeholders.
And so, a worker-centric approach to digital trade is one
that is comprehensive, that is meaningful, that recognizes the
limits of where Congress has acted and spoken and where it has
not, and also reflects the views, the aspirations, and also the
anxieties of our stakeholders across our economy.
Senator Carper. Great. Thank you.
If I could turn to the section 301 tariff exclusion
process. As you know, since 2018 the trade war initiated by
President Trump has wreaked havoc on American businesses, on
manufacturers, on farmers, and consumers.
Senator Portman and I have long advocated for relief from
the section 301 tariffs, especially for imported goods that are
only available from China. And I appreciate the recent
announcements by the USTR that a limited number of tariff
exclusions would be reinstated. That is good news. However, I
remain concerned about the impact of existing tariffs on
businesses in my State and across our country.
The question is this: moving forward, are you considering
more comprehensive section 301 tariff exclusions? How do these
tariffs fit in the Biden administration's broader China
strategy? Please go ahead.
Ambassador Tai. Senator Carper, we need--and I think that
there is very broad bipartisan support for this particular
view--we need a realignment in our trade relationship with
China. We need for our relationship to be more strategic and in
favor of our ability to compete.
Tariffs do have a role. Nevertheless, in this realignment
we need to take a strategic look at our tariffs, and we also
need to recognize that realignment is something that requires a
transition and cannot be accomplished overnight.
So I committed in my speech on the Biden administration's
China trade policy last October that we would start the first
exclusions process--which we did and just concluded last week--
and that we would consider additional exclusions processes as
warranted. That continues to be true today.
Senator Carper. Mr. Chairman, my time is about to expire. I
just want to mention the third question and ask the Ambassador
to respond for the record. I understand the administration has
been working with some of our WTO partners to develop a
possible agreement on waiving the intellectual property
protections for COVID vaccine. But yet the status and details
of the agreement remain unclear.
And my question I would ask you to answer for the record
is, how does the administration intend to increase its
engagement with Congress and outside stakeholders as this
process continues?
Will you answer that for the record? I would be most
grateful. It is great to see you, and thanks for your good
work. Thank you.
[The question appears in the appendix.]
Senator Cardin [presiding]. Thank you, Senator Carper. I am
going to recognize myself. And after I complete my questions,
Senator Cassidy will be next.
Ambassador Tai, first, thank you for coming to Baltimore.
It was, I thought, an incredible occasion. You could see
firsthand the investment made in the Port of Baltimore to be as
competitive as we can globally. We have the supermax capacities
in our cranes and in our berths. And you got to see some of the
container ships actually come in. They timed it for your visit,
which I thought was good. And the UK is a critically important
trading partner to the United States, and certainly to the Port
of Baltimore. So we are very pleased to see that we are engaged
in conversations with our trading partners in UK to expand
opportunity for both countries. That will mean more jobs for
people in Maryland. So I just really first wanted to thank you
for that initiative, and thank you for coming to Baltimore.
I want to cover first the Indo-Pacific Economic Framework.
I watch every word you say, so I want to just critique, if I
might, that in your list of objectives you included, rightly
so, workers' issues, promoting workers and businesses,
advancing strong labor standards, tackling climate change--all
of which I completely agree with. But I was disappointed,
knowing the countries that are in the framework, you did not
include one of the areas that has been a very high priority of
this committee: advancing good governance and anticorruption.
I know that you are committed to that, but I would ask that
there is sensitivity when that is not included in the list of
our objectives.
Ambassador Tai. Senator Cardin, your leadership on those
issues just is very, very clear. Good governance issues are
included in the trade pillar under what we call ``good
regulatory practices.'' And again, this gets lost in our
jargon. And if I were to translate it into ordinary English, it
is in our regulations, and engaging with our partners, ensuring
that there is a notice and comment process that allows for
participation. So that part is in the trade pillar.
On anticorruption, that is in our organization in a
separate pillar on anticorruption and tax. And that is a pillar
that Secretary Raimondo and her team will be leading. It does
not mean that USTR will not be involved, but we will lead the
trade pillar, and that pillar she and her team will lead.
Senator Cardin. Thanks for the explanation. I would assume
that the environmental issues will also be in the regulatory
framework. So the more you can put a spotlight on them--it is
our expectation. We made it--I know you are not using TPA. I
know TPA has expired. But we made that a principal trading
objective.
So I just would appreciate keeping us engaged on the
progress made, particularly in several of the countries that
are included in the framework. We recognize there is no
enforcement. We recognize the challenges of enforcement.
Let me talk about one country that is in this discussion--
that is, Japan. Congratulations on being able to complete some
really difficult issues with the beef industry and some others
with Japan. It looks like it has been extremely positive. And
quite frankly, Japan is a major trading partner in the Port of
Baltimore, as well as with our country.
And it does not go unnoticed that Japan was extremely
aggressive in supporting the sanctions against Russia, and
helping provide important equipment to the Ukrainians. So they
have been a true partner.
So it seems to me that Japan is one of the easier partners
that we have in the Indo-Pacific area, and I was just curious
as to how you see the next chapter as our trade relations are
unfolding?
Ambassador Tai. Well, Senator Cardin, I would agree with
you that Japan is an absolutely important partner with whom we
have a really strong relationship. I would not necessarily use
the adjective ``easy'' to describe Japan in my list of first
five adjectives, but I will agree with you that, in terms of
the Kishida administration that is in place now, we are
creating momentum in terms of our work.
So I think really, on a bilateral basis, we at USTR have
begun a new bilateral trade communication channel with Japan to
address our bilateral issues. We have a trilateral discussion
and forum that we have reignited with Japan and the EU on new
subsidies rules and also new tools for addressing the
challenges that we face in this 21st century. And also, we look
forward to working with Japan in a very robust way in the Indo-
Pacific Economic Framework.
Senator Cardin. Thank you.
Senator Cassidy is recognized.
Senator Cassidy. Madam Ambassador, thank you for being
here. First is context, and this will be along the lines of
what we have discussed in the past.
If we have a problematic trading partner, say China, that
is able to lower their price by noncompliance with
environmental and labor regulations, that gives them an
advantage not just over us, but over a country like Mexico or
Guatemala that must comply with those by treaty with us. And
every time we enforce that upon them, we raise their price
relative to that in China, which then grows stronger and
pollutes even more. I think you are with me on that.
So, in your opening remarks you mentioned that we need new
domestic tools. And in the press release as regards the U.S.-EU
agreement upon aluminum and steel, there is a suggestion that
you might have a new domestic tool looking at the carbon
content of the products that are being based.
But it occurs to me that we put barriers and penalties upon
China, they promise that they will change their behavior, so we
relax those barriers and penalties. Then they do not comply,
and then we have to enforce.
But it is different if you establish a standard which they
must reach in order to have access to the market, or by which
to avoid the penalty. It is a different--it is less a promise
and more ``if you do not comply, you pay a lot.''
So are these the domestic tools of which you speak,
including this kind of border carbon adjustment?
Ambassador Tai. Senator Cassidy, I think in general my
answer is ``yes,'' although I do not know that I would describe
it as a border carbon adjustment. But you are absolutely
correct that the global steel arrangement that we are in the
process of negotiating with the European Union exactly does
that, which is, it is a mechanism for creating a market between
the United States and the European Union that is going to
ensure fair competition and the promotion of clean industries.
And I agree with you in terms of the sense of leverage,
where you have a market gate-keeping mechanism as opposed to,
you open your market and are stuck having to increase barriers
as a form of enforcement. It is a bit of a carrot and stick
distinction.
Senator Cassidy. Well, the nice thing about having the
border carbon adjustment is, it rewards our people who are
doing the right thing, and therefore paying a price, but then
losing business because that business moves to a place where
there is lower cost of compliance.
I want to stick up for my folks, and I think this is a way
to do so. So we are very interested in partnering with you as
you kind of develop these schemes.
We have also spoken before regarding India's dumping of
shrimp into the United States. And I am told that they are
pushing back hard on this. Can you give any update on that?
Ambassador Tai. So this is something that I have spoken to
you multiple times about. I know how important this is to you
and your constituents. Secretary Raimondo and her team are in
good conversation with mine around the dumping issue. And yes,
I raised this directly with my Indian counterpart in Delhi last
November when I visited him. I did get very forceful pushback.
But, Senator Cassidy, I am committed to working with you on
this issue, and that means in our own system, but that also
means in engaging the Indian Government. And I look forward to
exploring ways to do that.
Senator Cassidy. I am told they complained that we somehow
put barriers on cold shrimp importation, but they do not have
cold shrimp. And so, if you do not have something, big deal.
But it is their warm-water shrimp that are heavily subsidized
and perhaps don't meet phytosanitary standards. Similarly, they
heavily subsidize their rice from even before the seed is
planted, and our folks are competing against something that is
being sold below cost because of heavy subsidies.
Is there any progress on addressing that?
Ambassador Tai. We are looking at this issue carefully with
our partners in the U.S. Government in terms of progress. Let
me get back to you since the last time I asked and make sure
that you have the very latest.
Senator Cassidy. Sounds great.
Another concern we had--that I had with Ambassador
Lighthizer way back when--was the absence of a dispute
resolution for energy companies. It turns out that if your
company was nationalized by Mexico and you are directly
contracting with the government, then you had some sort of a
deal, but not if you were a subcontractor. Think of somebody
required to build something there because of cabotage laws.
Then they get nationalized and you would not have recourse.
I gather that is currently taking place, and you addressed
this in an earlier question, but just to explore, a group out
of Houston has had their stuff nationalized. What are we going
to do to push back against that sort of issue?
Ambassador Tai. I have worked with partners across the
administration on this. This issue has the attention of many of
us working in our different issue areas, from energy to trade
to commerce and more, including climate.
So I want to assure you that this has the attention of the
Biden administration and of USTR. We are looking at all the
tools that we have to enforce what we know is in that
agreement, but also to champion the cause of our stakeholders
and North American competitiveness.
Senator Cassidy. Thank you.
I yield.
The Chairman. All right. There is lots going on here today,
Ambassador Tai. My understanding is the good souls here have
agreed that Senator Warren will go next.
Senator Warren. Thank you, Mr. Chairman. And thank you,
Senator Brown.
So, let's start with some good news. Ambassador Tai, your
approach to a worker-centered trade policy is actually
beginning to pay off. Thanks to your work, large groups of
employees in Mexico voted overwhelmingly for new unions. That
is good for those workers, and it helps level the playing field
for American workers who do not have to compete against
overseas factories that are paying below-poverty wages.
But now the administration has announced plans to negotiate
a new trade deal called the Indo-Pacific Economic Framework.
Lobbyists for the giant corporations are celebrating the IPEF
as the second-coming of the Trans-Pacific Partnership.
Now, there is a reason that the original TPP was derailed.
It would have offshored more jobs to countries that use child
labor and prison labor, and pay workers almost nothing. Let me
be clear. The IPEF cannot be TPP 2.0.
Ambassador Tai, you will lead the negotiations on a key
pillar of this new framework on fair and resilient trade.
Commerce Secretary Gina Raimondo will lead the negotiations on
several other pillars, and I urge the chairman to schedule a
public hearing with her soon as well. But I want to ask you
about your approach to these new negotiations.
Ambassador Tai, you have included labor and climate as your
two top areas of focus in these negotiations. Are you committed
to including strong, enforceable commitments in these two areas
in IPEF, and extending trade benefits only to countries that
can meet these standards?
Ambassador Tai. Senator Warren, thank you so much for this
question, and thank you for highlighting the objectives that we
have put out, including in our Federal Register notice
recently.
The short answer is ``yes.'' And the reason why these two
areas are listed at the top of our list is to indicate that, in
the exercise of setting high standards, one of the areas where
the United States has consistently led around the world has
been in incorporating strong, enforceable labor and environment
standards to demonstrate our commitment to the importance of
these areas in our competitiveness and in our terms of trade.
Senator Warren. Good. They are the right goals, and you are
already proving we can make this work. You know, our trade
policy for far too long has been about lowering standards so
that giant corporations can increase profits. Let's raise
standards and build more of these jobs at home.
Now I know that you are also going to be negotiating rules
on the digital economy. Tech companies like Facebook and Amazon
are a huge part of global trade, and are also involved in
spreading misinformation, mistreating workers, and squashing
competition. They also hire hordes of lobbyists to protect
their appalling way of doing business.
Ambassador Tai, will you ensure that any new digital trade
rules promote competition so they benefit workers, consumers,
and small businesses, and not just a handful of big tech
companies?
Ambassador Tai. Senator Warren, let me assure you that one
of our guiding principles in all of our exercises, but in
particular in the Indo-Pacific Economic Framework and the
digital component of the trade pillar, is to ensure that our
stakeholders' views are represented robustly and
comprehensively, so that that table of advice and input is
going to reflect our entire economy and not just parts of it.
Senator Warren. I am very glad to hear that, and I very
much appreciate your demonstrated commitment to labor,
environmental, and competition standards. But frankly, I am
worried that these higher standards will only be included in
the trade pillar that you are responsible for negotiating.
Secretary Raimondo will lead the negotiations on the three
other pillars. And when she listed her priorities, labor
standards and competition were absent. Based on this and her
other comments, I am concerned that her approach will boost
profits for giant corporations, the ones that offshore jobs and
squash small businesses. That should be a nonstarter in our
negotiations.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Warren.
Senator Brown?
Senator Brown. Thank you, and I----
The Chairman. Always standing up for workers.
Senator Brown. Thank you, Mr. Chairman. And Ambassador, it
is wonderful to see you. I look at the chairman of this
committee and the Trade Rep and, frankly, the last questioner,
and I see the most pro-worker officials I have seen in this
government in my time here. As the chair of the Finance
Committee and Ambassador Tai have, I commend the administration
on the recent success of the USMCA in raising labor standards
in Mexico, to the use of the Brown-Wyden rapid response
mechanism, and your leadership in lifting worker standards
everywhere. We hope you say, when we lift worker standards
everywhere, we help American workers. That is what your
predecessors never understood, or never cared to understand.
You do, and thank you for that.
The President's 2022 trade policy agenda makes clear--as
Senator Warren said, as Senator Wyden has said--this
administration is taking a worker-centered approach to trade
policy, as it always should have been.
I know what bad trade policy has done in my State. We have
lived with the wreckage caused by a trade policy lobbied by
corporate interests, where Congress and administrations went
along, that encouraged corporations to move products overseas
in the name of efficiency--always ``efficiency,'' which I think
is just business school speak for lower wages and more
environmental pollution.
You have taken a different approach. I am deeply indebted
to you, and that is why I was at your confirmation a year-plus
ago.
My question--a couple of questions. In your testimony at
Ways and Means, you said China is continuing to double down on
unfair trade practices. You explained the administration will
need to explore, quote, ``the design and build of new tools and
strategic investments.''
I have called for those strategic investments in
manufacturing, in American industrial production, for all my
time in Washington, including, as you know, as part of the
failed TPP effort. I am glad you mentioned that. Yesterday--I
know my colleague from Ohio brought up our bill, Leveling the
Playing Field 2.0, which was included in the House-passed
American COMPETES package. I am depending on Senator Portman to
help us keep it in this version.
You spoke about how this could help strengthen the
enforcement. What other tools do we need to make good on the
administration's commitments in supporting American workers?
Ambassador Tai. Senator Brown, it is wonderful to see you.
And thank you for your kind words. And I also celebrate the
wins and our demonstration of how a worker-centered trade
policy can work, and how we can do trade right.
On new tools and strategic investments, let me just mention
some of the efforts that are currently underway that are
extremely promising. Leveling the Playing Field 2.0 is one of
them, and I talked to Senator Portman about that. Frankly, the
Uyghur Forced Labor Prevention Act that was passed and signed
into law at the end of last year is another example--the CHIPS
legislation that has been proposed in both chambers. And let me
just say that all of these components are critically important
and necessary, but also not sufficient.
And so I look forward to working with you and your
colleagues here in the Senate and the House on building out our
suite of tools, including keeping all of you informed and
engaged in receiving input on exercises like the negotiation
with the European Union on a global steel arrangement that will
promote fair competition as well as clean industries.
Senator Brown. Thank you. It is very important to our
country and to climate, so thank you.
I have one other question, Mr. Chairman. I would like to
bring up what the chairman spoke about earlier on revoking
permanent normal trade relations with Russia. We have been
appalled, all of us of course, well, most all of us, by
Russia's invasion of Ukraine. It is a moral imperative that we
do every single thing we can.
I know that the former Vice President's daughter, Liz
Cheney, a House member in Wyoming, talked about the Putin wing
of the Republican Party. I am hopeful that that is not
represented in the Senate, but I am not sure of that. But we do
have agreement that Russia should not have free and unlimited
access to our economy, or the global economy.
The Senate has a chance to revoke PNTR with Russia. Senate
Republicans keep blocking it, as you know. Every day that we
let this stay on the books is another day we fail to support
the Ukrainian people who have to live under the fire from this
unprovoked imperialist Russian invasion.
Could you speak to the importance of ending PNTR as the
administration works to support Ukraine?
Ambassador Tai. Senator Brown, I would be pleased to. The
swiftness of the coordinated actions between the United States,
the European Union, and our other allies and partners on the
issue of pushing back and creating real, significant
consequences for Russia's invasion of Ukraine and Russia's
violation of Ukrainian sovereignty has been a real achievement.
I want to commend the members of Congress for speaking up
very quickly in a united way, in a bipartisan fashion,
bicamerally, on the need to take PNTR away from Russia. That
said, we are only halfway there. And we have said the words,
but now we need to finish the act.
It has been so important to have the U.S. Government
speaking in one voice, and I look forward to working with you
and others to get this over the finish line.
Senator Brown. Thank you.
The Chairman. Thank you, Senator Brown. I also very much
appreciate your bringing up PNTR this morning, because this is
the way--revoking PNTR--this is the way you deal a powerful
body blow to Putin and the oligarchs. There were stunning
reports over the weekend that basically anybody who makes money
in Russia is giving Putin a cut. These oligarchs have enormous
influence, and we have to get this PNTR revocation passed.
And then, as Senator Brown and I have talked about, I would
like to move on to another bill. If American companies are
doing business in Russia and paying taxes to the Russian
Government, we ought to take away foreign tax credits, because
there is no reason that people in Oregon and Ohio ought to be
subsidizing the Putin war machine.
So we've got to get this PNTR done. Then we can move on to
other important issues, and I thank Senator Brown.
All right; our next three in order are Senator Casey,
Senator Daines, and Senator Warner. And I hope we can get all
three of them done before the vote.
Senator Casey, are you online? Senator Daines is here.
Senator Casey. Yes.
The Chairman. Okay; Senator Casey, Senator Daines, and then
Senator Warner. We are going to get them all done before the
vote.
Senator Casey?
Senator Casey. Mr. Chairman, thanks very much. And I want
to thank Ambassador Tai for coming to the hearing today and for
being with us. I want to commend both you and the Biden-Harris
administration for your critical work to promote a worker-
centric trade policy that lifts up our domestic production and
our manufacturing capacities.
As you know, Senator Cornyn and I have been working on a
piece of legislation now for a good while, the National
Critical Capability Defense Act, which sets up a committee to
review offshoring of critical U.S. supply chains. As the
pandemic has demonstrated, we need to enhance visibility of the
supply chain vulnerabilities. This legislation, as you know, is
also being led in the House by Representative Pascrell as well
as Representative DeLauro. And I know you spoke in front of
their committee yesterday, talking about leaving no stone
unturned.
And you may have seen last week that Secretary Raimondo
said publicly that she would, quote, ``support enhancing our
outbound investment screening.''
So here is the question: how would outbound investment
screening add to and enhance existing tools and strategies to
prevent further offshoring that threatens our national
security, our domestic supply chains, as well as threatening
U.S. workers and leaving us dependent upon foreign adversaries,
especially China and Russia?
Ambassador Tai. Senator Casey, it is a really important
issue, and I know you and I have spoken directly about your
bill. In terms of your question, I think that what is critical
about this particular type of tool is that it is keeping pace
with the challenges that we are facing, and the risks that we
are seeing in the competitive environment that our economy is
in right now.
So again, with respect to inbound screening, that is
something where we have existing tools. As we are seeing new
vulnerabilities arise in the outbound area, I think it is
critical for us to be taking a look at tools like the one that
you have proposed.
Senator Casey. Thanks very much. And I have one final
question for you on the Indo-Pacific Economic Framework. I hope
that as the administration develops the framework, you take
into account the decades of offshoring and unfair practices by
these non-market economies that have left both our workers and
our businesses at a competitive disadvantage.
We need to ensure that our trade policy supports both safe
and fair working conditions for workers across the globe. I
know you understand that and believe that.
I have been working on policies like the particular bill,
the Women's Economic Empowerment in Trade Act, working with
Senators Cortez Masto and Senator Menendez. As you know, the
USMCA trade agreement included sweeping labor provisions, and
we have seen the early success of the rapid response mechanism
in supporting the workers' rights.
So here is the question: how would USTR build on the
lessons we have learned from past trade agreements and
approaches to ensure that our trading partners are treating
workers fairly in the future?
Ambassador Tai. Senator Casey, I think that the United
States is truly a global leader in this area as well, in terms
of our trade practice and bringing our trade policies back to
their roots, which is all about creating opportunities for all
people. We are, I would like you to know, getting very good
pickup from our trading partners, and at the World Trade
Organization, in trying to renew this principle that trade
policies are intended to benefit our economies, and the human
components in our economies above all.
So, in terms of the mechanisms and the standards that we
have in USMCA, they are really at the cutting edge of
international practice. We are looking forward to building on
what we have already accomplished in the USMCA, and that is a
guiding principle for our work across the board.
Senator Casey. Thank you, Ambassador.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Casey.
Next is Senator Daines, then Senator Warner.
Senator Daines. Ambassador Tai, welcome. It is good to have
you here.
When I think about Montana, certainly reducing these unfair
barriers to trade are so important for our farmers, our
ranchers, our small businesses, so we can compete on a level
playing field. Ninety-five percent of the world's consumers are
outside the United States. That is a lot of mouths to feed, and
the importance of being engaged in those markets is critical
for Montana, for U.S. jobs, for economic growth.
It is especially true, given China's growing economic and
geopolitical influence in the Asia-Pacific and around the
world. Regarding China, despite growth in exports for some
commodities, it is pretty clear that China has not been meeting
its agricultural purchasing or intellectual property
commitments in that Phase One agreement.
I was there in Beijing in 2019 working to get that Phase
One agreement finalized, and we want to hold both sides
accountable to make sure that we are living up to what we
agreed to. So, would you tell us the latest on any negotiations
with your Chinese counterparts on that Phase One deal? And how
are you working to enforce both the ag and the IP provisions of
the agreement?
Ambassador Tai. Well, Senator Daines, I know that your
experience with respect to China runs very deep, and you
understand both the opportunities and also the significant
challenges that we have coexisting with China in the global
economy.
We, as the Biden administration, thought it was very, very
important to begin our bilateral engagement with China on that
Phase One agreement and the commitments that China made to the
U.S. Government and to U.S. stakeholders in that agreement. And
that is why we have spent the past couple of months focused, in
our conversation with China, on two aspects.
One is China's performance in view of the promises that it
made in that agreement, especially with respect to its purchase
commitments which mean so much to our farmers and our ranchers
and our agricultural producers. We have fought very, very hard
to secure accommodations from China for the shortfalls that are
apparent in the trade data.
So far, as I have noted, the conversations have been very
difficult. We are not going to close the door on those
conversations. Nevertheless, we do need to move to a new phase
of our engagement. And that includes looking more intensively
at the overall industrial policy----
Senator Daines. Let me ask you this. What confidence do you
have--if we are not willing to get better compliance on the
Phase One deal, why would that give you confidence we will do
better here on another deal?
Ambassador Tai. I think that we are not necessarily looking
at another deal in the next phase, but to expanding out our
focus on China's challenges, beyond its commitments and
compliance in Phase One, to the issues that were not captured
by Phase One or the original investigation on intellectual
property and forced technology transfer, to industrial
targeting practices, where we have seen China again and again
corner the market in critical industries and now increasingly
in future industries.
Senator Daines. Thank you.
I want to talk about another important country, and that is
India. Late last fall, I traveled to India. I met Commerce
Minister Goyal to advocate for reducing tariffs on Montana and
U.S. ag. We talked a lot about pulse crops and saw firsthand
some of the leading technology companies.
I was down in Bangalore--it was Delhi and Bangalore where I
spent some time. It is clear that in the coming years, India is
going to play an even larger role in the region. And while it
will not be easy, the U.S., I think, should consider entering
formal negotiations with India, which presents an enormous
opportunity for growth for U.S. farmers, especially in States
like Montana, which is the number one producer of pulse crops,
and indeed the number one consumer.
What is USTR doing for the U.S.-India trade policy forum,
or otherwise, to address these longstanding agricultural market
access issues--it is not a new problem we have had with India--
and particularly related to pulse crops?
Ambassador Tai. I heard about your visit also from Minister
Goyal, who is very, very charismatic, and also a very strong
advocate for his country's policies, some of which I think we
will be able to strategically align with, and some of which
will and have proven to continue to be challenging for us.
It was very important for us at USTR, and for me
personally, to go to Delhi to revive that Trade Policy Forum.
As a result of the Trade Policy Forum, we secured commitments
from India to open up trade for the first time, or to resume
trade in a number of areas. The one that has been delivered on
soonest has been access for U.S. pork and pork products into
India.
We will continue to build on this relationship, which is so
strategically important, but also has traditionally been quite
challenging.
And I want to thank you for making that trip to India. That
kind of tag-teaming is really critical, and I look forward to
continuing to be able to do that with you with respect to India
and other trading partners.
Senator Daines. Ambassador Tai, thank you.
I just want to conclude by saying I echo some of my
colleagues' frustrations with the lack of a Chief Ag Negotiator
at USTR. While we have you here, I just want to make sure you
hear my frustration as well. That can hinder some of these
efforts to go forward.
This Chief Ag Negotiator is such an important role for ag-
producing States like Montana. It is the number one economic
driver. In fact, well over 15 months into the administration,
you currently do not even have a nominee to consider, which is
unacceptable and, frankly, hurtful to our farmers and ranchers
who, at the time, are battling high costs of fuel and high
costs of fertilizer and drought.
Ambassador Tai. Senator Daines, if I may quickly, the
President has nominated someone, and we will nominate another
person. I commit to you on that today.
Senator Daines. Thank you.
The Chairman. The time of the gentleman has expired.
Okay, Senator Warner is next.
Senator Warner. Thank you, Mr. Chairman. Ambassador Tai, it
is good to see you, at least remotely, and I appreciate the
chance that we had to meet in person recently.
I am going to start my questions in terms of discussing our
country's trade relationships with Africa, and first,
specifically Ethiopia. I know that the President made a
determination that Ethiopia, because of some of the human
rights and other circumstances, was being pushed out of AGOA.
I am concerned--I have a very large Ethiopian diaspora
community in Virginia--that as we do that, we do it carefully,
because of the ramifications it will have with the Ethiopian
civilians, for the economy, for civil society, and particularly
in light of the fact that there has been progress made. The
government has reached some level of at least lifting the state
of emergency and working with the Tigrayans to try to create
some level of cease-fire. My hope is that we can improve our
relationships with the Ethiopian government and, frankly, get
Ethiopia back in AGOA.
Can you speak about that relationship? And has the recent
progress on the ground in Ethiopia sped up any of this process?
Ambassador Tai. Senator Warner, I would be happy to comment
here. I think that we have all been watching what has been
happening in Ethiopia with grave concern. And as a humanitarian
issue, it is really heartbreaking to see what is happening in
that country.
The revocation of AGOA benefits is a result of the criteria
and the AGOA program as it is written. We are following the
latest developments in Ethiopia. We are very much encouraging
the government and others in Ethiopia to continue to make
progress. We have set out a very, very clear set of benchmarks
for Ethiopia that will create its pathway back into AGOA. And
on this, we are working not just as USTR, but with partners
throughout the administration, including the Special Envoy for
the Horn of Africa, to support that pathway back.
Senator Warner. Well, I would like to continue that
conversation. I think the government in Addis Ababa has made
significant strides forward. I think I want to make the
humanitarian relationship with the Tigrayans. I think the
lifting of the state of emergency is important.
I am going to try to get two more questions in. One, I
wanted to raise the status of the negotiations with Kenya,
another opportunity. In Virginia, and I think in probably many
States around the country--the fastest-growing population in
the Commonwealth is the African diaspora, and this is an
incredibly talented asset we feel in Virginia, and increasing
our trade with everywhere in Africa is a great opportunity, but
I know U.S.-Kenya trade conversations have been on your agenda.
And if you can, give me any update on that; that would be
great.
Ambassador Tai. Yes, I would be happy to provide you an
update. I believe this week--and if it is not this week, it
will be next week--the head of my African Affairs Office is
leading a delegation to Nairobi to continue to engage with our
counterparts in the Kenyan Government around trade enhancements
that we can work on. And we have exchanged a set of ideas back
and forth, and I will be happy to report back, and have my team
report back to yours on that trip as soon as they are back.
Senator Warner. In my last comment and my last minute--and
this is, respectfully, an area that the chairman and I have had
some disagreements on--but I want to raise it with you, and
that is the growing debate in our Congress about reforms to
section 230 around the Communications Act and the protections
that provides to many of our social media companies.
I was concerned when section 230 protections were included
in USMCA. And while there is a great amount of debate on this
issue, I hope we can have that fulsome debate here and not
individually include section 230 protections on other future
trade agreements when I think there is a growing bipartisan
consensus here in the Congress that we need to reform section
230.
So I will not ask for a comment on that, but I will look
forward to continuing working with you and with the chairman on
this issue.
The Chairman. And, Ambassador, because I feel very strongly
that that approach would be a mistake for America and a mistake
for the world, Senator Warner and I will continue this debate
offline, because we've got lots of members ready to ask
questions. I just wanted to repeat how strongly I feel about
it, and we will be talking about that.
Okay, next is Senator Whitehouse, and then Senator
Barrasso.
Senator Whitehouse. Thanks, Mr. Chairman----
The Chairman. Senator Whitehouse, are you there? And then
Senator Barrasso.
Senator Whitehouse. I am here. Thank you, Mr. Chairman, and
thank you, Ambassador Tai.
Ambassador, I would like to ask you a few questions about
the Indo-Pacific Economic Framework on specific issues. And I
have four different areas, and they are fairly complex, so I
hope that you will feel free to, given that I have 4\1/2\
minutes now, take this as a question for the record and have
your team get back to me, and I would hope by a set date so it
is not just an unknown obligation to answer.
The first has to do with ocean plastic waste. Scientific
American has reported that 10 rivers contribute about a quarter
of all the ocean plastic waste, and 8 of those rivers are in
Asia. So, getting agreements to deal with the ocean plastic
waste problem in the Indo-Pacific framework would seem to me to
be a very important priority. That is one.
Two is predatory Chinese fishing, which is a problem around
the world, but particularly throughout Asia. I traveled
extensively throughout Asia with Senator McCain, and in every
Asian coastal country that we visited there was very strong
resentment about the way the Chinese fishing fleet, often
supported by the Chinese Navy, was treating their sovereign
fisheries. I think this is actually an issue that really goes
round the world, but particularly in this Indo-Pacific
framework, I would be interested in what you are doing on both
Chinese predatory fishing practices, and more generally pirate
fishing, what is called IUU fishing, illegal fishing. So that
is two.
The third is climate. I am not sure what you are looking at
for climate provisions in the framework, but we are obviously
facing a huge crisis in particularly the sea level-impacted
areas of the Pacific that are going to be crises in the future
as they get overwhelmed by sea level rise, and unfortunately,
in the not-too-distant future, it looks like for some of the
major cities, and even breadbaskets like the delta in Vietnam.
And the fourth is anti-kleptocracy. We have just seen
played out in the Ukraine what happens when fossil fuel-funded
kleptocrats can run their countries like dictators and destroy
other nearby countries, or at least try to, using their
military. I think the Biden administration has wisely
understood that kleptocracy is actually a national security
issue, and that areas in which people hide money and are able
to seek rule-of-law shelter for ill-gotten gains, we have got
to clean up that mess. And wherever there is a leak, that is
where the crooked kleptocrats' money will go. So it is really
important to have agreements across the nations of the world
that they will stop providing that kind of sanctuary to crooked
criminals and corrupt money around the world.
So you now have 1 minute and 15 seconds to answer on all of
that. So, it may be no more than ``I will get you an answer by
X date on each one,'' but I offer those four questions to you.
Ambassador Tai. Senator Whitehouse, let me just say a
couple of words here. We will get answers to you on the QFR
schedule that Senator Wyden sets out.
On all of the issues that you have identified, we are
interested and intending to cover them in the Indo-Pacific
Economic Framework, many of them within the trade pillar. Anti-
kleptocracy I think, if we understand it, generally is
anticorruption also.
Senator Whitehouse. It is.
Ambassador Tai. It will be a pillar that Secretary Raimondo
is leading. I just want to emphasize that Secretary Raimondo
and I have been working hand in glove on this economic
framework, as have our teams and that, as we move forward into
launch and into the discussions, we will continue that hand in
glove partnership with each other, but also I want to
incorporate all of the priorities that you and other members of
this committee have.
So I look forward to doing that work with you.
[The questions appear in the appendix.]
Senator Whitehouse. Start strong. These things usually do
not get stronger in negotiations.
Thanks; my time is up.
The Chairman. The time of the gentleman has expired.
Ambassador, I was not clear whether you wanted to answer
today about 230, or to send a response for the record. What is
your pleasure?
Ambassador Tai. I would be happy to begin by responding
today, Senator Wyden.
The Chairman. Very well.
Ambassador Tai. To Senator Warner's question, which is, we
are at USTR very, very aware of the dynamics and the debate
around this particular provision in U.S. law, and we will
continue to follow it closely as we conduct our trade
conversations.
[The question appears in the appendix.]
The Chairman. Very good. And we will obviously work with
you. My interest here is very much connected to the trade
space. And that is, 230 is all about the innovators. It is all
about the risk-
takers. The big guys, they never have to worry. They can
monetize any claims and the like. It is always about the people
with the big new ideas. And what is striking is a lot of these
platforms, when they were small, oh, my goodness, they thought
230 was the greatest thing since night baseball was invented.
But as they got big and powerful, they pulled up the drawbridge
to try to hold down the little guys and the innovators.
We will have that conversation in the future. Thank you.
Senator Barrasso?
Senator Barrasso. Thanks so much, Mr. Chairman. Madam
Ambassador, it is nice to see you again. Thanks for your
service. Thanks for taking time to meet with us today.
When we last met to discuss President Biden's trade agenda,
I raised some concerns about a number of issues. They included
U.S. intellectual property rights protections; opening new
markets to Wyoming's beef, soda ash, and energy; unfair Chinese
trade practices; human rights violations; carbon border
adjustments; World Trade Organization reform; and trade
enforcement as well.
And after more than a year, the administration, I believe,
failed to address any of these concerns that I had. Instead of
protecting American intellectual property for COVID vaccines,
the administration worked vigorously at the WTO to give this
intellectual property away.
We have had the interaction, you and I, in this committee
room about that. Instead of aggressively seeking new markets
for American goods, President Biden has allowed our Nation to
fall behind.
Last year the trade deficit increased to an all-time high.
From day one, the President made it clear that he was not
really interested in negotiating new free trade agreements, and
unfortunately, he has kept his word. Instead of prioritizing
energy production at home so we can lower prices and increase
exports to our friends, the President remains focused on
shutting down U.S. energy production and exporting a wide array
of liberal labor, social, and environmental policies instead.
While America sits on the sidelines, China clearly is
winning in this confrontation. This year, China signed the
largest trade deal in history. The Regional Comprehensive
Economic Partnership, the RCEP, encompasses one-third of the
global GDP, 15 Indo-Pacific countries, and 53 percent of the
world's exports. China understands the importance of not only
market access, but also securing market share.
So the question I have is, what is the Biden
administration's solution to an Indo-Pacific Economic Framework
that fails to provide market access or increased market share
for U.S. producers? Is it a series of pillars or modules that
countries in the region may or may not voluntarily join? It is
also not clear to me how the framework will help us counter our
adversaries and our competitors, including China.
My home State of Wyoming understands and appreciates the
importance of trade. It has been very important for us
historically and presently. We need to work with our allies to
exchange goods and services across resilient, reliable supply
chains, and lower tariff barriers and trade barriers. We must
provide relief for families facing skyrocketing prices, supply
constraints, and the global pandemic. But Wyoming wants to
strengthen our economy and create jobs, and the trade agenda
falls way short of that.
So, given your wealth of experience in international trade,
can you explain how an agenda that exports progressive ideas
instead of American-made goods and services is going to help
our country keep pace with China?
Ambassador Tai. Well, Senator Barrasso, it is good to see
you. And I know we have had some very good conversations in the
past. You know, I am disappointed to hear that you do not think
that we have been doing anything, because I can assure you that
my commitment to the United States, our economy, our
stakeholders, and our trade policy is absolute.
I guess I am trying to suss out the specific question that
you have for me, which is, what have we been doing?
Senator Barrasso. And I want to know how we recover the
market share that we have already lost without aggressively
pursuing market access for U.S. producers.
Ambassador Tai. I do not actually think that we have lost
market share, and let me just take as an example your point
about the RCEP.
That is a trade agreement between 15 countries that already
have multiple trade agreements between them. So I think that in
the economic analysis of the impacts of the RCEP on the United
States economy, I do not think that there are significant or
detectable impacts, because it is kind of a remix and match of
what is already there.
But let me also just--I want to stick up for myself in
terms of all of the work that we have been doing over the
course of the past year. And it does include market opening.
Over the previous years, there was a lot of market closing, if
you will. And there was a reason for it. But we feel very
strongly that our approach to trade needs to be more strategic.
And the first year, I dealt a lot with converting trade
tensions that we had taken over into real wins for America, for
our farmers, for our workers, and for our economy as a whole.
You know, I do want to focus on your interest in this question
of market share, because it is something that we are looking
at.
Specifically, with respect to our competition in trade with
China, there I would say with respect to steel and aluminum,
with respect to solar panels, we have lost market share. But
that is because of the negative impacts of China's policies on
us. And that is an area where we are extremely motivated to act
and to act along with the U.S. Congress.
Senator Barrasso. Thank you, Mr. Chairman. My time has
expired.
The Chairman. The time of the gentleman has expired.
We have the good fortune of having Senator Hassan here, who
is very knowledgeable about trade issues. She will close our
hearing out. We may have a couple of other people, maximum, but
just a very quick close for you, Ambassador, and I am glad we
have Senator Hassan here.
Ambassador, you have made significant progress on key
issues, and this past year has been a bit less chaotic but no
less challenging. You have had your hands full, and you have
reduced tariffs on our exports to the EU. That is a good thing.
It increased market access for our ag products, for example, to
India. So your job is not for the faint-hearted. I am really
glad that you keep coming back to the importance of
transparency and consultation. A lot of members focus on that,
and we look forward to working with you in the days ahead.
Senator Hassan, we are ready for your comments, and
probably one or two others coming back to close the hearing.
Senator Hassan?
Senator Hassan [presiding]. Well, thank you very much, Mr.
Chair. And I appreciate your and Ranking Member Crapo's
decision to hold this hearing. And I want to thank you,
Ambassador Tai, for testifying today and for all your work on
behalf of the American people and American businesses.
The United States has led our allies around the world in
imposing crippling economic sanctions on Vladimir Putin and his
cronies for Russia's unprovoked invasion of Ukraine. We have to
ensure that Putin cannot circumvent our sanctions, which is why
Senator Cornyn and I are leading a bipartisan effort to close a
loophole that allows Russia to prop up its economy by selling
off its massive gold reserves.
Ambassador, what tools does your office have available to
help ensure that Russia does not evade any existing sanctions?
And how can you continue to apply pressure on Putin for these
unprovoked attacks?
Ambassador Tai. Senator Hassan, this is such an important
issue and so extremely timely and responsive to the challenges
that we are facing in the global economy. The most direct tool
that we have in the trade toolbox is how we treat Russia at the
WTO. And the U.S. Congress has certainly spoken, and we have,
in concert with our allies and our partners, made it very clear
that Russia's behavior has disqualified it from the courtesies
that we grant to our partners at the WTO.
In terms of the circumvention concerns that you have
raised, those are critical issues to how effective our
sanctions will be. And I think that, in terms of the largest
sets of sanctions that are related to the financial system and
export controls, we are happy to work with our lead partners at
the Commerce Department and at the Treasury Department in
whatever way that we can.
Senator Hassan. I appreciate that very much. This is not
only a whole-of-government, it is a whole-of-country and whole-
of-
democracies response. So, thank you.
I want to follow up with a question now about supply
chains. Earlier this month, this committee held a hearing on
out-competing China by strengthening economic ties with our
allies in the Indo-Pacific region. I spoke with witnesses about
ways to increase our supply chain resiliency, including through
legislation I have developed to help bring back American
manufacturing in strategically critical sectors.
Ambassador, how is your office working to increase the
security of critical U.S. supply chains, while also
strengthening our alliances in the Indo-Pacific and beyond?
Ambassador Tai. Well, this is really one of the critical
issues that is before us and our trading partners right now,
which is, after pursuing decades of efficiency-first trade
policies that were all about unfettered trade liberalization,
what are we going to do today in the face of 2 years of a
pandemic where lockdowns are continuing even now, and also
Russia's invasion of Ukraine, which is deeply disruptive to
certain parts of our global trade?
What are we going to do about our supply chain resilience?
And in terms of USTR's role, we have been working in the inter-
agency, whole-of-government, whole-of-country effort. We need a
supply chain task force, which is looking at combinations of
our trade tools, whether they are around the enforcement and
defensive side, or they are on the negotiation side, in terms
of how we come together with our trading partners to help each
other make each other stronger. How do we not just trade more,
but trade smarter with each other?
And we have had very, very good conversations. And I think
that the Indo-Pacific Economic Framework is going to be a
really critical forum for this type of collaboration, and
frankly innovative thinking in terms of our trade policies. It
is not something--it is not a problem we have solved for
before, but it is really clear to all of us that the version of
globalization that we have today is fragile and is reinforcing
our insecurity.
We need to figure out how we can trade with each other in a
smarter way. And I do want to reinforce where you started,
which is, it is about trade, and it is also about rebuilding
the U.S. manufacturing base.
Senator Hassan. Right. Thank you.
I want to follow up on another important issue that we
discussed at last year's trade agenda hearing regarding the
small business chapter of the bipartisan U.S.-Mexico-Canada
Agreement.
In addition to cutting red tape for small New Hampshire
business exporting to Canada and Mexico, the agreement also
created a committee to give the small business community a
voice in shaping our trade policy. Can you update us on your
office's efforts to be responsive to small business input
regarding trade with Canada and Mexico?
Ambassador Tai. I would be happy to. I believe it was last
October that we had actually a USMCA small business outreach
event in Texas, I think San Antonio, but my team will correct
me if I have gotten the wrong city.
The small business chapter is one of the clear wins of the
USMCA. And I just want to reinforce for you that in our ongoing
conversations and our forward-looking conversations, we are
carrying that small business record from USMCA into these new
conversations, because this is a critical part of democratizing
trade, bringing our trade policies to our people in our
communities.
Senator Hassan. Thank you very much. I really appreciate
that.
And I now will turn it over to Senator Cortez Masto. She is
available virtually.
Senator Cortez Masto. Thank you, Maggie. Thank you, Mr.
Chairman.
Ambassador Tai, it is always great to see you. Thank you
for joining us again.
There is one thing we talk about, and I am going to just
bring it up with you again, and this is the tariff on solar
panels. Here is my concern, and I think the concern of so many
in the industry. With these aggressive tariffs, we are running
the risk of actually undermining rapid solar deployment, and
risking our ability to achieve the President's climate goals.
Right now, in Nevada I have 600 IBEW-trained union workers
ready to go to work this year building a 300-megawatt solar
project in Nevada, but it is at risk if they cannot get the
materials they need for construction.
I also know the latest petition that has been presented to
Congress risks cutting off the supply of over 80 percent of the
solar panels needed to build out the development of our clean
energy economy and create good-paying jobs and reach our
climate goals.
Now, I have raised this concern with Secretary Raimondo
directly. We have sent letters in opposition. I have been
joined by my colleague Senator Rosen on our concerns about
this.
Here it is in a nutshell. At the end of the day, I
absolutely understand we need to grow solar manufacturing in
this country. But we cannot do it overnight. And if we are
going to make sure we continue with the growth and the jobs,
and go down the clean energy path, we cannot chill it by
continuing these tariffs or these investigations that are
happening that are going to prevent installers and others from
moving forward towards this clean energy future.
So here is my ask of you, just as to Secretary Raimondo:
how can you help us? Is there a path forward for resolving this
issue so that we can support growing our domestic industry,
holding countries like China accountable, but without putting
critical clean energy projects and workers in my State and
across the States, putting their jobs on the line?
Ambassador Tai. Senator Cortez Masto, I know your views on
this, and I know the impacts to the community that you
represent in Nevada.
Let me try to respond to your direct question in this way.
I think that we do have the tools to thread this needle, where
we need to rebuild our manufacturing capacity here at home, but
also be able to deploy this available technology and support
jobs in both parts of this sector.
I will be the first one to admit that trade tools are
powerful, but they have their limitations in bringing about the
policy change that we need, and need to be deployed in
combination with other policies. And I know that there are
legislative initiatives as well to address some of these
issues, and I want to let you know that we are very interested
in ensuring that our trade policies can work in concert with
other policies to better support all parts of our economy.
Senator Cortez Masto. Thank you, Ambassador; I appreciate
that. And I look forward to working with both you and Secretary
Raimondo.
I also--but let me just say this on a separate subject--I
understand Senator Casey already talked to you about the
Women's Economic Empowerment in Trade Act that he and I both
worked together on. Thank you. Thank you for the good work you
are doing there and your support of that legislation.
Then finally, let me just jump to workers' rights. On March
2nd, the USTR released both its 4-year strategic plan as well
as its 2022 trade policy agenda and 2021 annual report to
Congress. Both focus on pursuing a worker-centric trade policy
and standing up for workers' rights.
So, Ambassador, can you discuss how you plan to implement
these policies and talk a little bit about them?
Ambassador Tai. Certainly, Senator Cortez Masto. We have
been implementing the policy already now for more than a year,
and let me talk a little bit and give you some examples of our
wins there, and talk a little bit about where we want to take
this.
So, the worker-centered trade policy is taking a new
approach to our trade policies, where we are championing not
just the biggest economic stakeholders and the biggest winners
in our economy, but also bringing trade policy back to regular
people and the communities in which they live.
Our approach to resolving the 17-year-long dispute with the
European Union on large civil aircraft is an example of
bringing the spirit of worker-centrism to our trade policy. We
worked with not just our aircraft makers and their suppliers,
but also with the machinists who work for those companies, as
we negotiated the agreement with the European Union and the
United Kingdom so that when we got to the outcome, it was an
outcome that reflects not just the interests of one part of our
economy, but all parts.
In this case, that agreement also led to the lifting of
tariffs on both sides of the Atlantic, which we feel strongly
further champions the interests of large segments of our
economy.
So the spirit of worker-centrism is one around uniting as
much as possible American economic interests, including those
of our people, behind what we do in trade. And we are very
excited to build on our record from the first year, and do more
in our second year.
Senator Cortez Masto. Ambassador, thank you. Thank you
again for joining us.
Senator Hassan. Thank you, Senator Cortez Masto.
I believe, Senator Bennet, you are out there in cyberspace
somewhere?
Senator Bennet. Thank you, Madam Chair. I really appreciate
it very much. Can you hear me?
Senator Hassan. Yes. And I am going to just interject for a
minute. Because of the timing of votes and the timing of this
hearing, Senator Bennet, I am going to turn over the gavel to
you virtually, and you will ask your questions and close the
hearing out, which we have confirmed with the knowledgeable
people in the room is okay. And I am going to go back and vote.
And, Ambassador, thank you so much.
Senator Bennet [presiding]. That is bad news for Ambassador
Tai, because I have about an hour's worth of questions for
her--I am just kidding. I am just kidding.
Ambassador Tai, can you hear me?
Ambassador Tai. Yes, I can.
Senator Bennet. Okay. Thank you for testifying before the
committee today. I want to also lend my voice to underscore the
need to nominate and confirm a Chief Agricultural Negotiator. I
am hearing from Colorado farmers about their concerns on high
input costs and regulatory challenges they are facing in
international markets. And they need a permanent chief trade
advocate for them here in Washington.
Moving to the question, I am concerned that for years,
across Democratic and Republican administrations we have
neglected to implement a coherent strategy in the Indo-Pacific
region. You and I have talked about that before. And instead,
China has expanded its influence in that region and the world,
including across Latin America, for example, in our own
hemisphere.
And I just wonder--in light of the supply chain disruptions
due to COVID and ongoing global instability--whether you see
potential opportunities to reshore critical supply chains to
the U.S. where you can save our opportunities to strengthen
partnerships across the Western Hemisphere through trade, and
that might also give us a greater chance of strengthening the
supply chains. And what challenges do you think we face in
reshoring, or even near-shoring critical industries, and how
can Congress help reduce any barriers there?
Ambassador Tai. Senator Bennet, this is such a critical
question. I think that one of the greatest barriers that we
face is that we require new thinking. And new thinking is often
met with fear, but then also sometimes just met quizzically.
And so I think that the first barrier is bringing
innovation to our trading partners around how we accomplish
resiliency through trade. I have spoken a little bit about
this, but our traditional trade policies have been about
maximizing liberalization and creating incentives for
efficiency for our firms. I think that our experience shows us
that where we are today, we need to look for resilience. We
need to look for ways to reestablish a sense of security and
confidence in the global economy. And I think that that will be
done through a combination of rebuilding a manufacturing base
here in the United States and establishing trusted and
strategic trade relationships with our partners and our
friends.
Senator Bennet. I would like very much the opportunity, if
you have somebody who is doing some of that new thinking, to
talk to them about it. Because I do think that this a moment
where we are realizing that prioritizing making stuff as
cheaply as possible in China versus, as you say, resilience or
the chance to make things here in the United States for our own
national security--there are all kinds of other values that I
think our trade policy ought to reflect.
Let me just quickly, in the last 2 minutes that I have,
Ambassador, shift gears slightly. In your testimony, you state
that the administration really wants the United States-India
Trade Policy Forum. I know that has come up this morning, but I
did not have the chance to hear it.
India has been a critical U.S. ally. I am deeply concerned
about the status and trajectory of our relationship with India,
especially in light of Russia's invasion of Ukraine and India's
reluctance to condemn what Vladimir Putin has done.
Could you elaborate on the progress of that forum and
discuss any challenges we face, and how our trade policy could
strengthen our partnership with India? And then I will let you
go.
Ambassador Tai. Thank you, Senator Bennet. With respect to
India, India is such an important trade partner, and a
strategic partner. It is complicated. And we live in a
complicated world.
It was extremely important for us in the Biden
administration to restart that Trade Policy Forum with India,
and to do it at the ministerial level. So I went to Delhi last
November to meet with my counterpart, Minister Goyal, and it
was the first time in 4 years that the TPF had met at all. And
the last time it met in 2017, it was so fraught that the two
sides did not even issue a joint statement.
This time we issued a joint statement that was really
robust, around 5 pages I think, and it included important
principles where we agreed to work together, as well as market
access commitments that we have made to each other.
So, I think that this will continue to be a complicated
relationship, but to your point, it is an extremely important
one and one where we need to continue to invest our dedication
and our ability to make breakthroughs.
Senator Bennet. Thank you for that. And on behalf of the
committee, thank you for your testimony today, Ambassador Tai.
This hearing is adjourned.
[Whereupon, at 12:37 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Mike Crapo,
a U.S. Senator From Idaho
Thank you, Mr. Chairman. Welcome, Ambassador Tai.
On your drive here, Ambassador Tai, you passed an inscription
engraved on the National Archives: ``past is prologue.'' An enduring
piece of past wisdom is President Reagan's 1982 address to the Nation
on international free trade, which was founded on his personal
commitment to free market principles, both at home and abroad.
He explained that as Americans, we must, ``[I]nsist on sound
domestic policies at home that bring down inflation . . . provide
opportunity for free world countries [to] go forward and sustain the
drive toward more open markets,'' such as the meeting he organized in
Geneva that eventually led to the creation of the World Trade
Organization (WTO). And most importantly negotiate--particularly for
free trade agreements, like the United States' first two free trade
agreements, with Israel and Canada, that were led by Reagan's
administration.
President Reagan's policies helped to break inflation and to
restore American leadership on trade. But it seems President Biden's
trade policy takes the opposite stance. At a time when inflation has
soared to 7.9 percent, President Biden says he will not pursue trade
agreements until his domestic agenda is complete. If ever enacted, this
reckless spending agenda would not only make inflation worse, it would
undercut U.S. leadership on trade by promoting a China-styled
industrial policy.
Proposed electric vehicle provisions, for example, will
discriminate against 48 of the 50 models available for sale in the
United States. It is no wonder why 25 foreign ambassadors told Congress
these provisions breached our international trade obligations.
I am disappointed that the administration continues to pursue this
agenda, instead of focusing efforts on negotiations for new trade
agreements. This is a shame, because the Biden administration knows
better. Its 2022 trade agenda opens on the very point, and I quote: the
``Biden administration recognizes that trade can--and should--be a
force for good.''
Absolutely. My home State of Idaho is proof positive of that
proposition. In 2019, international trade supported over 200,000 Idaho
jobs--or almost 20 percent of the State's employment. Trade
liberalization also saves the average Idaho family of four more than
$10,000 per year.
The problem here is that President Biden's recognition of trade's
overall importance is not matched with an agenda that contains the
requisite ambition to succeed. There is not a single free trade
agreement (FTA) under consideration in this agenda. Free trade
agreements open opportunities. We have seen it over and over. The past
really is prologue.
Idaho's dairy exports to Korea increased by more than 250 percent
since our free trade agreement entered into force in 2012. But, in lieu
of trade agreements, this administration is proposing dialogues and
frameworks, including the new Indo-
Pacific Economic Framework, or IPEF. IPEF may be a positive first step
to engagement in Asia, but it is no substitute for a comprehensive
trade agreement.
The Center for Strategic and International Studies will soon
release its upcoming analysis on IPEF, based on conversations with over
a dozen governments in the Indo- Pacific.
Two points from its analysis are instructive: first, U.S.
engagement is welcome in the Indo-Pacific. One diplomat stressed, in
particular, that his country wants the United States to ``lay out an
affirmative economic strategy that complements its security presence in
the region.'' Second, our partners ``see the IPEF as a proposal with
many U.S. asks, few U.S. offers, and a variety of credible regional
alternatives to the framework that could provide more tangible
benefits.''
If the U.S. is to meet and exceed China's challenge, then the U.S.
must make stronger commitments than China. Regrettably, if the
administration's negotiating ambitions are low, its consultations with
Congress on the few negotiations actually taking place is even lower.
At last year's trade agenda hearing, Ambassador Tai stated that she
would brief this committee before and after each negotiating session
with respect to a waiver of the WTO TRIPS Agreement. That hasn't
happened.
USTR recently issued a press release confirming that it had reached
a ``compromise outcome'' on the TRIPS waiver in discussions with South
Africa, India, and the European Union. USTR refuses to share the text
of that ``outcome'' with this committee. While members may have
different views on the merits of this waiver, every member here should
agree with me that the administration cannot withhold documents
concerning U.S. rights under a congressionally approved trade
agreement. We need to see the document, and we need to ask questions,
because that is what respect for the Constitution requires.
There are serious questions to be asked. For example, last week,
South Africa and India joined with Russia and China to establish the
BRICS Vaccine R&D Center on vaccine cooperation. Congress should know
whether the text permits South Africa and India to share insights on
U.S. intellectual property with Russia and China.
USTR's transparency with the public is also poor. The American
innovators who developed the vaccines provided plenty of evidence on
why a waiver is unnecessary, including that 20 billion doses will be
produced this year--more than enough to achieve the World Health
Organization's vaccination target. The administration, however, has not
shared with the public any evidence as to why a waiver will get shots
into arms any faster. As disappointed as I am about negotiations and
congressional consultation, I also have concerns about enforcement.
Americans need to compete on a level playing field, and I
appreciate the administration's prosecution of two USMCA labor disputes
under the Brown-Wyden mechanism. Yet, much more can be done. With
respect to USMCA, agricultural market challenges remain. Mexico
continues to restrict potatoes and delay approval of biotech crops.
Discriminatory practices targeting our technology companies are also
increasing. Rather than launch cases, the administration appears to be
in retreat.
For example, the trade agenda highlights that USTR reached
agreements to terminate our section 301 investigations against various
countries over discriminatory digital services taxes.
Let us be very clear about what this means--those countries are
going to continue imposing discriminatory taxes on U.S. firms. They may
give a credit one day, but only if Congress approves the Biden
administration's international tax deal. The Biden administration is
blessing foreign governments which discriminate against Americans as
long as Congress refuses to go along with its plan to cede taxing
rights and revenue to foreign competitors.
Let me close with where I started--past being prologue. History
proves that Americans do not fear competition, but rise to it. Now is
the time to seize on that history and to go further on trade, not
shrink from it.
______
Prepared Statement of Hon. Katherine C. Tai, United States
Trade Representative, Executive Office of the President
Thank you, Chairman Wyden, Ranking Member Crapo, and members of the
committee. I appreciate the opportunity to be here today to discuss the
President's trade agenda.
President Biden believes that trade can be a force for good that
grows the middle class and addresses inequality--if we get the rules
right. To achieve those goals, trade must be grounded in fair
competition, and workers should not have to compete against
artificially low wages or unsafe working conditions. They should
compete on the merits and today, I am pleased to update you on our path
toward achieving those goals.
The President also believes we are at our strongest when we work
closely with our partners and allies around the world. Over the last
year, in coordination with my colleagues across the Biden
administration, we have worked to repair strained relationships and
recommitted the United States to the world's institutions. These
renewed partnerships have been instrumental to the strong, united
response to Russia's unjustified attack on Ukraine.
advancing a worker-centered trade policy
Our agenda begins with a commitment to putting workers at the
center of our trade policy. When we defend the rights of workers--both
at home and abroad--labor standards go up, workplaces are safer, and we
drive a ``race to the top.''
This commitment is evident both in our enforcement of existing
agreements like the United States-Mexico-Canada Agreement, as well as
our efforts to put workers at the center of our discussions at
multilateral fora like the OECD, WTO, ASEAN and APEC.
We have also stepped up our efforts to eliminate the use of forced
labor in global supply chains, and in January, USTR announced that we
will develop the first-ever focused trade strategy to combat forced
labor. Paired with the implementation of the Uyghur Forced Labor
Prevention Act, this will send a clear message that the United States
will use every tool available to block the importation of goods made
partially or entirely with forced labor.
Our agenda also recognizes that farmers, ranchers, fishers, and
food manufacturers are key to our worker-centered trade policy, and we
are fighting to achieve quick, economically meaningful wins. Some
highlights from last year include:
The 232 tariff arrangements and cooperative
frameworks for large civil aircraft with the EU and UK lifted
retaliatory tariffs on billions of dollars of U.S. exports--
including agriculture products like butter, cheese, pork, nuts,
and distilled spirits;
An agreement with Japan to increase the beef
safeguard trigger level under the U.S.-Japan Trade Agreement.
The new three-trigger safeguard mechanism will allow U.S.
exporters to meet Japan's growing demand for high-quality beef
and reduce the probability that Japan will impose higher
tariffs in the future;
Regaining access for our shellfish industry to
the EU for the first time in a decade;
Opening access for U.S. pork exports to India in
December 2021, following USTR's engagement under the U.S.-India
Trade Policy Forum;
The Philippines' unilateral lowering of its
tariffs in April 2021 on imported fresh, chilled, and frozen
pork, and a 1-year increase of tariff rate quota volumes
following TIFA meetings; and
Vietnam's approval in 2021 of pending biotech
regulatory applications following TIFA engagement, as well as
MFN duty reductions for corn, all classes of wheat, and frozen
pork.
realigning the u.s.-china trade relationship
The next major component of our trade agenda is the realignment of
the U.S.-China trade relationship.
As President Biden often says, competition with China must be fair.
American workers, farmers, producers, and businesses must be able to
compete on the merits, not against unfair state-led industrial planning
and targeting of certain sectors, labor rights suppression, a weak
environmental regime, or other distortions that put market-oriented
participants out of business.
In October, we launched a direct dialogue with the People's
Republic of China (PRC) regarding our concerns with distortions and
imbalances in our relationship. This included the PRC's failures to
fulfill the purchase commitments detailed in the Phase One agreement,
as well as the state-centered and non-market practices not addressed in
the Phase One deal. It was important for us to fight for the farmers
and businesses that benefit from those obligations and test how
committed the PRC was to the obligations it signed up to.
However, over time it became clear that the PRC would only comply
with those trade obligations that fit its own interests. This is a
familiar pattern with the PRC--from their actions at the WTO and in
various bilateral high-level dialogues. The United States has
repeatedly sought and obtained commitments from China, only to find
that follow-through or real change remains elusive.
While we continue to keep the door open to conversations with
China, including on its Phase One commitments, we also need to
acknowledge the agreement's limitations, and turn the page on the old
playbook with China, which focused on changing its behavior. Instead,
our strategy must expand beyond only pressing China for change and
include vigorously defending our values and economic interests from the
negative impacts of the PRC's unfair economic policies and practices.
In the last year, we have worked hard to deepen our understanding
of how these policies and practices affect our workers and industries,
as well as those of our allies and partners, and global supply chain
resiliency. We have seen what happened in the steel and solar
industries when existing mechanisms were too slow or ill-suited to
effectively address the distortions wrought by China's targeting of
those sectors. In the meantime, we know that the PRC is targeting
critical industrial and high-tech sectors, like electric vehicles,
batteries, semiconductors and others.
To ensure that our industries remain competitive, we must develop
new domestic tools targeted at defending our economic interests, and
make strategic investments in our economy. We have already made
significant progress through the American Rescue Plan, the
administration's focus on supply chain resilience, the Made in America
Office and the Bipartisan Infrastructure law. But to truly boost
America's competitiveness, we urge Congress to quickly pass the
Bipartisan Innovation Act.
President Biden also recognizes that our ability to defend against
unfair PRC economic practices requires that market economies act in
concert to confront policies and practices that are fundamentally at
odds with the modern global trading system. That is why we have also
brought a renewed focus to engagement with our partners and allies, who
also are negatively impacted by the PRC's unfair trade and economic
practices.
At the same time, we are also working towards innovative
arrangements with our allies and like-minded partners to strengthen our
resilience. For example, the global arrangement we are currently
negotiating with the EU will be world's first sectoral arrangement on
steel and aluminum trade to tackle both emissions and non-market excess
capacity.
engaging with key trading partners and multilateral institutions
Beyond this cooperation, we have deepened our engagement with key
trading partners through new and existing bilateral, plurilateral and
multilateral agreements and arrangements.
We launched the U.S.-EU Trade and Technology Council to
promote shared economic growth through an expanded trade and
investment relationship by avoiding unnecessary barriers to
trade in emerging technology products and services, promoting
cooperation on labor rights, combatting child and forced labor,
and expanding resilient and sustainable global supply chains.
We launched the U.S.-Japan Partnership on Trade to advance
an agenda of cooperation, as well as to address bilateral trade
issues of concern to either side.
We continued our work under the USMCA to ensure that Canada
and Mexico fully implement their commitments.
We relaunched the United States-India Trade Policy Forum to
enhance our relationship with India and make progress on
important bilateral trade irritants.
And most recently, we hosted the first Dialogue on the
Future of Atlantic Trade in Baltimore, MD last week. We will
hold the second leg in Scotland next month to consider what
concrete, economically meaningful steps we can take to deepen
our trade relationship with the United Kingdom and create more
durable trade policies.
The Biden administration is also committed to economic engagement
with partners in the Indo-Pacific. The Indo-Pacific is one of the most
dynamic regions in the world, and it is one of strategic importance to
the United States. Additionally, the region is home to some of our
closest allies and trading partners, including some with which we have
longstanding trade agreements. By working closely with allies and
partners to bolster our economic engagement in the Indo-Pacific, we can
establish a new path forward that supports the global competitiveness
of American workers and businesses and further the shared interests of
our allies in the years to come.
The goal of this framework will promote inclusive growth for
workers and businesses, advance strong labor standards, and tackle
climate change. The framework is also central to the Biden
administration's economic strategy in the Indo-Pacific and complements
our national security goals in the region.
USTR will lead efforts to craft a trade arrangement with our
partners that includes provisions on: high-standard labor commitments;
environmental sustainability; the digital economy; sustainable food
systems and science-based agricultural regulation; transparency and
good regulatory practices; competition policy; and trade facilitation.
Going forward, USTR will remain in close coordination and
consultation with this committee and Congress to keep you updated and
to develop this framework.
On the multilateral front, the Biden administration has made clear
its commitment to the WTO, and ensuring that it can be a force for good
that confronts the pressing global challenges affecting the lives of
people.
The Biden administration supports a WTO reform agenda that reflects
the priorities of our worker-centered approach, grounded in fair
competition, to benefit workers and the environment.
One of the top issues we are working towards is an outcome on
intellectual property as part of the administration's broader efforts
to end the pandemic. This has been a long and difficult process--and it
is never easy to reach a consensus across the 164 members of the WTO.
While no agreement on text has been reached, we will continue to engage
with members to get as many safe and effective vaccines to as many
people as fast as possible.
promoting confidence in trade policy through enforcement
The Biden administration is also clear-eyed about what happens when
trade policy fails to deliver on its promises. Manufacturers, farmers
and ranchers do not always get the full benefits of access to new
markets and too many workers and communities suffer due to unfairly
traded imports. This has created a trust gap with the public and is why
enforcement is a key component of our worker-centered trade policy.
For example, we have already employed the USMCA rapid response
mechanism in two instances to defend workers' rights in Mexico. One
critical aspect of this work is that we have been able to partner with
the Mexican Government to deliver real results to workers. Working with
other governments to advance a worker-centered trade policy is a
bedrock of the Biden administration's approach because when we fight
for workers abroad, we are fighting for workers here at home by
combating a global race to the bottom.
We cannot always achieve these results through cooperation, and we
are also using state-to-state mechanisms when we need to. We pursued
dispute settlement with Canada to ensure U.S. dairy farmers receive the
fair treatment in the Canadian marketplace that is due to them. We have
also initiated environmental consultations with Mexico designed to
prevent illegal, unreported, and unregulated fishing.
We are also upholding the eligibility requirements in our
preference programs. The African Growth and Opportunity Act has unique
rules to value rule of law and respect for human and labor rights as
cornerstones of development.
In November 2021, President Biden announced the termination of
eligibility for Ethiopia, Guinea, and Mali due to a failure to meet the
eligibility criteria, including those relating to human rights and rule
of law. We remain committed to working with all three countries to meet
the statutory benchmarks that would enable them to be reinstated in the
AGOA program.
We also recognize that despite our enforcement efforts, many of our
existing trade tools were crafted decades ago. In some cases, they do
not adequately address the challenges posed by today's economy. We are
reviewing our existing trade tools and will work with Congress to
develop new tools as needed.
promoting equitable, inclusive, and durable trade
policy and expanding stakeholder engagement
A final, important part of our trade agenda is promoting trade
policy that is equitable, inclusive, and durable for all Americans and
expanding stakeholder engagement.
In order for our trade policies to be effective and lasting, we
must make sure diverse perspectives are represented in the policymaking
process, and that our policies reflect those viewpoints.
The President's Trade Policy Agenda and Annual Report now includes
strategic objectives and actions to advance racial and gender equity in
trade policy. These actions will reflect the principles outlined in the
executive orders President Biden has signed to date, namely Advancing
Racial Equity and Support for Underserved Communities Through the
Federal Government and Worker Organizing and Empowerment. It will also
incorporate elements of the United States' first National Strategy on
Gender Equity and Equality and the Presidential Memoranda on Tribal
Consultation and Strengthening the Nation-to-Nation Relationship.
We have been--and will continue pairing these values with
sustained, long-term engagement with partners and stakeholders.
Congress, including this committee, is our constitutional partner
on trade. Having worked on the House Ways and Means Committee for 7
years, I am committed to close consultations and a robust partnership
between our two branches of government. We will continue this
partnership through regular briefings and one-on-one engagement with
you and your staffs.
That engagement is critical given the ambition and scope of our
agenda. One year into this position, I am more confident than ever that
we can walk, chew gum, and play chess at the same time. Serving as
United States Trade Representative and representing the Biden
administration at home and abroad is the honor of my career. I am
always inspired by the outstanding work and professionalism of the
people that make up USTR--and I look forward to continuing this work in
the year ahead.
Thank you for your time, and I look forward to answering your
questions.
______
Questions Submitted for the Record to Hon. Katherine C. Tai
Questions Submitted by Hon. Ron Wyden
Question. China has cheated, bullied, and stolen from American
companies for decades. The playing field for American workers isn't
just uneven--in some cases, we aren't even playing the same sport. The
last administration correctly identified these problems--but they
didn't get China to fix them. Stopping China's trade cheating is going
to be tough, and your testimony highlights two big reasons why. One,
China keeps making empty promises on trade. And two, China's government
keeps meddling in the markets by targeting whole industrial sectors--
from steel to electric vehicle batteries--that it can subsidize, take
over, and control. These issues are far too big to be solved by tariffs
alone.
How do you intend to chart a new course on China and ensure their
trade cheating doesn't undercut U.S. manufacturers and workers?
Answer. In October 2021, we launched a direct dialogue with China
regarding our concerns with distortions and imbalances in our economic
and trade relationship. This includes China's failures to fulfill the
purchase commitments detailed in the U.S.-China Economic and Trade
Agreement signed in January 2020, commonly referred to as the Phase One
agreement. We also have been raising our concerns relating to China's
harmful non-market policies and practices that were left unaddressed by
the U.S.-China Phase One agreement, particularly China's industrial
targeting, which can have a devastating impact on American workers and
businesses as well as global trade.
While we continue to keep the door open to conversations with
China, including on its Phase One agreement commitments, we also need
to acknowledge the Phase One agreement's limitations. Going forward,
our strategy includes vigorously defending our values and economic
interests from the negative impacts of China's non-market economic
policies and practices. At the same time, we are not solely relying on
bilateral engagement. We are actively reaching out to and enhancing our
engagement with like-minded trading partners, both directly and through
multilateral institutions, as we seek to develop and execute joint or
coordinated strategies for addressing the unique challenges posed by
China.
As part of this effort, we are prepared to use whatever trade tools
we have that may be necessary to protect U.S. interests, including our
manufacturers and workers. That includes working with Congress to
develop new trade tools. Our current trade tools are decades old and do
not always take into account the realities of what trade looks like
today.
Question. When you were confirmed a year ago, you had a lot of
tariffs--and retaliatory tariffs--on your plate. The Trump
administration loved to place tariffs on products as a one-size-fits-
all response to any trade problem. But one thing it couldn't do was use
the tariffs to actually solve the problems. In the last year, you
brokered a truce in the 17-year Boeing-Airbus dispute, lifting tariffs
that hurt American workers. And you've reached deals with our allies--
the EU, the UK, and Japan--to remove Trump's section 232 tariffs on
steel and aluminum and get their commitment to fight overcapacity and
carbon emissions in these sectors. But there's always more work to be
done, especially on the China 301 tariffs. They're still hitting
American companies that are reeling from COVID, supply chain
disruptions, and inflation.
Can you tell me about the work you've done--and the work you're
continuing to do--to take the tariffs that were handed to you and turn
them into solutions that benefit U.S. workers, farmers, and businesses?
Answer. The administration is continually reviewing the China
section 301 tariffs; this process is a key part of the Biden-Harris
administration's deliberative, long-term vision for realigning the
U.S.-China trade relationship around our priorities and making trade
work for American workers and businesses. As part of this process, we
have initiated and completed two separate exclusion processes--one on
COVID-related products, and one addressed to over 500 previously
extended but expired exclusions. In March, we reinstated exclusions
where American workers, farmers, and domestic producers would benefit.
We are continuing to consider additional exclusions processes, as
warranted.
Furthermore, we have started the process for the mandatory 4-year
review of all the China 301 tariffs, as provided in the statute. The
first step in the process is to notify representatives of domestic
industries that benefit from the tariff actions of the possible
termination of those actions and of the opportunity for the
representatives to request continuation. If a request for continuation
is received, USTR will conduct the statutory review of the tariff
actions. That review would include a consideration of the effectiveness
of the action in achieving the objectives of section 301, other actions
that could be taken, and the effects of such actions on the United
States economy, including consumers. The review would include an
opportunity for all interested persons to submit their views.
Further information may be found on the Four-Year Review page of
the USTR website: https://ustr.gov/issue-areas/enforcement/section-301-
investigations/section-301-china-technology-transfer/china-section-301-
tariff-actions-and-exclusion-process/four-year-review.
Question. The details of the Indo-Pacific Framework are still being
worked out, however you've said the U.S. must ``bring something new to
the conversation.'' Secretary Raimondo, for her part, has hailed the
initiative as a ``new framework for a new economy''--a chance for the
U.S. to accomplish things that wouldn't be possible in a garden-variety
trade deal. This administration is thinking creatively about how to do
more in the Indo-Pacific. That's important, because it's a region that
is bustling with opportunity for Pacific Northwest farmers and
manufacturers.
How is the Indo-Pacific Economic Framework going to bulldoze
barriers to trade and help folks in Oregon reach consumers in Asia?
Answer. We are working to develop a worker-centered trade policy
that benefits U.S. workers and consumers, and ensures that U.S.
companies can continue to innovate and create new economic
opportunities both in the United States and abroad. The Biden-Harris
administration is committed to deepening our economic engagement with
partners in the Indo-Pacific region and has launched the Indo-Pacific
Economic Framework for Prosperity (IPEF). The IPEF will strengthen our
economic ties to the region, while promoting inclusive growth for
workers and businesses, advancing strong labor standards, and tackling
climate change. As part of this effort, USTR will lead the work on a
trade arrangement with our partners that includes high-standard
commitments in the areas of labor, environmental sustainability, the
digital economy, sustainable food systems and science-based
agricultural regulation, transparency and good regulatory practices,
competition policy, and trade facilitation. We look forward to
continued close coordination with Congress on this initiative.
Question. Today, digital trade is at the heart of our economy. It's
not just how millions of consumers access everything from e-books to
online banking. The Internet also underpins the logistics for getting
American exports--from Oregon blueberries to Massachusetts
cranberries--shipped around the world. A free and open Internet is also
a critical engine for democracy, human and worker rights, and free
expression--if you want proof, just look at China and Russia. Their
governments are actively working to control the Internet so they can
censor, surveil, and repress their citizens. It's a human rights
disaster. If the U.S. wants to promote red, white, and blue American
values and stay competitive in the 21st-century economy, strong digital
trade rules are a necessity.
It's important to leverage the Indo-Pacific Economic Framework to
unite our allies and set strong digital rules of the road. Can you talk
about your strategy? How will strong digital trade rules help U.S.
workers, exporters, and consumers--as well as Internet users around the
world?
Answer. The development of strong digital trade rules remain a key
priority in the Indo-Pacific Economic Framework for Prosperity. We will
work together to build strong digital rules designed to help workers,
consumers, and businesses effectively participate in the digital
economy. New rules will build consumer trust, expand network access for
all, and promote network security and reliability. These rules will
allow like-minded countries to work together to protect our freedoms.
Question. I fought hard to ensure USMCA would knock down barriers
to Canadian markets for Oregon's dairy farmers. But if our dairy
farmers are going to realize the benefits of the agreement, it must be
fully implemented and enforced. And, right now, it sure looks like
Canada is viewing its binding commitments as little more than a pinky
swear.
I commend you for staying tough on the Canadians on behalf of our
dairy farmers. You have already filed and won a dispute to ensure that
our farmers are getting the Canadian market access that was bargained
for. But as I understand it, Canada's proposed remedy looks nearly
identical to what it was already doing!
What are your next steps? How will you make sure Canada comes into
compliance with its USMCA obligations?
Answer. Fully implementing the USMCA and ensuring that it benefits
American farmers, exporters, and workers is a top priority for the
administration. We secured a major win for the dairy sector when a
USMCA dispute settlement panel agreed with the U.S. claim that Canada
reserving access to in-quota quantities of its dairy tariff-rate quotas
(TRQs) exclusively for processors breaches its USMCA commitments. These
reserved pools undermine the value of the TRQs for U.S. farmers,
processors, and exporters. On May 16, 2022, Canada published policy
changes to implement the panel's finding. The United States rejects
these changes as a basis to resolve the dispute because Canada remains
out of compliance with its USMCA obligations. USTR initiated a second
USMCA dispute on Canada's allocation measures on May 25th.
Question. United States trade policy should ensure a level playing
field for American workers and companies of all sizes. If the rules are
fair, the U.S. can out-
compete and out-innovate anybody.
But when our trading partners pass laws that target American
companies and favor their homegrown industries, they aren't playing by
the rules. They're tipping the scales against American workers and
making it harder for the U.S. to compete.
One of our biggest trading partners--the EU--seems to be tipping
the scales of the digital economy. EU leaders have been pretty clear
that they want to achieve ``tech sovereignty'' by preventing U.S.
companies from competing fairly in Europe. In the past few years, the
EU has hit U.S. companies with discriminatory taxes. They've finalized
new competition rules over the objections of the Biden administration
and some members of this committee. And they're pursuing a raft of
other digital measures that will make it harder for U.S. companies to
compete on a level playing field. Now, the EU is a critical ally,
especially given the situation in Ukraine. But that doesn't mean we can
stand down when they toss the trade rule book out the window
What steps are you taking to ensure the EU's digital trade policies
don't unfairly discriminate against American companies and workers?
Answer. We are engaged with the EU on digital trade issues both in
the Trade and Technology Council and also in bilateral discussions. In
the context of the digital economy, the United States and the EU are
both committed to protecting workers, privacy, cybersecurity, and
consumer rights and we both want our markets to be fair and
competitive. We share many of the concerns animating EU action on many
policy issues. When governments exercise their regulatory powers, they
should not do so on the basis of advancing the interests of national
champions at the expense of foreign competitors.
______
Questions Submitted by Hon. Mike Crapo
Question. In your opening statement, you report that China failed
to live up to the Phase One agreement. It is easier for the public to
see China's unfulfilled purchase commitments but it is much harder for
anyone to know where China fell short on its structural commitments.
Why doesn't USTR provide this committee with its assessment on
which obligations China failed to comply?
How do you plan to redress China's failure to meet any commitments?
Answer. As noted in our China WTO Compliance Report, China followed
through in implementing some provisions of the Phase One agreement. At
the same time, China has not yet implemented some other significant
commitments, such as those in the area of agricultural biotechnology
and the required risk assessment that China is to conduct relating to
the use of ractopamine in cattle and swine. Other commitments that
China made, such as in the area of technology transfer, are difficult
to verify given the tactics that China takes to obscure its activities.
And as you note, it is clear that China did not fully implement its
Phase One agreement purchase commitments, and we have been discussing
with our Chinese counterparts how China plans to rectify the purchase
shortfalls.
We continue to consult with China on the implementation of the
Phase One agreement, and all options remain on the table in dealing
with China's compliance failures. We also need to acknowledge the
limitations of the Phase One agreement and past approaches to dealing
with China. Our strategies must expand beyond exclusively pressing
China for compliance with past commitments. We need to include the
vigorous defense of our economic interests in the face of China's
unfair policies and practices. And we need to work more closely with
like-minded trading partners on new strategies, as we are doing.
Question. Chinese companies are manufacturing vaccines in
developing countries, including Egypt and Algeria.
Would the ``compromise outcome'' allow such countries to let
Chinese-owned facilities take advantage of the TRIPS waiver?
Answer. I appreciate your concerns. Since the WTO Director-General
has released an official draft text, USTR has been conducting
consultations with Congress and stakeholders on all aspects of the text
and its implications, including the concern you have raised.
Question. According to the Pharmaceutical Industry Labor Management
Association, or PILMA, America's biopharmaceutical industry supports 22
million union labor hours. As they note, ``union hands craft the COVID
cure.'' PILMA opposes the waiver. Given that USTR is focused on a
worker-centered trade policy, I would hope USTR at least examined the
potential impact on U.S. jobs if a waiver goes forward.
Has USTR prepared any assessment on how a waiver would affect
workers in the biopharmaceutical industry, and if so, why has it not
published it?
Answer. USTR has had regular consultations with interested parties
throughout the process of discussions on this issue. These interested
parties have included Congress, labor organizations, civil society,
public health advocates, public health experts both inside and outside
of the government, and vaccine manufacturers themselves.
Now that the WTO Director-General has released the official text,
USTR has begun its consultations on that text with Congress and
stakeholders.
Question. The administration is very clear that IPEF will not
include market access initiatives.
Given that the administration wants to raise our trading partners'
labor and environmental standards through IPEF, why take the carrot of
market access off the table?
Answer. The Biden-Harris administration is committed to economic
engagement with partners in the Indo-Pacific region and has launched
the Indo-Pacific Economic Framework for Prosperity (IPEF). The IPEF
will strengthen our economic ties to the region, while promoting
inclusive growth for workers and businesses, advancing strong labor
standards, and tackling climate change. It is correct that market
access, in the form of tariff liberalization, is not currently being
considered as part of the IPEF trade pillar. However, the trade pillar
will include binding and non-binding rules that will enhance access to
markets by creating a common set of rules and norms. The high-standard
commitments we are seeking will establish a strong foundation for a
worker-centric trade policy that will support high-quality American
jobs and underpin innovative growth for American farmers, producers,
and businesses. As part of this effort, USTR will lead work on a trade
arrangement with our partners that includes high-standard commitments
in the areas of labor, environmental sustainability, the digital
economy, agriculture, transparency and good regulatory practices,
competition policy, and trade facilitation. We look forward to
continued close coordination with Congress on this initiative.
Question. Earlier this month Canada released proposed changes to
its dairy Tariff Rate Quota, or TRQ, system.
Unfortunately, that proposal would land U.S. dairy farmers and
manufacturers in basically the same spot they are today--forced largely
to sell to their direct competitors in Canada.
This is neither the type of reform I expected to see when the U.S.
launched the case last year nor one that I expect the U.S. to settle
for, now.
How will you leverage the tools available in USMCA to bring about
Canadian compliance with all of its USMCA dairy obligations?
Answer. Fully implementing the USMCA and ensuring that it benefits
American farmers, exporters, and workers is a top priority for the
administration. We secured a major win for the dairy sector when a
USMCA dispute settlement panel agreed with the U.S. claim that Canada
reserving access to in-quota quantities of its dairy TRQs exclusively
for processors breaches its USMCA commitments. These reserved pools
undermine the value of the TRQs for U.S. farmers, processors, and
exporters. On May 16, 2022, Canada published policy changes to
implement the panel's finding. The United States rejects these changes
as a basis to resolve the dispute because Canada remains out of
compliance with its USMCA obligations. USTR initiated a second USMCA
dispute on Canada's allocation measures on May 25th.
Question. The European Union (EU) speaks of promoting ``European
digital sovereignty.''
The recent text of the European Digital Markets Act appears to
target U.S. companies through thresholds that exclude not only European
firms, but also Chinese firms.
Rather than targeting our companies, the EU should be partnering
with the United States in the face of increasing digital
authoritarianism globally
How will you convince the EU to apply its digital measures even-
handedly--including with respect to the Digital Markets Act?
Answer. We are engaged with the EU on digital trade issues both in
the Trade and Technology Council and also in direct bilateral
discussions. It is clear that, in the context of the digital economy,
the United States and the EU are both committed to protecting workers,
privacy, cybersecurity, and consumer rights and we both want our
markets to be fair and competitive. We share many of the concerns
animating EU action on many policy issues. When governments exercise
their regulatory powers, they should not do so on the basis of
advancing the interests of national champions at the expense of foreign
competitors.
Question. The trade agenda states that ``the Biden administration
supports a WTO reform agenda.''
One of the major issues to reform is dispute settlement, including
the Appellate Body. There are problems with the dispute settlement
process, including the amount of time it took to resolve cases.
However, our allies tell me that it is very important to bring back
dispute settlement so that they may confront China's practices, since
they otherwise lack the economic scale necessary to wage a trade war.
When will the Biden administration table a proposal to reform WTO
dispute settlement, and what ideas might it include?
Answer. There have been longstanding, bipartisan concerns with the
way that the dispute settlement system has been functioning and for
years the United States has been saying there needs to be a course
correction. The Biden administration shares these bipartisan concerns,
including on decisions by the WTO Appellate Body that have harmed the
ability of the United States and other market economies to address
China's non-market economic distortions that harm U.S. workers and
businesses. I believe that a central feature of reform must be to
revitalize the agency of WTO members in securing acceptable resolutions
and to ensure that WTO dispute settlement does not impose new
obligations and take away rights in a way that was never agreed to by
members--or approved by Congress.
The first step to achieving lasting reform is to understand what
all WTO members want and need from dispute settlement. A true reform
discussion should aim to ensure that WTO dispute settlement reflects
the real interests of members. An inclusive, informal discussion that
does not prejudge what a reformed system would look like provides us
with the greatest chance of achieving reform. We look forward to
continuing these informal discussions with WTO members. While those
discussions occur, WTO dispute settlement remains available through a
number of different procedures, including arbitration agreed between
WTO members.
Question. In terms of the USMCA, as I have said before in concert
with Chairman Wyden, enforcement needs to be the priority. America's
businesses, workers and farmers need to compete on a level playing
field--but the administration can also stand up for them by challenging
other market access barriers at the same time.
Do you agree that Mexico appears to be moving in the wrong
direction, in many ways?
If so, what do you intend to do about it?
Answer. USTR has serious concerns with the deteriorating trajectory
of Mexico's energy policies, including a series of ongoing actions the
Mexican Government has taken to increase state control over, and limit
competition in, the energy sector. USTR is actively assessing these
developments, and as I wrote to Secretary of Economy Tatiana Clouthier
on March 31, 2022, I will be considering all available options under
the USMCA to address these concerns.
Additionally, I have been working closely with Secretary Vilsack to
address challenges for American agriculture in Mexico. I am examining
biotech policies and developments in Mexico carefully and have raised
concerns with Mexico's Secretary of Economy Clouthier and Agriculture
Secretary Villalobos. I will continue engaging them to ensure Mexico
fulfills its USMCA obligations and addresses issues that affect the
commercialization of biotech products.
USTR is considering all options available under the USMCA to
address these issues, as well as other areas of concern.
Question. I am disappointed to see that USTR has not decided to
pursue free trade agreement negotiations with the UK and Kenya to date.
I think it is important that we act in a timely fashion as the UK is
already pursuing new trade deals, and it is critical that we deepen our
engagement with Africa.
Is USTR still reviewing whether to pursue free trade agreement
negotiations with these countries, and if so, why has the review not
concluded?
Answer. In March 2022, I hosted United Kingdom Secretary of State
for International Trade Anne-Marie Trevelyan for the first joint U.S./
UK Dialogues on the Future of Atlantic Trade in Baltimore, Maryland.
Then in April 2022, we held the second round of dialogues in Scotland
and England. Following President Biden and Prime Minister Boris
Johnson's announcement last year of a new ``Atlantic Charter,'' the
U.S./UK Dialogues on the Future of Atlantic Trade are exploring how the
United States and United Kingdom will collaborate to advance mutual
international trade priorities rooted in our shared values, while
promoting innovation and inclusive economic growth for workers and
businesses on both sides of the Atlantic.
I have also held several meetings with Betty Maina, the Kenyan
Cabinet Secretary for the Ministry of Industrialization, Trade, and
Enterprise Development, to discuss the importance of the U.S.-Kenya
relationship and strengthening ties between both countries. We agreed
to direct our respective teams to pursue a deepening of the United
States-Kenya trade relationship in a manner that benefits workers,
attracts investment, and promotes regional economic integration. Toward
that end, Assistant United States Trade Representative for African
Affairs Constance Hamilton held meetings in Kenya on May 3rd through
May 6, 2022. She led a delegation of 14 Washington-based U.S. officials
that included subject-matter experts from USTR and the Departments of
State, Labor, Commerce, and Agriculture. The discussions between the
U.S. and Kenyan delegations covered a wide range of topics and proved
very productive, identifying areas of convergence and deepening our
mutual understanding on how to best strengthen our bilateral trade
engagement.
______
Questions Submitted by Hon. Chuck Grassley
Question. I understand that the Brazilian Government was facing
pressure over high gas prices so they moved to eliminate the tariff
this year on American ethanol which is good news.
What work is being done to permanently end this tariff?
Answer. USTR and USDA have engaged extensively with Brazil on this
issue in the nearly 5 years since it implemented a tariff rate quota on
imports of ethanol in September 2017. As part of Mercosur, Brazil
started applying, an across-the board tariff of 20 percent on all
ethanol imports in December 2020, before temporarily lowering that
tariff to 18 percent in November 2021. We are very pleased by Brazil's
more recent elimination of tariffs on ethanol imports for the remainder
of this calendar year. Bilateral trade of ethanol is in both of our
interests, and USTR will continue engaging with Brazil in advance of
the expiration of tariff relief in efforts to avoid the uncertainty of
past years and establish reciprocal conditions for bilateral trade.
Question. I have seen one of your pillars in the 2022 trade policy
agenda is to engage with key trading partners to incentivize climate
action.
As you likely know, emissions from corn ethanol are 46-percent
lower than conventional gasoline. Biodiesel and renewable diesel can
reduce emissions by 85 percent over conventional diesel.
Does this include U.S. produced biofuels?
Answer. We have encouraged trading partners to establish biofuel
policies that align with current U.S. law and regulations under the
Renewable Fuel Standard, and will continue to do so.
Question. India has aggressive timelines for implementing E20
across the country. However, without imports they will not be able to
meet their climate and air quality goals.
How can the United States best engage with India on market access
for U.S. biofuels?
Answer. We are actively engaging through the U.S.-India Trade
Policy Forum's working group on agricultural goods to expand access to
the Indian market for U.S. biofuels. We continue to press India to
rescind its prohibition on imports of ethanol destined for fuel use,
which would also help India to meet its own climate goals.
Question. President Biden has set forth extremely ambitious
renewable energy goals. Please explain generally, how does the current
investigation at the Department of Commerce regarding solar cells from
four southeastern Asian countries comport with those clean energy and
climate goals, particularly his net-zero carbon goal by 2035 for the
electric utility sector?
Answer. The Commerce Department has authority for antidumping and
countervailing duty investigations and is following the statutory
processes, including the deadlines set by statute, for investigating
possible circumvention of AD and CVD orders on solar cells and modules
from China. USTR does not have a role in how or when the Commerce
Department makes anticircumvention determinations.
Question. The investigation initiated by the Department of Commerce
adds great uncertainty to the solar supply chain and may impact solar
projects in Iowa as well as the local economies and jobs they support.
An efficient and expeditious investigation is imperative to removing
that uncertainty as quickly as possible.
Do you support accelerating the investigation timeline for a
preliminary determination identified in the Commerce decision?
Will USTR help in resolving this issue so that critical clean
energy projects can move forward?
Answer. The Commerce Department has authority for antidumping and
countervailing duty investigations and is following the statutory
processes, including the deadlines set by statute, for investigating
possible circumvention of AD and CVD orders on solar cells and modules
from China. USTR does not have a role in how or when the Commerce
Department makes anticircumvention determinations.
Question. Separate from the Commerce investigation, what longer
term steps are USTR taking to ensure that clean energy is deployed with
more international trade certainty?
Answer. USTR continues to examine how we can leverage U.S.
companies' innovation and domestic production of environmental goods to
benefit U.S. jobs and increase exports. We also continue to work with
international partners bilaterally and multilaterally to discuss how we
can facilitate trade in climate aligned and low-emissions goods,
including those used to generate clean energy.
Question. Record-high lumber prices and volatility continue to harm
housing affordability. This will continue to be the case as long as
lumber remains expensive and scarce.
We still do not have a softwood lumber agreement with Canada. As
best as I can tell, we are not even at the negotiating table on this.
Why is this and what progress, if any, can you speak to on this
critical issue?
Answer. I continue to discuss softwood lumber with my Canadian
counterpart. The United States is open to resolving our differences
with Canada over softwood lumber, but it would require addressing
Canadian policies that create an uneven playing field for the U.S.
industry. Unfortunately, to date, Canada has not been willing to
address these concerns adequately.
Question. I would like to have more information on the Indo-Pacific
Economic Framework that the Biden administration continues to work on.
What criteria is the administration using as it considers which
countries are appropriate partners?
What is the timeline for this framework?
Will Taiwan be included in the framework?
Answer. We are working to develop a worker-centered trade policy
that benefits U.S. workers and consumers, and ensures that U.S.
companies can continue to innovate and create new economic
opportunities both in the United States and abroad. The Biden-Harris
administration is committed to economic engagement with partners in the
Indo-Pacific region and has launched the Indo-Pacific Economic
Framework for Prosperity (IPEF). The IPEF will strengthen our economic
ties to the region, while promoting inclusive growth for workers and
businesses, advancing strong labor standards, and tackling climate
change. We are pleased to have launched IPEF with an initial strong,
diverse group of Indo-Pacific partners.
We expect that negotiation of the Indo-Pacific Economic Framework
will progress at different speeds across the various pillars. While we
want to produce results quickly, we must let the substance drive the
timeline.
Taiwan is a critical trading partner of the United States, and
under President Biden, we've only strengthened and deepened our
economic partnership by restarting Trade and Investment Framework
Agreement talks and launching the Technology Trade and Investment
Collaboration (TTIC) framework under Commerce. We look forward to
continuing to strengthen and deepen those economic ties under the Biden
administration. In fact, on June 1, USTR launched the U.S.-Taiwan
Initiative on 21st-Century Trade, which is intended to develop concrete
ways to deepen the economic and trade relationship, advance mutual
trade priorities based on shared values, and promote innovation and
inclusive economic growth for our workers and businesses. We are
pleased to be launching IPEF with an initial strong, diverse group of
Indo-Pacific partners. Moving forward, we will work with IPEF partners
to considering expanding membership in IPEF.
Question. The Biden administration often outlines a top priority is
having a
worker-centered trade policy.
Could you explain to me how support for an IP waiver advances U.S.
economic, entrepreneurial, and worker interests? How does this grow
American jobs and support American workers?
Answer. The pandemic has taken a devastating toll on the global
economy. It is in our collective interest, both morally and
economically, to end the pandemic. In announcing support for a waiver
of intellectual property protections, the Biden-
Harris administration showed its commitment to promoting access to
vaccines for people all over the world, as part of the effort to end
the pandemic and put the global economy back on sound footing. A
healthier global economy will, in turn, be good for American economic,
entrepreneurial, and worker interests.
Question. Has the administration conducted an analysis on the
impact of a TRIPS waiver on U.S. competitiveness? If so, please provide
this analysis and any background materials.
Answer. USTR has had regular consultations with interested parties
throughout the process of discussions on this issue. These interested
parties have included Congress, labor organizations, civil society,
public health advocates, public health experts both inside and outside
of the government, and vaccine manufacturers themselves. Also, in light
of variants, there is considerable uncertainty about how many vaccines
will be required to vaccinate the world over the long term.
Now that the WTO Director-General has released the official text,
USTR has begun its consultations on that text with Congress and
stakeholders.
______
Questions Submitted by Hon. Maria Cantwell
Question. If we could just remove the section 232 tariffs on Indian
steel and aluminum, I would expect India would get rid of their
retaliatory tariffs on lentils, apples, and a host of other goods.
Washington apple exports have declined precipitously after India placed
retaliatory tariffs on the product in June 2019, declining from a $120
million market in 2018 to $21 million in 2021.
You're working on the IPEF and it has no provisions to open
markets. You said that trade agreements were so 20th century. Putting
these facts together, I'm not sure how you are going to increase and
open up trade. My agriculture industry wants to grow exports to India--
very simply, we need to get rid of the tariffs and rebuild our trade
relations.
I appreciate that steel and aluminum negotiations are progressing
with the UK. Are you undertaking similar negotiations with India? How
are we going to resolve the trade conditions we currently have with
India and facilitate the opening of the India market for Washington
apples, and other goods?
Answer. I understand that India's retaliatory tariffs have
negatively impacted U.S. exports, particularly agricultural exports,
and I will explore prospects for working with India to address the root
causes of excess capacity in the global steel and aluminum markets. We
believe that India's duties are inconsistent with WTO rules and are
challenging them in a WTO dispute. As the Secretary of Commerce's
findings formed the bases for the actions taken under section 232 and
the Secretary is charged with, among other things, reviewing the status
of steel and aluminum imports with respect to the national security, we
encourage countries interested in discussing the section 232 measures
to engage the Department of Commerce on this matter.
Question. I am concerned about the timeline of the section 301
tariff exclusions. As you know, the first round of section 301
exclusions expired at the end of 2020. Last October, you announced some
exclusions could be reinstated, and announced the first round of
reinstatements last week.
Now, the exclusions apply between October 12, 2021 through December
2022.
However, the companies still have to pay the tariff between January
1, 2021 and October 12, 2021. I have one small business in my State
that makes lower-cost electric bikes. They want to add jobs in the U.S.
and move some manufacturing back here. But if required to pay the $25
million in tariffs from January to October 2021, they won't be able to
afford to.
If the companies had the exclusions before January 1st, why does
the reinstatement of the exemption only go back to October? Why are you
not making the reinstatement retroactive to January 1, 2021? Why should
companies pay the section 301 tariffs for the time in between the
expiration of December 31, 2020 and October 12, 2021?
Answer. In developing a process for the possible reinstatement of
previously extended exclusions, we sought to create a process that was
administrable, fair, and transparent, and had integrity. An important
element of our consideration was administrability with respect to past
entries, and the finality of Customs liquidation. The outcome of our
deliberation was that making the exclusions retroactive to the date
when the process was announced created the most administrable and fair
process for stakeholders seeking refunds for goods imported prior to
the reinstatement of the exclusions.
Question. As you know, after years of disputes with the U.S.
Government over potato market access, Mexico agreed to open their
market to fresh potatoes from the United States in 2014. Upon taking
that action, the National Confederation of Potato Growers of Mexico
(CONPAPA) sued their own government to prevent U.S. potato imports. In
April 2021, those lawsuits were decided unanimously in the U.S. favor
by the Mexican Supreme Court. However, I understand Mexico is still not
adhering to its trade commitments and continuing efforts to delay U.S.
potato growers access to the market. Washington State exports over $40
million worth of potatoes to Mexico.
How is USTR engaging on this issue to ensure fair access for
American potatoes in the Mexican market?
Answer. I have raised the issue with Mexico's Secretary of Economy,
Tatiana Clouthier, and Secretary of Agriculture and Rural Development,
Victor Villalobos. In April, Secretary Vilsack received a commitment
from Mexico that access for U.S. fresh potatoes beyond a 26-kilometer
zone along the U.S.-Mexico border would be authorized no later than May
15th. Earlier this month, U.S. fresh potatoes were successfully
exported beyond the border zone.
Question. Washington State is home to over 130,000 aerospace
workers. In June, 2021, USTR along with EU and UK counterparts
negotiated a settlement to the 17-year Boeing-Airbus case at the WTO
for large civil aircraft.
Since we are near the 1-year mark, can you please give us an update
on the status of the implementation and engagement in the working
groups?
Answer. The United States reached understandings on cooperative
frameworks with the EU and the UK, in which each side intends not to
impose the WTO-
authorized countermeasures for a period of 5 years starting from July
4, 2021. The working group established under each framework aims to
analyze and overcome any disagreements in the sector, including on any
existing support measures. The working group will also collaborate on
jointly analyzing and addressing non-market practices of third parties
that may harm the U.S. and EU large civil aircraft industries.
Since then, we held our first official meetings with the UK and the
EU in October and November, respectively, and have held numerous
preparatory and follow-up meetings at the staff level.
______
Questions Submitted by Hon. John Cornyn
Question. Last week, the chair of President Biden's Council of
Economic Advisors, Cecilia Rouse, said that the administration is
evaluating and reviewing the existing tariffs on products from China.
As part of that review, she said the administration is also looking
``for those still consistent with our trade goals and rolling off those
that are not.''
Can you confirm for us today that the administration is reviewing
the tariffs?
Can you provide additional insight regarding the administration's
review of the tariffs?
Given that the administration has been in office for more than a
year, and that we discussed a tariff review at last year's Trade Agenda
hearing, when can we expect the review to be completed and the results
shared with Congress and the public?
Answer. The administration is continually reviewing the China 301
tariffs; this process is a key part of the Biden-Harris
administration's deliberative, long-term vision for realigning the
U.S.--China trade relationship around our priorities and making trade
work for American workers and businesses. As part of this process, we
have initiated and completed two separate exclusion processes--one on
COVID-
related products, and one addressed to over 500 previously extended but
expired exclusions. In March, we reinstated exclusions where American
workers, farmers, and domestic producers would benefit. We are
continuing to consider additional exclusions processes, as warranted.
Furthermore, we have started the process for the mandatory 4-year
review of all the China 301 tariffs, as provided in the statute. The
first step in the process is to notify representatives of domestic
industries that benefit from the tariff actions of the possible
termination of those actions and of the opportunity for the
representatives to request continuation. If a request for continuation
is received, USTR will conduct the statutory review of the tariff
actions. That review would include a consideration of the effectiveness
of the action in achieving the objectives of section 301, other actions
that could be taken, and the effects of such actions on the United
States economy, including consumers. The review would include an
opportunity for all interested persons to submit their views.
Further information may be found on the Four-Year Review page of
the USTR website: https://ustr.gov/issue-areas/enforcement/section-301-
investigations/section-301-china-technology-transfer/china-section-301-
tariff-actions-and-exclusion-process/four-year-review.
Question. American importers have been assessed close to $130
billion in tariffs since President Trump first imposed tariffs on
products from China nearly 4 years ago. As you know, List 1 of those
tariffs is set to expire in July unless USTR receives a petition for a
continuation of the tariffs.
Has USTR received a petition to continue the tariffs?
If not, does USTR anticipate that it will receive a petition for a
continuation of the tariffs?
If USTR received or receives a petition, what will USTR's process
be for conducting a review of the tariffs?
Will you commit to including an opportunity for all stakeholders--
including American importers who pay the tariffs--to provide input into
the review process?
Further, will USTR consider a consolidated review of all four
tariff lists to create administrative efficiencies for USTR and
American companies, to provide a more holistic assessment of whether
the tariffs achieved their stated objectives, and to provide a fuller
picture of the tariffs' impact on the U.S. economy, as well as American
businesses, workers, and consumers?
Answer. USTR has started the process for the mandatory 4-year
review of all the China 301 tariffs, as provided in the statute. The
first step in the process is to notify representatives of domestic
industries that benefit from the tariff actions of the possible
termination of those actions and of the opportunity for the
representatives to request continuation. If a request for continuation
is received, USTR will conduct the statutory review of the tariff
actions. That review would include a consideration of the effectiveness
of the action in achieving the objectives of section 301, other actions
that could be taken, and the effects of such actions on the United
States economy, including consumers. The review would include an
opportunity for all interested persons to submit their views.
Further information may be found on the Four-Year Review page of
the USTR website: https://ustr.gov/issue-areas/enforcement/section-301-
investigations/section-301-china-technology-transfer/china-section-301-
tariff-actions-and-exclusion-process/four-year-review.
Question. The section 301 product exclusion process expired at the
end of 2020, except for a small number of exclusions that were extended
for products needed to respond to the COVID-19 pandemic. USTR announced
in October a narrow exclusion process for 549 products that previously
enjoyed an exclusion. Last week, USTR announced its determination to
reinstate 352 of those exclusions--approximately two-thirds of those
eligible. The exclusions are retroactive to October 12, 2021.
Why did USTR make the determination to only allow retroactivity for
these reinstated exclusions to October 12, 2021?
The Federal Register Notice announcing USTR's determination
regarding the reinstatement of this narrow set of exclusions did not
include any reasoning for why the remaining exclusions were denied.
Does USTR intend to notify petitioners regarding why the remaining
exclusions were not reinstated?
Can you share USTR's rationale for denying those exclusions now?
Answer. In developing a process for the possible reinstatement of
previously extended exclusions, we sought to create a process that was
administrable, had integrity, fair, and transparent. An important
element of our consideration was administrability with respect to past
entries, and the finality of Customs liquidation. The outcome of our
deliberation was that making the exclusions retroactive to the date
when the process was announced created the most administrable and fair
process for stakeholders seeking refunds for goods imported prior to
the reinstatement of the exclusions.
The USTR notices announcing the reinstatement decisions explained
the factors USTR considered in making its decisions. The decision not
to reinstate a particular exclusion reflects a determination that,
based on all public comments received, both supporting and opposing
reinstatement, on balance the exclusion did not meet the criteria for
reinstatement.
Question. The House and Senate are preparing to go to conference on
their China competition bills--the U.S. Innovation and Competition Act,
which was passed last year by the Senate, and the America COMPETES Act,
which the House passed earlier this year. The Senate bill includes a
trade title that was adopted by an overwhelming bipartisan vote of 91-
4. The trade title includes language amending section 301 of the Trade
Act of 1974 to require USTR to reinstate an exclusions process for
those experiencing ``severe economic harm'' for the current section 301
tariffs and would require USTR to have a similar process for any future
section 301 actions.
Does USTR intend to create a broader section 301 exclusions
process, or will Congress be forced to act to ensure that American
businesses have a mechanism to seek relief from the tariffs?
Answer. The administration is continually reviewing the China 301
tariffs; this process is a key part of the Biden-Harris
administration's deliberative, long-term vision for realigning the
U.S.-China trade relationship around our priorities and making trade
work for American workers and businesses. As part of this process, we
have initiated and completed two separate exclusions processes--one on
COVID-
related products, and one addressed to over 500 previously extended but
expired exclusions. In March, we reinstated exclusions where American
workers, farmers, and domestic producers would benefit. We are
continuing to consider additional exclusions processes, as warranted.
Furthermore, USTR has started the process for the mandatory four-
yea review of all the China 301 tariffs, as provided in the statute.
The first step in the process is to notify representatives of domestic
industries that benefit from the tariff actions of the possible
termination of those actions and of the opportunity for the
representatives to request continuation. If a request for continuation
is received, USTR will conduct the statutory review of the tariff
actions. That review would include a consideration of the effectiveness
of the action in achieving the objectives of section 301, other actions
that could be taken, and the effects of such actions on the United
States economy, including consumers. The review would include an
opportunity for all interested persons to submit their views.
Further information may be found on the Four-Year Review page of
the USTR website: https://ustr.gov/issue-areas/enforcement/section-301-
investigations/section-301-china-technology-transfer/china-section-301-
tariff-actions-and-exclusion-process/four-year-review.
Question. We are now 4 years into a trade war with China, and the
commitments the United States was expecting to see from China have not
materialized. It is well documented that China failed to meet its
purchase commitments under the Phase One agreement, and there has been
no indication that they have fulfilled their other obligations in the
agreement.
Do you believe China has lived up to the commitments it made for
the Phase One trade deal?
At what point do you intend to begin negotiations on a Phase Two
deal?
Do you believe that the tariffs have failed to create leverage for
getting China to make lasting structural changes and that we should
instead seek new tools?
Answer. As noted in our China WTO Compliance Report, China followed
through in implementing some provisions of the Phase One agreement. At
the same time, China has not yet implemented some other significant
commitments, such as those in the area of agricultural biotechnology
and the required risk assessment that China is to conduct relating to
the use of ractopamine in cattle and swine. And it is clear that China
did not fully implement its Phase One agreement purchase commitments,
and we have been discussing with our Chinese counterparts how China
plans to rectify the purchase shortfalls. Other commitments that China
made, such as in the area of technology transfer, are difficult to
verify given the tactics that China takes to obscure its activities.
We continue to consult with China on the implementation of the
Phase One agreement, and all options remain on the table in dealing
with China's compliance failures. We also need to acknowledge the
limitations of the Phase One agreement and past approaches to dealing
with China. Our strategies must expand beyond exclusively pressing
China for change or for compliance with past commitments. We need to
include the vigorous defense of our economic interests in the face of
China's unfair policies and practices. We also need to work more
closely with like-minded trading partners on new strategies, as we are
doing.
Question. USTR recently published a Federal Register Notice
soliciting comments on the Fair and Resilient Trade pillar of the Indo-
Pacific Economic Framework (IPEF). This is a positive first step
towards the U.S. acceding to a comprehensive free trade agreement in
the region.
The U.S. must engage in the Indo-Pacific and around the world that
reinforce the rules-based international trading system.
This is especially true as China continues to enter into agreements
like the Regional Comprehensive Economic Partnership and shows
ambitions to join the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP). However, I am concerned that the
administration has taken market access off the table, and that the
administration does not believe congressional approval will be
required. This suggests IPEF may not be a high ambition agreement with
enforceable commitments and that the U.S. is not serious about getting
off the trade negotiation sidelines.
Can you explain why the United States has taken market access off
the table for IPEF?
Will IPEF commitments be enforceable?
Will USTR commit to consulting with Congress and stakeholders every
step of the way?
Answer. It is correct that market access, in the form of tariff
liberalization, is not currently being considered as part of the IPEF
trade pillar. However, the trade pillar will include binding and non-
binding rules that will enhance access to each other's markets by
creating a common set of rules and norms, including by leveling the
playing field for works. The high-standard commitments we are seeking
will establish a strong foundation for a worker-centric trade policy
that will support high-quality American jobs and underpin innovative
growth for American farmers, producers, and businesses. As part of this
effort, USTR will lead work on a trade arrangement with our partners
that includes high-standard and binding commitments in the areas of
labor, environmental sustainability, the digital economy, and
agriculture, subject to negotiation. We expect to have both binding and
non-binding obligations. We look forward to continued close
coordination with Congress on this initiative.
Question. The Comprehensive and Progressive Agreement for Trans-
Pacific Partnership (CPTPP) agreement represents approximately half a
billion people and 14 percent of the global economy. American companies
were negatively impacted when the U.S. withdrew from the TPP agreement
in 2017. Joining the CPTPP would be a good opportunity for the U.S. to
reclaim global leadership and write the rules of the road regarding
trade, intellectual property, environmental, and labor standards. It
would also serve as an important foothold into key markets and help the
U.S. compete against China. The U.S. could go back to the negotiating
table to improve the agreement and to ensure it can receive broad
bipartisan support in Congress. But instead of CPTPP, the
administration has announced an Indo-Pacific Economic Framework with
few details, no market access, and questions about enforceability. IPEF
is a good first step for re-engaging in the Indo-Pacific region, but it
is just that--a first step.
What is USTR's plan for ensuring IPEF is a meaningful, high-
ambition agreement that helps American businesses and workers compete
against China?
Answer. The Biden-Harris administration is committed to economic
engagement with partners in the Indo-Pacific region and has launched
the Indo-Pacific Economic Framework for Prosperity (IPEF) to strengthen
our economic ties to the region, while promoting inclusive growth for
workers and businesses, advancing strong labor standards, and tackling
climate change. As part of this effort, we are specifically focused on
negotiating provisions in IPEF that can help American businesses and
workers compete in the global economy and will seek to include
commitments on labor, environmental sustainability, the digital
economy, agriculture, transparency and good regulatory practices,
competition policy, and trade facilitation. The administration's focus
will be on developing high-standard rules that can increase
interoperability and competitiveness among Parties to the arrangement,
which can generate increased access to foreign markets for U.S.
exporters.
Question. Many imports from China facing tariffs have no relation
to the original concern of intellectual property theft that the Trump
administration used for issuing tariffs.
Have these tariffs been successful at reducing intellectual
property theft?
Answer. The United States has been closely monitoring China's
progress in implementing its Phase One agreement commitments under the
intellectual property chapter. On the one hand, China has enacted
certain legislative changes aimed at addressing intellectual property
protection and enforcement. On the other hand, we continue to have
concerns about the adequacy of China's written measures, their
effective implementation, and unwritten practices involving forced
technology transfer. More work needs to be done, including in critical
areas not covered by the agreement.
Going forward, our strategies must expand beyond only pressing
China for change or for compliance with past commitments and include
the vigorous defense of our economic interests in the face of China's
unfair policies and practices. We also need to work more closely with
like-minded trading partners on new strategies, as we are doing.
Question. In the October USTR Federal Register Notice regarding a
process to petition for exclusions, included as one of the factors in
determining if an exclusion would be granted was ``whether the
particular product and/or a comparable product is available from
sources in the United States and/or in third countries.'' Recently,
USTR announced exclusions to some petitions and not others.
Was there a specific threshold you were looking for to help meet
this factor?
Answer. As the October 8th Federal Register notice seeking public
comments on the possible reinstatement of certain exclusions indicated,
USTR would evaluate possible reinstatement on a case-by-case basis.
Additionally, in addressing the availability factor, USTR requested
that commenters address specifically:
Whether the particular product and/or a comparable product
is available from sources in the United States and/or in third
countries;
Any changes in the global supply chain since September 2018
with respect to the particular product or any other relevant
industry developments;
The efforts, if any, the importers or U.S. purchasers have
undertaken since September 2018 to source the product from the
United States or third countries; and
Domestic capacity for producing the product in the United
States.
The decision not to reinstate a particular exclusion reflects a
determination that, based on all public comments received, both
supporting and opposing reinstatement, on balance the exclusion did not
meet the criteria for reinstatement.
Question. The four factors included in USTR's October 2021 Federal
Register Notice regarding the process to petition for exclusions seem
rather vague.
Could you provide some specificity on each of the four factors?
Answer. The October 8th Federal Register notice seeking public
comments on the possible reinstatement of certain exclusions provides
that USTR would examine three factors: (1) whether the product remains
available only from China; (2) whether or not reinstating the exclusion
will impact or result in severe economic harm; and (3) the overall
impact of the exclusion on the goal of obtaining the elimination of
China's acts, policies, and practices. Regarding availability, as noted
above, USTR requested comment and considered the availability of the
product from sources in the United States and/or in third countries;
changes in the global supply chain since September 2018; efforts to
source the product from the United States or third countries; and
domestic capacity for producing the product in the United States. With
respect to severe economic harm, USTR considered whether or not
reinstating the exclusion will impact or result in severe economic harm
to the commenter or other U.S. interests, including the impact on small
businesses, employment, manufacturing output, and critical supply
chains in the United States. Finally, in examining the overall impact
of the exclusion on the goal of obtaining the elimination of China's
acts, policies, and practices, USTR examined whether reinstating the
exclusion would undermine efforts to incentivize China to address the
acts, policies, and practices covered in the section 301 investigation.
Question. Last year, President Biden issued an executive order to
address the root causes of migration at our southern border. To ease
this migration challenge, communities in Central America need jobs with
higher wages and long-term stability. Increasing trade and investment
in the region will do this. Some businesses are creating proposals to
do this.
Will you commit to bringing all stakeholders to the table to
discuss creative solutions that protect current and planned U.S.
investments in the region while also creating conditions to sustainably
and permanently grow textile and apparel investment for the benefit of
U.S. apparel and textile companies?
Answer. One of the five pillars of the administration's Strategy
for Addressing the Root Causes of Migration in Central America, led by
Vice President Harris, is ``addressing economic insecurity and
inequality.'' The textile and apparel industry in Central America,
already one of the biggest employers in the region, holds great
potential for driving new, inclusive, worker-centered economic growth
and creating new jobs, especially for women and underserved and
marginalized populations. The Dominican Republic-Central America-United
States Free Trade Agreement (CAFTA-DR) provides the foundation upon
which the industry can grow and the agreement's rules of origin provide
the certainty needed by industry to invest and expand operations in a
way that promotes economic opportunity for both U.S. workers and those
in the region. We are now, and will continue to be, in dialogue with
all stakeholders to explore ways to make the most of CAFTA-DR's
provisions in order to increase two-way trade and boost sustainable
investment in region.
Question. Two critical trade preference programs--the Generalized
System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB)--
lapsed at the end of 2020 imposing a tax increase on American workers,
American consumers, and American businesses at a time when they can
least afford it. Both the GSP and MTB programs have been supported for
decades by overwhelming bipartisan majorities. The COVID-19 pandemic,
the shipping crisis, and inflation have caused great uncertainty for
American companies and their U.S. workers. This is not the time to
impose new costs on U.S. supply chains.
Can you confirm the administration's support for retroactive
renewal of GSP and MTB in short Order?
Answer. The Generalized System of Preferences is a program intended
to promote development in eligible beneficiary countries, and we
support Congress renewing this program. As you note, the Miscellaneous
Tariff Bill, which similarly expired in 2020, helps U.S. manufacturers
produce domestically, create jobs, and compete in a global marketplace,
and we support Congress's renewal of this program as well.
Question. According to the 2021 Review of Notorious Markets,
``commercial-scale copyright piracy and trademark counterfeiting cause
significant financial losses for U.S. right holders and legitimate
businesses, undermine critical U.S. comparative advantages in
innovation and creativity to the detriment of American workers, and
pose significant risks to consumer health and safety.''
What commitments can USTR make to focus more keenly on this growing
issue?
And specifically, with the most trusted e-commerce and social media
platforms here in America?
Answer. USTR will continue to use the Review of Notorious Markets
for Counterfeiting and Piracy to highlight prominent and illustrative
examples of online and physical markets that reportedly engage in,
facilitate, turn a blind eye to, or benefit from substantial piracy or
counterfeiting, with a goal to motivate appropriate action by the
private sector and governments to reduce piracy and counterfeiting.
USTR regularly engages with trading partners on these important issues.
Question. Key allies, like the United Kingdom and Germany, have
expressed concern that the WTO waiver would erode incentives for
innovation.
Why doesn't USTR have similar concerns?
Answer. The COVID-19 pandemic has highlighted the importance of
pharmaceutical, medical device, and other health-related innovations,
as well as a lack of widespread, timely, and equitable global
distribution of these innovations. The administration recognizes that
extraordinary circumstances such as pandemics call for extraordinary
measures. The administration continues to seek an appropriate balance
through adequate and effective protection for pharmaceutical and other
health-related intellectual property around the world to ensure robust
American innovation in these critical industries to treat diseases and
to fight the current pandemic.
Question. Congress was not adequately consulted before USTR agreed
to a ``compromise'' on the TRIPS waiver.
Were the Departments of State, Commerce, and Defense? Please tell
us about the interagency review process that led to your decision.
When administration principals discussed the importance of boosting
vaccine supply, how did you determine that the best path forward is to
eliminate intellectual property protections for American companies
rather than exporting our Nation's extra doses?
As you are aware--I hope--the United States threw away more than 15
million vaccine doses between March and September of last year, many of
which could have been exported instead.
What role did China play, if any, in restricting the equipment
necessary to refrigerate the vaccines sent to foreign nations, blocking
U.S. diplomacy efforts and harming the health of millions?
Answer. USTR has consulted with Congress on the TRIPS waiver
discussions at the WTO. When waiver discussions at TRIPS Council
stalled, the WTO Director-General decided to engage more directly in
order to facilitate an outcome. She convened an informal discussions
process with four WTO members (the United States; EU, which presented a
paper on addressing pandemic exigencies through the TRIPS agreement in
June 2021; and South Africa and India, which co-led the original TRIPS
waiver proposal in October 2020) to identify a possible path forward on
this important issue for deliberation by the entire WTO membership. The
informal process convened by the Director-General resulted in draft
text, released on May 3rd. The text has not been agreed to, either by
the four members, or by the WTO membership as a whole. All WTO members
currently have the opportunity to consult with their governments,
legislatures, and stakeholders. Those consultations, including ones
being conducted by USTR, are ongoing.
Question. Last week, USTR announced that an agreement-in-principle
has been reached on revisions to Japan's beef safeguard that should
provide greater opportunity for growth in the Japanese market. As you
know, Japan is a very important market for U.S. cattle producers,
accounting for nearly $2.4 billion in U.S. beef sales in 2021, or $91
per head. As we have learned, it was wise to include a provision in the
Japan agreement that called for consultation on safeguards when market
demand exceeds the negotiated thresholds. This is great news for Texas
cattle ranchers, feeders, and raisers.
As consumer demand continues to grow in Japan and other key Asian
markets, and food security becomes a focal point of trade policy, will
USTR continue to advocate for similar measures in future market access
agreements?
Answer. This administration takes a strategic approach when
engaging our partners worldwide. As each partner is different, we have
and will continue utilizing all our trade policy tools to come up with
innovative arrangements, whether in the context of a large trade
arrangement or through other formats that would secure market access
and provide the greatest economically meaningful outcomes for the
United States. U.S. farmers are integral to the Biden administration's
worker-
centered trade policy. Therefore, the consultation mechanism similar to
the one we used with Japan will continue to be one of many options that
USTR will reference as we engage with our partners.
Question. Geopolitical instability in recent months and supply
chain disruptions over the past couple years have underscored the
importance of building stronger economic relationships with
trustworthy, dependable markets. Higher input costs, scarcity of
supplies, and other market pressures are making it difficult for
primary industries like agriculture to remain competitive, resulting in
food security concerns among U.S. allies, including the United Kingdom.
Last week, USTR concluded high-level discussions with the British
Government and focused on digital trade, decarbonization of economies,
and strengthening supply chains. Unfortunately, agriculture was not a
prominent part of the discussion even though farmers, ranchers, and
consumers in the United States and United Kingdom will benefit greatly
from increased trade with goods produced with high standards.
As part of addressing food security concerns and strengthening
supply chains, will the Biden administration commit to prioritizing
trade with the United Kingdom, and do we have assurances that
agriculture will be included in future discussions and negotiations?
Answer. The trade dialogue I am conducting with my UK counterpart,
Secretary of State Trevelyan, is a strong signal of the priority the
Biden-Harris administration places on our trade relationship with the
UK. With the cost of global food prices recently rising to their
highest levels on record, according to the Food and Agriculture
Organization, we added a food security component to our ongoing supply
chain work in the trade dialogue with the UK, including in meetings in
Aberdeen, Scotland, following meetings in Baltimore. In these
discussions, we are exploring how trade policy may contribute to food
security, both by strengthening and making more efficient our bilateral
agricultural supply chains, and more closely collaborating with the UK
in international forums on this issue.
Question. You have stated that the Biden administration will ensure
that our trading partners fulfill their commitments under existing
agreements. Since entry into force of the USMCA, the government of
Mexico has announced and enacted policies that threaten our access to
the Mexican market and undermine our investment in multiple sectors.
This is particularly true in energy where government policy is
discriminating against U.S. energy companies and instead favors state-
owned enterprises. With rising energy prices and inflation, North
American energy security and protecting U.S. investments in energy
infrastructure is paramount. By April 12th-13th, the Mexican Chamber of
Deputies plans to act on a constitutional electricity reform measure
that would further harm U.S. investment in energy infrastructure in
Mexico, eliminate independent regulators, and give priority to the
state-owned utility.
Could you share your perspective and what steps USTR will take to
ensure that Mexico lives up to its USMCA commitments?
Would you consider requesting consultations with the government of
Mexico before these April votes, after which many believe it may become
more challenging to discourage Mexico from going down this troubling
path on energy?
Answer. USTR has serious concerns with the deteriorating trajectory
of Mexico's energy policies, including a series of ongoing actions the
Mexican Government has taken to increase state control over, and limit
competition in, the energy sector. USTR is actively assessing these
developments, and as I wrote to Secretary Clouthier on March 31, 2022,
I will be considering all available options under the USMCA to address
these concerns.
Question. What specific action is USTR going to take to help
companies that are on the verge of bankruptcy and have been forced to
file intent to submit claims to arbitration under USMCA and NAFTA due
to Mexico's illegal actions and pattern of non-compliance for these
trade agreements?
Answer. USTR has serious concerns with the deteriorating trajectory
of Mexico's energy policies, including a series of ongoing actions the
Mexican Government has taken to increase state control over, and limit
competition in, the energy sector. USTR is actively assessing these
developments, and as I wrote to Secretary Clouthier on March 31, 2022,
I will be considering all available options under the USMCA to address
these concerns.
Question. Lumber remains at historically high levels almost a year
since you were last before this committee, and is adding substantially
to the cost of constructing a home. This is having a huge, negative
impact on housing affordability. We still don't have a softwood lumber
agreement with Canada.
What is the status on discussions with regards to the softwood
lumber agreement with Canada?
Answer. I continue to discuss softwood lumber with my Canadian
counterpart. The United States is open to resolving our differences
with Canada over softwood lumber, but it would require addressing
Canadian policies that create an uneven playing field for the U.S.
industry. Unfortunately, to date, Canada has not been willing to
address these concerns adequately.
Question. Global biopharmaceutical companies are on track to
produce more than 20 billion COVID-19 vaccine doses in 2022, which is
more than enough to vaccinate the globe (and in fact developing
countries have already had to destroy/turn away over 100 million
expiring doses due to logistical/distributional challenges).
If we're already producing the vaccines needed, why is the United
States even entertaining the proposed COVID-19 TRIPS IPR waiver, which
would only undermine IP rights and harm the competitiveness of U.S.
life-sciences innovators?
Answer. The Biden-Harris administration supports a waiver of
intellectual property protections for COVID-19 vaccines under the TRIPS
Agreement. This is one part of a holistic approach to getting as many
safe and effective vaccines to as many people around the world as
possible. The United States continues to work with the private sector
and all possible partners to expand vaccine manufacturing and
distribution around the world. It is clear that there are vaccine
production powerhouses and vaccine deserts; we must close the gap. We
will also work to increase the raw materials needed to produce those
vaccines.
There are certainly last mile issues. However, in light of
variants, there is considerable uncertainty about how many vaccines
will be required to vaccinate the world over the long term.
WTO members look to the United States for leadership. As part of
that leadership, USTR is committed to engaging in good faith to address
concerns like this one, which relates to a global public health and
economic crisis like the COVID-19 pandemic, raised by over half of the
WTO's membership, primarily representing the world's developing and
emerging economies.
Question. I authored the SECRETS Act, which creates a rapid-
response, deterrent mechanism to intellectual property theft by foreign
governments as defined in the Economic Espionage Act of 1996 through
creation of a National Security Exclusion Order with the Attorney
General as the lead prosecutor, the International Trade Commission as
the forum of law, and USTR as the final arbiter.
This new ex parte process prevents foreign governments from tying
up our court system and profiting off American ingenuity.
Finally, it addresses the core issue of why billions in tariffs in
trade with China are currently in place, even on non-critical goods-
intellectual property theft.
Much to my chagrin and without explanation, this bill was excluded
as an amendment from the FY 2022 NDAA consideration. Yet I am hopeful
that we can include this in the Conference negotiations on the U.S.
Innovation and Competition Act. You yourself have said we need new
tools in the trade toolbox.
Can you discuss your thoughts on this proposal and if you would
support its inclusion in the USICA negotiations?
Do you have any concerns with the bill, and if so, will you commit
to having your staff engage with mine to reach a workable solution?
Answer. Protecting U.S. innovation through intellectual property
rights is key to our Nation's economic success. China's illicit
practices with regard to intellectual property theft have harmed
American innovators, manufacturers, and workers. I am open to
consideration of any proposal aimed at combating China's illicit
practices while protecting U.S. innovation and industry. My staff has
met with your staff several times to discuss the SECRETS Act proposal
over the course of last year, and provided substantive feedback on the
proposal. We look forward to continuing to work with your staff on
these issues.
Question. Discussions are underway to refine the scope of and
receive input on the National Critical Capabilities Defense Act. By
providing additional resources to USTR as the head of an interagency
committee, similar to the three it already chairs such as the 21-agency
Trade Policy Committee, we can replicate outbound screening mechanisms
already in place by allies such as Taiwan and South Korea.
Last week, former Trump National Security Adviser H.R. McMaster
stated: ``Last year venture capital firms financed $114 billion in
Chinese companies that are developing dual-use and sensitive
technologies that are going to be weaponized against us or are already
aiding and abetting the Russians.''
This proposal was included in the U.S.-China Economic Security and
Review Commission's recommendations for this year, and no other
authority besides the International Emergency Economic Powers Act
exists to address it.
Yet some in the business community believe we should put this issue
off to another day. I tried that 5 years ago when writing legislation
to authorize the Committee on Foreign Investment in the United States.
It's only become more of a problem. I am particularly interested in
the intersection of companies that receive taxpayer funding, develop
critical technologies, and want to continue doing business in China
without any guardrails in place unlike their competitors in Taiwan and
South Korea.
We need to have awareness of things like human, financial, and
intellectual capital where it really matters. A ``small garden with
high walls'' approach.
We don't need to know about salespeople or every transaction under
the sun. Trade with China must continue, but we should protect the
crowned jewels so to speak.
If provided additional resources as our bill currently foresees,
would you be up for chairing another interagency committee that can
task various cabinet departments, such as Treasury, DOD, or Commerce,
as needed?
Do you believe it is acceptable for us to continue doing business
in China with the status quo?
Answer. I wholeheartedly agree with focusing on critical supply
chain resiliency, which has been a priority for the administration from
Day 1. The concept of an outbound screening mechanism also has merit.
If a committee were established, USTR would want to serve as a member
of the interagency committee implementing a mechanism for screening
outbound investments. USTR has a unique role as a small, policy-focused
agency, and another agency would be more appropriate to chair this
committee. The committee contemplated under NCCDA would likely have
ongoing administrative and case management responsibilities, as well as
workstreams devoted to monitoring, enforcement, and international
engagement--much like the interagency Committee on Foreign Investment
in the United States (CFIUS) chaired by Treasury and of which USTR is a
member. The CFIUS process involves an enormous amount of resources
employed by the lead agency to review, coordinate, monitor, and enforce
its decisions. Therefore, even with additional resources, USTR would
not be the best fit for the lead role for a new committee. USTR stands
ready to engage with our executive branch partners and members of
Congress as needed.
With regard to doing business in China, there are many problems
that need to be addressed, including forced technology transfer and the
theft of intellectual property, among others. To ensure that our
industries remain competitive, our strategies must expand beyond only
pressing China for change and must include vigorously defending our
values and economic interests from the negative impacts of China's
unfair policies and practices. We must also develop new domestic tools
targeted at defending our economic interests, and make strategic
investments in our own economy.
Question. Your predecessor supported the approach in the CHIPS for
America Act to provide incentives to restore domestic semiconductor
production as a matter of national security. Funding for that bill I
authored with Senator Warner will be discussed in a formal conference
committee. It is my priority. There are currently significant
differences in the trade titles of each bill, however. A bipartisan
trade title is vital to passage of a final package. I believe the
longer we wait to enact this legislation, the more time China has to
build out its own capacity. Time is of the essence.
As the lead executive branch trade official, will you commit to
working with the House and Senate to reach a sensible compromise on the
trade title of the U.S. Innovation and Competition Act?
Answer. To secure America's supply chains and ensure the United
States remains the most productive and innovative Nation in the world,
the Biden-Harris administration urges Congress to pass a final version
of comprehensive competitiveness legislation, building on USICA and the
COMPETES Act.
______
Questions Submitted by Hon. Robert Menendez
Question. What statutory obligations for consultation with Congress
does the administration believe apply to the Indo-Pacific Economic
Framework negotiations? Please provide all applicable statutory
citations.
Answer. 19 U.S.C. 2211(c) provides that USTR shall consult, on a
continuing basis, with the House Ways and Means Committee and the
Senate Finance committee on the development, implementation, and
administration of overall trade policy, which would include the
development of the Indo-Pacific Economic Framework. Pursuant to this
obligation, we will continue to develop the Indo-Pacific Economic
Framework in close consultation with Congress.
Question. What statutory obligations for consultation with private-
sector and civil-society stakeholders does the administration believe
apply to the Indo-Pacific Economic Framework negotiations? Please
provide all applicable statutory citations.
Answer. 19 U.S.C. 2155 requires USTR to ``consult with
representative elements of the private sector and the non-Federal
governmental sector on the overall current trade policy of the United
States'' and, in particular, to consult with the Trade Advisory
Committees regarding ``significant issues and developments'' and
negotiating positions. This obligation would cover the development of
the Indo-Pacific Economic Framework. Pursuant to this obligation, USTR
staff has briefed relevant Trade Advisory Committees on the Indo-
Pacific Economic Framework, and we will continue to develop the
Framework through robust engagement with the Trade Advisory Committees
and interested stakeholders. Indeed, although no provision of U.S. law
specifically requires it, USTR recently published a Federal Register
notice soliciting comments on the IPEF's trade pillar. The comment
period closed on April 11th, and we are now reviewing these
submissions.
Question. What statutory obligations for sharing negotiating text
with Congress does the administration believe apply to the Indo-Pacific
Economic Framework negotiations? Please provide all applicable
statutory citations.
Answer. We are still in the early stages of developing the Indo-
Pacific Economic Framework. We will continue to develop the framework
in close consultation with Congress, including with respect to
developing negotiating text.
Question. What statutory obligations for sharing negotiating text
with the Trade Advisory Committees does the administration believe
apply to the Indo-Pacific Economic Framework negotiations? Please
provide all applicable statutory citations.
Answer. We are still in the early stages of developing the Indo-
Pacific Economic Framework. We will continue to develop the Framework
through robust engagement with all interested stakeholders, including
engagement with the Trade Advisory Committees on developing negotiating
text.
Question. Does the administration intend to abide by the 2015
Guidelines for Consultation and Engagement with respect to the Indo-
Pacific Economic Framework negotiations?
Answer. The Indo-Pacific Economic Framework will not be a
traditional free trade agreement, and its development likely will
proceed differently than that of traditional free trade agreements. The
2015 Guidelines for Consultation and Engagement were developed for
traditional free trade agreement negotiations. However, consistent with
19 U.S.C. 2211(c), we intend to consult closely with Congress
throughout the development of the Indo-Pacific Economic Framework,
which is in line with the substance of what the Guidelines sought to
achieve.
Question. I strongly support the emphasis you've placed on
enforcement and want to recognize the progress you've made,
particularly on labor rights in Mexico. We must also ensure that Mexico
lives up to its USMCA commitments in the energy sector, particularly
when it comes to treatment of U.S. investments in clean energy in
Mexico that can contribute to our shared goal of addressing climate
change. I know you share that concern and I appreciate your letter to
Secretary Clouthier on this issue late last month. As you know, the
government of Mexico has recently announced and enacted policies that
discriminate against U.S. renewable energy producers, and instead favor
state owned enterprises. In the coming days, the Mexican Chamber of
Deputies plans to act on a constitutional electricity reform measure
that would further harm U.S. investment in clean energy infrastructure
in Mexico, eliminate independent regulators, and give priority to the
state-owned utility that relies heavily on fossil fuels.
Could you share your perspective and specific steps you plan to
take to ensure that Mexico fulfills its USMCA commitments and remains a
reliable partner in the fight against climate change? Would you
consider requesting consultations with the government of Mexico before
action by the Chamber of Deputies, after which some believe it may
become more challenging to discourage Mexico from going down this
troubling path on energy?
Answer. USTR has serious concerns with the deteriorating trajectory
of Mexico's energy policies, including a series of ongoing actions the
Mexican Government has taken to increase state control over, and limit
competition in, the energy sector. USTR is actively assessing these
developments, and as I wrote to Secretary Clouthier on March 31, 2022,
I will be considering all available options under the USMCA to address
these concerns.
Question. There is an ongoing standards-setting competition between
free and authoritarian regimes in the realm of digital governance. Last
Congress, I released a report on China's digital authoritarianism and
how they are exporting digitally enabled products and the training and
expertise to other countries in an attempt to sway other nations to
adopt this alternative, authoritarian model for the digital domain.
How does the administration plan to approach IPEF partners on
digital standards setting, and how are we going to incentivize
countries to join an open and transparent rules-based approach? Is the
administration prioritizing critical and emerging technologies in these
standards-setting discussions?
Answer. Strong digital trade rules remain a key priority in our
strategy for the Indo-Pacific Economic Framework for Prosperity. These
rules will be designed to help workers, consumers, and businesses
effectively participate in the digital economy. They will build
consumer trust, expand network access for all, and promote network
security and reliability. These rules will serve as an alternative to
the efforts by certain countries in the region to promote a siloed,
tightly controlled version of the Internet.
Question. On August 13, 2021 eight colleagues and I wrote asking
you to correct an inequity related to exclusions from section 301
tariffs for COVID-19 products. For HTSUS codes that had not previously
received an exclusion, the COVID exclusions began on January 1, 2021--
leaving some companies responsible for millions in tariffs incurred
during the months in 2020 when demand for such products were at record
highs, supply chains were nearly shut down, and store shelves were
empty. Your office extended those COVID-related exclusions multiple
times, and you have recently provided tariff relief--including
retroactive relief--for certain non-COVID products. Each of those
actions was an opportunity to also correct the previous
administration's mistake of punishing companies for importing
lifesaving products to provide to hospitals, schools, businesses, and
homes during a period when importing from China was, in some cases, the
only option to meet demand.
What was the rationale for extending COVID-related exclusions for
2021 and 2022 but not providing such tariff relief for the period in
2020 when the products were most needed and least available in the
U.S.? Does USTR have the statutory authority to provide retroactive
tariff relief for these 2020 imports?
Answer. In developing a process for COVID-related exclusions, we
sought to create a process that was administrable, fair, transparent,
and had integrity. Additionally, an important consideration was the
need to address ongoing efforts to address COVID-19. The outcome of our
deliberations was that making new COVID exclusions retroactive to the
date when the exclusions were published created the most administrable
and fair process for stakeholders seeking refunds.
______
Questions Submitted by Hon. Thomas R. Carper
Question. In September 2021, Senator Cornyn and I sent a letter to
President Biden underscoring the importance of working with allies to
break down trade barriers to more efficiently distribute health
products used in the fight against COVID-19, including inputs used in
vaccine manufacturing, vaccine distribution and approval, therapeutics
and pharmaceuticals, diagnostics, PPE and medical devices.
As we continue to fight new and emerging variants of COVID-19 and
work to prepare for future pandemics, how will the administration work
with our allies at the WTO and through initiatives like the Indo-
Pacific Economic Framework to address export restrictions, reduce
tariffs, strengthen supply chains, and break down other medical trade
barriers to help boost global cooperation on pandemic response?
Answer. In addition to exacting a dreadful human toll, the pandemic
has also exposed the extent of the fragility of our supply chains. This
fragility has left us too dependent on concentrated sources of supply,
leading to shortages that in turn have left Americans with a lingering
sense of insecurity. In order to address the current pandemic, and
prepare for future ones, we must ensure that we fully understand how
our supply chains became so fragile and concentrated, so that we can
adopt policies that will mitigate that risk. We look forward to working
with like-minded parties on developing secure, resilient supply chains
that will withstand shocks such as pandemics, but also wars and
shipping bottlenecks.
Question. I have long advocated for a comprehensive exclusions
process on section 301 tariffs--especially for products that can only
be sourced from China. In previous rounds, USTR has established the
precedent of providing full retroactivity for these exclusions.
Will you consider extending full retroactivity for exclusions
granted during the most recent process, and how will USTR approach the
issue of retroactivity in possible future exclusions processes?
Answer. In developing a process for the possible reinstatement of
previously extended exclusions, we sought to create a process that was
administrable, had integrity, and was fair and transparent. An
important element of our consideration was administrability with
respect to past entries, and the finality of Customs liquidation. The
outcome of our deliberation was that making the exclusions retroactive
to the date when the process was announced created the most
administrable and fair process for stakeholders seeking refunds for
goods imported prior to the reinstatement of the exclusions.
We are considering and will continue to consider additional
exclusions processes, as warranted, and will continue to review the
issue of retroactivity.
Question. I have heard from stakeholders that the agreement
tentatively reached between the U.S., the EU, India, and South Africa
regarding the WTO vaccine IP waiver may allow countries to disclose
trade secrets that companies regularly submit as part of their
regulatory filings.
Will you commit to work with my office and relevant stakeholders to
ensure that any agreement protects valuable trade secrets from being
disclosed to competitors?
Answer. I appreciate your concerns. Now that the WTO Director-
General has released the text, USTR is conducting consultations with
Congress and a broad base of stakeholders on that text. The decision to
support a waiver of intellectual property protections for COVID-19
vaccines reflects the extraordinary circumstances of this pandemic. In
discussions at the WTO, I will continue to be clear-eyed about
potential risks. The compromise text has not been agreed to, either by
the four members, or by the WTO membership as a whole.
Question. I view the Indo-Pacific Economic Framework as an
opportunity for the United States to push back against the steady
increase of digital protectionism, including restrictions to data
flows, forced data localization, complex certification schemes, and
regulatory barriers that disadvantage American companies and workers.
How can the IPEF serve as a counterweight against these harmful
policies?
Answer. Strong digital trade rules remain a key priority in our
strategy for the Indo-Pacific Economic Framework for Prosperity. These
rules will be designed to help workers, consumers, and businesses
effectively participate in the digital economy. They will build
consumer trust, expand network access for all, and promote network
security and reliability. These rules will allow like-minded countries
to work together to protect our freedoms.
______
Question Submitted by Hon. Richard Burr
Question. I am greatly concerned by the potential for a TRIPS
agreement that would gut the intellectual property rights of
innovators. For example, I understand that such an agreement could
allow foreign governments to disclose companies' proprietary
information to their competitors.
Given the global availability of vaccines for COVID-19, and the
commitments of COVID-19 manufacturers to provide doses across the
globe, what specific gaps would the TRIPS waiver address that are not
already being met for the COVID-19 emergency? What will you do to
ensure that any such waiver expressly protects proprietary information
from disclosure by foreign governments?
Answer. The COVID-19 pandemic has highlighted the importance of
pharmaceutical, medical device, and other health-related innovations,
as well as a lack of widespread, timely, and equitable global
distribution of these innovations. The administration recognizes that
extraordinary circumstances such as pandemics call for extraordinary
measures. The administration continues to seek an appropriate balance
through adequate and effective protection for pharmaceutical and other
health-related intellectual property around the world to ensure robust
American innovation in these critical industries to treat diseases and
to fight the current pandemic. In the discussions at the WTO, I will
continue to be clear-eyed about potential risks.
______
Questions Submitted by Hon. Rob Portman
Question. At present, there is only one remaining producer of
Grain-Oriented Electrical Steel (GOES) in the United States. GOES
production is a capability critical to our national and economic
security; GOES is at the heart of the technology that powers our
electrical grid. During the last administration, the Department of
Commerce undertook an investigation into the national security threat
posed by imports--particularly from Canada and Mexico--of laminations
and cores made of GOES. With the public release of that report, we know
that the Department of Commerce found that there is, in fact, a
national security threat posed by these imports.
What steps do you intend to take to address this threat? Will you
commit to discussing ways to limit circumvention of the section 232
tariffs with respect to GOES imports with our trading partners
generally, and Canada and Mexico specifically?
Answer. The previous administration conducted an investigation on
imports of transformers and transformer components, including
electrical steel lamination and electrical transformer cores, under
section 232 of the Trade Expansion Act of 1962, but did not take any
action within the statutory timeframe. However, it is my understanding
that the Department of Commerce will continue to assess the issue you
raised.
I would also like to take this opportunity to assure you that my
staff will continue to work with the Department of Commerce and other
U.S. Federal agencies, as appropriate, to prevent the circumvention of
U.S. trade measures, and will engage the governments of Canada and
Mexico on this important issue.
Question. Haiti currently enjoys trade preferences with the United
States under the Hemisphere Opportunity through Partnership
Encouragement (HOPE) Act, and the Haitian Economic Lift Program (HELP)
Act. Combined, the HOPE-HELP program helps promote economic development
in Haiti. Apparel accounts for over 90 percent of Haiti's exports to
the United States. However, the program will expire at the end of
September 2025.
Do you agree that the HOPE-HELP program should be renewed? And if
so, do you agree that Congress should not wait until the eve of
expiration to renew in order to provide maximum certainty to workers,
industry and investors in Haiti?
Answer. I firmly support the trade preference programs provided for
in the HOPE and HELP Acts. Since 2006, these programs have been an
important element in our trade relationship with Haiti and have
contributed to increased trade between both our countries. I encourage
Congress to renew both programs in the near term. Haiti is going
through a difficult time, and investors are making long-term decisions
now about whether to suspend, continue, or expand operations. Renewing
these programs now would help support workers and industry, provide
jobs for youth who might otherwise be lured into gangs, and contribute
to the country's economic growth and stability at a critical time.
Question. Thank you for your efforts to identify, and resolve,
points of friction with U.S. trading partners. One outstanding friction
point is the ongoing dispute with Canada over their unfair
subsidization of softwood lumber.
Do you intend to focus additional time and resources on reaching a
fair settlement to the softwood lumber dispute? Will you commit to
active discussions with Canada in an effort to seek a resolution to
this dispute in the next 90 days?
Answer. I continue to discuss softwood lumber with my Canadian
counterpart. The United States is open to resolving our differences
with Canada over softwood lumber, but it would require addressing
Canadian policies that create an uneven playing field for the U.S.
industry. Unfortunately, to date, Canada has not been willing to
address these concerns adequately.
Question. I am disappointed that the European Union (EU) has agreed
to the Digital Markets Act (DMA), which is a protectionist policy aimed
at discriminating against American companies. At a time when the United
States and the EU should be working more closely in strategic and high-
technology sectors, it is troubling to see the EU embracing a blatantly
discriminatory agenda. This only makes it more difficult for us to work
together and present to adversaries a unified front against such
policies, digital or not.
What will be your strategy to defend U.S. trade interests against
protectionism like the Digital Markets Act? How are you engaging with
EU officials to challenge these policies? What tools can the United
States deploy in response to the DMA?
Answer. We are engaged with the EU on digital trade issues both in
the Trade and Technology Council and also in direct bilateral
discussions. It is clear to me that, in the context of the digital
economy, the United States and the EU are both committed to protecting
workers, privacy, cybersecurity, and consumer rights and that we both
want our markets to be fair and competitive. On many policy issues we
share many of the concerns animating EU action. When governments
regulate, they should not do so on the basis of advancing the interests
of national champions at the expense of foreign competitors.
______
Question Submitted by Hon. Tim Scott
Question. South Carolina is home to a large number of family
farmers who grow perishable fruits and vegetables during the fall to
spring months of the year. I've heard from those farmers that they are
losing output, revenue, and in many cases their farms because of
surging imports of unfairly priced foreign fruits and vegetables. I
believe it is the case that a number of other states are being harmed
for the same reason. Our country's import relief laws were not
structured to protect seasonal and perishable products from unfair
imports.
In view of the growing urgency, will you work quickly to help
contain any unfairly priced import surges and keep our fruit and
vegetable farms in business?
Answer. In 2020, USTR heard directly from stakeholders across the
country, including members of Congress, during a USTR-led public
hearing on this issue. The initiative resulted in USTR requesting the
U.S. International Trade Commission to initiate several section 332
investigations into imports of seasonal produce, and a section 201
investigation into importers of blueberries, that concluded with a ``no
injury'' determination. I welcome input and ideas from you as to how
USTR can further utilize the range of tools that are available to
address the challenges facingU.S. producers, including those in South
Carolina.
______
Questions Submitted by Hon. Robert P. Casey, Jr.
Question. A recent report by the U.S. International Trade
Commission, titled ``Foreign Censorship, Part 1: Policies and Practices
Affecting U.S. Businesses,'' highlights key foreign markets where
censorship presents a trade barrier for American businesses and
companies operating globally. Among these is China, Russia, Turkey,
Vietnam, India and Indonesia, which together represent nearly half of
the global population, billions of Internet users, billions of dollars'
worth of digital exports and a significant share of global GDP.
How is USTR working to better understand the worldwide impact of
censorship as a trade barrier for the U.S. and how these censorship
regimes restrict freedom of expression?
Answer. Over the years, the United States has repeatedly expressed
concerns to trade partners, including China, regarding the impact of
content-related policies on market access. For example, the United
States has raised concerns regarding China's burdensome restrictions on
content, which are implemented through exhaustive content review
requirements that are based on vague and otherwise nontransparent
criteria. Content and information services are key exports for the
United States, and we will continue to raise concerns when access to
these services is unreasonably denied.
Question. As you know from our many discussions with you,
Cleveland-Cliffs operations in Butler, PA and Zanesville, OH are the
last locations in all of North America that melt and finish Grain-
Oriented Electrical Steel (GOES). This market continues to face
significant challenges. Circumvention of U.S. duties has been well
documented, with foreign producers using unfair practices to skirt the
systems in place that are intended to provide relief for domestic GOES
producers. Lately, foreign producers have been entering the market by
way of Canada and Mexico. Foreign producers export their product to
Canada or Mexico where they alter their product and ship it to the U.S.
to avoid section 232 tariffs.
How will you work with our trade partners to the north and south to
resolve this issue and ensure that our trade protections are not being
undermined by bad actors?
Answer. The previous administration conducted an investigation on
imports of transformers and transformer components, including
electrical steel lamination and electrical transformer cores, under
section 232 of the Trade Expansion Act of 1962 but did not take any
action under the statutory timeframe. However, it is my understanding
that the Department of Commerce will continue to assess the issue you
raised.
I would also like to take this opportunity to assure you that my
staff will continue to work with the Department of Commerce and other
U.S. Federal agencies, as appropriate, to prevent the circumvention of
U.S. trade measures, and will engage the governments of Canada and
Mexico on this important issue.
______
Question Submitted by Hon. Bill Cassidy
Question. With agricultural input costs, such as fuel fertilizer
continuing to rise and India continuing to offset these higher costs
with increased subsidies, our Louisiana rice farmers will suffer severe
financial losses this year as a result.
Will USTR commit to raising the issues of India's cheating on rice
subsidies at the next working group discussion with the Indian
government? Furthermore, should India's cheating continue, what tools
are at USTRs disposal in its trade policy forum working groups with
India to ensure issues practices such as unfair rice subsidies do not
continue to harm U.S. rice farmers?
Answer. India maintains several concerning agricultural subsidy
programs, in particular for rice, and we will raise these issues in the
upcoming meetings of the U.S.-India Trade Policy Forum working groups.
In addition, the United States is working with several WTO members who
share similar concerns about Indian subsidies on agricultural products.
With these likeminded WTO members and independently, USTR is
considering several options to bring more transparency to India's
agricultural policies and increase pressure on India to reform its
subsidy programs.
______
Questions Submitted by Hon. Mark R. Warner
Question. Following the President's decision to terminate
Ethiopia's eligibility for the African Growth and Opportunity Act
(AGOA) trade preference program, I have heard from a number of my
constituents who are concerned about the impact of this decision on the
citizens of Ethiopia.
While I understand the administration's determination that Ethiopia
currently does not meet AGOA's statutory requirements due to human
rights concerns--I do think that, as with any instance where we're
enacting some sort of restrictions, it's important that we're doing so
in a way that most appropriately impacts those responsible for
violence, and as possible, minimizes the spillover costs to average
citizens.
I do share the concerns that have been raised about the impact of
this decision on the people of Ethiopia--and now, nearly three months
since the administration has terminated Ethiopia's eligibility, I
remain worried about the long-term economic impacts that this may have,
particularly among women in civil society.
Now, thankfully, it appears progress has been made in recent
months, including the Ethiopian government lifting the state of
emergency last month, and then just recently, aid convoys have arrived
in Tigray after the Tigray People's Liberation Front (TPLF) agreed to
the Ethiopian government's announcement of a humanitarian ceasefire to
facilitate humanitarian aid into the Tigray region.
Is there any update you can provide on the status of Ethiopia's
eligibility for AGOA? How has the recent progress impacted the
country's ability to meet the statutory requirements for reinstatement?
Is there a timeline for reassessing Ethiopia's eligibility?
Answer. USTR engages regularly with relevant stakeholders and the
Government of Ethiopia to gauge progress towards meeting the specific
benchmarks we provided as a path for regaining AGOA eligibility. We
routinely monitor Ethiopia's efforts on humanitarian access and on
human rights. The 2023 AGOA eligibility review will begin shortly and
that assessment will be the next opportunity to determine whether
Ethiopia meets the statutory obligations for AGOA eligibility, which
include to not engage in any gross violations of internationally
recognized human rights and to cooperate fully in international efforts
to eliminate human rights violations.
Question. I was pleased to see President Biden meet with Kenyan
President Kenyatta early in his administration. I strongly support
strengthening the U.S.-Kenya trade relationship and believe its effects
would be mutually beneficial.
In my State, the African diaspora, our business community, and the
Virginia Economic Development Partnership, have all been particularly
interested in increased trade between the U.S. and Kenya.
Last year, I had the opportunity to participate in a discussion
regarding the U.S.-Africa trade relationship with the head of the
African Continental Free Trade Area (AfCFTA) and the State Department.
During that conversation, I was encouraged to hear about the
standardization efforts AfCFTA can set for increased trade between the
U.S. and Africa.
How do you view a potential trade agreement with Kenya affecting
the U.S. trade relationship with the rest of the continent? How is USTR
working to ensure we formalize increased reciprocal trade opportunities
between countries and regions in Africa, and the U.S.?
You mentioned during the annual Trade Agenda Hearing that the head
of the USTR Office of African Affairs was leading a delegation to
Nairobi. When they return, I would like to get together your team with
my staff to hear about how the trip went.
Answer. The USTR-led delegation you referenced has now returned
from talks with their Kenyan counterparts on a range of trade issues,
with a view to advancing of the United States--Kenya trade relationship
in a manner that benefits workers, attracts investment, and promotes
regional economic integration.
Assistant United States Trade Representative for African Affairs
Constance Hamilton held meetings in Kenya on May 3rd through May 6th,
2022. She led a delegation of 14 Washington-based U.S. officials that
included subject-matter experts from USTR and the Departments of State,
Labor, Commerce, and Agriculture. The discussions between the U.S. and
Kenyan delegations covered a wide range of topics and proved very
productive, identifying areas of convergence and deepening our mutual
understanding on how to best strengthen our bilateral trade engagement.
We will certainly arrange for them to brief your staff regarding
the trip. The discussions between the U.S. and Kenyan delegations
covered a wide range of topics and proved very productive, identifying
areas of convergence and promoting mutual understanding. This effort
will help us explore how best to deepen our reciprocal trade
relationship, and ideally this will help serve as model we can
replicate with other willing partners on the continent.
Question. As co-chair of the Senate India Caucus, I have put forth
a lot of effort during my time in the Senate to helping further the
really important and strategic bilateral relationship between India and
the U.S.
On the trade front, I have pushed multiple administrations now to
prioritize the advancement of this relationship--whether it is a
comprehensive trade agreement or one with a more limited scope. Being
able to resolve outstanding barriers and support American businesses in
overcoming market access issues in India is all incredibly important.
We have unfortunately seen, in the aftermath of Russia's invasion
of Ukraine, that India and Russia retain longstanding ties on a number
of fronts--certainly on the economic side. I think this highlights a
real opportunity for the U.S. as we look to present more diversified
and compelling avenues for Indian partnership, relative to what the
Russians can offer.
What role do you envision India playing in the broader Indo-Pacific
Economic Framework? How are you prioritizing our relationship with
India as part of this broader regional trade framework?
What are the areas you see as ripe for progress in the U.S.-India
trade relationship, and which issues do see as the major sticking
points to a more comprehensive agreement?
Answer. India is an important player in the Indo-Pacific region and
is one of the countries that joined the launch of the IPEF. With
respect to the anticipated trade pillar of the IPEF, we will be aiming
for high-ambition outcomes in areas like digital trade and labor. We do
regard the U.S.-India Trade Policy Forum (TPF), which my Indian
counterpart and I relaunched in November 2021, as a vital part of the
broader U.S.-India relationship, as well as an integral element of the
Biden administration's Indo-Pacific Strategy. The TPF will continue to
afford us important opportunities to resolve some of the existing trade
concerns and to engage and build trust on important emerging trade
policy issues. Among other issues, agricultural and digital trade will
continue to be priorities for U.S. engagement with India, including
with respect to proposed Indian policies that may unduly restrict the
free flow of data across borders.
Question. Technological leadership in emerging and critical
technologies will determine the political, economic, and military
strength of countries in the 21st century.
For the last half century, the U.S. and other democratic countries
led in scientific research and development of transformational
technologies. Our leadership enabled us to set the global rules of the
road for the use of new technologies, including software, satellites,
and telecommunications, for example. We set the standards, and our
values were embedded throughout. Leadership in these technologies will
have major implications for our democracy and the growth--and
security--of democracies around the world.
For several years now, I have been leading calls to update our
approach to digital trade, working with like-minded allies to develop
rules to reflect and uplift democratic values. Therefore, I am pleased
to see the White House announced over the weekend an agreement with the
EU on a new Trans-Atlantic Data Privacy Framework. I am encouraged by
this new framework, in addition to other recent efforts by the
administration to engage in better global cooperation, such as the
U.S.-EU Trade and Technology Council (TTC).
While these initiatives serve as important steps forward, it is
vital that we continue working to expand beyond this framework and
develop global rules and protocols surrounding new technologies--
encompassing data privacy provisions, cybersecurity standards, and
more.
What do you see as the biggest barriers to cooperation or agreement
on a global framework here?
What are the administration's goals beyond this new agreement with
the EU? Will the Trans- Atlantic Data Privacy Framework be used as a
foundation for future data privacy and technology rules?
In your view, what role should Congress play in developing these
sort of digital governance rules?
Answer. We are engaged with the EU on digital trade issues both in
the Trade and Technology Council and also in direct bilateral
discussions. It is clear to me that, in the context of the digital
economy, the United States and the EU are both committed to protecting
workers, privacy, cybersecurity, and consumer rights and that we both
want our markets to be fair and competitive. We share many of the
concerns animating EU action on many policy issues. When governments
regulate, they should not do so on the basis of advancing the interests
of national champions at the expense of foreign competitors.
______
Questions Submitted by Hon. James Lankford
Question. Taiwan is the 8th largest economy in the region, the 18th
largest economy in the world, the 10th largest trading partner of the
United States, 8th largest export market for agricultural commodities,
and a thriving democracy with a market-based economy. Many of us on
this committee support a Free Trade Agreement with Taiwan.
The administration has used the term ``inclusive'' to describe the
Indo-Pacific Economic Framework. Will Taiwan be included in the IPEF?
Answer. Taiwan is a critical trading partner of the United States,
and under President Biden, we've only strengthened and deepened our
economic partnership by restarting Trade and Investment Framework
Agreement talks and launching the Technology Trade and Investment
Collaboration (TTIC) framework under Commerce. We look forward to
continuing to strengthen and deepen those economic ties under the Biden
administration. In fact, on June 1st, USTR launched the U.S.-
Taiwan Initiative on 21st-Century Trade, which is intended to develop
concrete ways to deepen the economic and trade relationship, advance
mutual trade priorities based on shared values, and promote innovation
and inclusive economic growth for our workers and businesses. We are
pleased to be launching IPEF with an initial strong, diverse group of
Indo-Pacific partners. Moving forward, we will work with IPEF partners
to consider expanding membership in IPEF.
Question. Everything we've heard about the IPEF is that it doesn't
include market access. If we are going to robustly compete with China,
then we need to reduce tariff barriers with similar countries in the
region so that companies have a viable alternative to China.
Will the IPEF include any free trade agreements--or any provisions
expanding market access? What is the incentive for countries to join
his framework if there are no provisions expanding market access for
their exports?
Answer. While the focus of this trade arrangement is not market
access, it does offer robust incentives that are priorities for
countries in the region, including digital and trade facilitation. USTR
will lead work on a trade arrangement with our partners that includes
high-standard commitments in the areas of labor, environmental
sustainability, the digital economy, agriculture, transparency and good
regulatory practices, competition policy, and trade facilitation.
The administration's focus will be on developing high-standard
rules that can increase interoperability and competitiveness among
Parties to the arrangement, which can generate increased access to
foreign markets for both U.S. exporters and exporters from
participating countries. We look forward to continued close
coordination with Congress on this initiative.
Question. I recently introduced the Quad Critical Minerals
Partnership Act with Senators Warner, Cornyn, and King that would
establish a partnership with the Quad countries for critical minerals
security. A similar provision was included in the Trade Act of 2021.
China controls nearly two-thirds of the world's supply of critical
minerals. For our own security interest, we desperately need to reduce
our risk exposure to China.
What does the IPEF say about critical minerals and how will the
IPEF help to reduce reliance on China for rare earths?
Is the administration supportive of including language in China
competitiveness legislation that incentivizes working with our Quad
partners towards critical minerals security?
Answer. We are in the early stages of consulting with stakeholders,
including Congress, on the content of IPEF. We received submissions to
a Federal Register notice on April 11th and are reviewing these
submissions. We welcome your feedback on IPEF, including with respect
to critical minerals and rare earths, and want to continue close
consultation with Congress as we move forward in its development.
Question. The 232 tariffs on steel and aluminum continue to
compound the price of those commodities for our businesses. I
appreciate the initiative you've taken to establish tariff-rate quotas
with the EU, Japan, and the UK, but most countries are still subject to
the 232 tariffs and those costs are being passed on to our small
manufacturing businesses and their customers. These tariffs, coupled
with inflation, are compounding the price of steel and aluminum for
producers in my State. Lifting them would provide tremendous relief.
Now that the deal with the UK has been finalized as of last week,
who is the next country you plan to engage on lifting 232?
Would the administration be open to a multilateral 232 negotiation
with the Abraham Accords countries--Israel, the UAE, Bahrain, Morocco,
Jordan, and Egypt? Would this step be consistent with the
administration's stated objectives of rebuilding alliances and
supporting the Abraham Accords?
Answer. While we are not in the position to consider launching 232
negotiations with additional countries at this time, the United States
welcomes effective actions by like-minded trading partners to address
the distortive effects of non-market excess capacity and carbon-
intensive production in the global steel and aluminum sectors. As the
Secretary of Commerce's findings formed the bases for the actions taken
under section 232 and the Secretary is charged with, among other
things, reviewing the status of steel and aluminum imports with respect
to the national security, we encourage countries interested in
discussing the section 232 measures to engage with the Department of
Commerce.
Question. I've been disappointed in the administration's engagement
on pursuing a TRIPS waiver. All of the reports coming out of the WTO
indicate that the latest proposal for a waiver goes beyond COVID
vaccines, but also therapeutics and diagnostics. Our efforts would be
better spent ramping up our manufacturing of U.S.-made vaccines and
then sharing them with the world--not going through this exercise of
giving away American intellectual property at the WTO. You talk about a
``worker-centered'' trade policy, but I don't see how it's ``worker-
centered'' to give our IP away to other countries for them to
manufacture. It could be American workers producing American products
with American IP. It seems like this administration is ``buy American''
on some things, but when it comes to pharmaceuticals or energy, you're
set on outsourcing it to China and Russia.
Why are you continuing to pursue a TRIPS waiver that will put
future American innovation at risk?
Answer. The COVID-19 pandemic has highlighted the importance of
pharmaceutical, medical device, and other health-related innovations,
as well as a lack of widespread, timely, and equitable global
distribution of these innovations. The administration recognizes that
extraordinary circumstances such as pandemics call for extraordinary
measures. The administration continues to seek an appropriate balance
through adequate and effective protection for pharmaceutical and other
health-related intellectual property around the world to ensure robust
American innovation in these critical industries to treat diseases and
to fight the current pandemic.
Question. Constitutionally, trade policy is set by Congress, yet
Congress has been kept in the dark on the TRIPS negotiations.
Will you commit to sharing the latest text proposal of the TRIPS
waiver to this committee in conjunction with your responses to our
questions for the record from this hearing?
Answer. USTR has consulted with Congress on the TRIPS waiver
discussions at the WTO. When waiver discussions at TRIPS Council
stalled, the WTO Director-General decided to engage more directly in
order to facilitate an outcome. She convened an informal discussions
process with four WTO members (the United States; EU, which presented a
paper on addressing pandemic exigencies through the TRIPS agreement in
June 2021; and South Africa and India, which co-led the original TRIPS
waiver proposal in October 2020) to identify a possible path forward on
this important issue for deliberation by the entire WTO membership. The
informal process convened by the Director-General resulted in draft
text, released on May 3rd. The text has not been agreed to, either by
the four members, or by the WTO membership as a whole. All WTO members
currently have the opportunity to consult with their governments,
legislatures, and stakeholders. Those consultations, including ones
being conducted by USTR, are ongoing.
WTO members look to the United States for leadership. As part of
that leadership, USTR is committed to engaging in good faith to address
concerns like this one, which relates to a global public health and
economic crisis like the COVID-19 pandemic, raised by over half of the
WTO's membership, primarily representing the world's developing and
emerging economies.
Question. Mexico continues to violate the USMCA with their state-
owned oil company Pemez, and last year's change to the Electric Power
Industry Law favors Mexican state energy companies at the expense of
private investment in the energy sector. Permits for private-sector
energy projects continue to be blocked, harming U.S. competitiveness in
the energy industry and compounding the spike in energy costs that
Americans are experiencing. I've been pushing USTR to engage on this
since last year, and you finally issued a statement last month noting
your ``serious concerns'' with Mexico's energy policies and that you
are ``actively assessing these developments.''
What is your plan to pursue corrective action on this issue? When
will you be done ``assessing'' the situation and take action?
Will you commit to pushing back on any country who is harming the
U.S. oil and gas industry, or will this issue not be prioritized due to
the climate agenda?
Do you agree that gas prices and energy costs are increasing the
burden for American workers?
What do you view as USTR's role in decreasing energy costs as part
of your ``worker-centered'' trade policy?
Answer. USTR has serious concerns with the deteriorating trajectory
of Mexico's energy policies, including a series of ongoing actions the
Mexican Government has taken to increase state control over, and limit
competition in, the energy sector. USTR will continue to pursue ways to
address these issues to advance the administration's worker-centric
trade policy. As I wrote to Secretary Clouthier on March 31, 2022, I
will be considering all available options under the USMCA to address
these concerns.
Question. The biggest challenge we've faced since the
administration took over is the migrant crisis at our southern border.
The Biden administration announced that they are expecting the number
of migrant encounters at the border to double in the coming months with
title 42 authority ending. What strikes me is that many of the migrants
coming to our border are from countries with whom we have a Free Trade
Agreement. For example, all three Northern Triangle Countries are
parties to the Dominican Republic-Central America Free Trade Agreement
(CAFTA-DR).
What mistakes have we made over the last 15 years that have
inhibited CAFTA from having a bigger impact on the prosperity and
stability of the Northern Triangle? What is USTR's role in the
administration's strategy for this region?
How can we better utilize CAFTA as presently written to promote
stable and resilient economic development in this region?
During the Trump administration, we renegotiated NAFTA to update
the provisions and adapt to modern challenges. Is USTR open to
revisiting CAFTA and revising it as part of our strategy to get to the
root causes of migration in the Northern Triangle?
If we decided to renegotiate CAFTA, should Nicaragua be excluded
due to Ortega's erosion of the rule of law and democracy?
Answer. One of the five pillars of the administration's Strategy to
Address the Root Causes of Migration in Central America is ``addressing
economic insecurity and inequality.'' The administration is committed
to promoting investment and trade engagement under the CAFTA-DR
(Dominican Republic-Central America-United States Free Trade Agreement)
to strengthen our economic ties to the region, generating inclusive
growth for Central America workers and businesses, and supporting
strong labor protections. The CAFTA-DR is critical to the well-being of
the people of Central America. It provides a strong framework to foster
economic opportunity, transparency and rule of law, but a trade
agreement cannot address the full range of socioeconomic and political
challenges in the region. Given the dramatic deterioration of respect
for democratic principles and human rights in Nicaragua, the United
States has already taken a number of actions and will continue to use
diplomatic and economic tools at our disposal to promote accountability
in the Nicaraguan government, while supporting the people of Nicaragua.
______
Questions Submitted by Hon. Sheldon Whitehouse
Question. Eight million metric tons of plastic end up in the oceans
each year, which is the equivalent of a garbage truck of waste every
minute. One study found that 10 rivers account for a quarter of that
waste, eight of which are in Asia. Including plastic waste commitments
in USMCA was a positive step, but we must go further.
What would the Indo-Pacific Economic Framework do to address
plastic pollution and how would it be more ambitious than the USMCA
commitments?
Answer. In the trade pillar of the Indo-Pacific Economic Framework
(IPEF) we will seek trade-related environmental commitments that can
measurably contribute to improving environmental sustainability,
including protecting the marine environment. Marine debris,
particularly ocean plastic pollution, harms coastal economies and
vulnerable communities, particularly those that rely heavily on tourism
and fishing, as is the case for much of the Indo-Pacific region.
Stemming the tide of litter from land to the oceans depends on
environmentally sound waste management and the sustainable use of
materials, including through recycling and reuse. Accordingly, under
the IPEF, we will seek ways to support solid waste management and
recycling infrastructure, including through capacity building for sound
regulatory frameworks, and through policies that promote more circular
economies, including the development of markets for and trade in
recyclable materials. The Commerce Department leads on the
Infrastructure and Decarbonization and Clean Energy pillar of the IPEF.
Question. Pirate fishing--fishing that is illegal, unreported, and
unregulated (IUU)--is another major threat to our oceans, undermining
both responsible fisheries management and human rights. Predatory
Chinese fishing is particularly problematic, and many coastal Asian
countries resent how the Chinese fishing fleet, with the help of the
Chinese navy, treats their sovereign fishing fleets.
What would the Indo-Pacific Economic Framework do to combat IUU
fishing generally and predatory Chinese fishing in particular?
Answer. USTR intends to seek trade-related environmental
commitments under the trade pillar that can measurably contribute to
improving environmental sustainability, including by building on
previous efforts with provisions related to IUU fishing and other
fisheries-related issues.
Question. It has been more than 20 years since WTO negotiations
over an agreement on fisheries subsidies began, and reaching a robust
agreement is long overdue.
What is are you doing to ensure we achieve an ambitious agreement?
Answer. We remain fully engaged in the ongoing negotiations on
harmful fisheries subsidies, where we have long been leading efforts to
try to arrive at a meaningful result. We are urging members to focus on
building ambition back into the negotiating text to try to bring the
negotiations to a successful conclusion. This includes supporting
greater transparency with respect to the use of forced labor on fishing
vessels, and ensuring any outcome includes effective disciplines on the
most harmful fisheries subsidies that apply to all members, including
China. If we are to achieve an ambitious agreement, WTO members must
support an outcome that does more than simply lock in the status quo
and provide the WTO's blessing to continue harmful subsidies practices
in perpetuity.
Question. We are facing a climate crisis. Sea level rise threatens
to overwhelm coastal regions in the pacific.
What meaningful, enforceable commitments on fighting climate change
will you pursue as part of the Indo-Pacific Economic Framework?
Answer. Under the IPEF trade pillar, we intend to work with
partners to mobilize technologies, investments, and technical resources
to scale up clean energy. We also intend to pursue commitments by
participating IPEF countries to decarbonize their industries, explore
low- emission procurement opportunities, pursue methane and carbon
reductions, and promote sustainable land use. The Commerce Department
leads on the Infrastructure and Decarbonization and Clean Energy pillar
of the IPEF.
Question. The Biden administration has wisely understood that
kleptocracy and corruption abroad is a national security issue. We have
seen what happens when kleptocrats seek out rule-of-law nations to
shelter their ill-gotten gains. Wherever there is a leak, the money
will follow, which is why it is so important to reach agreement
internationally to stop providing sanctuary for corrupt money.
What would the Indo-Pacific Economic Framework do to combat
kleptocracy and what would you do to ensure other countries agree to
meaningful commitments?
Answer. We are in the early stages of consulting with stakeholders,
including Congress, on the content of IPEF. We received submissions to
a Federal Register notice on April 11th and are reviewing these
submissions. We welcome your feedback on IPEF, including with respect
to addressing kleptocracy, and want to continue close consultation with
Congress as we move forward in the IPEF's development.
______
Questions Submitted by Hon. Todd Young
Question. I have been closely following the progress of the Indo-
Pacific Economic Framework (IPEF). There is a lot a stake if the United
States cannot meaningfully increase trade engagement with countries in
the region. China has used economic coercion to pull nations deeper
into dependency and away from American businesses. I would be thrilled
if we can offer nations real certainty and benefit through trade
agreements--this would be an effective way to incentivize a
relationship between us and our Indo-Pacific partners.
In this vein, can you explain what outcomes the IPEF will hope to
achieve, and more importantly how you will measure those outcomes?
Furthermore, will there be an opportunity to edit the modules over time
to increase effectiveness?
Answer. The Biden-Harris administration is committed to economic
engagement with partners in the Indo-Pacific region and has launched
the Indo-Pacific Economic Framework for Prosperity (IPEF) to strengthen
our economic ties to the region, while promoting inclusive growth for
workers and businesses, advancing strong labor standards, and tackling
climate change. As part of this effort, USTR is specifically focused on
negotiating provisions in IPEF that can help American businesses and
workers compete in the global economy, and will seek to include
commitments on labor, environmental sustainability, the digital
economy, agriculture, transparency and good regulatory practices,
competition policy, and trade facilitation. The administration's focus
will be on developing high-standard rules that can increase
interoperability and competitiveness among parties to the arrangement,
which can generate increased access to foreign markets for U.S.
exporters. The final structure of the IPEF pillars will be part of the
negotiation undertaken with trading partners, however, we expect to
have both binding and non-binding obligations that contribute to a
meaningful outcome for all parties. We look forward to continued close
coordination with Congress on this initiative.
Question. Beyond technology exports and economic significance,
Taiwan holds vital strategic and normative importance for the U.S.
With respect to the Indo-Pacific Economic Framework, can you
confirm whether or not the administration is planning to include or
consult with Taiwan? If the administration is opposed to Taiwan joining
IPEF, how is the U.S. collaborating with them in terms of broad supply
chain integration and trade agreements?
Answer. Taiwan is a critical trading partner of the United States,
and under President Biden, we've only strengthened and deepened our
economic partnership by restarting Trade and Investment Framework
Agreement talks and launching the Technology Trade and Investment
Collaboration (TTIC) framework under Commerce. We look forward to
continuing to strengthen and deepen those economic ties under the Biden
administration. In fact, on June 1st, USTR launched the U.S.-
Taiwan Initiative on 21st-Century Trade, which is intended to develop
concrete ways to deepen the economic and trade relationship, advance
mutual trade priorities based on shared values, and promote innovation
and inclusive economic growth for our workers and businesses. We are
pleased to be launching IPEF with an initial strong, diverse group of
Indo-Pacific partners. Moving forward, we will work with IPEF partners
to consider expanding membership in IPEF.
Question. Anticipating that Russia's economy is not going to
survive in isolation, it will likely turn to the Chinese for goods and
market access. As you may know, there have been several reports of
Chinese financial firms offering payment services to Russian banks and
potential new deals for China to purchase Russian commodities, which
would very easily provide impactful assistance to Moscow.
Is the administration considering action to hold China accountable
for providing assistance to Russia, and what might those actions
entail?
Answer. The Biden-Harris administration, working closely with our
allies and partners, is committed to ensuring that the Russian
Federation and the Lukashenka regime in Belarus--and those aiding
them--pay a severe economic and diplomatic price for their unprovoked
aggression against Ukraine.
Question. As Congress debates legislation to out-compete China,
nations are actively debating their own policies to boost domestic
production. Japan, for example, is considering an economic security
bill to secure supply chains specifically with sensitive technologies.
Given that Japan is a trusted ally of the U.S., it would seem prudent
for us to pursue deeper collaboration on the sensitive technology issue
specifically. And, it would make sense for the U.S. to collaborate with
partners like Taiwan for more collaboration.
Does the administration plan to engage on supply chain resiliency--
particularly for sensitive technologies--with like-minded partners?
Answer. The Biden-Harris administration, working closely with our
allies and partners, is committed to ensuring that the Russian
Federation and the Lukashenka regime in Belarus--and those aiding
them--pay a severe economic and diplomatic price for their unprovoked
aggression against Ukraine.
As the leader of the administration's Supply Chain Trade Task
Force, USTR is bringing together a broad range of U.S. Government
agencies to consider ways to address unfair trade practices that
undermine critical U.S. supply chains, and to look at how we can use
our trade agreements with other countries and trade tools to strengthen
supply chain resilience.
USTR is also working closely with trading partners and stakeholders
through our many bilateral and multilateral venues, including the U.S.-
Mexico-Canada Agreement (USMCA), U.S.-European Union Trade and
Technology Council, U.S.-Korea Free Trade Agreement (KORUS), Japan
Comprehensive Partnership, and U.S.-United Kingdom Trade Dialogue, as
well as multilateral organizations such as the World Trade Organization
(WTO), Asia-Pacific Economic Forum (APEC), and Organisation for
Economic Co-operation and Development (OECD).
USTR's main focus so far has been on areas related to advanced
batteries, semiconductors, and critical materials and permanent
magnets.
It will be important that the administration and Congress work
together to implement the recommendations that emerge from the
administration's significant work on supply chains. These include
critical investments in sensitive technologies such as the
semiconductor, medical, and clean energy supply chains.
Question. Indiana is a hub for biotechnology innovation, allowing
farmers and producers globally to withstand weather challenges and
boost yields. Today, Mexico is perhaps our most important trading
partner, but so far, they have not honored their commitments made under
USMCA regarding biotechnology. In fact, their approval delays and lack
of a science-based approach are really stunting our agriculture
industry's ability to export and move forward with plans for this
planting season.
How will you, in consultation with Secretary Vilsack, seek to
improve the biotech approval process in Mexico? What engagement have
you had on this issue with the Mexican Government thus far, and are you
considering using enforcement levers if there is a stalemate?
Answer. I have been working closely with Secretary Vilsack to
address challenges for American agriculture in Mexico. I am examining
biotech policies and developments in Mexico carefully and have raised
concerns with Mexico's Economia Secretary Clouthier and Agriculture
Secretary Villalobos. I will continue engaging them to ensure Mexico
fulfills its USMCA obligations and addresses issues that affect the
commercialization of biotech products. USTR is looking at all of our
tools under the USMCA and considering our strategy on Mexico's biotech
policies.
Question. American companies, including many of my constituents,
are experiencing circumvention tactics deployed by China in order to
skirt our trade laws. Of particular concern is stainless steel
production in Indonesia that is subsidized by the Chinese Government,
and then exported to the U.S. market outside of the bounds of the
section 232 tariffs. The stainless steel industry in Indonesia now
produces double what is produced in the United States, and Indonesian
stainless steel imports have tripled over the last few years.
Is USTR concerned about circumvention tactics deployed by China to
undercut American businesses? Is USTR specifically aware of this issue
related to stainless steel and Indonesia? In your view, how can trade
tools be strengthened to target bad actors that engage in circumvention
to the detriment of our domestic manufacturers?
Answer. The administration is concerned about the cross-border
investment activities of Chinese steel enterprises in Indonesia and
other countries throughout Southeast Asia. The United States is also
closely monitoring the ongoing WTO dispute regarding Indonesia's export
ban on nickel ores-- an essential raw material for U.S. stainless steel
producers.
Regarding your question on new tools to address trade circumvention
and other unfair trade practices by China, we believe some of the
efforts underway in Congress are extremely promising. For example, the
updates and the enhancements present in the Level the Playing Field Act
2.0 are exactly in the spirit of what we need right now, which is the
tailoring of a toolset and expansion of a toolset that will be up to
the task of meeting the challenges that our workers and industries are
facing today.
I would also like to take this opportunity to assure you that my
staff will continue to work with the Department of Commerce and other
U.S. Federal agencies, as appropriate, to prevent the circumvention of
U.S. trade measures.
Question. With respect to the COVID-19 vaccine, the World Health
Organization's vaccine equity website states, ``With global vaccine
production now at nearly 1.5 billion doses per month, there is enough
supply to achieve our targets, provided they are distributed equitably.
This is not a supply problem; it's an allocation problem.''
Given that there are currently enough vaccines in production for
everyone who needs them, what is the rationale for the administration's
view that the recently announced TRIPS waiver compromise is truly
necessary? Is the administration worried that waiving patent
protections for COVID vaccines will threaten the supply chain for safe
and efficient manufacturing?
Answer. The Biden-Harris administration supports a waiver of
intellectual property protections for COVID-19 vaccines under the TRIPS
Agreement. This is one part of a holistic approach to getting as many
safe and effective vaccines to as many people around the world as
possible. The United States continues to work with the private sector
and all possible partners to expand safe and effective vaccine
manufacturing and distribution around the world. It is clear that there
are vaccine production powerhouses and vaccine deserts; we must close
the gap. We will also work to increase the raw materials needed to
produce those vaccines.
There are certainly last mile issues. However, in light of
variants, there is considerable uncertainty about how many vaccines
will be required to vaccinate the world over the long term.
______
Questions Submitted by Hon. Ben Sasse
Question. During the hearing, you said that USTR continues to hold
Trade and Investment Framework (TIFA) talks with Taiwan. The last round
of TIFA talks were held in June 2021.
Will you commit to holding the next round of TIFA talks in 2022?
Has the Biden administration decided to exclude Taiwan from IPEF
discussions? If so, why?
Are the current section 232 tariffs placed on Taiwan under review?
When can we expect that review to be complete?
Answer. We are committed to holding regular TIFA Council meetings,
and are exploring with Taiwan the possibility of holding the next round
this year. The United States and Taiwan have been working hard to
implement the commitments made during the TIFA Council meeting last
year. Over the past several months, the two sides have held several
TIFA working group meetings on a host of important issues. We welcome
Taiwan's meaningful engagement and will continue to remain in close
contact in the coming months as we assess the progress being made and
consider the appropriate time for the next TIFA Council meeting.
Taiwan is a critical trading partner of the United States, and
under President Biden, we've only strengthened and deepened our
economic partnership by restarting Trade and Investment Framework
Agreement talks and launching the Technology Trade and Investment
Collaboration (TTIC) framework under Commerce. We look forward to
continuing to strengthen and deepen those economic ties under the Biden
administration. In fact, on June 1st, USTR launched the U.S.-Taiwan
Initiative on 21st-Century Trade, which is intended to develop concrete
ways to deepen the economic and trade relationship, advance mutual
trade priorities based on shared values, and promote innovation and
inclusive economic growth for our workers and businesses. We are
pleased to be launching IPEF with an initial strong, diverse group of
Indo-Pacific partners. Moving forward, we will work with IPEF partners
to consider expanding membership in IPEF.
While we are not in the position to consider launching section 232
negotiations with additional trading partners at this time, the United
States welcomes effective actions by like-minded trading partners to
address the distortive effects of nonmarket excess capacity and carbon-
intensive production in the global steel and aluminum sectors. As the
Secretary of Commerce's findings formed the bases for the actions taken
under section 232 and the Secretary is charged with, among other
things, reviewing the status of steel and aluminum imports with respect
to the national security, we encourage trading partners interested in
discussing the section 232 measures to engage with the Department of
Commerce on this matter.
Question. The Biden administration needs to request, and Congress
should reauthorize, Trade Promotion Authority (TPA) to give our allies
and partners the confidence that they are negotiating trade deals with
the American people, not just with one administration.
Will you commit to publicly asking Congress to reauthorize TPA in
2022?
Answer. There are strong views on both sides of the Trade Promotion
Authority issue, and I look forward to working with Congress should you
decide to advance TPA legislation.
Question. When will Congress be presented with formal text of the
TRIPS agreement that has allegedly been reached between the
administration and WTO member nations?
Does this agreement include COVID-19 therapeutics, diagnostics,
medical devices, and health technologies, or is it limited to vaccines?
Can you point to specific examples where American manufacturers
have been unwilling to work with developing nations to produce and
distribute COVID-19 resources and technologies?
Answer. The WTO Director-General released official draft text on
May 3rd. Accordingly, USTR has begun its consultations on that text
with Congress and stakeholders. Those consultations, including on scope
of coverage regarding products, are ongoing.
USTR has had regular consultations with interested parties
throughout the process of discussions on this issue. These interested
parties have included labor organizations, civil society, public health
advocates, public health experts both inside and outside of the
government, and vaccine manufacturers themselves as well as their trade
associations.
Question. According to USTR's website, ``American trade policy
works toward opening markets throughout the world to create new
opportunities and higher living standards for families, farmers,
manufacturers, workers, consumers, and businesses.'' During the
hearing, you attempted to draw a distinction between ``market access''
as tariff liberalization and ``market access'' as mean meaningful
economic outcomes. I agree that meaningful economic outcomes are an
important trade policy objective, but I think opening markets through
trade agreements is the key mechanism for securing meaningful economic
outcomes for our farmers, ranchers, and businesses.
Will you commit to prioritizing opening markets for farmers,
ranchers, and businesses as a core trade policy objective for the Biden
administration?
Answer. The Biden administration is using our trade tools to create
new opportunities for American agriculture, including using our
existing Trade and Investment Framework Agreements (TIFAs) and Free
Trade Agreements (FTAs), to eliminate tariff and non-tariff barriers to
U.S. agricultural products. Last year, we secured a number of wins that
will provide more certainty for U.S. farmers, ranchers, and food
producers around the country, including removal of retaliatory tariffs
due to resolution of the EU aircraft dispute and a historic agreement
on steel and aluminum; removal of tariffs due to agreements with four
European trading partners on Digital Services Taxes; new access to the
Indian market for U.S. pork following the U.S. India Trade Policy
Forum; favorable outcomes on products such as pork, beef, rice, wheat,
corn and grape juice in negotiations with the United Kingdom and the EU
on tariff rate quotas resulting from Brexit; Vietnam's approval of
pending biotech events following TIFA engagement; MFN duty reductions
in Vietnam for corn, wheat, and frozen pork; and regaining access to
the EU market for our shellfish producers. We are also committed to
strong enforcement of our agreements, as our recent win in the Canada
dairy dispute illustrates, to promote predictability and level the
playing field in agricultural trade.
Finally, the Biden administration has launched the Indo-Pacific
Economic Framework for Prosperity with allies and partners to deepen
economic relationships in the region and coordinate approaches to
addressing global economic challenges. We intend to use this framework
to set standards that promote fair and open competition and inclusive
growth for farmers, ranchers, workers, and businesses small and large.
Within the trade pillar, we are developing agriculture provisions that
include high-standard commitments to address some of the persistent
challenges that American farmers face in accessing markets in the
region.
______
Questions Submitted by Hon. John Barasso
Question. International trade plays a critical role in our economic
security and our national security. American security as well as the
security of our allies around the world are supported through trade.
Russia put the world on notice.
More and more nations are waking up to the realization that energy
security equals national security. Countries around the globe are
scrambling to find new energy supplies to replace Russian oil, coal,
natural gas, and nuclear fuel. This is because Russia uses its energy
monopoly as a weapon. Russia understands that energy is power.
President Biden's 2022 Trade Agenda fails to outline a strategy to help
our allies be more energy secure. America is a global energy
superpower. We should act like it, especially through trade.
Wyoming has an abundance of coal, oil, natural gas, and uranium.
The U.S. can provide our allies around the world with reliable,
affordable, and secure energy resources. I see no plan or urgency to do
this in the President's Trade Agenda. This is a mistake.
How can we leverage American energy in international trade to
counter our adversaries like Russia who use their own energy exports as
a weapon?
Answer. Natural gas plays an important role in U.S. energy
security, and U.S. LNG exports now contribute to the energy security of
our allies and trade partners. The Department of Energy is responsible
for authorizing LNG exports, and as new LNG export capacity comes
online U.S. exports of LNG are expected to continue to grow.
President Biden and European Commission President Ursula von der
Leyen recently announced a joint Task Force to reduce Europe's
dependence on Russian fossil fuels and strengthen European energy
security as President Putin wages his war of choice against Ukraine.
This Task Force for Energy Security will be chaired by a
representative from the White House and a representative of the
President of the European Commission. It will work to ensure energy
security for Ukraine and the EU in preparation for next winter and the
following one while supporting the EU's goal to end its dependence on
Russian fossil fuels.
Question. I'm deeply concerned about the current nationalization of
U.S. energy assets in Mexico despite specific protections from U.S.-
Mexico-Canada Agreement (USMCA). Despite bipartisan pressure from
Congress, USTR has not prioritized USMCA enforcement of energy industry
in Mexico. As a result, U.S. companies' facilities have been seized by
the Mexican Government with little enforcement support from USTR.
What specific action is USTR going to take to help U.S. companies
who are suffering the consequences of Mexico's actions with respect to
the energy sector; and will you commit to requesting direct
consultations with the Government of Mexico under USMCA regarding their
recent activities in the energy sector?
Answer. USTR has serious concerns with the deteriorating trajectory
of Mexico's energy policies, including a series of ongoing actions the
Mexican Government has taken to increase state control over, and limit
competition in, the energy sector. USTR is actively assessing these
developments, and as I wrote to Secretary Clouthier on March 31, 2022,
I will be considering all available options under the USMCA to address
these concerns.
Question. I'm concerned about the lack of action taken to date by
this administration to open new markets for U.S. ranching and
agriculture products. Wyoming's farmers and ranchers take great pride
in their work. Our beef, barley, sugar, grain, feed and other ranching
agriculture products are second to none. In order to showcase these
products around the world, Wyoming's producers need access to
international markets.
Will you commit to fighting for fair market access and market share
for America's farmers and ranchers; and
Will you aggressively highlight and push back against market access
barriers that disadvantage producers in Wyoming and across the country?
Answer. The Biden administration is using our trade tools to create
new opportunities for American agriculture, including using our
existing Trade and Investment Framework Agreements (TIFAs) and Free
Trade Agreements (FTAs) to eliminate tariff and non-tariff barriers to
U.S. agricultural products. Last year, we secured a number of wins that
will provide more certainty for U.S. farmers, ranchers, and food
producers around the country, including: removal of retaliatory tariffs
due to resolution of the EU aircraft dispute and a historic agreement
on steel aluminum; removal or aversion of tariffs due to agreements
with four European trading partners on Digital Services Taxes; new
access to the Indian market for U.S. pork following the U.S. India
Trade Policy Forum; favorable outcomes on products such as pork, beef,
rice, wheat, corn and grape juice in negotiations with the United
Kingdom and the EU on tariff rate quotas resulting from Brexit;
Vietnam's approval of pending biotech events following TIFA engagement;
MFN duty reductions in Vietnam for corn, wheat, and frozen pork; and
regaining access to the EU market for our shellfish producers. We are
also committed to strong enforcement of our agreements, as our recent
win on Canada dairy illustrates, to promote predictability and level
the playing field in agricultural trade.
Finally, the Biden administration has launched the Indo-Pacific
Economic Framework for Prosperity with allies and partners to deepen
economic relationships in the region and coordinate approaches to
addressing global economic challenges. We hope to use this framework to
set standards that promote fair and open competition and inclusive
growth for farmers, ranchers, workers, and businesses small and large.
Within the trade pillar, we are developing agriculture provisions that
include high-standard commitments to address some of the persistent
challenges that American farmers face in accessing markets in the
region.
Question. U.S. businesses are often at a disadvantage vis-a-vis
state-owned enterprises (SOEs) that are not guided by market
principles. Such SOEs benefit from environmental, health, and labor
standards below that of publicly traded companies. The uranium miners
in Wyoming know this only too well, as U.S. mining has come to a
standstill at the hands of increased imports from places like Russia,
Uzbekistan and other countries where the Chinese have significant
mining investments. U.S. trade policy needs a clear strategy for
addressing the SOE imbalance.
Can you describe in detail how USTR intends to address the
challenges posed by SOEs in China and elsewhere; and
Does what tools, if any, will the Indo-Pacific Economic Framework
include to address the challenges posed by SOE's in the region?
Answer. We are committed to using the full range of tools we have,
and to develop new tools as needed, to defend American economic
interests from the harmful economic and trade policies and practices of
others, including the challenges posed by state-owned enterprises
(SOEs) in China and elsewhere. The administration is also actively
working with like-minded partners, both directly and in multilateral
institutions like the Organisation for Economic Co-operation and
Development, to advance new international disciplines on SOEs. In
addition, we are currently pursuing the negotiation of additional SOE
disciplines with Mexico and Canada under the USMCA.
We are in the early stages of consulting with stakeholders,
including Congress, on the content of IPEF. We received submissions to
a Federal Register notice on April 11th and are reviewing these
submissions. We welcome your feedback on IPEF, to include with respect
to addressing the challenges posed by SOEs, and want to continue close
consultation with Congress as we move forward in its development.
Question. The COVID-19 pandemic has starkly demonstrated--through
trade restrictions, supply chain breakdowns, and other unpredictable
actions by countries around the world--the importance of food security.
Russia's unprovoked invasion of Ukraine has exacerbated this critical
issue and placed enormous pressure on the global food supply chain.
Fertilizer shortages are already changing American farmers' approach to
planting and this will put additional pressure on the food supply.
What actions is USTR taking to address the current challenges
facing the U.S. and global food Supply?
Answer. The United States is working with our partners and allies
around the world to address the disruptions to supply chains that
Russia's unprovoked invasion of Ukraine has caused. Specifically, USTR
is working bilaterally and multilaterally, with like-minded countries
to avoid the use of trade distorting measures, eliminate unjustified
non-tariff barriers, fully implement the Trade Facilitation Agreement,
and continue notifying and informing other WTO members of relevant
trade programs and measures that affect agricultural production and
global trade.
Question. As we discussed numerous times in the past, soda ash is
very important to my home State. U.S. ``natural soda ash'' is refined
from the mineral trona. The Green River Basin in Wyoming has the
world's largest trona deposit.
Soda ash is a key manufacturing component of glass, detergents,
soaps, and chemicals. U.S. natural soda ash sets the standard for
quality, purity, and energy efficiency in production. Like many U.S.
industries, soda ash faces significant trade barriers around the world.
As part of your effort to promote U.S. industries in international
markets, will you recommit to advocate for eliminating trade barriers
for soda ash and other important U.S. industries in the international
marketplace?
Answer. The U.S. soda ash industry is among the most competitive in
the world. Often, countries competing for the global soda ash market do
so through the degradation of worker rights and the environment. I will
work to remove trade barriers and to ensure U.S. exports of soda ash
and other important goods face a level playing field in the
international market.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
The biggest trade and economic security stories in the world today
are Russia and China. Their governments are united in putting up
barriers to American products and American values.
Since Putin launched his unprovoked invasion of Ukraine, the U.S.
and our allies have hit Russia, Putin, and his circle of oligarchs with
the most powerful economic sanctions in history. It's not just about
yanking away super-yachts and private jets. Putin is now the head of a
pariah state. In terms of trade, the Senate is currently in the process
of formally designating Russia as a pariah state by revoking its
Permanent Normal Trade Relations status.
The U.S. has proven to Russia that going down the abusive
totalitarian road is a bad bet. The U.S. and our allies must prove the
same to China. China's Government is a human-rights abusing, jobs- and
tech-stealing behemoth at the head of an economic superpower. One of my
top concerns about the Chinese Government's economic model is
censorship.
When the Internet took off, American innovators were first out of
the gate with big ideas. The Chinese Government responded by using its
Great Firewall to block those companies, and allowing Chinese firms to
rip off their ideas instead of competing with them directly. Even
worse, Chinese tech comes with Chinese censorship, and it even censors
American people and American businesses.
The Chinese model of censorship is popping up all over the world.
It's fracturing the Internet. It's distorting reality for entire
nations, as you see in Russia, where the people are being fed lies
about what's going on in Ukraine. The U.S. must stand up to that kind
of censorship, and USTR has a big role in fighting for a free and open
Internet through smart digital trade policy.
You can also bet that the Chinese Government will want to dominate
the technologies that will dominate the rest of the 21st century, such
as semiconductors, EV batteries, and AI. It's also continuing its awful
record of abusing human rights and trampling on workers.
Again, this is where USTR comes in. The U.S. must do everything it
can to stand up to China, protect American workers and businesses, and
prevent a race to the bottom on basic rights.
As I said at the outset, the U.S. and our allies have proven with
the sanctions on Russia that our collective economic power is anything
but ``soft.'' A big reason why the U.S. was able to marshal such
strength was because the Biden administration, USTR included, had
worked hard to mend our relationships in Europe and elsewhere.
USTR racked up a lot of significant wins in the process that don't
always get lots of discussion. USTR finally brokered a deal in an
aircraft trade dispute with the EU and the UK that had been unresolved
for nearly 2 decades. USTR and the Commerce Department also reached
deals with the EU, the UK, and Japan on steel and aluminum trade--which
will remove existing tariffs, bring prices down for Americans, and
fight carbon emissions.
Before those disputes were resolved, American firms had been hit in
the crossfire, with tariffs on everything from airplanes to cranberries
to wine. EU tariffs on distilled spirits were a big danger to Oregon's
thriving craft beverage industry. Ambassador Tai's work to negotiate
deals has wiped away these tariff threats, ensuring our businesses can
grow, create good-paying jobs, and export with confidence.
Just last week, USTR got Japan to agree to allow in more U.S. beef
at lower tariff levels, which is huge news for our ranchers. And thanks
to an agreement with the EU, American fishers are exporting live
oysters, clams, and mussels to Europe for the first time in over a
decade. There's no question that resolving these issues has brought the
U.S. and our traditional economic allies closer together.
Two weeks ago, this committee held a hearing on the Indo-Pacific
Economic Framework, which is another opportunity to strengthen our
economic ties and marginalize the Russia-China model. It's got a lot of
promise for Oregon workers and businesses, who live at one of the
gateways to the Pacific. A good agreement will bulldoze overseas
barriers to Oregon products from Columbia Gorge pears to Wallowa beef.
Reducing barriers means better market access for farmers and
manufacturers, which is incredibly important to Oregon--where one in
five jobs are trade jobs, and trade jobs often pay better.
It's also an important opportunity to raise standards for labor
rights, environmental protections, and a free and open Internet. And
because sunlight is the best disinfectant, it's a positive sign that
USTR has committed to handling those discussions with transparency and
close consultations. My view is, that's key to getting the best
possible deal for American workers.
I want to thank Ambassador Tai for joining the committee today. I'm
looking forward to discussing these issues with her, and more.
______
Communications
----------
American Apparel and Footwear Association
740 6th Street, NW
Washington, DC 20001
P: 202-853-9080
https://www.aafaglobal.org/
April 14, 2022
The Honorable Ron Wyden The Honorable Mike Crapo
Chairman Ranking Member
U.S. Senate U.S. Senate
Committee on Finance Committee on Finance
Washington, DC 20510 Washington, DC 20510
RE: Statement for the Hearing Record: The President's 2022 Trade Policy
Agenda, March 31, 2022
Dear Chairman Wyden and Ranking Member Crapo,
On behalf of the members of the American Apparel and Footwear
Association (AAFA), we appreciate this opportunity to submit a
statement for the record for the Committee's hearing on the ``The
President's 2022 Trade Policy Agenda.''
The American Apparel and Footwear Association (AAFA) is the national
trade association representing apparel, footwear and other sewn
products companies, and their suppliers, which compete in the global
market. Representing more than 1,000 world famous name brands, AAFA is
the trusted public policy and political voice of the apparel and
footwear industry, its management and shareholders, its three million
U.S. workers, and its contribution of more than $350 billion in annual
U.S. retail sales.
Trade Agreements
The U.S. apparel, footwear, and related products industry encompasses
domestic manufacturers, exporters, importers, and global suppliers. Our
members make and sell products in the United States and around the
world. Because nearly every U.S. job in our industry depends on access
to foreign customers, access to global supply chains, or both for its
existence, trade agreements are vitally important for the
competitiveness of the industry. We encourage the Committee to urge
USTR complete negotiations with Kenya and the United Kingdom. We also
support \1\ a comprehensive Indo-Pacific Economic Framework (IPEF) that
includes market access, tariff liberalization, customs facilitation,
strong intellectual property provisions, sustainability provisions, and
a clear strategy \2\ on supply chain resiliency.
---------------------------------------------------------------------------
\1\ https://www.aafaglobal.org/AAFA/AAFA_News/
2022_Letters_and_Comments/AAFA_Sub
mits_Comments_to_USTR_on_IPEF.aspx.
\2\ https://www.aafaglobal.org/AAFA/AAFA_News/
2022_Letters_and_Comments/AAFA_Sub
mits_Comments%20to_Commerce%20_on_IPEF.aspx
---------------------------------------------------------------------------
Generalized System of Preferences (GSP)
We are pleased to see full retroactive renewal of GSP in both the House
and Senate bills. However, we are concerned the increased eligibility
criteria may make it more difficult for many countries to comply. We
must remember that GSP is a critical development tool needed to help
lift people out of poverty. Thus, any proposal must preserve as much
``good trade'' as possible during country practice reviews, including
the possibility of removing GSP on a case-by-case basis for only bad
actors, updating the Competitive Need Limit (CNL) rules to raise the
value thresholds, and amending the statute to say that GSP benefits
should be restored for products that fall below the (new) thresholds.
Further, the longer duration in the Senate version provides more
business certainty, providing more incentives to meet any new
eligibility criteria.
Miscellaneous Tariff Bill (MTB)
The MTB allows American companies the ability to eliminate or reduce
duties on nearly 2,500 items not available or manufactured in the
United States. We urge the Committee to consider renewing retroactively
back to when it expired at the end of December 2020. Further, since the
process already includes a thorough vetting process by the U.S.
International Trade Commission and allows Members of Congress to object
to specific petitions, provisions that seek to exclude finished
products are arbitrary and unnecessary. If the goal of the MTB is to
support U.S. jobs, it should not matter whether U.S. value-add occurs
at the beginning or end of a product's value chain. Excluding only
finished products suggests that the only U.S. value-add that comes at
the end of a value chain are worthwhile to protect, sending a terrible
message to the millions of Americans employed in developing, designing,
sourcing, moving, marketing, and ensuring the compliance of products.
We also have serious questions over whether a ``finished product''
exclusion is even administrable.
Section 301 China Tariff Exclusions
We have called on the Office of the U.S. Trade Representative (USTR) to
reinvigorate the exclusion process for products subject to additional
tariffs under Section 301 of the Trade Act of 1974. Such a provision
was included as part of the Trade Act of 2021 in the U.S. Innovation
and Competition Act (S. 1260) after an overwhelming bipartisan 91-4
vote. While similar language was not included in the House America
COMPETES Act, a bipartisan letter signed by 141 Members of the House of
Representatives was recently sent to Ambassador Tai asking for the
establishment of this process. AAFA supports a new exclusion process
that retroactively renews any expired exclusions and is transparent and
fact-based.
Central America
Through smart trade policies, we can promote billions of dollars of new
investment in the region's most promising industries and create
sustainable civil societies where opportunity can flourish. By
encouraging further investment in textile and apparel manufacturing
within the Western Hemisphere, we can provide communities in Central
America with more jobs, higher wages, sustainable growth and long-term
stability. This will ease the pressures on its citizens to migrate out
of the Central America--all while protecting existing manufacturing and
trade flows, and the jobs they support.
The Coalition for Economic Partnerships in the Americas \3\ (CEPA) has
submitted comments to the Committee and encourages Members to review
them for additional details on how we can grow jobs, investment, and
trade in the region.
---------------------------------------------------------------------------
\3\ https://cepacoalition.com/.
---------------------------------------------------------------------------
Haiti
The apparel industry now provides more than 50,000 formal Haitian jobs
and, by some estimates, supports another 450,000 Haitian citizens.
Congress has made this possible through successive enactment of the
Haiti HOPE/HELP programs to provide duty free access to the U.S. market
featuring practical rules of origin that support responsible and
sustainable sourcing.
We urge you to act now to ensure that there is no gap in the trade
preference programs that Haiti currently uses. Early renewal of the
programs that expire in just under 4 years cannot come soon enough.
Last year, Congress rightly extended the Caribbean Basin Trade
Partnership Act (CBPTA) for 10 years, which is used almost exclusively
by Haiti, a few days after it expired. The Generalized System of
Preferences (GSP)--another trade program that Haiti uses--expired more
than 13 months ago. Such delays, and the prospect that the HELP and
HOPE programs (which now support nearly 80 percent of Haiti's garment
exports to the U.S.) could face similar obstacles, discourage U.S.
companies from making long term plans. Such delays not only harm
Haitian families and the communities who depend on the jobs created by
U.S. apparel sourcing in Haiti, but they also hurt U.S. textile
manufacturers and their workers who depend on that production to
support their exports. Therefore, we urge you to pass the Haiti
Economic Lift Program Extension Act of 2021, recently introduced by
your colleagues, as soon as possible.
African Growth and Opportunity Act (AGOA)
AGOA is an important program for the U.S. apparel and footwear
industry. Even though the AGOA expiration date is three years away,
U.S. investment in the region already faces mounting uncertainty.
Companies are poised to diversify out of China, and Africa is a logical
place for many of them. The on-again, off-again nature of the program
before the ten-year renewal was extremely disruptive and meant the
industry was not able to take full advantage of the first 15 years of
the program. If AGOA were to be renewed this year for another 10 years,
companies would have the necessary certainty and timeframe they need to
grow a vertical, responsible, and competitive industry in Africa up to
and past 2025.
As more companies are beginning to utilize AGOA, and specifically the
third country fabric provision, the quota fill rate will be
significantly increasing in the coming years. Therefore, we also
suggest raising the existing 3.5% limit to at least 4.5%, with a growth
provision, so that it not be a constraint going forward.
We ask that you renew this important program this year for another 10
years and that we increase the quota so that we can reinject
predictability to support investment well ahead of the current 2025
expiration.
Thank you for your attention on these important trade matters.
Sincerely,
Beth Hughes
Vice President, Trade and Customs Policy
______
American Farm Bureau Federation
600 Maryland Ave., NW, Suite 1000W
Washington, DC 20024
p. 202-406-3600
f. 202-406-3606
https://www.fb.org/
The American Farm Bureau Federation, the nation's largest general farm
organization, submits this statement for the Committee hearing on the
President's 2022 trade policy agenda. Trade is critically important to
the current welfare and future prosperity of U.S. farmers and ranchers.
America's farmers and ranchers depend on growing and stable export
markets for the success of their businesses.
President's Trade Agenda for 2022
The Administration's approach on trade includes dealing with China;
pursuing the Indo-Pacific Economic Strategy; supporting agriculture;
reducing trade barriers; promoting sustainable environmental practices;
focusing on supply chain improvements; and promoting stability.
The Indo-Pacific Economic Framework (IPEF) was introduced as a part of
the overall Indo-Pacific Strategy. It is a strong start to improve
relationships and reach agreements with the region's countries. It
should also be used to reach science-based standards that will assist
exports. The inclusion of sanitary and phytosanitary (SPS) standards
will reduce barriers and expand opportunities for our agricultural
exports.
The IPEF can be significantly improved. As released, it does not
include a strategy of improving market access for agriculture by
working to reduce tariff barriers. The Administration is also not
proposing a reauthorization of Trade Promotion Authority nor a
commitment to pursuing trade negotiations with binding and enforceable
commitments. Farm Bureau supports trade agreements in the region as the
most durable and effective means to improve market opportunities for
farmers and ranchers.
Indo-Pacific Region Agricultural Trade
Current agreements in the region show the importance of moving forward
with additional efforts to improve opportunities for U.S. agricultural
exports.
U.S.-China Phase 1 Agreement
The U.S.-China Phase 1 Agreement has and will continue to result in
real progress toward a mutually beneficial trade relationship. We are
already seeing positive results for agricultural trade and substantial
progress in the removal of barriers that impact the competitiveness of
U.S. products in this important market. In the Phase 1 Agreement, China
committed to increase purchases of U.S. agricultural products. For
2020, China purchased over $27.5 billion of U.S. agricultural products.
In 2021, China purchased $33.5 billion of U.S. agricultural exports.
While the purchase commitment has ended, the outlook for Chinese
purchases of soybeans, corn, wheat, sorghum, beef, pork, and other
products is forecast by USDA to be over $36 billion in FY 2022.
China has also been addressing the commitments they made to improve and
reform many standards in the Agreement. Long-standing barriers to the
export of U.S. beef, pork, poultry, and other products have been or are
being resolved, pursuant to the Agreement. As these barriers go down,
the opportunity for increased U.S. commodity sales goes up.
Also helping our sales growth is China's granting, upon application by
importers, waivers of their retaliatory tariffs on U.S. agricultural
products, which were put in place in 2018 and 2019, with direct,
substantial impacts on agricultural sales.
China is U.S. agriculture's number one export destination. As such, an
ongoing trade relationship with China is critical for U.S. farmers and
ranchers.
U.S.-South Korea Agreement
The U.S.-South Korea Free Trade Agreement (KORUS) entered in force on
March 25, 2012. The agreement eliminated or reduced tariff and non-
tariff barriers on agricultural and other products.
U.S. agricultural exports to South Korea reached an all-time high in FY
2021 at $9.2 billion. The forecast for FY 2022 is $9.8 billion.
U.S.-Japan Agreement
The U.S.-Japan Trade Agreement went into effect on Jan. 1, 2020. The
tariffs applied to U.S. products are now the same as those applied to
the products of the other countries with a trade agreement with Japan.
Tariffs are being reduced or eliminated on a variety of U.S.
agricultural exports to Japan. The U.S. and Japan should continue talks
on the remaining issues, such as SPS rules, which would help lead to a
comprehensive FTA between the U.S. and Japan. The recent agreement on
the operation of Japan's beef safeguard mechanism will help increase
sales of U.S. beef products.
U.S. agricultural exports to Japan were over $14 billion in 2021.
USMCA
The U.S.-Mexico-Canada Agreement is important for the continuation and
improvement of trade among the nations of North America. Canada ($24
billion) and Mexico ($23.9 billion) are the second and third largest
export markets for U.S. agriculture. The implementation and enforcement
of this Agreement will yield future growth for our exports.
U.S.-United Kingdom
The U.S. and the United Kingdom (UK) have just reached an agreement to
resolve the steel tariffs dispute between the two countries. This
agreement will remove the retaliatory tariffs on U.S. agricultural
products placed by the UK after the U.S. placed tariffs on UK steel and
aluminum.
We support a resumption of trade negotiations between the U.S. and the
UK to deal with non-science-based barriers to our agricultural exports.
Trade Promotion Authority
The Bipartisan Congressional Trade Priorities and Accountability Act of
2015 (Trade Promotion Authority) ended on July 1, 2021. Farm Bureau
recognizes the crucial importance of Trade Promotion Authority and
supports its reauthorization. The negotiating objectives set by
Congress, the consultation requirements of the Administration with
Congress and the voting procedures established under TPA are important
to the successful negotiation and conclusion of trade discussions.
World Trade Organization
The Biden Administration will need to deal with various WTO reform
issues such as the operation of the Appellate Body. For agriculture, we
support working toward increased transparency through an improved
notifications process. We do not support discussion of subsidy levels
without a full discussion of market access initiatives.
Sustainability
U.S. farmers and ranchers look to be partners in addressing the
challenges of our changing climate. Not only are agriculture's
emissions low, farmers and ranchers are taking active steps to make
their footprint even smaller. This is best accomplished through
policies that provide voluntary, incentive-based tools for farmers,
ranchers, and forest owners to maximize the sequestration of carbon.
This approach will also help achieve a reduction in greenhouse gas
emissions; increase the resilience of the land; advance science-based
outcomes and help rural economies adapt.
Conclusion
U.S. farmers and ranchers rely on export markets for over twenty
percent of agricultural production. As Congress considers future
discussions with the nations that are our most important export
destinations, and those that have the potential to grow in importance,
we need to consider how the proposed Indo-Pacific Economic Framework
can most effectively expand agricultural exports to the benefit of U.S.
farmers and ranchers.
______
Americans for Free Trade
April 13, 2022
The Honorable Ron Wyden The Honorable Mike Crapo
Chairman Ranking Member
U.S. Senate U.S. Senate
Committee on Finance Committee on Finance
Washington, DC 20510 Washington, DC 20510
The Honorable Richard Neal The Honorable Kevin Brady
Chairman Ranking Member
U.S. House U.S. House
Committee on Ways and Means Committee on Ways and Means
Washington, DC 20515 Washington, DC 20515
RE: Statement for the Hearing Record: The President's 2022 Trade Policy
Agenda
Dear Chairman Wyden, Ranking Member Crapo, Chairman Neal, and Ranking
Member Brady,
The Americans for Free Trade coalition, a broad alliance of American
businesses, trade organizations, and workers united against tariffs,
respectfully submits this written statement to include in the public
record of the House Ways & Means Committee and Senate Finance
Committee's (``the Committees'') 2022 Trade Policy Agenda hearings,
which took place on March 30 and 31, respectively. We appreciate the
Committees holding hearings on this important matter.
By way of background, Americans for Free Trade represents every part of
the U.S. economy including manufacturers, farmers and agribusinesses,
powersports, retailers, technology companies, service suppliers,
natural gas and oil companies, importers, exporters, and other supply
chain stakeholders. Collectively, we employ tens of millions of
Americans through our vast supply chains.
As companies in the U.S. continue to recover from the global pandemic,
face supply chain disruptions, and operate in an inflationary economic
environment, we continue to call upon the administration to use more
strategic tools to address China's unfair trade practices without
further damaging U.S. competitiveness. To date, U.S. Customs and Border
Protection has assessed more than $130 billion dollars in tariffs from
U.S. companies who import products from China. These taxes increase the
cost of doing business in the United States and place a financial
burden on U.S. businesses--negatively impacting their ability to invest
in their companies, hire more American workers, innovate cutting-edge
goods and services and remain competitive globally.
We continue to call for an end to the China 301 tariffs that have had a
disproportionate economic impact on American companies, consumers, and
workers and that have failed to change China's unfair trade practices.
But until the tariffs are lifted, we believe reinstituting a fully
retroactive section 301 exclusion process for all covered products is
critical to providing interim relief for U.S. businesses. According to
a recent Moody's Investor Service Report, the tariffs ``hit American
businesses and consumers hardest,'' with China absorbing only 7.6
percent of the tariffs ``while the rest of the tab was picked up by
Americans.'' Further, recent articles have highlighted that the tariffs
are having a modest but real impact on inflationary pressures.\1\ A
new, comprehensive, transparent, and fair exclusions process would help
alleviate the economic burden on American businesses and consumers.
---------------------------------------------------------------------------
\1\ See the attached list of articles discussing the section 301
China tariffs' contributions to U.S. inflation woes.
We welcomed USTR's announcement in October to open an exclusions
process for a limited set of products. However, that process was only
available to 549 products, which is approximately 1 percent of the
original exclusion applications. USTR recently announced the
reinstatement of 342 of the 549 exclusions, but it did not explain why
the remaining requests were denied or why the exclusions were
retroactive only to October 12, 2021. While these 342 reinstated
exclusions are an important first step, a more robust process is needed
to provide meaningful relief. This view is shared by at least 141
bipartisan House members and 41 bipartisan Senators who recently wrote
to Ambassador Tai urging USTR to open a broader exclusions process.
During the Trade Agenda hearings, many Members of the Committees asked
Ambassador Tai whether USTR intended to make available a broader
exclusion process. Ambassador Tai responded that she was happy to
discuss the issue further with Members of Congress and that USTR would
continue to consider a broader exclusions process if circumstances
warranted it. These responses provided no insight to the Committees or
the public regarding USTR's intentions for opening a broader exclusions
---------------------------------------------------------------------------
process or what circumstances might prompt USTR to do so.
Absent a clear indication from USTR that it will use its authority to
provide a comprehensive, transparent, and fair exclusions process,
Congress must act. We therefore urge the Committees to include language
in a conferenced China competition bill that would require USTR to
reinstitute a comprehensive, transparent, and fair exclusions process--
with retroactivity--for all products subject to the section 301
tariffs, not just an arbitrary, narrow subset of products.
As the Committees may also be aware, List 1 of the China 301 tariffs is
set to expire in July unless USTR receives a petition for a
continuation of the tariffs, which we understand is almost certain to
occur. Such a request would trigger a review process under the statute,
requiring USTR to examine the effectiveness of the tariffs in achieving
their objectives and other actions that could be taken, as well as the
effects of such actions on the U.S. economy, including consumers.
While USTR would only be required to conduct this review with respect
to List 1, we have written to Ambassador Tai urging USTR to include all
four tariff lists in its review. A single review for all four tariff
lists would create administrative efficiencies for USTR and American
companies. It would also permit a more holistic assessment of whether
the tariffs achieved their stated objectives and provide a full picture
of the impact the tariffs have had to the U.S. economy, as well as
American businesses, workers, and consumers. It would also give USTR
the opportunity to consider whether the 301 tariffs represent the best
path forward considering U.S. companies continue to face many of the
same challenges with respect to trade with China today as they did when
the tariffs were first imposed.
Further, it is essential that the review process be fully transparent
and include a public comment period and public hearings to ensure that
the Administration gives all stakeholders--including stakeholders who
pay the tariffs--the opportunity to provide input. A review that does
not include the American businesses, workers, farmers, and consumers
burdened by the tariffs would be inconsistent with the commitments USTR
has made in its Transparency Principles, congressional testimony, and
the 2022 Trade Policy Agenda and 2021 Annual Report regarding public
outreach, engagement, and transparency.
We strongly support a fully transparent review of the Section 301
tariffs on products from China, including a comprehensive economic
assessment of the tariffs' impact on American businesses, workers,
farmers, and consumers. We urge the Committees to inquire about USTR's
plans for reviewing the tariffs, including timing and opportunities for
stakeholder input. We believe the review presents an important
opportunity to assess the tariffs and determine whether this
Administration will continue them as part of its China trade policy.
We appreciate the Committees' continued engagement on these critical
issues and urge it to continue weighing in with the Administration to
ensure that destructive tariffs are lifted, and that a new and more
effective approach to addressing China's unfair trading practices is
adopted. We thank the Committees for holding these hearings and look
forward to continuing to work with you.
Sincerely,
Accessories Council American Rental Association
ACT | The App Association American Seed Trade Association
Agriculture Transportation
Coalition (AgTC) American Specialty Toy Retailing
Association
ALMA, International (Association of
Loudspeaker Manufacturing and
Acoustics) American Trucking Association
American Apparel and Footwear
Association (AAFA) Arizona Technology Council
American Association of Exporters
and Importers (AAEI) Arkansas Grocers and Retail
Merchants Association
American Association of Port
Authorities Association for Creative Industries
American Bakers Association Association for PRINT Technologies
American Bridal and Prom Industry
Association (ABPIA) Association of American Publishers
American Chemistry Council Association of Equipment
Manufacturers (AEM)
American Clean Power Association Association of Home Appliance
Manufacturers
American Coatings Association, Inc.
(ACA) Auto Care Association
American Down and Feather Council Beer Institute
American Fly Fishing Trade
Association BSA | The Software Alliance
American Home Furnishings Alliance Business Alliance for Customs
Modernization
American Lighting Association California Retailers Association
American Petroleum Institute Can Manufacturers Institute
American Pyrotechnics Association Carolina Loggers Association
Colorado Retail Council Chemical Industry Council of
Delaware (CICD)
Columbia River Customs Brokers and
Forwarders Assn. Coalition of New England Companies
for Trade (CONECT)
Computer and Communications
Industry Association (CCIA) Coalition of Services Industries
(CSI)
Computing Technology Industry
Association (CompTIA) Indiana Retail Council
Consumer Brands Association Information Technology Industry
Council (ITI)
Consumer Technology Association International Association of
Amusement Parks and Attractions
(IAAPA)
Council of Fashion Designers of
America (CFDA) International Bottled Water
Association (IBWA)
CropLife America International Foodservice
Distributors Association
Customs Brokers and Freight
Forwarders Assn. of Washington
State International Housewares
Association
Customs Brokers and Freight
Forwarders of Northern California International Warehouse and
Logistics Association
Distilled Spirits Council of the
United States International Wood Products
Association
Electronic Transactions Association ISSA--The Worldwide Cleaning
Industry Association
Energy Workforce and Technology
Council Jeweler's Vigilance Committee
Experiential Designers and
Producers Association Juice Products Association (JPA)
Fashion Accessories Shippers
Association (FASA) Juvenile Products Manufacturers
Association
Fashion Jewelry and Accessories
Trade Association Leather and Hide Council of America
Flexible Packaging Association Licensing Industry Merchandisers'
Association
Florida Ports Council Los Angeles Customs Brokers and
Freight Forwarders Assn.
Florida Retail Federation Louisiana Retailers Association
Footwear Distributors and Retailers
of America (FDRA) Maine Grocers and Food Producers
Association
Fragrance Creators Association Maine Lobster Dealers' Association
Game Manufacturers Association Maritime Exchange for the Delaware
River and Bay
Gemini Shippers Association Maryland Retailers Association
Georgia Retailers Michigan Chemistry Council
Global Chamber Michigan Retailers Association
Global Cold Chain Alliance Minnesota Retailers Association
Greeting Card Association Missouri Retailers Association
Halloween Industry Association Motor and Equipment Manufacturers
Association
Home Fashion Products Association Motorcycle Industry Council
Home Furnishings Association NAPIM (National Association of
Printing Ink Manufacturers)
Household and Commercial Products
Association National Association of Chain Drug
Stores (NACDS)
Idaho Retailers Association National Association of Chemical
Distributors (NACD)
Illinois Retail Merchants
Association National Association of Foreign-
Trade Zones (NAFTZ)
Independent Office Products and
Furniture Dealers Association
(IOPFDA) National Association of Home
Builders
National Retail Federation National Association of Music
Merchants
National Ski and Snowboard
Retailers Association National Association of Trailer
Manufacturers (NATM)
National Sporting Goods Association National Council of Chain
Restaurants
National Confectioners Association National Electrical Manufacturers
Association (NEMA)
Natural Products Association National Fisheries Institute
New Jersey Retail Merchants
Association National Foreign Trade Council
North American Association of Food
Equipment Manufacturers (NAFEM) National Grocers Association
North American Association of
Uniform Manufacturers and
Distributors (NAUMD) National Lumber and Building
Material Dealers Association
North Carolina Retail Merchants
Association National Marine Manufacturers
Association
Ohio Council of Retail Merchants National Restaurant Association
Outdoor Industry Association RV Industry Association
Pacific Coast Council of Customs
Brokers and Freight Forwarders
Assns. Inc. San Diego Customs Brokers and
Forwarders Assn.
Pennsylvania Retailers' Association SEMI
PeopleforBikes Semiconductor Industry Association
(SIA)
Personal Care Products Council Snowsports Industries America
Pet Food Institute Software and Information Industry
Association (SIIA)
Pet Industry Joint Advisory Council South Dakota Retailers Association
Plumbing Manufacturers
International Specialty Equipment Market
Association
Power Tool Institute (PTI) Specialty Vehicle Institute of
America
PRINTING United Alliance Sports and Fitness Industry
Association
Promotional Products Association
International TechNet
Recreational Off-Highway Vehicle
Association Telecommunications Industry
Association (TIA)
Retail Association of Maine Texas Water Infrastructure Network
Retail Council of New York State The Airforwarders Association
Retail Industry Leaders Association The Fertilizer Institute
Retailers Association of
Massachusetts The Hardwood Federation
RISE (Responsible Industry for a
Sound Environment) The Toy Association
Travel Goods Association Truck and Engine Manufacturers
Association (EMA)
United States Council for
International Business United States Fashion Industry
Association
U.S. Global Value Chain Coalition U.S.-China Business Council
Vinyl Institute Virginia Retail Merchants
Association
Virginia-DC District Export Council
(VA-DC DEC) Washington Retail Association
Window and Door Manufacturers
Association World Pet Association, Inc. (WPA)
Articles Related to Tariffs' Effect on Inflation:
Larry Sommers on potential recession: ``Nothing is inevitable or
certain in economics,'' The Hill, April 10, 2022.
For inflation relief, the United States should look to trade
liberalization, Peterson Institute for International Economics, March
30, 2022.
Opinion: Biden wants more price-reducing ``competition.'' Except
in this one circumstance, The Washington Post, February 8, 2022.
Trump's China tariffs continue to vex small Minnesota importers,
Star Tribune, February 6, 2022.
Will inflation see off the Trump tariffs? Vogue Business,
January 5, 2022.
Retreat From Globalization Adds to Inflation Risks, The Wall
Street Journal, December 5, 2021.
Facing Down a Surprising Inflation Surge, Harvard Kennedy
School, December 1, 2021.
PPI's Trade Fact of the Week: Trump tariff increases
contribution to inflation: 0.5%, Progressive Policy Institute
Newsletter.
Inflationary Effects of Trade Disputes with China, Federal
Reserve Bank of San Francisco, February 25, 2019.
Administration Comments on Tariffs and Inflation
Rolling back U.S.-China tariffs would ease inflation in the
U.S., former Treasury secretary says, CNBC, November 30, 2021.
The inflation-fighting step Biden has yet to take, CNN, November
21, 2021,
Janet Yellen Interview with ``Face The Nation,'' November 14,
2021.
Yellen says reciprocal lowering of tariffs could help ease
inflation, Reuters, November 1, 2021.
Recent AFT coalition member pieces:
Two Years Since Trade Deal with China, Tariffs Aren't Working for
American Businesses, Entrepreneur, MSN, February 11 2022.
Trade Wars Worsen Shipping Crisis, Townhall, September 7, 2021.
Joe Bell: Ongoing trade war limits recovery for U.S. businesses,
Tribune Review, June 23, 2021
Repeal Tariffs to Boost the Economy, Help Small Businesses,
RealClearMarkets. March 25, 2021.
Removing tariffs is key to economic relief, Washington Examiner,
February 24, 2021.
______
Center for Fiscal Equity
14448 Parkvale Road, Suite 6
Rockville, MD 20853
[email protected]
Statement of Michael G. Bindner
Chairman Wyden and Ranking Member Crapo, thank you for the opportunity
to submit these comments for the record. Please consider the following
issues, which are likely left off of the President's current agenda.
If the Belt and Road and forced labor in China are still an issue, the
answer is probably resurrecting some form of the Trans-Pacific
Partnership. The right of businesses to short-circuit local law in
special tribunals must be modified or ended in any redux. This should
be the case with all such trade agreements.
Agreements which try to modernize other nation's labor arrangements
need an awareness that America's performance on issues of democracy,
organized labor, wage and hour and safety enforcement are far from
stellar. Perhaps any arrangements should include monitoring American
employers and the government agencies that should be looking out for
them.
At the very least, end right-to-work. Such laws are really right-to-
exploit laws, including through the use of human trafficking. Migrant
workers in the food industry, from harvesting to processing and packing
face all sorts of bad treatment, sometimes with that treatment abetted
by local law enforcement.
Immigration reform must be part of the trade policy agenda. Workers who
do not have documentation problems cannot be easily exploited--
especially if they are able to unionize. This will also help level the
playing field for American workers. A unionized worker, whether they be
an immigrant or a citizen, will make more money and be safer. The
stories of workers having to do so sick was highlighted in the early
days of the Pandemic. I have not heard that things have gotten any
better.
An analysis of how consumption taxes can improve our trade policy is
found in a second attachment. The first attachment on tax reform is
included to clarify the terms of the second. These are attachments
because they have been provided before. I am available to explain these
topics. There are many who can talk about how value added taxes relate
to trade, but I am the only one who can walk the Committee and staff
through how an employer-paid subtraction value added tax applies.
Part of the trade equation is the recently completed agreement on
Corporate Minimum Taxes. This faces challenges to enactment in the
Senate. Perhaps it should. I am no fan of corporate income taxation
when value added taxes (both GST/Invoice VAT and Subtraction VAT) are
available.
Our proposal for an Asset Value-Added Tax will require international
cooperation. Part of trade is moving money around--including financial
assets. An asset VAT as a replacement for capital gains taxes and
capital returns must go farther than the border. It is too easy to
shift to offshore stock exchanges where such taxes do not exist.
International agreements on rates and enforcement structures are vital
for such a tax to work. The model for negotiating the CMT on a multi-
national basis can be used for this effort.
The other issue not usually discussed with Trade Policy is its impact
on national debt ownership. Bond holdings backing the currencies of our
trading partners is a key consideration. The possibility that the debt
may outpace our trading capital needs must be a concern. A more urgent
concern is the impact on Treasury bond prices if the European Union
creates a consolidated debt with a continental tax system to back the
Euro. Such an option would bring about a day of reckoning on our debt--
a reckoning that income taxpayers will have to face.
It is important to understand who owns and owes the debt. We are
currently revising our previous study: Settling (and Squaring)
Accounts: Who Really Owes the National Debt? Who Owns It? available
from Amazon at https://www.amazon.com/dp/B08FRQFF8S. I can provide free
copies of the prior version upon request and will distribute the latest
edition once it is completed. The most recent bottom line estimates can
be found in the second attachment. This shows who is on the hook for
the debt and who benefits from it.
Note well that the top 22,000 households break even on debt owned and
owed. Everyone else is in hock. Such an imbalance cannot continue.
Please see the third attachment for more on this issue.
A main conclusion of our analyses is that the national debt is the
leverage for capitalism to the extent that debt securities allow Wall
Street to offer riskier assets, such as mortgage backed securities
embedded in Exchange Traded Funds, as well as more traditional
offerings. Wealth held by the few (and the attachment shows how very
few we mean), provides management absolute control of most workplaces.
Employee-owned firms would not need such an unbalanced economy
leveraged by American Treasury holdings.
As you may have heard, China is in the middle of a housing finance and
development crisis. The impact of these developments on both bilateral
and world trade will be huge. They demand a separate set of hearings by
multiple committees--but especially Finance and Ways and Means.
The most important long-term trade issue is international employee
ownership, which is discussed in the second attachment. Domestic
employee-owned firms will find it in their interest to offer the same
standard of living and ownership rights to overseas subsidiaries and
their supply chain. In the long term, such ownership ends the need for
any political agenda on trade.
Trade issues will take care of themselves within the enterprise,
leaving currency arbitrage in the dust. Enacting the proposed Asset
Value-Added Tax, with zero rated sales to such firms, will make that
day come sooner--leading to a more integrated world without the need
for a worldwide war machine.
Our most urgent concern in trade is climate change. Our current
approach is inadequate. We need to put our money where our mouths are--
or rather--where the world is. We need more than international
agreements. We need international retrofitting, primarily in the energy
sector. This means funding abatement issues in the developing world--
and helping to carry them out. It is not enough to insist on goals. We
must pay for action anywhere our trading partners will let us.
Thank you for the opportunity to address the committee. We are, of
course, available for direct testimony or to answer questions by
members and staff.
Attachment One--Tax Reform, Center for Fiscal Equity, December 7, 2021
Individual payroll taxes. Employee payroll tax of 7.2% for Old-Age and
Survivors Insurance. Funds now collected as a matching premium to a
consumption tax based contribution credited at an equal dollar rate for
all workers qualified within a quarter. An employer-paid subtraction
value-added tax would be used if offsets to private accounts are
included. Without such accounts, the invoice value added tax would
collect these funds. No payroll tax would be collected from employees
if all contributions are credited on an equal dollar basis. If employee
taxes are retained, the ceiling would be lowered to $100,000 to reduce
benefits paid to wealthier individuals and a $16,000 floor should be
established so that Earned Income Tax Credits are no longer needed.
Subsidies for single workers should be abandoned in favor of radically
higher minimum wages. If a $10 minimum wage is passed, the employee
contribution floor would increase to $20,000.
Wage Surtaxes. Individual income taxes on salaries, which exclude
business taxes, above an individual standard deduction of $100,000 per
year, will range from 7.2% to 57.6%. This tax will fund net interest on
the debt (which will no longer be rolled over into new borrowing),
redemption of the Social Security Trust Fund, strategic, sea and non-
continental U.S. military deployments, veterans' health benefits as the
result of battlefield injuries, including mental health and addiction
and eventual debt reduction.
Our proposed brackets have been increased from $85,000 to $100,000
because this is the income level at the top of the 80% of tax paying
households who earn the bottom third of adjusted gross income. Earners
above this level are considered middle class. Likewise, the top 1% of
income earners are at the $500,000 level, which will be used as the
start of the highest rate.
Asset Value-Added Tax (A-VAT). A replacement for capital gains taxes,
dividend taxes, and the estate tax. It will apply to asset sales,
dividend distributions, exercised options, rental income, inherited and
gifted assets and the profits from short sales. Tax payments for option
exercises, IPOs, inherited, gifted and donated assets will be marked to
market, with prior tax payments for that asset eliminated so that the
seller gets no benefit from them. In this perspective, it is the
owner's increase in value that is taxed. As with any sale of liquid or
real assets, sales to a qualified broad-based Employee Stock Ownership
Plan will be tax free. These taxes will fund the same spending items as
income or S-VAT surtaxes.
This tax will end Tax Gap issues owed by high income individuals. A 26%
rate is between the GOP 23.8% rate (including ACA-SM surtax) and the
Democratic 28.8% rate as proposed in the Build Back Better Act. It's
time to quit playing football with tax rates to attract side bets. A
single rate also stops gaming forms of ownership. Lower rates are not
as regressive as they seem. Only the wealthy have capital gains in any
significant amount. The de facto rate for everyone else is zero. For
now, however, a 28.8% rate is assumed if reform is enacted by a
Democratic majority in both Houses.
Subtraction Value-Added Tax (S-VAT). These are employer paid Net
Business Receipts Taxes. S-VAT is a vehicle for tax benefits, including
Health insurance or direct care, including veterans' health care
for non-
battlefield injuries and long term care.
Employer paid educational costs in lieu of taxes are provided as
either
employee-directed contributions to the public or private unionized
school of their choice or direct tuition payments for employee children
or for workers (including ESL and remedial skills). Wages will be paid
to students to meet opportunity costs.
Most importantly, a refundable child tax credit at median income
levels (with inflation adjustments) distributed with pay.
Subsistence-level benefits force the poor into servile labor. Wages and
benefits must be high enough to provide justice and human dignity. This
allows the ending of state administered subsidy programs and
discourages abortions, and as such enactment must be scored as a must
pass in voting rankings by pro-life organizations (and feminist
organizations as well). To assure child subsidies are distributed, S-
VAT will not be border adjustable.
The S-VAT is also used for personal accounts in Social Security,
provided that these accounts are insured through an insurance fund for
all such accounts, that accounts go toward employee-ownership rather
than for a subsidy for the investment industry. Both employers and
employees must consent to a shift to these accounts, which will occur
if corporate democracy in existing ESOPs is given a thorough test. So
far it has not. S-VAT funded retirement accounts will be equal-dollar
credited for every worker. They also have the advantage of drawing on
both payroll and profit, making it less regressive.
A multi-tier S-VAT could replace income surtaxes in the same range.
Some will use corporations to avoid these taxes, but that corporation
would then pay all invoice and subtraction VAT payments (which would
distribute tax benefits. Distributions from such corporations will be
considered salary, not dividends.
Invoice Value-Added Tax (I-VAT). Border adjustable taxes will appear on
purchase invoices. The rate varies according to what is being financed.
If Medicare for All does not contain offsets for employers who fund
their own medical personnel or for personal retirement accounts, both
of which would otherwise be funded by an S-VAT, then they would be
funded by the I-VAT to take advantage of border adjustability. I-VAT
also forces everyone, from the working poor to the beneficiaries of
inherited wealth, to pay taxes and share in the cost of government.
Enactment of both the A-VAT and I-VAT ends the need for capital gains
and inheritance taxes (apart from any initial payout). This tax would
take care of the low-income Tax Gap.
I-VAT will fund domestic discretionary spending, equal dollar employer
OASI contributions, and non-nuclear, non-deployed military spending,
possibly on a regional basis. Regional I-VAT would both require a
constitutional amendment to change the requirement that all excises be
national and to discourage unnecessary spending, especially when
allocated for electoral reasons rather than program needs. The latter
could also be funded by the asset VAT (decreasing the rate by from
19.5% to 13%).
As part of enactment, gross wages will be reduced to take into account
the shift to S-VAT and I-VAT, however net income will be increased by
the same percentage as the I-VAT. Adoption of S-VAT and I-VAT will
replace pass-through and proprietary business and corporate income
taxes.
Carbon Added Tax (C-AT). A Carbon tax with receipt visibility, which
allows comparison shopping based on carbon content, even if it means a
more expensive item with lower carbon is purchased. C-AT would also
replace fuel taxes. It will fund transportation costs, including mass
transit, and research into alternative fuels (including fusion). This
tax would not be border adjustable unless it is in other nations,
however in this case the imposition of this tax at the border will be
noted, with the U.S. tax applied to the overseas base..
Tax Reform Summary
This plan can be summarized as a list of specific actions:
1. Increase the standard deduction to workers making salaried income
of $35,000 and over, shifting business filing to a separate tax on
employers and eliminating all credits and deductions--starting at 7.2%,
going up to 28.8%, in $50,000 brackets.
2. Shift special rate taxes on capital income and gains from the
income tax to an asset VAT. Expand the exclusion for sales to an ESOP
to cooperatives and include sales of common and preferred stock. Mark
option exercise and the first sale after inheritance, gift or donation
to market.
3. Employers distribute the child tax credit with wages as an offset
to their quarterly tax filing (ending annual filings).
4. Employers collect and pay lower tier income taxes, starting at
$100,000 at 7.2%, with an increase to 14.4% for all salary payments
over $150,000 going up 7.2% for every $50,000 up to $250,000.
5. Shift payment of HI, DI, SM (ACA) payroll taxes to employers,
remove caps on employer payroll taxes and credit them to workers on an
equal dollar basis.
6. Employer paid taxes could as easily be called a subtraction VAT,
abolishing corporate income taxes. These should not be zero rated at
the border.
7. Expand current state/federal intergovernmental subtraction VAT to a
full GST with limited exclusions (food would be taxed) and add a
federal portion, which would also be collected by the states. Make
these taxes zero rated at the border. Rate should be 19.5% and replace
employer OASI contributions. Credit workers on an equal dollar basis.
8. Change employee OASI of 7.2% from $18,000 ($20,000 for $10 minimum
wage) to $100,000 income are optional taxes for Old-Age and Survivors
Insurance.
Attachment Two--Trade Policy and Value-Added Taxes
Consumption taxes could have a big impact on workers, industry and
consumers. Enacting an I-VAT is far superior to a tariff. The more
government costs are loaded onto an I-VAT the better.
If the employer portion of Old-Age and Survivors Insurance, as well as
all of disability and hospital insurance are decoupled from income and
credited equally and personal retirement accounts are not used, there
is no reason not to load them onto an I-VAT. This tax is zero rated at
export and fully burdens imports.
Seen another way, to not put as much taxation into VAT as possible is
to enact an unconstitutional export tax. Adopting an I-VAT is superior
to it's weak sister, the Destination Based Cash Flow Tax that was
contemplated for inclusion in the TCJA. It would have run afoul of WTO
rules on taxing corporate income. I-VAT, which taxes both labor and
profit, does not.
The second tax applicable to trade is a Subtraction VAT or S-VAT. This
tax is designed to benefit the families of workers through direct
subsidies, such as an enlarged child tax credit, or indirect subsidies
used by employers to provide health insurance or tuition reimbursement,
even including direct medical care and elementary school tuition. As
such, S-VAT cannot be border adjustable. Doing so would take away
needed family benefits. As such, it is really part of compensation.
While we could run all compensation through the public sector.
The S-VAT could have a huge impact on long term trade policy, probably
much more than trade treaties, if one of the deductions from the tax is
purchase of employer voting stock (in equal dollar amounts for each
worker). Over a fairly short period of time, much of American industry,
if not employee-owned outright (and there are other policies to
accelerate this, like ESOP conversion) will give workers enough of a
share to greatly impact wages, management hiring and compensation and
dealing with overseas subsidiaries and the supply chain--as well as
impacting certain legal provisions that limit the fiduciary impact of
management decision to improving short-term profitability (at least
that is the excuse managers give for not privileging job retention).
Employee owners will find it in their own interest to give their
overseas subsidiaries and their supply chain's employees the same deal
that they get as far as employee-ownership plus an equivalent standard
of living. The same pay is not necessary, currency markets will adjust
once worker standards of living rise.
Over time, ownership will change the economies of the nations we trade
with, as working in employee-owned companies will become the market
preference and force other firms to adopt similar policies (in much the
same way that, even without a tax benefit for purchasing stock,
employee-owned companies that become more democratic or even more
socialistic, will force all other employers to adopt similar measures
to compete for the best workers and professionals).
In the long run, trade will no longer be an issue. Internal company
dynamics will replace the need for trade agreements as capitalists lose
the ability to pit the interest of one nation's workers against the
others. This approach is also the most effective way to deal with the
advance of robotics. If the workers own the robots, wages are swapped
for profits with the profits going where they will enhance consumption
without such devices as a guaranteed income.
Attachment Three--Debt Ownership as Class Warfare, February 16, 2022
Visibility into how the national debt, held by both the public and the
government at the household level, sheds light on why Social Security,
rather than payments for interest on the debt, are a concern of so many
sponsored advocacy institutions across the political spectrum. Direct
household attribution can be made by calculating direct bond holdings,
income provided by Social Security payments and secondary financial
instruments backed with debt assets for each income quintile.
Responsibility to repay the debt is attributed based on personal income
tax collection. Payroll taxes create an asset for the payer, so they
are not included in the calculation of who owes the debt. Using 2019
tax data and the national debt as of COB February 15th, the ratio is
$19 of debt owed for every dollar of income tax paid.
The top 4% take home 33% of AGI (not shown in table), with the next 20%
and the bottom 75% each taking a third. This is how we classify class
distribution in America. To allow estimates of asset ownership, we have
distributed income using rounder numbers.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The bottom 80% of taxpaying units hold few, if any, public debt
assets in the form of Treasury Bonds or Securities or in accounts
holding such assets and only take home one-third of adjusted gross
income. Their main national debt assets are held on their behalf by the
Government. They are owed more debt than they owe through taxes. The
next 10% (the middle class), hold more in terms of long-term
investments and mutual fund and bond assets. They hold a bit under a
fifth of social insurance assets.
The top 10% pay more than half of income taxes (the dividing line is
about 97.5%--and has been for a while). Asset shares within the top 10%
are estimated using the same breakdown as the entire population, that
is, the top 1% hold 54% of Federal Reserve and Long Term Investment
Assets and 77% of mutual funds and bonds as held by the top 10%. A
similar fraction is used to estimate holdings by the top 0.01%--which
is consistent to how much income they receive (note that I did not say
earn.
This illustration shows who benefits the most from having a national
debt, therefore who has the most to lose through default.
______
Coalition for Economic Partnerships in the Americas
April 14, 2022
The Honorable Ron Wyden The Honorable Mike Crapo
Chairman Ranking Member
U.S. Senate U.S. Senate
Committee on Finance Committee on Finance
Washington, DC 20510 Washington, DC 20510
RE: Statement for the Hearing Record: The President's 2022 Trade Policy
Agenda, March 31, 2022
Dear Chairman Wyden and Ranking Member Crapo,
On behalf of the members of the Coalition for Economic Partnerships in
the Americas (CEPA), we appreciate this opportunity to submit a
statement for the record for the Committee's hearing on the ``The
President's 2022 Trade Policy Agenda.''
CEPA brings together companies, trade associations, think tanks, and
other stakeholders with a decades-long track record of creating
thousands of jobs in the Americas through investment and trade. We are
a coalition of major American companies and manufacturers focused on
the humanitarian, security, and economic crisis in the Americas, ready
to dedicate resources, experience, and expertise to create enduring
humanitarian, worker-centric, and sustainable solutions that work for
the United States and Central America.
Through smart trade policies, we can promote billions of dollars of new
investment in the region's most promising industries and create
sustainable civil societies where opportunity can flourish. By
encouraging further investment in textile and apparel manufacturing
within the Western Hemisphere, we can provide communities in Central
America with more jobs, higher wages, sustainable growth and long-term
stability. This will ease the pressures on its citizens to migrate out
of the Central America--all while protecting existing manufacturing and
trade flows, and the jobs they support.
Job Growth
A recent economic study, Close Knit: Migration and Apparel Production
in Central America, conducted by Raymond Robertson at the Mosbacher
Institute for Trade, Economics, and Public Policy at Texas A&M
University found the United States can address the root causes of
instability in Central America by creating jobs, reducing poverty, and
contributing to economic growth through international trade. Mr.
Robertson estimates that at least a hundred thousand more jobs will be
created in the region if there were access to more yarns and fibers to
increase apparel production. Specifically, the study found:
Both the dollar value and the share of apparel imports from
Central America into the United States has declined while both the
dollar value and share of apparel imports from China and Vietnam has
dramatically increased since CAFTA-DR went into force.
Apparel imports from Central America are highly concentrated in
low value-add apparel products that do not use technologically advanced
yarns and fabrics.
Increasing the diversity of apparel inputs that may be
incorporated into finished goods and receive CAFTA-DR duty-free
treatment through modernizing the rules of origin could support
economic growth in Central America.
Apparel is a significant share of Central American countries'
exports to the U.S., and, therefore, improving the region's position in
the apparel value chain could have significant economic effects for
those countries.
In addition, the study cited other research supporting the fact that
retail-supported apparel production increases economic opportunity and
creates good jobs for would-be migrants. The World Bank report Stitches
to Riches? Apparel Employment, Trade, and Economic Development in South
Asia notes that ``the apparel industry contributes to the social,
economic, and policy realms of developing countries'' and ``increases
female labor-force participation.'' Mr. Robertson cites another World
Bank report, Globalization, Wages, and the Quality of Jobs, noting that
``apparel workers earn more in apparel than they would earn in their
most likely domestic alternatives (domestic service and agriculture).''
Access to these new yarns and fabrics will incentivize more cut and sew
production in the region. This will serve as a long-term demand signal
to the U.S. textile industry and lead to new investments in yarns,
fabrics, and apparel that simply do not exist in the hemisphere right
now. To begin making progress, it is imperative that the right policies
are put in place to attract more cut and sew jobs as soon as possible.
This will have the two-fold impact of (1) creating the jobs today
needed to make a significant dent in the migration crisis and (2)
creating a demand signal that will stimulate even more textile
investment (in both the U.S. and the region) that will support more
trade tomorrow (accounting for the lag in textile investments to come
online).
CAFTA-DR Trade
It is through trade, specifically incentivizing the utilization of the
Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) in
apparel, where we will see progress. Sadly, as it has been for the past
20 years, CAFTA-DR is currently not structured as a magnet to attract
the kind of textile and apparel investment we need to move a broader
diversity of sourcing from Asia. Companies are indeed diversifying out
of China--both goods and materials. While some of that is moving to
CAFTA-DR, it may be only temporary, and the vast majority is still
bypassing the region and will continue to do so because the terms of
trade are simply not structured to support the industry of 2022 or the
future.
According to data released by the Office of Textiles and Apparel
(OTEXA) (enclosed as charts in this statement), the utilization rate of
CAFTA-DR for apparel sourcing fell to a new low of only 73.7% in 2021.
A record number of U.S. apparel imports (26.3%) from CAFTA-DR member
countries did not claim duty-free benefits most notably due to an
insufficient supply of qualifying yarns and fabrics. It is important to
note that U.S. yarn and fabric exports to CAFTA-DR continues to lag
behind U.S. yarn and fabric exports to the rest of the world. There is
no question that CAFTA-DR continues to be a strong market for U.S. yarn
and fabric exports (about 20% go there), but growth in apparel from
other parts of the world continues to be stronger. In 2021, about 64%
of the new growth over the previous year came from the rest of the
world.
The current trade consists heavily in basic cotton tee shirts, socks,
and underwear. In fact, about 80% of the trade is concentrated in only
25 tariff lines. CEPA is committed to protecting the current trade in
these items and partnering with the U.S. cotton industry. At the USDA's
Agricultural Outlook Forum in February 2022, Chief Economist Seth Meyer
presented data showing U.S. cotton planted area is rising with
historically strong cotton prices. The U.S. cotton industry is an
important partner providing good American jobs and sustainably sourced
cotton free of forced labor.
China
U.S. apparel companies understand the concern that access to more yarns
and fabrics will mean a flood of Chinese inputs into the region that
will harm U.S. production. We share this concern and have championed an
outcome that will prevent this result. First, we have urged that a go
forward process with respect to CAFTA-DR include ALL stakeholders to
make sure any changes insulate current trade and investment flows. This
will also ensure that textile companies advocate for areas where they
need to rely upon foreign inputs, similar to the way many textile
companies currently support duty reductions or suspensions for Chinese
inputs under the Miscellaneous Tariff Bill (MTB) in a manner that does
not harm U.S. production. Second, we are actively trying to drive more
trade under the CAFTA-DR umbrella so they will be subject to CAFTA-DR's
strong customs provisions. This enforcement tool is vital to provide
added visibility for CBP to make sure that textile and apparel inputs
are not infected by forced labor. Given heightened concerns about the
use of cotton from the Xinjiang Uyghur Autonomous Region (XUAR), CAFTA-
DR provides excellent guardrails to ensure that supply chains, which
are increasingly diverse, are free and clear of forced labor.
CEPA Policy Recommendations
Fashion apparel production in the Western Hemisphere cannot be
diversified and expanded unless there is access to yarns and fabrics.
With only 10% of the world's yarns produced in the Western Hemisphere,
many fashion yarns are in short supply in the region even if they are
not recognized as such by the CAFTA-DR short supply list. Modern
apparel is made up of thousands of fabrics, yarns, and fibers and only
a tiny fraction of those are produced in the U.S. Fibers, yarns, and
fabrics determined not to be available in commercial quantities in a
timely manner should be allowed to be sourced from outside the CAFTA-DR
countries for use in apparel products and imported to the U.S. duty-
free. For example, U.S. apparel companies need heathered yarns,
textured yarns, fine count yarns, sustainable yarns, and printed woven
fabrics to increase apparel production in Central America. Despite a
few promises of new investments, there have not been commitments by
textile companies to produce these much-needed yarns and fabrics in the
region. Moreover, the current short supply process is too burdensome
and slow to allow sufficient flexibility for modern apparel producers.
The current process has become tainted due to the blocked submission of
valid petitions and by certain textile producers failing to provide the
product at a commercially available price, quality, volume, and time
frame. We believe the current process could be improved to provide the
needed flexibilities to modern apparel producers without negatively
impacting U.S. jobs.
Further, the Central America-Dominican Republic Apparel And Textile
Council (CECATEC-RD) supports short supply and stated in a press
release from August 2021 that the short supply mechanism is an
important provision and ``would be open to review this mechanism to
ensure it stays transparent, efficient and responsive to the needs of
the supply chain.'' In fact, short supply and other flexibilities were
specifically included in CAFTA-DR in recognition that the yarn forward
provisions alone would be too rigid to support trade.
In addition to modernizing the short supply process to be more
responsive to industry needs, CEPA also recommends capitalizing on
another flexibility that already exists in CAFTA-DR as well as in other
U.S. trade preference programs like Haiti HOPE/HELP--cumulation. CAFTA-
DR allows cumulation for knit fabric used in garments classified under
Chapter 62 (See Appendix 4.1-B). In his article from January 2021,
Central America: Promoting Prosperity with Targeted U.S. Trade Policy,
Matthew Rooney of the George W. Bush Institute argues in favor of
linking CAFTA-DR with the U.S. Mexico-Canada Agreement (USMCA) to
``allow a company manufacturing in Mexico to source components in
Central America that would count toward the threshold for duty-free
access to the United States under USMCA.'' CEPA supports linking all
U.S. trade agreements, Trade and Investment Framework Agreements, and
trade preference programs together, which would create a virtuous web
among U.S. trading partners without allowing textile and apparel
products using inputs from China to receive the benefits of the CAFTA-
DR agreement.
In addition to allowing access for more yarns and fabrics, reducing
nontariff barriers and harmonizing export and import processes in
Central America is key to promoting regional trade, investment, and job
growth in the region. CEPA supports the report of the Commercial
Customs Operations Advisory Committee (COAC) Rapid Response
Subcommittee Northern Triangle Working Group which provides
``recommendations on reducing the nontariff trade barriers and
improving customs processes in the Northern Triangle region of Central
America, comprised of Guatemala, El Salvador, and Honduras, for the
purpose of reducing migration driven by economic push factors.''
CEPA has called on the Biden Administration to bring all stakeholders
to the table to discuss creative solutions that protects current and
planned U.S. textile investments while also creating conditions to
sustainably and permanently grow textile and apparel investment for the
benefit of U.S. apparel and textile companies.
Thank you for your attention to this important issue. CEPA looks
forward to working with the Committee to foster CAFTA-DR and ensure it
fulfills its purpose for investors, workers, and communities.
Sincerely,
Beth Hughes
Vice President, Trade and Customs Policy
American Apparel and Footwear Association
On behalf of CEPA
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Consumer Technology Association
1919 S. Eads St.
Arlington, VA 22202
703-907-7600
https://www.cta.tech/
In response to the March 30th \1\ and March 31st \2\ congressional
hearings on the 2022 U.S. Trade Policy Agenda, the Consumer Technology
Association (CTA)' submits this statement for the record on
U.S. trade priorities in this time of uncertainty and upheaval in the
international arena.
---------------------------------------------------------------------------
\1\ House Ways and Means Committee, Biden Administration's 2022
Trade Policy Agenda, https://waysandmeans.house.gov/legislation/
hearings/biden-administration-s-2022-trade-policy-agenda (last accessed
March 23, 2022).
\2\ Senate Finance Committee, The President's 2022 Trade Policy
Agenda, https://www.
finance.senate.gov/hearings/the-presidents-2022-trade-policy-agenda
(accessed March 28, 2022).
CTA represents the $505 billion U.S. consumer technology industry,
which supports more than 18 million U.S. jobs. Our industry appreciates
the Office of the U.S. Trade Representative's (USTR's) efforts to
strengthen U.S. trade relationships with allies and key trading
partners, roll back prior harmful trade actions, establish a worker-
centric trade policy, and use trade policy to address other important
U.S. objectives like combating the COVID-19 pandemic and eliminating
---------------------------------------------------------------------------
forced labor from supply chains around the world.
Ambassador Tai's successes in her first year as U.S. Trade
Representative are creating a solid foundation for a more proactive and
market-opening U.S. trade policy. Her testimony and responses to
questions, however, clearly indicated that USTR under her leadership is
not prioritizing the negotiation of free trade agreements and opening
new markets through tariff liberalization.
CTA's statement highlights key themes and actions for USTR to pursue to
support American businesses and workers and advance U.S. engagement
with key partners and allies.
I. USTR can act immediately to improve U.S. economic health,
decrease inflation, and ensure the continued availability of innovative
tech products to all Americans by reducing harmful tariffs.
Strong consumer demand for home technology products has allowed total
industry revenue to grow over the past 4 years. However, industry costs
are also up significantly, and businesses have been forced to increase
their average unit sales prices for many products for the first time in
decades in no small part due to increased tariffs, exploding
transportation expenses, supply chain disruptions, profiteering by
foreign ocean carriers, and counterproductive trade policy actions
taken by the prior Administration and continued by this one.
These price increases in the consumer electronics industry are, in
turn, contributing to the highest U.S. inflation rate in 40 years and
jeopardizing our overall national economic health.\3\ They also
undermine USTR efforts to establish a worker-centric trade policy, as
workers increasingly use consumer technology both in the office and at
home with their families. Higher tariffs--taxes that U.S. businesses,
consumers, and workers pay on imports--are regressive in nature, with
the greatest impacts felt by the poorest and most vulnerable people in
our society, particularly in combination with high prices. As the May
2021 report ``Imports Work for American Workers''\4\ demonstrates,
imports support over 21 million American jobs. Maintaining high tariffs
undermines both workers supporting the importation of consumer
technology and those using consumer technology throughout the country.
More, given that inflation is known to be reduced only by raising
interest rates or enhancing productivity, maintaining a special tax on
productivity enhancing products is especially counterproductive.
---------------------------------------------------------------------------
\3\ See February 2022 data from the Bureau of Labor Statistics:
https://www.bls.gov/news.release/pdf/cpi.pdf. See also A. Galloni and
D. Lawder, Yellen says cutting some tariffs on Chinese goods could ease
price pressures, Reuters (December 2, 2021), https://www.
reuters.com/markets/rates-bonds/yellen-says-cutting-some-tariffs-
chinese-goods-could-ease-price-pressures-2021-12-02/
#:-:text=WASHINGTON%2C%20Dec%202%20(Reuters),no%20%22game%
2Dchanger.%22.
\4\ Trade Partnership Worldwide LLC, Imports Work for American
Workers (May 2021), https://tradepartnership.com/wp-content/uploads/
2021/05/ImportStudy2021FINAL.pdf.
CTA has long advocated for tariff elimination for consumer technology
products and inputs for these products through trade agreements,
whether bilateral, regional, plurilateral, or multilateral. In our
experience, tariffs do not lead to the creation of new industries, re-
shoring, on-shoring, near-shoring, or friend-shoring. They simply are
an extra cost that drags down U.S. productivity and curtails U.S.
innovation and hiring. At a time when the United States is striving to
achieve greater digital integration, advance telecommunications
technology and increase Internet access for rural populations and
underrepresented communities, any additional, punitive tariffs on
technology products directly undermine these goals. USTR is not the
Federal Reserve, but it can immediately contribute to the resolution of
this significant economic challenge by eliminating punitive tariffs on
consumer technology products and continuing progress in international
negotiations to otherwise lower normal tariff rates on these products.
These actions will enable everyone in the United States to access new,
productivity enhancing technologies at lower costs and improve the
---------------------------------------------------------------------------
condition of our economy.
II. USTR should proactively address the U.S.-China trade
relationship with new tools and not continue to rely on the
fundamentally flawed Section 301 action taken by the prior
Administration.
The Section 301 tariffs on China have been among the greatest
contributors to our present inflationary situation, and they have
imposed significant costs on consumers, businesses and the United
States in the form of higher expenses, greater prices, taxes paid, jobs
lost or never created, and innovation and product development
squandered. CTA applauds USTR's recent reinstatement of certain product
exclusions,\5\ but we hope that USTR also recognizes the limitations of
that narrow process, which was inherently constrained by the arbitrary
nature of the prior Administration's initial exclusion process.\6\ We
are disappointed that Ambassador Tai did not announce during her
testimonies a new solution to provide meaningful relief to U.S.
businesses from these harmful Section 301 taxes. Such a mechanism could
include a new process for U.S. companies to request exclusions of
products from the tariffs across all four lists. Additional exclusions
should be issued on a rolling basis, and USTR should give appropriate
due process and provide detailed rationales for its decisions to
companies. The process should not be time-limited, nor be subject to
arbitrary eligibility criteria.
---------------------------------------------------------------------------
\5\ USTR, USTR Issues Determination of Reinstatement of Certain
Exclusions from China Section 301 Tariffs, Press Release (March 23,
2022), https://ustr.gov/about-us/policy-offices/press-office/press-
releases/2022/march/ustr-issues-determination-reinstatement-certain-
exclusions-china-section-301-tariffs.
\6\ See Letter from CTA to Ambassador Katherine Tai (November 30,
2021), https://cdn.cta.
tech/cta/media/media/advocacy/pdfs/ustr-tai-letter.pdf.
Yet even a broader exclusion mechanism cannot address the fundamental
flaws of the current Section 301 tariff action. CTA has always opposed
the Section 301 tariffs as bad policy hastily made by the prior
Administration in violation of statutory and procedural
requirements.\7\ For this reason, CTA urges USTR to allow the automatic
expiry of the tariff lists once they reach their 4-year statutory
sunset period.\8\
---------------------------------------------------------------------------
\7\ See In re Section 301 Cases, No. 1:21-cv-00052-3JP (Ct. Int'l
Trade 2021) (arguing violations of Section 301 of the Trade Act of 1974
and the Administrative Procedure Act with respect to the promulgation
of List 3 and List 4).
\8\ The 4-year sunset date of each list is as follows: July 5, 2022
(List 1); August 22, 2022 (List 2); September 23, 2022 (List 3); and
August 31, 2023 (List 4A). As List 4B was never imposed, it should be
considered to expire no later than the same date as List 4A.
If other parts of U.S. industry petition USTR to continue the tariffs,
USTR must faithfully engage in the comprehensive review process
required by statute.\9\ CTA is confident that USTR's review will
consider the overwhelming evidence that the tariffs have not been
effective against China and have instead have severely harmed U.S.
economic interests. While CTA shares this Administration's concern
about China's unfair trade practices, the United States must develop a
more sophisticated solution that actually applies pressure on China,
rather than on U.S. businesses, workers, and consumers. Continuing the
tariff status quo is not the solution to promote fair and equitable
international policy or to resolve regulatory disagreements. With the
expiration of the Section 301 tariffs, the United States will be able
to move on from this harmful and unsuccessful attempt at protectionism
and craft a more strategic and beneficial trade policy for growing the
U.S. economy and creating U.S. jobs while also strengthening
relationships with U.S. allies around the world. To this end,
Ambassador Tai has long called for the development of new trade tools
in the U.S. toolbox to deal with China's role in the international
trading system.
---------------------------------------------------------------------------
\9\ 19 U.S.C. Sec. 2417(c).
Many of the tools suggested by USTR, the Congress, or stakeholders are
unilateral and therefore merit careful consideration of the costs and
benefits. Suggested tools encouraged by other stakeholders could
include a new Section 301 investigation on China's industrial subsidies
and other harmful non-market economy practices with subsequent actions
that are not tariff-based; new export controls to prevent strategic
industries in China from accessing critical U.S. technologies, which
would require close coordination with allies; reviews of outbound U.S.
investments to strategic industries in China; revisions to U.S. trade
remedies law to address circumvention of U.S. anti-dumping and
countervailing duties by China; further restrictions on imports
presumed to be made with forced labor; and restrictions on carbon-
intensive imports produced in markets with low environmental standards.
In considering these and other tools, U.S. actions must be
unambiguously WTO-consistent, or we stand to set a poor example for our
trading partners; undermine our own international policy objectives;
---------------------------------------------------------------------------
and invite harmful retaliation.
III. USTR should work to create an ongoing and consistent dialogue
with China that is supported by robust engagement with American
businesses as well as U.S. partners and allies.
To be truly effective, any new U.S. policy towards China must not only
engage China, but it must also break down and prevent trade barriers
between U.S. allies and key trading partners. American businesses have
an important role in U.S.-China relationship and can be an instrumental
part of a positive solution. CTA encourages the U.S. government to
engage in a robust, transparent, and comprehensive dialogue with U.S.
stakeholders as it crafts and deploys effective and narrowly tailored
tools to change China's behavior and ensure that China abides by its
international trade commitments. That dialogue should respect U.S.
norms regarding stakeholder input wherever possible and include
opportunities for public comment, public hearings, and administration
responses to comments from stakeholders.
More, CTA notes that diplomacy and re-engagement with both China and
U.S. allies and key trading partners (e.g., under the U.S.-EU Trade and
Technology Council and the new Indo-Pacific Economic Framework (IPEF))
can achieve concrete, commercially meaningful, durable, and sustainable
results and create better economic futures for all parties. We urge the
Administration to prioritize working with our allies to develop a
longer-term strategy that holds China accountable and raises labor and
environmental standards in China, while abiding by international laws
and strengthening the rules-based trading system (rather than
undermining it, as the Section 301 tariffs have done). Coordinating
policies at the highest levels is necessary and important, but only the
negotiation of binding and enforceable trade commitments is durable and
sustainable. As CTA outlines in our April 2021 white paper on the
semiconductor shortage,\10\ to combat illegal trade practices, or to
counter foreign competition, policies must be derived in accordance
with our international trade obligations and in concert with our many
global trade allies.
---------------------------------------------------------------------------
\10\ When the Chips are Down: Industry Outlook and Policy Response
to the Semiconductor Crisis. Consumer Technology Association, April
2021. https://www.cta.tech/Resources/Articles/2021/When-the-Chips-are-
Down.
CTA supports the creation of a concrete pathway to re-enter the
Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the
negotiation agreements on digital trade rules (including through the
IPEF and at the WTO), and the negotiation new free trade agreements
with U.S. allies that open markets and prevent barriers to trade. A
free trade agreement with the United Kingdom is the best near-term
opportunity to negotiate the highest standard binding and enforceable
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trade rules to prepare for negotiated U.S. entry into the CPTPP.
IV. USTR should capitalize on the competitive advantage of the
U.S. technology and innovation economy by pursuing new market access
opportunities.
Ambassador Tai's testimony was a lost opportunity to signal stronger
and more focused USTR's efforts to open new markets and create new
trade rules with U.S. allies and key trading partners. Instead, it was
clear from her testimony and answers to questions that the
Administration has no interest in opening new markets through tariff
liberalization and negotiating robust new U.S. trade agreements.
CTA urges U.S. negotiation of comprehensive new free trade agreements
with U.S. allies and key trading partners as soon as possible. A free
trade agreement with the United Kingdom and U.S. negotiated entry into
the CPTPP must be high priorities for the Administration's trade policy
agenda. The proposed Indo-Pacific Economic Framework should serve as a
market-opening forum and leads to U.S. negotiated entry into the CPTPP.
For context, the last two trade agreements that opened new markets for
U.S. companies were the expansion of the WTO Information Technology
Agreement in 2015 and KORUS in 2008.
By contrast, other governments, including U.S. adversaries, are
negotiating new trade agreements at a rapid pace, resulting in U.S.
firms losing market share in key growth markets to their foreign
competitors. While free trade agreements may be a tool of the 20th
century, there is no other viable mechanism at the present time to
secure favorable market access commitments from trading partners. More,
it is nonsensical for potential trading partners to make general,
unilateral commitments on framework rules and principles when they
stand to get nothing in return. For these reasons, the pause in U.S.
trade agreement negotiations is not in the short or long-term interests
of the U.S. economy, U.S. businesses, U.S. workers, and most
importantly, U.S. innovation. Other governments are setting the new
rules of trade, forcing the United States to catch up and adapt rather
than lead.
CTA greatly appreciates the opportunity to submit these comments for
the record. We look forward to continuing to work with the House Ways
and Means and Senate Finance Committees and with the Administration to
fight inflation, strengthen U.S. relationships with allies by opening
new markets and negotiating high standard, binding and enforceable
trade rules, and bolster the U.S. innovation economy.
______
Embassy of the Republic of Mauritius
1709 N Street, NW
Washington DC 20036
Statement of Mauritius on Sub Saharan Africa and the AGOA
The Trade Policy Agenda 2022 highlights President Biden's vision for
trade that is equitable, fair and lasting. Of particular importance to
Mauritius, is that the USTR will continue to support the
Administration's work to coordinate with allies on shared priorities,
while exploring new partnerships around the world.
Mauritius fully shares the view that the U.S.-Kenya approach (whereby
both countries are working to deepen their trade and investment
relationship) should serve as the model to deepen trade and investment
relations with African countries.
Benefits of AGOA to Sub Saharan Africa including Mauritius
Since its enactment, AGOA has had a very positive impact on U.S. Africa
trade flows and by extension, has indeed led to economic
diversification and created regional value chains. This has in turn
contributed to the socio-economic development of Africa. Indeed, AGOA
is the corner stone of the economic and trade relations between the
U.S. and Sub Saharan Africa.
Predictability--Important Prerequisite for Trade
While AGOA has had a positive impact on the development of the AGOA
eligible countries, however the full potential of the U.S. and SSA
trade and investment relations has yet to be unleashed. This is partly
attributed to the fact that AGOA is a temporary trade arrangement and
limited in time. Investors and the business community need
predictability for trade and investment to flourish. In this respect,
the short-term renewals of the AGOA programme do not create the much
needed certainty for long term investment plans and adequate production
planning. Investment from the U.S., for instance has remained quite low
in Africa as compared to U.S. investment in other regions.
Implications of High-Income Country Status
The AGOA has a graduation clause which is based on the World Bank Gross
National Income (GNI) threshold. The high income threshold is the
benchmark for graduation from both the GSP and AGOA regimes.
It is important to note that Mauritius may be classified a high income
country before the expiry of AGOA in 2025 and would therefore not
qualify for AGOA eligibility. We are making a request to the U.S.
authorities to consider removing the graduation clause based on per
capita GNI.
In fact, GNI per capita is not the ideal criteria to determine the
graduation of a country as countries like Mauritius have a high GNI on
account of its small population. Small countries with relatively higher
national per capita income face significant challenges in finding a
viable path towards sustainable growth and remain highly vulnerable to
global economic and global trade patterns. The COVID-19 pandemic for
instance which has led to the disruption of the global supply chains
and rising transport costs have impacted Mauritius heavily.
Rather than using the GNI per capita as the graduation criteria, it
might be better to use the share of exports in relation to the overall
imports of the U.S.. If a country's share is over 1% of U.S. total
imports then the graduation criteria may apply.
Post AGOA 2025
Regarding the renewal of AGOA, there is unanimity that the AGOA
programme has been beneficial to the eligible countries, and has
provided one of the poorest regions in Africa with a powerful tool to
increase exports, create jobs and economic welfare. Any post AGOA 2025
strategy should not lead to the disruption of trade in any AGOA
eligible country, including those that may graduate out by virtue of
the per capita Gross National Income criteria.
In this respect, it is extremely important for both sides to work
together on a mutually acceptable solution before AGOA expires. The
extension of AGOA on a long term basis to ensure predictability and
legal security should be given serious consideration.
During the opening of the last AGOA Ministerial Forum held in October
2021, Ambassador Katherine Tai, USTR, alluded to the fact that the U.S.
was willing to engage with AGOA countries at the national, regional and
continental level to ensure that the African Continental Free Trade
Area (AfCFTA) delivers real benefits to African workers. She also
mentioned that the U.S. is open-minded and is willing to explore all
possible solutions for trade policy to make a positive contribution to
economic development.
Kenya is already negotiating a Free Trade Agreement with the U.S. and
it would be crucial for countries that risk graduation to have the
option to conclude bilateral Free Trade Agreements with the U.S.
Otherwise, sudden graduation from AGOA would disrupt trade and have
drastic socio-economic consequences.
In the longer term consideration should be given to conclude a new
generation of Comprehensive Economic Partnership Agreement between U.S.
and Africa that encompasses trade in goods, trade in services,
investment liberalisation and facilitation, intellectual property
rights, competition policy, sustainable amongst others. This can be
done when the AfCFTA would have matured and a customs union established
on the continent.
To ensure effective implementation and address structural adjustment
which such a framework would entail, a financial and technical support
package should also be included.
Mauritius is proposing a hybrid approach as follows:-
(i) Renew AGOA preferences in 2025 whilst prioritising a long
term comprehensive trade agreement between the U.S. and Africa using
the AfCFTA as a vehicle;
(ii) Allow interested countries to negotiate bilateral Free Trade
Agreements with the U.S., in particular those that risk graduation.
In addition, Mauritius is also proposing a review of the criteria for
graduation from the per capita Gross National Income to one based on
the share of exports relative to overall U.S. imports from the world.
Position of Mauritius
Mauritius is prepared to negotiate a comprehensive trade agreement with
the U.S. which would be based on the core values of the new U.S. Trade
Policy Agenda. Mauritius welcomes the idea of a Worker-Centred Trade
Policy as we are compliant with several International Labour Convention
(ILO) Agreements. A comprehensive and ambitious Free Trade Agreement
would enable the U.S.-Mauritius trading relationship to evolve on a
predictable basis and be conducive to investment promotion.
______
National Electrical Manufacturers Association
1300 North 17th Street, Suite 900
Rosslyn, VA 22209
The National Electrical Manufacturers Association (NEMA) represents
more than 325 electrical equipment and medical-imaging manufacturers
that make safe, reliable, and efficient products and systems. Member
companies support more than 370,000 American manufacturing jobs in
6,100 locations across all 50 states. NEMA companies play a key role in
transportation systems, building systems, lighting, utilities, and
medical-imaging technologies and will thereby serve a critical role in
the implementation of the recently enacted Infrastructure Investment
and Jobs Act (IIJA). These industries produce $130 billion in shipments
and $38 billion in exports of electrical equipment and medical imaging
technologies per year.
President Biden's 2022 Trade Policy Agenda outlines key accomplishments
of the Administration in its first year in office, including important
information about how the Administration is advancing a worker-centered
trade policy that ensures the benefits of trade reach everyone. The
electroindustry has a robust domestic manufacturing base and shares
with the Administration the fundamental goal of creating well-paying
American jobs and shoring up our domestic supply chains.
NEMA supports a comprehensive approach to international trade policy
that results in fair and open global markets. NEMA believes in global
free enterprise based on solid legal infrastructure and due process to
define and protect property rights as well as negotiate and ensure
adherence to international trade agreements. NEMA strives to eliminate
barriers to international trade such as tariffs, quotas, and technical
regulations that unfairly limit market access. NEMA works with
governments and international organizations to strengthen property
rights protections and enforcement. With those objectives in mind, NEMA
submits a statement for the record to highlight three key areas of
focus for the organization as the Committee considers the Biden
Administration's 2022 Trade Policy Agenda.
U.S. leadership in International Standards Setting Organizations
As USTR continues its work to engage with key trading partners and
multilateral institutions, NEMA urges the Administration to address
growing concerns about declining U.S. involvement and influence in
multilateral standards setting organizations. Participation in
development processes and technical standards setting bodies are
crucial to preserving and expanding international market access for
U.S. companies. Although the United States has historically been a
leader in these fora, China has increased its membership and leadership
participation in recent years.\1\ Further, as Congress continues to
deliberate on a path forward for pending competitiveness legislation it
has the opportunity to provide incentives to support U.S. participation
in international standards organizations. The House COMPETES Act
codifies the National Institute of Standards and Technology's role as a
convenor and federal coordinator in international standard setting and
includes a pilot program for grants to small businesses, nonprofits,
and universities to participate in international standards setting.
Congress and the Administration should consider providing additional
support to all U.S. businesses, as well as relevant trade associations
to support U.S. involvement and capacity building given the key roles
these organizations play in establishing international manufacturing
standards.
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\1\ https://www.lawfareblog.com/what-us-competition-and-innovation-
act-gets-right-about-standards.
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Access to materials needed to secure the electric grid and support
electrical infrastructure
NEMA believes any effort to bolster national security must not disrupt
the very supply chain that ensures our ability to produce reliable,
resilient, and affordable energy, including electrical transformers in
the U.S. for the grid, as well as for industrial, commercial, and
residential buildings. The supply chain for transformer cores and
laminations is facing unprecedented challenges to meet demand. Over the
past six months, NEMA has been contacted by the respective trade
associations that represent both public and private utilities with
concerns about growing lead-times (in some cases extending well beyond
12 months) for orders for new electrical transformers. The
implementation of the IIJA will only add to this demand. These supply
chain challenges in and of themselves pose an immediate threat to
energy security particularly in the face of severe weather events that
often necessitate the immediate replacement of hundreds of
transformers. As the Administration receives requests to impose
policies that would reduce U.S. imports of downstream GOES products
from Canada and Mexico, we urge the Administration to consider the
current state of the supply chain and high demand for this material and
potential detrimental impacts on U.S. citizens, our domestic base, and
the nation's infrastructure goals.
Section 301 Tariff Relief
NEMA member companies continue to experience supply chain disruptions,
labor shortages, and resulting inflationary pressures which have
resulted in disrupted domestic production, reduced sales, increased
consumer costs, and delayed delivery of critical products. If these
concerns are not addressed, they will have a negative impact on
implementation of the IIJA. These supply chain issues require both
near-term and long-term solutions and Congress and the Administration
can help with both.
In the immediate term, the Biden Administration should use the looming
expiration of List 1 of the Trump Administration's Section 301 tariffs
on Chinese imports as an opportunity to conduct a robust, thorough, and
transparent review of the effectiveness of the full list of tariffs put
in place in achieving their objectives and their impact on U.S.
importers and consumers of electrical goods. And while USTR announced
its decision to reinstate certain previously granted and extended
product exclusions pursuant to the China Section 301 investigation last
week, NEMA urges the Administration to fully restart and reform the
Section 301 tariff exclusions process in a way that has clear
eligibility standards for applicants, is transparent, and fair to all
who apply.
______
Outdoor Industry Association
P.O. Box 21497
Boulder, CO 80308
April 7, 2022
Chairman Ron Wyden Chairman Richard Neal
U.S. Senate U.S. House
Committee on Finance Committee on Ways and Means
219 Dirksen Senate Office Building 1102 Longworth House Office
Building
Washington, DC 20510 Washington, DC 20515
Ranking Member Mike Crapo Ranking Member Kevin Brady
U.S. Senate U.S. House
Committee on Finance Committee on Ways and Means
219 Dirksen Senate Office Building 1102 Longworth House Office
Building
Washington, DC 20510 Washington, DC 20515
Dear Chairman Wyden, Chairman Neal, Ranking Member Crapo, and Ranking
Member Brady:
On behalf of Outdoor Industry Association (OIA), we write to express
the critical need for inclusion of trade provisions in the reconciled
version of H.R. 4521--The America Competes Act of 2022 \1\ (``COMPETES
Act'') and S. 1260--The United States Innovation and Competition Act of
2021 \2\ (``USICA''). Outdoor companies continue to face exorbitant
transportation costs, increases in raw material prices, and other
inflationary pressures. Action on important trade provisions is
necessary to sustain their U.S. operations, preserve their ability to
create U.S. jobs, and develop innovative new products.
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\1\ https://pascrell.house.gov/news/documentsingle.aspx.
\2\ https://www.congress.gov/bill/117th-congress/senate-bill/
1260?q=%7B%22search%22%3A%
5B%22united+states+innovation+and+competition+act%22%2C%22united%22%2C%2
2states%22
%2C%22innovation%22%2C%22and%22%2C%22competition%22%2C%22act%22%5D%7D&s=
5
&r=1.
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Specifically, we urge:
Retroactive reauthorization of Generalized System of Preferences
(GSP) for at least 7 years, with the addition of certain footwear not
made in the United States;
Passage of Miscellaneous Tariff Bills (MTBs) as recommended by
the International Trade Commission (ITC) with the reauthorization of
future cycles that preserves the eligibility of finished goods;
Amending Section 321 de minimis entry to grant U.S. Foreign
Trade Zones (FTZs) parity with foreign warehouses and operations; and
The reinstatement of previously granted exclusions to the China
301 tariffs and the establishment of a new exclusion process.
The outdoor recreation economy is a $689 billion economic engine
supporting 4.3 million American jobs. Outdoor companies produce
innovative, high-tech apparel, footwear, and equipment designed to
enhance the outdoor experience. As we emerge from the COVID-19
pandemic, relief from certain tariffs is essential to helping our
businesses grow and take advantage of a surge in interest in the
physical and mental health benefits of outdoor recreation.
GSP has been instrumental to our industry, particularly as we move
production out of China. Congress agreed on a bipartisan basis to
remove the statutory exclusion for travel goods--such as backpacks,
sports bags, and hydration packs--in 2015. Since that time, China's
market share has plummeted, with $5 billion of trade in travel goods
shifting to GSP countries. Annual duty savings have been in the range
of $300 million, leading to lower costs, new U.S. jobs, and new product
development.
We appreciate and support bipartisan efforts to modernize country
eligibility criteria for GSP participation. These are consistent with
our industry's values. We believe the addition of certain footwear not
made in the United States would create a powerful incentive for
countries to meet these new criteria and remain in the program--and we
urge you to include such a provision in any renewal of GSP.
We also support passage of the MTBs included in USICA, which were
recommended by the U.S. ITC after rigorous vetting by the Commerce
Department and Customs and Border Protection (CBP). These provisions
will only be in place until the end of 2023, leaving little time for
companies to benefit from them. Because of the harm to U.S. industry
due to the delay in enacting MTBs and their limited duration, we urge
Congress to make all provisions, both extensions and new MTBs,
retroactive to January 1, 2021.
In addition, we urge you to authorize future MTB rounds that maintain
eligibility of finished products that have been included in MTBs since
their inception. Each proposed MTB undergoes a thorough vetting process
that ensures duty relief is only granted for products that do not
compete with domestic production. Removing eligibility for finished
products would eliminate a critical tool for outdoor companies and
inhibits the ability to use duty savings to create new jobs, develop
new products, and support economic growth. We oppose any MTB process
that does not include finished goods.
Next, we strongly urge you to provide parity for U.S. FTZs vis-a-vis
offshore facilities relating to e-commerce fulfillment. Failure to
change the law to allow Section 321 de minimis entry from U.S. FTZs
will only encourage more U.S. companies to move their U.S. e-commerce
distribution operations offshore and result in the loss of tens of
thousands of American jobs. The COMPETES Act fails to address this
problem; in fact, it de facto treats U.S. FTZs like facilities in
China.
Finally, while we continue to call on the administration to negotiate
an agreement with China that will lift all punitive tariffs, we urge
you to reinstate all previously granted Section 301 exclusions, provide
for the refund of such tariffs paid, and establish a new exclusion
process.
Tariff relief from GSP and MTBs, along with a meaningful exclusion
process from Section 301 tariffs on imports from China, will help
sustain the strong economic recovery. Moreover, eliminating the
economic advantage for distributing e-commerce orders from offshore
warehouses and companies by allowing Section 321 de minimis entries
from U.S. FTZs will prevent further American job losses in the e-
commerce distribution sector.
We appreciate your attention to our letter and your support for prompt
action on GSP, MTBs, de minimis for FTZs, and Section 301 tariffs.
Sincerely,
Outdoor Industry Association
Advanced Elements, Inc. Nite Ize, Inc.
ALPS Brands Oberalp North America
Bates Oboz
Bell Helmets Osprey
Black Diamond Equipment Ltd. Outdoor Element
Bridge City Kid prAna
CamelBak QuietKat
Camp Chef REI Co-op
Cat Footwear Sanitas Sales Group
Chaco Saucony
Cheers Suz Simms Fishing Products
Columbia Sportswear Company SOREL
Full Circle Ocean Gear LLC Sperry
Giro Stride Rite
Global Cases/XPack Sweaty Betty
Harley-Davidson Footwear Swen Products, Inc.
Helen of Troy Swrve, Inc.
Hush Puppies Tiara Yachts
Hydro Flask Toad&Co
HYTEST Turtle Fur
Kahtoola U.S. Hang Gliding and Paragliding
Association
Keds VF Corp.
L.L.Bean Vista Outdoor
La Sportiva N.A., Inc. W.L. Gore and Associates
LaCrossse Footwear, Inc. Westfield Outdoors
Merrell Wolverine World Wide Inc.
Mountain Hardwear
Mountain Shades, Inc.
NEMO Equipment
[all]