[Senate Hearing 115-724]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 115-724

                      CURRENT AND PROPOSED TARIFF
                      ACTIONS ADMINISTERED BY THE
                         DEPARTMENT OF COMMERCE

=======================================================================

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 20, 2018

                               __________


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
                                     

            Printed for the use of the Committee on Finance


                               __________


                 U.S. GOVERNMENT PUBLISHING OFFICE

38-578--PDF             WASHINGTON : 2019










                          COMMITTEE ON FINANCE

                     ORRIN G. HATCH, Utah, Chairman

CHUCK GRASSLEY, Iowa                 RON WYDEN, Oregon
MIKE CRAPO, Idaho                    DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas                  MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming             BILL NELSON, Florida
JOHN CORNYN, Texas                   ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota             THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina         BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia              SHERROD BROWN, Ohio
ROB PORTMAN, Ohio                    MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania      ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina            CLAIRE McCASKILL, Missouri
BILL CASSIDY, Louisiana              SHELDON WHITEHOUSE, Rhode Island

                     A. Jay Khosla, Staff Director

              Joshua Sheinkman, Democratic Staff Director

                                  (ii)
                                  
                                  
                                  
                                  


                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman, 
  Committee on Finance...........................................     1
Wyden, Hon. Ron, a U.S. Senator from Oregon......................     4

                         ADMINISTRATION WITNESS

Ross, Hon. Wilbur L., Secretary, Department of Commerce, 
  Washington, DC.................................................     5

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Hatch, Hon. Orrin G.:
    Opening statement............................................     1
    Prepared statement...........................................    41
Ross, Hon. Wilbur L.:
    Testimony....................................................     5
    Prepared statement...........................................    43
    Responses to questions from committee members................    45
Wyden, Hon. Ron:
    Opening statement............................................     4
    Prepared statement...........................................    91

                             Communications

Acuity Brands....................................................    93
Flexible Packaging Association...................................    95
Taxpayers Protection Alliance....................................    98

                                 (iii)




 
                      CURRENT AND PROPOSED TARIFF
                      ACTIONS ADMINISTERED BY THE
                         DEPARTMENT OF COMMERCE

                              ----------                              


                        WEDNESDAY, JUNE 20, 2018

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 9:11 a.m., 
in room SD-215, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch (chairman of the committee) presiding.
    Present: Senators Grassley, Crapo, Roberts, Enzi, Cornyn, 
Thune, Isakson, Portman, Toomey, Heller, Scott, Cassidy, Wyden, 
Cantwell, Nelson, Carper, Cardin, Brown, Bennet, Casey, Warner, 
McCaskill, and Whitehouse.
    Also present: Republican staff: Brian Bombassaro, 
International Trade Counsel; Rory Heslington, Professional 
Staff Member; Shane Warren, Chief International Trade Counsel; 
and Jeffrey Wrase, Deputy Staff Director and Chief Economist. 
Democratic staff: Elissa Alben, Senior Trade and 
Competitiveness Counsel; Roberta Daghir, Detailee; Michael 
Evans, General Counsel; Joshua Sheinkman, Staff Director; and 
Jayme White, Chief Advisor for International Competiveness and 
Innovation.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
              UTAH, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The committee will come to order.
    I want to say good morning and welcome to everybody who is 
here today at this morning's hearing on current and proposed 
tariff actions administered by the Department of Commerce.
    Naturally, I would like to welcome Secretary Ross in 
particular. I want to thank you, Mr. Secretary, for joining us.
    I intend to focus this morning on three investigations 
self-
initiated by the Department of Commerce under section 232 of 
the Trade Expansion Act of 1962.
    It should come as no surprise that many of us on the 
committee have concerns about the process, effects, and 
strategy behind these investigations and resulting actions. 
That includes the serious problems that Senator Wyden and I 
raised in April about the product exclusion process, a process 
that still needs significant improvement.
    In February, the Department of Commerce completed two of 
its section 232 investigations, one on imports of steel and the 
other on aluminum products. As a result of those reports, the 
United States is currently imposing tariffs of 25 percent on 
steel products and assessing tariffs of 10 percent on aluminum 
products. Combined, these tariffs directly affect almost $50 
billion worth of goods while also affecting many billions of 
dollars more in downstream goods.
    American manufacturers are already suffering the 
consequences of increased costs and decreased supply of steel 
and aluminum inputs. Take, for example, Bish's Steel 
Fabrication. Bish's makes custom industrial equipment in my 
hometown, Salt Lake City, UT, and sells to customers in the 
United States and around the globe.
    Bish's has been in business since 1945, but because of the 
section 232 tariffs, they are worried about their future. Steel 
prices are going up; not just foreign steel subject to tariffs, 
but also U.S. steel. As a consequence, Bish's has lost its 
competitive edge against foreign manufacturers, and the company 
tells me that contracts for future work have all but dried up.
    And Jack's Ornamental Iron, another Salt Lake City 
manufacturer, saw its steel costs jump 20 percent in less than 
2 weeks since the steel tariffs were announced.
    These companies are small, Mr. Secretary, but they are 
important. They are important sources of jobs in our 
communities, and they are particularly vulnerable to the 
consequences of the steel and aluminum tariffs.
    On the other end of the scale, multibillion-dollar 
investments for new manufacturing plants that employ thousands 
of workers are also being put at risk.
    As you are aware, Mr. Secretary, the Shell Pennsylvania 
Chemical Project is one of the largest economic development 
projects in the United States. I grew up in Pittsburgh, and I 
know how important this development is for western 
Pennsylvania.
    The project is expected to employ 6,000 construction 
workers and 600 full-time employees once the facilities are 
operational. Unfortunately, this project is being slowed down 
and these new jobs are being delayed because essential parts 
are being stopped by Customs as a result of the steel quotas.
    Now, these parts are individually customized under 
contracts concluded years ago and are suddenly being stopped at 
the port of Long Beach because they contain steel from Brazil.
    I know delaying these construction and manufacturing jobs 
and even putting some of these jobs at risk was not the intent 
of the actions on steel, but it is the inevitable result.
    The negative consequences of the steel and aluminum tariffs 
are not isolated to manufacturing. Rather, the effects have 
spread throughout the economy. Take, for example, American 
farmers who are bearing the brunt of retaliation for these 
actions.
    As many of us know, Mexico is the largest export market for 
American pork, including pig farmers in Utah. Recently, Mexico 
announced it will impose tariffs of 20 percent on U.S. pork in 
retaliation for U.S. steel and aluminum tariffs.
    China, our second-largest overseas market for American 
pork, is increasing tariffs by 25 percent. I just do not see 
how the damage imposed on all of these sectors could possibly 
advance our national security.
    The steel and aluminum tariffs distract from the real trade 
issue that must be addressed. The President has repeatedly 
stated that Chinese mercantilist policies harm U.S. companies 
and the U.S. economy, something with which I fully agree. 
However, these steel and aluminum tariffs utterly fail to 
address Chinese overproduction.
    Of the steel and aluminum products targeted, only around 5 
percent are from China. Let me repeat that: only 5 percent are 
from China.
    In reality, these actions target our allies, particularly 
Canada and the European Union, with whom our trade in steel and 
aluminum products far exceeds our trade with China.
    This is not just my opinion. The U.S. Department of Defense 
has stated that it is, quote, ``concerned about the negative 
impact on our key allies,'' unquote, of the steel and aluminum 
actions recommended by the Department of Commerce, particularly 
global tariffs and the use of quotas.
    The lessons of the steel and aluminum tariffs are clear: 
these tariffs do not support U.S. national security. Instead, 
they harm American manufacturers, damage our economy, hurt 
American consumers, and disrupt our relationship with our long-
time allies, while giving China a free pass.
    That is why I was stunned to hear on May 23rd that the 
Department of Commerce has initiated another investigation 
under section 232, this time into the national security 
implications of imports of automobiles and auto parts.
    This investigation covers more than $200 billion worth of 
trade, four times larger than that under the steel and aluminum 
investigations combined.
    A car is not a can of soup. It is not a can of soup, Mr. 
Secretary.
    For most American families, their car is the second-biggest 
purchase they make, and many require a car to get to their 
jobs. It is a significant financial commitment for most 
families, often paid for with debt, and I am shocked that 
anyone would consider making it more expensive.
    The average price of an imported car is $23,200. If the 
Department of Commerce were to recommend a 25-percent tariff on 
cars, it would be recommending raising the cost of an average 
imported car for an American family by $5,800.
    To put that in perspective, the median household income in 
the United States is just over $59,000. That means that roughly 
10 percent of the median household income could be erased 
purely by the additional cost of a single car.
    That is why I call tariffs a tax on American families. And 
the Tax Foundation agrees. It estimates that auto tariffs could 
result in a $73-billion tax increase on American consumers and 
businesses, erasing many of the benefits of tax reform passed 
earlier this Congress.
    Not only would these tariffs cost American families, but 
they would also put American jobs at risk. The Peterson 
Institute calculates that auto tariffs could cause 195,000 
workers to lose their jobs. Now, that is nearly 200,000 people 
out of work, and that is before other countries retaliate 
against American auto manufacturers, which support U.S. jobs by 
exporting $65 billion worth of autos per year.
    And once again, though supposedly pursued for national 
security reasons, tariffs on cars and trucks target our closest 
allies--namely Europe, Canada, Mexico, Japan, and South Korea--
while allowing China to continue its predatory trade policies 
undeterred.
    Mr. Secretary, as you consider these tariffs, know that you 
are taxing American families, you are putting American jobs at 
risk, and you are destroying markets, both foreign and 
domestic, for American businesses of all types, sorts, and 
sizes.
    I hope you will consider that carefully as your department 
conducts its investigation into the national security threat 
from imported automobiles and auto parts.
    With that, Senator Wyden, please go ahead with your 
statement.
    [The prepared statement of Chairman Hatch appears in the 
appendix.]

             OPENING STATEMENT OF HON. RON WYDEN, 
                   A U.S. SENATOR FROM OREGON

    Senator Wyden. Thank you very much, Mr. Chairman. And thank 
you for holding this hearing.
    If you follow the news on trade, you know that Secretary 
Ross is a key Trump trade official negotiating with China, 
determining who gets tariff exemptions and potentially 
reshaping the automobile industry for decades to come.
    In the last few days, news reports about Secretary Ross 
uncovered a short sale of stock in a Kremlin-tied shipping 
firm. New developments show that while Secretary Ross was 
negotiating on trade with China, he may have maintained 
financial ties with firms connected to the Chinese government.
    A fund controlled by the Ross family reportedly owns a 
major international manufacturer of auto parts. This 
unfortunately is not a one-off story. Virtually every day in 
the news, you get whacked over the head with another report 
about Trump officials violating ethics rules or coming into 
questionable windfalls.
    You do not need a thick government rulebook to recognize 
flagrant conflicts of interest when they are brought into 
public view. And when it comes to trade, Americans have a right 
to know it is their best interests Trump administration 
officials are looking out for at the negotiating table. The 
stories that we have seen in the last few days call that into 
question.
    Now, here is why these issues are so important. I am 
onboard with several of the administration's top trade 
priorities.
    First, tougher enforcement of our trade laws--long overdue, 
colleagues.
    Second, cracking down on China ripping off American 
technology and jobs--also long overdue.
    Updating NAFTA--you know, NAFTA was written decades ago, 
and clearly it needs an update.
    Those are challenges that demand action, but taking action 
gets harder when you are surrounded by the specter of conflict 
of interest. That undermines the credibility of our 
negotiators, it certainly makes it harder to work in a 
bipartisan way in Congress, and it makes it less likely the 
American people will accept the end results.
    It is also frustrating to watch as the administration's 
trade moves seem more like knee-jerk impulses than any kind of 
carefully thought-out strategy. Its most obvious accomplishment 
on trade so far is sowing a lot of chaos that has united our 
allies and China against us, that is, unless you rank that 
behind the rescue of ZTE, an action that, in my view, has 
compromised, has sold out American security and gotten nothing 
in return.
    Chaos has consequences, and you do not have to take it from 
me.
    Tariffs on steel and aluminum imports are in place, but the 
process of determining what imports will be excluded is in a 
state of disarray. Businesses from sea to shining sea that are 
filing for those exclusions are waiting for the Commerce 
Department to do its job.
    So I have heard from potato farmers in my home State of 
Oregon who export nearly a third of what they grow and now will 
face tariffs in key markets like Mexico. I have heard from 
Pacific Northwest cherry growers who have nearly 1.5 million 
boxes of cherries ready to ship to China. They are worried 
those cherries are going to end up stuck on the dock or rotting 
in a warehouse due to China's retaliation. Small brewers find 
their costs skyrocketing when they need new can lines and 
holding tanks, which, of course, are largely made of steel and 
aluminum.
    Now, a strong, well-planned strategy on trade would bring 
the full economic might of the United States and our allies to 
bear on China's trade cheating. That would give confidence to 
American farmers, manufacturers, and service firms, rather than 
creating yet more bedlam and chaos. And I believe there would 
be bipartisan interest here in the Senate in fresh policies 
that would strengthen trade enforcement and protect American 
workers.
    So today has to be a beginning of the end of the chaos. I 
hope that we will see more from the administration in the days 
ahead. I think it is priority business to get a clear sense of 
what is going to be done to resolve these questions we hear 
about from our constituents every single day. And those will be 
the questions I will pose to Secretary Ross.
    And I appreciate him being here, and I look forward to 
questions.
    The Chairman. Thank you, Senator.
    [The prepared statement of Senator Wyden appears in the 
appendix.]
    The Chairman. I would like to extend a warm welcome to 
Secretary Wilbur Ross for coming here today. Secretary Ross was 
sworn in as the 39th Secretary of Commerce on February 28th, 
2017 and has been the principal voice of business in the Trump 
administration.
    Secretary Ross, it is a pleasure to have you here today. 
And please proceed with your opening statement.

  STATEMENT OF HON. WILBUR L. ROSS, SECRETARY, DEPARTMENT OF 
                    COMMERCE, WASHINGTON, DC

    Secretary Ross. Chairman Hatch, Ranking Member Wyden, and 
members of the committee, thank you for inviting me here today 
to discuss the actions we have taken to assure the continued 
viability of our important steel and aluminum industries.
    The reports I have submitted to the President this past 
January pursuant to section 232 of the Trade Expansion Act of 
1962 found that steel and aluminum imports threaten to impair 
our national security. The President determined that tariffs 
are the necessary means to address these threats. As a result, 
the President signed proclamations on March 8th imposing a 25-
percent tariff on steel imports and a 10-percent tariff on 
aluminum imports.
    The tariff actions taken by the President are necessary to 
revive America's essential steel and aluminum industries. They 
have been harmed by imports to the point that allowing imports 
to continue unchecked threatens to impair our national 
security.
    The tariffs on steel and aluminum are anticipated to reduce 
imports to levels needed for these industries to achieve long-
term viability.
    In the short term, since the imposition of the section 232 
tariffs, industry already has started taking actions to restart 
idled facilities. Idled steel and aluminum capacity is being 
restarted as we sit here, in Illinois, Ohio, South Carolina, 
Missouri, and Kentucky. Several other companies have also 
announced new investments in these industries in Oklahoma, 
Florida, Missouri, and Texas.
    In addition, the President authorized the establishment of 
a mechanism for U.S. parties to apply for exclusions from the 
tariff for specific products based on demand that is unmet by 
domestic production or for specific national security 
considerations.
    Today we are announcing our first determinations on 98 
exclusion requests for steel products, granting 42 and denying 
56. Commerce has received more than 20,000 steel and aluminum 
exclusion requests, including resubmissions, and has posted 
more than 9,200 for public review and comment.
    Commerce also has received more than 2,300 objections to 
exclusion requests. Review of exclusion requests and related 
objections is being conducted, as it must be, on a case-by-case 
basis. But we have made some major changes in reforming and 
improving the process. And I will describe a couple now.
    First of all, we will be accelerating the processing of 
exclusion requests by immediately granting those which are 
correctly submitted in full, to which no objections have been 
received during the public comment period.
    Commerce is making an unprecedented effort to process the 
requests expeditiously. We also are developing a list of 
downstream products that have been hurt by imports since the 
tariffs have been imposed. And we are incorporating as many of 
these as are logical to the list we are recommending for 
inclusion in the 301 tariff listing of $200 billion that will 
be released shortly. We have already found some 50 products 
that will be included in that list.
    The public comment period on the interim final rule for 
these decisions ended on May 18th, and we are reviewing the 
comments received to assess whether any further revisions to 
the process are necessary.
    Finally, on May 23rd, after a conversation with the 
President, I initiated a proceeding under section 232 to 
determine whether imports of automobiles and automotive parts 
into the United States threaten to impair the national 
security. This investigation will examine the United States' 
production capabilities and the technologies needed for 
projected national defense requirements, as well as the adverse 
effects of foreign competition on our internal economy.
    In conclusion, this administration is standing up for 
American families, American businesses, and American workers by 
taking action to reduce imports that threaten our national 
security.
    I thank you, and I look forward to answering questions from 
the members of the committee.
    The Chairman. Well, thank you, Mr. Secretary.
    [The prepared statement of Secretary Ross appears in the 
appendix.]
    The Chairman. Let me just start off with the section 232 
statute, which requires that the Secretary of Commerce consider 
the domestic production that is needed for projected national 
defense requirements.
    When you decided to self-initiate a section 232 
investigation into automobiles and auto parts, what were the 
projected national defense requirements for these products that 
you had identified?
    Secretary Ross. Well, as you know, the investigation, Mr. 
Chairman, has just begun, so we do not have the detailed 
answers to any of those questions.
    What we have done is, as required by section 232, I 
immediately sent a notification letter to General Mattis as 
Secretary of Defense asking for his inputs, just as we had 
under the steel and aluminum investigations.
    And as you are aware, in the case of steel and aluminum, 
General Mattis wrote back to us that he accepts the proposition 
of the threat to national security arising from the imports of 
steel and aluminum.
    I have no idea at this early stage what his attitude will 
be on the automotive sector, but it is a factor that we 
definitely will consider as required by the statute and, even 
more, as required by good common sense as we consider the 
automotive and auto parts environment.
    The Chairman. Okay. Product-based exclusions from the steel 
and aluminum tariffs are available in two circumstances: when a 
product is not available domestically in the quality or amount 
needed and when national security considerations warrant an 
exclusion.
    However, I understand that the Commerce Department is 
refusing to grant any exclusions from the quotas that limit the 
volume of steel and aluminum products that Americans may import 
from certain countries. What is the national security 
justification for refusing to grant exclusions from quotas 
where, in the same circumstances, the same product would be 
excluded from tariffs?
    Secretary Ross. Thank you for that question, Mr. Chairman.
    The President's proclamation does not authorize us to grant 
exclusions from quotas. There are very few countries that have 
quotas in any event, the most important of which is South 
Korea, and they do have a quota which is equal to 70 percent of 
the average shipments, product by product, from 2015 through 
2017.
    In addition, Brazil and Argentina have agreed to quotas, 
and so those three are fundamentally the quotas that exist.
    We are taking into consideration the requests that have 
been made for exclusions based on quotas that have already been 
exceeded or shortly will. The problem is that a number of 
countries rammed in a huge amount of product prior to the 
President's decisions and therefore have put in much more than 
they had in the prior year, so there is an intellectual 
challenge as to whether or not to reward those countries that 
were trying to game the system.
    Nonetheless, we are giving real consideration to requesting 
the President to consider whether these similar exclusions 
should be granted to those countries subject to quota as 
opposed to the ones we are granting to those countries that are 
subject to tariff rates.
    The Chairman. The process that the Commerce Department is 
administering for businesses to request product-based 
exclusions from the steel and aluminum tariffs has had, in my 
opinion, many serious flaws, and problems continue to surface.
    For instance, some have been subject to objections that, in 
their view, contain inaccurate, incomplete, or misleading 
claims, and they would like to rebut those claims. However, I 
understand that the Commerce Department has provided no formal 
channel for submitting rebuttals on regulations.gov where all 
of the requests and objections must be filed.
    Will the Commerce Department accept rebuttal comments on 
objections? And if so, will petitioners be able to submit their 
rebuttals through the regulations.gov website?
    Secretary Ross. I would like to put up chart number one, 
which will describe to you some statistics on the section 232 
processing.
    I hope it is large enough that the type can be viewed. But 
on the off chance that your vision is as bad as mine, I will 
also read you the information.
    By type of submission in the case of steel, we have 
received 20,003 exclusion requests, and in the case of 
aluminum, 2,503, totaling 22,506.
    Against those, there have been objections filed in the case 
of 3,939 items in steel and 98 items in aluminum, for a total 
of 4,037 exclusion objections to the filing.
    In terms of comments, we have received during the comment 
period 383 comments on steel, 51 comments on aluminum, for a 
total of 434.
    So the total submissions in the case of steel are 24,325, 
in the case of aluminum, 2,652, for a grand total of 26,977.
    Of the exclusion requests, we have posted 8,168 in the case 
of steel. Of those, we have rejected 2,513. The rejections are 
in addition to the ones posted. We have pending 9,310, for a 
total of 20,003.
    In the case of aluminum, we have posted 1,828. We have 
rejected 420. We have pending 253, for a total of 2,503.
    That comes to the same total--22,506--of exclusion 
requests.
    In terms of objections, we have posted 1,765 in the case of 
steel, 52 in the case of aluminum, for a total of 1,817.
    We have rejected 230 in the case of steel, 5 in the case of 
aluminum, total 235.
    We have pending 1,944 in the case of steel, 41 in the case 
of aluminum, total 1,985.
    So the grand totals: There were 3,939 objections filed in 
steel and 98 in aluminum, for a total of 4,037.
    The timing is in chart two.
    These are the steel submissions by week. And you can see, 
or will be able to see in a moment, that there was a big peak 
realized on the week of the 14th of May of this year. In that 
single week, we received 3,175 requests. Those are the large 
blue bars that you see on the chart.
    Those have now tapered off quite a bit. The exclusion 
requests received in the week ended June 11th this year are 
only 1,481.
    In terms of the ones posted, those are the gray bars. And 
you can see that is starting to go down as well, because we are 
eating through the backlog.
    The orange bars are the objections filed. And you will see 
that bar is growing very rapidly.
    As the exclusion requests have become a little bit 
seasoned, the objections come in.
    And then finally, the yellow, very small bars are the 
objection filings posted. So we are pretty well catching up 
with the backlog that was created.
    A similar pattern in aluminum in chart three.
    In the case of aluminum, the requests for exclusion peaked 
in the week ended the 7th of May at 769 that week and have gone 
down to 210 in the most recent week.
    Of exclusion requests posted--that is again the gray bar--
you can see how that is going up. We managed to post in the 
week of June 4th 602.
    The orange bar, again, is objection filings.
    And the yellow bar, the very, very small one, is objection 
filings posted.
    So there is no huge backlog because, as you know, there was 
a mandatory objection period prior to which we could not grant 
anything. So you will start seeing, more or less every single 
day, batches of exclusions being acted upon.
    Based on what we have seen so far, though, there is a high 
probability that relatively few of those will be granted, 
because many of them have no substance and/or have some 
potential substance, but have objections that are well-grounded 
posted against them.
    So I hope that gives you a bit of the feel for both the 
magnitude of the chore in terms of the number of requests 
received and the fact that we are making very good progress in 
dealing with them.
    It is also important to note that under the President's 
proclamation, whatever the date when an exclusion request is 
granted, it is granted retroactive to the date when that 
objection was posted. So even if it takes a few days longer for 
people to be granted an exclusion, they really will not suffer 
meaningful economic harm because it will be made retroactive, 
and whatever tariffs they have paid will be refunded to them 
quite promptly.
    I hope that helps to clarify that part of your question, 
sir.
    Senator Grassley. Senator Wyden, out of my time, could I 
just make an observation after hearing all that?
    It sounds to me like we have a government-run mercantilist 
economy as opposed to a free-market economy.
    The Chairman. Senator Wyden?
    Senator Wyden. Thank you very much, Mr. Chairman.
    Mr. Secretary, look, your charts notwithstanding, America's 
small businesses believe they are being held hostage in a 
bureaucratic twilight zone waiting to see if they are going to 
escape.
    And you do not have to take my word for it, Mr. Secretary. 
Here is what one of the top officials in the Commerce 
Department said this morning in the newspaper. He is quoted as 
saying that the process on these tariff exclusion issues is, 
quote, ``going to be so unbelievably random, and some companies 
are going to get screwed. These people are making multibillion-
dollar unbelievably uninformed decisions.''
    Now, Mr. Secretary, those are not my words; those are the 
words of a top official in your department as of this morning.
    Now, the number of companies--and every single member of 
this committee is hearing from small businesses, every one--the 
number is staggering. You planned on receiving 6,000 
applications for exclusions; so far you have gotten 21,000.
    Now, we are going to review your math today, but as far as 
we can tell, what you have done is going to address something 
like 1 percent of the applications.
    And by the way, adding further concern is, this top 
official, who is quoted this morning, says you have only begun 
training staff on how to process the applications. So every 
week, it just seems to me there is more and more bedlam.
    And I would like to start with a question of whether you 
are satisfied with how the product exclusion process is working 
now. That is a ``yes'' or ``no'' answer. Are you satisfied?
    Secretary Ross. Well, thank you for raising those 
questions.
    First of all, as to this unnamed, anonymous, allegedly 
high-
ranking Commerce official, I do not take very seriously 
comments that are made by people who are probably disgruntled 
for some other reason when they are anonymous. I do not think 
that that is a very good basis for anything.
    But more importantly, on the substance of it, the person is 
totally incorrect in saying we have only begun to train people.
    What is correct is that it took a long time for the 
Congress to give us, through the appropriations process, the 
right to add people as we had requested, and they have not 
given us the full amount that we requested. Between it being 
delayed and smaller than what we had requested, that is why the 
new people, the people who finally we got permission to hire, 
about a million dollars' worth of them, those are the people 
who are being trained.
    So it simply shows this anonymous source is not very well-
informed as to what is actually going on. That is simply wrong.
    Senator Wyden. I can tell that you want to dismiss the 
criticisms, but what he said, Mr. Secretary, is consistent with 
what every single member of this committee is hearing from 
home.
    I have companies that employ hundreds of workers in our 
State making steel pipe fittings, cutting blades for the 
sawmill industry, a wide variety of industrial products caught 
up in this process. I was just home; all I hear are these 
endless stories.
    And I have to tell you, I think it is a real head-slapper, 
and it will certainly be baffling to these small businesses 
that check in with all of us on this committee for anybody to 
say that this process is going well. It is not going well.
    And I think I would like to close with a very specific 
request. As you can see, the chairman and I have been working 
on these matters. And I do not think the improvements that you 
have talked about are going to be adequate.
    I would like to ask you this morning to commit to providing 
this committee on a bipartisan basis within a week a specific 
timetable and specific fixes so that the small businesses and 
the workers who are contacting us can really have a sense of 
what is going to happen.
    Will you make a commitment to do that and get it to us 
within the next week, Mr. Secretary?
    Secretary Ross. I would be happy to send to you within the 
next week our program. But it is impossible to commit to a 
specific timetable when we do not know how many requests are 
yet to come in. So that is one big problem.
    As you can see, there are requests still coming in. But if 
you do the homework, you will find that there are very, very 
few requests that have ended the comment period more than about 
a dozen days without response.
    Senator Wyden. Mr. Secretary, the reason I am asking for 
this plan within a week is, I do not think your department did 
a lot of homework at the front end, which is one of the reasons 
we are having the problems.
    You all planned on receiving 6,000 applications for 
exclusion. So far, you have gotten 21,000. So respectfully, I 
will tell you I do not think enough homework was done at the 
front end.
    I want to make it clear, I am expecting to see within a 
week to the chairman, myself, and all of our colleagues on a 
bipartisan basis an actual timetable on how we are going to get 
this fixed. Because I will tell you, respectfully, nothing I 
have heard this morning sounds like we are going to be on top 
of this anytime soon.
    Thank you, Mr. Chairman.
    The Chairman. Senator Grassley?
    Senator Grassley. Yes. I heard the question by our chairman 
about auto parts, and this relates a little bit to it, but it 
is a little bit more specific.
    The section 232 announcement that the administration 
released May 24th states that it will apply to light-duty autos 
and auto parts.
    Now, many auto parts share the same private code in the 
automotive chapter of the U.S. Harmonized Tariff Schedule with 
other similar products such as heavy-duty trucks, buses, 
construction equipment, agricultural equipment, and industrial 
engines.
    For example, water pumps used in the cooling system of the 
construction equipment are classified as, quote, ``fuel, 
lubricating, or cooling medium pumps for internal combustion 
piston engines,'' end of quote. The Harmonized Tariff Schedule 
code does not differentiate between auto and construction 
equipment parts.
    Is it the administration's intent to impose tariffs of up 
to 25 percent on all these parts for every country around the 
world, even if they do not necessarily go into automobiles?
    Secretary Ross. Well, at this early stage in the 
investigation, we do not have the data to make any of those 
decisions. But the intention is to deal with automotive parts, 
not to deal with parts throughout the economy. I can assure you 
of that.
    But there also has been no decision made as to whether to 
recommend tariffs at all. We are at the early stages of the 
process. We have invited the various participants in the 
industry to make their submissions. They requested some extra 
time, so we gave them an extra week to do so.
    So we are trying to go about this in a very judicious and a 
very open, transparent, and fair manner.
    Senator Grassley. Okay.
    Secretary Ross. We will try our very best to avoid there 
being any unintended consequences, such as the ones you have 
described. And I have taken note of what you said, and we will 
undertake to deal with that as we go through the process.
    Senator Grassley. I think that that would be a pretty 
satisfying answer to manufacturers of other than cars in my 
State.
    Question 2. You mentioned in your testimony that several 
U.S. steel plants are expected to come back online as a result 
of steel and aluminum tariffs. How long do you think it will 
take for production from these facilities to impact and lower 
the price of steel here in the United States by increasing 
supply?
    Secretary Ross. It should be fairly quick. U.S. Steel 
announced a couple of months ago their first restart, which was 
a million tons. They subsequently announced the second restart 
of a million and a half tons. That is 2\1/2\ million tons of 
steel. That is the better part of $2 billion worth of steel 
right there. So it is coming.
    Exactly what month it will come, I do not know. But by 
around the end of the year, that problem should be fairly well-
addressed by most of these new restarts of facilities.
    What has been happening and is a very unsatisfactory thing 
is, there has been a lot of speculative activity--storing 
inventory, withholding product from the market--by various 
intermediary parties. So the price of steel and, for a while, 
the price of aluminum went up far more than is justified by the 
tariffs.
    And so we are starting an investigation into that, trying 
to find out whether there are people who illegitimately are 
profiteering out of the tariffs. There is no reason for tariffs 
to increase the price of steel by far more than the percentage 
of the tariff; and yet, that is what has been happening. That 
clearly is not a result of the tariff; it is clearly a result 
of antisocial behavior by participants in the industry.
    Senator Grassley. My last point is something you do not 
directly deal with, but I want to make this point anyway. It is 
not a question to you, it is just a message I would like to 
have the administration get.
    I realize that section 301 intellectual property 
investigation is not in your jurisdiction, but since you are 
the person here representing the administration, I convey this 
point to you from what I hear from my constituents.
    The impact of the proposed tariff is getting very real. We 
have watched the soybean markets start to collapse from an 
upper-nine-dollar range to a mid-eight-dollar range, yesterday 
down 40 cents I believe.
    As an example, losing $1.25 on national average soybean 
yield of 49 bushels per acre equates to a farmer losing $61.25 
an acre because of these movements.
    Even if farmers do not have to sell their physical crop 
right now, the sudden volatility in the market can increase the 
costs of hedging and, in some cases, require margin calls for 
those who are long in the market.
    I would request you and others in the administration, and 
particularly Peter Navarro, to be aware of the pros and cons of 
the brash statements to the press on these trade issues and be 
very diplomatic with comments.
    Thank you very much, Mr. Chairman.
    Secretary Ross. Senator, I will be happy to relay your 
comments to the parties you described.
    And as you know, the President has directed the Secretary 
of Agriculture to use every power that is at his disposal to 
help the agriculture parties who are adversely affected by 
retaliation.
    But I will communicate what you have said to the White 
House.
    Senator Grassley. We heard the President say that to the 
Secretary of Agriculture. And in the process, all the Senators 
around the table said, ``We do not want money from the 
Treasury; we want markets.''
    Thank you, Mr. Chairman.
    The Chairman. Senator Bennet?
    Senator Bennet. Just to follow up on Chairman Grassley's 
question, what do you mean by that? What do you mean? What are 
you going to make available to our farmers and ranchers? What 
do you propose?
    When Ambassador Lighthizer was sitting there, he said, 
``Your farmers and ranchers have my sympathy, because they will 
be the first people who will suffer retribution if there is a 
trade war.'' And I said, ``They do not need your sympathy; they 
need you to act reasonably.''
    What do you now propose for our farmers and ranchers? What 
do you mean when you say the Secretary of Agriculture should do 
everything he can do--who, by the way, I think opposes these 
policies?
    Secretary Ross. Well, I am not in-detail familiar with all 
of the tools the Secretary----
    Senator Bennet. But how can you not be familiar with them? 
You have come here and testified that that is how you are going 
to solve the issue. It is like describing these steel prices 
that are going straight up like this as antisocial behavior and 
not a result of the tariffs. That is not true.
    Secretary Ross. Well, I disagree with you, Senator.
    Senator Bennet. The antisocial behavior--even accepting 
that description--was certainly provoked by the tariffs, was it 
not?
    Secretary Ross. No, sir.
    Senator Bennet. Would it have existed with no tariffs?
    Secretary Ross. I think they have viewed the tariffs as an 
opportunity for them to profiteer.
    Senator Bennet. Thank you. It is related to the tariffs.
    So what do you propose the Agriculture Secretary should do? 
A policy opposed by my Republican colleagues, but what should 
he do?
    Secretary Ross. Well, it is up to the Secretary of 
Agriculture to decide, because each of the segments of 
agriculture is quite a different segment.
    I think he heard very clearly the comment from the farm 
State representatives that they do not want government aid. 
Well, we have no control over what another country does in 
retaliation, but what the President just did announce to try to 
discourage retaliation, when the Chinese on the 301 announced 
that they would match the $50 billion of product that we have 
put tariffs on with their own $50 billion, the President said 
he would put tariffs on $200 billion. That is a very 
significant number.
    Senator Bennet. It sounds like the beginning of a trade war 
to me, Mr. Secretary.
    And I think the sensitivity maybe on Capitol Hill might be 
that we are looking at a trillion-dollar deficit next year, the 
largest deficit that we have seen outside of a recession or 
outside of a war, because of this administration's policies.
    So my point is, I do not think you are going to have any 
backstop for our farmers and ranchers. And to blindly pursue 
these policies without considering what happens to them, I 
think is a huge mistake.
    I would like to ask you, following on the chairman's 
questions of you, Mr. Secretary, what is it about the Canadian 
steel industry that is a national security interest threat to 
the United States?
    Secretary Ross. The Canadian steel industry is not being 
accused of directly and individually being a security threat.
    Senator Bennet. Well, what is our trade deficit in steel 
with Canada?
    Secretary Ross. We do not have a trade deficit.
    Senator Bennet. We do not?
    Secretary Ross. No, sir.
    Senator Bennet. We have a surplus with Canada in steel?
    Secretary Ross. Yes, sir. We have a surplus in dollars----
    Senator Bennet. Does that surplus----
    Secretary Ross. May I finish my answer?
    Senator Bennet. Sure, of course.
    Secretary Ross. We have a surplus in dollars. We do not 
have a surplus in physical value.
    Senator Bennet. Okay, so----
    Secretary Ross. What happens is steel----
    Senator Bennet. Mr. Secretary, what is the national 
security threat of the trade surplus that the United States has 
with Canada in steel?
    Secretary Ross. The national security implication is, in 
the aggregate, all of the steel.
    Senator Bennet. But why did you put a tariff on--what is 
the national security basis for the tariff that you have placed 
on Canada?
    I understand what we are supposed to be doing with China. I 
do not understand why the President is not focused on it. I do 
not understand why he is excluding ZTE. I do not understand it.
    What is the national security rationale for putting a 
tariff on the Canadian steel industry with whom we have a trade 
surplus?
    Secretary Ross. If you would let me finish the answer----
    Senator Bennet. I will.
    Secretary Ross [continuing]. I will try to do so. The 
reason the tariff has been put on essentially all countries, 
most of whom are friendly countries and have good relations 
with us and some others which also have surpluses with us, the 
reason it has to be a global solution is, if you just looked at 
the raw data, you would not think China is a problem for the 
U.S., because what they have been doing is masking their 
exports to us by shipping them through other countries.
    So the raw data, if you just believe the raw numbers, China 
is shipping less to us than they did 5 years ago.
    The reality is quite to the contrary.
    They are disrupting the global steel markets. They are 
causing both direct and indirect damage to it. So we have to do 
it on a global basis.
    Senator Bennet. I am----
    Secretary Ross. I am not quite finished, sir.
    Senator Bennet. I am sorry.
    Secretary Ross. The good news is, that as a direct result 
of the 232s, suddenly Europe is enacting safeguards against 
steel dumping into Europe. They did not do much before. Canada 
is taking action. Japan for the first time has created an 
enforcement body within METI to deal with the problem.
    The only way we are going to solve the global steel 
overproduction and overcapacity is by getting all the other 
countries to play ball with us. And while they are complaining 
bitterly about the tariffs, the fact is they are starting to 
take the kind of action which, if they had taken sooner, would 
have prevented this crisis.
    The Chairman. Senator, your time is up.
    Senator Roberts?
    Senator Roberts. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for coming today.
    I know you expect me to focus on tariffs, as ably described 
by my colleague from Colorado. And putting agriculture 
commodities in a retaliation bullseye, that is an ongoing and 
very critical challenge for everybody in farm country.
    But I would like to start off my questions by providing you 
with an update on the effects that the steel and aluminum 
tariffs are having in Kansas and locally.
    First, I want to let you know our wheat harvest has just 
started. The expected total will be the lowest in 40 years. We 
are in a rough patch.
    Yesterday, the closing price in Dodge City--here is the 
farm report--for wheat was down about 70 cents per bushel, corn 
down about 3 cents, sorghum down about 4 cents.
    By the way, I was in my office when the decision was made 
on the solar panels and the washing machines. Rather, I was not 
in my office, I was at the White House when that happened. And 
the sorghum producers were there, and they lost 80 cents on the 
dollar and, you know, there were more problems with that as we 
continued.
    Soybeans down about 20 cents. That would have been worse if 
they had not rebounded over the course of the day.
    We usually have our wheat exported to Mexico. I am talking 
about ``we,'' the wheat producers in Kansas. We have wheat on 
the ground from last year's crop. This year's crop, as I said, 
was the lowest in 40 years.
    Mexico is buying their wheat from Argentina, their corn 
from Brazil. That is the problem. We could be in a situation 
where we would lose that market and we would not be a reliable 
supplier. Once you do that, you are in a lot of trouble in the 
trade business.
    But I want to talk about--recently the owner and operator 
of Shield Agricultural Equipment, Mike Bergmeier, contacted me 
about the rising costs his business is experiencing due to 
steel tariffs. This is just one example. I guess he is in 
exclusion purgatory with one of the 42,000 you are trying to 
deal with.
    But Shield Ag is a small business in South Hutchinson, KS. 
It employs 42 people. The company designs and manufactures and 
distributes tillage tools and hardware. His company uses steel 
from Manitoba, Canada to make their Shield V blades, a key 
component of blade plows. Farmers use this equipment for 
conservation efforts all across the High Plains.
    The steel is not available from any other mill in the 
United States. And due to tariffs on steel, Shield Ag's cost of 
production for this single replacement blade is $85,000.
    Shield Ag has submitted a steel exemption request, but has 
yet to see it posted on the regulation website. I think every 
member here has already mentioned that. It is a cumbersome and 
very slow exclusion process. And I know you need people, and I 
know you need funds to pay the people.
    In the absence of an exemption, Shield Ag will have no 
choice but to pass the rising costs of production on to their 
customers, primarily farmers and ranchers. They do not want to 
do that, and they are in no situation to pay for it.
    What will be the impact of tariffs on steel and aluminum? 
Well, Mike Bergmeier knows, as do many small and medium-sized 
enterprises that are seeing price increases now and have been 
for months. I think a case can be made that these businesses 
are paying the price for the administration's negotiating 
strategy.
    Secretary Ross, I think it is imperative that you and your 
department understand the current impact, not only with regards 
to farmers and ranchers and the entire ag industry, but also 
the small-business community, the so-called little guy.
    So, when Mike called and talked to my staff, he asked, 
``Who can I call? What can I do?''
    I talked to him. I sympathized with him. But obviously, you 
can only do so much as a Senator and also the chairman of the 
Ag Committee.
    I told him about the hearing today. And he made a request 
and I made a request to you earlier--and I appreciate your 
response--and that is that you give Mike Bergmeier a call so 
you can hear firsthand the tough choices that small and medium-
sized businesses are making due to these tariffs.
    He gets up every morning at 5:30. That would be 6:30 our 
time. I know your time is extremely valuable. You have 
indicated you are going to give him a call. I gave you the card 
and a little background sheet. I truly appreciate your 
willingness to give him a call, because his example is a 
classic with regards to small businesses up and down Main 
Street in rural and small-town America.
    Thank you.
    Secretary Ross. Well, thank you, Senator.
    From your description of his situation, it sounds like it 
is one for which the exclusion process was specifically 
designed. If it is a unique product, a unique form of steel, 
not available from here, and if there is no objection--which, 
if there is no U.S. manufacturer, it is hard to imagine there 
would be an objection filed--if none of that happens, there is 
no reason he would not be granted an exclusion.
    As I promised to you before, I promise you now on the 
record: I will call him no later than tomorrow morning. It may 
not be quite as early as 6:30, but I will get him either today 
or quite early tomorrow.
    Senator Roberts. Well, if you could move him to the top of 
the list, it would be great. But I think I am not sure that 
that is the way we ought to do business.
    Thank you.
    Secretary Ross. No. But do you know offhand, Senator, when 
he filed the request for the exclusion?
    Senator Roberts. I do not know that.
    Secretary Ross. Because if he----
    Senator Roberts. I will be happy to get back to you on 
that.
    Secretary Ross. Because, as you know, there is a statutory 
waiting period that we have. We cannot do anything until that 
clock has tolled and, therefore, until we have received 
whatever objections there may be.
    So it could well be that he is in that period. If he is out 
of the period, we will do our best to accelerate.
    The Chairman. Okay.
    Senator Enzi?
    Senator Enzi. Mr. Chairman, thank you for holding this.
    I am going to have a different kind of a question for you. 
And that is that in January, you were submitted a section 232 
petition for relief from imports of foreign uranium that 
threaten our national security. According to the recent 
``Uranium Marketing Annual Report for 2017'' that was released 
by the U.S. Energy Information Administration, domestic uranium 
comprised only 7 percent of the total uranium delivered to the 
civilian nuclear power reactors.
    Our overreliance on uranium from foreign countries, such as 
Russia and Kazakhstan, has created a significant national 
security threat and hamstrung our domestic uranium producers. 
The problem is particularly important in my home State of 
Wyoming, because we account for two-thirds of that domestic 
uranium.
    Will the Commerce Department initiate an investigation 
based on this petition? And if ``yes,'' when can we expect that 
investigation to begin?
    Secretary Ross. Yes, I am quite familiar with that 
situation and have, among other things, been discussing it with 
Secretary Perry. Because as you know, energy comes very much 
under his--and power comes directly under him.
    We will be making a decision very shortly as to whether to 
initiate a 232 investigation. It is complicated by some prior 
agreements that exist, but we are sorting through it, and we 
will come to a conclusion very, very quickly.
    I think your figures are quite accurate about the extreme 
dependence that our country has on foreigners, who are not 
necessarily always our friends, for the supply of uranium. But 
we are going right now through the process of trying to come to 
a rational conclusion about whether or not to self-initiate the 
232 on uranium.
    Senator Enzi. I appreciate that and your answer.
    Now, Congress has enacted trade remedy laws, such as the 
antidumping and countervailing duty remedies provided in title 
VII of the Tariff Act, in an effort to protect domestic 
industries. In the case of uncoated groundwood, tariffs imposed 
to benefit one mill will result in significant harm to our 
rural newspapers.
    How should the Commerce Department approach cases where the 
protection of one portion of an industry can lead to 
significant harm to another portion of the same domestic 
industry?
    Given that Congress did not enact the trade remedy laws in 
order to harm the overall economy, how does Commerce ensure 
that Congress's intent is achieved?
    Secretary Ross. Right. Well, among the data that we have 
requested from the newspaper industry--which, frankly, has yet 
to be forthcoming--is just how much per page for each of their 
publications does this mean.
    And the only ones we have gotten data for have been 
provided by the petitioner. And his figures show that it is a 
very trivial thing, both for major newspapers, such as The Wall 
Street Journal, and for small newspapers, such as the one in 
the Pacific Northwest where he operates.
    So we have been seeking from the industry--and some of the 
members of Congress have been helpful in going back to their 
newspaper constituents and asking, ``Please tell us three 
things.'' How many pages do you print a day? How much per page 
is the extra cost? And how does that compare to the price of 
the paper?
    Then we can really put in perspective and judge the extent 
to which it is a compelling argument. So we are quite open to 
receiving that information. I have no idea what it will show, 
but we are desperately seeking input.
    So any newspapers in any of your areas that would be 
willing to submit that information, it would be very, very 
helpful.
    Senator Enzi. Well, that information will not be very 
difficult from the big newspapers. It is the little newspapers 
that do not have an extra person to calculate what the per-
penny cost is on a sheet of paper.
    And they do know that the inserts that they are putting in 
are also going up, which means advertisers are going to 
advertise less, because they have a budget that they have to 
meet.
    So it has a lot of different implications, of which a lot 
of them are hard to calculate. But I can guarantee you that a 
lot of small newspapers are going to go out of business if that 
happens. And that one mill may do well. And on the other hand, 
with less customers, it may not.
    Thank you.
    Secretary Ross. Well, you know, there also, sir, are a 
number of parties who have told us that they are in the process 
of opening mills. So to the degree that that proves correct, 
there may very well be another solution, which is more domestic 
production.
    So we understand the dilemma; we understand the problem. To 
the degree you can get me that information, it would be very, 
very helpful. Because the only information on the record is 
what was put in by the petitioner, and his information is it is 
a fraction of a penny--not per page, but per issue, counting 
all the pages.
    So if he is right, that would say it is not a very big 
problem compared with some of the other problems the newspaper 
industry has.
    We already have gotten to a situation where he has 
withdrawn his similar petition against the particular kind of 
paper used in directories, so that should also help alleviate 
the situation. So we are working on it. We are trying very hard 
to get a handle on just what these cost figures are.
    And frankly, even with a small newspaper, I cannot imagine 
they do not know what their paper cost is and the number of 
pages. So it cannot be that hard a calculation for them to come 
up with.
    Senator Enzi. Thanks.
    The Chairman. Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    Mr. Secretary, China has been stealing our intellectual 
property and using unfair trade practices for far too long. We 
all acknowledge that. And I am glad the President is taking 
this problem seriously, unlike his predecessor.
    However, I am increasingly concerned that the tariffs, both 
those in place and those that have been proposed, are going to 
hurt American consumers and our domestic businesses, especially 
in the agricultural sector, far more than they are going to 
persuade the Chinese to change their unfair trade practices.
    And with the President's announcement last night that he is 
prepared to impose as much as $400 billion more in tariffs if 
China does not make systemic changes, it appears that this 
situation is escalating rapidly.
    My question is, what is the administration's overall 
strategy to find an equitable solution in this case before the 
burden of these tariffs have a substantial impact on American 
consumers and businesses and drive down U.S. economic growth?
    Secretary Ross. Well, the basic strategy is to try to bring 
enough pressure on parties who are not behaving appropriately 
so that they conclude that the alternative of continuing their 
present behavior is going to be more painful to them than 
acceding to the requests we have made that they honor 
intellectual property.
    As to the importance of intellectual property, the 
President is extremely committed, and so am I. And in fact, 
yesterday we had a historic event. The President signed the 10 
millionth patent issued by the United States. That is almost 
half of all the patents that have ever been issued in the 
entire world, and more than half of the 10 million have been 
issued since 1985.
    So the pace of patents is growing very, very rapidly. And 
that is good. But it is only good if we can force other nations 
to honor them and not abuse them, not force technology 
transfers, not steal through cybersecurity, not do all of the 
horrible things that we are well aware are in fact being done.
    So the only method we could think of--we have tried 
negotiation. I myself have been four or five times in China 
negotiating over the last year or so. And the President has 
concluded that we need more than just negotiation.
    There have been years of talk with China about intellectual 
property. The President feels, and I agree, that now is the 
time for action. And unless we make it more painful for them to 
continue those practices than to do otherwise, unless we put 
that kind of pressure on, it is unlikely we will succeed.
    Senator Thune. Well, and we appreciate your focus on that. 
We all agree that they have been abusive, they have cheated. 
And again, I like the focus.
    But this thing seems to be escalating out of control fairly 
quickly. And I want to come back to one other issue.
    I am running out of time here.
    But the White House's decision to impose tariffs under the 
section 301 investigation is also very concerning. And this 
decision walks back an earlier announcement that the United 
States and China had reached a tentative deal that would 
increase agricultural exports from China and put the 
implementation of tariffs on hold.
    What is more, the President's proposal to move forward with 
hundreds of billions of dollars in additional tariffs threatens 
to severely damage the ag industry at a time when producers are 
already experiencing low prices in a down farm economy. In 
fact, one commodities analyst this week described the current 
commodity markets as wildly dangerous, largely due to trade 
uncertainties.
    A recent $1 drop on soybean prices will potentially cost 
soybean producers in just my State of South Dakota alone $225 
million. Corn, wheat, beef, and pork are all suffering market 
price declines as well due to current trade policies.
    And I would like to drive home the point that with every 
passing day, the United States loses market share to other 
countries competing with our ag product market, some of it 
unlikely to be recaptured.
    So I have two questions. First, with low and recently 
dropping crop and livestock prices and slim profit margins, 
producers are looking to the administration to create more 
opportunities for trade, not less. What is the administration 
doing to increase ag exports and promote jobs in rural 
communities? And how long will farmers, ranchers, and the rest 
of rural America have to hold their breath until U.S. trade 
with multiple global partners stabilizes? Question number one.
    Second, what new trade agreements is the administration 
working on to counterbalance what we may lose if we do not 
reach an agreement on NAFTA to offset what we gave up by 
pulling out of TPP and to anticipate the result of imposing 
crippling tariffs on our top trading partner, which is China?
    Secretary Ross. Well, I met last Friday with a delegation 
of farmers from North Dakota. And they voiced similar concerns, 
but they amplified it in another direction as well. They felt 
that the market price, at least of soybeans, which was the main 
product they discussed with me, that the market price decline 
has been exaggerated by speculative activity.
    Their belief is that the price will level out at a better 
level than it is now. They also believe, and our own research 
tends to confirm, it will be relatively difficult for China to 
fully implement their threat on soybeans. The fact is that 
Brazil now ships to China around 55 percent of the soybean 
imports it needs. We ship around 32, 33 percent from America.
    For Brazil to replace us--and they are the only one which 
has remotely enough capacity to do it--they would have to 
increase their exports of soybeans to China by 60 percent.
    Well, if they could do that, they would be doing it already 
if they could do it at a competitive price. There is no 
evidence that Brazil has been holding back just because we did 
not put tariffs on China.
    So I think you are going to find that as this thing settles 
down, while there probably will be some problems, two things 
will happen. One, to the degree that China is able to pay a 
premium to Brazil to divert shipments from their other existing 
customers, that will open up for American farmers the markets 
that were vacated by that product. Whether that will be a full 
offset, I do not know, but I think that the current speculative 
activity in the ag futures market is due to anxiety, fear of 
the unknown, fear of what might come next.
    And I sympathize very much with that, but I heard from big 
farmers directly, and they do think it is a little exaggerated. 
I do not know whether your constituents in South Dakota feel 
the same or not.
    But the problem we have is, if we are not going to fix the 
big problem, which is the unfair trade practices, the abuse of 
intellectual property, now, when are we ever going to fix it? 
It is very, very difficult to do.
    It would have been a lot easier had prior administrations 
dealt with it before things got as far out of hand. But the 
President feels very committed that we have to put maximum 
pressure on to have any hope of fixing the problems.
    Senator Thune. Well, and just so you know, there is a lot 
of consternation in farm country about this.
    Secretary Ross. Well, I know that, sir.
    Senator Thune. And I hope that you are right. I hope that 
things settle and stabilize. But in the long run, there are 
serious concerns about restricting access to markets rather 
than expanding it.
    And obviously, in farm country, we have to do everything we 
can to grow our markets. And it does not seem, at least right 
now--we do not see a lot of evidence that there is any 
negotiation going on with respect to some of these countries 
that we missed out on with TPP.
    Mr. Chairman, thank you.
    Senator Wyden [presiding]. Thank you, Senator Thune.
    Secretary Ross. And if I could just add one thing. You 
mentioned the proposal the Chinese had come up with about the 
$70 billion, including a lot of ag. I was the one who 
negotiated that, so that does show you that the administration 
is trying. It is just that we were not able to accomplish 
enough to justify, in the President's mind, not going ahead 
with the tariffs.
    So I think there already are some signs that we may get 
some ultimate resolution. I do not think the Chinese want a 
trade war any more than we do. And as you know, the President's 
general view is that the trade war was lost years ago. This is 
an effort to fix the outcomes that were unsatisfactory from it.
    Senator Wyden. Senator Casey?
    Senator Casey. Thank you, Mr. Chairman.
    And, Secretary Ross, thanks for being here.
    I sent a letter with Senators Brown and Portman regarding 
electrical steel. That was back in March. At that time, that 
letter asked the President to expand the scope of 232 to cover 
downstream electrical steel products.
    We followed up on that request with your office and the 
White House staff, as you know.
    We have only one electrical steel manufacturer left in the 
United States. They have been hammered by dumped imports of 
electrical steel and minimally transformed downstream products. 
The continued import of these dumped products in the U.S. not 
only endangers good-paying jobs in Pennsylvania but also puts 
at risk the last domestic producer of electrical steel, which 
is of significant national security importance.
    I was glad to see the Trade Representative included 
downstream electrical steel products on their 301 list.
    Secretary Ross. Yes.
    Senator Casey. Could you provide an update on where things 
stand with regard to the inclusion of downstream electrical 
steel products?
    Secretary Ross. I believe there is no doubt that they will 
be included. There will be a big list forthcoming very, very 
shortly. And I believe that will cover the downstream products 
in the electrical steel as well as in some other areas.
    And I do not know if you were here for my opening remarks, 
but we have also supplied a supplemental list to the U.S. Trade 
Representative of other industries that we have become aware 
have hit the same problem where, instead of it coming in as raw 
steel or with a relatively low degree of processing, it is 
coming in as a little bit more sophisticated product.
    So we are working actively to deal with that, because that 
is even worse than the steel itself coming in, because now you 
are hitting another layer of value added, another layer of jobs 
just beyond the steel. So we are totally cognizant of that.
    And unlike some others' considerations, that is something 
we believe we can very well deal with in the 301.
    Senator Casey. Thank you. And I was also going to ask you 
today about newsprint tariffs. As you know, we have, in a State 
like mine, we have a couple of major papers and then a lot of 
smaller papers. Lots of jobs are at stake when it comes to 
policy that affects those newspapers.
    Secretary Ross. Yes.
    Senator Casey. You and I have spoken about this, and I 
appreciate you taking the time to talk about it.
    I, after our conversation, sent a letter to you regarding 
the initiation of a suspension agreement. I hope you are giving 
that suspension agreement request and the accompanying data 
provided serious consideration. And I hope you take the 
appropriate action to address those concerns that are raised by 
lots of papers across our State and I am sure many others.
    Secretary Ross. Yes. I just received your letter within the 
last couple of days. And I would make the same request to those 
papers: give us the per-page cost, give us the information.
    I do not know if you were here when this question was 
raised before, but what we are seeking from the papers is, how 
much paper do they use in a page? How many pages do they 
publish in each issue? And what is the subscription price or 
the price that they have, so that we can put it into 
perspective?
    Because for sure, any time you deal with products that have 
been dumped, for sure somebody is going to bear an increase. 
The question is, is that really an important increase to them? 
Or is it just something which adds a little bit to existing 
problems that they have from Internet and from social media and 
stuff that is unrelated to paper?
    So to the degree you can get your newspaper constituents to 
give us those data, it will be a great help.
    Senator Casey. We will work on that and provide an ample 
record.
    Secretary Ross. Thank you, Senator.
    Senator Casey. Thanks, Mr. Secretary.
    Senator Wyden. Senator Brown?
    Senator Brown. Thank you, Mr. Secretary.
    I would like to ask if you would, just in the interest of 
time--I am going to ask a series of questions. I would like a 
``yes'' or ``no,'' if you would answer that way, please.
    First of all, I am wondering about the electrical steel 
issue resolved in 232. In your 232 steel investigation, you 
identified steel mills that had closed because of imports. 
According to the steelworkers, since 2012, some 6,500 to 7,000 
USW members have been laid off in my State alone due to steel 
plant closures in Steubenville, Yorkville, Martins Ferry, 
Warren, and Lorain, mostly in the northeast quadrant of the 
State.
    We know the culprit behind these layoffs is global steel 
overcapacity, which started as a singularly Chinese problem but 
has infected the global market as other countries have followed 
their lead with State-supported steel companies.
    You know all this.
    My first question is based on your 232 analysis. Would you 
expect more steel mills to close and would you expect thousands 
more workers to be laid off in Ohio and across the country if 
the U.S. took no trade enforcement action to address China's 
steel overcapacity?
    Secretary Ross. Yes.
    Senator Brown. Okay. Thank you, Mr. Secretary.
    I often say, if we do not address unfairly traded steel 
imports now, China and other countries will just move down the 
supply chain. Today it is steel, tomorrow it is cars or some 
other finished product.
    Do you agree China intends to use unfair trading practices 
to gain market share, not just in steel, which they have done, 
but in other sectors down or up the supply chain?
    Secretary Ross. Yes.
    Senator Brown. Okay. Thank you, Mr. Secretary.
    Given the role you have had in trade talks with China, do 
you believe it would undercut U.S. leverage in these 
negotiations if Congress took action to weaken our trade 
enforcement tools, whether by undermining the section 232 
statute or our antidumping and countervailing duty laws?
    Secretary Ross. Yes.
    Senator Brown. Okay. Thank you, Mr. Secretary.
    And I thank Ranking Member Wyden for his outspoken, 
especially recently, ringing defense of trade remedy laws.
    Last question. Senator Grassley and I, a Republican member 
of this committee, have written a bill to review foreign 
investment in the U.S. to determine if it is in our long-term 
economic interests.
    We know China is trying to gain U.S. market share by buying 
up our companies. Right now, if the investments fall outside 
the scope of CFIUS, the Committee for Foreign Investment in the 
U.S., outside our national review scope, we do not review them 
at all.
    The bill that Senator Grassley and I have would give you, 
the Secretary of Commerce, the authority to review those 
investments and give us another tool to fight Chinese unfair 
trade practices and their investments here.
    Senator Grassley and I want to get this bill signed into 
law. There is a lot of interest in both parties here. We would 
like to get it into law, particularly as the administration 
considers investment restrictions against China.
    Will you work with Senator Grassley and me to get this bill 
to the President's desk?
    Secretary Ross. Well, we are happy to help you with 
anything that will make it easier to restrict the Chinese 
investments here.
    As you know, we have in place right now some 446 trade 
actions against various countries for various infractions. Of 
those, about half are against China and about 40 percent of 
that half are on steel.
    So that means the 60 percent that are in products other 
than steel already, to the degree that we could have the 
ability to pass on anything that the Chinese were trying to 
acquire, it would be very useful power, because right now the 
CFIUS is somewhat constricted as to what can be done. FIRRMA* 
will be helping in that regard. So whatever----
---------------------------------------------------------------------------
    * Foreign Investment Risk Review Modernization Act of 2018.
---------------------------------------------------------------------------
    Senator Brown. Good. Thank you.
    Are you willing--and this is just to make clear for anybody 
listening, I know the Secretary understands this. This is about 
Chinese investment in the U.S.--or other countries' investment 
in the U.S. Are you prepared to take a position in support of 
that bill at this point?
    Secretary Ross. Well, I am prepared to take a position in 
support of the objective for sure.
    Senator Brown. Okay.
    Secretary Ross. I have not read the bill in detail.
    Senator Brown. Okay. We want to get with you and your staff 
to get an endorsement from the administration--and more than 
just an endorsement. But we will do that.
    And thank you for all your answers.
    And my invitation for you, as we talked about after your 
nomination and since, to come to Lorain steel plants still 
stands. I hope you can make it.
    Secretary Ross. Thank you very much. As you know, Lorain is 
one of the communities where facilities have been reopened.
    Senator Brown. Well, we are working on it.
    Thank you, Mr. Chairman.
    Senator Wyden. Senator Toomey?
    Senator Toomey. Thank you, Mr. Chairman.
    Mr. Secretary, thanks for joining us today.
    Well, I am very concerned about a number of aspects of 
these 232 tariffs, not the least of which is, it does not seem 
to me that the administration has taken into account the fact 
that for every person who works in the steel production 
industry, there are probably something on the order of 40 or 
more people who work in steel-consuming industries. And so we 
are picking winners and losers, probably resulting, in my view, 
in the risk of far more jobs lost than jobs that are going to 
be gained.
    One company that comes to mind--and I mentioned this 
company to you on the phone, and I have sent a letter to you. 
By the way, I sent the letter almost 2 months ago, and I have 
not yet received a response. I would appreciate it if I could 
get a response----
    Secretary Ross. It is en route to you as we sit here.
    Senator Toomey. Okay. It has been almost 2 months. And it 
was a list of many Pennsylvania companies that have applied for 
exclusions. Allegheny Technology is one, a steel producer. And 
because they have been able to import a particular type of 
steel that is not commercially available in the U.S., they 
bring it into a facility they have in Pennsylvania where they 
recently brought back almost 100 workers.
    These workers have total compensation packages, on average, 
that exceed $100,000 per worker. These are good jobs. And every 
one of them is at risk if they do not get an exclusion. They 
have not heard anything since their submission in early April.
    And I certainly hope they will get a prompt response, 
because these guys do not deserve to lose their jobs because we 
have decided to impose taxes on American consumers of steel. I 
hope that we will get a quick resolution to their situation.
    But I think other circumstances are more difficult. I 
recently had a conversation with an executive from Kraft Heinz. 
Right?--iconic American company, co-headquartered in my State. 
Heinz ketchup is a quintessentially American product. I do not 
think I have had a day of my life that their ketchup has not 
been on the shelf in my kitchen.
    Well, it is interesting. As a result of NAFTA and the free 
trade agreement we have with Canada and Mexico, Kraft Heinz 
decided to reorganize their supply chain, and they moved 
production facilities from Canada to the United States. And all 
of the ketchup that they sell to Canada, and they sell a lot, 
is manufactured in the United States.
    Well, unsurprisingly, the Canadians have decided that they 
are going to impose huge taxes on the sale of American ketchup. 
So it is hard to imagine that this does not dramatically erode 
their market share.
    And there is a solution for Kraft Heinz. They have not 
suggested this to me, but, you know, I was not born yesterday. 
The solution for them to be able to continue to sell their 
product in Canada would be to shut down their U.S. factory and 
move to Canada, then they would not be subject to these 
tariffs.
    So I am very, very concerned about the direct consequences 
for the downstream steel and aluminum users. And we are seeing 
the threat to their jobs. And I am really concerned about the 
retaliation, which has not even really started to hit us yet, 
but it is going to hit the people who make Kraft and Heinz 
products.
    And so I guess I would like to follow up on a question that 
Senator Bennet was pursuing. With respect to section 232 
tariffs on Canadian steel, I did not hear a persuasive argument 
for why the importation of these modest amounts of steel from 
Canada amounts to a national security threat to the U.S.
    So let me pose the question a little differently. What 
policy change would the Canadians have to make, what changes, 
what would they have to do so that the administration would 
stop taxing my constituents on the steel that they buy from 
Canada?
    Secretary Ross. Okay. As I believe you know from testimony 
from Ambassador Lighthizer--and you know from the media as 
well--we have initially exempted Canada and Mexico from the 
232, pending negotiations of the NAFTA overhaul.
    Unfortunately, those talks were not able to come to a 
conclusion. Ambassador Lighthizer has indicated publicly that 
he is optimistic that after the Mexican election, which is, I 
believe, the 1st of July of this year, that those talks could 
pick up steam again.
    So our objective is to have a revitalized NAFTA, a NAFTA 
that helps America. And as part of that, the 232s would 
logically go away, both as it relates to Canada and as to 
Mexico.
    Senator Toomey. So I am about to run out of time, so let me 
just respond to this.
    First of all, I am very deeply concerned that the very 
provisions that Trade Representative Lighthizer is seeking 
would make NAFTA a much lesser agreement. It would weaken 
NAFTA. One of them is to have a sunset provision which 
basically causes NAFTA to expire.
    In that kind of context, I think we can expect to see a 
departure of investment from the United States, which would be 
harmful.
    I wish we would stop invoking national security, because 
that is not what this is about. This is about economic 
nationalism and an economic policy of managing trade.
    When South Korea is exempted from 232 securities because 
they agreed to lift a quota on American car exports, which we 
were not hitting anyway, and they agreed that we would punish 
our own consumers of South Korean light trucks and that got 
them exempted, that has nothing to do with national security.
    Mr. Chairman, I see my time is up, but I want to urge the 
Commerce Secretary: please do not impose these taxes on my 
consumers with respect to automobiles.
    And since we are witnessing what I think is a wholly 
inappropriate use of the 232 tariffs, I would urge my 
colleagues to support the legislation that Senator Corker and I 
have, which would restore to Congress the authority to make the 
final decisions about the imposition of those tariffs.
    Senator Wyden. I thank the Senator.
    A couple of other questions, Mr. Secretary, and we will see 
if other colleagues are coming.
    So the Commerce Department made a deal with ZTE. And I was 
struck by the fact that during all of this, the Trump 
administration had a nominee, Mr. William Evanina, to head an 
important and new counterintelligence post.
    And this was an open hearing in the Intelligence Committee. 
We do not have very many. And I asked Mr. Evanina if he thought 
ZTE was an espionage threat. There has been a bipartisan report 
on this in the past. And he said, ``yes.''
    So the Commerce Department has now entered into a deal with 
ZTE. So my question is, does the Commerce Department believe 
that the espionage threat that the counterintelligence nominee 
was concerned about--does the Department believe that the 
espionage threat has gone away?
    Secretary Ross. I think it is a little more complicated 
question and a little more complicated answer.
    When the only powers that Commerce has relate to 
enforcement of export controls, ZTE violated those provisions 
by breaking the sanctions both to North Korea and to Iran.
    That is why in early 2017 we forced them into a settlement 
agreement that was approved in court. And that agreement 
provided for them to pay, between escrows and actual cash, over 
a billion dollars and to agree that in the event they had 
further violations of the agreement that we could take one of 
two courses of action. One was to confiscate the $300 million 
that had been suspended as part of the original deal, and two 
was to shut them down.
    The staff at BIS, which is Bureau of Industry and 
Security--and that is the relevant part of Commerce--they 
recommended that in punishment for the second thing that came 
up just recently, namely March of this year, which was not 
further sanction violations, but rather proof that ZTE had lied 
to us during the negotiation process and after it, they 
recommended that we grab the $300 million.
    I felt that that was not enough of a penalty and therefore 
initiated the action, with the support ultimately of BIS, that 
we not do the $300 million, that we instead shut them down.
    When President Trump made the request that we reconsider 
and see if there was some other way to deal with the behavior 
that is within our domain--which is not espionage, it is simply 
violation of export controls--we came with the new solution of 
fining them a billion dollars more and $400 million in escrow, 
but more importantly, the right to put in a monitor of our 
choosing, a group of people of our choosing, who would have 
unfettered access to ZTE.
    There has never been an enforcement case of either an 
American company or a foreign company where we have gotten that 
power.
    So I believe, and I believe most people agree, that from a 
strictly enforcement point of view, which is all that Commerce 
is empowered to deal with, from a strictly enforcement point of 
view, I think if this had been our original solution, everybody 
would have applauded it.
    It is only with this other revelation about espionage, if 
that is outside my----
    Senator Wyden. Whoa, whoa, whoa. Please, Mr. Secretary. I 
have let you go on for quite a while. Recent revelation about 
espionage?
    Mr. Evanina, when he came--I pointed out that the House, on 
a bipartisan basis, has been talking about the fact they think 
ZTE is an espionage threat for years.
    Now, you certainly have a right to basically take the full 
5 minutes to take me through this explanation, but I still have 
not gotten an answer as to whether you and this administration 
agree with Mr. Evanina, who said in an open hearing that it was 
an espionage threat.
    So what I would like to do is, I will hold the record open 
and have you give us in writing--and consult with your 
colleagues--whether you all feel that ZTE is still an espionage 
threat. Because what I see in the trade area--and certainly, we 
need not go in to differences you have had with Mr. Navarro and 
Mr. Lighthizer--one of the big challenges in building the 
bipartisan support for the President's trade policies, where 
there is lots of opportunity to come together on enforcement 
and on China and on upgrading NAFTA, is it is virtually 
impossible to sort out how different voices within the 
administration speak on trade and, in my view, seemingly 
contradict each other.
    Because when I asked Mr. Evanina in an open intelligence 
hearing about whether he thought ZTE was an espionage threat, 
he did not have a 3\1/2\-minute answer, he had one word: ``Yes, 
I consider ZTE an espionage threat.''
    So let me ask you about one other matter. And we will wait 
to have a written response. Could we have that within a week 
with respect to ZTE as a current espionage threat with you and 
your associates in the administration? Is that acceptable to 
you?
    Secretary Ross. We will respond to all of the requests for 
written answers as promptly as possible, sir.
    Senator Wyden. Well, I would like that, again, in a week 
because, as you know, we are continuing the debate here in the 
Congress with respect to ZTE. So I hope that we will get this 
within a week.
    One other question with respect to how you all intend to 
proceed in some of these areas.
    When there was discussion with respect to the tariffs on 
steel and aluminum and how you were going to look at this going 
forward--and I think your prepared statement touched on this--
you said you would evaluate it on the basis of what constitutes 
good management, and then you had other criteria.
    So are you all going to be in the business of trying to 
create measures for what constitutes good management for these 
areas of the economy that are so important to American 
businesses?
    Secretary Ross. No. What I was referring to was that our 
objectives in the steel and aluminum tariffs were to get the 
volume levels and the facility utilization levels to a point 
where, with decent management, they should be able to be self-
sufficient, able to support the necessary R&D, able to support 
the necessary capital expenditures, and therefore be viable as 
long-term entities.
    It was not that we are going to pick and choose winners and 
losers in that regard. It simply was to get the operating rates 
up to where decent management could survive.
    Senator Wyden. One last question. And we understand you 
have to go here around 11:15. There are colleagues who are 
coming back because of the vote schedule.
    On the autos investigation, I am curious whom you talked 
with in connection with putting this all together. For example, 
did you talk to the United Automobile Workers? Was this 
something that you all did as you tried to reach out? And same 
thing with respect to business.
    And by the way, I did not hear about it as the ranking 
Democrat on the Senate Finance Committee, which troubles a lot 
of the members because there are consultation requirements, as 
you know, embedded in the law.
    So when you took on this auto investigation, whom did you 
consult with?
    Secretary Ross. Well, we took it on, as you know, at the 
request of the President. The period for comment from unions, 
from the members of the industry, from foreign companies, from 
the interested parties in the public, is just now beginning. I 
believe we have issued the public Register notice about 
hearings and comment periods.
    And at the recent request of the American automotive 
industry, we have extended the deadline for that by a week so 
that they can provide the full breadth of information that they 
wish us to consider.
    We obviously have not talked to all the participants, 
because the investigation is just beginning.
    Senator Wyden. Well, as you know, 232 is different with 
respect to consultation. And one of the concerns I have is that 
there ought to be more consultation with the Congress. And as 
far as I can tell, the way this process unfolded on 232 is, you 
pretty much had one conversation: you had a conversation with 
the President.
    And to me, when we are talking about something with such 
sweeping implications for the American economy, we are going to 
have to do better with 232 and with consultation.
    I hope my colleague from Missouri made the second vote.
    Senator McCaskill. I did.
    Senator Wyden. So I think we can hand the gavel off to her. 
There may be other colleagues coming.
    Senator McCaskill. I believe there are; there are a number 
on the floor who have not yet questioned the Secretary.
    Senator Wyden. I think I see Senator Whitehouse.
    And it would be good if, Senator McCaskill, you can handle 
the remainder of the hearing, because I am going to have to 
take off.
    Senator McCaskill [presiding]. Thank you.
    Mr. Secretary, thank you for being here.
    You know, as someone who has listened to my colleagues 
across the aisle bang the podium for free markets and less 
regulatory burden, I feel like I have gone down the rabbit hole 
as it relates to the issues that we are discussing today.
    It appears to me that in a chaotic and, frankly, 
incompetent manner, you are picking winners and losers on a 
very technical basis, according to all the reporting we have, 
without a great deal of training.
    And the regulatory burden is so extreme on small 
businesses. For example, if someone gets a waiver for a very 
specific product--and I do not need to tell you with what kind 
of specificity. I mean, many of these companies are filing 
dozens of waivers based on having to file a different one for 
every slightly different product. A waiver for a very specific 
product for one business does not even result in a waiver for 
another business with the exact same product.
    You are requiring that these waivers be filed every year. 
And many of these are small businesses. And I want to tell you 
the story of one.
    The majority of nails that are manufactured in this country 
come from a company called Mid Continent Nail Corporation in 
Poplar Bluff, MO. It is about an hour down the road from the 
aluminum smelter that you referenced in your opening statement. 
It is the only large-scale producer of steel nails in the 
United States. They produce over 50 percent of the nails made 
in America.
    The company has 500 workers in a town of only 17,000. They 
are the second-largest employer in Poplar Bluff.
    So far, in response to the tariff, they have lost almost 
half of their business in 1 month due to price. They went from 
an average of 9,000 tons of nails sold every month--in June, 
that dropped to 5,500. In July, the company will sell fewer 
than 4,000 tons.
    The customers can easily source nails manufactured in other 
countries.
    So they have now laid off 60 of their 500 employees. They 
have idled their most sophisticated production facility in 
Poplar Bluff. And they are expected to cut 200 more jobs by the 
end of July. And the company, which has visited with us at 
length, believes they will be out of business by Labor Day.
    They absorbed the duties for inputs because the inputs were 
in fact so much cheaper. They have filed 24 separate exclusion 
requests, but there will not be enough time for them to 
potentially save their business.
    Now, down the road, the smelter has indeed added jobs. But 
at the end of the day, we are going to lose more jobs an hour 
down the road at the nail company than we may gain in the 
smelter.
    And so, this is what is happening. All of us have talked 
about this. And frankly, I do not want--I mean, I would love to 
save this company, I want to save this company, but there is 
something very wrong when people on this committee are able to 
jump the line with individual companies and have you call 
someone in Kansas or have you go back and figure out how you 
can help this nail company when there are thousands of 
employees across this country who are potentially going to lose 
their jobs because, on the day you announced the tariffs, you 
have not done the homework about what exclusions would be 
appropriate.
    And that could have been done. That is what George W. Bush 
did when he announced steel tariffs. On the very day he 
announced the tariffs, they announced exclusions.
    And that is why it feels like what is going on over there--
training people and 3-hour sessions with something so complex--
really feels chaotic and incompetent.
    Secretary Ross. Well, let me address the several remarks.
    First of all, Mid Continent only filed their exclusion 
requests 2 days ago. So for whatever reason, they did not file 
it on a very prompt basis. If they had----
    Senator McCaskill. They filed it last week.
    Secretary Ross. Yes, 2 days ago. We received it 2 days ago.
    I do not understand--and I am not belittling their 
situation at all. But given the importance of it to them, it is 
very unfortunate that they waited all these weeks to file the 
request. Because, under the authority we were granted, there is 
a process which we have to follow.
    Senator McCaskill. You could have excluded them on day one, 
Mr. Secretary. You had the ability to list exclusions on the 
same day you announced the tariffs. That was just a matter of 
homework. It took you a year to figure out the 232, why 
couldn't the experts at Commerce figure out the exclusions that 
would obviously apply?
    Secretary Ross. Well, all I can tell you is, we can only 
deal with exclusions of which we are aware. And they just filed 
theirs very recently.
    But more substantively than that, I do not think you were 
here earlier when I described the process----
    Senator McCaskill. No, I heard. And by the way, it would be 
really helpful if you are going to bring charts like that if 
you would give us all copies.
    Secretary Ross. Sure.
    Senator McCaskill. That would also be something that you 
would think would be normal: that you would distribute the 
charts that you are going to put up, that, frankly, I could not 
read from over here.
    Secretary Ross. Oh, we would be very happy to. We just 
completed the charts last night.
    Senator McCaskill. Well, then you could use a copy machine. 
There are not that many members on the committee, Mr. 
Secretary.
    Secretary Ross. We will be happy to provide you with them.
    Senator McCaskill. That would be great.
    The Chairman. That will be good.
    Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman.
    Secretary Ross, we have had many conversations about 
Washington State and trade writ large. I guess I would say 
this, that we kind of look at trade wars as very 1980s retro 
policy, because one in four jobs is related to trade. So 
whether it is aerospace or agriculture or now seafood that is 
going to be impacted, when we have trade wars, it impacts the 
Washington economy in a major way.
    And so many of our businesses have fought these same fights 
that you are trying to fight, but they have tried to avoid the 
trade war because, in the end, what happens is, somebody pays 
the price. And in this case, we are very, very concerned about 
agriculture.
    So not only do we have 10-billion-plus-dollars revenue from 
ag in our State, we push through our ports about $182 billion 
worth of ag products. So anything that affects ag affects our 
State writ large.
    Anything obviously on the steel tariffs impacts aerospace. 
And now we are faced with this seafood issue.
    So I guess what I am really trying to understand is, how do 
you think this end game is going to support people who are in a 
sector that is paying the price in the short term for, as many 
of my colleagues have said, this area of job recovery in one 
area but tremendous risk and failure in other areas if these 
tariffs continue?
    Secretary Ross. Well, the President's objective is not to 
end up with high tariffs, and his objective is not to end up 
with a trade war. He has made that pretty clear.
    Senator Cantwell. Do you think we are in a trade war right 
now? Because I do.
    Secretary Ross. Well, if I could finish. His objective is 
to get to a lowering of trade barriers, both tariff and 
nontariff ones, and to protect intellectual property.
    The problem we have is that, because of constrictions 
imposed by the WTO rules, there are relatively few tools we 
have to accomplish those objectives. The main tool seems to be 
one of trying to put pressure on China and on other parties 
that are doing what we view as untoward practices, because the 
only way we are going to get them to change and protect another 
big industry in Washington, namely one very dependent on high 
tech and very dependent on intellectual property--those are the 
industries of the future as well as the industries of the 
present--is to put pressure on them.
    The purpose of this is to get to an end game that is much 
closer to free trade than anything the world has seen before.
    The tragic fact is that, historically, we are the least-
protectionist country in the world, and we have the deficits to 
show for it.
    It would have been much easier to solve these problems 
sooner. They were neglected. The President has decided to take 
decisive action to deal with these problems now. That is what 
is our purpose.
    Senator Cantwell. Mr. Secretary, so I just want to be 
clear. Do you think we are in a trade war right now? Because 
that is where I see us.
    Secretary Ross. As the President has often said, we have 
been in a trade war forever. The difference is that now our 
troops are coming to the ramparts.
    Senator Cantwell. No. Mr. Secretary, I want you to hear me. 
Apples and cherries are getting hurt.
    Secretary Ross. I understand.
    Senator Cantwell. People who are farmers, who are small 
businesses, individual businesses, who fight every day to get 
access to Asian markets, to India, to Canada, to Mexico, they 
believe in a trade policy that keeps moving forward. Why? 
Because they gain access and there is a growing middle class 
around the globe.
    They get that we can grow things and be competitive at 
growing things, even if there are more value-added products. 
American agriculture can still win.
    But what they cannot win at is if you push them off a shelf 
space right now with a huge tariff and they go out of business; 
they are not coming back. Once you get whatever you think you 
are going to get later, that person does not refinance their 
company and just come back; they might be out of business 
forever.
    So I do not think you are empathetic enough to the plight 
of agriculture.
    Now seafood, which, again, is also on short margin, is 
going to be in the same spot. And these people might go out of 
business while you are creating this trade war.
    So I would just say, Mr. Secretary, trade wars are not 
good; they are very damaging. And for the State of Washington, 
they are very very damaging.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Whitehouse?
    Senator Whitehouse. Thank you very much.
    Secretary Ross, I am over here in this corner. [Laughter.]
    I would like to try to get what information we can that 
either your department or the Treasury Department has about 
what the administration's expectations are for how this plays 
out.
    We know what tariffs the administration is planning to 
impose. You know that because they are your tariffs. So that is 
a known, correct? Yes?
    Secretary Ross. Yes. Ours and USTR.
    Senator Whitehouse. And we probably have some pretty solid 
intelligence and estimates and conclusions about, if we do X, 
the Chinese do Y, the Canadians do Y. So we have some capacity 
to predict what the trade countermeasures are likely to be.
    So, given then what we know about our own tariffs and given 
then what we predict about trade countermeasures, presumably 
somebody at Commerce or Treasury is thinking through how those 
inputs cascade into different industries and what different 
industries have to look forward to.
    Now, if you are Senator Cantwell and you have Boeing in 
your State, that is a very big company that can pretty well 
take care of itself and try to figure this out as best it can.
    But if you are a Rhode Island parts manufacturer with 30 
employees that is providing things to Boeing, it is really hard 
to know how this apparently unplanned or only simply planned or 
partly planned cascade of tariff consequences is going to come 
down and hit you.
    So I guess my question is, what does the Commerce 
Department have and, to the extent that you know it, what does 
the Treasury Department have by way of predictions as to how 
these trade conflicts will cascade into the American economy? 
And who needs to worry the most? What do you have for 
information?
    I assume you looked at that kind of stuff before you 
embarked on this. And I would like to see whatever it is that 
you've got.
    Secretary Ross. Okay. Well, as to the 232s, we have 
testified before about research we have done into the direct 
impact of the 232s on various segments of the economy. I think 
you are aware that we have testified that it is a fraction of a 
penny on a can of Campbell's soup, it is a fraction on a can of 
Budweiser, a fraction on a can of Coke, that it is less than 1 
percent on the cost of an automobile. We have done those kinds 
of research.
    Senator Whitehouse. Can we see those studies? Can we see 
those studies? Would you let us have a look at that? Can we 
make that a question for the record?
    Secretary Ross. Sure. Well, they are not very difficult to 
figure out.
    Senator Whitehouse. They are difficult for a Rhode Island 
manufacturer with 30 employees to figure out. If the government 
has that information, it would be great if you could share it 
so we could have a sense of what to expect.
    Secretary Ross. Well, the best proof that they are accurate 
is, with all the complaints that have been voiced about the 
232s, no one has refuted the percentages that I have quoted.
    Senator Whitehouse. I am not trying to refute them; I am 
trying to get access to them.
    Secretary Ross. Sure.
    Senator Whitehouse. I am trying to get that information to 
us. So will you----
    Secretary Ross. We are happy to do that.
    Senator Whitehouse. Sometimes a question for the record 
goes in and nobody ever answers it. So I want to be able to 
call up your legislative staff later on and say, actually, the 
Secretary agreed to give us this in the hearing, and maybe that 
will help them get the information to us.
    Secretary Ross. Yes. What we also did was take a look 
overall at the economy. And the total amount of the tariffs is 
a small fraction of 1 percent of the GDP. So it is not 
physically possible for the tariffs as such to have more of an 
impact than that on the overall economy.
    Senator Whitehouse. And my time is running out. I am down 
to 30 seconds.
    So I just want to make sure that my request also includes 
whatever planning or projections were done for the President's 
announcement that he was going to jack up the China tariffs 
$200 billion.
    So specific to that particular trade threat, I would like 
to see what the economic projections are as to how that plays 
through.
    Secretary Ross. Well, that one is not Commerce; that 
relates to the U.S. Trade Representative.
    Senator Whitehouse. Yes, but I have you here. So I assume 
you have access to that material, right? You are the Secretary 
of Commerce; they are not going to tell you, ``No, you cannot 
see that.''
    Secretary Ross. I really think your proper party to ask 
that to--we are not 301; we are the 232s. I would be happy to 
relay the request to the U.S. Trade Representative.
    Senator Whitehouse. So you are truly telling me that you 
are not going to answer this question, I should go knock on a 
different door in the same administration?
    Secretary Ross. No. There are different doors because we 
have different responsibilities and different functions.
    Senator Whitehouse. But you do have access to the U.S. 
Trade Representative's materials, do you not? You talk to each 
other, you exchange documents. You are operating as a team, are 
you not?
    Secretary Ross. Everyone has access. If you would like to 
submit that as a written request, we will respond as----
    Senator Whitehouse. That is what I would like to do. I am 
just trying to clarify that.
    Okay. Thank you.
    The Chairman. Senator Portman?
    Senator Portman. Thank you, Mr. Chairman. I appreciate you 
having the hearing today. And, Secretary Ross, good to have you 
back.
    You guys have been busy, clearly.
    As you know, I am supportive of cracking down on China. I 
think it is necessary. I think we have tried in the past; it 
has not been successful. And my hope is, we will have more 
success. We have to be careful about an escalation there.
    I also support what we are doing with regard to a better 
NAFTA accord. We need NAFTA, we need it badly, but we have to 
be sure that it is updated.
    I also believe in leveling the playing field on trade 
generally. I am the author of the Leveling the Playing Field 
Act with Senator Brown. We have been winning cases 
consistently, including steel cases, because of unfair trade 
dumping and subsidies.
    My concern is 232. And you and I have talked about this.
    Secretary Ross. Yes, sir.
    Senator Portman. It is a very extraordinary remedy that 
ought to be used very carefully and very selectively. And it 
ought to be used for national security reasons, which is why it 
was drafted.
    Frankly, my concern is, the way we are using it now, it is 
both misusing it and having negative economic impacts in 
certain sectors, but also I think it risks us not having this 
tool in the future. Because, although the WTO has not yet 
adjudicated this case, if we are pushing the envelope beyond 
national security, I think we lose a tool that could be very 
important for us in a true national security situation.
    I am deeply concerned about its application to Canada, as 
an example, our number-one export market from Ohio, the 
country's number-one export market. Mexico, the EU--I do not 
see the national security perspective there.
    And I have looked back, you know, to try to figure out, 
well, what did we mean back in the 1960s when we came up with 
this bill? It has only been used, as you know, a few times. It 
has not been used in over 30 years.
    Secretary Ross. Right.
    Senator Portman. George Bush tried to use it, and his 
Secretary of Commerce said it was not a national security 
concern with regard to steel, so he had to use another measure.
    It does not require any surge. It does not require any 
showing of material injury. So it is very unusual in terms of 
our trade laws and ought to be used for national security 
concerns.
    When you look back at the then-chairman of the Ways and 
Means Committee, what he said, he talked about, you know, this 
needs to be used to be sure we are helping our allies, not 
hurting them. He said any modification of a duty on imports 
would inevitably result in curtailment of exports; it could be 
a burden on the domestic industry. It would not only be a 
burden on the domestic industry, an economic disadvantage, it 
would also be a disadvantage to national security. So that was 
the thought here: this would be very narrow.
    And speaking of damages, Ohio, as you know, is 
disproportionately hit. We are hit harder than any other State 
by the Canadian retaliatory tariffs, as an example, because of 
232.
    So I get your argument that we have a global glut of steel. 
I agree with that. China is the reason. Fifteen years ago, they 
had about 15 percent of production; now they have about 50 
percent of the world's production. They do not need it, they 
are sending it out below its costs. That is dumping. That is 
why we are winning these cases, including almost a 300-percent 
tariff on some of the rolled product from China today.
    I believe that the ENFORCE Act ought to be used much more 
aggressively. This is something I worked on with Senator Wyden 
and others in this committee. It is in law to stop these 
transshipments, where China sends its product to one country 
and then it ends up coming to us. We are not enforcing it in 
the way we should. And Customs and Border Protection has a huge 
role to play there.
    I think with regard to Canada and Mexico, there is a 
solution that we ought to be looking to. One, the ENFORCE Act. 
If you see a problem too, let us measure transshipment.
    My understanding is, we do not know to what extent there is 
any transshipment. We are not even accusing them of that. We 
are certainly not accusing them of any unfair trade practices. 
But if that is true, let us have a trigger in place where, 
should that happen, we can react. It seems like that would be a 
very appropriate part of the NAFTA negotiations.
    How would you feel about such an approach where we could 
measure transshipments and then have a trigger in NAFTA as 
compared to using 232, this blunt instrument?
    Secretary Ross. Well, at present, there is no measurement 
being conducted, because Customs and Border Protection is not 
very interested in things that are shipped between two 
countries that have no tariff to each other. So we simply do 
not have definitive data as to what is going on in the way of 
transshipment from China through Canada.
    We have seen all kinds of transshipment with or without 
slight modification of product going on to get around the 
existing enforcement actions we have taken.
    You are well aware, we have some 440 trade actions in 
force, including the one we just put in on the welded, large-
diameter pipe, mostly against China.
    But what happens is, the WTO rules--as you are well aware 
as former U.S. Trade Representative--require great specificity 
as to product and origin. So if they make a small modification, 
a steel bar like this, if they put a little, tiny flange on it, 
we have to start all over.
    Senator Portman. I would just say, Mr. Secretary--and I 
appreciate your response--that is why we wrote the ENFORCE Act, 
precisely to be able to get at those kinds of situations.
    And I understand you are saying that Customs and Border 
Protection does not prioritize this issue as much as you would 
like them to, apparently. We agree. That is why we wrote the 
law.
    So it seems to me, before we take these extraordinary 
actions and really risk the possibility of using 232 in the 
future, in my view--because I think the next time it is before 
the WTO, it is going to be very problematic for us, given the 
way we are using it without any national security connection.
    Let me go on to another one, which is automobiles. What is 
the basis for a national security concern with regard to 
automobiles?
    Secretary Ross. Well, we are at the early stages of the 
investigation on the auto industry. So we clearly do not have 
conclusions.
    There are a few things, however, that we are very concerned 
about, one of which is the automotive trade deficit that we 
have been experiencing.
    If you look at the overall trade deficit of the--and we are 
going to put up a chart to show you why we think it is so 
important and so dramatic.
    The blue bars, the vertical ones, are the amount of trade 
deficit each year. And you will see that starting about 1985, 
we had small trade deficits in autos; now we have a quite huge 
one, pushing $140 billion a year.
    We have a similar one in auto parts. And as you can----
    Senator Portman. Let me just say, because I am over my 
time--and I apologize. I wish we had more time. Maybe we can do 
a second round. I know you have to leave also.
    But my point is not that we do not have a need to balance 
trade, it is what tools we use. And if you use 232--and I 
looked back at the legislative history. It has only been used 
three times since the 1960s when it was written. It has not 
been used in over 30 years, because other Commerce Departments 
have said this is not a national security concern--I do think 
that you risk these huge retaliatory tariffs that will be 
upheld.
    By the way, our auto industry now is the number-one 
exporter in America.
    Secretary Ross. Right.
    Senator Portman. Cars and auto parts, the number-one 
exporter. So losing those export markets is a big deal to the 
auto companies as well. It is also a highly integrated 
industry, as you well know, given your background.
    Secretary Ross. Sure. Truly.
    Senator Portman. And so the supply chains are complicated, 
but they are international. So they are really concerned.
    I just hope, Mr. Secretary, that we continue to make 
progress and level that playing field, reciprocity, but do it 
with the tools we have at our disposal that deal with unfair 
trade, that deal with surges, that deal with countries that 
dump, that deal with countries that subsidize, and be very, 
very cautious in terms of how we extend beyond that, because I 
think that will end up hurting our workers and our economy.
    And I thank you for being here today. I look forward to 
continuing to work with you on this.
    Secretary Ross. Thank you very much, Senator.
    The Chairman. Well, thanks, Senator Portman.
    The witness's time--he is supposed to leave here at 11:15; 
he has an appointment at the White House.
    Senator Isakson has a short statement. And then there is a 
quick question from Senator Cardin, if we can finish up that 
way.
    Senator Isakson. I will be very quick.
    I respect your time, and I appreciate you staying here this 
morning.
    And I know whom you speak for and represent, and I know 
whom I speak for, which is the voters of the State of Georgia.
    Let me just say this. In your first press conference on the 
steel and aluminum tariffs, at the end of that press conference 
you held up an aluminum can and made reference that tariffs 
would only add pennies to the cost of that can.
    The largest producer of soft drinks in the United States of 
America and in the world is the Coca-Cola Company, which is 
headquartered in Atlanta. That pennies a can is pennies times a 
billion for the billions of cans of Coca-Cola and other 
products they produce that are sold every single day by their 
bottlers and their retail outlets.
    The same is true with automobile companies. The same is 
true with everybody.
    So, although a couple of pennies on a can is not much, a 
couple of pennies times a billion is lots. We are getting into 
a war that is going to cost lots of billions of dollars. And we 
need to be careful to follow the admonition of Senator Portman 
and make sure we know where we are going before we find out we 
got there and it is the wrong place to be.
    Thank you, Mr. Secretary.
    The Chairman. Thanks, Senator.
    Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman.
    And, Mr. Secretary, thank you for being here.
    And I was listening to your exchange with Senator Portman, 
and a lot of that I agree on. Our enforcement rules we strongly 
support and want the enforcement rules used. The problem is 
that the way this administration is using 232 is unprecedented 
and not what was anticipated in that authority being given by 
Congress.
    You also have pointed out, the framework for international 
trade under WTO does not cover a lot of things that we would 
like to see it cover. I have not seen the administration work 
within the WTO to try to make that more favorable towards the 
U.S. As you point out, we have open markets.
    And lastly, in our bilateral and regional trade agreements, 
we have elevated the standards. And they have worked to help 
American companies. And you do not seem to be sensitive to 
trying to deal with some of these issues on that level.
    So I share Senator Cantwell's concern that we are getting 
into a trade war. I do not understand. Are we in a trade war? I 
do not understand the administration's strategy.
    Certainly, as we talk to some of our key partners, some of 
whom we have favorable trade balances with, they are scratching 
their heads as to why we are taking action against one of our 
NATO allies. So it raises significant concern, the manner in 
which the administration is carrying out the trade policy.
    My quick question deals with some of the issues that have 
already been raised in regards to small companies. I am the 
ranking Democrat on the Small Business Committee. And I heard 
your exchange on this issue before.
    But I would just point out, small companies do not have an 
army of lawyers that can help deal with exemption of products, 
and they cannot deal with the way that the original process was 
set up for exemptions. It just does not work for small 
companies.
    We need to have some sensitivity for them to be able to get 
the help they need in order to make an appropriate case to you 
for an exemption of product line.
    I would just urge you to work with us and the small-
business community so we can find a streamlined process, 
perhaps through their industry representatives, so that they 
can pursue properly exemptions to these rules.
    Secretary Ross. Right. Well, I think you were perhaps not 
here earlier when I described some of the changes that we have 
in fact made. One of them is----
    Senator Cardin. I heard that exchange. I was not here, but 
I heard it.
    But it is not working yet.
    Secretary Ross. Well, I honestly do not agree with that. It 
is working, but there are these time periods that are required, 
like the one that Senator McCaskill mentioned, complaining that 
we had not granted an exclusion to a request that was filed a 
few days ago after weeks and weeks and weeks during which it 
could have been filed. So it is not our fault if people file 
late.
    And I put up a chart before. The number of filings that are 
still coming in is quite considerable. So we cannot deal with 
an exclusion request that has not been filed.
    Senator Cardin. And my point is that the process that you 
have set up makes it extremely challenging for a small company 
to be able to pursue a product line exemption.
    Secretary Ross. Yes. But the only way that we can deal with 
it is very specific products, the harmonized code, because that 
is the only way the Customs and Border Patrol can deal with 
things and implement them. We have no choice.
    Senator Cardin. Well, would you let a trade organization 
file the claim on behalf of a business?
    Secretary Ross. No, the reason that----
    Senator Cardin. So how do they have the capacity to do 
this?
    Secretary Ross. Here is the reason that that does not work, 
sir. The only way the trade association will know the 
harmonized code numbers, which are up to 10-digit numbers, the 
only way they would know them is to get them from the 
individual members. So adding another step to the process not 
only would not accelerate it, it would slow it down.
    So we decided that it is better and essential to have the 
individual companies file the individual requests, and 29,000 
or some such number have already been filed. So the process is 
under way.
    Senator Cardin. And you and I will just have to disagree on 
this. I am telling you, from our perspective, from the small-
business role that I play, it is not working for a lot of small 
companies. They effectively cannot pursue this. It is because 
they do not have the capacity to do this.
    Secretary Ross. Well, I do not mean to be argumentative, 
but I find it hard to imagine that even a small company does 
not know the harmonized code number of the products they buy. I 
really have a great deal of difficulty----
    Senator Cardin. And I have a hard time understanding why a 
trade association could not do that on behalf of a small 
company.
    The Chairman. Okay. Okay. This has been good. And I want to 
thank you all for your attendance and participation today.
    And I want to thank you again, Secretary Ross, for your 
patience and for your being here today and answering the 
questions, your willingness to appear and answer our questions 
today.
    And I ask that any member who wishes to submit questions 
for the record do so by noon on Friday, June 27th.
    So with that, we are going to get you going so you can meet 
your schedule.
    This hearing is adjourned.
    Secretary Ross. Thank you, Mr. Chairman.
    The Chairman. Yes, sir.
    [Whereupon, at 11:28 a.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


              Prepared Statement of Hon. Orrin G. Hatch, 
                        a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah) 
today delivered the following opening statement at a hearing with U.S. 
Commerce Secretary Wilbur Ross to examine the use of tariffs under 
section 232 of the Trade Expansion Act of 1962.

    I intend to focus this morning on three investigations self-
initiated by the Department of Commerce under section 232 of the Trade 
Expansion Act of 1962.

    It should come as no surprise that many of us on the committee have 
concerns about the process, effects, and strategy behind these 
investigations and resulting actions.

    That includes the serious problems that Senator Wyden and I raised 
in April about the product exclusion process, a process that still 
needs significant improvement.

    In February, the Department of Commerce completed two of its 
section 232 investigations, one on imports of steel and the other on 
aluminum products.

    As a result of those reports, the United States is currently 
imposing tariffs of 25 percent on steel products, and assessing tariffs 
of 10 percent on aluminum products.

    Combined, these tariffs directly affect almost $50 billion worth of 
goods, while also affecting many billions of dollars more in downstream 
goods.

    American manufacturers are already suffering the consequences of 
increased cost and decreased supply of steel and aluminum inputs.

    Take, for example, Bish's Steel Fabrication. Bish's makes custom 
industrial equipment in my hometown, Salt Lake City, Utah, and sells to 
customers in the United States and around the globe.

    Bish's has been in business since 1945, but because of the Section 
232 tariffs, they are worried about their future.

    Steel prices are going up. Not just foreign steel subject to 
tariffs, but also U.S. steel.

    As a consequence, Bish's has lost its competitive edge against 
foreign manufacturers and the company tells me that contracts for 
future work have all but dried up.

    And Jack's Ornamental Iron, another Salt Lake City manufacturer, 
saw its steel costs jump 20 percent in less than two weeks since the 
steel tariffs were announced.

    These companies are small, Mr. Secretary, but they are important 
sources of jobs in our communities, and they are particularly 
vulnerable to the consequences of the steel and aluminum tariffs.

    On the other end of the scale, multi-billion dollar investments for 
new manufacturing plants that employ thousands of workers are also 
being put at risk.

    As you are aware, Mr. Secretary, the Shell Pennsylvania Chemical 
Project is one of the largest economic development projects in the 
United States.

    I grew up in Pittsburgh, and I know how important this development 
is for western Pennsylvania.

    The project is expected to employ 6,000 construction workers and 
600 full-time employees once the facilities are operational.

    Unfortunately, this project is being slowed down and these new jobs 
are being delayed because essential parts are being stopped by Customs 
as a result of the steel quotas.

    These parts are individually customized under contracts concluded 
years ago, and are suddenly being stopped at the Port of Long Beach 
because they contain steel from Brazil.

    I know delaying these construction and manufacturing jobs, and even 
putting some of these jobs at risk, was not the intent of the actions 
on steel, but it is the inevitable result.

    The negative consequences of the steel and aluminum tariffs are not 
isolated to manufacturing. Rather, the effects have spread throughout 
the economy.

    Take, for example, American farmers who are bearing the brunt of 
retaliation for these actions.

    As many of us know, Mexico is the largest export market for 
American pork, including pig farmers in Utah.

    Recently, Mexico announced it will impose tariffs of 20 percent on 
U.S. pork in retaliation for U.S. steel and aluminum tariffs. China, 
our second largest overseas market for American pork, is increasing 
tariffs by 25 percent.

    I just don't see how the damage imposed on all of these sectors 
could possibly advance our national security.

    The steel and aluminum tariffs distract from the real trade issue 
that must be addressed.

    The President has repeatedly stated that Chinese mercantilist 
policies harm U.S. companies and the U.S. economy--something I fully 
agree with.

    However, these steel and aluminum tariffs utterly fail to address 
Chinese overproduction.

    Of the steel and aluminum products targeted, only around 5 percent 
are from China.

    Let me repeat that. Only 5 percent are from China.

    In reality, these actions target our allies, particularly Canada 
and the European Union, with whom our trade in steel and aluminum 
products far exceeds our trade with China.

    This is not just my opinion.

    The U.S. Department of Defense has stated that it is ``concerned 
about the negative impact on our key allies'' of the steel and aluminum 
actions recommended by the Department of Commerce, particularly global 
tariffs and the use of quotas.

    The lessons of the steel and aluminum tariffs are clear: these 
tariffs do not support U.S. national security.

    Instead, they harm American manufacturers, damage our economy, hurt 
American consumers, and disrupt our relationship with our long-time 
allies while giving China a free pass.

    That's why I was stunned to hear on May 23rd that the Department of 
Commerce has initiated another investigation under Section 232, this 
time into the national security implications of imports of automobiles 
and auto parts.

    This investigation covers more than $200 billion worth of trade, 
four times larger than that under the steel and aluminum investigations 
combined.

    A car isn't a can of soup, Mr. Secretary.

    For most American families, their car is the second biggest 
purchase they make, and many require a car to get to their jobs.

    It is a significant financial commitment for most families, often 
paid for with debt, and I'm shocked that anyone would consider making 
it more expensive.

    The average price of an imported car is $23,200. If the Department 
of Commerce were to recommend a 25 percent tariff on cars, it would be 
recommending raising the cost of an average imported car for an 
American family by $5,800.

    To put that in perspective, the median household income in the 
United States is just over $59,000.

    That means that roughly ten percent of the median household income 
could be erased purely by the additional cost of a single car.

    That's why I call tariffs a tax on American families.

    And the Tax Foundation agrees.

    It estimates that auto tariffs could result in a $73 billion tax 
increase on American consumers and businesses, erasing many of the 
benefits of tax reform passed earlier this Congress.

    Not only would these tariffs cost American families, but would also 
they put American jobs at risk.

    The Peterson Institute calculates that auto tariffs could cause 
195,000 workers to lose their jobs. That's nearly 200,000 people out of 
work, and that's before other countries retaliate against American auto 
manufacturers, which supports U.S. jobs by exporting $65 billion worth 
of autos per year.

    And once again, though supposedly pursued for national security 
reasons, tariffs on cars and trucks target our closest allies--namely 
Europe, Canada, Mexico, Japan, and South Korea--while allowing China to 
continue its predatory trade policies undeterred.

    Mr. Secretary, as you consider these tariffs, know that you are 
taxing American families, you are putting American jobs at risk, and 
you are destroying markets--both foreign and domestic--for American 
businesses of all types, sorts, and sizes.

    I hope you consider that carefully as your Department conducts its 
investigation into the national security threat from imported 
automobiles and auto parts.

                                 ______
                                 
              Prepared Statement of Hon. Wilbur L. Ross, 
                   Secretary, Department of Commerce
    Chairman Hatch, Ranking Member Wyden, and members of the committee:

    The reports that I submitted to the President in January pursuant 
to section 232 of the Trade Expansion Act of 1962 found that steel and 
aluminum imports threaten to impair our national security. The 
President determined that tariffs are necessary to address this threat. 
As a result, the President signed proclamations on March 8th imposing a 
25-percent tariff on steel imports and a 10-percent tariff on aluminum 
imports. The President subsequently signed additional proclamations on 
March 22nd, April 30th, and May 31st, and modified the tariffs with 
respect to steel imports from Australia, Argentina, Brazil, and South 
Korea, and aluminum imports from Australia and Argentina. The 
President's section 232 decisions are the result of a robust and 
thorough interagency review coordinated by the White House.

    The tariff actions taken by the President are necessary to protect 
America's essential steel and aluminum industries, which have been 
harmed by the quantities and circumstances of imports to the point that 
allowing imports to continue unchecked threatens to impair our national 
security. These imports stem from a variety of reasons, including 
industrial export policies of our trading partners, unfair trade 
practices, and massive global excess production, particularly by China.

    I initiated the steel and aluminum section 232 investigations in 
April 2017, and the President signed two memoranda that month directing 
me to proceed expeditiously to conduct these investigations and report 
my findings. The Department provided a 30-day public comment period and 
held three days of hearings. Section 232 investigations include 
consideration of: domestic production needed for projected national 
defense requirements; domestic industry's capacity to meet those 
requirements; the existing and anticipated availabilities of human 
resources, products, raw materials, production equipment and 
facilities, and other supplies and services essential to the national 
defense; the growth requirements of domestic industries to meet 
national defense requirements and the supplies and services, including 
the investment, exploration and development necessary to assure such 
growth; the impact of foreign competition on the economic welfare of 
individual domestic industries; and any substantial unemployment, 
decrease in revenues of government, loss of skills or investment, or 
other serious effects resulting from the displacement of domestic 
products by excessive imports, without excluding other factors, in 
determining whether such weakening of our internal economy may impair 
the national security.

    We concluded that steel import levels and global excess capacity 
are weakening our domestic economy and therefore threaten to impair our 
national security. The level of foreign steel imports has been greater 
than 30 percent for the past four years and threatens to impair the 
national security by displacing domestic production. Six basic oxygen 
furnaces and four electric arc furnaces had closed since 2000 and 
employment has dropped 35 percent since 1998. Global excess capacity 
will cause U.S. producers to face more and more competition from 
foreign imports as other countries increase their exports to further 
their own economic objectives. China is by far the largest producer and 
exporter of steel, and the largest source of excess steel capacity. 
China's excess capacity alone exceeds the total U.S. steel-making 
capacity by at least three times. Even more importantly, China exported 
40 percent more steel than the U.S. produced in 2015 and 36 percent 
more in 2016. In 2017 China reduced its exports, but still exported an 
amount of steel equal to 90 percent of total U.S. production.

    We also concluded that the quantities and circumstances of aluminum 
imports are weakening our economy and threaten to impair national 
security. Rising levels of foreign imports put domestic producers at 
risk of losing the capacity to produce aluminum needed to support 
critical infrastructure and national defense. Aluminum imports had 
risen to 90 percent of total domestic demand for primary aluminum, up 
from 66 percent in 2012. From 2013-2016, aluminum industry employment 
fell by 58 percent, six smelters shut down, and only two of the 
remaining five smelters are operating at capacity, even though demand 
has grown considerably. The report found that excess production and 
capacity, particularly in China, has been a major factor in the decline 
of domestic aluminum production. We concluded that if no action were 
taken, the United States could be in danger of losing the capability to 
smelt primary aluminum altogether.

    The tariffs on steel and aluminum are anticipated to reduce imports 
to levels needed for these industries, in combination with good 
management, to achieve long-term viability. As a result, these 
industries will be able to re-open closed mills, sustain a skilled 
workforce, invest in needed research and development, and maintain or 
increase production. The strengthening of our domestic steel and 
aluminum industries will reduce our reliance on foreign producers. It 
will take time for U.S. steel and aluminum producers to fully restart 
idled capacity and regain long-term financial health.

    However, industry has started taking actions to restart idled 
capacity:

          U.S. Steel is restarting two steel blast furnaces in Granite 
        City, IL, adding approximately 2.5 million metric tons of steel 
        capacity available for U.S. consumers.
          Republic Steel is restarting an idled steel electric arc 
        furnace in Lorain, OH.
          Liberty Steel is reopening its wire rod coil steel facility 
        in Georgetown, SC.
          Magnitude 7 Metals is restarting 236,000 metric tons of 
        aluminum production in Marston, MO.
          Century Aluminum is investing $100 million dollars to 
        restart and modernize its high purity aluminum smelter in 
        Hawesville, KY.
          India's JSW Steel Limited announced in March 2018 that it 
        paid nearly $81 million to acquire the Acero Junction facility 
        near Steubenville, OH.

    The United States is not the only country that has expressed 
concern about the types of unfair trade practices and excess capacity 
that are prevalent in the steel and aluminum industries. Countries like 
China have provided massive subsidies to their companies, and this is 
harming markets worldwide. Recognizing our shared concern about global 
excess capacity, the President's proclamations announcing these actions 
welcomed any country with which we have a security relationship to 
discuss alternate ways to address the threatened impairment of the 
national security caused by imports from that country.

    In addition, the President authorized the establishment of a 
mechanism for U.S. parties to apply for exclusions from the applicable 
tariff for specific products based on demand that is unmet by domestic 
production or for specific national security considerations. This 
process is being managed by the Commerce Department in consultation 
with other Federal agencies. We published an interim final rule in the 
Federal Register on March 19 establishing the procedures for the 
exclusion process.

    Today, we are announcing our first determinations on 98 exclusion 
requests for steel products, granting 42 requests and denying 56. 
Commerce has received more than 20,000 steel and aluminum exclusion 
requests (including resubmissions) and has posted more than 9,200 for 
public review and comment. Commerce has also received more than 2,300 
objections to exclusion requests. Review of exclusion requests and 
related objections is being conducted on a case-by-case basis in a fair 
and transparent process. Commerce is making an unprecedented effort to 
process the requests expeditiously. The public comment period on the 
interim final rule ended on May 18th, and we are reviewing the comments 
received to assess whether any revisions to the process are necessary.

    On May 23rd, I also initiated an investigation under section 232 to 
determine whether imports of automobiles and automotive parts into the 
United States threaten to impair the national security. Automobile 
manufacturing has long been a significant source of American 
technological innovation. This investigation will examine the United 
States' production capabilities and technologies needed for projected 
national defense requirements and the adverse effects of foreign 
competition on our internal economy. As with the steel and aluminum 
investigations, there is a transparent notice and comment period: a 
Federal Register notice was issued on May 30th inviting public 
comments, which are due by June 22nd. Public hearings on the 
investigation will be held on July 19th and 20th.

    This administration is standing up for American families, American 
businesses, and American workers by taking action to reduce imports 
that threaten our national security.

    Thank you for allowing me to testify on this important matter, and 
I look forward to answering questions from members of the committee.

                                 ______
                                 
       Questions Submitted for the Record to Hon. Wilbur L. Ross
               Questions Submitted by Hon. Orrin G. Hatch
    Question. In March, when the Commerce Department published 
instructions in the Federal Register for the product exclusion process, 
the Commerce Department estimated that the steel and aluminum product 
exclusion processes would yield a total of 6,000 responses. During the 
hearing on June 20th, you told me that Commerce has received more than 
20,000 responses, meaning that the Commerce Department's estimate was 
wrong by 330 percent and counting.

    In light of the magnitude of the error in this estimate, what steps 
is the Commerce Department taking to confirm whether the estimates and 
assumptions that underlie its national security analysis of steel and 
aluminum imports are proving to have been correct or wrong?

    Answer. The Department's estimates on the number of product 
exclusion requests were based on the number of exclusion requests 
submitted in response to President Bush's March 5, 2002 imposition of 
safeguard measures on certain steel products under section 201 of the 
Trade Act of 1974. The 2002 action was the most relevant prior 
experience upon which the Department could draw. However, the 2002 
action was not an exact analog. For example, under the 2002 action 
there was a limited window for exclusion requests to be submitted. In 
contrast, the exclusion process in the current action is ongoing. It 
also appears that many companies are submitting exclusion requests for 
every steel and aluminum product they import, even if the product is 
available in the U.S. market. The number of product exclusion requests 
does not affect the Secretary's analysis and conclusion that the 
quantities and circumstances of steel and aluminum imports threaten to 
impair U.S. national security.

    Question. The process that the Commerce Department is administering 
for businesses to request product-based exclusions from the steel and 
aluminum tariffs has had many serious flaws, and problems continue to 
surface. For instance, some petitioners have been subject to objections 
that, in their view, contain inaccurate, incomplete, or misleading 
claims, and they would like to rebut those claims. However, I 
understand that the Commerce Department has provided no formal channel 
for submitting rebuttals on regulations.gov, which is where all of the 
requests and objections must be filed.

    Will the Commerce Department accept rebuttal comments on objections 
and, if so, will petitioners be able to submit their rebuttals through 
the regulations.gov website?

    Answer. The Department has developed a rebuttal process to allow 
exclusion requestors to provide evidence refuting objectors' claims of 
domestic capacity. This process has been implemented in the revised 
exclusion process rule, which was published in the Federal Register on 
September 11th and is also available on the BIS website.

    Question. U.S. businesses have contracts for the purchase of steel 
and aluminum products that pre-date the administration's imposition of 
quotas.

    How will the Department of Commerce ensure that quotas will not 
interfere with supply of products companies rely upon to execute long-
term business and investment plans?

    Answer. On August 29th, the President signed proclamations allowing 
the Secretary to provide relief from quotas imposed under section 232 
on steel from South Korea, Argentina, and Brazil, and aluminum from 
Argentina. Companies can apply for product exclusions on the same basis 
as product exclusions are available from tariffs, namely lack of 
sufficient quantity or quality available from U.S. steel or aluminum 
producers, or for national security reasons. In such cases, an 
exclusion from the quota may be granted and no tariff would apply to 
the excluded steel or aluminum product.

    In addition, the President has proclaimed that exclusion from the 
quota be provided in certain limited cases where steel articles from a 
quota country are being imported for use in a facility construction 
project in the United States under a contract signed prior to the 
President's decision to adjust imports under section 232, and that 
cannot enter into the United States because the applicable quota has 
already been reached. In such cases, the steel articles excluded from 
the quota may only be imported upon payment of the 25-percent tariff.

    Question. During the June 20th hearing, I asked you what the 
national security justification is for refusing to grant exclusions 
from the section 232 quotas where, in the same circumstances, the same 
product would be excluded from the section 232 tariffs. You responded 
that ``the President's proclamation does not authorize us to grant 
exclusions from quotas,'' and that the Commerce Department ``is giving 
real consideration to requesting the President to consider whether the 
similar [product] exclusion [process] should be granted to those 
countries subject to quota.''

    What steps have you taken to obtain authority to grant American 
businesses product exclusions from the section 232 quotas?

    Answer. Please see the answer to the question above.

    Question. If authority for the Commerce Department to grant 
American businesses product exclusions from the section 232 quotas is 
not imminent, what is the national security justification for the delay 
in obtaining such authority?

    As chairman of the Senate committee charged with oversight of U.S. 
international trade policy, I view the Commerce Department as 
responsible for procuring this authority, absent an urgent and 
compelling national security justification.

    Answer. Please see the answer to the question above.

    Question. According to the interim final rule that the Commerce 
Department published in the Federal Register on March 19, 2018 (83 Fed. 
Reg. 12,106), ``follow-on requesters of exclusion requests are not 
required to reference a previously approved exclusion, but Commerce may 
take that into account when reviewing a subsequent exclusion request.''

    Has the Commerce Department organized the adjudicated product 
exclusion requests and determinations into a searchable format to allow 
American businesses to identify efficiently whether or not the Commerce 
Department has issued any precedent in respect of a particular steel or 
aluminum product?

    If not, will American businesses need to canvass each one of the 
tens of thousands of requests and determinations to identify whether a 
precedent exists for each steel or aluminum product?

    Answer. We are posting responses on regulations.gov to each steel 
and aluminum exclusion request submitted. The file names include the 
requester's name, a product description, and the HTSUS classification 
associated with each exclusion request to assist U.S. industry in 
determining whether any precedent exists for each steel or aluminum 
product. The regulations.gov website includes search features.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
    Question. Public reports and filings from the Office of Government 
Ethics (OGE) raise new questions regarding trades you made pertaining 
to your stake in Navigator Holdings, a publicly traded shipping firm 
which does substantial business with Sibur, a Russian energy company 
owned by oligarchs sanctioned for their close ties to President 
Vladimir Putin. On October 26, 2017, New York Times investigative 
reporter Mike McIntire sent you a letter requesting comment on a story 
he was working on that would reveal your investment in Navigator and 
the company's dealings with Sibur. Subsequently on October 31st, OGE 
filings show that you took out a short position in your shares of 
Navigator Holdings worth up to $250,000, allowing you to exit the 
position with a profit if the stock price dropped in response to the 
potentially damaging story. The New York Times piece was then 
published, and the Navigator Stock declined four percent in the 11 days 
before you exited your position.

    Accordingly, please provide answers to the following questions 
regarding your trading activity.

    Did you personally direct the opening of a position on your shares 
of Navigator Holdings on October 31, 2017?

    Answer. I directed the sale of my remaining shares of Navigator 
Holdings Ltd. (Navigator) that occurred on October 31, 2017. This 
transaction completed the disposition of my direct and indirect 
interests in Navigator, which I initiated in May 2017. The facts and 
context of these divestments should allay any concern about the sale.

    In my new entrant OGE Form 278, completed in January 2017, I 
reported my prior service as a director of Navigator from January 2012 
. November 2014. I further disclosed holding interests in Navigator 
indirectly through three investment funds, specifically noting that 
Navigator is in the transoceanic shipping sector. Unfortunately, I 
inadvertently omitted from the report Navigator shares that Navigator's 
stock transfer agent held on my behalf in book entry form. Many years 
ago, when I served as a director, Navigator awarded those shares to me 
as part of the company's compensation plan for directors. I did not 
keep a personal record of this holding and I simply did not recall it 
when I prepared my OGE Form 278.

    In my Ethics Agreement, dated January 15, 2017, I agreed to divest 
nearly all investments that I held in specific companies and in the 
investment funds managed by my former firm. The Ethics Agreement 
authorized me to retain investments in funds that held transoceanic 
shipping company stocks, including Navigator. The Department's ethics 
office explained that the likelihood that I would need to participate, 
in the words of the Agreement, in ``any particular matter affecting 
these entities is remote.''

    Nevertheless, to eliminate any remaining concerns about my 
retention of financial interests in Navigator, in May 2017 I decided to 
divest those interests. As I reviewed my records, I found a record of 
the directors shares that I had previously forgotten. I sold those 
shares on May 31st, as disclosed in an OGE Form 278-T transaction 
report that I filed on June 1, 2017. At that time, I believed that I 
had sold all of my directly held Navigator stock.

    Subsequently, however, as I was finalizing the sale in late October 
2017 of various investment fund interests, including interests in funds 
that owned Navigator stock, I learned that I still owned some Navigator 
shares in book entry form. I immediately directed the stock transfer 
agent to transfer those shares to a personal stock brokerage account so 
that I could sell them. Because I could not be sure how long that 
transfer process would take, I executed with the broker a short sale 
against the ``box'' of Navigator shares on October 31, 2017, with the 
intent of closing the position when the broker received my Navigator 
stock from the company's stock transfer agent. Weeks later, the broker 
received those shares and closed the position in November 2017.

    In a normal short sale, a person sells shares he does not own and 
hopes to buy them back at a lower price so that he can make a profit. I 
my case, I already owned the shares I sold and therefore had no profit 
motive in the transaction. The SEC rules require that you deliver 
shares sold within a 2-day period, but I knew from experience that a 
much longer period would be likely here. Therefore, I executed what is 
called a short against the box, meaning that I would temporarily borrow 
shares until I received mine from the agent. Since I was long and short 
the same number of shares, my net interest was zero. There was no 
potential for gain or loss as the long and short positions exactly 
canceled each other out. My purpose was simply to meet the required 
delivery date and weeks later when the broker finally received the 
shares from the agent, he turned those shares over to the person who 
initially had lent me his shares, completing the transaction. The fact 
that it did take weeks for my shares to be delivered to the broker 
proves that my decision was correct.

    I, therefore, sold the shares short against the box on October 31st 
as the only way to exit my position in Navigator immediately, prior to 
the delivery of the shares from the stock transfer agent. Selling the 
Navigator shares in this way neutralized my financial position and 
effectively terminated my direct financial interest in Navigator on the 
date of sale. In essence, the sale simply extended the time for me to 
deliver the shares to close the position.

    The October 31st sale of Navigator occurred in conjunction with my 
effort to complete the divestments of most of my investment fund 
holdings. Because those investments were illiquid, my Ethics Agreement 
provided an initial 180-day period to accomplish the divestments, with 
the possibility of an extension (an extension to October 25, 2017 was 
granted). Consistent with this commitment and timeline, I completed 
those divestments on October 25, 2017. I sold the previously overlooked 
Navigator book entry shares on October 31st, after I verified the 
holding. On the same day, I also sold short a small number of shares of 
Sun Bancorp, with the same intent of immediately eliminating the value 
of shares I already owned.

    In sum, (1) the sale of Navigator shares on October 31, 2017 was 
simply the last of several transactions, dating to May 2017, through 
which I disposed of my interests in the company, and (2) my purpose in 
executing a short against the ``box'' sale was solely to accelerate my 
separation from any financial interest in the company. I followed the 
same approach to divest Sun Bancorp holdings. The structure of the 
short sale--covering the open position with shares that I already 
owned--also demonstrates that the transaction had neither the purpose 
nor effect of seeking to profit from market trading.

    Question. Did your knowledge that the Times was working on a story 
detailing your investment in Navigator Holdings and its connections to 
Vladimir Putin's inner circle influence your decision to take a short 
position in the company?

    Answer. No. As I explain in the response to question 1, I sold my 
indirect Navigator interests on October 25th at the conclusion of a 
months' long divestment process, followed by my sale of the remaining 
direct holdings on October 31st. I also sold Sun Bancorp. on October 
31st. The timing of these and other divestments completed in late 
October resulted from the finalization of the fund divestments within 
the deadline required by my Ethics Agreement, as extended. and my 
concomitant review of my investment records, which revealed the 
remaining book entry Navigator shares and raised in my mind a question 
about my prior sale of Sun Bancorp. It is noteworthy that my investment 
interests involving Navigator were already a matter of public record, 
as was the fact that Sibur was a customer of Navigator, as was the 
identity of Russians owning Sibur. Therefore, there was no new 
information in the article.

    Question. Times reporter Mike McIntire recently stated that: ``Days 
after I sought comment from Wilbur Ross about his investment in a 
Kremlin-linked shipping firm, he shorted stock in the company, then 
sold it after my story with @sashachavkin came out.'' Is it true that 
after the Times sought comment, you shorted your stock in Navigator 
Holdings and then sold it after the story came out?

    Answer. The suggestion that I engaged in ``insider trading'' in 
executing the sale of Navigator Holdings stock on October 31, 2017, is 
utterly false. As you know, ``insider trading'' under Federal 
securities laws occurs when a person, in breach of a fiduciary duty, 
purchases or sells securities on the basis of material non-public 
information. That simply did not occur in respect of my sale of 
Navigator Holdings stock. Nothing in the article was not already in the 
public domain.

    Question. Did you profit off of the short position you took in 
Navigator Holdings days before the New York Times story was published?

    Answer. No. Because I already owned the stock used to close the 
short against the ``box'' position, I neither profited nor lost on the 
transaction.

    Question. You previously served on the board of Navigator Holdings 
and your private equity firm WL Ross Group had long been its largest 
shareholder. Did you communicate with any executives or board members 
at Navigator in advance of your decision to take a short position?

    Answer. Yes, I communicated with Navigator executives as I sought 
to pinpoint whether there remained any book entries of Navigator stock 
held in my name, and to arrange for the transfer.

    Question. Please identify each of your initial holdings in 
Navigator at the time of your nomination including the vehicle in which 
they were held, e.g., in the specific trust, partnership, etc.

    Answer. I held indirect interests in Navigator through my 
investments in three investment funds:
        (1) WLR Recovery Associates IV DSS AIV, L.P.
        (2) WLR Recovery Associates V DSS AIV, L.P.
        (3) WLR Select Associates DSS GP Ltd. (Cayman).

    In addition, I held Navigator stock in book entry form in records 
maintained by Navigator's stock transfer agent.

    Question. Please describe the extent to which you were required to 
divest each of these Navigator holdings by your ethics agreement? 
Please identify each related divestiture required by the agreement, 
e.g., the specific trust, partnership, etc.

    Answer. My ethics agreement did not require me to divest my 
Navigator holdings. I voluntarily chose to divest my interests in 
Navigator. As described in the response to Question 1 and reported in 
OGE Form 278-T transaction reports, I sold Navigator shares on May 31, 
2017 and October 31, 2017, and I sold my interests in the three funds 
listed in response to Question 6 on October 25, 2017.

    Question. Did you continue to hold any shares of Navigator at the 
time of the October 31, 2017 short sale? If so, how many shares and in 
what related holding, e.g., trust, partnership, etc.? On November 16, 
2017, you closed this short position. How many shares of Navigator did 
you hold at that time, if any, and in what related holding?

    Answer. Yes, Navigator's stock transfer agent maintained a book 
entry record of 14,093 shares in my name, which I discovered in late 
October 2017. I instructed the agent to transfer those shares to my 
account with a stock brokerage firm, which recorded receipt on November 
16, 2017. I sold 14,093 shares of Navigator in a trade executed as a 
short against the box on October 31st. The broker closed the short 
position after receiving the transferred shares weeks later.

    Question. To the extent you retained Navigator shares in October 
2017 or November 2017, wouldn't such holdings have violated your ethics 
agreement divestiture requirements?

    Answer. No. The Ethics Agreement did not require me to divest 
Navigator. To the contrary, the agreement specifically authorized me to 
retain my interests in funds that held Navigator, because of the 
Department of Commerce's judgment that owning interests in such 
transoceanic shipping companies would present only a remote likelihood 
of a conflict with any particular matter coming before me as Secretary. 
In fact, so far as I am aware, no particular matter involving Navigator 
has come before me since I became Secretary. I voluntarily chose to 
divest my direct and indirect Navigator interests, and did so.

    Question. As noted above, the Navigator Holdings short sale was 
listed on the OGE Form 278-T periodic transaction report you certified 
and filed on December 21, 2017. This filing was then certified by the 
Designated Agency Ethics Official, David Maggi, on January 18, 2018, 
and automatically sent to OGE. However, the form was never reviewed, 
certified, or posted on the OGE website within the required 60-day 
period. Did OGE contact you regarding the contents of this report? Did 
OGE return the form to you or Mr. Maggi stating that they were refusing 
to certify the report? If so, why?

    Answer. The Office of Government Ethics (OGE) did not contact me 
directly nor did it ever state that it refused to certify the report. 
OGE contacted Commerce ethics officials for clarifications and when 
they were provided OGE certified the report.

    Question. According to an OGE certification of ethics agreement 
compliance form that you signed on three separate occasions including 
June 2nd, September 5th, and November 1, 2017, you claimed:

        I complied with my interim recusal obligations pending the 
        divestitures required by my ethics agreement.

        I am recusing from particular matters in which I know I have a 
        personal or imputed financial interest directly and predictably 
        affected by the matter, unless I have received a waiver or 
        qualify for a regulatory exemption.

        I am recusing from particular matters in which any former 
        employer or client I served in the past year is a party or 
        represents a party, unless I have been authorized under 5 CFR 
        Sec. 2635.502(d).

        I am recusing from particular matters in which any former 
        employer or client I served in the 2 years prior to my 
        appointment is a party or represents a party, unless I have 
        received a waiver under Exec. Order 13770.

        You also confirmed on each date that you had received no 
        waivers pursuant to 18 U.S.C. Sec. 208, Executive Order 13770, 
        5 CFR Sec. 2635.502(d), or 5 CFR Sec. 2635.503(c). For each 
        instance in which you have recused yourself please provide 
        copies of all recusal determinations and supporting 
        documentation beginning on February 28, 2017.

    Please also confirm that you have in fact received no waivers 
pursuant to the above statutes and executive order.

    Answer. I confirm that I received no such waivers.
   section 232 tariffs: inconsistency and chaos in product exclusions
    Question. On June 20th, The Washington Post quoted a senior 
Department of Commerce official as saying that the process for 
companies seeking exclusion from the section 232 tariffs on steel and 
aluminum ``is going to be so unbelievably random, and some companies 
are going to get screwed.'' According to that official, ``These people 
are making multibillion-dollar, unbelievably uninformed decisions.'' 
The number of companies caught up in this chaos is staggering. You 
planned on receiving 6,000 applications for exclusion. So far you have 
gotten 21,000. You stated at the hearing that you have made decisions 
on less than 1 percent of those applications.

    Manufacturers all over the country are facing rising costs that 
make it impossible for them to compete. I am hearing complaints from 
across Oregon about this process and these hard-Working Americans 
deserve answers.

    What was the basis for the Department's initial estimate of product 
exclusion applications? Did the Department prepare any analysis to 
support this estimate? If so, please provide a copy or, if that is not 
possible, summarize the key findings. If not, please explain why the 
Department did not prepare such analysis.

    Answer. The Department's estimates on the number of product 
exclusion requests were based on the number of exclusion requests 
submitted in response to President Bush's March 5, 2002 imposition of 
safeguard measures on certain steel products under section 201 of the 
Trade Act of 1974. The 2002 action was the most relevant prior 
experience upon which the Department could draw. However, the 2002 
action was not an exact analog. For example, under the 2002 action 
there was a limited window for exclusion requests to be submitted. In 
contrast, the exclusion process in the present action is ongoing.

    Question. Why in your view did the number of applications end up 
vastly exceeding the estimate that was the basis for the Commerce 
Department's interim final rule?

    Answer. Please see the answer to questions above. In addition, it 
appears that many companies are submitting exclusion requests for every 
steel and aluminum product they import, even if the product is 
available in the U.S. market.

    Question. The Department has requested additional funds to manage 
the product exclusions process. Did the Department prepare an estimate 
of budgetary requirements of the section 232 product exclusions process 
as part of its development of the interim final rule? If so, what were 
the Department's expected expenditures and have they been exceeded? If 
not, why not?

    Answer. As discussed in response to question 12 and noted in the 
interim final rule, the Department estimated 6,000 requests based on 
the most relevant prior experience and assessed resource needs 
accordingly.

    Question. Not only is the current exclusion request decision-making 
process both delayed in implementation and slower than the pace of 
incoming requests, but it is also defined by opaque and seemingly 
incoherent criteria by which requests are judged. To an outsider, the 
process appears to lack consistent standards by which exclusion 
requests are processed, assessed, and decided. Of the 98 requests that 
have been adjudicated to date, 48 were denied, all because according to 
the Department the companies provided ``insufficient information to 
verify the product description and/or HTSUS code.'' In other words, 
each of the denials were made on a technical basis and were not decided 
based on the actual merits of the requests.

    What does the Department do to verify the product description in an 
exclusion request?

    Answer. The Department of Homeland Security's Customs and Border 
Protection (CBP) provides a determination on whether the product 
description is consistent with the claimed Harmonized Tariff Schedule 
of the United States (HTSUS) classification.

    Question. Please provide examples of the types of information that 
were not contained in the rejected requests such that the request did 
not allow the Department to verify the product description in the 
application.

    Answer. There have been many cases in which CBP determined that 
requesters have provided incorrect HTSUS classification for their 
products or a product description that does not align with the 
identified HTSUS classification.

    Question. Prior to denying these business' requests, did the 
Department make any effort to give these companies an opportunity to 
correct their submission and provide sufficient information?

    Answer. CBP only reviews requests for which no objection has been 
filed. Thus, CBP's determinations come after the end of the comment 
period. If CBP advises that an exclusion is not administrable, for 
example due to a product description inconsistent with the claimed 
HTSUS classification, a denial is issued without prejudice, and the 
applicant is given contact information at CBP for questions and 
assistance in determining which HTSUS classification applies to their 
products. The applicant may then submit a new exclusion request. The 
Frequently Asked Questions note that in those circumstances, the 
applicant should note the resubmission and include CBP's HTSUS 
determination to expedite review.

    Question. Of the 48 rejected requests, how many were rejected for 
failing to comply with procedural filing requirements established by 
the Department in its interim final rule? Which specific requirements?

    Answer. Exclusion requests returned without posting include those 
that list multiple products and those missing information. Denials 
occur after posting and public comment, and can be based on meritorious 
objections, national security concerns, failure to meet the criteria 
for an exclusion, or CBP informing Commerce that an exclusion could not 
be administered--typically due to a product description inconsistent 
with the claimed HTSUS classification.

    Question. At the hearing I asked you to commit to providing within 
a week a list of specific fixes that the Commerce Department will 
implement to improve the exclusion application process, along with a 
timeline for the implementation of those improvements. We have not yet 
received a response from you or the Department.

    Please list the specific improvements to the product exclusions 
process the Commerce Department has implemented since the date of the 
hearing, and the date it took effect. In addition, please list any 
other improvements the Commerce Department intends to implement and, 
for each improvement, the date on which the Department intends to 
implement it.

    Answer. Based on several months of experience, to streamline the 
exclusion review process, the Department has:

          Modified internal procedures to expedite decisions on 
        requests that have no corresponding objections. After CBP 
        determines that the exclusion is administrable, meaning the 
        product description in the exclusion request is consistent with 
        the claimed HTSUS classification, the request will promptly be 
        granted if it presents no national security concerns and 
        otherwise meets the criteria for an exclusion. As of October 
        22nd, the Department has granted more than 12,000 exclusion 
        requests.
          Worked with CBP to enhance the speed and accuracy of its 
        review of exclusion requests. CBP no longer reviews requests 
        for which objections have been filed. CBP has automated its 
        review process and is expected to return the 5,000 steel and 
        aluminum requests sent to it on Friday, October 12th, along 
        with the 1,000 aluminum requests in its queue, within weeks.
          Provided language that was included in subsequent 
        Presidential Proclamations that allows successful exclusion 
        requesters to obtain refunds of duties paid as of the date 
        their original exclusion request was accepted.
          Developed a rebuttal process to allow exclusion requestors 
        to provide evidence refuting objectors' claims of domestic 
        capacity, which was published in the Federal Register on 
        September 11th and is also available on the BIS website.
          Increased and organized staff to most efficiently process 
        exclusion requests. As a result of Congress's authorization of 
        the reprogramming of funds to the Department's Bureau of 
        Industry and Security (BIS), BIS has hired 15 contractors. In 
        addition, the Department's International Trade Administration 
        (ITA) has used existing funds to bring on 41 contractors, with 
        11 more in the hiring queue, to review objections and provide 
        recommendations to BIS. Moreover, over a dozen non-BIS Commerce 
        Department staff have been detailed to BIS to assist in its 
        administration of the steel and aluminum exclusion process.
          In addition to these measures, the Secretary has directed 
        Commerce Department economists to regularly review the impacts 
        of the steel and aluminum tariffs, including on downstream 
        sectors. The Secretary will present this information to the 
        President for his consideration.
         section 232 tariffs: objections to exclusion requests
    Question. I have been hearing concerns from companies seeking 
product exclusions that some of the objections filed in response to 
their requests contain misleading or inaccurate information. I have 
been told that in some cases, domestic producers are objecting with 
claims that they could make the products in question, even though they 
do not currently manufacture the needed goods.

    What is the Department's process for verifying that the information 
contained in filed objections is accurate?

    Answer. The Department reviews objections the same way it reviews 
requests and has rejected 2,874 objections as of October 22nd. In 
addition, the Department has developed a rebuttal process to allow 
exclusion requestors to provide evidence refuting objectors' claims of 
domestic capacity, which was published in the Federal Register on 
September 11th and is also available on the BIS website.

    Question. When a company seeking an exclusion considers that 
information in an objection filed on its request is inaccurate or 
misleading, what process is available for it to advise the Department 
of its concerns?

    Answer. Please see the answer to the question above.

    Question. Does the Department take such concerns into account in 
evaluating requests for exclusion and objections to those requests?

    Answer. Yes.

    Question. If the Department does take these concerns into account, 
how does it ensure that all interested parties are aware of the 
identified concerns?

    Answer. Rebuttals to objections and surrebuttals to rebuttals will 
be posted on regulations.gov as set forth in the September 11th Federal 
Register notice.

    Question. What recourse does a company have if it considers that 
its exclusion request was wrongfully denied or if its objection was 
wrongfully overruled?

    Answer. A party may submit another request for exclusion and should 
provide additional details or information to support the request. If a 
resubmission is granted, duties paid will be refunded from the date the 
original exclusion request was accepted by the Department of Commerce. 
Exclusions are typically granted for 1 year, so requesters will have to 
submit renewal requests to extend an exclusion. Objectors can then 
submit comments regarding the renewal request.

    Question. If there is no objection to a request, within how many 
days after the expiration of the objection period will the Department 
issue its determination on the request?

    Answer. The timing will primarily depend on when Customs and Border 
Protection (CBP) determines whether the product described in the 
request is consistent with the claimed classification under the HTSUS. 
CBP has recently automated its process and expects to return tranches 
of requests within 2 weeks of receipt. Once it receives CBP's 
determination, BIS will assess the request for any national security 
concerns and to ensure it otherwise meets the criteria for an 
exclusion. If BIS identifies no national security concerns and the 
request meets the exclusion criteria, it will expeditiously post a 
decision on regulations.gov granting the exclusion request.
    section 232 tariffs: exclusion request burden on small business
    Question. The exclusion process, as it is currently structured, 
places a tremendous regulatory burden on American small business. 
Because companies are required to submit exceedingly specific exclusion 
requests for each marginally different product, many small businesses 
are being made to file dozens of separate exclusion requests. America's 
small businesses can rarely afford to retain a small army of corporate 
lawyers to help them navigate this bureaucracy. Rather than spending 
their valuable time, money and energy expanding their businesses, these 
companies are instead forced to expend their resources to process 
mountains of paperwork.

    You have suggested that the reason the Department does not allow 
industry representatives to submit exclusion requests on behalf of 
companies is that the amount of detailed information required in the 
application necessitates a request from the company itself. However, an 
industry representative could work with companies to compile the 
detailed information required and submit it on an individual company's 
behalf. In some cases, this type of assistance could prove valuable to 
small businesses. Would the Department still refuse to accept such 
applications, and if so, why?

    Answer. The Department has sought to minimize the burden on 
requesters while ensuring that the objectives of the President's 
proclamations are met. Allowing trade associations to file requests 
will not make the process more efficient. While industry 
representatives could serve as a resource to small businesses seeking 
guidance in compiling such requests, exclusions are granted to 
importers of record. This, plus the accurate HTSUS code, allow CBP to 
determine which specific imports are excluded from the tariffs or 
applicable quota. To evaluate an Exclusion Request, and to allow 
potential objectors to evaluate the request, parties applying for 
exclusions are required to identify the source products for the single 
product for which the exclusion is requested, the annual quantity to be 
supplied, the name of the current manufacturer(s)/supplier(s), and the 
country of the manufacturer(s)/supplier(s). The exclusion request, if 
granted, will only pertain to the identified supplier(s) listed in the 
exclusion request form and the specific country of origin identified by 
the requester. The Department has also posted online tips and a guide 
for submitting exclusion requests on regulations.gov. The Department is 
also always available to answer questions at our dedicated phone and 
email accounts.

    Question. What specific procedures has the Department of Commerce 
adopted to streamline the product exclusions process and ease the 
regulatory burden on small companies?

    Answer. Please see the answers to questions above.
  section 232 tariffs: impact on u.s. manufacturers / lack of analysis
    Question. I am in favor of tough enforcement, but it needs to be 
targeted and effective enforcement that will help and not harm U.S. 
companies and workers. Secretary Ross, back in January you issued a 
report recommending to the President that tariffs be imposed on 
imported steel and aluminum. Now some American manufacturers have said 
they can no longer compete with a company across the border in Canada, 
where there are no similar tariffs on inputs. Others simply cannot 
absorb the higher costs and worry that customers will delay purchases 
if they try to force them to pay more.

    What economic studies did the Commerce Department do before the 
tariffs were announced to understand how the tariffs would affect 
downstream producers, including producers of products important to the 
national defense? If studies were done, please provide a copy of the 
studies to the Senate Finance Committee and indicate whether they have 
been made available to the public.

    Answer. The steel and aluminum reports dated January 11th and 
January 18, 2018, respectively, addressed the statutory requirements 
Congress directed the Secretary and the President to consider in 
executing section 232. Those congressional requirements do not include 
consideration of the potential effects of section 232 actions on 
downstream industries. Nonetheless, the Department did analyze the 
downstream economic impact of potential steel tariffs using the 
standard version of the Global Trade Analysis Product (GTAP) Computable 
General Equilibrium (CGE) model of global trade. The GTAP model uses 
the ``metals'' sector, of which steel is a major portion. Because 
aluminum accounts for a much smaller portion of the sector, the 
Department determined that use of the GTAP model was inappropriate for 
the aluminum investigation. Accordingly, the Department used a partial 
equilibrium analysis to estimate the impact of an adjustment on 
aluminum imports, with no modeled effects on domestic demand or price, 
and an assumption that domestic production would replace all imports 
removed due to a tariff or quota.

    The GTAP model results indicate that real GDP, a commonly used 
measure of welfare, will be mostly unchanged from its baseline level, 
declining by less than 0.008 percent. Aggregate imports will decline by 
0.444 percent by volume while the average price of steel in the US 
market will rise by approximately 4.5 percent.

    At the sector level, downstream sectors such as metal products, 
motor vehicles and parts, and construction that use steel relatively 
intensively (either directly or indirectly), see their output contract 
slightly because of higher steel prices.


                 Sector Level Import and Output Changes
------------------------------------------------------------------------
                                          Change in U.S.
            232 Model Sector               Import Volume  Change in U.S.
                                                (%)         Output (%)
------------------------------------------------------------------------
Crops                                              -0.05            0.05
------------------------------------------------------------------------
Extraction and Natural Resources                    0.09            0.01
------------------------------------------------------------------------
Animal Products                                    -0.19            0.03
------------------------------------------------------------------------
Processed Foods                                    -0.11            0.01
------------------------------------------------------------------------
Textiles                                           -0.22            0.04
------------------------------------------------------------------------
Wearing apparel                                    -0.15            0.09
------------------------------------------------------------------------
Leather products                                   -0.10            0.20
------------------------------------------------------------------------
Wood products                                      -0.18           -0.15
------------------------------------------------------------------------
Paper products, publishing                         -0.21            0.02
------------------------------------------------------------------------
Petroleum, coal products                            0.04            0.02
------------------------------------------------------------------------
Chemical, rubber, plastic products                 -0.13            0.07
------------------------------------------------------------------------
Mineral products                                   -0.10            0.03
------------------------------------------------------------------------
Iron and steel                                    -21.90            6.36
------------------------------------------------------------------------
Non-ferrous metals                                  0.21           -0.26
------------------------------------------------------------------------
Metal products                                      1.22           -0.41
------------------------------------------------------------------------
Motor vehicles and parts                           -0.07           -0.25
------------------------------------------------------------------------
Other transportation equipment                     -0.12           -0.13
------------------------------------------------------------------------
Electronic equipment                               -0.15           -0.08
------------------------------------------------------------------------
Machinery and equipment                             0.13           -0.24
------------------------------------------------------------------------
Other manufactured products                        -0.04           -0.16
------------------------------------------------------------------------
Construction                                       -0.26           -0.19
------------------------------------------------------------------------
Utilities                                          -0.11            0.09
------------------------------------------------------------------------
Transportation and Communication                   -0.11            0.00
------------------------------------------------------------------------
Financial Services                                 -0.22           -0.01
------------------------------------------------------------------------
Insurance                                          -0.16            0.01
------------------------------------------------------------------------
Other Business Services                            -0.14            0.01
------------------------------------------------------------------------
Other Services                                     -0.14           -0.01
------------------------------------------------------------------------


    The full report is non-public as part of the deliberative process.

    Question. If no studies were done, why didn't the Commerce 
Department take a look at the specific effects the tariffs would have n 
downstream manufacturers? If the economic well-being of the steel 
industry is important to the national security, isn't the economic 
well-being of other manufacturers--including other manufacturers that 
supply our military--important?

    Answer. Again, the statute crafted in Congress does not consider 
downstream impacts; however, the studies that were done are described 
in the answer to question 28.
                section 232 tariffs: impact on exporters
    Question. I have long believed that we need to grow things here, 
make them here, innovate here, and then ship them somewhere. Secretary 
Ross, you said in The Wall Street Journal back in March that the steel 
and aluminum tariffs ``shouldn't'' start a trade war. Your op-ed 
suggested that you did not think the United States was in a trade war 
at the time and that the tariffs would not start one. Yet as of today, 
China, the EU, Mexico, Canada, India, and Turkey have announced 
retaliatory tariffs on U.S. exports.

    Based on what has happened since the tariffs were announced--U.S. 
tariffs followed by retaliation from our trading partners, followed by 
the President escalating with additional tariffs--is the United States 
now in a trade war?

    Answer. The actions taken by the President under section 232 are 
wholly legitimate and fully justified as a matter of U.S. law and 
international trade rules. Where other countries respond to these 
actions with unjustified and illegitimate retaliatory measures, the 
administration will take all necessary actions to protect U.S. 
interests. The United States has launched separate disputes at the 
World Trade Organization (WTO) against China, the European Union, 
Canada, Mexico, Turkey, and Russia challenging the retaliatory tariffs 
these WTO Members have imposed in response to our section 232 actions.

    Question. For my State of Oregon alone, those retaliatory tariffs 
apply to products accounting for roughly over $400 million in exports 
in 2017. Adding in the retaliation from the President's latest salvo 
with China, over roughly $800 million in exports from Oregon alone now 
face tariffs.

    What specific action does the administration intend to take to 
address these harms to U.S. exporters?

    Answer. Please see the answer to question above. In addition, on 
July 24th, President Trump directed the Secretary of Agriculture to 
craft a short-term relief strategy to protect agricultural producers 
while the administration works on free, fair, and reciprocal trade 
deals to open more markets in the long run to help American farmers 
compete globally. Specifically, the Department of Agriculture has 
authorized up to $12 billion in programs, which is in line with the 
estimated $11 billion impact of the unjustified retaliatory tariffs on 
U.S. agricultural goods. These programs will assist agricultural 
producers to meet the costs of disrupted markets.

    Question. U.S. cheese companies have been hit with Mexican tariffs 
ranging between 10 to 15 percent on their products. These tariffs are 
set to increase on July 5 to 20 to 25 percent. Mexico is a critical 
market for U.S. cheese exports, accounting for over $390 million in 
sales last year, which is a sizable share of total U.S. dairy exports 
that amounted to $1.3 billion in sales in 2017. Under NAFTA, U.S. dairy 
exports enjoy duty-free access that allows U.S. manufacturers to 
capture 75 percent of the Mexican market.

    What steps is the administration taking to prevent U.S. dairy 
farmers and cheese companies from losing access to this market? For 
example, would it consider suspending the section 232 steel and 
aluminum tariffs on Mexican products until the NAFTA renegotiation is 
completed?

    Answer. U.S. agriculture plays a critical role in the U.S. economy 
and foreign markets. As noted in the answers to questions above, the 
administration is taking actions to challenge the imposition of tariffs 
on U.S. exports and to ameliorate the impact on our farmers. To the 
extent any retaliatory measures are imposed that are inconsistent with 
international trade obligations, the United States is prepared to 
address them under U.S. and international law.

    Question. Some U.S. manufacturers, such as Tube Forgings America in 
Portland, may have to consider buying a semi-finished product offshore 
because the increased raw material costs from the tariffs could make 
the company's product less competitive against other products sourced 
overseas. If TFA were to make the difficult decision to outsource semi-
finished product production, it would most likely cause a reduction in 
their workforce in Oregon.

    What steps are the administration taking to address the adverse 
impacts on the competitiveness of manufacturers such as TFA resulting 
from the tariffs?

    Answer. In addition to the exclusion process, the Department will 
be monitoring the domestic aluminum and steel industries, including the 
industries consuming aluminum and steel, and be conducting future 
assessments as necessary to evaluate the health and competitiveness of 
U.S. industry.
      section 232 tariffs: impact on allies and national security
    Question. Secretary Ross, two weeks ago when the President 
announced tariffs on imports from Canada, Mexico, and the EU, you said 
that this was just a ``blip on the radar screen'' and that ``everybody 
will get over this in due course.'' But as of today, six countries have 
announced retaliation against the United States, covering billions of 
dollars of U.S. exports. The EU has stated that this has resulted in an 
``unfortunate . . . weakening of trans-Atlantic relations.'' Canada's 
Prime Minister said these tariffs are ``quite frankly insulting and 
unacceptable,'' and represented ``a turning point in the Canada-U.S. 
relationship.'' It seems to me that you may have misjudged the reaction 
of our allies to the President's decision. In fact, the Secretary of 
Defense seemed to more accurately predict the likely fallout when he 
expressed concern in March about the negative impact on our 
relationships with key allies that could result from Commerce's 
recommended options and voiced a preference for targeted, rather than 
global, tariffs.

    In your view, who is better positioned to make recommendations 
about national security measures: the Secretary of Commerce or the 
Secretary of Defense?

    Answer. Section 232 of the Trade Expansion Act of 1962, as amended, 
directs the Secretary of Commerce, in consultation with the Secretary 
of Defense, to investigate the effects on national security of imports 
of articles.

    Question. Section 232 mandates that the Secretary of Commerce shall 
consult with the Secretary of Defense regarding the methodological and 
policy questions raised in any section 232 investigation. While the 
Defense Department may have supported the overall assessment that 
unfair steel and aluminum trading practices impair national security, 
the Defense Department also informed Commerce that it, ``continues to 
be concerned about the negative impact on our key allies,'' and posited 
that, ``targeted tariffs are more preferable than a global quota or 
global tariff.''

    What was the basis for the administration's decision to reject 
these recommendations?

    Answer. The President's section 232 decisions are the result of a 
robust and thorough interagency review coordinated by the White House.
       section 232 tariffs: steel and aluminum company management
    Question. Secretary Ross, in your prepared statement, you said that 
the tariffs on steel and aluminum are anticipated to reduce imports and 
that combined with ``good management'' will achieve ``long term 
viability'' for the steel and aluminum industry.

    Does the Department of Commerce intend to review the management 
performance of companies in determining whether the tariffs should 
continue? Will the Department require that U.S. steel and aluminum 
companies reinvest a specific percentage of increased profits from 
tariffs into new equipment, jobs, or other similar activities?

    Answer. The presidential proclamations direct the Secretary of 
Commerce to monitor imports of steel and aluminum, and from time to 
time, review the status of such imports with respect to the national 
security, in consultation with other senior Executive Branch officials. 
The proclamations also direct the Secretary to inform the President of 
any circumstances that might indicate the need for further action under 
section 232, as well as any circumstance that might indicate that the 
increases in duty rates provided in the proclamations are no longer 
needed. The Department will carry out the President's direction.
       section 232 tariffs: domestic economy as national security
    Question. Secretary Ross, in your prepared testimony you say that 
the administration concluded that steel import levels were ``weakening 
our domestic economy and therefore threaten to impair our national 
security.''

    In making its determination that import levels threaten to impair 
U.S. national security, and recommending tariffs as a response, did the 
administration take into account the likely effect of retaliatory 
tariffs on U.S. national security--in particular, retaliatory tariffs 
on U.S. exports of steel and aluminum products?

    Answer. The criteria that Congress directed the President and 
Secretary to consider when assessing the impact of imports on national 
security does not include retaliatory actions by other countries. As a 
result, the Department did not assess the impact of potential 
retaliatory actions as part of the section 232 investigations. Further, 
as noted in answers to previous questions, the administration will take 
all necessary action to protect U.S. interests in the face of 
unjustified retaliation against the President's wholly legitimate 
actions under section 232.
      section 232 tariffs: country exemption process/consultation
    Question. Mr. Secretary, I understand that you have been the point 
person in negotiations with the European Union for a possible exemption 
from the tariffs on steel and aluminum. When the tariffs were first 
announced in March, the President postponed imposing duties on the EU 
and tasked you with negotiating it. As the ranking member of the Senate 
Finance Committee, the only information I received about these 
discussions with a major trading partner was from press reports.

    Do you think the Commerce Department should consult with the Senate 
Finance Committee regarding your negotiations with trading partners for 
exemptions from steel and aluminum tariffs before positions, let alone 
decisions, are made? If not, why not?

    Answer. The Department has had extensive engagement with the 
Congress throughout the section 232 investigations and now during the 
implementation of the 232 tariff/quotas. This engagement will continue.

    Question. The presidential proclamations regarding the tariffs have 
acknowledged the important security relationship that the United States 
has with the EU, including a shared commitment to support each other in 
national security concerns, the strong economic and strategic 
partnership between the United States and the EU, and a shared 
commitment to addressing global excess capacity in steel and aluminum. 
As you noted in your hearing, the EU is also conducting a safeguard 
investigation into steel products.

    What did you tell the E.U. it would need to do to avert the 
tariffs? Please identify any specific criteria you advised the EU it 
must meet in order to receive a country exemption from the steel and 
aluminum tariffs. Please identify which of those criteria were met by 
the EU and which were not.

    Answer. The President's proclamations describe the factors he is 
assessing in determining whether the United States and other countries 
have arrived at satisfactory alternative means to address the 
threatened impairment of U.S. national security caused by imports of 
steel and aluminum. The proclamations also describe the measures agreed 
between the United States and countries that the President has exempted 
from the tariffs.
                     trade negotiations with china
    Question. Mr. Secretary, you stated at the hearing that you have 
been the point person for recent trade negotiations with China. Recent 
reports indicate that China has announced that any deals you have made 
have been put in jeopardy by the recent announcement of the tariffs to 
be imposed pursuant to USTR's section 301 investigation. By way of 
example, senior Chinese officials referenced deals on soybeans, natural 
gas, and other exports.

    Please specifically identify any agreements, deals, or 
understandings that you have concluded with the Government of China, 
any Chinese companies, or any Chinese industry associations, list the 
terms of each such deal, or if the terms have been made publicly 
available, please identify the official government website on which the 
terms have been published.

    Answer. In the Spring of 2017, the U.S. Government negotiated 
several market openings with the Chinese government under the 100 Day 
Plan framework that was initiated during the April 2017 Presidential 
Summit at Mar-A-Lago. Details of the agreement are available to the 
public and can be found on the Commerce Department website (https://
www.commerce.gov/news/press-releases/2017/05/joint-release-initial-
results-100-day-action-plan-us-china-comprehensive). In summary, the 
Chinese Government agreed to: allow imports of certain U.S. beef 
products; a more transparent and expeditious review of eight pending 
U.S. agricultural biotechnology product applications; allow U.S. 
electronic payment services suppliers to begin the licensing process, 
which should lead to full and prompt market access; allow wholly 
foreign-owned financial services firms in China to provide credit 
rating services and to begin the licensing process for credit 
investigation; and issue both bond underwriting and settlement licenses 
to two qualified U.S. financial institutions by July 2017. On the U.S. 
side, the administration agreed to: publish a proposed rule relating to 
the importation of Chinese cooked poultry; send a delegation to the 
Belt and Road Forum in May 2017; and extend, through the U.S. Commodity 
Futures Trading Commission (CFTC), the current no-action relief to 
Shanghai Clearing House for six months, with further extensions up to 3 
years if appropriate. The U.S. side also confirmed that Chinese 
companies have the same access to U.S. liquefied natural gas as 
companies from other non-FTA partners and that the United States 
applies the same bank prudential supervisory and regulatory standards 
to Chinese banking institutions as to other foreign banking 
institutions, in like circumstances and in accordance with U.S. law.

    In November 2017, I led a trade mission to China as part of 
President Trump's official visit. While there were no government-to-
government agreements during the visit, there were over $250 billion in 
U.S. company signings witnessed by U.S. and Chinese government 
officials. A summary of the agreements is publicly available on the 
Commerce Department website (https://www.commerce.gov/news/press-
releases/2017/11/us-secretary-commerce-wilbur-ross-announces-hundreds-
billions-deals). The details of the signings can be obtained from the 
companies themselves and State trade offices.
                         zte/national security
    Question. Mr. Secretary, I was shocked when the President cut a 
deal with China to put Chinese telecom company ZTE back in business, 
despite flagrant violations of U.S. sanctions law. At the hearing I let 
you know that William Evanina, the administration's nominee for 
National Counterintelligence and Security Center Director, stated in 
his confirmation hearing that he believes ZTE presents an espionage 
threat.

    Why does the administration regard steel and aluminum imports from 
Canada, Mexico, and the EU to constitute a national security threat 
sufficient to require tariffs, but sees no national security threat 
from allowing a repeat sanctions violator to operate and engage in 
transactions with the United States? Especially when U.S. security 
experts have found that Chinese telecommunications equipment is used to 
spy on Americans?

    Answer. The penalty and superseding settlement agreement addressed 
ZTE's failure to fully comply with the initial settlement agreement. 
ZTE has already paid a $1 billion penalty, put an additional $400 
million into an escrow account in a US bank, and agreed to a Special 
Compliance Coordinator (SCC) who will have unprecedented access to 
drive and monitor compliance. In addition, the suspended Denial Order 
can be reinstated if ZTE commits further violations of the agreement. 
These unprecedented requirements enhance the Department's ability to 
protect U.S. national security from unauthorized exports and reexports 
of telecommunications equipment.

    In addition, the administration is taking other steps to mitigate 
the threat from Chinese telecommunications providers, including 
implementation of a provision from the 2019 NDAA that prohibits U.S. 
government agencies from purchasing telecommunications equipment from 
Chinese suppliers or contracting with entities who use such equipment 
and recommending to the Federal Communications Commission that it deny 
China Mobile's section 214 license request to offer telecommunications 
services within the United States.

    Question. Do you agree with Mr. Evanina's assessment of ZTE as an 
espionage threat? If not, please explain why. If so, please explain how 
such a view is consistent with the administration's goal to put ZTE 
back in business.

    Answer. These requirements are the harshest penalties and strictest 
compliance measures ever imposed in such a case and will protect US 
national security from unauthorized exports and reexports of 
telecommunications equipment. In the event that ZTE fails to comply 
with the new requirements during the next 10 years, BIS can re-impose 
the suspended denial order and terminate ZTE's access to US technology.
                section 232 tariffs: autos investigation
    Question. The Commerce Department recently self-initiated an 
investigation into whether foreign auto imports are harming our 
national security. When asked how such imports could possibly threaten 
our country in this way, you responded by stating, ``National security 
is broadly defined to include the economy, to include the impact on 
employment, to include a very big variety of things.''

    Are there any sectors of the economy that in your view would not 
merit a section 232 investigation?

    Answer. Detailed analyses would need to be conducted in order to 
determine what industries have weakened to such a degree that their 
current State would pose a national security threat.

    Question. Before launching this investigation, did you consult with 
Congress and if so, with whom?

    Answer. The Department conducted its own independent assessment of 
the merits of initiating a section 232 investigation on imports of 
automobiles and automotive parts.

    Question. Before launching this investigation, did you consult with 
the Big Three auto producers?

    Answer. No. The Department conducted its own independent assessment 
of the merits of initiating a section 232 investigation on imports of 
automobiles and automotive parts.

    Question. Before launching this investigation, did you consult with 
the United Auto Workers?

    Answer. No. The Department of Commerce conducted its own 
independent assessment of the merits of initiating a section 232 
investigation on imports of automobiles and automotive parts.

    Question. To what extent is this investigation linked to NAFTA 
negotiations?

    Answer. The Department's investigation under section 232 is being 
conducted independent of the NAFTA negotiations.

                                 ______
                                 
                Questions Submitted by Hon. Pat Roberts
    Question. Over the last 4 years, farm prices are down 40 percent 
and farm income is down 50 percent. During an already challenging time 
for farmers and ranchers, drastic trade policy measures have a 
compounding effect on producers in rural America. What agricultural 
producers need right now is certainty and predictability. U.S. 
industries currently face approximately $143 billion in retaliatory 
tariffs, due to the section 232 steel and aluminum investigation and 
USTR's action under section 301.

    What is the plan to resolve U.S. concern on steel and aluminum 
overcapacity so that other countries will end retaliatory tariffs on 
$9.2 billion of U.S. agriculture exports?

    Answer. The aluminum and steel proclamations signed by the 
President on March 8, 2018 state that the objective of each action is 
to help our domestic and steel industries to revive idled facilities, 
open closed mills and smelters, preserve necessary skills by hiring new 
workers, and maintain or increase production. These actions will reduce 
our Nation's need to rely on foreign producers of aluminum and steel 
and ensure that domestic producers can continue to supply all of the 
aluminum and steel necessary for critical industries and national 
defense. It will take time for U.S. aluminum and steel producers to 
fully restart idled capacity and regain long-term economic health. It 
is likely that the import adjustments will need to be in place for some 
time to enable aluminum and steel producers to achieve sustained 
economic viability.

    U.S. agriculture plays a critical role in the economic growth of 
our country and the administration is actively working to ensure fair 
and reciprocal access to foreign markets for your constituents. The 
administration will take all necessary actions to protect U.S. 
interests against unjustified retaliatory actions by other countries. 
The United States has launched separate disputes at the World Trade 
Organization (WTO) against China, the European Union, Canada, Mexico, 
Turkey, and Russia challenging the retaliatory tariffs these WTO 
Members have imposed in response to our section 232 actions.

    On July 24th, President Trump directed Secretary Perdue to craft a 
short-term relief strategy to protect agricultural producers while the 
administration works on free, fair, and reciprocal trade deals to open 
more markets in the long run to help American farmers compete globally. 
Specifically, USDA will authorize up to $12 billion in programs, which 
is in line with the estimated $11 billion impact of the unjustified 
retaliatory tariffs on U.S. agricultural goods. These programs will 
assist agricultural producers to meet the costs of disrupted markets.

    Question. As we have seen numerous times, agriculture is often the 
first industry impacted when retaliatory measures are enacted. Earlier 
this month, USTR released their list of tariffs on Chinese goods, 
totaling $50 billion. Almost immediately, China released their own list 
of retaliatory tariffs that will hit many agriculture commodities on 
July 6th. While I respect the administration's intentions to address 
bad actors in China, I do not believe tariffs are the solution, 
especially when looking at the short-term consequences on American 
businesses. While the Department of Commerce was not the agency 
responsible for proposing and enacting this specific trade policy and 
strategy, it is vital that we remember trade policy decisions are 
intertwined and agencies cannot act in a silo.

    As we watch farmers and ranchers bear the brunt of section 232 and 
section 301 retaliation, what coordination and communication is ongoing 
between the Department of Commerce, USTR, and other agencies within the 
administration to minimize the damage being continuously imposed on 
certain industries, such as agriculture?

    Answer. The administration has extensive, ongoing discussions on 
trade policy to ensure that the different departments and agencies are 
working in unison to execute the President's initiatives to restore 
fair and reciprocal trade with our global partners and protect our 
national security.

    Question. The disruption in the trade of softwood lumber with 
Canada is increasing lumber prices, and, as a result, is affecting 
housing affordability. The homebuilders and housing industry is also 
facing tariffs on other critical building materials, including steel 
and aluminum.

    I have heard from homebuilders in Kansas who are feeling the pinch 
from higher lumber prices, due to tariffs on imports on softwood lumber 
from Canada.

    Realistically, how soon can we expect to see a new deal on the 
lumber issue?

    Answer. I have met with representatives of the homebuilders 
industry and appreciate their concerns about a possible rise of 
softwood lumber prices. I am aware that the U.S. price of softwood 
lumber for framing increased by more than 60 percent from November 2016 
to June 2018. There have been a number of demand-side factors that have 
contributed to this trend, including an increase in new home 
construction and growth in remodeling and home repair activity. 
However, since the first week of June 2018, the price has steadily 
decreased for 9 straight weeks. The weekly price of softwood lumber has 
decreased by 24.4 percent over those 9 weeks. Lastly, with respect to 
changes in the price, there have been modest price increases, amounting 
to a three percent change, in the last two weeks of August and the 
first week of September 2018. Although the United States and Canada, 
and their respective softwood lumber industries, made significant 
efforts to reach a long-term settlement to this ongoing trade dispute, 
the parties were unable to agree upon terms that were mutually 
acceptable. As a result, the Department completed its antidumping (AD) 
and countervailing duty (CVD) investigations, finding that producers/
exporters of softwood lumber from Canada dumped softwood lumber at 
rates ranging from 5.57 percent to 8.89 percent and received 
countervailable subsidies at rate ranging from 3.34 percent to 18.19 
percent. Following the Department's affirmative determinations, the 
U.S. International Trade Commission determined that the dumped and 
subsidized imports of softwood lumber from Canada materially injured 
the U.S. softwood lumber industry. As a result of these findings, the 
Department issued AD/CVD orders on imports of softwood lumber from 
Canada. The Department's determinations were made following a 
comprehensive review of factual evidence and arguments from all 
interested parties in the proceedings. Please know that the Department 
is committed to administering the trade remedies adopted by Congress in 
a fair and balanced fashion in accordance with U.S. law, regulations, 
and international obligations. Because the AD and CVD investigations 
are completed, any future negotiations involving a long-term agreement 
related to bilateral trade of softwood lumber would be led by the 
United States Trade Representative.

    Question. Can you give an explanation as to why Ukraine was placed 
on the list of countries included in the section 232 Tariffs given 
their minimal importation of steel products into the United States?

    Answer. The President's actions under section 232 are global in 
nature--that is, they apply to imports from all countries. Imports of 
steel products are either subject to a 25 percent tariffs or are exempt 
from the tariff on the basis of alternative measures the United States 
has agreed individually with specific countries.

                                 ______
                                 
              Questions Submitted by Hon. Michael B. Enzi
    Question. Secretary Ross, one of the unfortunate casualties of the 
steel and aluminum tariffs is the U.S. agriculture industry. Canada has 
responded to our steel and aluminum tariffs by targeting U.S. 
agriculture exports like beef. In fact, Canadian tariffs on some U.S. 
beef products will be implemented on July 1st. Canada is a $1-billion 
market for U.S. beef, and producers in my home State of Wyoming will 
feel these market consequences.

    Will the administration commit to resolving this tariff issue 
immediately so that farmer and ranchers in Wyoming will not be 
negatively impacted by Canadian tariffs on beef and other agricultural 
products?

    Answer. U.S. agriculture plays a critical role in the economic 
growth of our country and foreign markets are important to your 
constituents. The administration will take all necessary actions to 
protect U.S. interests against unjustified retaliatory actions by other 
countries. The United States has launched separate disputes at the 
World Trade Organization (WTO) against China, the European Union, 
Canada, Mexico, Turkey, and Russia challenging the retaliatory tariff 
these WTO Members have imposed in response to our section 232 actions.

    On July 24th, President Trump directed Secretary Perdue to craft a 
relief strategy to protect agricultural producers while the 
administration works on free, fair, and reciprocal trade deals to open 
more markets in the long run to help American farmers compete globally. 
Specifically, USDA will authorize up to $12 billion in programs, which 
is in line with the estimated $11-billion impact of the unjustified 
retaliatory tariffs on U.S. agricultural goods. These programs will 
assist agricultural producers to meet the costs of disrupted markets.

    Question. China has indicated that it is preparing to retaliate on 
U.S. oil imports--a U.S. export market that represents more than $1 
billion per month. Last year, Wyoming produced 1.8 billion MCF of 
natural gas and 75.6 million barrels of crude oil. In 2016, the 
petroleum industry employed over 8,000 people in the State and 
contributed over $1.5 billion to Wyoming's economy.

    Has the Commerce Department considered implications that 
retaliatory tariffs could have our domestic oil and gas industry and 
the communities that depend on it?

    Answer. The criteria that Congress directed the President and 
Secretary to consider when assessing the impact of imports on national 
security does not include retaliatory actions by other countries. As a 
result, the Department did not assess the impact of potential 
retaliatory actions as part of the section 232 investigations. Further, 
as noted in answers to previous questions, the administration will take 
all necessary action to protect U.S. interests in the face of 
unjustified retaliation against the President's wholly legitimate 
actions under section 232.

    Question. Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 
Sec. 1862) requires that ``[u]pon request . . . of an interested party 
. . . the Secretary of Commerce . . . shall immediately initiate an 
appropriate investigation to determine the effects on the national 
security of imports of the article which is the subject of such 
request.''

    It has been more than 5 months since the two largest U.S. uranium 
miners submitted their request for Commerce to initiate an 
investigation into imports of uranium products that threaten national 
security. Despite this unambiguous legal requirement for an immediate 
investigation when an interested party files a section 232 petition, 
the uranium investigation has not yet been initiated. At the Finance 
Committee hearing, Secretary Ross stated that a decision would be made 
soon as to whether Commerce will conduct an investigation and that 
prior agreements were complicating the issue. In section 232 of the 
Trade Expansion Act, Congress did not give the Secretary discretion to 
decide whether or not to initiate an investigation.

    Why has Commerce delayed investigating the impact of these damaging 
imports on the national, economic, and energy security of the U.S.? 
Please explain in detail what issues, including prior agreements, have 
prevented the Department from initiating the investigation, and why 
such issues cannot be resolved during the investigation or through the 
final recommended remedies. Furthermore, please provide a specific date 
by which the Department will initiate this investigation.

    Answer. The Department initiated investigation of uranium imports 
under section 232 on July 18, 2018.

    Question. Many of my constituents have expressed concern regarding 
the usually high prices of aluminum, specifically the Midwest Premium. 
You stated during the hearing that Commerce is starting an 
investigation into whether there are people who are illegitimately 
profiteering off the tariffs given that prices of steel and aluminum 
have risen much higher than justified by the tariffs.

    When can we expect this report and what will Commerce to do to 
remedy this situation?

    Answer. The Midwest Premium (MWP) is determined by S&P Global 
Platts (Platts). In May, I requested and received from both Platts and 
the Aluminum Association information regarding the MWP and how it is 
determined. I understand that Platts has taken steps to address 
concerns about non-tariff pricing. The Department also received public 
comments on this issue in response to the Department's March 19 interim 
final rule implementing the submission of exclusion requests and 
objections to submitted requests for steel and aluminum. Department 
staff have provided the Department of Justice and the Federal Trade 
Commission with the public comments regarding the MWP and other 
information provided by industry.

    Question. The beer industry buys a significant amount of barley 
from my State. The recent retaliatory tariff imposed by Canada on 
exported aluminum cansheet and finished cans is another cost imposed on 
the U.S. beer industry, which will ultimately impact the bottom line of 
Wyoming's barley producers.

    What is the administration's plan to end this new trade 
restriction?

    Answer. The administration will take all necessary actions to 
protect U.S. interests against unjustified retaliatory actions by other 
countries. On July 16th, the United States launched a dispute at the 
World Trade Organization (WTO) challenging the retaliatory tariffs 
Canada imposed in response to our section 232 actions.

                                 ______
                                 
                Questions Submitted by Hon. John Cornyn
    Question. Energy infrastructure projects are a critical component 
of our economy, and the State of Texas is ground zero for the energy 
resurgence that our Nation is experiencing. Much of that production is 
centered around the Permian Basin. Unfortunately, energy companies in 
my State are extremely worried that this growth will be halted by the 
steel tariffs. In 2017 alone, the oil and gas industry accounted for 10 
percent of steel demand. Many of the producers are importing and 
sourcing steel products that are only available abroad from a country 
that is not currently excluded.

    Will Commerce be prioritizing energy projects for disposition of 
the tariffs under product exclusions?

    Answer. Review of exclusion requests and related objections are 
being conducted on a case-by-case basis managed by the Department's 
Bureau of Industry and Security (BIS). As part of this process, BIS is 
also working closely with enforcement and compliance specialists within 
Commerce's International Trade administration (ITA). We have modified 
our procedures to expedite decisions on requests that have no 
corresponding objections.

    Question. Because energy infrastructure developers typically can 
only seek foreign sources of materials due to no domestic supply, will 
you consider a categorical exclusion?

    Answer. The Department does have the discretion to make broader 
exclusions available to all importers if we find the circumstances 
warrant and will exercise this discretion as appropriate.

    Question. Will you give all due consideration to Texas's energy 
projects in their review of exemption requests, especially those 
whereby a domestic steel alternative is not available?

    Answer. Yes.

    Question. Is Commerce taking any action to ensure contracts that 
were entered in to force prior to the tariff announcement will be 
excluded from enforcement?

    Answer. The President's proclamations provide that product 
exclusions from the tariffs and quotas imposed under section 232 may be 
granted if an article is not produced in the United States in 
sufficient quantity or of satisfactory quality, or for a specific 
national security consideration. In addition, the President has 
proclaimed that exclusion from the quota be provided in certain limited 
cases where steel articles from a quota country are being imported for 
use in a facility construction project in the United States under a 
contract concluded prior to the President's decision to adjust imports 
under section 232, and that cannot enter into the United States because 
the applicable quota has already been reached. In such a cases, the 
steel articles excluded from the quota may be imported upon payment of 
the 25-
percent tariff.

    Question. I am proud to say that both domestic and international 
automakers have established deep roots in the State of Texas. In fact, 
Toyota and General Motors both have a significant manufacturing 
presence in my State. In total, there are nearly half a million auto 
related jobs in Texas and I am very concerned about the potential 
impact the recently initiated section 232 investigation on imported 
autos and auto parts will have on auto workers both in my State and 
throughout the Nation. A recent analysis conducted by the Peterson 
Institute shows that a 25-percent tariff on imported autos and parts 
would cause 195,000 U.S. workers to lose jobs and, if other countries 
retaliate with their own tariffs, then American job losses would likely 
increase to 624,000.

    Can you please elaborate on why the administration is concerned 
that imports of automobiles and auto parts may be a national security 
threat, and not just an economic competitor?

    Answer. The administration considers core industries such as 
automobiles and automotive parts as critical to our strength as a 
Nation. Data reviewed prior to initiating the investigation revealed a 
decline in automobile production by U.S.-owned automobile producers, an 
increasing reliance on imported auto parts for U.S. automobile 
assembly, and a decline in employment in the automotive industry. Our 
investigation will look at all the statutory factors under section 232 
to determine the effects on the national security of imports of 
automobiles and automotive parts. The investigation will take into 
account all relevant facts and input from stakeholders compiled during 
a transparent process before reaching a final determination, which will 
be based on the facts and the statutory requirements.

    Question. What does the Commerce Department estimate annual car 
sales to look like under a 25-percent tariff?

    Answer. The investigation is still ongoing, and we have not yet 
made a national security determination. Consideration of specific 
remedies or potential tariff levels is not necessary until we conclude 
our national security analysis.

    Question. Will you pledge to provide members of this committee with 
any data on what job losses and reduction in car sales may look like if 
there is a 25-percent car tariff imposed?

    Answer. The investigation is still ongoing, and we have not yet 
made a national security determination. Consideration of specific 
remedies or potential tariff levels is not necessary until we conclude 
our national security analysis.

    Question. Many manufacturers tell me that aluminum has gotten more 
expensive as a result of the 232 investigation and tariffs. If a 
company importing aluminum gets an exclusion from the tariff, that 10 
percent cost savings doesn't automatically change the price of aluminum 
in the U.S. due to the Midwest premium and U.S. aluminum pricing 
mechanism. The downstream U.S. manufacturer must seek an agreement from 
the exporting company and the importer of record case-by-case. 
Otherwise those upstream companies just get to pocket greater profits. 
This is also true in the case of country exemptions. For example, when 
Canada received a temporary exemption, it just had a windfall of 
greater profit while the cost to U.S. manufacturers for aluminum was 
ticking up with the increasing Midwest premium.

    How do we make sure the product exclusion process benefits American 
manufacturers, OEMs, and end-users?

    Answer. We are monitoring the domestic aluminum and steel 
industries, as well as industries consuming aluminum and steel, and 
will be conducting future assessments as necessary to evaluate the 
health and competitiveness of U.S. industry.

    Question. As we have discussed before previously, I am very 
concerned about the current AD/CVD case petitioned by a single U.S. 
supplier on uncoated groundwood paper. My rural constituent 
newspapers--the very industry these tariffs are meant to protect--may 
see a spike in prices they cannot afford as a result of this petition 
by a single supplier.

    Will you commit to using full discretion when rendering a final 
decision on duties, taking in to account the impact this may have on 
the newsprint industry?

    Answer. I have heard from the newsprint industry and appreciate the 
concerns that they have with the AD/CVD investigations of uncoated 
groundwood paper. The United States' trade remedy laws require the 
Department to initiate an AD and/or CVD investigation if a petition 
filed by producers or workers in the United States meets the statutory 
criteria for initiation, as was the case in these proceedings. While 
the Department issued final affirmative determinations in the AD and 
CVD investigations, the U.S. International Trade Commission (ITC) 
reached a negative determination on August 29, 2018, finding that 
imports of uncoated groundwood paper from Canada did not materially 
injure the domestic industry. As a result of the ITC's determination, 
the investigations have been terminated, and all duties collected will 
be returned.

    Question. Tariffs on imports of Canadian softwood lumber have 
highlighted a real fundamental issue with trade disputes.

    In your opinion, how do we strike the appropriate balance between 
helping U.S. producers of, in this case, lumber products and protecting 
the consumers of those products, home builders and home buyers in this 
case, from unnecessary price increases? Do you believe that we are 
doing that here? If not, how can we do better?

    Answer. As Secretary of Commerce, I have a duty to conduct our 
trade remedy proceedings pursuant to the law as written by Congress. 
When the Department finds that dumping or subsidization is occurring, 
and the U.S. International Trade Commission (ITC) determines that 
dumping and/or subsidization is causing injury to the domestic 
industry, the statute requires that the Department impose duties to 
offset that unfair trade.

    In this instance, the Department determined that imports of 
softwood lumber are being dumped and unfairly subsidized and the ITC 
determined that the U.S. industry is being injured by imports of 
softwood lumber. The Department's determinations were made following a 
comprehensive review of factual evidence and arguments from all 
interested parties in the proceedings. U.S. law allows an opportunity 
for consumers and industrial users who do not otherwise satisfy the 
definition of ``interested party'' to submit relevant information 
concerning dumping or countervailable subsidies. See 19 U.S.C. 
1677f(h). The Department reviews all record information when 
determining the level of dumping and countervailable subsidization, in 
accordance with 19 U.S.C. 1671 and 1673. Under U.S. law, the Department 
does not have the authority to consider additional factors when making 
our determinations in such instances. Please know that the Department 
is committed to administering the trade remedies laws in a fair and 
balanced fashion in accordance with U.S. law, regulations, and 
international obligations.

    Question. What actions is the administration taking to avoid 
jeopardizing the future viability of this important and valuable 
program to the U.S. economy?

    Answer. Although the United States and Canada, and their respective 
softwood lumber industries, made significant efforts to reach a long-
term, negotiated settlement to this ongoing trade dispute, the parties 
were unable to agree upon terms that were mutually acceptable. Any 
future negotiations involving a long-term agreement related to 
bilateral trade of softwood lumber would be led by the United States 
Trade Representative.

                                 ______
                                 
                 Questions Submitted by Hon. John Thune
    Question. In your testimony before the Finance Committee, you said 
that the Commerce Department would be accelerating the processing of 
exclusions to the section 232 steel and aluminum tariffs by immediately 
granting those that are correctly submitted and for which you receive 
no objections during the public comment period.

    Does that mean that exclusion applications will be granted 
``immediately'' after the 30-day comment period if there are no 
objections or do the applications still have to go through the rest of 
the 90-day review process?

    The business community needs a better understanding about how 
quickly they could see relief from these tariffs if they've requested 
an exemption and how fast you might be able to work through the 
thousands of applications currently in the backlog.

    Answer. The posting of granted exclusion requests depends primarily 
on when Customs and Border Protection (CBP) determines whether the 
product description in the request cites the correct HTSUS 
classification. Once CBP determines the that they can implement the 
exclusion request, BIS will assess the request for any national 
security concerns and to ensure it otherwise meets the criteria for an 
exclusion. If BIS identifies no national security concerns and the 
request meets the exclusion criteria, BIS will expeditiously post a 
decision on regulations.gov granting the exclusion request. The 
Commerce Department and CBP have both assigned additional staff to work 
expeditiously through the backlog.

    Question. As a key member of President Trump's trade team, you are 
aware of the retaliatory effects of the tariffs that have been 
implemented, as well as the tariffs that are being proposed, will have 
on U.S. agriculture. China is our number one export market for 
soybeans, with approximately $14 billion exported to China last year. 
Chinese retaliatory tariffs on U.S. soybeans and other ag commodities 
will be a devastating blow to farmers and ranchers in my State of South 
Dakota and other States, especially given today's low commodity prices 
and an overall sluggish agriculture economy.

    How does the administration plan to address the consequences of 
these tariffs on U.S. agriculture, which is so critical to the U.S. 
economy, especially in terms of U.S. exports?

    I'd also note that I, along with many of my colleagues--and frankly 
most farmers and ranchers--oppose ad hoc price-loss payments (which 
would be just a stopgap-approach, costing billions of dollars, and not 
a long-term solution) for farmers and ranchers who suffer economic loss 
due to trade sanctions, tariffs and loss of export markets as a result 
of U.S. trade policies. These producers want to sell their products, 
not have to look to a government subsidy program to offset an unrelated 
trade war.

    Answer. U.S. agriculture plays a critical role in the economic 
growth of our country and foreign markets are important to your 
constituents. The administration will take all necessary actions to 
protect U.S. interests against unjustified retaliatory actions by other 
countries. The United States has launched separate disputes at the 
World Trade Organization (WTO) against China, the European Union, 
Canada, Mexico, Turkey, and Russia, challenging the retaliatory tariffs 
these WTO Members have imposed in response to our section 232 actions.

    On July 24th, President Trump directed Secretary Perdue to craft a 
relief strategy to protect agricultural producers while the 
administration works on free, fair, and reciprocal trade deals to open 
more markets in the long run to help American farmers compete globally. 
Specifically, USDA will authorize up to $12 billion in programs, which 
is in line with the estimated $11 billion impact of the unjustified 
retaliatory tariffs on U.S. agricultural goods. These programs will 
assist agricultural producers to meet the costs of disrupted markets.

    Question. We appreciate the President's efforts to take on abusive 
trade practices and stand up to long-standing offenders like China. At 
the same time, I'm sure you are aware that the steel and aluminum 
tariffs aimed at Chinese over-production are already having a direct 
effect on U.S. businesses. I have heard from several small fabricators 
and manufacturers in South Dakota that are already seeing steel and 
aluminum commodity prices rise significantly. With their thin profit 
margins, they really cannot absorb these cost increases, and some are 
having to consider lay-offs.

    While most of these businesses would like nothing more than to buy 
only U.S. steel and aluminum, the increased supply is not going to 
materialize overnight nor avoid the commodity price increase. In 
addition, many of these businesses rely on particular products that 
have been created specifically for them by producers in Europe, Canada, 
or other countries. For many smaller firms, they may not survive the 
time it will take for them to identify a U.S. provider and work through 
the certification process to ensure that the new product meets the 
necessary specifications.

    Has the administration factored these effects into its impact 
analysis, and what steps are you taking to help these smaller companies 
survive the direct effects of this trade battle?

    Answer. The steel and aluminum reports dated January 11th and 
January 18, 2018, respectively, addressed the statutory requirements 
Congress directed the Secretary and the President to consider in 
executing section 232. Those congressional requirements do not include 
consideration of the potential effects of section 232 actions on 
downstream industries. Nonetheless, the Department did analyze the 
downstream economic impact of potential steel tariffs using the 
standard version of the Global Trade Analysis Product (GTAP) Computable 
General Equilibrium (CGE) model of global trade. The GTAP model uses 
the ``metals'' sector, of which steel is a major portion. Because 
aluminum accounts for a much smaller portion of the sector, the 
Department determined that use of the GTAP model was inappropriate for 
the aluminum investigation. Accordingly, the Department used a partial 
equilibrium analysis to estimate the impact of an adjustment on 
aluminum imports, with no modeled effects on domestic demand or price, 
and an assumption that domestic production would replace all imports 
removed due to a tariff or quota. The results were considered as part 
of the administration's deliberations but are non-public as part of the 
deliberative process.

    Question. Congress enacted the trade remedy laws, such as the anti-
dumping and countervailing duty remedies, in an effort to protect 
domestic industries. However, we now have at least one example, with 
the Canadian newsprint case, where the law is being applied to protect 
one portion of a domestic industry but also is resulting in significant 
harm of another portion of the same domestic industry. Obviously, 
Congress did not enact the trade remedy laws in order to harm the 
overall economy.

    I have two questions: First, how should the Commerce Department and 
the International Trade Commission approach this kind of case and 
ensure that Congress's intent is achieved?

    Answer. I have heard from the newsprint industry and appreciate the 
concerns that they have with the AD/CVD investigations of uncoated 
groundwood paper. The United States' trade remedy laws require the 
Department to initiate an AD and/or CVD investigation if a petition 
filed by producers or workers in the United States meets the statutory 
criteria for initiation, as was the case in these proceedings. While 
the Department issued final affirmative determinations in the AD and 
CVD investigations, the U.S. International Trade Commission (ITC) 
reached a negative determination on August 29, 2018, finding that 
imports of uncoated groundwood paper from Canada did not materially 
injure the domestic industry. As a result of the ITC's determination, 
the investigations have been terminated, and all duties collected will 
be returned.

    Question. Second, more than two dozen Senators, including myself, 
have expressed concern with the unintended consequences of these 
tariffs in the Canadian newsprint case by cosponsoring the Collins/King 
PRINT Act (S. 2835). Will you take our concerns into account as the 
Commerce Department moves to the final-determination phase for these 
tariffs?

    Answer. Please see the prior answer regarding the outcome of the 
newsprint case. Regarding the legislation you and your colleagues have 
introduced, I can assure you that if the law is changed, consistent 
with my duty, I will implement those changes as well.

                                 ______
                                 
               Questions Submitted by Hon. Johnny Isakson
    Question. Secretary Ross, the recent imposition of retroactive 
quotas capping tinplate steel imports from countries like South Korea 
and Brazil is exacerbating the supply shortage caused by the lack of 
availability of this product from U.S. steel producers. This has 
resulted in U.S. container manufacturers importing steel from countries 
not subject to the quotas, such as China. Unfortunately, this shift in 
behavior defeats the stated purpose of the steel tariffs. Still other 
companies are contemplating moving production and jobs to other 
countries, eventually selling the finished good into the American 
market to avoid the tariffs.

    These outcomes are harming Georgia's manufacturers and have the 
potential to do harm to the broader U.S. economy. Will you consider 
excluding tinplate steel from the 232 tariffs?

    Answer. On August 29th, the President signed proclamations allowing 
the Secretary to provide relief from quotas imposed under section 232 
on steel from South Korea, Argentina, and Brazil, and aluminum from 
Argentina. Companies can apply for product exclusions on the same basis 
as product exclusions are available from tariffs, namely lack of 
sufficient quantity or quality available from U.S. steel or aluminum 
producers, or for national security reasons. In such cases, an 
exclusion from the quota may be granted and no tariff would apply to 
the excluded steel or aluminum product. The process for quota 
exclusions has been implemented in the revised exclusion process rule, 
which was published in the Federal Register on September 11th and is 
also available on the BIS website.

    Question. On July 6th, the recently announced 25 percent tariffs on 
a slate of $34 billion of goods imported from China will go into 
effect. In its June announcement, USTR reiterated its desire to 
minimize the impact of tariffs on American consumers, stating that the 
final list of products would not include products like televisions or 
mobile phones that are ``commonly purchased by American consumers.'' 
However, USTR has placed a 25-percent tariff on an item found in nearly 
all American households: thermostats. American consumers purchase 17 
million new thermostats every year to help bring down their household 
energy costs.

    Through a product exclusion process, USTR has provided an 
opportunity to reconsider whether tariffs are warranted for goods on 
the current list. In light of the administration's goal of avoiding 
tariffs on consumer goods, what is your role in the exclusion process 
for this set of tariffs? What actions are you going to take as Commerce 
Secretary to ensure that these tariffs do not have a negative impact on 
American consumers, retailers, and homebuyers?

    Answer. The Office of the United States Trade Representative (USTR) 
controls the exclusion process for the section 301 tariffs. The 
Department of Commerce will remain in contact with USTR to share our 
input regarding these and other future tariff lists. The administration 
remains committed to minimizing consumer harm, and the exclusion 
process is in part designed to help us do so.

    Question. Further, what are you going to do as Commerce Secretary 
to mitigate the negative impact of this tariff regime on small 
businesses that are suppliers of specialized components to major 
manufacturers?

    Answer. Helping small businesses is at the core of my Department's 
mission, and many of our initiatives improve the competitiveness of 
small businesses in the U.S. Our daily work, such as the export 
promotion and counseling work in U.S. Export Assistance Centers, will 
continue. At the same time, the exclusion process run by USTR, where 
appropriate, will provide some relief to small businesses that are 
importing products from China that are covered by the additional 
duties.

                                 ______
                                 
                Questions Submitted by Hon. Rob Portman
    Question. In your testimony you cited the automotive trade deficit 
as ``something you are very concerned about'' in terms of a possible 
threat to our national security for purposes of the section 232 
investigation. You also shared unease with the declining automobile 
production as a percentage of U.S. sales over the past 3 decades.

    Can you elaborate? What about these economic factors suggests a 
national security threat to the U.S. automobile industry under the 
statute?

    Answer. The administration considers core industries such as 
automobiles and automotive parts as critical to our strength as a 
Nation. Data reviewed prior to initiating the investigation revealed a 
decline in automobile production by U.S.-owned automobile producers, an 
increasing reliance on imported auto parts for U.S. automobile 
assembly, and a decline in employment in the automotive industry. Our 
investigation will look at all the statutory factors under section 232 
to determine the effects on the national security of imports of 
automobiles and automotive parts. The investigation will take into 
account all relevant facts and input from stakeholders compiled during 
a transparent process before reaching a final determination, which will 
be based on the facts and the statutory requirements.

    Question. Although section 232 makes reference to the relationship 
between economic welfare and national security, the statute's 
administrative regulations (15 CFR Sec. 705.4) connect three ``economic 
welfare'' factors with an ``and,'' indicating that all three factors 
must be satisfied. The first factor for consideration is ``The impact 
of foreign competition on the economic welfare of any domestic industry 
essential to our national security.''

    Do you believe that there is an industry that cannot meet that 
criteria? If so, what would that industry look like? Or do you 
understand the language in the regulation to be broad enough to 
encompass all, or most, industries in the United States? Specifically, 
do you believe that automobiles, trucks, and auto parts are an industry 
``essential to our national security''? If so, why and how?

    Answer. Detailed analyses would need to be conducted in order to 
determine what other industries have weakened to such a degree that 
their current State would pose a national security threat under section 
232. The administration considers core industries such as automobiles 
and automotive parts as critical to our strength as a Nation. The 
investigation will take into account all relevant facts and input from 
stakeholders compiled during a transparent process before reaching a 
final determination, which will be based on the facts and the statutory 
requirements.

    Question. Last Congress Senator Brown and I worked together to 
secure enactment of the Leveling the Playing Field Act, which clarified 
the material injury standard to make it easier for American companies--
particularly in the steel sector--to seek and win trade cases. The 
benefits of this law have been predominantly seen in antidumping cases, 
but countervailing duty cases are also a very import tool in our trade 
remedy kit.

    Do you believe that improper and nonmarket subsidization of foreign 
steel industries by relevant governments--mainly, but not exclusively 
China--contributes to overcapacity? Do you believe that our 
countervailing duty laws should be improved to make it easier for 
industries facing overcapacity to secure relief when challenging 
subsidies that contribute to overcapacity?

    Answer. Since the beginning of the Trump administration, the 
Department has been vigorously enforcing the trade laws Congress has 
entrusted to it, including the additional authorities Congress provided 
in the Trade Preferences Extension Act of 2015 (title V of Public Law 
114-27) to which you refer. In its countervailing duty proceedings 
involving steel imports from China and other countries, the Department 
has investigated and countervailed dozens of subsidies determined to 
benefit those imported steel products. More broadly, in various fora, 
including the Global Forum on Steel Excess Capacity and the World Trade 
Organization (WTO) Committee on Subsidies and Countervailing Measures, 
the U.S. government has made clear its view that subsidies are an 
important contributing factor behind the overcapacity that currently 
characterizes many industries, such as steel, aluminum, and fisheries. 
We have made clear that the current subsidies rules do not adequately 
address the problem of excess capacity and, in the WTO context, we have 
pressed other major trading nations in these industries to consider 
whether the rules need to be changed. Meanwhile, the Department 
continues to investigate and address, to the fullest extent under U.S. 
laws, imports that benefit from countervailable subsidies and that 
cause injury to our domestic industries. And we stand ready to fully 
implement any new legislation that provides additional tools to more 
effectively remedy injury from unfairly traded imports.

    Question. During your testimony, you said that ``the price of 
steel, and for a while the price of aluminum, went up far more than is 
justified by the tariffs.'' As a result of the price of steel 
increasing by a percentage greater than the tariff, you said that the 
Commerce Department is beginning an investigation into this unexpected 
phenomenon.

    Can you elaborate on this investigation? What do you believe is 
driving this extra price increase? Specifically, were you referring to 
the Midwest Premium, and is your investigation into the Midwest Premium 
and related indices?

    Answer. The Midwest Premium (MWP) is determined by S&P Global 
Platts (Platts). In May, I requested and received from both Platts and 
the Aluminum Association information regarding the MWP and how it is 
determined. I understand that Platts has taken steps to address 
concerns about non-tariff pricing. The Department also received public 
comments on this issue in response to the Department's March 19th 
interim final rule implementing the submission of exclusion requests 
and objections to submitted requests for steel and aluminum. Department 
staff have provided the Department of Justice and the Federal Trade 
Commission with the public comments regarding the MWP and other 
information provided by industry.

    Question. Ohio is home to American Fence Posts, which is the last 
domestic manufacturer of the iconic green u-shaped steel fence post 
common to many road signs and fences. Unfortunately, the tariffs on 
steel have dramatically increased the price of their inputs and yet has 
not slowed the surge of finished fence post imports from China. This is 
just one example of American manufacturers being squeezed between 
unfair trade practices abroad and higher metal prices at home.

    Is the Commerce Department aware of these types of situation? And 
is the Department considering options to help--and in comes cases even 
save--these U.S. businesses?

    Answer. The Department is aware of these types of situations. As I 
testified, we developed a list of downstream products that have been 
hurt by imports and have worked with the interagency to incorporate 
many of these downstream products on the section 301 tariff lists.

    Question. Ohio is also home to AK Steel, which is the last domestic 
producer of grain-oriented electrical steel (GOES). Used in power 
transformers, GOES is an important part of our Nation's critical 
infrastructure. Unfortunately, the section 232 remedy does not cover 
downstream products that are really just minimally transformed GOES, 
such as cores, core parts, and laminations. Without coverage of these 
products, the remedy is not completely effective, as production of 
these parts will move offshore. In your testimony, you mentioned that 
you were considering additions for products like this. Unfortunately, 
it was unclear if you were referring to product additions to the 
current section 232 remedy or additions to the section 301 retaliation 
lists crafted by the U.S. Trade Representative.

    Will you commit to adding products, like the minimally transformed 
GOES as core, core parts, and laminations, to the section 232 remedy? 
Adding products like these to the section 301 remedy is incomplete 
because it only applies to China and falls short of the global solution 
needed to the global problem of steel overcapacity.

    Answer. The presidential proclamations direct the Secretary of 
Commerce to monitor imports of steel and aluminum, and from time to 
time, review the status of such imports with respect to the national 
security, in consultation with other senior executive branch officials. 
The proclamations also direct the Secretary to inform the President of 
any circumstances that might indicate the need for further action under 
section 232. The Department will carry out the President's direction.

    Question. In your testimony, you noted that the Commerce Department 
is seeking input from newspapers on three factors that assess the 
economic health of the industry. As you know downstream industries are 
not a consideration in the Commerce Department's antidumping/
countervailing duty analysis.

    From how many newspapers have you received input? How does the 
collection, and use, of this information comport with the Commerce 
Department's obligations to just determine the existence and extent of 
dumping or subsidization, rather than be an arbiter of the economic 
impacts duties may have on different industries who may have a stake in 
a trade remedy investigation?

    Answer. As Secretary of Commerce, I have a duty to conduct our 
trade remedy proceedings in a manner consistent with current U.S. law. 
When dumping or subsidization is found to cause injury the domestic 
industry, the statute requires that the Department impose duties to 
offset that unfair trade.

    As you note, at my last hearing, I invited the input from 
newspapers that you reference. The Department has received numerous 
comments on behalf of the newsprint industry relating to the impact of 
potential antidumping and countervailing duties on uncoated groundwood 
paper from Canada. With respect to your question on how the collection, 
and use, of this information comports with the Department's 
obligations, the statute allows an opportunity for consumers and 
industrial users who do not otherwise satisfy the definition of 
``interested party'' to submit relevant information concerning dumping 
or countervailable subsidies. See 19 U.S.C. 1677f(h). The Department 
reviews all record information when determining the level of dumping 
and countervailable subsidization, in accordance with 19 U.S.C. 1671 
and 1673. Under U.S. AD and CVD law, the Department does not have the 
authority to consider additional factors when making our determinations 
in such instances. Please know that the Department is committed to 
administering the trade remedies laws in a fair and balanced fashion in 
accordance with U.S. law, regulations and international obligations.

    It is important to note that any affirmative finding made by the 
Department in the context of an antidumping duty or countervailing duty 
investigation must be transmitted to the U.S. International Trade 
Commission (ITC), which as required by law has the authority to examine 
whether dumping or subsidization is injuring the domestic industry. On 
August 29, 2018, the ITC reached a negative determination finding that 
imports of uncoated groundwood paper from Canada did not materially 
injure the domestic industry. As a result of the ITC's determination, 
the investigations will be terminated, and all duties collected will be 
returned.

    Question. As you know, there is a growing international campaign to 
coerce and delegitimize Israel by imposing boycotts, divestment and 
sanction actions. In fact, the United States recently withdrew from the 
UN Human Rights Council due, in part, to its relentlessly anti-Israel 
bias, including its decision to in 2016 to create a database of 
companies--including U.S. companies--that do business in Israeli-
controlled territories. It is virtually impossible to target businesses 
that operate in Israeli-controlled territories without also hurting 
Israel economy, so this database essentially amounts to a 
``blacklist,'' designed to help coerce Israel into resolving issues 
that should only be addressed through direct talks between Israelis and 
Palestinians.

    I have introduced legislation with my colleague, Ben Cardin of 
Maryland, that would prohibit U.S. entities from responding to requests 
from the UN Human Rights Council or other international governmental 
organizations designed to blacklist and boycott companies engaged in 
legal commerce with Israel. The legislation is based on the 40-year-old 
Export Administration Act (EAA), which has been repeatedly upheld by 
Federal courts and protects the rights of individual Americans who want 
to criticize Israeli or American policies.

    What are your views on the global boycott, divest, and sanctions 
(BDS) movement? Will you commit to fighting efforts led by 
organizations like the UN Human Rights Council's to pressure U.S. 
companies not to do business in Israel or Israeli-controlled 
territories? Will you commit to working with my team and me to ensure 
our legislation is a complement to your ongoing enforcement efforts?

    Answer. The Department of Commerce's Office of Antiboycott 
Compliance (OAC) administers and enforces the antiboycott provisions of 
the Export Administration Act. These provisions discourage and in 
specific circumstances prohibit United States persons to refuse to take 
certain actions, including furnishing information or entering into 
agreements which have the effect of furthering or supporting a 
restrictive trade practice or boycott against a country friendly to the 
United States. The Department, through OAC, vigorously scrutinizes 
information and practices which may constitute boycott-based activity 
and, as appropriate, initiates enforcement actions under relevant 
regulatory authority.

    OAC recognizes the boycott, divestment and sanctions movement as a 
``grassroots boycott'' and continues to monitor its influence and its 
activities. The Department opposes restrictive trade practices or 
boycotts against any country friendly to the U.S. and does not support 
the imposition of any artificial barrier to trade that would pressure 
U.S. companies to refuse to do business in order to achieve political 
outcomes. To this end, I am committed to continue the robust support of 
OAC's program and related enforcement activities and to ensure that all 
Bureau of Industry and Security's authorities are utilized to carry out 
its mission.

                                 ______
                                 
                Questions Submitted by Hon. Bill Cassidy
    Question. Louisiana is home to two LNG export projects which are 
either operating or under construction, five that are fully permitted, 
and five more that are awaiting their Federal permits. Unfortunately, 
the section 232 steel tariffs could not come at a less opportune time. 
As the second wave of U.S. LNG projects approach final investment 
decisions, multiple billion-dollar projects are on hold due to project 
financing issues related to the section 232 tariffs.

    Given the enormous economic potential of these projects and 
geopolitical benefits of expanding our energy exports, what are your 
thoughts on exempting the entire LNG industry from 232 tariffs?

    What is your opinion on an industry wide exemption for the U.S. oil 
and gas industry and their domestic suppliers in order to achieve the 
administration's objective of American energy dominance?

    Answer. The purpose of the exclusion process is to protect 
downstream manufacturers that rely on products not produced by domestic 
industry. The guiding principle is that if domestic industry does not 
or will not produce a given steel or aluminum product, companies that 
rely on those products should not pay tariffs on them. The review of 
exclusion requests and related objections are being conducted on a 
case-by-case basis managed by Commerce's Bureau of Industry and 
Security (BIS). As part of this process, BIS is also working closely 
with enforcement and compliance specialists within Commerce's 
International Trade Administration (ITA). We have modified our 
procedures to expedite decisions on requests that have no corresponding 
objections. We do have the discretion to make broader exclusions 
available to all importers if we find the circumstances warrant and 
will exercise this discretion as appropriate.

    Question. Downstream steel fabricators are facing a tenuous 
situation due to dumped and subsidized imports of finished Process 
Industry Components primarily from Asia. This situation has been 
exacerbated as a result of the 232 tariffs, doubling the price of 
carbon and alloy plate.

    Considering section 232 is intended to improve our national 
security, what do we gain from a more robust steel and aluminum sector 
if the sectors that manufacture goods from those products are no longer 
competitive in the United States?

    Answer. The aluminum and steel proclamations signed by the 
President on March 8, 2018 state that the objective of each action is 
to help our domestic aluminum and steel industries to revive idled 
facilities, open closed mills and smelters, preserve necessary skills 
by hiring new workers, and maintain or increase production. These 
actions will reduce our Nation's need to rely on foreign producers of 
aluminum and steel and ensure that domestic producers can continue to 
supply all of the aluminum and steel necessary for critical industries 
and national defense. It will take time for U.S. aluminum and steel 
producers to fully restart idled capacity and regain long-term economic 
health. It is likely that the import adjustments will need to be in 
place for some time to enable aluminum and steel producers to achieve 
sustained economic viability. The Department, working with other 
agencies, will continue to monitor the impact of the tariffs and the 
health and competitiveness of U.S. industry, and the Department will 
conduct a comprehensive analysis of the impact of the section 232 
tariffs after they have been in effect long enough to make the results 
of that analysis useful.

    Question. I have yet to meet anyone who has had a good experience 
with the Commerce Department's 232 tariff exclusion process. Some 
sectors such as steel fabrication or machinery for oil and gas 
production rely on similar steel products.

    What is the Commerce Department doing to streamline the process so 
that industries vital to national security, such as steel fabrication 
and oil and gas, are not negatively affected by the 232 tariffs?

    Answer. Based on several months of experience, to streamline the 
exclusion review process, the Department has taken several steps:

          Modified internal procedures to expedite decisions on 
        requests that have no corresponding objections. After CBP 
        determines that the exclusion is administrable, meaning the 
        product description in the exclusion request is consistent with 
        the claimed HTSUS classification, the request will promptly be 
        granted if it presents no national security concerns and 
        otherwise meets the criteria for an exclusion. As of October 
        22nd, the Department has granted more than 12,000 exclusion 
        requests.
          Working with CBP to enhance the speed and accuracy of its 
        review of exclusion requests. CBP no longer reviews requests 
        for which objections have been filed. CBP has automated its 
        review process and is expected to return the 5,000 steel and 
        aluminum requests sent to it on Friday, October 12th, along 
        with the 1,000 aluminum requests in its queue, within weeks. 
        Provided language that was included in subsequent Presidential 
        Proclamations that allows successful exclusion requesters to 
        obtain refunds of duties paid as of the date their original 
        exclusion request was accepted by the Department of Commerce.
          Developed a rebuttal process to allow exclusion requestors 
        to provide evidence refuting objectors' claims of domestic 
        capacity, which was published in the Federal Register on 
        September 11th and is also available on the BIS website.
          Increased and organized staff to most efficiently process 
        exclusion requests. As a result of Congress authorizing a 
        reprogramming of funds to the Department's Bureau of Industry 
        and Security (BIS), BIS has hired 15 contractors. In addition, 
        the Department's International Trade Administration (ITA) has 
        used existing funds to bring on 41 contractors, with 11 more in 
        the hiring queue, to review objections and provide 
        recommendations to BIS. Moreover, over a dozen non-BIS Commerce 
        Department staff have been detailed to BIS to assist in its 
        administration of the steel and aluminum exclusion process 
        review.

    In addition to these measures, the Secretary has directed Commerce 
Department economists to regularly review the impacts of the steel and 
aluminum tariffs, including on downstream sectors. The Secretary will 
present this information to the President for his consideration.

    Question. Canada and Mexico are longtime allies. Given their 
geographic position and the vast infrastructure connecting our 
countries, one would think we would like to depend on their industrial 
capacity if the United States ever faced a significant national 
security crisis.

    Given these facts, how is it in our national security to lessen the 
competitiveness of allies, via tariffs, that we may need to call on in 
the case of a national crisis?

    Would a reduced tariff on American's allies still allow for U.S. 
steel and aluminum industry to be competitive, while ensuring the 
industrial capacity of those allies is available in a time of crisis?

    Answer. The President's section 232 decisions are the result of a 
robust and thorough interagency review coordinated by the White House. 
Decisions about country exemptions are made by the President, based on 
his assessment of the factors described in the proclamations he has 
issued.

    Question. I appreciate your interest and efforts to help curb our 
seafood deficit. Louisiana has the one of the largest commercial 
seafood industries in the country, employing thousands and contributing 
billions each year to the economy. Shrimping is the largest industry 
and my constituents tell me they continue to be hit hard by increased 
imports from India, lowering dock side prices for wild caught Gulf 
shrimp.

    We have to find ways to maximize our domestic resources but also 
look at how we can curb the practices of bad actors dumping product 
such as shrimp in to the U.S. market because places such as the EU 
won't accept it. What are your thoughts on specific measures the 
Department can take to address our current seafood deficit?

    Answer. To address unfair import of shrimp, the Department 
currently maintains four antidumping duty (AD) orders on imports of 
frozen warm water shrimp from China, India, Thailand and Vietnam. As 
directed by Congress, the Department's National Oceanic and Atmospheric 
Administration (NOAA) recently lifted its stay on shrimp and abalone in 
the U.S. Seafood Import Monitoring Program (SIMP). Effective December 
31, 2018, it will be mandatory for foreign shrimp products to be 
accompanied by production or harvest and landing data and for importers 
to maintain chain of custody records for shrimp and abalone imports 
entering the United States. The inclusion of shrimp--the largest U.S. 
seafood import--and abalone in SIMP nearly doubles the volume and value 
of imported fish and fish products subject to its requirements, further 
leveling the playing field for U.S. fishermen, aquaculture producers, 
and seafood producers around the world who play by the rules.

    In addition, the Department has been clear about its goal of 
reducing the seafood trade deficit. That said, many of the dynamics 
that drive our seafood trade balance such as U.S. consumer preferences, 
the volume and composition of U.S. seafood production, and global 
seafood demand lie outside of the Department's control. In any case, 
the Department intends to shift the balance of trade and increase the 
value and volume of U.S. seafood production by supporting increased 
investment in, and productivity of, the Nation's aquaculture industry, 
by ensuring that fisheries regulations promote optimal yield while 
adhering to science-based conservation mandates, and by promoting 
access to export markets and maintaining a level-playing field for U.S. 
seafood producers within the global seafood marketplace.

    Question. I'm concerned with the health and safety of the consumer 
and the conditions under which farmed seafood is raised by importers. 
According to this GAO report, FDA inspects only a fraction of foreign 
processors but does not inspect the farms or the labs. And this 
decision from the EU says they have increased inspections of farmed 
shrimp from India due to unsatisfactory controls to mitigate use of 
veterinary products in shrimp.

    What are your thoughts on interagency collaborations outside of 
Commerce such as with FDA and USTR to ensure there is a unified 
approach to maximize domestic seafood resources and protect the 
consumer?

    Answer. Expanded interagency collaborations on seafood trade will 
be needed to promote access to export markets and maintain a level-
playing field for U.S. seafood producers within the global seafood 
marketplace. Currently, the Department of Commerce (DOC), through NOAA 
and the International Trade Administration (ITA) and in coordination 
with USTR support a range of activities that increase U.S. seafood 
market access and competitiveness. This includes NOAA advising USTR on 
fisheries and seafood issues in the development of WTO engagement and 
positions on technical barriers to trade and sanitary issues concerns. 
ITA works to address seafood market access issues on behalf of U.S. 
seafood exporters.

    NOAA does not have authorities at the border with regard to the 
safety or quality of imported seafood. The National Marine Fisheries 
Service's Seafood Inspection Program (SIP) can assist other Federal 
agencies with information and expertise with regard to imported 
seafood. Any work performed by SIP on imported seafood would be to 
assist FDA in meeting their mandates and would be at their request. 
Such work is accomplished through a Memorandum of Understanding (MOU) 
between the agencies to ensure a strong working relationship; both take 
advantage of the benefits of each agency's mechanisms and authorities 
to deliver a full and complete set of inspection services. This MOU 
also permits the FDA and SIP to cooperate on inspection of aquaculture 
facilities producing any seafood destined for export to the United 
States. SIP also has the capability to permit establishments outside of 
the United States to become approved establishments within the Program. 
This voluntary activity is utilized by buyers in the United States to 
assure products purchased from suppliers meet U.S. regulations and the 
particular buyer's specifications. The reports are available for use by 
the FDA as part of the MOU between the agencies.

    Question. At the end of March 2017, President Trump signed an 
executive order requesting an omnibus report on significant trade 
deficits to, among other things, identify foreign trading partners with 
which the United States had a significant trade deficit in goods in 
2016. I'm told the Department and USTR have not yet released the 
findings.

    Can you please provide an update on the status of this report?

    Answer. In 2017, Commerce and other agencies collected relevant 
government reports such as the National Trade Estimates and Special 301 
reports, solicited public input, and compiled information responsive to 
the Executive Order. That information was provided to the White House 
and served as background information for administration officials. The 
Executive Order did not call for release of the findings.

    Question. I am a strong supporter of the policies this 
administration has implemented to incentivize a return of manufacturing 
jobs to the United States. However, I have recently heard from 
constituents in industries that are growing the economy--such as 
chemicals and oil and gas--and how they are being negatively impacted 
by tariffs and quotas. One company in southwest Louisiana mentioned a 
$15 million per year increase in maintenance costs alone as a result of 
the tariffs.

    How does this administration weigh the impacts of retaliatory 
tariffs to industries for which it has emphasized support when 
considering the imposition of trade restrictions?

    Answer. The administration will take all necessary actions to 
protect U.S. interests against unjustified retaliatory actions by other 
countries. The United States has launched separate disputes at the 
World Trade Organization (WTO) against China, the European Union, 
Canada, Mexico, Turkey, and Russia challenging the retaliatory tariffs 
these WTO Members have imposed in response to our section 232 actions.

    Question. The United States is sending Javelin anti-tank weapons 
and small arms support to Ukraine following the Russian incursion in 
Crimea and its industrial heartland in Donetsk and Luhansk.

    From a national security standpoint, what benefits are realized by 
imposing tariffs under section 232 on Ukraine's minimal importation of 
steel products to the United States?

    Answer. The President's actions under section 232 are global in 
nature--that is, they apply to imports from all countries. Imports of 
steel products are either subject to a 25 percent tariffs or are exempt 
from the tariff on the basis of alternative measures the United States 
has agreed individually with specific countries.

                                 ______
                                 
              Questions Submitted by Hon. Debbie Stabenow
    Question. I have heard from Michigan companies about the steel and 
aluminum product exclusion process that the Commerce Department is 
overseeing. Many of them are small businesses that do not have the 
necessary resources or the capacity to navigate this process.

    How does Commerce field questions by these small businesses as they 
relate to the exclusion process? What tools are you using to assist 
small businesses in this process? Please specify all the resources 
available.

    How many inquiries do you receive on average each day on your 
telephone hotline? How have you advertised this hotline to companies in 
States that are affected by the tariffs?

    How many people are staffed to help or respond to small businesses 
seeking clarification or assistance on the exclusions process? Do you 
think this number is adequate?

    Have you consulted with the Small Business Administration on tools 
that may be available to assist small business in navigating this 
process or letting them know where to access information?

    Please specify all the criteria that you are using to determine 
product exclusion approvals and denials.

    Answer. The Department is very cognizant of the importance of 
providing resources to help small and medium-sized businesses navigate 
the exclusion process. The Department published the initial procedures 
for the product exclusion requests in the Federal Register on March 19, 
2018 and updated those procedures in the Federal Register on September 
11, 2018. The regulations setting forth procedures are available on the 
Department's Bureau of Industry and Security (BIS) web site. In 
addition, the BIS established dedicated phone numbers and email 
addresses for U.S. industry to seek assistance or ask questions about 
the process. These receive approximately 20 inquiries each day. These 
phone numbers and email addresses were included in the press releases 
announcing the exclusion process and the coinciding Federal Register 
notices. BIS has also posted guidance with a step-by-step visual guide 
to assist industry, including small and medium-sized businesses, 
through the process and with tips on how to properly complete the 
exclusion request forms based on issues identified during BIS's initial 
review of submissions (the most common issues being incomplete forms or 
bundling numerous requests in a single submission).

    Question. As you know, I am very concerned about retaliation by 
other countries as a result of the President's trade actions, 
particularly in our agriculture sector in Michigan.

    Has the administration prepared, or is the administration preparing 
an economic analysis on the impact of retaliatory tariffs on the 
agriculture sector?

    Answer. U.S. agriculture plays a critical role in the economic 
growth of our country and the administration is actively working to 
ensure fair and reciprocal access to foreign markets for your 
constituents. The administration will take all necessary actions to 
protect U.S. interests against unjustified retaliatory actions by other 
countries. The United States has launched separate disputes at the 
World Trade Organization (WTO) against China, the European Union, 
Canada, Mexico, Turkey, and Russia challenging the retaliatory tariffs 
these WTO Members have imposed in response to our section 232 actions.

    On July 24th, President Trump directed Secretary Perdue to craft a 
relief strategy to protect agricultural producers while the 
administration works on free, fair, and reciprocal trade deals to open 
more markets in the long run to help American farmers compete globally. 
Specifically, USDA will authorize up to $12 billion in programs, which 
is in line with the estimated $11 billion impact of the unjustified 
retaliatory tariffs on U.S. agricultural goods. These programs will 
assist agricultural producers to meet the costs of disrupted markets.

    Question. On April 18, 2017, President Trump signed the ``Buy 
American Hire American'' executive order to ensure that the maximum 
amount of Federal procurement funds are being used to purchase 
American-made products and to limit the use of waivers to the Buy 
American Act. The executive order also tasked the Secretary of Commerce 
with developing a Buy American report that contains a government-wide 
assessment on Buy American compliance. Furthermore, the executive order 
required the report contain recommendations to strengthen Federal 
implementation of Buy American laws. I understand the Buy American 
report was completed several months ago, but is not accessible to 
Members of Congress and the public.

    Will the Department of Commerce commit to publicly posting on its 
website the contents of the Buy American report? If so, can you provide 
the exact date the Buy American report will be posted?

    Is the Buy American report available to members of Congress and 
their respective staffs upon request?

    Answer. As required by the executive order, I submitted the report 
with findings and recommendations to the President on March 20, 2018. 
The report is being used to assist the administration's deliberations 
on Buy American issues and the President has not yet decided whether to 
publicly release the report.

                                 ______
                                 
                Questions Submitted by Hon. Bill Nelson
    Question. What would you say to the workers who are negatively 
impacted by the section 232 tariffs on steel and aluminum or the 
ensuing fallout abroad?

    Answer. This President is enforcing U.S. trade laws by taking 
action to address a threat to our national security. The President's 
section 232 decisions are the result of a robust and thorough 
interagency review coordinated by the White House. It will take time 
for U.S. aluminum and steel producers to fully restart idled capacity 
and regain long-term economic health. It is likely that the import 
adjustments will need to be in place for some time to enable aluminum 
and steel producers to achieve sustained economic viability. The 
Department, working with other agencies, will continue to monitor the 
impact of the tariffs and the health and competitiveness of U.S. 
industry, and the Department will conduct a comprehensive analysis of 
the impact of the section 232 tariffs after they have been in effect 
long enough to make the results of that analysis useful.

    The potential loss of any jobs concerns me. The administration will 
take all necessary actions to protect U.S. interests against 
unjustified retaliatory actions by other countries. The United States 
has launched separate disputes at the World Trade Organization (WTO) 
against China, the European Union, Canada, Mexico, Turkey, and Russia 
challenging the retaliatory tariffs these WTO Members have imposed in 
response to our section 232 actions.

    Question. How many years should we expect the steel and aluminum 
tariffs to be in effect?

    Answer. It will take time for U.S. aluminum and steel producers to 
fully restart idled capacity and regain long-term economic health. It 
is likely that the import adjustments will need to be in place for some 
time to enable aluminum and steel producers to achieve sustained 
economic viability. The Department, working with other agencies, will 
continue to monitor the impact of the tariffs and the health and 
competitiveness of U.S. industry, and the Department will conduct a 
comprehensive analysis of the impact of the section 232 tariffs after 
they have been in effect long enough to make the results of that 
analysis useful.

    Question. What does the administration plan to do if years from now 
the domestic steel and aluminum industries are still having problems 
competing without the section 232 tariffs? Would you recommend making 
the tariffs permanent?

    Answer. The Presidential proclamations direct the Secretary of 
Commerce to monitor imports of steel and aluminum, and from time to 
time, review the status of such imports with respect to the national 
security, in consultation with other senior executive branch officials. 
The proclamations also direct the Secretary of Commerce to inform the 
President of any circumstances that might indicate the need for further 
action under section 232, as well as any circumstance that might 
indicate that the increases in duty rates provided in the proclamations 
are no longer needed. The Department will carry out the President's 
direction.

    Question. How are the section 232 tariffs specifically affecting 
steel and aluminum production in China?

    Answer. These actions have been in force for a relatively short 
period of time, and it would be too soon to assess any impact from the 
imposed tariffs with currently available data.

    Question. In response to the section 232 steel and aluminum 
tariffs, the EU, Mexico, Canada, and others filed trade cases against 
the United States in the World Trade Organization (WTO). What would you 
recommend the President do if the WTO rules against the U.S. on these 
tariffs?

    Answer. Our actions under section 232 are fully consistent with our 
WTO obligations.

    Question. As I understand it, South Korea, Brazil, and Argentina 
worked out a deal to get exempted from the steel and aluminum tariffs, 
agreeing to quotas (or caps) on the amount of steel or aluminum 
products they import into the United States.

    What happens to shipments that exceed the quotas?

    What should businesses do if they have shipments already on the way 
here that will exceed the quotas?

    Answer. The Department of Homeland Security's Customs and Border 
Protection (CBP) is responsible for administering the quotas and has 
published guidance on available options, should above quota shipments 
arrive in a U.S. port (including warehouses, foreign trade zones, 
exportation, or destruction).

    On August 29th, the President signed proclamations allowing the 
Department of Commerce to provide relief from quotas imposed under 
section 232 on steel from South Korea, Argentina, and Brazil, and 
aluminum from Argentina. Companies can apply for product exclusions on 
the same basis as product exclusions are available from for tariffs, 
namely lack of sufficient quantity or quality available from U.S. steel 
or aluminum producers, or for national security reasons. In such cases, 
an exclusion from the quota may be granted and no tariff would apply to 
the excluded steel or aluminum product.

    In addition, the President has proclaimed that exclusion from the 
quota be provided in certain limited cases where steel articles from a 
quota country are being imported for use in a facility construction 
project in the United States under a contract signed prior to the 
President's decision to adjust imports, and that cannot enter into the 
United States because the applicable quota has already been reached. In 
such cases, the steel articles excluded from the quota may be imported 
upon payment of the 25-percent tariff.

    Question. Currently, the administration does not allow businesses 
to get product exclusions if they're importing steel and aluminum 
products from countries agreeing to import quotas, in exchange for an 
exemption from the section 232 tariffs. However, product exclusions are 
allowed from other countries that fall under the section 232 tariffs if 
the product is needed for national security purposes or a comparable 
product is not available from a domestic supplier. I have heard from 
businesses in Florida that believe this situation will force them to 
close their business, as they import highly specialized components that 
no one makes domestically, or could make profitably because of 
economies of scale.

    Could you explain why product exclusions were not allowed for 
imports from countries agreeing to import quotas?

    Will you discuss this issue with the President and ask for product 
exclusions to be allowed for businesses that import products from 
countries that agreed to import quotas, but the imported product is 
needed for national security reasons or not available from domestic 
suppliers?

    Answer. As noted above, on August 29th the President signed 
proclamations allowing the Department to provide product exclusions 
from the applicable steel or aluminum quotas.

    Question. I've heard that in the past when a shipment came in over 
an import quota, it was stored. But if it was subsequently abandoned by 
the importer while in storage, it was later dumped in a lake 
somewhere--which seems to pose serious health and environmental 
hazards.

    Can you guarantee that no such action will be taken by the 
government if a shipment comes in over the import quota and is stored, 
but later abandoned by the importer?

    Answer. The Department of Homeland Security's Customs and Border 
Protection (CBP) is responsible for administering the quota. I have 
deferred this question to CBP, and their response appears below.

    CBP Response: Absolute Quota strictly limits the quantity of goods 
that may enter the commerce of the United States for a specific period. 
Once the quantity permitted under an absolute quota is filled, no 
further importation entries or withdrawals from warehouse are allowed 
into the U.S. for consumption for the remainder of the quota period. 
Quantities entered in excess of the absolute quota must either be 
entered into a bonded warehouse (type 21 entry), admitted into a 
Foreign Trade Zone to await a quota re-opening; be re-exported from the 
arrival port; or be destroyed under CBP supervision. Any of these four 
options can be completed with a permit to transfer or an in-bond.

    For any trade commodity shipments entered into a bonded warehouse 
and stored at that facility, that are subsequently abandoned by the 
importer while in storage, the responsibility for disposal or 
destruction, and compliance with environmental and health protection 
standards and regulations, falls to the operator and proprietor of the 
specific warehouse. CBP and the U.S. government do not operate any 
bonded warehouses. For shipments of goods that are stored on CBP 
premises, the disposal or destruction of such shipments is conducted in 
accordance with CBP facilities management and environmental stewardship 
policy, as well as an Federal, State, and local laws and regulations.

                                 ______
                                 
              Questions Submitted by Hon. Robert Menendez
                         conflicts of interest
    Question. Secretary Ross, a recent article in Forbes alleges that 
you shorted stock in Navigator Holdings five days before the Paradise 
Papers revealed that you, while serving as Secretary of Commerce, still 
held a stake in the firm that did millions of dollars of business with 
a Russian petrochemical company that is allegedly linked with Vladimir 
Putin and partially owned by U.S.-sanctioned oligarchs.

    Did you at any point while serving as Secretary short Navigator 
Holdings?

    Answer. On October 31, 2017, I sold shares of Navigator Holdings in 
a transaction structured as a ``short against the box,'' a well-known 
type of sale in which I sold shares that I already owned. This 
structure neutralized my financial position and effectively terminated 
my direct financial interest in Navigator Holdings on the date of sale.

    Incidentally, it was not the Paradise Papers that revealed I held 
interests in Navigator. I revealed this information in my initial 
financial disclosure form. I believe you may be referring to The New 
York Times article mentioned in Senator Wyden's questions. As I 
responded to Senator Wyden, the fact that I held ownership interests in 
Navigator, that Sibur was a customer of Navigator, and that two 
oligarchs were investors in Sibur all had been publicly disclosed long 
before this article and certainly did not constitute material non-
public information.

    Question. Were you at any point while serving as Secretary aware of 
any non-
public information that could affect Navigator's stock price?

    Answer. I can State categorically that at no time during my tenure 
as Secretary have I ever taken any particular action regarding 
Navigator based on non-public information. And so far as I am aware, no 
particular matter involving Navigator has come before me since I became 
Secretary.

    The suggestion that I engaged in ``insider trading'' in executing 
the sale of Navigator Holdings stock on October 31, 2017, is utterly 
false. As you know, ``insider trading'' under Federal securities laws 
occurs when a person, in breach of a fiduciary duty purchases or sells 
securities on the basis of material non-public information. That simply 
did not occur in respect of my sale of Navigator Holdings stock. 
Nothing in the article was not already in the public domain.

    My investment interests in Navigator, the fact that Sibur was a 
customer of Navigator, and the fact that Russians owned Sibur were 
already a matter of public record.

    At all times since becoming Secretary, I have sought to comply 
scrupulously with Federal ethics laws. I continue to rely on the 
Department's ethics officials for advice on compliance with those laws, 
including my recusals and the avoidance of any conflict of interest in 
my work as Secretary. I am confident that my actions with regard to 
divestments of my financial interests in Navigator Holdings were 
entirely proper.

    Question. Do you or any of your family members still hold an 
interest in Navigator?

    Answer. Neither my wife nor I have any financial interest in 
Navigator. A trust established for the benefit of my adult children 
holds, among other assets, interests in Navigator. Neither my wife nor 
I have any financial interest in that trust. I have been advised by 
Department ethics officials that this is fully compliant with 
applicable ethics rules and guidance provided by the Office of 
Government Ethics.
                            china vs. allies
    Question. Secretary Ross, in your testimony, you pointed out that 
China's excess capacity is the largest threat to our steel and aluminum 
industry. But instead of leading our allies in a coordinated response 
to China's unfair trade practices, the President earlier this month 
used his appearance at the G7 to insult Canadian Prime Minister Trudeau 
and accuse our allies of ripping us off on trade. Then on Monday, the 
Senate overwhelmingly passed the NDAA, which included a bipartisan 
amendment to undo the sweetheart deal this administration gave to ZTE, 
a Chinese company that violated U.S. sanctions law.

    Do you think Canada presents a greater national security threat 
than China?

    Do you believe our allies are going to be more or less likely to 
join us in coordinated action against China when they see this 
administration being tougher on allies like Canada than on China?

    Answer. Section 232 requires the Secretary of Commerce to advise 
the President if any article ``is being imported into the United States 
in such quantities or under such circumstances as to threaten to impair 
the national security.'' Our investigation concluded that the present 
quantities and circumstances of steel imports are ``weakening our 
internal economy'' and threaten to impair the national security as 
defined in section 232. In light of this conclusion, I determined the 
only effective means of removing the threat of impairment is to reduce 
imports to a level that should, in combination with good management, 
enable U.S. steel mills to operate at 80 percent or more of their rated 
capacity. The President's proclamation directed tariffs at 25 percent 
for steel and 10 percent for aluminum, with certain countries, 
including Canada, initially exempted pending bilateral negotiations. 
Several countries subsequently negotiated quotas in lieu of tariffs.

    Regarding Canada, the issue is the impact of the cumulative imports 
from many countries on domestic industry, resulting from global 
overproduction, which threatens to impair U.S. national security by 
putting at risk the remaining steel and aluminum production in the 
United States. The tariffs on steel and aluminum from allies are not 
higher than those on Chinese steel and aluminum. Multilateral efforts 
to address the global overproduction issue have heretofore not reduced 
excess production in the countries that export their steel and aluminum 
to the U.S.

    Question. We all know that we've had trade disputes with our allies 
before, but this time is different. In the past, we've found ways to 
negotiate settlements or take action at the WTO or similar 
institutions, but we've generally shied away from claiming that trade 
with our allies presents a national security threat to the United 
States.

    Has the U.S. government ever before made a determination that trade 
with our allies represents a national security threat?

    Answer. The President's section 232 actions on aluminum and steel 
are the result of a robust and thorough interagency review coordinated 
by the White House.
                steel imports from countries with quota
    Question. Secretary Ross, I have been contacted by dozens of 
companies in New Jersey that have been negatively impacted by the 
administration's tariff and quota policies. One such company uses a 
Korean specialty steel product to manufacture life-saving medical 
devices. But the section 232 quota on Korean steel could put this third 
generation family-owned company out of business. New Jersey could lose 
over 400 good paying manufacturing jobs, and hospital and surgery rooms 
could shut down for certain endoscopic procedures if the supply chain 
for these medical devices is disrupted. Ultimately, the lives and 
health of hundreds of thousands of patients nationwide could be put at 
risk. There is no U.S. source for this steel, and even if there were, 
it could take up to 3 years to gain FDA approval for its use in medical 
devices. I know your goal in instituting these tariffs was not to 
undercut U.S. manufacturing, but I'm concerned about the unintended 
consequences for high-tech manufacturing jobs that we all want to 
encourage.

    In cases where imports of steel are subject to the 232 tariff, 
American companies can obtain relief through exclusion requests when 
there is little or no U.S. production. But as you noted, there is not 
currently a similar opportunity for U.S. companies importing steel from 
countries, such as Korea, that have entered into quota arrangements.

    In cases where the imported products are essential components for 
domestic manufacturers of high-tech medical devices essential to 
improving the care and well-being of Americans, why has the Department 
not established an exclusion process?

    Will you commit to working with me to ensure that these kinds of 
supply chains are not disrupted by the 232 tariffs?

    Answer. On August 29th the President signed proclamations allowing 
the Department to provide targeted relief from quotas imposed under 
section 232 on steel from South Korea, Argentina, and Brazil, and 
aluminum from Argentina. Companies can apply for product exclusions on 
the same basis as product exclusions are available from tariffs, namely 
lack of sufficient quantity or quality available from U.S. steel or 
aluminum producers, or for national security reasons. In such cases, an 
exclusion from the quota may be granted and no tariff would apply to 
the excluded steel or aluminum product.

    In addition, the President has proclaimed that exclusion from the 
quotas be provided in certain limited cases where steel articles from a 
quota country are being imported for use in a facility construction 
project in the United States under a contract signed prior to the 
President's decision to adjust imports under section 232, and that 
cannot presently enter into the United States because the applicable 
quota has already been reached. In such cases, the excluded steel 
article may be imported upon payment of the 25-percent tariff.
                           long-term strategy
    Question. Secretary Ross, in your testimony you rightly pointed out 
that China is the largest source of excess steel capacity. And while 
the 232 investigation was going on last year, the administration 
suggested that it would use the threat of tariffs as a way to force 
China and other countries to the negotiating table so we could get an 
agreement to stop countries from unfairly subsidizing their operations 
and undercutting American producers. But when you finally released the 
section 232 reports in February, you said that the goal of the tariffs 
and quotas would be to raise domestic steel capacity utilization rate 
to 80 percent instead of seeking a more systemic change that would shut 
down unfairly subsidized foreign production.

    Will you recommend to the President that he roll back the 232 
tariffs and quotas once U.S. industry reaches 80 percent utilization, 
or will you recommend he keep them in place until we get more systemic 
change?

    Answer. The Presidential proclamations direct the Secretary of 
Commerce to monitor imports of steel and aluminum, and from time to 
time, review the status of such imports with respect to the national 
security, in consultation with other senior executive branch officials. 
The proclamations also direct the Secretary of Commerce to inform the 
President of any circumstances that might indicate the need for further 
action under section 232, as well as any circumstance that might 
indicate that the increases in duty rates provided in the proclamations 
are no longer needed. The Department will carry out the President's 
direction.
                              retaliation
    Question. Secretary Ross, retaliatory tariffs from the EU and 
Canada specifically are putting New Jersey companies in the crossfire 
of this dispute.

    Do you really expect foreign countries not to retaliate when we 
impose tariffs on their exports to the United States?

    Answer. The actions taken by the President under section 232 are 
wholly legitimate and fully justified as a matter of U.S. law and 
international trade rules. Where other countries respond to these 
actions with unjustified retaliatory measures, the administration will 
take all necessary actions to protect U.S. interests.

    Question. If they do, what is the second step in your approach? 
More tariffs?

    Answer. The administration will take all necessary action to 
protect U.S. interests in the face of unjustified retaliation against 
the President's wholly legitimate actions under section 232. The United 
States launched separate disputes at the World Trade Organization (WTO) 
against China, the European Union, Canada, Mexico, Turkey, and Russia 
challenging the retaliatory tariffs these WTO members have imposed in 
response to our section 232 actions.
                  impact of lumber tariffs on housing
    Question. Secretary Ross, homebuilders back in New Jersey tell me 
that the cost of lumber has increased far more than the 20-percent 
tariffs would have predicted. American home buyers are bearing the 
brunt of these tariffs, and some estimates show that the tariffs have 
driven up the average price of a new home by nearly $9,000. This is 
materially affecting housing affordability.

    What do you believe is going on in the lumber market?

    If the price increases are not attributable to the tariffs, what 
explains these astronomically high lumber prices?

    Additionally, do you believe the tariffs are having the intended 
outcome? In other word, are you seeing the domestic industry rebound 
with the record high prices? How many new jobs have been created in the 
sector?

    Answer. I have met with representatives of the home builders 
industry and appreciate their concerns about the rise of softwood 
lumber prices. I am aware that the U.S. price of softwood lumber for 
framing increased by more than 60 percent from November 2016 to June 
2018. There have been a number of demand-side factors that have 
contributed to this trend, including an increase in new home 
construction and growth in remodeling and repair construction activity. 
However, since the first week of June 2018 the price has steadily 
decreased for 9 straight weeks. The weekly price of softwood lumber has 
decreased by 24.4 percent over those 9 weeks. Lastly, with respect to 
changes in the price, there have been modest price increases, amounting 
to a three percent change, in the last two weeks of August and the 
first week of September 2018. Although the United States and Canada, 
and their respective softwood lumber industries, made significant 
efforts to reach a long-term, negotiated settlement to this ongoing 
trade dispute, the parties were unable to agree upon terms that were 
mutually acceptable. As a result, the Department of Commerce 
(Department) completed its antidumping duty (AD) and countervailing 
duty (CVD) investigations, and following affirmative determinations by 
the Department and the International Trade Commission, issued AD/CVD 
orders on imports of softwood lumber from Canada. The Department's 
determinations were made following a comprehensive review of factual 
evidence and arguments from all interested parties in the proceedings. 
Please know that the Department is committed to administering the trade 
remedies laws in a fair and balanced fashion in accordance with U.S. 
law, regulations and international obligations. That said, any future 
negotiations involving a long-term agreement related to bilateral trade 
of softwood lumber would be led by the United States Trade 
Representative.

                                 ______
                                 
              Questions Submitted by Hon. Thomas R. Carper
    Question. Last week, I heard from a manufacturing company in 
Delaware that relies on foreign steel for its business. The steel they 
require is not available from domestic suppliers so they, like so many 
other small manufacturing companies, must look outside the United 
States.

    They recently applied for an exclusion from the tariffs. An 
objection to their request for exclusion, which they believe contains 
inaccurate information, was filed. The Department's process, however, 
doesn't give my constituent company any clear way to respond to the 
filed objection.

    What is your Department doing to ensure that domestic 
manufacturers, the very businesses you claim to be protecting with 
these tariffs, are able to respond to inaccurate objections?

    Answer. The Department has developed a rebuttal process to allow 
exclusion requestors to provide evidence refuting objectors' claims of 
domestic capacity. This process has been implemented in the revised 
exclusion process rule, which was published in the Federal Register on 
September 11th and is also available on the BIS website.

    Question. In your testimony, you note that the Department has 
received over 20,000 steel and aluminum tariff exclusion requests from 
US companies and that the Department had announced determinations on 98 
of those requests. At that rate, it will take your department decades 
to process all of the pending requests.

    Do you believe that the progress your Department has made thus far 
is acceptable?

    What is your Department doing to expedite consideration of these 
requests?

    What do you believe is a reasonable timeline for Commerce to 
complete its consideration of all outstanding requests?

    Answer. Based on several months of experience, to streamline the 
exclusion review process, the Department has:

          Modified our internal procedures to expedite decisions on 
        requests that have no corresponding objections. After CBP 
        determines that the exclusion is administrable, meaning the 
        product described in the exclusion request is consistent with 
        the claimed HTSUS classification, the request will promptly be 
        granted if it presents no national security concerns and 
        otherwise meets the criteria for an exclusion. As of October 
        22nd, the Department has granted more than 12,000 exclusion 
        requests.
          Worked with CBP to enhance the speed and accuracy of its 
        review of exclusion requests. CBP no longer reviews requests 
        for which objections have been filed. CBP has automated its 
        review process and is expected to return the 5,000 steel and 
        aluminum requests sent to it on Friday, October 12th, along 
        with the 1,000 aluminum requests in its queue, within weeks. 
        Provided language that was included in subsequent presidential 
        proclamations that allows successful exclusion requesters to 
        obtain refunds of duties paid as of the date their original 
        exclusion request was accepted.
          Developed a rebuttal process to allow exclusion requestors 
        to provide evidence refuting objectors' claims of domestic 
        capacity, which was published in the Federal Register on 
        September 11th and is also available on the BIS website.
          Increased and organized staff to most efficiently process 
        exclusion requests. As a result of Congress authorizing a 
        reprogramming of funds to the Department's Bureau of Industry 
        and Security (BIS), BIS has hired 15 contractors. In addition, 
        the Department's International Trade Administration (ITA) has 
        used existing funds to bring on 41 contractors, with 11 more in 
        the hiring queue, to review objections and provide 
        recommendations to BIS. Moreover, over a dozen non-BIS Commerce 
        Department staff have been detailed to BIS to assist in its 
        administration of the steel and aluminum exclusion process 
        review.

    In addition, the Secretary has directed the Commerce Department's 
economists to regularly review the impacts of the steel and aluminum 
tariffs, including on downstream sectors. The Secretary will present 
this information to the President for his consideration.

    Question. Earlier this year, my office got a draft of an 
administration proposal to freeze fuel economy standards in the name of 
American consumers, saying that the Obama administration's rules were 
going to make new cars unaffordable. Yet, the President has also 
directed you and your Department to explore imposing tariffs on 
imported cars and car parts.

    What analysis will the Commerce Department on the impact these 
potential tariffs could have on the price of new vehicles and American 
consumers before making recommendations to the President?

    Answer. The Department's investigation under section 232 is still 
ongoing and we have not yet made a national security determination. 
Consideration of specific remedies or potential tariff levels is not 
necessary until we conclude our national security analysis.

    Question. Early studies suggest that a 25-percent tariff on 
imported cars would increase the cost of a $30,000 imported car by over 
$6,000. Car producers in the United States, which rely on global supply 
chains, would also see increased prices.

    Do you agree with the conclusion that if tariffs are imposed, the 
costs of a new car will go up significantly?

    Answer. The Department's investigation under section 232 is still 
ongoing and we have not yet made a national security determination. 
Consideration of specific remedies or potential tariff levels is not 
necessary until we conclude our national security analysis.

    Question. Do you agree that any cost savings that might be realized 
if fuel economy standards are rolled back are likely to be completely 
eliminated by imposing these tariffs?

    Answer. The Department's investigation under section 232 is still 
ongoing and we have not yet made a national security determination. 
Consideration of specific remedies or potential tariff levels is not 
necessary until we conclude our national security analysis.

    Question. In response to this administration's steel and aluminum 
tariffs, Canada and Mexico are imposing retaliatory tariffs on U.S. 
goods. I've heard serious concerns from manufacturers in my State on 
the impact this retaliation could have.

    Many of these manufacturers have developed highly integrated supply 
chains over the past 20 years and are unable to immediately adapt to 
these retaliatory tariffs.

    I appreciate the administration's interest in cracking down on 
China but by applying these tariffs to some of our closest allies you 
are putting American jobs at risk.

    What is your message to those American manufacturers who will be 
forced to lay off employees or possibly move their facilities overseas 
due to the President's decision to impose tariffs on Canada and Mexico?

    Answer. The potential loss of any jobs concerns me. The President's 
section 232 decisions are the result of a robust and thorough 
interagency review coordinated by the White House. It will take time 
for U.S. aluminum and steel producers to fully restart idled capacity 
and regain long-term economic health. It is likely that the import 
adjustments will need to be in place for some time to enable aluminum 
and steel producers to achieve sustained economic viability. The 
Department, working with other agencies, will continue to monitor the 
impact of the tariffs and the health and competitiveness of U.S. 
industry, and the Department will conduct a comprehensive analysis of 
the impact of the section 232 tariffs after they have been in effect 
long enough to make the results of that analysis useful. The 
administration will take all necessary action to protect U.S. interests 
in the face of unjustified retaliation against the President's wholly 
legitimate actions under section 232. The United States has launched 
separate disputes at the World Trade Organization (WTO) against China, 
the European Union, Canada, Mexico, Turkey, and Russia challenging the 
retaliatory tariffs these WTO member have imposed in response to our 
section 232 actions.

    Question. The Paperwork Reduction Act requires the Department of 
Commerce to review and approve Federal collections of information 
before they are conducted.

    This includes the addition of a question on citizenship to the full 
2020 Decennial Census.

    Last month, I led a letter with over 30 of my colleagues from the 
House and Senate asking for clarification on how the untested 
citizenship question will comply with the requirements of that act.

    Can you please provide us with an update on the response to this 
letter?

    Answer. A response to your letter will be provided as soon as 
possible.

    Question. I've inquired with the administration on a number of 
occasions about leadership at the Census Bureau.

    I believe that we are well served by the leadership shown by Dr. 
Ron Jarmin and Dr. Enrique Lomas as Acting Director and Acting Deputy 
Director respectively.

    However, it is imperative that the Census Bureau has the Senate 
confirmed leadership it needs to ensure and accurate and cost-effective 
enumeration in 2020.

    Can you provide us with an update on the appointment of a Director 
and Deputy Director?

    Have you considered nominating Dr. Jarmin and Dr. Lomas for these 
roles?

    Answer. The President has nominated Dr. Steven Dillingham to serve 
as the Director of the Census Bureau. As I announced in July, Dr. 
Jarmin will be named Deputy Director, and is performing the non-
exclusive functions and duties of the Director pending Dr. Dillingham's 
confirmation.

    Question. I recently met with home builders in my State and they 
raised serious concerns with tariffs on Canadian softwood and its 
impact on housing affordability. According to a recent study, Buyers 
are paying nearly $9,000 more for an average new home because of their 
lumber costs than they were in late 2016.

    How does the administration plan to address the increased cost of 
homes caused by these tariffs?

    Answer. I have met with representatives of the home builders 
industry and appreciate their concerns about the rise of softwood 
lumber prices. I am aware that the U.S. price of softwood lumber for 
framing increased by more than 60 percent from November 2016 to June 
2018. There have been a number of demand-side factors that have 
contributed to this trend, including an increase in new home 
construction and growth in remodeling and home repair activity. 
However, since the first week of June 2018 the price has steadily 
decreased for 9 straight weeks. The weekly price of softwood lumber has 
decreased by 24.4 percent over those 9 weeks. Lastly, with respect to 
changes in the price, there have been modest price increases, amounting 
to a three percent change, in the last two weeks of August and the 
first week of September 2018. Although the United States and Canada, 
and their respective softwood lumber industries, made significant 
efforts to reach a long-term, negotiated settlement to this ongoing 
trade dispute, the parties were unable to agree upon terms that were 
mutually acceptable. As a result, the Department completed its 
antidumping (AD) and countervailing duty (CVD) investigations and, 
following affirmative determinations by the Department and the 
International Trade Commission, issued AD/CVD orders on imports of 
softwood lumber from Canada. The Department's determinations were made 
following a comprehensive review of factual evidence and arguments from 
all interested parties in the proceedings. Please know that the 
Department is committed to administering the trade remedies laws in a 
fair and balanced fashion in accordance with U.S. law, regulations and 
international obligations. That said, any future negotiations involving 
a long-term agreement related to bilateral trade of softwood lumber 
would be led by the United States Trade Representative.

                                 ______
                                 
                Question Submitted by Hon. Sherrod Brown
    Question. As you know, AK Steel is the last domestic producer of 
electrical steel. Although electrical steel was included on the list of 
products covered by the steel 232 remedies, downstream products such as 
laminations, cores, and transformers were not. This loophole will 
invite a surge of imports of these products into the U.S. Any increase 
in imports of laminations, cores and transformers will decrease demand 
for AK's electrical steel, which is critical for our national security 
interests.

    Will you commit to addressing this loophole by ensuring the steel 
232 remedies apply to laminations, cores, and transformers by issuing 
an updated proclamation adding them to the covered products list?

    Answer. The Presidential proclamations direct the Secretary of 
Commerce to monitor imports of steel and aluminum, and from time to 
time, review the status of such imports with respect to the national 
security, in consultation with other senior executive branch officials. 
The proclamations also direct the Secretary to inform the President of 
any circumstances that might indicate the need for further action under 
section 232. The Department will carry out the President's direction.

                                 ______
                                 
            Questions Submitted by Hon. Robert P. Casey, Jr.
    Question. Secretary Ross, this question asks you clarify your 
hearing response to me regarding electrical steel. As you know, we only 
have one electrical steel manufacturer left in the United States, which 
is threatened by the continued import of dumped electrical steel and 
minimally transformed downstream products from numerous countries. This 
not only endangers Pennsylvania jobs, but also puts at risk the last 
domestic producer of electrical steel, which is of significant national 
security importance.

    Will you update the 232 to include downstream electrical steel 
products including transformer cores and laminates?

    If so, please provide an update on when you expect to announce 
their inclusion.

    If not, please describe how you intend to ensure that imports of 
minimally transformed downstream electrical steel products, including 
cores and laminates, cannot be used to circumvent your current order on 
electrical steel.

    Answer. As I testified, we developed a list of downstream products 
that have been hurt by imports and have worked with the interagency to 
incorporate as many of these to the section 301 tariff list. As regards 
the actions taken under section 232, the Department will continue to 
monitor imports as called for in the President's proclamations.

    Question. Secretary Ross, during the hearing you said in response 
to Senator Bennet that we need to have all our allies work with us to 
address China overcapacity--I agree.

    Please discuss the steps you took in the year the 232 was under 
investigation to work with our allies on a coordinated response to 
China's overcapacity.

    Answer. Working with the United States Trade Representative, the 
Department participates in the Global Forum on Steel Excess Capacity 
(Global Forum), an initiative commenced under the G20 Leaders' call for 
a forum to address steel excess capacity worldwide. The Global Forum's 
membership represents 97 percent of the world's steel production, and 
it has met on a consistent basis since its establishment in December 
2016. In the Global Forum, we have emphasized that resolving the 
ongoing steel excess capacity situation will require immediate and 
sustained concrete action, which includes allowing markets to function 
and removing market-distorting subsidies and other forms of State 
support. While we welcome some of the initial steps in this forum, such 
as the establishment of a platform for information and data exchange 
and specific policy recommendations, real progress in addressing the 
root causes of excess capacity has been disappointing. The 
administration continues our ongoing work with like-minded trading 
partners to emphasize the importance of allowing market principles to 
work in the industry, particularly in China. At the same time, we have 
made clear that talking about the problem is not enough and that the 
United States will not hesitate to use the tools available under U.S. 
law to firmly respond to the causes and consequences of steel excess 
capacity.

                                 ______
                                 
               Questions Submitted by Hon. Mark R. Warner
                                  zte
    Question. In March 2017, the United States entered into a 
settlement agreement with ZTE finding them guilty of violating 
sanctions on Iran and North Korea hundreds of time, and as recently as 
April 2018, this administration said ZTE failed to make the necessary 
changes to solve the problem and, moreover, had lied to the United 
States about its efforts. Furthermore, the defense and intelligence 
community--and many members on this panel--have long expressed our 
concern that the use of ZTE's equipment could pose significant threats 
to our national security. And this administration at times seems to 
agree--you can no longer buy Huawei or ZTE devices at military bases.

    Do you believe a national security threat should be essentially 
ignored in exchange for trade concessions?

    Answer. These requirements are the harshest penalties and strictest 
compliance measures ever imposed in such a case and will protect U.S. 
national security from unauthorized exports and reexports of 
telecommunications equipment. In the event that ZTE fails to comply 
with the new requirements during the next 10 years, BIS can re-impose 
the suspended denial order and terminate ZTE's access to U.S. 
technology.

    Question. Were you aware of the national security threat posed by 
ZTE when trading the resolution of the sanctions action for unspecified 
Chinese action on trade?

    Answer. I was and am aware of the national security threat posed by 
ZTE, and do not agree with your characterization. There was no 
``trade'' involved in the Department's decision to adopt the penalty 
and superseding settlement agreement that addressed ZTE's failure to 
fully comply with the initial settlement agreement. ZTE has already 
paid a $1 billion penalty, put an additional $400 million into an 
escrow account in a U.S. bank, and agreed to a Special Compliance 
Coordinator (SCC) who will have unprecedented access to drive and 
monitor compliance. In addition, the suspended Denial Order can be 
reinstated if ZTE commits further violations of the agreement. These 
unprecedented requirements enhance the Department's ability to protect 
U.S. national security from unauthorized exports and reexports of 
telecommunications equipment.

    In addition, the administration is taking other steps to mitigate 
the threat from Chinese telecommunications providers, including 
implementation of a provision from the 2019 NDAA that prohibits U.S. 
government agencies from purchasing telecommunications equipment from 
Chinese suppliers or contracting with entities who use such equipment 
and recommending to the Federal Communications Commission that it deny 
China Mobile's section 214 license request to offer telecommunications 
services within the United States.

    Question. What were the views of the Department of Defense and the 
intelligence community regarding the administration's decision to give 
ZTE a pass?

    Answer. As described in the responses to your earlier questions, 
the superseding settlement agreement applied even tougher sanctions 
than the original agreement, and the Department can reinstate the 
suspended denial order if ZTE violates the new agreement. ZTE was not 
given a ``pass'' as you allege.

    Question. Part of the deal is to put a compliance team at ZTE to 
help prevent future sanctions evasion.

    Does the compliance team have any responsibility to monitor privacy 
practices of ZTE or communications between ZTE and the Chinese 
government or to monitor ZTE from a national security perspective, to 
include its equipment for technical security?

    Answer. The Special Compliance Coordinator (SCC) will have 
unprecedented access to drive and monitor compliance with U.S. export 
controls.

    Question. How does the deal with ZTE demonstrate to third parties 
our country's seriousness about enforcing sanctions?

    Answer. The penalty and superseding settlement agreement addressed 
ZTE's failure to fully comply with the initial settlement agreement. 
ZTE has already paid a $1 billion penalty, put an additional $400 
million into an escrow account in a U.S. bank, and agreed to a Special 
Compliance Coordinator (SCC) who will have unprecedented access to 
drive and monitor compliance with U.S. export controls. In addition, 
the suspended Denial Order can be reinstated if ZTE commits further 
violations of the agreement. These unprecedented requirements enhance 
the Department's ability to protect U.S. national security from 
unauthorized exports and reexports of telecommunications equipment.

    In addition, the administration is taking other steps to mitigate 
the threat from Chinese telecommunications providers, including 
implementation of a provision from the 2019 NDAA that prohibits U.S. 
government agencies from purchasing telecommunications equipment from 
Chinese suppliers or contracting with entities who use such equipment 
and recommending to the Federal Communications Commission that it deny 
China Mobile's section 214 license request to offer telecommunications 
services within the United States.

    Question. We exported $130 billion to China last year. So if China 
matches this administration tit for tat, as they have pledged, what 
nontariff measures do you expect they will take when they run out of 
U.S. goods to target?

    Answer. The President has made clear that the United States will 
respond to any and all retaliation by China.
                        pork/section 232 tariffs
    Question. Recently, the President imposed tariffs on steel and 
aluminum imports from several of our closest allies--including Canada 
and Mexico. In response, several of our allies decided to impose 
retaliatory tariffs on a wide range of U.S. exports, including many 
agricultural products. I've heard from a number of my constituents who 
are concerned these tariffs will affect their bottom lines. In 
particular, I'm concerned Mexico's decision to impose tariffs on U.S. 
pork exports will negatively impact hog producers in my State. Last 
year, Virginia exported nearly $70 million worth of pork to Mexico. 
These tariffs endanger a critical export market for our farmers and 
could have negative repercussions for the entire agricultural economy.

    What is this administration's plan to protect my constituents and 
others from harmful retaliation measures?

    Answer. Any potential job loss concerns me. U.S. agriculture plays 
a critical role in the economic growth of our country and the 
administration is actively working to ensure fair and reciprocal access 
to foreign markets for your constituents. The administration will take 
all necessary actions to protect U.S. interests against unjustified 
retaliatory actions by other countries. The United States has launched 
separate disputes at the World Trade Organization (WTO) against China, 
the European Union, Canada, Mexico, Turkey, and Russia challenging the 
retaliatory tariffs these WTO Members have imposed in response to our 
section 232 actions.

    On July 24th, President Trump directed Secretary Perdue to craft a 
short-term relief strategy to protect agricultural producers while the 
administration works on fair and reciprocal trade deals to open more 
markets in the long run to help American farmers compete globally. 
Specifically, USDA will authorize up to $12 billion in programs, which 
is in line with the estimated $11 billion impact of the unjustified 
retaliatory tariffs on U.S. agricultural goods. These programs will 
assist agricultural producers to meet the costs of disrupted markets.

    Question. What would you say to a farmer in Virginia who is facing 
the loss of their livelihood as a result of these tariffs?

    Answer. Please see the answer above.
                            soybeans/tariffs
    Question. Currently, China is the number one export market for U.S. 
soybeans, accounting for almost half of all U.S. soybean exports. 
Soybeans are the number one row crop produced in my home State of 
Virginia, and my constituents depend on the availability of overseas 
markets to stay in business. China and other nations have targeted U.S. 
soybean exports in retaliation to the section 232 tariffs on steel and 
aluminum and the recent tariffs on China.

    As the Secretary of Commerce, what actions are you prepared to take 
to protect my constituents from tariff retaliation?

    Answer. The administration will take all necessary actions to 
protect U.S. interests against unjustified retaliatory actions by other 
countries. On July 16th, the United States launched a dispute at the 
World Trade Organization (WTO) challenging the retaliatory tariffs 
China imposed in response to our section 232 actions.

    Question. Are there plans for Commerce to study the effects 
retaliatory measures will have on U.S. exporters?

    Answer. As noted above, the administration will take all necessary 
actions to protect U.S. interests against unjustified retaliatory 
actions by other countries. The United States has launched disputes at 
the World Trade Organization (WTO) against China, the European Union, 
Canada, Mexico, Turkey, and Russia challenging the retaliatory tariffs 
the WTO members have imposed in response to our section 232 actions.

    Question. What would you say to a farmer in Virginia who is facing 
the loss of their livelihood as a result of these tariffs?

    Answer. Any potential job loss concerns me. U.S. agriculture plays 
a critical role in the economic growth of our country and the 
administration is actively working to ensure fair and reciprocal access 
to foreign markets for your constituents. The administration will take 
all necessary actions to protect U.S. interests against unjustified 
retaliatory actions by other countries. The United States has launched 
separate disputes at the World Trade Organization (WTO) against China, 
the European Union, Canada, Mexico, Turkey, and Russia challenging the 
retaliatory tariffs these WTO members have imposed in response to our 
section 232 actions.

    On July 24th, President Trump directed Secretary Perdue to craft a 
short-term relief strategy to protect agricultural producers while the 
administration works on free, fair, and reciprocal trade deals to open 
more markets in the long run to help American farmers compete globally. 
Specifically, USDA will authorize up to $12 billion in programs, which 
is in line with the estimated $11 billion impact of the unjustified 
retaliatory tariffs on U.S. agricultural goods. These programs will 
assist agricultural producers to meet the costs of disrupted markets.
                                 china
    Question. The administration put out a new National Security 
Strategy that has informed other strategies and policies that relate to 
China and the Indo-Pacific, to include the Free and Open Indo-Pacific 
Strategy.

    Have these initiatives changed the way you strategically resource, 
manage, and oversee Department operations in response to the Chinese 
tech transfer problem the administration has identified?

    Answer. The Department has been utilizing its relevant authorities 
to address this issue in a number of ways. Restricting exports and 
reexports to Chinese parties engaged in activities contrary to our 
national security interests, such as the recent addition of 44 Chinese 
entities to the Department's Entity List, is one such action. Reviewing 
export license applications in light of these initiatives is another 
way the Department is addressing this issue. Initiating the process to 
identify emerging technologies to review for national security 
sensitivity is yet another way the Department is responding to this 
issue. The Department's Fiscal Year 2019 appropriations request, with 
additional funds requested for review of potential foreign investments 
in U.S. companies and section 232 investigations and defense industrial 
base studies, reflects the need for additional resources for the 
Department to respond to China's technology transfer objectives.

    Question. China's current 5-year plan identifies technology, 
aerospace, telecommunications, energy, transportation, engineering 
services, and high-tech electronics as the country's strategic sectors 
on which China's future growth, prosperity, and economic strength 
hinge.

    How do you balance the concern over China's ambitions that present 
a national security threat versus the economic opportunity it presents?

    Answer. Many of China's industrial policies pose challenges for the 
United States. For instance, China's policy of civil-military 
integration and State owned enterprises require constant vigilance by 
the Department as it administers export controls. These policies are 
among the considerations that the agencies involved in our export 
control system take into consideration when reviewing exports of 
controlled items to China.

    Question. Given the role that commercial vehicles such as venture 
capital investment and joint ventures play in China's acquisition of 
sensitive U.S. technologies, what comparable alternatives to Chinese 
investment capital exist to U.S. tech start-ups? How credible are those 
alternatives?

    Answer. The United States is the largest capital market in the 
world and there are many creditable comparable alternatives to Chinese 
capital investment for U.S. tech start-ups.

    Question. I've heard from business leaders that American companies 
with offices in China are subject to pressure by the Chinese government 
to include not only periodic physical searches by security officials, 
but also through coercion, cyber intrusion, and insider threat risks.

    How aware do you think American businesses are of the commercial 
and corporate coercion and espionage risks attached to doing business 
in China before deciding to go there?

    Answer. U.S. firms have become increasingly more sophisticated in 
understanding the risks associated with doing business in China. Not 
only have there been substantial news reports about corporate coercion 
and espionage risks in China, there are also publicly available 
materials from the U.S. Government and numerous 
private-sector entities, such as the U.S. Chamber of Commerce and the 
American Chamber of Commerce in China, that help to educate potential 
investors and exporters. Companies working with trade specialists at 
the Department's International Trade Administration--at local Export 
Assistance Centers throughout the country, at the Department's 
headquarters in Washington DC, and at Commercial Services offices at 
U.S. Embassies and Consulates around the globe--are given one-on-one 
counseling before entering new markets. For companies looking to export 
to China, the counseling usually includes a briefing on intellectual 
property rights protection, as well as how to navigate regulatory 
hurdles and non-tariff barriers. When non-tariff barriers do manifest 
themselves, ITA works to remove them in a commercially-meaningful 
timeframe and monitors and seeks Chinese compliance with its 
obligations under the WTO, all in service of ensuring that American 
businesses are treated fairly in this important market.

                                 ______
                                 
             Questions Submitted by Hon. Sheldon Whitehouse
    Question. Prior to the President's decision to impose new tariffs, 
the administration must consider not only the proposed tariff actions, 
but also (a) the expected retaliatory measures U.S. exports will face 
from trading partners that are affected, and (b) the expected effect on 
downstream products that are affected by the higher cost of raw 
materials imports.

    Please explain the process that the Commerce Department used to 
evaluate the direct impact of section 232 tariffs on various segments 
of the U.S. economy, including price impacts for manufacturers of 
downstream products.

    Please provide copies for the record of any studies the Department 
has performed to identify the price impact data you referred to in your 
testimony.

    Answer. The steel and aluminum reports dated January 11th and 
January 18, 2018, respectively, addressed the requirements of section 
232, which do not require the Department to consider the potential 
effects of steel and aluminum tariffs on downstream industries. 
Nonetheless, the Department did analyze the downstream economic impact 
of potential steel tariffs using the standard version of the Global 
Trade Analysis Product (GTAP) Computable General Equilibrium (CGE) 
model of global trade. The GTAP model uses the ``metals'' sector, of 
which steel is a major portion. Because aluminum accounts for a much 
smaller portion of the metals sector, the Department determined that 
use of the GTAP model was inappropriate for the aluminum investigation. 
Accordingly, the Department used a partial equilibrium analysis to 
estimate the impact of an adjustment on aluminum imports, with no 
modeled effects on domestic demand or price, and an assumption that 
domestic production would replace all imports removed due to a tariff 
or quota. The results were considered as part of the administration's 
deliberations but as part of the deliberative process, are not public.

    Question. The President has made a number of threats to retaliate 
against China's retaliatory measures by imposing tariffs on imports of 
Chinese goods totaling up to $200 billion.

    Has the Commerce Department, the office of the U.S. Trade 
Representative, or any other department or agency performed any 
planning or made any projections to understand the potential economic 
impacts of such retaliation? If so, please provide detailed information 
about these projections and/or planning. If not, why not?

    Answer. The administration has a robust interagency process for 
advising the President on the potential impacts of actions he may 
undertake. The United States Trade Representative is responsible for 
actions pursuant to section 301 and is the agency to which this 
question should be directed.

    Question. In his memorandum to you providing the consolidated 
Defense Department position on the 232 investigation, Secretary Mattis 
noted that ``the U.S. military requirements for steel and aluminum each 
only represent about three percent of U.S. production. Therefore, DoD 
does not believe that the findings in the reports impact the ability of 
DoD programs to acquire the steel or aluminum necessary to meet 
national defense requirements.'' Secretary Mattis also wrote that the 
Department ``continues to be concerned about the negative impact on our 
key allies regarding the recommended options within the reports.'' He 
further noted that ``[i]t is critical that we reinforce to our key 
allies that these actions are focused on correcting Chinese 
overproduction and countering their attempts to circumvent existing 
antidumping tariffs--not the bilateral U.S. relationship'' with those 
allies.

    How does the Commerce Department quantify the national security 
risk that is a consequence of alienating allies and partners with 
bellicose rhetoric and adversarial trade actions?

    What steps has the administration taken to manage the risk of a 
negative impact on key allies identified by Secretary Mattis?

    Answer. The President's section 232 decisions are the result of a 
robust and thorough interagency review coordinated by the White House.

    Question. The Save Our Seas Act, which passed the Senate last 
August, urges the administration to pursue a number of activities aimed 
at reducing the influx of plastic waste into the oceans, including 
investing in research into ocean biodegradable plastic alternatives, 
pursuing new international agreements focused on land-based plastic 
pollution, providing technical assistance to improve waste management 
in developing countries, and considering marine debris in future trade 
agreements.

    What role can or does NOAA play in achieving these goals?

    Answer. To support these goals, NOAA can:

          Convene international dialogues, such as the International 
        Marine Debris Conference, to highlight innovative research and 
        waste management initiatives;
          Work with partner agencies, such as EPA, Department of State 
        and USAID, to ensure coordination of U.S. agencies' 
        international efforts through the Interagency Marine Debris 
        Coordinating Committee;
          Provide technical assistance to national and/or local 
        governments to promote more strategic approaches to marine 
        debris actions on various scales;
          Develop emergency response guidelines that enhance the 
        effectiveness of foreign governments' efforts to prepare for, 
        respond to and recover from severe weather events that 
        significantly increase marine debris outflows;
          Assist in creating and improving public awareness campaigns 
        and outreach programs to induce behavioral change to reduce, 
        reuse and recycle;
          Promote methodologies and guidelines for more accurate 
        assessment and monitoring of marine debris;
          Offer expertise on administering prevention initiatives such 
        as small grant programs; and
          Upon ratification, support efforts to implement a first-of-
        its kind provision in the USMCA for parties to take measures to 
        prevent and reduce marine litter.

    Question. Is marine debris a priority in discussions with your 
counterparts in other countries, especially the rapidly developing 
economies in Asia that are currently contributing the most plastic 
waste from land into the oceans?

    Answer. Yes, marine debris is a significant priority of the global 
marine conservation community and is a topic discussed with foreign 
counterparts frequently and with much urgency. Many foreign governments 
and entities have approached NOAA for assistance on this issue in 
recent years; for example, in the past 2 years NOAA has advised the 
Government of Indonesia on how to design and implement a national 
marine debris program. NOAA views U.S. Government engagement with the 
rapidly developing economies in Asia as critical to our international 
efforts to combat marine debris.

    Question. Are you pursuing any opportunities for U.S. waste 
management experts to export their knowledge, technology, and other 
opportunities to assist other countries while creating business 
opportunities for domestic companies?

    Answer. While NOAA's Marine Debris Program has not historically 
worked with waste management experts, we recognize that building 
capacity in this area is critical to reducing marine debris at its 
sources, especially in the developing world. NOAA has had some initial 
informal discussions with the International Trade Administration about 
the potential export of U.S. private sector knowledge, technology, etc. 
We are continuing to advance that collaboration as well as bringing 
other relevant Federal agencies into the conversation.

    Question. Climate change is driving shifts in marine species 
distributions, including commercially valuable species that span across 
State and fishery management council jurisdictions, as well 
international boundaries.

    Is NOAA prioritizing research and funding for species that are 
seeing climate change-driven shifts in population hubs and 
distribution?

    Answer. Shifts in the distribution of commercially and 
recreationally valuable fish species have been observed in several 
regions concurrent with changes in ocean conditions and, in some cases, 
fishing pressure. These shifts can have important implications for 
fisheries management and for the people, businesses and communities 
that depend on the resource. NOAA has developed a NOAA Fisheries 
Climate Science Strategy (NCSS) that calls for better tracking, 
understanding and responding to shifting species distributions. To 
implement the NCSS, regional action plans were developed and the agency 
has focused research and funding on this issue over the last few years. 
NOAA's National Marine Fisheries Service (NMFS) has directed research 
on species with shifting distributions in the northeast, west coast and 
Bering Sea marine ecosystems. In addition, NMFS (in partnership with 
Rutgers University) created the OCEANADAPT website to provide annual 
information on the distribution of over 650 commercially valuable 
marine species to help fisheries managers and the fishing sector better 
track and respond to shifting distributions. NMFS has also worked with 
international partners to promote understanding and responses to 
shifting distributions across international boundaries.

    Question. How can the current council structure be strengthened to 
better handle and quickly respond to shifting stocks?

    Answer. In general, the current council structure is well-suited to 
handle and quickly respond to shifting stocks as well as other 
management challenges. Section 304 of the Magnuson-Stevens Act provides 
authority for the Secretary of Commerce to determine how to manage 
fisheries that span the geographical authority of more than one 
Council. The Secretary can designate a single Council to manage a stock 
throughout its range, or he can require that management be shared by 
the relevant Councils. Currently, there are a number of joint 
management plans for stocks that extend beyond a single Council's 
jurisdiction. Additionally, Councils and the States are increasingly 
discussing the changing distributions of several stocks; adjacent 
Councils will need to work together even more to ensure the goals of 
the Magnuson-Stevens Act--both ecological and economic--are achieved as 
fish stock distributions change. NMFS will continue to work with the 
Councils to base decisions on best information available and in a fair 
and equitable manner.

    Question. How is NOAA coordinating with Coast Guard, Navy, State 
Department, and other relevant agencies to identify and combat IUU 
fishing?

    Answer. Combating IUU fishing, both within the United States and 
abroad, is one of NOAA's core missions that is achieved through strong 
Federal partnerships and is carried out on an interagency level. NOAA 
is proactively engaging to detect and prevent IUU fishing and will 
continue to leverage these partnerships to maximize our ability to 
maintain a level playing field for law abiding fishers.

    Fourteen Federal agencies have a role in implementing U.S. actions 
to combat IUU fishing and seafood fraud, both domestically and 
internationally. Recent interagency coordination on these efforts has 
been managed through an interagency working group on IUU Fishing and 
Seafood Fraud, co-chaired by NOAA and the Department of State. The 
working group coordinates the implementation of a suite of 
recommendations to improve international tools to combat IUU fishing, 
strengthen enforcement cooperation both domestically and 
internationally, enhance partnerships with industry and other 
stakeholders, and create a risk-based traceability program for seafood 
entering U.S. commerce.

    Question. NOAA is currently implementing the Seafood Import 
Monitoring Program (SIMP), a program that will help level the playing 
field for U.S. fishermen by improving traceability and transparency 
requirements for imported seafoods that meet domestic seafoods 
standards. So far, NOAA has only applied SIMP requirements to a handful 
of high-risk species. Given NOAA currently estimates that the U.S. 
imports over 80 percent of the seafood consumed domestically, this 
program should be expanded to capture all imported species.

    Has NOAA identified what species will next be added into the SIMP?

    Answer. NOAA has applied SIMP requirements to specified high-risk 
species. NOAA is currently focused on continued success in implementing 
SIMP and on the work required to include shrimp and abalone by December 
31, 2018, as directed in the 2018 Appropriations Act.

    Edible seafood imports to the U.S. in 2014 were valued at $20 
billion; $9.34 billion of which are commodities subject to 
documentation requirements under SIMP (including shrimp and abalone). 
Shrimp imports alone comprise approximately 23 percent by volume and 29 
percent by value of all U.S. seafood imports.

    Question. What specific steps have been taken, or will be taken, to 
expand the SIMP to more species?

    Answer. Any future expansion of the program will be based on the 
risk of importing product vulnerable to IUU fishing and seafood fraud 
and would require additional public comment and rulemaking.

    Question. What is the anticipated timeline for when the SIMP 
program will expand to cover all seafood species imported into the 
U.S.?

    Answer. NOAA does not intend to cover species that are not at risk 
of IUU fishing and seafood fraud in the SIMP.

    Question. When SIMP is expended to additional species, will it 
similarly consider aquaculture and wild-caught seafoods?

    Answer. The scope of imports covered under SIMP is defined by 
species and tariff codes, which include both wild-caught and 
aquaculture seafood products. If SIMP is expanded to include new 
species for which there is U.S. aquaculture, NOAA will require 
congressional authorization to collect comparable reporting and 
recordkeeping requirements to those of SIMP. Section 539 of the 2018 
Appropriations Act limits comparable domestic data collection and 
reporting to shrimp and abalone species. NOAA is working on the 
implementing regulations for these species.

                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    If you follow the news on trade, you know that Secretary Ross is a 
key Trump trade official negotiating with China, determining who gets 
tariff exemptions, and potentially reshaping the automobile industry in 
America for decades to come.

    In the last few days, news reports about Secretary Ross uncovered a 
short sale of stock in a Kremlin-tied shipping firm. New developments 
show that while Secretary Ross was negotiating on trade with China, he 
may have maintained financial ties with firms connected to the Chinese 
government. A fund controlled by the Ross family reportedly owns a 
major international manufacturer of auto parts.

    And let's be clear, this isn't a one-off story. Virtually every day 
reading the newspaper you get whacked over the head with a new report 
about Trump officials violating ethics rules or coming into 
questionable windfalls. You don't need a thick government rulebook to 
recognize flagrant conflicts of interest when they're brought into 
public view. When it comes to trade, Americans have a right to know 
that it's their best interests Trump administration officials are 
looking out for at the negotiating table. These stories call that into 
question.

    Here's why I raise these issues. I'm on board with several of the 
administration's top trade priorities. Tougher enforcement of our trade 
laws, cracking down on China ripping off our technology and jobs, 
updating NAFTA. Those are challenges that demand action, but taking 
action gets harder when you're surrounded by the specter of conflict. 
It undermines the credibility of our negotiators, it makes it harder to 
work in a bipartisan way in Congress, and it makes it a lot less likely 
the American people are going to accept the end results.

    It's also frustrating to watch as the administration's trade moves 
tend to seem more like knee-jerk impulses than any kind of carefully 
thought-out strategy. Its most obvious accomplishment on trade is 
sowing economic chaos that's united our allies and China against us--
unless you rank that behind the rescue of ZTE, an action that sold out 
American security and got nothing in return.

    Chaos has consequences, but you don't have to take it from me. 
Tariffs on steel and aluminum imports are in place, but the process of 
determining what imports will be excluded is in a state of disarray. 
American businesses filing for those exclusions are waiting for the 
Commerce Department to do its job.

    I've heard from potato farmers in my home State of Oregon who 
export nearly a third of what they grow and will now face tariffs in 
key markets like Mexico. I've heard from Pacific Northwest cherry 
growers who've got nearly 1.5 million boxes of cherries ready to ship 
to China. They're worried those cherries are going to end up stuck on 
the dock or rotting in a warehouse due to China's retaliation. Small 
brewers find their costs skyrocketing when they need new can lines and 
holding tanks, which are largely made from steel and aluminum.

    A strong, well-planned strategy on trade would bring the full 
economic might of the United States and our allies to bear on China's 
trade cheating. It would give confidence to American farmers, 
manufacturers, and service firms, rather than creating chaos. And there 
would be bipartisan interest here on Capitol Hill in fresh policies 
that would strengthen trade enforcement and protect American workers.

    Enough of the chaos--that's what I hope to see more of from the 
administration in the weeks and months ahead. I thank Secretary Ross 
for joining us here today, and I look forward to questions.

                                 ______
                                 

                             Communications

                              ----------                              


                             Acuity Brands

                            One Lithonia Way

                           Conyers, GA 30012

                              July 2, 2018

The Honorable Orrin Hatch           The Honorable Ron Wyden
Chairman                            Ranking Member
U.S. Senate                         U.S. Senate
Committee on Finance                Committee on Finance
219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
Washington, DC 20510                Washington, DC 20510

Dear Chairman Hatch and Ranking Member Wyden,

    We write to express Acuity Brands' concerns about the economic 
effects of recent trade actions undertaken by the Trump Administration. 
Specifically, we are concerned that the steel and aluminum tariffs, 
along with the tariffs on Chinese goods, are harming American 
businesses in a variety of ways--making it harder for them to 
affordably acquire necessary materials, utilize existing supply chains, 
and compete in both domestic and international markets.

    While we very much appreciate the Committee's focus on the 
Administration's section 232 trade actions, those developments are only 
part of the story regarding the impact of recent trade actions on U.S. 
businesses. In particular, U.S. businesses must consider the impact of 
all tariffs on materials and components, as well as the potential for 
foreign countries to shift production or import processed goods that 
create increased competition for domestic products. For that reason, we 
have also provided the Committee with information on how the section 
301 tariffs, in addition to the 232 tariffs, are negatively affecting 
the landscape for businesses.

    Overall, Acuity Brands urges Congress to continue working to 
evaluate both the 232 tariffs and the 301 tariffs, carefully consider 
the full scope of the economic impact they may have on many American 
businesses and industries (e.g., cost increases for component parts and 
materials while finished goods imports are unaffected, supply chain 
disruptions, loss of technological advancement and efficiency 
improvements, etc.), and take steps to minimize the harms the tariffs 
inflict on American companies.

I. Company Background

    Acuity Brands, Inc. (NYSE: AYI) is a North American market leader 
and one of the world's leading providers of lighting and building 
management solutions for commercial, institutional, industrial, 
infrastructure, and residential applications throughout North America 
and select international markets. With fiscal year 2017 net sales of 
$3.5 billion, Acuity Brands currently employs approximately 13,000 
associates. We are headquartered in Atlanta, Georgia and have 
operations throughout North America and in Europe and Asia.

    The Company's lighting and building management solutions vary from 
individual manufactured products to intelligent network systems. 
Individual products include luminaries, lighting controls, emergency 
lighting, lighting components, controllers for various building systems 
(including HVAC, lighting, shades, and access control), power supplies, 
and prismatic skylights. Networked systems, meanwhile, allow the 
infrastructure in buildings, roadways, and properties to communicate 
data regarding operations and activities; this can optimize energy 
efficiency and enhance building occupants' experiences--all while 
reducing operating costs.

II. The Steel and Aluminum Tariffs Affect Supply Chains and Costs, 
Harming American Businesses

    With regard to the 232 tariffs on steel and aluminum, we remain 
concerned that they unfairly penalize a number of U.S. businesses 
across a variety of industries. Notably, Acuity Brands' efforts to 
continue innovating and striving for even greater energy efficiency and 
smart functionality within all aspects of building management are 
substantially impacted by the price and availability of steel. We are a 
strong supporter and business partner of domestic metals suppliers, 
working with U.S. mills to source steel and manufacturing a significant 
volume of our products at various locations across the country. We have 
worked closely with our steel suppliers to project usage trends and 
develop contracts that provide us with the financial certainty needed 
to promote cost-effective lighting and high-quality network solutions.

    Despite Acuity's relationships with domestic steel mills, however, 
our business still runs the risk of being significantly harmed by the 
tariffs. With the recent decision to end a number of country 
exclusions, as well as the already-significant strain placed on the 
limited supply of domestic steel--as domestic capacity, even with new 
U.S. mills, cannot be ramped up for at least another year and may be 
constrained by other economic and workforce factors--businesses seeking 
to purchase steel continue to face uncertainty in the marketplace. Not 
only can uncertainty regarding the price of steel affect the end cost 
of consumer goods, but the confusion created by ever-changing country 
exemptions only adds more uncertainty to businesses' sourcing 
strategies.

    In addition to the impacts on Acuity and the lighting/building 
solutions industry, we would note that the impacts of the tariffs will 
have ramifications for a much broader swath of industries. For example, 
pricing uncertainty resulting from the tariffs could negatively impact 
any construction projects--including school and hospital projects, 
commercial renovations, and so on--that use Acuity products. 
Furthermore, the energy efficiency sector, which employs more than 2 
million Americans and is growing, could take a hit as energy-efficient 
lighting products will become more expensive and less available for 
use. This will harm Acuity's sales, as well as the ability of these 
related industries to expand their economic impacts. It also will 
decrease the long-term environmental benefits and monetary savings for 
businesses that result from construction of energy-efficient buildings.

    In sum, while we appreciate the intended goal of supporting the 
domestic aluminum and steel industries--as noted, Acuity is a strong 
supporter of U.S. steel, purchasing much of our steel from U.S. mills--
we are concerned that the tariffs are ultimately operating as a de 
facto tax on domestic manufacturers of finished products across the 
nation, harming not only Acuity, but a multitude of other businesses 
across a variety of industries.

III. Tariffs on Chinese Goods Threaten to Increase Costs of Energy-
Efficient Goods and Smart Technologies

    As an initial matter, Acuity takes pride in being a U.S.-
headquartered manufacturer that provides more than 4,000 good-paying 
domestic jobs to hard-working Americans. However, we are concerned that 
the tariffs on Chinese goods--particularly those that target electrical 
component parts--scheduled to go into effect on July 6, 2018, will 
affect Acuity's ability to maintain its competitive business standing. 
Moreover, beyond the potential direct impacts on Acuity, the tariffs 
also threaten to harm the U.S.'s status as an innovation leader in 
emerging areas such as energy efficiency and smart technologies.

    We do understand--through direct experience in our industry--the 
desire to attempt to curtail China's less-than-favorable trade 
behaviors. We are concerned, however, that inclusion of certain 
products on the list of goods that will face additional tariffs will 
harm Acuity's business, the broader lighting industry, and related 
industries.

    In particular, we are concerned about the list's inclusion of 
electronic components and LED chips that are vital parts of a number of 
energy-efficient products and smart technologies that Acuity produces. 
These parts are not easily sourced, as they are not generally available 
from domestic suppliers and it would be incredibly difficult to adjust 
Acuity's supply chains. Ultimately, Acuity will have to bear an 
increased cost for these products. Preliminary estimates show that the 
tariffs on these products will end up costing Acuity as much as $10 
million annually, as long as the tariffs are in place.

    In addition to the immediate effect of increased costs for 
products, Acuity will also be likely to face longer-term supply chain 
disruptions as a result of the tariffs. Many vendors who manufacture 
impacted components or materials in China are already developing plans 
to shift production to other low-cost countries. As such, we are 
concerned that U.S. manufacturers will be faced with significant 
business disruptions without an offsetting benefit for U.S. labor. 
Moreover, the tariffs could simply shift the trade deficit to different 
country.

    The tariffs will also put Acuity and other domestic manufacturers 
at a competitive disadvantage by exposing them to additional costs on 
necessary components and materials, while finished goods may still be 
imported from foreign countries at a rate much lower than the component 
tariffs. This creates a compounded burden on domestic manufacturers who 
will be exposed to both increased costs for components and lost sales 
or reduced profit margins resulting from imported, low-cost finished 
goods. Customers are aware of these issues and will likely be driven to 
shift their purchases to vendors outside the U.S., further harming 
Acuity's business prospects.

    Ultimately, therefore, Acuity will face increased cost burdens 
associated with the tariffs on vital component parts, as well as supply 
chain disruptions, both of which will affect Acuity's ability to 
competitively price its products. Meanwhile, Acuity is already facing 
increased competition from foreign companies that do not have to 
contend with the tariffs, as well as an increasing competitive 
disadvantage from companies that are importing finished goods. This 
only compounds the uncertainty businesses such as Acuity are facing due 
to the 232 actions.

IV. Conclusion

    Again, Acuity urges Congress to work with the Administration to 
evaluate both the 232 tariffs and the proposed 301 tariffs and consider 
the full scope of the potential economic harm that could impact a 
variety of industries across the country. Addressing unfair trade 
practices by other countries should not come at the expense of American 
businesses. Instead, policies should be implemented to, among other 
things, avoid disruptions in global supply chain strategies and 
minimize uncertainty for domestic manufacturers. In particular, we 
strongly urge Congress and the Administration to consider the 
compounded burden of increased material and component costs, which 
further harm U.S. manufacturers of light fixtures who are already 
facing increased competition from finished goods importers, who are 
unaffected by the tariffs. The trade deficit in the lighting industry 
will be best addressed by imposing tariffs on finished goods imports, 
rather than electrical and electronic components.

    If properly designed and implemented, tariffs can help address 
trade imbalances and unfair trade practices without harming the ability 
of American businesses to succeed and grow. Moreover, appropriate trade 
actions will not harm the ability of the U.S. to lead in areas such as 
energy efficiency and smart technologies. We appreciate the focus 
Congress has placed thus far on the larger real-world impacts of the 
Administration's recent trade actions, and we ask that you continue to 
work to minimize harm to U.S. businesses.

            Sincerely,

            Cheryl English
            VP, Government and Industry Relations
            [email protected]
            770-860-2660

                                 ______
                                 
                     Flexible Packaging Association

                 185 Admiral Cochrane Drive, Suite 105

                          Annapolis, MD 21401

                           Tel (410) 694-0800

                           Fax (410) 694-0900

                            www.flexpack.org

                        Statement for the Record

    My name is Alison Keane, and I am President and CEO of the Flexible 
Packaging Association (FPA). FPA is the voice of U.S. manufacturers of 
flexible packaging and their suppliers. The association's mission is 
connecting, advancing, and leading the flexible packaging industry. 
Flexible packaging represents over $30 billion in annual sales in the 
U.S. and is the second largest and one of the fastest growing segments 
of the packaging industry. The industry employs over 80,000 workers in 
the United States. Flexible packaging is produced from paper, plastic, 
film, aluminum foil, or any combination of these materials, and 
includes bags, pouches, labels, liners, wraps, rollstock, and other 
flexible products. With respect to tariff impacts, the industry uses 
aluminum foil, and it is used for everyday food and beverage products 
such as candy, salty snacks, yogurt, and beverages; as well as health 
and beauty items and pharmaceuticals, such as aspirin, shampoo and 
shaving cream. Aluminum foil provides the barrier protection from 
oxygen, light, and bacteria that these products need to ensure stable 
shelf-life and freshness. Aluminum foil is also used by the flexible 
packaging industry to ensure sterility for medical device packaging 
enabling the products packaged, such as absorbable sutures, human 
tissue, and artificial joints, to maintain their efficacy at the time 
of use.

    The Section 232 investigation, which resulted in the 10% tariff on 
aluminum, which includes foils produced from that aluminum, was 
initiated under the Trade Expansion Act of 1962, and was to determine 
what, if any, effects imports of aluminum have on national security. 
FPA is not aware of any impacts aluminum foil imports for use in the 
packaging industry has on U.S. national security, and the Department of 
Commerce Report entitled ``Effects of Aluminum Imports on the National 
Security'' (Report) did not specify any. FPA supports efforts to 
protect domestic manufacturing and ensure national security, however, 
these efforts must consider the impact and consequences on all U.S. 
manufacturing industries, and the recently imposed 10% tariff on 
aluminum imports does not. Aluminum foil imports necessary for the 
packaging industry, and without application for national defense, 
should have been excluded from the tariffs. In its investigation, the 
Administration was to consider a range of factors related to national 
security, including the economy and the effects of foreign competition 
on the economic welfare of domestic industries, including impacts on 
employment. However, this does not appear to have been the case. These 
import restrictions on aluminum will have a significant negative impact 
on the flexible packaging industry and its employment in the U.S. with 
regard to aluminum foil converting.

    FPA was pleased to see that one aspect of the Report was adopted in 
the Administration's proclamation instituting the aluminum tariffs--the 
process for exclusions from the tariffs ``upon request of affected 
parties if the steel or aluminum articles are determined not to be 
produced in the U.S. in a sufficient and reasonably available amount or 
of a satisfactory quality or based upon specific national security 
considerations.'' However, according to the direct-final regulations 
implementing the exclusionary process (83 FR 12106, March 19, 2018), 
trade organizations, such as FPA, cannot petition on behalf of their 
respective members, even though our members would all be making the 
same request--that aluminum foil is exempted as it is not make 
domestically in the quantities and quality needed for the packaging 
industry. Many manufacturers, particularly small businesses, rely on 
their trade associations to assist them in responding and negotiating 
solutions to government regulations. By not allowing trade associations 
to file on behalf of their industries, this rule is encouraging 
excessive and duplicative filings and will disproportionately impact 
small businesses. And, the tariffs went into effect on March 23, 2018, 
when the earliest possible date Commerce could grant an exclusion would 
be May 18, 2018, when the exclusions will ``generally'' be approved. 
So, there is no guaranteed time frame in which petitioners will know 
whether or not their petition has been approved and they will have 
already been paying the tariff for at least 90 days. The damage to U.S. 
flexible packaging jobs may very well already be done after 90 days of 
this tariff, and once again, this process will certainly 
disproportionately disadvantage small converting businesses that cannot 
afford to front these costs.

    Further, there is little to no clarity on the petition process from 
the rule. Commerce must supply FAQ's answering such questions as how 
confidential business information (CBI) can be submitted. Right now, 
there is simply a check box on the form where businesses can state that 
they have CBI information and there is no indication of the process for 
submitting such; whether or not the petition is incomplete without the 
information and if so, what the timeline for completion would be; nor 
if the arbitrary 25-page limit of the petition includes or does not 
include this CBI. Similarly, the rule states that Commerce may approve 
a broader exclusion request to apply to multiple similarly situated 
importers but gives absolutely no information on how groups of 
companies can apply for this broader exclusion. Again, as trade 
associations such as FPA, do not ``use aluminum in business,'' we 
cannot file on behalf of multiple companies. If a product exclusion is 
granted because it is not manufactured domestically in quantities and 
quality necessary for the industry--why wouldn't that exclusion be 
granted to all users of the product? Lastly, the exclusion process, if 
granted, would only be applicable for one-year. Will companies have to 
petition for the exclusion every year? If the product is not available 
domestically now, why does Commerce believe it will be available next 
year, or the year after, or ever? It should not be up to individual 
companies to prove to the Administration that these products do not 
exist domestically, this should have been part of Commerce's analysis 
before instituting the overly broad tariff in the first place. Even if 
the domestic aluminum foil suppliers guaranteed to start making the 
aluminum foil gauges flexible packaging manufacturers need tomorrow--it 
would take several years for the mills to produce the quantity and 
quality of the foil our companies need. Further, under Federal Food and 
Drug Administration regulations, substitution of the foil substrate 
could take two to ten years for approval, depending on use in packaging 
for food or medical devices.

    FPA is also concerned about the lack of transparency with regard to 
the Section 232 remedy and the process Commerce will use to monitor and 
report on its effects. As stated above, while the investigation was 
supposed to take into consideration the effects of foreign competition 
on the economic welfare of domestic industries, including impacts on 
employment; the Report failed to address downstream industries 
dependent on aluminum or steel. How will Commerce monitor and report on 
the effect of this tariff on the primary manufacturers of aluminum in 
the U.S.; let alone downstream industries, which were ignored in the 
Report? A recent report by the Trade Partnership Worldwide, LLC/The 
Trade Partnership estimates the job loss for downstream users of 
aluminum and steel under the Section 232 tariffs would be 18 for every 
one job created in those sectors. Commerce must be accountable to show 
the impacts to all affected industries and ultimately work towards 
alleviating the devastating impacts of these tariffs on downstream 
users of aluminum products and mitigating the burdensome and 
unnecessary paperwork this exclusionary process would apparently 
mandate on an annual basis.

    The Section 232 investigation and proposed remedy is paralleling an 
International Trade Commission (ITC) investigation and remedies for 
Chinese aluminum foil imports. Thus, FPA members are being penalized 
twice--first with the ITC anti-
dumping and countervailing duties that in some cases exceed 140%, and 
then with the new 10% tariffs on other imports of aluminum foil, which 
are applied on top of the duties already in place. The consequences of 
the tariff under this investigation, combined with the duties from the 
ITC probe, is the loss of flexible packaging jobs in the U.S. The 
negative impact on American jobs by cutting off the supply of aluminum 
foil for flexible packaging manufacturing will far outweigh any job 
benefits that are envisioned by the ITC and Section 232 taxes. These 
duties and tariffs are leading to U.S. companies sourcing aluminum foil 
from other non-U.S. manufacturers at a much higher cost; Chinese 
suppliers of printed or otherwise converted aluminum foil products 
entering the U.S. market, since this bypasses the duties; and/or U.S. 
companies moving flexible foil packaging production outside the U.S., 
thereby reducing the amount of U.S. foil converting jobs. There is 
simply no scenario where the benefits to the U.S. aluminum 
manufacturers outweighs the detriment to the U.S. flexible packaging 
industry.

    Aluminum foil used by the flexible packaging industry is not 
manufactured in the U.S. in the quantities and qualities needed. 
Failure to invest, and quality lapses, including gauge, width, and lack 
of appropriate alloys all contribute to the fact that the U.S. 
producers of aluminum foil are not able to serve the U.S. flexible 
packaging industry. In fact, the ITC, at its preliminary hearing on 
March 30, 2017, found that domestic ultra-thin foil production ``may be 
limited or nonexistent.'' Thus, the packaging industry in the U.S. 
should be granted an exclusion for aluminum foil imports from the 
Section 232 tariff. Since FPA is not eligible to petition on their 
behalf, Commerce should recognize the broad-based exclusion the rule 
mentions to reduce the repetitive and burdensome petitions it will 
received with regard to this foil for flexible packaging manufacturers.

    FPA shares the same goal as the domestic aluminum foil producers 
who want more American jobs and understands the importance of 
protecting national security. This tariff is not the answer. The 
Administration should find ways to work together to improve our 
country's competitiveness. Everybody loses in unfair trade cases, 
especially the American consumer.

    Thank you.

                                 ______
                                 
                     Taxpayers Protection Alliance

                      1401 K Street, NW, Suite 502

                          Washington, DC 20005

                      www.protectingtaxpayers.org

June 25, 2018

The Honorable Orrin Hatch
Chairman
U.S. Senate
Committee on Finance
219 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Hatch,

On behalf of the Taxpayers Protection Alliance (TPA), and the millions 
of Americans that we represent, we urge you to reconsider the tariffs 
on aluminum and steel that Department of Commerce Secretary Wilbur Ross 
supported in testimony to your committee. After the historic passage of 
the Tax Cuts and Jobs Act of 2017, these new actions take a step 
backwards and harm American business. From automotive manufacturers to 
beer distributors, these tariffs will wreak havoc on the thriving 
American economy and could cost hundreds of thousands of jobs. It is 
imperative that you do not reverse the course of our economy, which 
added 233,000 net new jobs in the month of May. We thank you for your 
committee's recent hearing on the Trump administration's tariffs and 
wish to submit this letter and TPA's commentary to your committee for 
the record.

It is nonsensical for Congress and the current administration to allow 
such tariffs to stay in effect; Americans are finally gaining 
confidence in the national economy and are enjoying a saturated job 
market. For the first time in the adult lives of Americans under 30 
years old, the American economy is growing, and the pro-growth policies 
enacted under the current administration are driving that growth.

Consider the consequences of protectionist policies to our economy. 
When the Bush administration enacted similar steel tariffs in 2002, the 
result was the loss of more than 200,000 American jobs. More than 7 
million jobs are tied to the US auto industry and 2 million Americans 
are employed by the beer industry--both of which would be harshly 
effected by a continued hike in steel and aluminum tariffs. According 
to the Peterson Institute for International Economics, the proposed 
auto tariffs as they stand now will affect more than $200 billion in 
imports and will cause automotive production to decline by more than 
1.5 percent. If retaliatory tariffs are imposed by other countries, 
automotive production could drop a full 4 percentage points and more 
than 624,000 American jobs would be lost in the process.

Tariffs of any kind hurt American business. It is time for America to 
trade openly with other nations, to continue the growth of the economy 
and to keep protectionism out of our trade policy. Without the adoption 
of a modern trade policy, free of burdensome tariffs, American business 
will be stifled under that same red tape this administration fought to 
clear just months before. TPA, and our members and supporters, hope 
that the Senate Finance Committee will offer a solution that satisfies 
all needs of American trade and TPA staff members are available for 
counsel and support at any time.

Sincerely,

David Williams
President

                                 ______
                                 

                            MORNING CONSULT

https://morningconsult.com/opinions/tariffs-would-tax-consumers-roll-
back-tax-reform-gains/
        Tariffs Would Tax Consumers, Roll Back Tax Reform Gains
                          (By David Williams)
June 20, 2018

In the wake of historic tax reform delivered by President Donald Trump 
and Congress, the American economy is showing strong signs of life. 
Just days ago, it was reported that the United States added around 
223,000 net new jobs in May, helping the economy reach an 18-year low 
jobless rate of just 3.8 percent. And with new tax reform in hand, 
taxpayers can expect to keep more of their hard-earned dollars in their 
pockets.

Those strong signals of economic health are part of what make the 
administration's recent moves toward imposing new tariffs so confusing. 
According to reports, the president is now considering using Section 
232 of a 1960s trade law, the same instrument he used to levy tariffs 
on imported steel and aluminum earlier this year, to create a new 
tariff as high as 25 percent on auto imports. While the president's 
tariffs on steel and aluminum were certainly unpopular, this latest 
unsolicited proposal has been met with widespread criticism not only 
for its potential economic consequences here at home, but for the seeds 
of discord it sows with major trading partners such as Japan, South 
Korea and Germany.

It doesn't make sense that Trump would risk dealing a major blow to the 
American economy with new tariffs when pro-growth policies are just now 
starting to generate real result s.

Consider the serious consequences of the administration's pursuit of 
tariffs. First, all tariffs are essentially taxes paid by consumers. In 
the case of steel and aluminum, the effect of tariffs is to raise the 
price of products made in the United States, affecting not just the 
obvious sectors such as construction, but raising the cost of everyday 
products such as washing machines, dryers and ovens. Jobs matter too. 
More than 7 million jobs in the United States are tied to the auto 
industry, which in turn is tied to the price of steel. Another 2 
million jobs are supported by beer manufacturing, which is heavily 
influenced by aluminum prices.

According to the Peterson Institute for International Economics, these 
tariffs would affect more than $200 billion in U.S. imports, dropping 
American vehicle production by 1.5 percent and costing 195,000 jobs in 
the United States. Further, if competitor nations countered with their 
own tariffs, the drop in production could be a full 4 percent, costing 
624,000 American workers their jobs.

Estimates from the Tax Foundation are equally grim. With the United 
States importing nearly $300 billion of vehicles from abroad last year, 
new tariffs would essentially create a new $73 billion tax increase for 
American consumers. The Tax Foundation estimates that this new de facto 
``tax'' would drastically eat into the after-tax gains taxpayers are 
due to see from tax reform, with taxpayers in the bottom 80 percent 
shouldering the highest burden for this new tax on vehicles.

In fact, the lowest income earners will see nearly half of their after-
tax gains from tax reform disappear should the President impose new 
tariffs on auto imports. That ``two steps forward, one step back'' 
result for taxpayers was a major part of why The Wall Street Journal 
recently editorialized against new auto tariffs, calling on the 
president to abandon the idea.

The reality is that all tariffs, whether on steel and aluminum or 
vehicles, are taxes. They burden consumers and businesses, push jobs 
away, and stress the economy in dangerous ways. All of these are 
consequences the American economy can ill afford as it claws its way 
out of stagnation.

It would be a shame to endanger the progress already being made to 
restore the American economy to full strength, but that is what the 
administration is doing by turning American economic policy toward 
protectionism.

Now, in the days when the pulse of the economy is quickening, 
unemployment is falling and companies nationwide are announcing 
employee bonuses and exciting new investments, the president and 
Congress should avoid doing anything that puts a dent in economic 
growth. With tax reform in hand, the president should abandon the path 
of protectionism by giving up the idea of new auto tariffs.

David Williams is president of the Taxpayers Protection Alliance.

                                 ______
                                 
                  TPA Leads Coalition Opposing Tariffs

March 6, 2018

The Honorable Donald J. Trump
President of the United States
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Dear Mr. President:

On behalf of the undersigned groups representing millions of taxpayers 
and consumers across the country, we urge you to reconsider the tariffs 
on aluminum and steel announced on March 1, 2018. We appreciate your 
work cutting taxes and promoting America, but tariffs on aluminum and 
steel will be a tax on the Middle Class with everything from cars to 
baseball bats to even beer being more expensive.

Free trade is an integral foundation for any economy seeking growth, 
innovation, and expanded opportunity. Not only is free trade good for 
the U.S. economy, it is also good for the American taxpayer. As 
President, you pledged to put America and American jobs first. But 
imposing tariff s would be bad for the economy and bad for American 
workers. U.S. manufacturers that consume steel employ an estimated 40 
to 60 times more U.S. workers than do steel producing facilities. This 
tax hike would put these jobs at risk. In fact, when George W. Bush 
increased tariffs on steel, 200,000 jobs were lost as a direct result.

If the U.S. government develops a fortress mentality in a global 
marketplace, it will spur trading partners to treat U.S. products in 
the same manner. If foreign governments imitate the U.S. use of 
tariffs, U.S. exports of manufactured goods could decline. Nothing is 
more important to long term U.S. prosperity than being able to sell 
exceptional products in markets that 95 percent of the population call 
home. In December, you signed into law the most significant tax reform 
in more than 30 years. These tax cuts will revolutionize the U.S. 
economy, create new jobs and increase living standards throughout the 
country. This new tariff proposal puts all of that at risk. A new tax 
on steel and aluminum will cost jobs, increase costs to consumers, and 
force businesses to go overseas. We strongly urge you to reconsider 
this proposal.

Sincerely,

David Williams
President

https://www.protectingtaxpayers.org/blog/a/view/tpa-leads-coalition-
opposing-tariffs

                                 ______
                                 
     Taxpayers Protection Alliance Statement on President Trump's 
          Imposition of Tariffs on Steel and Aluminum Imports
                            (David Williams)

March 8, 2018

WASHINGTON, DC--Today, David Williams, President of the Taxpayers 
Protection Alliance (TPA), slammed President Trump's announcement of 
tariffs on steel and aluminum imports to the United States. In a March 
6 open letter signed by 30 free market organizations, TPA cautioned 
against the tariffs, citing the costs posed to consumers.

Williams argued that, ``If the U.S. government develops a fortress 
mentality in a global marketplace, it will spur trading partners to 
treat U.S. products in the same manner. If foreign governments respond 
with tariffs of their own, U.S. exports of manufactured goods could 
decline. Nothing is more important to long-term U.S. prosperity than 
being able to sell exceptional products in markets that 95 percent of 
the global population calls home. The number of free market, pro-
consumer groups who joined with us to address the President on this 
matter in our joint letter is a testament to the severe negative impact 
these tariffs will have on the economy.''

Williams continued: ``The tariffs amount to a tax on consumers. They 
are a burden on the average taxpayer, and will raise costs on consumer 
products of all kinds, from canned goods to cars. Additionally, the 
tariffs will increase costs for countless supply chains in the U.S., 
and those excess costs will be passed straight down to the consumer. 
While consumers will feel an immediate impact on their wallets from 
these tariffs, the long-run effects could be even more severe. These 
tariffs will surely solicit retaliatory trade restrictions from U.S. 
trade partners across the globe, with middle-class taxpayers and their 
families bearing the brunt of resulting trade conflicts.''

Williams concluded: ``The President has made some great progress 
towards helping the middle class with tax reform. Levying tariffs on 
steel and aluminum imports is a step in the wrong direction. 
Protectionist trade policies inhibit free trade. It would be a mistake 
to run away from the policies that have kept prices down for consumers 
and steered our economy in a positive direction for decades.''

https://www.protectingtaxpayers.org/blog/a/view/taxpayers-protection-
alliance-statement-on-president-trumps-imposition-of-tariffs-on-steel-
and-aluminum-imports

                                 ______
                                 
            Taxpayers Protection Alliance Issues Statement 
                    on President Trump's New Tariffs
                            (David Williams)

March 5, 2018

Imposing tariffs on aluminum and steel amounts to middle-class tax 
increase, warns TPA President

WASHINGTON, DC--Today, the Taxpayers Protection Alliance (TPA) reacted 
to President Trump's planned tariffs on aluminum and steel, which were 
announced on March 1, 2018.

TPA President David Williams voiced his frustration with the new 
policy, stating that, ``We are extremely disappointed with the 
announced tariffs on steel and aluminum. These new taxes will mean 
price increases on everything from cars to baseball bats to even 
beer.''

Williams continued, ``Free trade is an integral foundation for any 
economy seeking growth, innovation, and expanded opportunity. In 
addition to clear, widespread economic benefits, free trade allows 
American taxpayers to keep more money in their wallets. The 
announcement of these tariffs undercut the positive gains made by the 
tax cuts passed last year. As we've seen with previous decisions to 
raise tariff rates, levying new taxes on the middle class will 
establish an awful precedent and harm other industries.''

In a letter to be released on March 6, TPA and a group of free market 
organizations warned that protectionist measures rarely save jobs, 
raise tax revenues or preserve competition. In part, the letter stated:

        If the U.S. government develops a fortress mentality in a 
        global marketplace, it will spur trading partners to treat U.S. 
        products in the same manner. If foreign governments imitate the 
        U.S. government's use of tariffs, U.S. exports of manufactured 
        goods could decline. Nothing is more important to long-term 
        U.S. prosperity than being able to sell America's exceptional 
        products in markets that 95 percent of the world's population 
        call home.

Williams concluded, ``These protectionist measures could have long-
lasting effects and adversely impact exports by tempting foreign powers 
to retaliate. The prospect of a trade war, along with a slew of other 
unintended consequences, will negatively impact the American economy 
for many years.''