[Senate Hearing 115-799]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 115-799
 
         TARIFFS: IMPLICATIONS FOR U.S. FOREIGN POLICY AND 
                       THE INTERNATIONAL ECONOMY

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                     
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS


                             SECOND SESSION
                               __________

                             JULY 12, 2018

                               __________



       Printed for the use of the Committee on Foreign Relations
       
       
       
       
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                 COMMITTEE ON FOREIGN RELATIONS        

                BOB CORKER, Tennessee, Chairman        
JAMES E. RISCH, Idaho                ROBERT MENENDEZ, New Jersey
MARCO RUBIO, Florida                 BENJAMIN L. CARDIN, Maryland
RON JOHNSON, Wisconsin               JEANNE SHAHEEN, New Hampshire
JEFF FLAKE, Arizona                  CHRISTOPHER A. COONS, Delaware
CORY GARDNER, Colorado               TOM UDALL, New Mexico
TODD YOUNG, Indiana                  CHRISTOPHER MURPHY, Connecticut
JOHN BARRASSO, Wyoming               TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia              EDWARD J. MARKEY, Massachusetts
ROB PORTMAN, Ohio                    JEFF MERKLEY, Oregon
RAND PAUL, Kentucky                  CORY A. BOOKER, New Jersey
                  Todd Womack, Staff Director        
            Jessica Lewis, Democratic Staff Director        
                    John Dutton, Chief Clerk        



                              (ii)        

  


                            C O N T E N T S

                              ----------                              
                                                                   Page

Corker, Hon. Bob, U.S. Senator From Tennessee....................     1


Menendez, Hon. Robert, U.S. Senator From New Jersey..............     3


Singh, Hon. Manisha, Assistant Secretary, Bureau of Economic and 
  Business Affairs, U.S. Department of State, Washington, DC.....     4
    Prepared statement...........................................     5


Bolten, Hon. Joshua, President and CEO, The Business Roundtable, 
  Washington, DC.................................................    33
    Prepared statement...........................................    34


Fuchs, Michael H., Senior Fellow, Center for American Progress, 
  Washington, DC.................................................    38
    Prepared statement...........................................    39


              Additional Material Submitted for the Record

Responses of Manisha Singh to Questions Submitted by Senator 
  Robert Menendez................................................    56


Responses of Manisha Singh to Questions Submitted by Senator Tim 
  Kaine..........................................................    57


The New York Times Article Submitted for the Record by Senator 
  Menendez.......................................................    59


                             (iii)        


  TARIFFS: IMPLICATIONS FOR U.S. FOREIGN POLICY AND THE INTERNATIONAL 
                                ECONOMY

                              ----------                              


                        THURSDAY, July 12, 2018

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:00 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Bob Corker, 
chairman of the committee, presiding.
    Present: Senators Corker [presiding], Risch, Rubio, 
Johnson, Flake, Gardner, Young, Barrasso, Isakson, Portman, 
Menendez, Cardin, Coons, Udall, Kaine, Markey, and Booker.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    The Chairman. The Foreign Relations Committee will come to 
order.
    Ranking Member Menendez mentioned he is going to be just a 
minute late, and for us to go ahead and get started.
    We thank our witnesses and all of you for being here.
    We are going to consider the implications of recent trade 
actions by the administration, including the implementation of 
tariffs on steel and aluminum imports from Canada, Mexico, and 
the European Union.
    I do not think it will come as a big surprise to anyone 
here that I am very concerned about the President's trade 
policies, and I think we all should be, from the imposition of 
tariffs on--by abusing Section 232 of the--the 232 authorities 
to threats to withdraw from longstanding trade agreements such 
as NAFTA. These actions are hurting our business and farm 
communities all around the country. They are damaging our 
international relationships that we have spent decades 
building, casting doubt on the United States and our role as a 
global leader and a reliable partner.
    The tariffs imposed on imported steel and aluminum under 
Section 232 are already disrupting and damaging supply chains 
and business plans of numerous American businesses. These 
artificial distortions will continue to have real-world 
effects, including the possibility that many Americans could, 
and will, lose their jobs. Many of our companies risk losing 
markets carefully developed and cultivated over years to their 
foreign competitors. And now we await the outcome of another 
232 investigation initiated by the President, this one to 
determine if foreign auto imports threaten our national 
security.
    Do not get me wrong, we do have significant trade 
challenges when it comes to China. And, while we all agree on 
the need to ensure the international trade system is fair to 
American workers, companies, and consumers, I believe we should 
focus on building coalitions to confront longstanding threats, 
such as Chinese theft of intellectual property, instead of 
imposing 232 tariffs on our friends. Instead, these actions are 
alienating our close friends and allies, such as Canada, Japan, 
and Europe, partners we rely upon for far more than just 
economic security. The President has said that trade wars are 
winnable. Whether we win or lose, there is certain to be 
collateral damage to U.S. citizens and businesses along the 
way, as well as our place in the world.
    The administration needs to explain to Congress where this 
is all headed. I know many members have been over to meet with 
the President to talk about where this is headed. To my 
knowledge, not a single person is able to articulate where this 
is headed, nor what the plans are, nor what the strategy is. It 
seems to be a wake-up-ready-fire-aim strategy.
    So, they need to explain to us where this is going. The 
disruptions and costs of these tariffs are clear. How and when 
it does end, will we be better off as a result? The 
Constitution clearly establishes the power to collect duties 
and the power to regulate foreign commerce with Congress. We 
are holding this hearing today because of the vital need for 
congressional oversight on these actions. I have offered 
bipartisan legislation with Senators Flake, Johnson, Isakson, 
Shaheen, and others on this committee for Congress to reclaim 
its appropriate role and responsibility with respect to setting 
tariff policy. The bill has attracted wide-ranging support from 
organizations representing business and agriculture across our 
country, with an overwhelming vote of support for those efforts 
yesterday in the Senate. We will continue to push for a binding 
vote on this legislation in the near future.
    We thank our witnesses for being here today. Let me go 
ahead and introduce our witness. Our first witness is Manisha 
Singh, Assistant Secretary of State for the Economic and 
Business--for Economic and Business Affairs. In this role, she 
is responsible for advancing American prosperity, 
entrepreneurship, and innovation worldwide.
    We thank you for being here. I would not want to be in your 
position today, but you are gladly here to do so. And we look 
forward especially to our private panel that will come up 
after, without some of the same relationships. But, with it--
with that, if you would give your testimony in about 5 minutes. 
Any written documents you have, without objection, will be 
entered into the record. Again, we thank you for your service.
    Do you want to make an opening comment?
    Senator Menendez. If you have a moment, I do.
    The Chairman. Well, why do you not get a cup of coffee and 
take a deep breath and give an opening comment?

              STATEMENT OF HON. ROBERT MENENDEZ, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Menendez. These days, Mr. President, deep--Mr. 
President--I wish.
    [Laughter.]
    Senator Menendez. Mr. Chairman, I hope that does not get--
--
    The Chairman. Recently, I have been feeling the same way, 
honestly. I----
    Senator Menendez. --I hope that does not get you into 
trouble. But, in any event, I have had--a deep breath is not 
enough, these days. So.
    Mr. Chairman, thank you for calling a very timely hearing.
    Over the past few months, we have watched the President 
impose a series of trade measures against our allies and 
adversaries alike, seemingly without considering the impact 
of--these actions could have on important strategic 
partnerships. I appreciate that your legislation, Mr. Chairman, 
addresses this issue. And, although you and I may have 
different views about some of our existing and proposed trade 
agreements, the recent vote on the Senate floor shows strong 
bipartisan support for pushing back on what I believe is the 
President's disruptive action.
    We have witnessed more of this action on display as he is 
meeting with our NATO allies this week, arguably our most 
important partners in creating or sustaining critical 
agreements that keep our Nation and our citizens secure. His 
erratic actions, coupled with his denigrating remarks, do not 
inspire confidence.
    As it relates to the subject of this hearing, I believe 
that decades of unfair trading practices have left American 
workers, businesses, and families hard hit. It is critical that 
we strategically assess the real challenges and threats to 
America workers. Recent economic analysis has again revealed 
how China's economic rise over the last generation has severely 
damaged some of America's hardest-working people in their 
communities. China has driven global overcapacity in steel and 
aluminum, a problem that the rest of the world shares with us. 
We must, indeed, go after China's subsidization of these 
materials and their dumping onto the global market, which has 
shuttered factories across our country and put too many 
Americans out of work.
    Separately, as many of my constituents in New Jersey know 
too well, we must also aggressively go after China's 
expropriation and outright theft of our patents and copyrights. 
American families do not need spreadsheet analysis to know the 
economic implications. These actions are real.
    So, now, following the Section 301 investigation into 
China's policies on technology transfer and intellectual 
property, the administration must take action to reverse the 
damage done to U.S. workers and companies. Success, however, 
will require more than a never-ending escalation of tariffs. To 
support hard-working Americans, we need a strategic, 
coordinated response from all countries that China's predatory 
practices have disadvantaged.
    Sadly, the administration has begun a reckless campaign 
against our allies, driving them into the arms of our 
adversaries instead of leading a joint effort to address the 
serious challenges of China's economic policies. As the NATO 
summit this week in Brussel reminds us, United States 
leadership in the world, our ability to meet the full range of 
global economic, environmental, health, and security challenges 
we face requires sustainable, trustworthy partnerships. Whether 
confronting Russia's disruption of democratic institutions here 
and among our European allies, working with our Latin American 
neighbors to cope with the instability driving families from 
their homes, or responding to China's aggressive moves in South 
China Sea, we are stronger with the alliances built on shared 
history and values. But, remarkably, Mr. Chairman, the 
President saves his harshest words for our allies who fight 
alongside us in the fields of Afghanistan, alongside us in the 
fight for freedom and democracy against Russian aggression, and 
who are on the front lines of Chinese economic imperialism in 
our own hemisphere.
    So, I will look forward to our witnesses. I hope the 
hearing will help illuminate the administration's confusing 
flurry of tariffs and trade restrictions. I hope we can agree 
on who our friends are and who our adversaries are, which are 
the right tools and the right priorities.
    And, with that, Mr. Chairman, I look forward to the 
hearing.
    The Chairman. Thank you. Thank you so much.
    Madam Secretary, if you would begin, we would appreciate 
it.

STATEMENT OF HON. MANISHA SINGH, ASSISTANT SECRETARY, BUREAU OF 
   ECONOMIC AND BUSINESS AFFAIRS, U.S. DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Ms. Singh. Thank you. Chairman Corker, Ranking Member 
Menendez, and members of the committee, thank you for the 
opportunity to testify before you today regarding tariff 
implications for U.S. foreign policy and the international 
economy.
    The Department is grateful for the partnership we have with 
the members of this committee and with your staffs. The Trump 
administration is committed to ensuring that American workers, 
farmers, and companies have every opportunity to compete and 
succeed in the global arena. We look forward to continuing to 
work with you on this common goal.
    President Trump's National Security Strategy declares that 
economic security is national security. We are working to 
safeguard both economic security and economic prosperity for 
the American people. In addition to the dedicated officers here 
in Washington, the State Department has over 1500 economic 
officers posted in embassies and consulates around the world 
who explain our policies to foreign governments and enlist 
their support of our goals. Our Ambassadors and senior 
officials meet with foreign leaders to discuss our mutual 
priorities. They also advocate directly for U.S. companies. The 
Department works in coordination with our colleagues at USTR, 
Commerce, and other agencies to ensure that we are in close 
contact with our allies to explain the administration's trade 
and economic policies.
    We have heard some concerns and questions from our allies 
and trading partners, and we have engaged with them proactively 
on a regular basis. We have made addressing their concerns 
about our international trade policy a part of our larger 
conversation with them.
    The Department is clear with our allies that we continue to 
have shared interests with countries around the world, from 
countering terrorism to the denuclearization of North Korea. We 
emphasize that our combined efforts are required to make the 
world a more just, safe, and prosperous place.
    A key area in which our allies and partners share our 
frustration is responding to the challenge of China's economic 
aggression. We are building an international coalition to 
address China's state-led policies, which distort markets, 
discriminate against international competition, force 
technology transfer, and permit theft of sensitive intellectual 
property. The Department is committed to utilizing all 
available tools to increase economic security, promote greater 
opportunity, and build constructive global relationships.
    We are also working to attract foreign direct investment, 
green field investment, which will benefit our workers. Last 
month, Secretary Pompeo joined four other Cabinet Secretaries 
and 15 of our Ambassadors to welcome international businesses 
to the Select USA Summit, and emphasized the President's 
message that America is open for business. Under the leadership 
of Secretary Pompeo, we are focused on America--economic 
diplomacy in the interest of the American people.
    Thank you again for holding this very important hearing. I 
am happy to answer any questions that you may have.
    [The prepared statement of Ms. Singh follows:]

                  Prepared Statement of Manisha Singh

    Chairman Corker, Ranking Member Menendez, and Members of the 
Committee, thank you for the opportunity to testify before you today 
regarding ``Tariff Implications for U.S. Foreign Policy and the 
International Economy.''
    The Department is grateful for the partnership we have with the 
members of this committee and your staffs. The Trump administration is 
committed to ensuring that American workers, farmers and companies have 
every opportunity to compete and succeed in the global arena. We look 
forward to continuing to work with you on this common goal.
    President Trump's National Security Strategy declares that Economic 
Security is National Security. We are working to safeguard both 
economic security and economic prosperity for the American people.
    We have over 1500 economic officers posted in embassies and 
consulates in over 190 countries as well as in Washington who explain 
our policies to foreign governments and enlist their support of our 
goals. Our Ambassadors and senior officials meet with the leaders and 
ministers of our partners to highlight areas of continued shared 
interest, and they advocate directly for U.S. companies.
    The Department works in coordination with our colleagues at USTR, 
Commerce and other agencies to ensure that we are in close contact with 
our allies to explain the administration's trade policies.
    We have heard concerns and questions from some of our allies and 
trading partners about our policies and we have engaged with them 
proactively to understand their issues. We have made addressing their 
concerns about our international trade policy a part of our larger 
conversation with them.
    The Department is clear with our allies that we continue to have 
shared interests with countries around the world from countering 
terrorism to the denuclearization of North Korea. We emphasize that our 
combined efforts are required make the world a more just, safe, and 
prosperous place.
    A key area in which allies and partners share our frustration is 
responding to the challenge of China's economic aggression. We are 
building an international coalition to address China's state-led 
policies which distort markets, discriminate against international 
competition, force technology transfer and permit theft of sensitive 
intellectual property.
    The Department is committed to utilizing all available tools to 
increase economic security, promote greater opportunity and build 
constructive global relationships.
    We are also working to attract foreign direct investment--
greenfield investment--which will benefit our workers. Last month, 
Secretary Pompeo joined four other Cabinet secretaries and 15 of our 
Ambassadors to welcome international businesses to the Select USA 
Summit and emphasized the President's message that America is open for 
business.
    Under the leadership of Secretary Pompeo, we are focused on 
economic diplomacy in the interest of the American people.
    Thank you again for holding this hearing on this important topic. I 
look forward to your answering your questions.

    The Chairman. Thank you.
    I might just ask a few and then reserve the rest of my 
time. But, do you have any idea what the strategy is, relative 
to using 232 to put tariffs on our European partners, and 
Canada and Mexico? Can you articulate how that helps us build a 
coalition to counter what you mentioned in your opening 
comments, which is China's abuse and theft of intellectual 
property?
    Ms. Singh. Thank you, Senator Corker.
    President Trump has determined that the 232 actions are 
necessary to preserve the vitality of our domestic industries. 
I have received questions about why it is that we are focused 
on China or the EU or other of our allies. However, the 232 
initiative was not targeted at any particular country, it was 
instituted on a global basis to address steel and aluminum 
overcapacity. The 232 statute specifically indicates that the 
viability of our domestic industries to be able to supply needs 
for our defense industrial base, for our critical 
infrastructure, do constitute national security threats under 
this legislation.
    The Chairman. So, Canada is a threat to us, from a national 
security standpoint? Do we not ship more steel to them than 
they ship to us?
    Ms. Singh. Well, Senator, Canada is not a national security 
threat. However, the global steel and aluminum overcapacity 
that currently exists in the marketplace is affecting our 
ability--our--the ability of our domestic companies to 
adequately produce aluminum and steel. The viability of these 
industries does constitute a national security issue for us.
    The Chairman. I am going to likely reserve my time for the 
second panel.
    Go ahead, sir.
    Senator Menendez. Thank you, Mr. Chairman.
    So, you just said that Canada is not a national security 
threat. Did I hear you right?
    Ms. Singh. Yes, Senator.
    Senator Menendez. Well, but Section 232 is--that the 
President has invoked, actually has to sustain that Canada is a 
national security threat. So, if it is not a national security 
threat, how is the President using Section 232?
    Ms. Singh. Well, thank you, Senator, for that question.
    As I indicated previously, Section 232, the language 
indicates that the competitive viability of our domestic 
industries is needed in order to maintain national security. In 
addition, it states that a weakened economy inhibits our 
ability to maintain our defense industry--our defense 
capabilities. And so, therefore, under 232, the President has 
determined that this global steel and aluminum overcapacity 
does----
    Senator Menendez. Okay. Really?
    Ms. Singh. --impair our national security.
    Senator Menendez. Really? Does Canada present a greater 
national security threat than China?
    Ms. Singh. Senator, China is considered our largest threat. 
And, to that end, the President has instituted very tough 
measures to protect our intellectual property, to protect our 
innovation, to prevent the Chinese from imposing unfair trade 
practices, from distorting markets----
    Senator Menendez. Does Canada have a defense production-
sharing agreement with the United States?
    Ms. Singh. I am not aware if we do or not, Senator. I can--
--
    Senator Menendez. The answer is yes.
    Ms. Singh. Okay.
    Senator Menendez. It has a defense production-sharing 
agreement with the United States. Yet, we say that it is a 
national security threat while--at the same time that they are 
in the midst of producing defense elements with us. Do you 
believe our allies are going to be more or less likely to join 
us in a coordinated action against China when they see the 
administration being tougher on allies like Canada than China?
    Ms. Singh. Well, Senator, thank you for that question.
    Our allies and partners share our frustration about China's 
economic coercion. And I, personally, have had many 
conversations with allies all over the world about cooperating 
against the Chinese economic threat. They are as concerned 
about China as we are.
    Senator Menendez. Yes. The problem is, is that, instead of 
building a coalition that was willing and wanting to confront 
China through the international forums that we could execute 
through, we attack them. We attack them. So, what is the 
administration's strategy to respond to China's escalating 
retaliation and bring them to the negotiating table to deal 
with underlying issues? More escalation? I mean, I do not 
understand what is the pathway, here, at the end of the day. 
So, we slap a series of tariffs on them, they reciprocate and 
retaliate and add tariffs to us. Where is the end game, here?
    Ms. Singh. Well, Senator, thank you for that question. It 
is an important one.
    Our end game is for China to change its behavior. We want 
to demonstrate to China that we are willing to take strong 
measures to force China to change its behavior, which distorts 
markets, which has contributed to----
    Senator Menendez. Madam Secretary, I know--I do not mean to 
interrupt you. My time is limited. I--we share the end game. 
The question is, What is the strategy to get there? Tariffs 
slapped in a--in the action that the President has done then 
gets retaliatory tariffs, and then the President retaliates 
against those tariffs, and then China says they will retaliate 
against those tariffs. Tell me, What is the strategy, at the 
end of the day, to achieve the goal that you have just 
enunciated?
    Ms. Singh. Well, Senator, President Trump has determined 
that tariffs are the most effective means to achieve this goal. 
For the last several decades, we have been having many 
conversations with the Chinese. You will recall our economic 
dialogues in which we tried to make progress. And this problem 
has not been solved. So, President Trump has determined that 
tariffs are the way--tariffs are the right tool to be used in 
this situation to get the Chinese to change their behavior. We 
need to see real action on the part of the Chinese, not just 
the ongoing conversations that they keep having with us.
    Senator Menendez. Well, listen, Madam Secretary, I regret 
that you were sent here, because I do not think that you are 
really in the mix, here, on this issue. And you are sent here 
as cannon fodder, at the end of the day, which is really a 
challenge. So--but, the problem is, I have heard no strategy 
whatsoever that suggests how this is going to end up. I do not 
even know how we are using 232 to gain leverage on other 
issues. For example, a July 8th New York Times article reported 
that the State Department threatened Ecuador with punitive 
trade measures if it refused to drop a resolution on 
breastfeeding at the World's Health Organization, which--I ask 
the article be entered into the record, Mr. Chairman.

    [The information referred to is located at the end of the 
hearing]

    Senator Menendez. How is it that we are using Section 232 
on something like that?
    Ms. Singh. Well, Senator, I am aware of the breastfeeding 
resolution. And that media report was false. The Department has 
confirmed it. That was a false report. That is----
    Senator Menendez. So, you are not using 232 as it relates 
to anything other than national security concerns.
    Ms. Singh. Well, we are using 232 so that we can give our 
domestic steel and aluminum producers the ability to regain 
their industries. We want the domestic industries to have--be 
able to have the capacity to supply needs for our critical 
infrastructure for our defense needs. 232 specifically states 
that the viability of domestic industries is in the interest of 
national security.
    Senator Menendez. Well, we are all for helping the steel 
industry and the United States, but the manner in which your--
this administration is going about it is going to have huge 
consequences for middle America, for middle-class families, for 
rising costs, for farmers in the country, and for lost jobs. 
And so, at the end of the day, you--I think you are going to 
wreak more havoc than you are going to create the result you 
want.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    I would just state that we produce 75 percent of the steel, 
I think, that we use in this Nation. And our defense industry 
only uses 3 percent.
    I am really saddened that you are the person that is up 
here today. I think we all like working with you. And I know 
that--because you do a good job in the areas that you really 
spend most of your time.
    I would just ask the committee members that--we do have a 
second panel that I think might ask--might be able to answer 
questions in a little bit different way.
    You are going to be cannon fodder this morning. And I do 
not think you are really prepared to defend the policies in an 
appropriate manner.
    So, what I would say to people is, if you have a question--
I know some of you do--let us ask them, but maybe not use the 
entire 5 minutes, so we can move on to a panel. But, anybody 
that wishes to do that is more than welcome to do so.
    Senator Johnson.
    Senator Johnson. Just quickly. Just basic data. So, again, 
we want to increase the number of tons of steel we produce. Are 
there goals, in terms of number of tons that we are looking 
for? Are there goals, in terms of number of jobs?
    Ms. Singh. Well, Senator, I do not know that there are 
specific numeric goals. I think that an interagency analysis 
that was--
    Senator Johnson. Okay, okay. That is--you answered the 
question, then.
    Back when President Bush did this, there was a study that 
showed, for a few thousand steel jobs, when he slapped down 
steel tariffs, we lost about 200,000 jobs. Is that a study 
that--in those types of considerations, have they been taken 
into account?
    Ms. Singh. Well, I am not aware of that study, in 
particular, but I know that my colleagues at USTR and the 
Department of Commerce have done economic modeling and economic 
analysis to advise the President on their recommendation that 
the 232 investigations be conducted----
    Senator Johnson. Okay.
    Ms. Singh. --and that the tariffs be implemented.
    Senator Johnson. Are you tracking, right now, what is--how 
steel prices have increased in the U.S.? Do you know what 
percent we have recognized?
    Ms. Singh. No, sir, I am not tracking them.
    Senator Johnson. We are hearing somewhere between 30 and 40 
percent. If you put on a 25 percent tariff, and now our 
domestic producers are realizing 30 to 40 percent gains, you do 
realize how that makes them uncompetitive in the world markets, 
correct?
    Ms. Singh. Yes, sir.
    Senator Johnson. Earlier, we heard that there are 30,000-
some waivers being requested of the Commerce Department. Is 
that roughly the number of waivers you have received?
    Ms. Singh. I believe the number I saw was 20,000, something 
in that nature.
    Senator Johnson. Okay. And how are we going to possibly 
respond to that? And does it make good economic sense to have a 
few commissars in the Commerce Department picking who is going 
to be able to survive and who is not going to be able to 
survive in industry? Literally, we had a woman build a business 
supplying the trucking industry, who said, in 3 months, she 
will be out of business. I mean, are we really taking into 
account--I have heard the administration say some short-term 
pain for long-term gain--are we really taking into account the 
permanent damage that is being done right now?
    Ms. Singh. Well, Senator, the goal of the Commerce 
Department and USTR in instituting these actions, again, is to 
increase the viability of our domestic industries. You know, we 
would----
    Senator Johnson. Of steel----
    Ms. Singh. --like to----
    Senator Johnson. --steel.
    Ms. Singh. Correct, of steel and aluminum. And we would 
like to see everyone succeed. We would like these industries to 
be at a level where they can start hiring people again, where 
they can create more American jobs.
    Senator Johnson. Okay, but you have to look at the steel-
using industries. We have a lot of them in Wisconsin. They are 
really worried.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Before I turn to Senator Kaine, how are they deciding on 
these exclusions? Are they looking at who made political 
contributions to the administration when they were running? I 
mean, this is pretty worrisome, that you have got a couple of 
folks deciding on who is going to be excluded from these 
tariffs. There is no criteria that has been laid out. There is 
no transparency that has been given. How should we feel 
comfortable about how these--there were 20,000, 3 weeks ago. I 
have got to believe the number that Ron laid out is probably 
closer to where we are today. But, do you know anything about 
the process of how we are granting exclusions to people 
throughout our country, picking winners and losers?
    Ms. Singh. Well, Senator, at the end of the day, we would 
like to see all American workers come out as winners in this 
situation. Secretary Ross did testify before the Senate Finance 
Committee last month, and he discussed extensively the process. 
He mentioned the transparent public hearing and comment period 
before the tariffs are instituted, and then he described the 
exclusion process through which U.S. companies can apply. It is 
being done on an objective basis. The Commerce----
    The Chairman. Yeah.
    Ms. Singh. --Department does have economic models----
    The Chairman. I watched the excerpts of the hearing. I do 
not think he was near that clear.
    But, with that, Senator Kaine.
    Senator Kaine. Thank you, Mr. Chair. And I associate myself 
with a number of the comments that colleagues have made.
    Just talk about Virginia, the effect in Virginia of the 
aluminum and steel tariffs, and the retaliation imposed as a 
result. I was at a farmers' market in Halifax County, rural 
southern Virginia, over the weekend. And soybean farmers were 
coming to me to complain about the significant damage that they 
are now suffering under because of retaliatory tariffs taken in 
response to President Trump's actions. Yesterday, my poultry 
industry in the Shenandoah Valley and the Eastern Shore came in 
to talk to me. I mentioned Senator Coons has had these 
conversations, as well. They are being significantly affected 
by the retaliation by China and other nations.
    And then I got one, right here, Catoctin Creek rye whiskey. 
This is a tiny little Virginia distillery in Purcellville, 
which is in Loudoun County, and they are small, 10 employees. 
They make rye whiskey, gin, and brandy. In the last 5 years, 
they spent $100,000 to expand in Europe. In Europe, American 
whiskey is really popular. This tiny company--I am sorry, they 
employ 20 people--have--has had some real significant success 
in starting to sell Catoctin Creek in Germany, Italy, Holland, 
and the U.K. But, after the steel and aluminum tariffs went 
into effect, the EU retaliated with equivalent tariffs on 
whiskey, an additional 25 percent tariff. The founder of the 
company, Scott Harris, said, ``We are just launching into the 
European market now in a big way, and this is the worst 
possible timing for us. We are probably going to see all of our 
European sales come to a screeching halt.''
    We talk about a trade war. And the question is, Who is it 
against? And, in Virginia, it seems it is against farmers and 
workers. And actually, the national stats would suggest this.
    And, Mr. Chairman, I ask to put a version of this into the 
record.

    [The information referred to can be accessed from the link 
below:]
    [https://www.washingtonpost.com/graphics/2018/business/
trump-tariff-trade-war/]

    Senator Kaine. This is from a recent Washington Post 
article that pulled trade data. This is just the effect of the 
steel and aluminum tariffs and the retaliation of it, not other 
tariffs and trade wars that the administration is starting. The 
projection is that, over the next 3 years, 30,000 jobs would be 
gained in American industries because of these steel and 
aluminum tariffs, largely in industries that make steel and 
aluminum. But, 430,000 jobs will be lost in a whole set of 
industries, for a net job loss of 400,000 jobs to manufacturers 
and agricultural workers.
    This is what we are dealing with just on the aluminum and 
steel tariffs. This morning, there is another announcement 
about an additional $200 billion of tariffs that are going to 
be imposed on China, and they will retaliate in kind. This is 
hitting Virginians very hard, hitting Americans very hard.
    Mr. Chair, I appreciate you and others who positioned that 
vote yesterday. It will not surprise anybody on this panel. I 
do not think we should ever be at war without a vote of 
Congress, and I do not think we should be at a trade war 
without a vote of Congress. Congress has to approve trade 
deals. I think Congress should have to approve trade wars. And 
I do not think the President, except in very tightly defined 
circumstances, should be able to unilaterally get us into a 
trade war that hits American and Virginia workers to this 
degree.
    I have a question for you. And it really goes into the 
strategy question, What is the end game? In addition to all of 
the effort that is being undertaken by an administration on the 
imposition of tariffs without explanation to us of a strategy, 
the administration is also acting in a significant way to 
undercut the World Trade Organization. There was an article in 
the Wall Street Journal yesterday, ``Trump Puts the WTO on the 
Ropes. President sows crisis by invoking national security for 
tariffs and blocking trade-judge appointments.'' The 
administration's decision to block appointments to the appeals 
judges on the WTO mean that American companies, if they want to 
challenge unfair trade practices of other nations, may have a 
hard time being able to get an appeal heard. What possibly--
what possibly could be a justification for the administration 
trying to block appointments to the WTO appeals panel? I view 
that as hurting American companies. What is the justification 
for it?
    Ms. Singh. Well, thank you, Senator, for that question.
    The administration is not actually trying to block these 
appointments. What we are trying to do is make sure that these 
WTO appellate judges have--are acting within their mandates, 
are held accountable. There is concern that these appointed 
judges are exceeding their responsibilities. There is no 
accountability for them. Our United States Trade Representative 
wants to look at WTO reform. As part of the President's overall 
trade strategy, we would like to reform the multilateral 
trading system, overall, so that it works better for the 
American people and for American companies.
    Senator Kaine. Does it help American companies if they are 
not able to have their cases heard when they want to have--when 
they want to allege an unfair trade practice by another nation?
    Ms. Singh. Well, Senator, I think it is in the interest of 
all American companies that we reform the multilateral trading 
system in a manner so that it works best for American workers 
and American companies.
    Senator Kaine. I will have follow-up questions for the 
record.
    Thanks, Mr. Chair.
    The Chairman. Senator Young.
    Senator Young. Thank you, Chairman.
    Ms. Singh, thank you so much for being here.
    In your prepared statement, you note Beijing's use of 
intellectual property theft, forced technology transfer, 
overproduction, and thus, market distortion on account of 
state-owned enterprises and other anticompetitive behaviors by 
Beijing. Over 2 months ago, I convened a Senate Foreign 
Relations Committee subcommittee hearing on predatory 
international economic practices. For those who are observing 
this hearing, I would ask you to review the testimony. There--
and--there are a lot of answers there about particular tactics 
we might employ, that we are not employing, to help bring China 
and others who engage in these practices into good behavior. It 
is clear to me that China is more of a threat, comparatively, 
to other countries who are engaging in these economic predatory 
practices, because of the scope, the nature, and the 
consequences of their behavior.
    In your prepared remarks, you indicate you are building an 
international coalition, along with other stakeholders within 
government, to address this economic aggression by China. Do 
you agree that an optimal response is to unite allies, to unite 
partners who have also suffered because of Beijing's predatory 
international economic practices, and thus, allow us to 
leverage our collective weight against Beijing, as opposed to 
sort of going it alone?
    Ms. Singh. Yes, Senator, I agree with that. We need to 
build support, and we are building support, among our--amongst 
our allies.
    Senator Young. Well, Winston Churchill reportedly said, 
``There is only one thing worse than fighting with allies, and 
it is fighting without them.'' I agree with you. Would you 
agree that the international coalition that we need to assemble 
to address China's economic aggression should ideally include, 
at a minimum, the G7 countries?
    Ms. Singh. Well, Senator, we are trying to work with 
countries in all regions of the world, because all regions, 
including the western hemisphere, the EU, Southeast Asia, 
everyone is suffering the effects of China's economic 
aggression of their distortion of markets. So, I would say that 
we should look to allies all over the world, including the G7.
    Senator Young. Okay. There is a lot of questions as to 
whether or not we are doing that. We need a strategy. We have 
heard that, time and again here, starting--what are our 
objectives? What is the end game? What are our threats to 
accomplishing those objectives? What means do we have at our 
disposal right now? What resources are at our disposal, what 
authorities, in order clear away those threats, in order to 
advance those objectives? What new authorities or resources are 
required? That is a strategy. Very methodically put together. 
It is not clear to me that one exists.
    Now, do you believe that Congress should be a fully 
informed partner in developing and implementing our Nation's 
response to China and others' predatory international economic 
practices?
    Ms. Singh. Well, yes, Senator. That is one of the reasons I 
am here, is, I was hoping to have a conversation that better 
informed the administration on Congress's views and how we can 
better work together to combat China's economic aggression.
    Senator Young. Well, you said earlier that the USTR, 
Commerce, and others are sharing our policies with allies. I do 
not believe there has been sufficient sharing with Congress. In 
fact, I believe the administration needs to do a better job in 
explaining its trade strategy to Congress. I do not know that a 
forum like this, frankly, is conducive to eliciting a detailed 
strategy. I also believe that a response to Beijing's economic 
aggression, in order to be sustainable, is going to require the 
buy-in of Congress and us, the American people.
    So, you know, I tried to be productive over the weeks and 
months as this whole situation has played out. And 
increasingly, farmers from Indiana, manufacturers, workers, and 
others, their anxiety is heightening, I have to say. And I put 
out a solution, a bipartisan National Economic Security 
Strategy Act of 2018. This is--has the support of Senators 
Merkley, Rubio, Coons. Senator Gardner is now onboard. It would 
create a statutory requirement for the periodic production and 
submission to Congress of a National Economic Security 
Strategy. Will you take a look at this, if you have not 
already?
    Ms. Singh. Yes, Senator. I have--your staff has shared it 
with me, and we will take a look at it.
    Senator Young. Okay. Well, we would welcome the opportunity 
to work with the administration on teasing this out.
    The last thing I would like to very quickly turn to, Ms. 
Singh--and I do appreciate your presence here--is--in the 
prepared testimony for the second panel that we are going to 
hear from momentarily, Mr. Bolten notes that Section 232 of the 
Trade Expansion Act of '62 provides the President of the United 
States with broad authority to restrict foreign imports for 
national security purposes. Mr. Bolten asserts that this 
authority has only been used twice, once to ban oil imports 
from Iran in 1979, and then a second time, in '82, to ban oil 
imports from Libya.
    Ms. Singh, as Assistant Secretary of State for Economic and 
Business Affairs, is it accurate that the authority under this 
Act to restrict foreign imports for national security purposes 
has previously been used against Iran and Libya? Is that right?
    Ms. Singh. Yes, I believe that is correct.
    Senator Young. Okay. And against which countries is the 
authority currently being used?
    Ms. Singh. Well, Senator, it is not being used against any 
particular country. It is being used in the case of domestic 
production. Section 232 indicates that we should give 
consideration to domestic production needed for projected 
national defense requirements, and the capacity of domestic 
industries to meet such requirements. So, 232 is being----
    Senator Young. Well, there is a--I am sorry to interject, 
but my time is--you know, I am about a minute over, so--and I 
want to respect the Chairman's prerogative to get to the next 
panel. So, I will just say that we know it has been used for 
Ayatollah Khomeini's Iran, Muammar Gaddafi's Libya. There is a 
strong nexus between strong allies, like Canada, on one hand, 
and this general threat that you point to with respect to its 
current usage. So, from a foreign policy perspective, I see an 
important distinction between 1979 Iran and Canada today. Let 
me just go on record.
    I thank you for your appearance here today and your 
service.
    The Chairman. Thank you.
    Before we move to Senator Cardin--Senator Coons--I would 
love for you to use your time here in answering these questions 
to disabuse us--me--I do not want to put anybody else in the 
same boat with me. I believe the President is abusing his 
authorities. I think it is a massive abuse of his authorities. 
And the reason he is using 232 and abusing his authorities in 
this way is that 232 can be used with no basis. In other words, 
you do not have to go to the ITC or the World Trade 
Organization or anything else and prove something out. You can 
just say that it is in our national security interest. Again, 
we may move to autos, as I understand it. And again, I have no 
idea how the making of automobiles by others is a national 
security threat to our Nation.
    So, the President does not have to lay anything out using 
232. We are trying to change that. So, the second thing I would 
like for you to disabuse me of, anyway, is: There is no 
strategy. None whatsoever. And I think what is sad is, there 
are people around this Nation that are hurting. Farmers are, 
you know, losing money as they harvest right now. Some of that 
has got to go across the scales at the time of harvest. And if 
the price is down, they just absolutely lose money. And many of 
them, unfortunately, have faith that there is a plan, that 
there is a strategy.
    Now, I know Senators have been up there to meet with him a 
zillion times. I have not heard a single Senator come back with 
any earthly idea--any earthly idea of a plan and cannot 
articulate a sentence as to why we are doing this.
    So, with the rest of the questions, to the extent you can 
disabuse us and inform people across our country, that are 
patiently waiting, that there actually is a plan. I happen to 
believe there absolutely is no plan and, in the mornings, 
people wake up and make this up as they go along. And if, in 
some uncanny way, they figure out a way out of this, that will 
be great for our Nation. But, I know, today, there is no end 
goal. And so, again, I hope you will disabuse us of that. You 
are welcome to do that now, if you wish.
    Ms. Singh. Well, Senator, if I may, the President is acting 
within his statutory authority. We have looked at Section 232. 
There was a very robust interagency process in which the State 
Department participated, the Treasury Department. Every agency 
of the United States Government which has equities in 
particular areas came together, we talked about this, we talked 
about the plan, we talked about a strategy. Our goal was to act 
in the interest of the American economy.
    And, as far as an overall economic strategy, I can lay it 
out for you right now. The President's strategy has five 
pillars to it. It is to support our national security. We want 
to strengthen the domestic U.S. economy. We want to negotiate 
better trade deals; free, fair, and reciprocal deals. We want 
to aggressively enforce U.S. trade laws in the interest of the 
American worker. And, as I was indicating to Senator Kaine 
earlier, we want to reform the multilateral trading system. The 
WTO, if it works properly, can be a great resource for us in 
our global economic disputes.
    So, the President has very carefully laid out an economic 
strategy. It is contained within the National Security 
Strategy, which is our blueprint for how this administration is 
operating.
    The Chairman. That enlightened us in no way.
    Senator Coons.
    Senator Coons. Thank you, Chairman Corker. Thank you for 
calling this hearing, and thank you for what you and the 
Ranking Member have done to lead us in what is a united effort 
to say that, Madam Assistant Secretary, you have launched a 
war--President Trump has launched a trade war without a 
strategy, and these Trump tariffs are imposing consumer taxes.
    I am hearing from folks in Delaware, from port workers at 
the docks who are concerned that shiploads of steel that come 
to my state in the wintertime from Sweden and from Finland will 
not be coming, that the costs will be raised, that their jobs 
will be harmed. I am hearing from soybean farmers, in the 
southern part of my state, that they are facing the lowest 
price for their crops in a decade. Folks are confused, they are 
anxious, and they have a concern. And you have just heard it 
from us on a bipartisan basis, that President Trump has 
launched a trade war without a strategy and without a plan for 
how to get through this.
    In your prepared remarks, which you repeated, you said, 
``Allies and partners share our frustration in responding to 
the challenge of China's economic aggression. We are building 
an international coalition to address China's state-led 
policies, which distort markets, discriminate against 
international competition, force technology transfer, and 
permit theft of sensitive intellectual property.''
    Madam Assistant Secretary, if that is what you were doing, 
I would be cheering. I would be saying, ``What a terrific 
plan.'' I only wish this were true. But, it is not.
    In a trip that I just took with the Chairman, we visited 
four of our vital allies in Northern Europe that included 
Sweden. And in our meetings with national leaders in those four 
countries, countries that are fighting alongside us in 
Afghanistan, they are puzzled, they are offended, and they are 
distanced from us by these tariffs. Swedish steel, that should 
be being imported to Wilmington, Delaware, may soon be turned 
away by tariffs that are dividing us from a country that should 
be an ally in an appropriate trade contest with China.
    I just had a meeting yesterday with Senator Isakson, my 
good friend from Georgia, where we met with the Trade Minister 
of South Africa, a country that has finally opened their 
markets to our poultry, after years of effort that we 
undertook. And it is clear they are going to slap reciprocal 
tariffs on us that will harm the poultry farmers of Eastern 
Shore Maryland, Eastern Shore Virginia, Southern Delaware.
    This is a trade war with real consequences, but without a 
strategy. And, frankly, I could not agree more with the point 
that Republican Senator Young just made, this Section 232 
authority has, in the past, been used against the real enemies 
of the United States, against Libya and Iran, not against 
Canada, Germany, Sweden, South Africa.
    So, Madam Assistant Secretary, with all due respect, the 
administration should be on notice that 88 Senators yesterday 
voted to send a strong and clear signal to President Trump that 
he is misusing his Section 232 authority, and that if you 
believe what you are accomplishing with these tariffs is 
supporting our national security, in recent meetings with 
Ministers of Foreign Affairs from Sweden to South Africa to 
Canada, you are, in fact, harming our national security. If you 
believe we are going to negotiate better trade deals by picking 
fights with all of our best allies, that is not, in fact, the 
case. And if you think the outcome will be a reformed WTO, I 
think, instead, it will be chaos.
    I wish the articulated strategy you delivered in your 
prepared statement was, in fact, what was happening, but I see 
the exact opposite. Please, Madam Secretary, in a minute or 
two, if you could give us some reassurance that President Trump 
sees as clearly as you do that our goal should be to unite our 
allies against China's mercantilist policy, and is not, in 
fact, what I see happening, which is a wildly swung bat that is 
hitting our closest allies in a way that harms our national 
security, harms our chances at better trade deals, and harms 
folks in my home state who work at our port and work in our 
farms.
    Ms. Singh. Well, thank you, Senator.
    I can tell you, President Trump is committed to working 
with our allies. Secretary Pompeo, under the leadership of 
President Trump, as you know, has been traveling the world, 
seeking support from our allies in order to achieve our goal of 
a complete, irreversible, verifiable, denuclearized North 
Korea. We, at all levels of the State Department, are 
discussing all of these issues of shared interests with our 
allies, including the China threat. I have had many personal 
conversations in the western hemisphere, in South America, in 
the European Union, in North Asia, all over the world. Everyone 
agrees that China is a big threat. We are working to combat 
that threat.
    Turning back to the 232 issue, I would disagree with you, 
Senator, that our--a weakened national economy, weakened steel 
and aluminum industries, they are a national security threat. I 
understand Senator Young's point about 232 being used against 
Iran, who clearly--which is still a problem. You know, Iran is 
still an issue that we need to deal with. But, at the end of 
the day, 232 is designed to also protect our domestic economic 
production. It is laid out clearly in the statute. President 
Trump is acting within his statutory authority. There is a 
strategy. I laid out for you the five pillars of our economic 
strategy. As you have indicated, in my opening statement, I 
have laid out for you the State Department's role and the 
strategy in President Trump's agenda. The President----
    Senator Coons. Thank you, Ms. Singh. I am out of time. And 
I appreciate your response. But, Ms. Singh, as Assistant 
Secretary, I hope you will take back the message that, while 
the President may be acting within his statutory authority, he 
is acting recklessly, he is acting dangerously, in a way that 
is dividing us from our allies and that is imposing consumer 
taxes on the folks in our country who we most wanted to help. 
If we do not see a strategy that lines up, I think Congress 
will act to restrain his reckless use of this authority. Thank 
you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Isakson.
    Senator Isakson. Mr. Chairman, I will be brief. I know you 
want to go to the second hearing.
    I just want to say, Madam Secretary, that the last time you 
and I were together, I was speaking in favor of you to be 
confirmed by the United States Senate in your current position. 
I am glad that you are in the position. I am sorry you have got 
to sell the program you are selling today. But, I am glad you 
are in the position you are in. You are doing the best job you 
can, and I appreciate that.
    But, I would like to say one thing that--about what is 
being said. I am reminded of the Wendy's commercial, about 20 
years ago.
    The Chairman. ``Where's the beef?''
    Senator Isakson. When the little old lady in the Rambler 
pulls up to the window at McDonald's, open--pulls the wrapper 
off her hamburger and looks at it and says, ``Where's the 
beef?'' I mean, that was a great commercial. And they got a 
good bit of the market share from McDonald's, because it made a 
big point. And McDonald's actually changed their product line 
and increased the number of ounces in their hamburger because 
of that commercial. That is the power of a good point and a 
good plan.
    It is pretty apparent that we do not have a stated plan, 
from a marketing or a business standpoint. And this lady is the 
chairman--is the Secretary for our country in diplomacy in 
charge of business and that kind of issues. Tariffs are a big 
business and economic issue, and we are going to cause 
difficulties for our State Department and Secretary Pompeo if 
we do not have a clear message to sell as what our policy is, 
and a goal as to how to get there.
    So, notwithstanding what has been said--and I appreciate 
all the comments everybody has made, and I want to say what 
Senator Kaine said, also--I am sitting next to a former Trade 
Rep. I was in there when Zoellick finally took China to the 
World Trade Organization and we finally got the run on textiles 
out of the South stopped when it was really too late, they were 
almost all gone. We are at that point now, where we are going 
to get in a situation where we are going to have a terrible--be 
in a terrible negotiating position because we do not have a 
plan. So, with Ron Johnson on our command--committee always 
talking about you having a plan, let us get one so, when she 
goes to the drive-in window and opens the wrapper around the 
beef, there is plenty of beef there to sell on behalf of the 
United States and its people.
    The Chairman. Thank you.
    Senator Isakson. Thank you, Mr. Chairman.
    The Chairman. Thank you, sir. Thank you.
    Senator Cardin.
    Senator Cardin. Madam Secretary, in response to Senator 
Coons, you said that there are many countries around the world 
that you are visiting that share our concern about China's 
trade practices. And that is understandable. Can you list the 
countries that are prepared to join President Trump's strategy 
as it relates to the tariff issues that he has currently 
implied?
    Ms. Singh. I would have to look through all of my 
conversations specifically to determine----
    Senator Cardin. Can you name one country?
    Ms. Singh. Well, there are many countries----
    Senator Cardin. But, can you name one----
    The Chairman. I would say----
    Senator Cardin. --that publicly supports----
    The Chairman. Maybe--probably Russia, would you not think?
    [Laughter.]
    Senator Cardin. I would agree with the Chairman.
    [Laughter.]
    Senator Cardin. You--can you name a country that agrees 
with what President Trump is doing?
    Ms. Singh. Well, Senator, I am hesitant to speak for 
another country, but I can tell you confidently that I have had 
conversations with many different government officials who 
share our concerns about China and who agree that----
    Senator Cardin. Oh, I--no question about it. I have met 
with many representatives of countries that share the concern 
about what China is doing, but they do not agree with what 
President Trump is doing. And it is amazing that we have a very 
strong case against China, but the way that the President has 
pursued this, he has been able to give China a free pass, 
because the rest of the world will not join President Trump.
    Ms. Singh. Well, Senator, I do not think we are giving 
China a free pass. We are instituting very strong actions 
against----
    Senator Cardin. The universal community--if we had friends 
with us, we would be in a much stronger position.
    Let me just--I was at that Finance Committee hearing with 
Secretary Ross, and I get a different opinion, as the Chairman 
mentioned, as to how the process on the exemptions to the 
Section 232 process is going with steel and aluminum, 20,000-
plus cases. The administration will not let the industry 
represent small businesses. They have to follow each individual 
case on their own. Do you imagine the burden on a small company 
trying to pursue a claim? And they are trying to do business. 
The company, for example, that Senator Kaine was talking about, 
they do not have a lot of employees that can pursue a--an 
exemption issue in order to deal with the--getting an 
exemption. So, you--the process is a mess, is it not, if you 
are trying to get an exemption? If you are a small business 
owner, and your supply chain depends upon the product coming in 
without tariff--what do you say to that small business owner?
    Ms. Singh. Well, Senator, if you have any small business 
owners that are having problems, I am happy to connect them to 
colleagues at the Department of Commerce who can, hopefully, 
help them.
    Senator Cardin. We have, of course, direct problems of 
supply chain with those who are subject to the direct tariffs 
that are imposed. Then we have the retaliatory tariff issues, 
those that are getting the retaliatory--which is Senator 
Kaine's situation. Chairman Corker mentioned that the 
administration has announced they are also looking at Section 
232 from the point of view of autos, SUVs, vans, trucks, and 
auto parts. Can you tell us how that interagency discussion is 
going as to the--imposing security tariffs in that industry?
    Ms. Singh. Senator, Commerce is still completing that 
investigation, so the interagency----
    Senator Cardin. But, you said you have robust interagency 
discussions. Have they started?
    Ms. Singh. On the auto investigation, the Commerce 
Department is still completing its investigation.
    Senator Cardin. So, there is not an--has not been any 
interagency. How much--after the Commerce finished its 
investigation, when did the--how much time did it take with the 
interagency discussions before the aluminum tariff--aluminum 
and steel tariffs were imposed?
    Ms. Singh. All of the agencies have provided input to the 
White----
    Senator Cardin. But, how long after Commerce did the 
initial investigation, when did you all start meeting?
    Ms. Singh. I do not recall the exact time.
    Senator Cardin. I mean, how much time was spent?
    Ms. Singh. I do not recall.
    Senator Cardin. Are there other industries that--they are--
that Commerce, that you aware of, are looking at, in addition 
to the auto industries?
    Ms. Singh. None that I am aware of.
    Senator Cardin. Let me just point out, Mr. Chairman, what 
many of my committee members have already said. In Maryland, I 
have heard from farmers that have already been impacted--soy 
crop, et cetera. We have heard from manufacturers. Let me just 
quote from one, ``Maryland's Independent Can Company is facing 
two bad choices, according to its CEO. They can move production 
to China or raise prices and risk losing consumers. Either way, 
it will cost jobs.'' That is just one company in my state. I 
could give you many, many more. And you are not giving us much 
of a comfort level of a process that is a deliberative process.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Flake.
    Senator Flake. Thank you, Mr. Chairman.
    Thank you for being here.
    You mentioned that part of the justification was to have a 
strengthened economy and the--the rationale for imposing of 
these tariffs. You mentioned a weakened economy affects our 
ability, basically, to provide for the national security. I am 
familiar with some of the literature surrounding the effects of 
imposing these tariffs. And correct me if I am wrong, but the 
wealth of data out there suggest that there is far--a far 
bigger impact, negatively, on our economy by imposing these 
tariffs, because of the knock-on effects, in terms--other 
industries surrounding steel, that use steel and aluminum, than 
we gain by--I mean, whether it is, you know, 50 jobs saved 
versus 200 jobs lost, magnified, you know, multiple times. Tell 
me what data you relied on to suggest that this will lead to a 
strengthened economy.
    Ms. Singh. Well, Senator, again, there I would refer you to 
the--Secretary Ross's presentation at the Finance Committee 
hearing. He talked in detail about the economic analysis of the 
232 actions and the conclusions that they arrived at.
    Senator Flake. But, aside from his statement, the wealth of 
data--you are familiar with some of this data--the wealth of 
data, would you not concede, suggests that this has a 
detrimental effect on our overall economy? And so, if you are 
using as a rationale a weakened economy does not allow us to 
provide for the national security, putting aside whether or not 
Canada represents a real threat, in terms of its inability to 
supply us with steel and aluminum during some kind of conflict, 
given the defense arrangements that we have with Canada, and 
the fact that they have never, ever, ever been in a position, 
or wanted to be in a position, where they would deny us the 
ability to mount a national defense, but, just on the economy, 
alone, can--are you relying simply on the words of Wilbur Ross, 
here? Because the wealth of data suggests that this will weaken 
our economy, not strengthen it.
    Ms. Singh. Well, Senator, these were interagency 
conversations. The recommendations of the United States Trade 
Representative, the Commerce Secretary, other officials, all 
went to the President, and this is the President that--this is 
the decision that the President has made.
    Senator Flake. I understand that is the decision, but I am 
just saying, What data does he rely on? Just interagency memos 
or actual economic figures and historical data that we have 
accumulated for prior actions of this sort? The wealth of data 
suggests that this weakens our economy, not strengthens it. You 
dispute that, then.
    Ms. Singh. Well, Senator, there are experts at the 
Department of Commerce who have been there for decades--you 
know, they are not political appointees, they are career 
folks--who have looked at this situation, and this is the 
information that they provided. I mean, we have the Treasury 
Department, the Commerce Department, the United States Trade 
Representatives, hundreds of economists who have looked at 
this, and these are the recommendations that they have provided 
based on the information and perhaps the same data that you 
have looked at.
    Senator Flake. I would suggest that you really have to use 
tortured data to come to a conclusion that this is going to 
strengthen our overall economy, that it is just--the data out 
there affirms, in spades, that this will lead to a weakened 
economy. And we are seeing the knock-on effects now, with the 
announcements of companies moving offshore now to escape these 
tariffs. So, I just--I cannot believe that, with a straight 
face, the administration tries to claim and tries to say--
simply ignore what we know about the economy and the effect of 
these kind of tariffs.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Markey.
    Senator Markey. Yeah, thank you, Mr. Chairman, very much.
    The North Koreans did not attend a meeting they were 
scheduled to have with the United States today. And it just 
continues to raise the question as to whether or not the North 
Koreans are playing games with the United States with regard to 
their promise to denuclearize, especially in light of the fact 
that reports indicate that, even before the Singapore summit, 
that China had already increased trade with North Korea, and, 
after Singapore, China also said that they were going to 
increase trade with North Korea. Now, that clearly undermines 
our ability to be able to extract the concessions from the 
North Koreans, which they had promised to the United States and 
to the rest of the world.
    So, my question to you is, Looking at China right now, do 
you believe that China has increased trade with North Korea 
over the last couple of months, and especially in the aftermath 
of the Singapore summit?
    Ms. Singh. Senator, thank you for that question.
    I do not have personal knowledge of Chinese trade with 
North Korea and if it has increased.
    Senator Markey. So, you do not know.
    Ms. Singh. I do not know, sir.
    Senator Markey. Yeah. Again, I think that, you know, 
whenever, you know, we listen to the administration when it 
comes to any subject that relates to China, that there is a--an 
ambiguity that, unfortunately, is presented from the 
administration with regard to a lack of knowledge. But, here it 
is clear that we are not going to get the result which we want 
from North Korea if China is playing games with the trade 
sanctions, which they are a part of committing to enforce. Have 
you ever had a discussion internally within the State 
Department or in a joint agency panel with regard to toughening 
the crude-oil sanctions against the North Koreans in order to 
ensure that they understand that there is a commitment that has 
been made to guarantee that North Korea, in fact, has to 
fulfill its promises before it receives economic relief?
    Ms. Singh. Well, Senator, I am not sure I am able to 
comment in an open forum on our sanctions deliberations, but I 
can tell that Secretary Pompeo is personally committed to a 
process that leads to the complete, irreversible, and 
verifiable denuclearization of North Korea.
    Senator Markey. And that is why I am asking you the 
question. If the Chinese are loosening the trade sanctions 
against North Korea, then complete and irreversible 
denuclearization becomes less likely, not more likely. So, what 
is the conversation that the State Department is having with 
the Chinese about this increase in trade?
    Ms. Singh. We are talking to all nations about--all nations 
with an interest in the denuclearization of North Korea--we are 
having conversations with the Chinese, with others in Asia, all 
over the world. This is global interest, to have a denuclear 
North Korea. So, our Secretary is committed to having 
conversations with leaders around the world about making sure 
that this process works.
    Senator Markey. Exactly. And what I am saying is, there is 
no evidence that it is working. In fact, there is evidence that 
it is not working. You know, and it is pursuant to the Kim 
family playbook, that goes back to his grandfather and his 
father, where they pocket the benefits. Here, it would be 
suspension of military maneuvers on the Korean Peninsula. But, 
it would--it is in return for concessions made by the North 
Koreans, but we do not see any evidence of that yet. They did 
not show up at the meeting today. And it is all part of a 
longstanding pattern of conduct by the North Koreans, going 
back generations. And if they--if China is now playing into 
this, then ultimately the likelihood of them actually making 
the concessions are very slim.
    And so, I would ask for you to report back to this 
committee with regard to whatever plan the administration has 
to ensure that China continues to honor its commitment to 
impose trade sanctions that are enforceable on the North Korean 
government. And I would ask that--make that request for you, 
Mr. Chair, so that we receive that information from the State 
Department.

    [The information referred to was not available at time of 
print]

    Senator Markey. Thank you.
    The Chairman. Thank you.
    Ms. Singh. Well, Senator, I can----
    The Chairman. Thank you.
    Ms. Singh. --I can tell you that, you know, we are 
committed to engaging China on this issue. We are committed to 
making sure that they work on this issue. And, as far as our 
posture in North Korea, of course, as you know, the Singapore 
summit was historic. A North Korean leader has never met with a 
U.S. President. So, we feel that we have made progress in at 
least having the conversation with North Korea.
    Senator Markey. I do not see--think the meeting, in and of 
itself, signifies progress. I think it is a first step. But, if 
there is nothing that follows on, and China can--uses the 
ambiguity of the agreement to increase its trade, then the 
pressure on North Korea to comply with whatever promises they 
made is reduced. So, if you could report back to us, I would 
appreciate it.
    Senator Markey. Thank you----
    Ms. Singh. Yes, Senator.
    Senator Markey. --Mr. Chairman.
    The Chairman. Senator Gardner.
    Senator Gardner. Thank you, Mr. Chairman.
    And thank you, Secretary Singh, for being here. I 
appreciated the opportunity to visit with you at the Shangri-La 
Dialogue to talk about the issues that Senator Markey touched 
upon dealing with North Korea, Asia issues overall. A chance to 
speak with you about my legislation, the Asia Reassurance 
Initiative Act, that Senator Markey is a part of, Senator 
Coons, Senator Kaine, Senator Young, a part of. So, thank you 
for that opportunity.
    I want to follow up a little bit with what Senator Markey 
is talking about. In January of this year--at least in the Asia 
realm--in January of this year, China suspended access to 
Marriott's website with China for referring to Taiwan as a 
country. It was lifted only after Marriott's chief executive 
issued a public apology. In April of this year, according to 
the Chicago Tribune, the Chinese Civil Aviation Administration 
delivered 36 airline carriers a letter demanding that they 
immediately stop referring to Taiwan as a part of China. And 
last month, the Wall Street Journal reported that China 
rejected official U.S. requests to discuss China's new anti-
Taiwan labeling policy for U.S. airlines, including potential 
action against American Airlines, Delta Airlines, and United 
Airlines. These actions--there was articles yesterday about the 
iPhone, that if you had the Taiwan flag in China or your 
location showed up in China, that our iPhone would lock up if 
you used the Taiwan flag. In fact, if you look at your iPhone 
location settings, it does not say Taipei, Taiwan, it just says 
Taipei. These actions are just the latest from an aggressive 
Chinese government working to pressure American businesses. It 
calls into question how the U.S. intends to respond to such 
threats to commerce in this new landscape. What have we been 
doing, and what more can the United States be doing, in the 
Indo-Pacific to counter this kind of pressure campaign and 
bullying from China?
    Ms. Singh. Thank you, Senator, for that question.
    We have been looking at the situation that you have 
indicated about how Taiwan should be labeled. You may recall 
that the administration----
    Senator Gardner. But, it is not just about Taiwan being 
labeled. I mean, this is about overall----
    Ms. Singh. This is a foreign policy--yes, sir.
    Senator Gardner. --inappropriate action, yes.
    Ms. Singh. It is inappropriate behavior, absolutely. You 
will recall that the administration put out a very strong 
statement regarding China's directive that airlines change 
their websites not to reflect Taiwan as a separate country. We 
have told our airlines that they should do what they think is 
right, that they are under no obligation to comply with China's 
directive. We have made this clear to the Chinese government, 
as well, that our businesses will conduct policy--conduct their 
business as they see fit, and that the airline websites, the 
way that they have listed in--listed Taiwan is completely in 
accordance with U.S. policy. So, we have made very strong 
statements.
    There is a July 25th deadline, as you may know, for the 
airlines to comply. We are not sure what sort of penalty will 
be imposed against any of our private sector for not complying, 
but we are prepared to respond appropriately if any damage is 
done to our U.S. enterprises.
    Senator Gardner. And, to follow up on the lines of 
discussions on China, and China--I--recently brought to my 
attention a business in Colorado that has had an employee that 
moved to China from Taiwan. They had a plant in Taiwan. This 
employee was hired in Taiwan--apparently, or allegedly, took 
some information, intellectual property, with them to Taiwan. 
They replicated the manufacturing process in Taiwan--in China 
from Taiwan--they replicated the manufacturing process, stole 
the information, used the stolen information, allegedly, and 
then the--now a court in China has accused the U.S. firm of 
violating copyrights and patents. And so, this is just a sign 
of things that we have to work on. I do not like the tariff 
approach. I want to be clear, there is a letter I would read to 
you that talked about 25 percent cost being passed on to people 
in agriculture buying, you know, sweeps and other equipment 
that they would use in cultivation practices, because of the 
steel tariffs. We do have to do something about China, but I 
hope that U.S. businesses do not succumb to the bullying 
pressure that China has pursued.
    Thanks.
    Ms. Singh. Thank you, Senator, for that.
    And we, in the U.S. Government, want to make sure that our 
businesses are not bullied. And, as an aside--you referred to 
your ARIA legislation--of course, Secretary Mattis and 
Secretary Pompeo have sent a letter indicating that we welcome 
the ARIA legislation. It is completely in line with our Indo-
Pacific strategy, which is also designed to demonstrate our 
commitment to the region and, again, China's--counter China's 
influence there. Thank you, Senator.
    The Chairman. Thank you.
    Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    And let me say that a group of us from the committee, four 
of us on this committee--Senator Flake headed up a CODEL--
bipartisan CODEL, three Democrats, three Republicans. We went 
over into the Baltic region and met with leaders from four 
countries--four countries--and leaders at all level, from 
Presidents to Prime Ministers to parliamentarians. And I am 
sure Chairman Corker has already mentioned this, but they were 
very, very concerned with where President Trump is going on 
trade, and then, very specifically, a lot of talking about 
tariffs. And the discussion went along the lines, ``I mean, we 
have been your friends. Now you are calling us, under this 232 
section, enemies and a threat to national security.'' So, they 
really are--they are not happy about this. They do not 
understand it. They do not--they think that we are headed for a 
trade war, that this--you know, you start, and then you do 
not--it starts spiraling down, and nobody has control of it.
    And so, I do not see, from anything I have heard today from 
you, what the exit strategy is here, where the--what is the end 
game. Clearly, we have some things that we should be doing on 
trade, but I really do not see that the President is listening. 
Do you have any evidence the President is listening to foreign 
leaders about what is going on, what they are recommending? 
Because I think it is almost unanimous the four--the foreign 
leaders are telling him, you know, ``You are headed in the 
wrong direction.'' Is he listening to foreign leaders? It is 
just a yes or no.
    Ms. Singh. Well, Senator, thank you for the question.
    I do think that there is an end game. Our----
    Senator Udall. Well, I am not asking about the end game. I 
am asking, Is President Trump listening to foreign leaders?
    Ms. Singh. President----
    Senator Udall. The answers that you--it is easy answer. 
Just tell me no.
    [Laughter.]
    Ms. Singh. President Trump----
    Senator Udall. That is the----
    Ms. Singh. --has regular conversations with foreign 
leaders.
    Senator Udall. Yeah. He is not listening to them, ma'am. He 
is not listening to them.
    And let me--under this piece of law, here, the Trade 
Expansion Act requires Commerce to consult with the Department 
of Defense and other agencies, making a determination under 
232. Right? Well, I do not even think the President is 
listening to his own agencies. Here is a report, where the 
consultation is going on. Secretary Mattis writes to Secretary 
Ross and says, ``Current domestic capacity''--they are talking 
about the aluminum and the steel, like that, you know, that 
this is some big national security issue--``is actually 
sufficient to meet national defense requirements, and that 
DOD''--and this is a direct quote from Secretary Mattis--``DOD 
is concerned that the negative impact on our key allies 
regarding the recommended options within the Commerce 
reports.'' So, even within the government, the Trump 
administration, you have agencies speaking out and saying, 
``Oh, there are no national security issues here.'' I mean, 
this is very, very unusual, I think, what--and unprecedented, 
what this administration is doing.
    Let me just say a quick word about NAFTA. And I know the 
Chairman wants to move on, so I will stay within my time, here.
    But, free trade agreements that we have negotiated to the 
benefit of the world's largest corporations and their 
shareholders, I have consistently argued, on these free trade 
agreements, that they should do much more: guarantee labor 
protections, secure commitments to environmental stewardship. 
And NAFTA is no exception. It entered into force 25 years ago, 
and I support the effort. And I have talked to Secretary Ross 
about making sure that we try to improve NAFTA. Actually, 
Secretary Ross told me, he said, ``It is going to be done in 90 
days.'' And he--that was before he took over. He said, ``We 
have been working on this for years. Be done in 19--90 days.'' 
Here we are, today, 17 months later, and there is no end game 
there.
    So, here is a specific example about what is happening with 
trades in New Mexico and how it is hurting New Mexico under 
NAFTA. There is a company called Southwest Steel Coil. Almost 
all of the exports are finished products from the United 
States, U.S. workers been down to Mexico. The response to the 
U.S. actions will be devastating to businesses like this that 
rely on a production process that moves back and forth across 
the border. Companies will be forced out of business, and they 
will be required to pay a new tariff every step of the way. You 
are going to put companies out of business in New Mexico with 
these tariffs.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Portman.
    Senator Portman. Thank you, Mr. Chairman.
    Ms. Singh, on the heels of the NATO summit, let me start by 
complimenting your boss. I thought that Secretary Pompeo's 
comments about the importance of the alliance, calling it 
perhaps the most successful and important military alliance in 
the history of the world, was appropriate. And I appreciated 
his speaking out on that.
    With regard to the issue we have before us today, I think 
you have heard clearly from some of my colleagues already on 
the broader issue of concern about what will happen with both 
increased tariffs and higher costs to our consumers and our 
companies, but also the impact on our exporters. Let me say 
that I think, in response to your questions, respectfully, you 
should also talk about the vision the President laid out at the 
G7 summit in June, which was no tariffs. And maybe I was just 
listening for what I wanted to hear, but what I heard was that 
there is an ultimate vision, here, of getting us to a world 
where both tariff and nontariff barriers are reduced 
substantially, or even eliminated, to the benefit of the 
economies of countries around the world, including ours. And I 
hope that is the ultimate objective, here, is to have the 
United States continue to play the leading role as the country 
that advocates more open markets, more transparency, less 
corruption. That has been our historic role over the decades.
    My concern is--and this is from talking not just to our 
negotiators, but also to people from some of these other 
countries, including China and including the EU and Canada--
that we have not laid out clear, realistic objectives as we 
take on these countries with regard to China, the 301, the 25 
percent tariffs on the 36 billion, another--or 34 billion, 
another 16 billion coming, and 25 percent of the 200 billion at 
10 percent. And so, the Chinese are confused. They are not sure 
if it is because we want to see them buy more of our products, 
which was an objective, I think, which was raised with them 
specifically with regard to soybeans and LNG, liquefied natural 
gas. They are not sure if it is the structural changes that you 
talk about in your testimony, including, as you say, stopping 
their discrimination against international competition, 
technology transfer, theft of the sensitive intellectual 
property. They are not sure if it is about steel overcapacity, 
which, for me, is a huge issue. Ultimately, what we see around 
the world is partly a response to China now producing half of 
the world's steel, when they produced probably 15 percent of it 
15 years ago, and therefore, having that steel come through 
transshipment to our country. They do not know.
    I think the same is true with the European Union. Recently, 
there has been discussion with regard to the 232 case--again, 
different than the 301--that it is about autos. Well, if it is 
about autos, we ought to be very clear. And I do not think that 
232 is the right tool to use, but, to the extent we have these 
tariffs in place, we need to be clear and, again, realistic, in 
terms of our objectives.
    Senator Isakson talked about my being in this position to 
negotiate in the past. And I think it is clear to all people 
who have been in that position that, without having a clear and 
realistic negotiating objective and, as compared to that, 
sending mixed messages, it is very difficult to get to a 
solution.
    So, I would--I say this to you as the representative of the 
administration who is here, knowing you are not in direct 
negotiations, but maybe you could respond to that. Do our 
trading partners know what our objectives are with regard to 
these trade cases that we have initiated?
    Ms. Singh. Well, thank you so much, Senator.
    When it comes to the 232 steel and aluminum tariffs, we are 
having many bilateral conversations. As you may know, there are 
some countries with whom we have come to agreement on quotas. 
There are other countries where we had a conversation and we 
were not able to come to agreement. So, we are talking to 
countries very individually, and helping them understand what 
we would like to see achieved.
    Senator Portman. Yeah, and that is an interesting response, 
because it is true, with regard to some countries, we have been 
able to negotiate something. With regard to others, some of our 
strongest allies, including Canada, Mexico, and the EU, we have 
not. And again, I am not sure they know. With Canada, we have 
talked about their dairy program. By the way, that does not fit 
within the national security criteria, but, if that is it, we 
should be clear. With regard to the EU, you know, we have 
talked about the auto issue. With regard to Mexico, we have 
talked about potatoes being able to be sold in the interior or 
state-owned enterprises, but I am not sure that they--from what 
I am hearing from them, that they understand what the objective 
is. NAFTA, of course, is the broader issue. But, again, not a 
232 issue.
    Mr. Chairman, I see my time is expiring. I would just like 
to submit for the record some thoughts about 232.

    [The information referred to was not available at time of 
print]

    Senator Portman. I believe that the entity that is best 
capable of determining what is in our national security 
interest is the Department of Defense. And I believe the 
statute could be changed to do that. I believe that there ought 
to be a tightening of the criteria, so we understand what 
national security is, using the CFIUS and Joint Chiefs' 
definition. I believe that the disapproval which is already in 
the legislation could be broadened to all products, not just 
oil.
    I think there are things we could do to ensure that, going 
forward, that we do not misuse 232, because my concern is, we 
will lose the tool. We will lose it because one of two things 
will happen. Either other countries will respond in kind, as we 
are starting to see, without showing injury, without showing 
any unfair trade. Or we will go back to the WTO, as we have 
been in the past, and this time we will find ourselves losing 
an Article 21 case with regard to 232 because of the way we 
have used it so broadly.
    So, thanks, Mr. Chairman, for your indulgence.
    And appreciate your testimony today, Ms. Singh.
    The Chairman. Thank you.
    Ms. Singh. Thank you, Senator.
    If I may, when it comes to Canada and Mexico, as you have 
recognized, we are having the broader NAFTA conversation with 
them, but I just want to assure you that we are having 
conversations with our allies. As I indicated at the outset, 
the State Department, in particular, it is our job, it is our 
mission to make sure that our allies understand the direction 
we are going in.
    The Chairman. Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman.
    Thank you for being here to talk with us today.
    I had a couple of questions regarding 232. And, you know, I 
am concerned, just as everyone is, of the impact of the steel 
and aluminum tariffs on businesses and consumers. But, I do 
think that Section 232 really still has an important role to 
play in shaping our trade policy, in--specifically, with 
strengthening our national security. And to that end, I have 
been actually pushing the administration to launch a separate 
232 investigation into uranium imports, because what we have 
been seeing for years is that uranium producers owned by the 
government in Russia, in Kazakhstan, in Uzbekistan, they have 
unfairly flooded our American markets with cheap uranium, to 
the point that today American producers fulfill less than 5 
percent of our U.S. demand for uranium. So, our ability to 
produce uranium is, I believe, critical and crucial to our own 
energy security. And it is not just energy. I mean, this is a 
national security issue, in terms of the uranium in our nuclear 
power. So, I think it is important that the administration 
actually quickly initiates an investigation into the industry's 
232 petition that we have been awaiting a response for about 6 
months.
    So, to that end, I would ask, you know, instead of 
requiring Congress to weigh in all Section 232 actions, you 
know, are there some things that we can do to maybe improve 
this--the 232 process? Because, as Senator Portman talked about 
perhaps losing it completely, is--are there things we can do to 
actually improve the process, that will not hamper an 
administration's ability to protect our national security with 
regard to trade and with regard to, you know, the issues of the 
energy that I raised with the uranium?
    Ms. Singh. Thank you, Senator.
    I think we--I can--we can take a look at that. I will take 
that back, as far as improving the 232 process.
    Senator Barrasso. All right. And do you know anything, in 
terms of the process, with regard--and the timing and things, 
of how things are going with the concerns we have expressed, 
regard to uranium and the Russian flooding--Russia's flooding 
the market, and the national security implications of that?
    Ms. Singh. I can get back to you with information on that, 
Senator.

    [The information referred to was not available at time of 
print]

    Senator Barrasso. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Risch.
    Senator Risch. Thank you very much, Mr. Chairman.
    And thank you, Ms. Singh, for what you do and representing 
the administration here. I hope you will take back the message 
that some of the difficulty that has been expressed here is not 
universally shared by every United States Senator.
    I hope that every member of this panel would go back and 
look at and study the five pillars that you suggested. There 
have been people say they do not know where we are going, here. 
We have a very, very clear description, using those five 
pillars, of where we do want to go, here, and we are following 
that.
    You know, there is a lot of criticism about the President 
of arguing with our allies over trade. There are some examples 
out there that make him very angry, and should make him angry. 
One of the--it has already been referred to here--we have a 
partner in the NAFTA agreement, called Canada. And Canada is 
beating their breast over these tariffs that have been put on 
steel. But, Canada is a member of the North American Free Trade 
Association. They are our ally, they are our friend, they will 
continue to be, but they put a 247 percent tariff on dairy 
products that are produced. Now, we are the third-largest dairy 
producer in America, behind Wisconsin and California. And so, 
our dairy farmers do not look at it the same way the Canadians 
do. And it is hard to explain to them how they can be in a free 
trade zone and wind up with a 247 percent tariff on their 
product. Softwood lumber is the exact same problem, and it is 
hard to explain to them how we can be in this position. And 
these are our friend--these people claim they are our friend 
and our ally, and they are. But, my point is, NAFTA needs some 
adjustment. And I commend the President for doing all he can to 
make the adjustments in NAFTA. And he has been very clear that 
he wants to get that done. And we should all support him in 
that effort to try to do things better than what they are. 
Trade is complex. There is no question about it. Using tariffs 
is complex.
    But, I want to talk about, in the few minutes that I have 
left here, a--something that is going on with the Chinese. And 
we--I think we are all in agreement that the Chinese are 
something to be concerned about. Anyone who has not studied 
China's Made in China 2025 plan needs to look at that and 
actually drill down to see what their objectives are.
    We have a company called Micron Technology in Idaho. Micron 
Technology is the second-largest employer in the State of 
Idaho. They are one of the world's largest producers of memory 
products. They had Chinese nationals steal from them patents 
that they use to produce products. Those people took those to 
China. They then patented the exact same thing in China. They 
then turned around and sued Micron in Fujian Province. That 
case is going on today. And a couple of weeks ago, a judge in 
the court in Fujian Province used the stolen patents to put an 
injunction against Micron Technology from selling products in 
China. China is a huge producer, of course, of technology 
products, and it is absolutely critical that Micron sell their 
products there. And if they do not, it is going to cause them 
serious problems.
    So, you have--and who sued Micron? A state-owned enterprise 
in a court in Fujian, which is a state-owned enterprise and 
headed by a judge who is employed by the Chinese government. 
Why would you--why would Micron think they had a chance under 
those circumstances? So, those of us from Idaho are taking a 
very serious look at this, and we are going to do some things 
that are probably pretty stringent, as far as Chinese--as far 
as the Chinese government is concerned. And we have to. This 
company's very existence depends upon having a rule of law in 
countries where we are doing business. And we--I applaud the 
President for his strong feelings about what the Chinese are 
doing, what they claim is legally. For instance, requiring 
Chinese ownership in companies that do business there and 
getting into their secrets and their patents. But, they are 
also doing things under the table, like I just described is 
happening to Micron technology. And this has got to stop. If 
this does not stop, we are going to be in very difficult 
straits as we go down the pike trying to compete with China 
with their 2025 plan.
    Mr. Chairman, I see my time is up, and----
    The Chairman. Thank you.
    Senator Risch. --thank you.
    The Chairman. Thank you, sir.
    Ms. Singh. Senator Risch, if I can thank you for your 
comments. And I would like to associate myself with your 
remarks.
    Senator Risch. Well, thank you. And this on the President's 
radar screen, by the way. I know that personally. But, it is 
something that we are all going to have to pay attention to. 
And this is just the tip of the iceberg, as far as what is 
coming.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Rubio.
    Senator Rubio. Thanks for holding this hearing, Mr. 
Chairman and the Ranking Member
    Thank you for being here.
    This is a complicated issue, because it really involves two 
separate stories. The first is, sort of--well, let me back up 
and say that, you know, we have all--I say there has been a 
general consensus in American politics and American debate 
about the value of the global economic order, the rules-based 
trading system. And I do think, while this is a committee that 
focuses on foreign policy, that it is difficult to ignore that, 
while free and open global trade has incredible benefits, it 
does have downsides. There are losers to trade, even agreements 
that are great, and not enough attention has been paid to the 
fact that people have been displaced over 20 or 30, 40 years, 
and that has created some of the domestic blowback against some 
of the trade.
    That said, by and large, America is generally a winner, 
particularly when we are interacting with countries who follow 
the rules. And that is where these dispute resolution 
mechanisms exist, and you have a hope that they would work. 
When these countries also happen to be geopolitical allies with 
whom we partner with on a host of other issues, including 
national security, I think the wisdom would say that, 
particularly when we talk about the 232 actions and whether it 
is our partners in the EU, Mexico, Canada, and other places, 
these are ultimately allies and countries that we do have 
issues that need to be addressed. But, we can work with them. 
We believe we can. Because, ultimately, none of these nations 
seek to displace the United States or undermine our position in 
the world. They do want to get better deals, but there is a 
mechanism in place to address it. Which is why I would have 
strongly preferred for the President and the administration to 
kind of dealt with those issues second, after first focusing on 
China, because many of those countries that we are allies with 
have deep concerns about China, as well, which leads us to the 
301 actions.
    And the threat from China is perhaps without precedent. 
Senator Risch just mentioned, a moment ago, Made in China 2025. 
That is a key piece of a broader plan to displace the United 
States on virtually every--in virtually every field that will 
define the 21st century. And if they were going to displace us 
because they work harder, because they are more innovative, 
because they just out-hustle us, that is one thing. That just 
calls on us to work harder and do better. But, the way they 
seek to displace us is through things like the theft of 
intellectual property. Just yesterday, or a couple of days ago, 
a former employee of Apple was arrested at an airport in 
California, headed to China with a bunch of secrets and 
intellectual property on Apple's autonomous vehicle technology. 
Every single day brings stories. We have all heard the horror 
stories of the forced transfers. ``You want to do business in 
China? Here is your new partner. And, by the way, you need to 
teach them everything you do so that, in a few years, when they 
can do it as well as you can, we can kick you out and we can be 
your competitor, backed by the Chinese government, and put you 
out of business.'' Unfair practices of just outright denying 
market access, but demanding unfettered access to our own 
market. This needs to be addressed.
    And so, there is a consensus or there is a belief in the 
business community, ``Well, we should have told China what we 
were upset about. We should have warned them. And this is what 
we are going to do if you do not listen.'' That is the story of 
the last 20 years. Our relationship with China, economically, 
over the last 20 years, has been built on the hope that, once 
they became richer, they would behave more like us. And what 
they have done is, they have taken all the benefits of that 
global order, but assumed none of its responsibilities, leading 
us to this point.
    I guess my only question is that I wonder what role the 
State Department played, or others, in advising the 
administration on a path that would have said, ``Why do we not 
partner with our allies first so we can all, collectively, 
confront China, because we are all facing the same challenges, 
and then, secondarily, deal with these other issues because of 
its geopolitical implications?''
    And I would be remiss if I did not also ask, related to 
that, What role, if any, did the State Department play in 
advising the administration on its recent decisions regarding 
ZTE? Because, while I would say to you that the penalties 
imposed on ZTE for violating sanctions are severe for purposes 
of sanctions violation, they extend well--our issues with ZTE 
extend well beyond sanctions violations. Any telecommunication 
company in China is controlled by the Chinese government, 
whether they want to be, or not. And allowing them to embed 
themselves in the commercial infrastructure of the United 
States poses a significant national security threat. And there 
is an irony that, while we are out there imposing tariffs for 
national security on partner countries with whom we have 
national security arrangements with, we are allowing a foreign 
telecommunication operator to stay in business, with our parts, 
knowing the threat they pose to our national security.
    So, did the State Department have any role in advising, 
from a geopolitical perspective, and focusing on China first? 
And what role did the State Department play if any, in the 
decision on ZTE?
    Ms. Singh. Thank you, Senator, for those. Both of those are 
very important questions.
    The State Department has played, and continues to play, a 
role in advising the President on working with our allies to 
counter China. I previously indicated that, in all of my 
travels, the senior leadership of the State Department, whether 
it is the Deputy Secretary--Secretary Pompeo himself, who, as 
you may know, is on a tour of several countries right now--we 
have explicitly provided input to the White House and said, 
``We need to work with our allies specifically to counter 
China. We need their buy-in.'' Because the only way to have 
success against China is to isolate them. China needs to be 
clear that it is a threat to the global economic community. And 
if our allies agree with us, then we can isolate China and 
force it to change its behavior.
    On your question regarding ZTE, the State Department did 
play a role, and we advocated the stiffest penalties possible 
against ZTE.
    Senator Rubio. Mr. Chairman, I would just like to add, I 
think it is hard to partner up with countries to take on China 
and isolate China when we are in a trade war with the countries 
we seek to partner up with. So, that is why I think this is 
something I hope we can get worked out.
    The Chairman. I could not agree more. We have done a great 
job in unifying the world against us.
    Senator Booker.
    Senator Booker. You can move to the next panel. Thank you.
    The Chairman. Thank you so much.
    Senator Booker. Yes.
    The Chairman. You can have my time.
    [Laughter.]
    The Chairman. Thank you so much for being here. And we 
appreciate your service, mostly in the other areas.
    And we will move now to the second panel.
    Ms. Singh. Thank you, Chairman Corker.
    [Pause.]
    The Chairman. We will now turn to our second panel. We have 
a very distinguished witnesses here with us.
    Our first witness is Joshua Bolten. Mr. Bolten is president 
and CEO of the Business Roundtable, an association of CEOs of 
leading U.S. companies that employ more than 16 million people 
and generate more than 7 trillion in annual revenues. Mr. 
Bolten has had an extensive career serving our Nation at the 
highest levels. He was Chief of Staff and Director of Office of 
OMB to then--President George W. Bush. Before that, he served 
as general counsel to the U.S. Trade Representative, so 
certainly has a lot of background in this area.
    Our second witness is Mr. Michael Fuchs from the Center for 
American Progress. Mr. Fuchs is a Senior Fellow at Focusing on 
U.S. Foreign Policy and Priorities and U.S. Policy Towards the 
Asia-Pacific Region. Mr. Fuchs has previously served as Deputy 
Assistant Secretary of State for the East-Asian and Pacific 
Affairs.
    We thank you both very much for being here and for your 
patience in waiting.
    And, Senator Menendez, I do not know if you want to welcome 
them.
    If you would go ahead and summarize your comments in about 
5 minutes, any written materials you have will be entered into 
the record.
    And, with that, if you would begin, we would appreciate it. 
Again, thanks for being here.

    STATEMENT OF HON. JOSHUA BOLTEN, PRESIDENT AND CEO, THE 
              BUSINESS ROUNDTABLE, WASHINGTON, DC

    Mr. Bolten Thank you, Chairman Corker, Senator Menendez, 
other members of the committee. Thank you for holding this 
hearing and for inviting me to testify on behalf of Business 
Roundtable.
    Business Roundtable is an association of chief executive 
officers of leading U.S. companies. Our CEOs are, today, 
overwhelming bullish about the American economy, thanks, in 
large part, to tax reform and ongoing regulatory reform. Our 
overriding concern now is that those gains will be entirely 
reversed by major missteps in U.S. trade policy.
    The Trump administration is rightly focused on addressing 
unfair foreign trade practices that hurt American businesses 
and workers. However, Business Roundtable strongly disagrees 
with many of the administration's recent actions on trade, 
particularly invoking national security under Section 232 to 
impose unilateral tariffs on imported steel and aluminum. We 
have four important reasons for opposing this action:
    First, the 232 tariffs increase costs on American 
consumers. This multibillion-dollar tax increase on imported 
steel and aluminum is already driving up the cost of many 
industrial and consumer products.
    Second, by driving up the cost of inputs, these tariffs are 
also causing U.S.-made final products to be less competitive in 
both domestic and export markets.
    Third, the 232 tariffs are inviting a cascade of 
retaliatory tariffs against America's most competitive 
exports.Overall, a recent study by the Trade Partnership 
Worldwide found that the administration's steel and aluminum 
tariffs, along with the resulting retaliation, will cause 16 
American jobs to be lost for every American steel or aluminum 
job saved.
    The Roundtable's fourth reason for opposing the 232 tariffs 
is the misuse of the 232 statute itself. As several members of 
the committee have already noted: Since its inception in 1962, 
Section 232 has been invoked only twice before, to ban oil 
imports from Iran and Libya. In both cases, the national 
security purpose was clear. The national security purpose of 
restricting steel and aluminum imports from our closest allies 
is not at all clear. The administration's improper use of 
Section 232, twisting the definition of ``national security'' 
beyond reason, invites other countries to do the same against a 
wide range of U.S. exports.
    Despite these evident harms, the Commerce Department is now 
investigating whether to employ the same national security 
argument to restrict imports of autos and auto parts. There is 
no national security purpose for this, and the damage would be 
exponentially greater.
    For these reasons, Business Roundtable strongly supports 
Chairman Corker's bipartisan bill to require congressional 
approval of Section 232 tariffs. We would also enthusiastically 
support other legislative approaches that would similarly 
advance the goal of preventing the misuse of U.S. trade 
statutes inappropriately to restrict trade.
    The administration's deployment and threatened deployment 
of Section 232 tariffs demonstrates clearly that the statute is 
susceptible to misuse. It is time for Congress to assert its 
constitutional prerogative to prevent serious harm to the U.S. 
economy.
    A final less-direct but no substantial harm from the misuse 
of Section 232 is that it risks alienating U.S. allies needed 
to address the real problem in international commerce: Chinese 
policies and practices. Most Business Roundtable companies have 
encountered at least one of these serious problems: 
intellectual property theft, forced technology transfer, unfair 
restrictions on access to and investment in Chinese markets, 
and competing with state-subsidized Chinese companies. Business 
Roundtable, therefore, welcomes the administration's focus on 
China's trade policies. However, the cycle of tariffs and 
counter-tariffs recently initiated by the administration is 
dangerously counterproductive. Imposing Section 301 tariffs 
without first pursuing serious negotiations unnecessarily 
jeopardizes U.S. farmers, workers, and businesses.
    Instead of starting negotiation by imposing punitive 
tariffs on tens or even hundreds of billions of Chinese 
imports, thereby triggering commensurate retaliation against 
U.S. exports, the administration should: first, detail clearly 
to China how its practices must change; second, establish 
deadlines for China to adopt concrete reforms; and third, 
describe actions the U.S. will take in coordination with our 
allies if China fails to address our concerns. Finally, the 
administration should exempt U.S. allies from 232 tariffs to 
encourage them to join in this effort.
    Mr. Chairman, thank you for your leadership in holding this 
hearing and for encouraging a constructive trade policy that 
will truly benefit America's workers and businesses.
    The Chairman. Thank you.
    Mr. Bolten I look forward to the committee's questions.
    [The prepared statement of Mr. Bolten follows:]

                  Prepared Statement of Joshua Bolten

    Chairman Corker, Ranking Member Menendez, Members of the Foreign 
Relations Committee, thank you for holding this important hearing. I am 
grateful for the opportunity to testify on behalf of Business 
Roundtable regarding the implications of tariffs for U.S. foreign 
policy and the international economy.
    Business Roundtable is an association of chief executive officers 
(CEOs) of leading U.S. companies. Collectively, our CEO member 
companies employ more than 16 million people. These companies, their 
workers, and the communities in which they operate rely on 
international trade for their continued success.
                    benefits of international trade
    International trade supports approximately 36 million American 
jobs--which is roughly one in five--and is a driver of economic growth 
in all 50 states. Through our nation's commitment to free and fair 
trade and our network of free trade agreements, the United States has 
shaped the international trading system in favor of our businesses, 
workers and consumers. The benefits of this approach are immense, 
helping U.S. businesses compete, helping more workers find and secure 
well-paying jobs, and helping families access a wider selection of 
products at more affordable prices. Ninety-five percent of the world's 
consumers and 80 percent of global GDP are located outside U.S. 
borders. America's future prosperity, even more than its past, is 
dependent on a well-functioning, rules-based international trading 
system.
    Today, Business Roundtable CEOs are overwhelmingly bullish about 
America's economy. The administration's agenda on tax reform and 
streamlining regulation is increasing America's competitiveness around 
the world and supporting new investment and growth here at home. Our 
major concern now is that these gains will be reversed by major 
missteps on trade policy.
      business roundtable opposes administration's approach on 232
    The Trump administration is rightly focused on addressing unfair 
trade practices that hurt American businesses and workers. However, 
Business Roundtable strongly disagrees with many of the 
administration's recent trade actions--particularly, invoking 
``national security'' concerns to impose unilateral U.S. tariffs under 
Section 232 of the Trade Expansion Act of 1962. This is a mistake by 
the administration that risks forfeiting decades of U.S. leadership on 
trade and carries substantial consequences for the U.S. economy and the 
entire rules-based international trading system.
    The administration's global Section 232 tariffs on steel and 
aluminum--now imposed on all but a few countries--are hurting the very 
workers and families the administration aims to protect while doing 
little to address a real problem in the global economy, which is 
overcapacity in steel and aluminum resulting largely from China's 
distortionary trade practices. In addition to diminishing the economic 
benefits of the administration's successful tax and regulatory 
policies, these tariffs--and resulting trade retaliation from other 
countries--will continue to impose tremendous costs on U.S. businesses 
and workers, erode U.S. global competitiveness and economic growth, and 
undermine key U.S. economic and security relationships. This is the 
wrong approach.
    For four important reasons, Business Roundtable has been strongly 
opposed to the administration's imposition of Section 232 tariffs on 
steel and aluminum imports:
1. Increased Cost to Consumers
    The administration's tariffs are a tax hike on American businesses 
and ultimately, consumers. In the case of the 232 steel and aluminum 
tariffs, it is a tax increase on $23 billion of imported steel and $18 
billion of imported aluminum--both of which are key manufacturing 
inputs for industrial products and a variety of everyday items consumed 
by the American people. As the cost of production rises from these 
tariffs, so too will the cost of finished goods, making products less 
affordable for families across the nation and reducing demand for those 
products.
2. Makes American Businesses Less Competitive
    Higher production costs resulting from the administration's Section 
232 tariffs are also making U.S. companies and products less 
competitive here at home and our exports less competitive in foreign 
markets. An increase in the cost of finished goods as a result of these 
tariffs makes U.S. products more expensive--and less attractive--versus 
their foreign rivals. Inevitably, this means lower revenue, lost 
profits and fewer jobs.
    Companies and workers are already experiencing the harm from these 
increased cost pressures and the subsequent loss of competitiveness 
from the administration's 232 tariffs. For example, Gradall Industries' 
plant in New Philadelphia, Ohio, shelved plans ``to hire at least 30 
more workers'' after the cost of steel increased by one-third. At the 
Mid Continent Steel & Wire manufacturing plant in Poplar Bluff, 
Missouri, 60 employees were recently laid off ``due to lost business 
from increased steel costs.''
3. Invites Retaliation Against America's Most Competitive Exporters
    These tariffs are resulting in a cascade of retaliatory tariffs 
from some of our nation's closest trading partners.
    Because of the administration's implemented Section 232 tariffs on 
steel and aluminum, a number of countries have announced significant 
retaliatory tariffs. So far, retaliation measures have been announced 
on approximately $40 billion in U.S. exports. U.S. exports targeted for 
retaliation include products throughout the United States, including: 
flat-rolled steel exports from Ohio, Michigan and Pennsylvania; 
aluminum scrap from California, Texas and Florida; motorcycles from 
Missouri and Pennsylvania; herbicides from Iowa; pork products from 
Missouri and North Carolina; whiskies from Tennessee and Kentucky; 
cherries from Washington; and coal from West Virginia and Alabama.
    Harley-Davidson's recent announcement is the most notable example 
of how these tariffs and resulting retaliation can hurt America's most 
competitive exporters and their workers. Due to the U.S. tariffs on 
steel and aluminum, Harley estimated that it would see an additional 
$30 million to $45 million in increased costs here in the United 
States. On top of this, the European Union (EU) imposed a retaliatory 
tariff of 25 percent on Harley motorcycles, making their products 
significantly less competitive in a vital foreign market.
    Because of this ``double whammy,'' Harley was forced to choose 
between losing sales in a lucrative market or shifting some of its 
production outside the United States--where it would prefer to 
manufacture its products--to another location that would allow the 
company to continue to sell competitively to European customers. 
Ultimately, Harley chose the latter, a very difficult and 
understandable business decision given the dual damages of both the 
U.S. 232 tariffs and the retaliatory tariffs imposed by the EU.
    One Business Roundtable member company, a U.S. manufacturer of 
consumer and personal care products, faces a 10 percent Canadian 
retaliatory tariff across multiple categories of exports. Canada is a 
large export market and most of what this company sells in Canada is 
made in the United States, with U.S. jobs across multiple U.S. 
manufacturing sites. Faced with this additional duty, the U.S. 
manufacturer will have no other choice but to (1) increase prices which 
would reduce sales, or (2) absorb the duty which would affect jobs. The 
net result will make this U.S. manufacturer less competitive versus 
other companies that produce in Canada or source from outside the 
United States.
    The lost opportunities for workers at Harley and other leading U.S. 
companies are a glimpse at the potential widespread damage to come. 
According to a recent economic analysis by Trade Partnership Worldwide, 
the administration's steel and aluminum tariffs, and the resulting 
trade retaliation from our allies, will result in a net loss of over 
400,000 American jobs. The study found for every steel or aluminum job 
created in the United States because of these tariffs, 16 American jobs 
will be lost in other sectors of the economy.
4. Misuse of National Security Designation
    Section 232 of the Trade Expansion Act of 1962 provides the 
president of the United States with broad authority to restrict foreign 
imports for national security purposes. This authority has only been 
used twice, once to ban oil imports from Iran in 1979 and a second time 
in 1982 to ban oil imports from Libya. The national security purpose in 
both cases was clear.
    The national security purpose of restricting steel and aluminum 
imports from our closest allies is not at all clear. In fact, in a 
February Defense Department memo regarding the Commerce Department's 
Section 232 investigation, Secretary of Defense James Mattis wrote, 
``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.''
    The administration's improper use of the 232 statute--twisting the 
definition of ``national security'' beyond reason--only invites other 
countries to do the same. Countries looking for a way to bypass long-
established international trade rules to gain an unfair advantage over 
American businesses and workers now have a perfect opening to do so.
 232 tariffs on autos would dramatically escalate a dangerous approach
    Despite the dangerous precedent set by the administration's 232 
tariffs on steel and aluminum and the harm these tariffs are already 
causing, the U.S. Commerce Department is now investigating whether to 
employ the same ``national security'' argument to restrict imports of 
automobiles and auto parts under Section 232.
    The damage from this approach would be exponentially worse on all 
four fronts: costs to consumers, decreased competitiveness of American 
businesses, retaliation against U.S. exporters and the perversion of 
the statute. Families looking to purchase or repair their car would 
face significantly higher prices. American auto manufacturers and 
dealers would see their costs go up, their competitiveness decrease and 
their ability to grow diminish. Retaliation from our allies of equal 
magnitude would be a $320 billion hit to American exports. There is no 
national security purpose to restricting imports of automobiles and 
auto parts from our allies.
           business roundtable supports congressional action
    For all these reasons, Business Roundtable supports Chairman 
Corker's bipartisan bill to require congressional approval of tariffs 
designated under Section 232 of the Trade Expansion Act of 1962.
    Article I of the Constitution is clear: ``The Congress shall have 
the power . . . To regulate commerce with foreign nations,'' including 
levying tariffs. In the Trade Expansion Act, Congress delegated narrow 
authority to the executive branch, providing authority to the president 
to impose tariffs to safeguard national security.
    As current circumstances make clear, 232 authority is susceptible 
to misuse. Business Roundtable today is calling on Congress to assert 
its constitutional authority when a president misuses Section 232 to 
restrict trade
    There may be other ways to accomplish the goals of Senator Corker's 
legislation. Business Roundtable would also enthusiastically support 
other legislative approaches that advance our goal of preventing the 
misuse of Section 232 to restrict trade.
                  addressing china's trading practices
    In addition to the harms caused by the increased costs to 
consumers, the loss of American competitiveness, retaliation against 
U.S. exporters and the perversion of the 232 statute, there is another 
less direct, but no less substantial harm. The President's use of 232 
alienates the U.S. allies we need the most in addressing the real 
problem: China's many policies and practices that distort international 
commerce.
    Business Roundtable welcomes the administration's focus on China's 
trade practices. Most of our members have faced problems in China in at 
least one of the following areas:
 a) Unfair restrictions on access to and investment in Chinese markets: 
        China should, among other reforms, lift restrictions on foreign 
        ownership of Chinese enterprises subject to certain narrow and 
        specific exceptions; substantially reduce tariff rates and 
        other import barriers in priority sectors for U.S. exporters; 
        and provide foreign investors treatment no less favorable than 
        the best treatment offered to any domestic Chinese company.
 b) Intellectual property theft: China should strengthen intellectual 
        property protection by, for example, prohibiting theft of 
        proprietary information, providing effective enforcement 
        against counterfeit goods and ensuring effective prosecution of 
        cyber intrusion targeting foreign companies.
 c) Forced technology transfers: China should eliminate technology 
        transfer requirements and regulatory preferences for indigenous 
        innovation.
 d) Subsidies on domestic production: China should eliminate market-
        distorting subsidies that artificially support industries, and 
        domestic support that promotes domestic overproduction and 
        global overcapacity, among other reforms.
 e) Restrictions on digital trade: China should allow the free flow of 
        data across borders subject to a very narrowly defined national 
        security exemption, exclude all commercial ICT products from 
        ``secure and controllable'' requirements and lift requirements 
        to use or locate computing facilities locally as a condition 
        for conducting business in China.
    Business Roundtable believes the administration can best address 
these problems by (1) detailing to China how their current practices 
must change; (2) establishing deadlines for China to adopt concrete 
reforms; (3) and describing the actions the United States will take--
hopefully in coordination with U.S. allies--if China fails to address 
our concerns.
    To encourage U.S. allies to join the administration in convincing 
China to reform its trade practices, the administration should 
permanently exempt U.S. allies from the Section 232 tariffs. This would 
create a constructive environment for the administration to coordinate 
with our allies on our real, mutual challenge. The administration and 
China should suspend their reciprocal imposition of tariffs in order to 
give negotiations for systemic economic reforms a chance to succeed.
    This is in stark contrast to both countries' current approach. 
Utilizing its authority under Section 301 of the Trade Act of 1974, the 
U.S. administration has so far imposed a 25 percent tariff on $34 
billion worth of Chinese goods exports with promises to impose a 25 
percent tariff on another $16 billion. China has responded 
commensurately, immediately implementing retaliatory tariffs of 25 
percent on an estimated $29.6 billion of U.S. exports, with another 
$15.4 billion under review. The top U.S. sectors affected by China's 
tariffs include soybeans, automobiles, cotton, pork products and wheat. 
Following China's retaliation, the administration announced this week 
it intends to impose a 10 percent tariff on an additional $200 billion 
of Chinese goods.
    Cummins Inc., an Indiana-based manufacturer of diesel and 
alternative fuel engines, has already been swept up in the damage of 
the escalating trade war. As a result of the administration's actions 
under Section 301, Cummins must now pay a 25 percent tariff on 
manufacturing components it imports from China for use in U.S. 
production. In addition, the company is absorbing a 25 percent U.S. 
tariff on finished products that it manufactures in China for sale to 
off-highway equipment manufacturers in the United States. If Cummins 
were to pass this tariff-related cost increase to its off-highway 
customers, it would lose vital sales in the market to European and 
Asian competitors.
    Business Roundtable considers the cycle of tariffs and counter-
tariffs initiated by the administration to be dangerously 
counterproductive. Imposing Section 301 tariffs without undertaking 
serious negotiations--based on clear, realistic negotiating 
objectives--unnecessarily places U.S. jobs, families and our economy in 
the crosshairs of a rapidly escalating trade confrontation. Recent 
events indicate a need to reassert some control over not only Section 
232 authority, but also other areas a president may take actions that 
could dramatically harm the U.S. economy by inappropriately restricting 
trade. That includes Section 301 authority.
    Business Roundtable encourages Congress to exercise more oversight 
of the administration's approach to the trade challenges posed by 
China. Congress should press the administration more on its negotiating 
objectives with China, how the escalating tariffs advance those 
objectives, and the administration's strategy for achieving the 
objectives rather than letting a trade war with China grow out of 
control.
               america needs a constructive path forward
    Business Roundtable strives to be a constructive partner to both 
the White House and to Congress as policymakers weigh the potential 
costs and benefits of any action on trade.
    As I have detailed, there is far more harm than good to come from 
imposing unilateral tariffs under Section 232 and placing America's 
economy--and American workers--in the crosshairs of an escalating trade 
war. The current approach does not put America in a position of 
strength on international trade. Rather, it puts our nation in retreat 
from closely-held international relationships and undermines 
international trade rules that promote a fair and level playing field 
for U.S. businesses and workers.
    Mr. Chairman, thank you for your leadership in holding this hearing 
and for encouraging a more constructive American trade policy that will 
truly benefit American businesses and workers. Again, I appreciate the 
opportunity to testify, and I look forward to answering the Committee's 
questions.

    The Chairman. Thank you so much for your testimony.
    Mr. Fuchs.

   STATEMENT OF MICHAEL H. FUCHS, SENIOR FELLOW, CENTER FOR 
               AMERICAN PROGRESS, WASHINGTON, DC

    Mr. Fuchs. Thank you, Chairman Corker and Senator Menendez, 
members of the committee. It is an honor to be here today.
    My written testimony contains my thoughts on this subject. 
And so, here I would just like to highlight a few points for 
the committee.
    First, in order to tackle the global challenges that we 
face from Russia to China to climate change and beyond, and to 
build a strong economy at home, America needs serious, long-
term strategies that use all the tools of American power. The 
current administration's approach to tariffs and trade is 
undermining U.S. national security. The decisions being made in 
the capitals of American allies right now--how to cooperate on 
counterterrorism, whether to fight in Afghanistan or Syria, how 
to deter Russia and compete with China--are being influenced by 
these tariffs. The leaders of these countries are asking 
themselves, ``Can we trust America anymore?'' The world does 
not stand by when we act, and our allies are looking elsewhere 
for trade deals and for partnerships.
    Second, driven by a single-minded focus on tariffs and 
trade deficits, U.S. foreign policy is losing its moral compass 
right now. The current President has repeatedly berated South 
Korea over trade while praising the North Korean dictator, Kim 
Jong Un. And while the President ignores Russia's efforts to 
undermine democracies and its invasion of Ukraine, and tries to 
avoid sanctioning Russia, he has imposed harsh tariffs on 
America's closest allies in Europe, countries America relies on 
to help deter Russian aggression and uphold the values that 
America holds dear.
    Third, to build an economy that empowers and provides 
opportunities for all Americans, we need a comprehensive 
strategy to level the economic playing field with China, but 
the recent tariffs, instead leave the U.S. economy more 
vulnerable by alienating friends and allies and creating 
opportunities for China to work with our own partners against 
us. These tariff decisions are the policy equivalent of coming 
to a gunfight and shooting your partners at the same time you 
take aim at your adversary. We need a targeted strategy crafted 
in concert with our friends and allies, many of whom are 
suffering from the same problems from China.
    Fourth, the United States should see our trade 
relationships as one aspect of our larger efforts to achieve a 
strong economy at home and to achieve our national security 
objectives around the world. To do that, I believe the United 
States should take a number of steps, including strengthening 
alliances to counter our biggest national security threats, 
supporting democracy abroad to push back against the rise of 
illiberalism and autocracy, develop a strategy in concert with 
our allies to deal with China's unfair economic practices 
through both bilateral and multilateral actions, and build an 
economy at home that works for everyone by investing in areas 
such as infrastructure and education. Congress should also play 
an important role in holding the administration accountable and 
in reassuring our allies.
    Thank you again for inviting me here today, and I look 
forward to your questions.
    [The prepared statement of Mr. Fuchs follows:]

                 Prepared Statement of Michael H. Fuchs

    Chairman Corker, Ranking Member Menendez, members of the Committee, 
it is an honor to appear before you today.
    Today's world is full of challenges to American prosperity, 
security, and our ability to uphold our values. Russia interferes in 
the domestic politics of the United States and Europe while fighting a 
war in Ukraine and threatening Eastern Europe. China takes provocative 
actions that concern its neighbors, endangering regional peace in Asia. 
Illiberal populism and autocracy are on the march, from Hungary to 
Turkey and beyond. Changes in the global economy make it difficult to 
ensure that no Americans are left behind. Climate change is literally 
making ever-larger parts of the planet uninhabitable while generating 
mass migration.
    In order to tackle these challenges, America needs serious, long-
term strategies that use all the tools of American power. The United 
States must: strengthen alliances; support democracies around the 
world; work with partners to level the economic playing field with 
China; and build a strong economy at home that works for all Americans. 
And Congress has a crucial role to play in helping to achieve all of 
this.
    But the current U.S. administration is pursuing a foreign policy--
including the imposition of a series of reckless tariffs--that 
undermine America's security and values, and seriously jeopardize 
America's prosperity. In short, this administration is adopting 
policies that endanger the very foundations of global peace and 
prosperity that have made the United States the world's largest economy 
and most powerful country, and which provide us with significant 
advantages in achieving our goals in today's world.
                            u.s. prosperity
    The United States needs an economic growth strategy that combines 
domestic policies that empower and provide opportunities for Americans 
with trade policy that ensures that the rules of international trade 
benefit as many Americans as possible. Globalization over the decades 
has transformed America's economy in ways that have advantaged some 
while disadvantaging others, and it is clear that--regardless of how 
well the unemployment rate or national GDP growth may be doing-- the 
United States has much work to do to help all Americans succeed in a 
global economy. There is a legitimate debate to be had on the best 
policies to achieve these goals, and we must keep that debate honest 
and based on the merits.
    As we focus on tariffs, it is first important to note that no 
international economic policy will be successful without strong and 
fair domestic economic policies. But instead of acting in the interest 
of American workers and families, this administration has unfortunately 
attempted to destroy the Affordable Care Act; enacted large tax cuts 
for corporations and high-income households, which will be used to 
justify reductions in social investment; gutted overtime pay;
    undermined quality standards for workforce training; and attacked 
environmental and financial regulations which protect consumers. These 
policies are hurting American workers and the middle class and will 
make America less competitive on the global stage.
    While there may not be widespread agreement in the United States 
today on trade policy, there is a growing consensus that China is 
taking advantage of America's openness to distort the two countries' 
trade relationship in ways that disadvantage American workers, 
consumers, and companies. Through stealing intellectual property rights 
from American businesses and forcing some that do business in China to 
hand over proprietary technology, China is ransacking the hard-earned 
innovation of American companies. Simultaneously, China prevents 
America from accessing the Chinese market--in whole or in part--using 
tools that include unfair subsidies for state-owned enterprises and 
caps on U.S. investment in certain sectors.
    We need real, hard-hitting strategies to level the economic playing 
field with China. But the Trump administration's tariffs on China so 
far appear misguided, and unlikely to produce the results that 
Americans need. Large, across-the-board tariffs on Chinese goods are 
likely to just make Chinese goods more expensive for American 
consumers, and significantly harm a niche set of vulnerable export-
reliant industries, while not affecting the core problems the United 
States faces with China, such as coercive measures to take American 
technology and IPR, let alone generating replacement jobs in the United 
States.
    To effectively deal with China, we need a targeted strategy crafted 
in concert with our friends and allies, many of whom are suffering from 
the same problems with China. Instead, the current administration is 
starting trade wars with our closest allies and trading partners in 
Europe, North America, and Asia. In recent months the current 
administration has imposed tariffs on steel, aluminum, and washing 
machines, which largely hit U.S. allies more than China. The European 
Union has responded with targeted retaliatory tariffs on 
stereotypically American goods like bourbon and jeans; Japan and South 
Korea have filed notices with the WTO to take retaliatory measures; and 
Mexico is pursuing both paths. These tariff decisions are the policy 
equivalent of coming to a gun fight and shooting your partners at the 
same time you take aim at your adversary.
    This is not only counterproductive--it could also boomerang and 
come back to hit America with more than just retaliatory tariffs. In 
advance of next week's EU-China Summit, China has reportedly attempted 
to forge an anti-U.S. alliance with Europe on trade issues, including 
suggesting joint EU-China cases against the United States at the World 
Trade Organization. In return, China would offer Europe more market 
access. Europe has reportedly rebuffed China's offers--so far.
    The United States is pushing its closest friends into the hands of 
a major competitor, undermining America's ability to forge a united 
front to deal with that very competitor.
                         u.s. national security
    The erratic imposition of tariffs on America's closest allies is 
also undermining U.S. national security. America's closest allies in 
Europe and Canada fight and die with American soldiers. Cooperation 
with our allies is essential to U.S. efforts to fight terrorism, and we 
work together on everything from defeating ISIS to intelligence 
sharing. The United States and NATO work closely on responding to 
Russia's destabilization of Ukraine and on deterring Russia elsewhere. 
The United States and its allies Japan and South Korea partner in 
deterring China and North Korea in Asia. U.S. alliances from North 
America to Europe to Asia are the bedrock not only of global peace and 
stability, but also most importantly of American national security.
    The recent punitive tariffs imposed by the administration are 
endangering the ability of America's alliances to deal with these 
threats to U.S. national security. The recklessness of U.S. policies 
that hurt our closest friends will damage our relationships and have 
effects far beyond the economic sphere. Beyond retaliatory tariffs, it 
is difficult to quantify the impacts to date--but it is not hard to 
imagine. Europeans already do not trust the current U.S. president--in 
2017 only 22 percent of United Kingdom, 14 percent of France, and 11 
percent of Germany have confidence in him to ``do the right thing.''
    Europe is working with others to mitigate the damage of American 
foreign policy, as evidenced by the fallout of the Iran nuclear deal. 
In the wake of America's withdrawal from the agreement that has 
prevented Iran from obtaining a nuclear weapon, the United Kingdom, 
France, Germany, and the EU are working with China, Russia, and Iran to 
keep the deal alive--without U.S. leadership at the table. If current 
trends of American behavior continue, expect more of this to come.
    As the United States pursues high stakes negotiations with North 
Korea over its nuclear program, the United States is simultaneously 
hurting its own negotiating position with reckless tariffs on Japan and 
China--two countries necessary for an effective North Korea policy.
    The decisions being made in the capitals of American allies right 
now--how to cooperate on counter-terrorism, whether to fight in 
Afghanistan or Syria, how to deter Russia, how to compete with China--
are being influenced by American tariffs. The leaders of these 
countries are asking themselves: Can we trust America anymore?
    Now imagine a world where America's closest allies become convinced 
that they must push back against America. A world where there are no 
partners that will follow America into war. No allies to share 
intelligence on urgent threats. A world where some of the biggest and 
most lucrative markets for American goods become hostile to American 
companies and interests.
    When Al Qaeda attacked America on 9/11, NATO responded by invoking 
Article 5 of its charter--collective self-defense--to support America. 
If a similar attack happened today, would NATO do the same?
    It's hard to imagine this world, and we are certainly not there 
yet. But we may be closer than we think. The series of summits that the 
current U.S. president is holding this week with NATO, the United 
Kingdom, and Russian President Vladimir Putin are risky territory for a 
U.S. president that has repeatedly criticized allies and cozied up to 
Putin.
    After the debacle of the Group of 7 Summit--where, for the first 
time, the U.S. did not sign the joint communique--German Foreign 
Minister Heiko Maas called for a European strategy to push back against 
America. Alongside Russian aggression and Chinese expansionism, Maas 
listed America's current foreign policy approach as one of the three 
top threats to Europe. Maas encouraged Europe to develop a strategy to 
counter the United States, stating that, ``our common response to 
`America first' today must be `Europe United' . . . forming an 
assertive European counterweight when the U.S. crosses a red line.''
    In the 21st century, when a German foreign minister is calling for 
a European strategy to counter America, something is deeply wrong.
                            advancing values
    Driven by a myopic focus on tariffs and trade deficits, U.S. 
foreign policy under this administration has lost its moral compass--
and Congress can play an important role in putting it back on track.
    No longer does America work first and foremost with its democratic 
partners--instead, this administration appears to treat countries based 
on their trade balance with the United States, which is an unhelpful 
metric regardless of whether one is considering economic or security 
interests. This approach is distorting U.S. foreign policy, steering it 
away from upholding basic values that advance American priorities and 
interests.
    Despite a decades-old alliance with South Korea and needing close 
coordination with Seoul to engage in effective diplomacy with North 
Korea, President Trump has instead repeatedly criticized South Korea 
over trade, while praising the North Korean dictator Kim Jong Un.
    With Russia--a country that interfered in the 2016 U.S. 
presidential election to help then-candidate Trump, invaded Ukraine, 
and propped up Bashar al-Assad in Syria--President Trump does 
everything he can to avoid placing sanctions for violating U.S. 
sovereignty by interfering in our elections. Yet, he has imposed harsh 
tariffs on America's closest allies in Europe--countries America relies 
on to help deter Russian aggression.
    As French President Emmanuel Macron summarized it, ``The American 
President may not mind being isolated, but neither do we mind signing a 
6 country agreement if need be. Because these 6 countries represent 
values, they represent an economic market which has the weight of 
history behind it and which is now a true international force.''
                            the way forward
    The United States must get back on the right track. The United 
States should take the following steps:
   Strengthen alliances to counter America's biggest national security 
        threats. There is much work to be done to ensure that America's 
        alliances are equipped to tackle the threats of the 21st 
        century. The United States must work with its allies in North 
        America, Europe, and Asia to modernize alliance structures and 
        goals to align with today's needs of deterring competitors like 
        Russia and China and tackling new challenges like 
        cybersecurity.
   Support democracy abroad to push back against the rise of 
        illiberalism and autocracy. The United States needs to develop 
        a series of robust policies that privilege America's 
        relationships with democracies around the world; network those 
        democracies together to tackle shared global challenges; and 
        counter the authoritarian playbook when countries like Russia 
        and China attempt to weaken democracies from within.
   Develop a strategy--in concert with allies--to level the economic 
        playing field with China. The United States needs an effective 
        strategy to counter China's economic practices that hurt U.S. 
        businesses and workers and insulate America as much as possible 
        from the harmful effects of China's actions. This strategy must 
        be developed and executed in close coordination with America's 
        allies.
   Build an economy at home that works for everyone. The United States 
        needs to adopt a series of domestic and international economic 
        policies that provide opportunities for American workers and 
        businesses and give them a leg up against global competitors. 
        These policies should include: investing in human capital by 
        resourcing education, retraining, and apprenticeship 
        opportunities; investing in infrastructure and R&D that 
        contribute to innovation; and adopting a trade policy that 
        prioritizes high standard rules on issues like labor, 
        environment, and IPR and revises the international tax 
        structure to ensure that companies and individuals pay their 
        fair share of taxes.
   Congress must lead. Especially with the current administration 
        pursuing dangerous policies, Congress must exercise its budget 
        and oversight authorities in ways that advance America's 
        interests. This includes continuing to force the administration 
        to stand up to Vladimir Putin, as with the sanctions 
        legislation passed in 2017, and refusing to make massive cuts 
        to the budgets of the State Department and USAID. And members 
        of Congress should travel abroad regularly, making clear to 
        America's friends and allies that there is widespread support 
        in this country for alliances and democracy in addition to 
        resolve in the face of threats.
    Supporting alliances and standing up for our values around the 
world have always been bipartisan pillars of foreign policy and have 
helped advance economic prosperity and opportunity for Americans. 
America must return to those priorities.
    Thank you for your focus on this important issue.

    The Chairman. Thank you.
    Thank you both for that testimony.
    Senator Menendez.
    Senator Menendez. Thank you both for your testimony.
    Mr. Bolten, 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, 
for example, uses a Korean specialty steel product to 
manufacture a lifesaving medical device. 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 as the supply 
chain for these medical devices is disrupted. Ultimately, the 
lives and health of hundreds of thousands of patients 
nationwide could be at risk. Now, there is no U.S. source for 
this steel. And if it were, it could take up to 3 years to gain 
FDA approval for its use in medical devices.
    So, 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. However, 
there is not a similar process for steel products from 
countries with quotas. So, this is one dimension of the 
challenges that we are having. Given your previous experience 
at USTR, how would you compare the administration's 
implementation process to similar efforts of past 
administrations?
    Mr. Bolten Well, Senator, I think it compares poorly. The 
use of Section 232 in this case was entirely inappropriate. In 
previous cases, where administrations, including the one I 
served in, have sought to provide some protection to the steel 
industry, it has been done through a different process that has 
typically narrowed the scope of the products protected, has 
required that the International Trade Commission make a finding 
of injury to that industry, and has typically put the tariffs 
on for a very limited period in an internationally accepted 
regime that has not triggered retaliation. All of those things 
have been absent from the way the administration has approached 
this, in significant part because they used the wrong statute 
for it, badly undermining the rule of law that currently exists 
around the world, at least some understanding of the meaning of 
``national security.'' Because if we have used national 
security in this way to protect our steel and aluminum imports, 
not even mentioning autos at this point, but just even on steel 
and aluminum, that is an open invitation to other countries to 
do the same when they want to protect themselves from our 
exports.
    Senator Menendez. Let me ask you. The companies that you 
represent in the world of international business, how important 
are predictability, reliability, and consistency when it comes 
to making deals?
    Mr. Bolten That is business. To be able to plan in advance, 
most of the members of the Business Roundtable do their 
planning many years in advance. Supply chains take 5, 10 years 
to develop. So, the transparency and the ability to know what 
the rules are is critical to the success of business anywhere.
    You mentioned, in your first question, Senator, the use of 
quotas. And the administration witness treated that as though 
it were a benign success, because we are not imposing tariffs, 
we bulled our trading partners into quotas. I know, from 
talking to several of our member companies, that those quotas 
are even more damaging than the tariffs themselves, because, in 
some cases, they would be willing to pay the tariff just to get 
the product that they need in their supply chain to make things 
work. With the quota in place, they cannot get it at all. So, 
there are companies at the Business Roundtable that have 
products sitting on the dock that are desperately needed for--
as inputs to a big project. They cannot get them, because of 
the quotas.
    Senator Menendez. Is it the position of the Roundtable that 
these tariffs are in the national interest?
    Mr. Bolten No.
    Senator Menendez. No.
    Mr. Fuchs, let--thank you--let me ask you one quick 
question. Let me make it generic in nature. Whether we are 
talking about the Indo-Pacific region and how we try to promote 
a rule-based order, or whether it is with critical allies, like 
Canada, our impact in Europe, what damage does the 
administration's policy in this regard affect our ability to 
pursue all of those? And, in a tit-for-tat process with China, 
what is your assessment of the internal politics in China when 
it comes to tolerating economic costs? And who flinches first?
    Mr. Fuchs. Thank you, Senator. I think that that is an 
incredibly important question.
    The impacts of the administration's tariffs right now are 
widespread. And I believe that if they continue, we are only 
seeing the very beginnings of them. So, first and foremost, for 
the main challenges that we face in our national security, the 
threats we face around the world--again, whether it is China in 
the Indo-Pacific or it is Russia or it is anything else--our 
allies are our first line of defense. They are our key partners 
in tackling any of these challenges. But, right now, instead of 
focusing on those challenges, we are making enemies of the very 
allies that we need to be with us to tackle any of these 
challenges. And we are seeing those impacts right now in the 
trade war, frankly, that we are starting with our own best 
friends around the world.
    Second, the--I think that what we are seeing here is--and 
we are only seeing the beginning of it right now, as it just 
starts--in capitals around the world of our allies and our 
friends, they are making decisions right now. They are 
planning, just like companies, what kinds of policies and 
positions that they are going to be taking in the coming months 
and years when it comes to national security threats. And they, 
right now, are asking themselves very clearly, ``Can we trust 
the United States?''
    I think it is very instructive. Right after the G7 summit 
debacle, just a few weeks ago, the German Foreign Minister gave 
a speech in which he listed three main threats that concern him 
about the fate of Europe. One is Russia. Second is China. And 
the third is President Trump's America First foreign policy 
that he is pursuing right now. To me, that is incredibly 
concerning.
    Senator Menendez. Do you have a--just go--very quickly, do 
you have a view on the China question, who gets--in a tit-for-
tat, you know, who blinks? How--what--how much are they willing 
to endure?
    Mr. Fuchs. Well, I think that we have seen in recent years, 
and we are seeing right now--I think that the Chinese Communist 
Party, which, again, runs China. And we have to remember how 
China operates here. They are not a democracy. It is a 
dictatorship run by the Chinese Communist Party. They have one 
interest in mind, and that is maintaining stability and staying 
in power. And they do not want to lose face, because that helps 
them, they believe, lose legitimacy. And so, I believe that the 
Chinese Communist Party is highly likely to try to weather any 
storm and go tit-for-tat with the United States going forward.
    Senator Menendez. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Before turning to Senator Young, Mr. Bolten, I am sure you 
have high-level access to the White House, and you represent 
some of the titans of industry. Has anyone yet articulated to 
you the strategy behind using 232 in such a broad way against 
our allies?
    Mr. Bolten They have not, Mr. Chairman. And that is why we 
are concerned. I mean, we--from the positions I have served in, 
I would--I understand the politics. I understand the need of--
that leaders have of living up to commitments they make in 
campaign rhetoric. But, what the administration has pursued, 
here, under 232--and in 301, with China--has us deeply 
concerned, because there does not appear to be any strategy 
behind it that is designed to produce an outcome, other than 
just tariffs. And what we would--we are strongly encouraging 
the administration, and are very glad to see many Members of 
Congress encouraging the administration, is: Develop a strategy 
that can produce success. And success, in this case, means 
getting the international community aligned to put pressure on 
China to reform their trade policies and practices.
    The Chairman. I agree.
    Senator Young.
    Senator Young. It is a great segue, Mr. Chairman, because I 
am going to continue to hit the same note I did in the first 
panel, and the same note I have been hitting for a couple of 
months now with respect to our response to predatory 
international economic practices. We need a strategy. And this 
is important to Hoosiers. I really appreciated, Mr. Bolten, in 
your testimony, you referenced an Indiana-based manufacturer, 
Cummins, Incorporated, major company. They manufacture diesel 
and alternative fuel engines. And you note that Cummins, on 
account of what you characterize as an escalating trade war, 
must now pay a 25 percent tariff on manufacturing components it 
imports from China for use in U.S. production. You go on to 
note that the company is absorbing a 25 percent U.S. tariff on 
finished products that it manufactures in China for sale to 
off-highway equipment manufacturers in the United States. And 
if Cummins were to pass this tariff-related cost increase to 
its off-highway customers, it would lose vital sales in the 
market to European and Asian competitors. So, that brings it 
right close to home for the people I represent.
    Mr. Bolten, earlier this year, I introduced, along with 
various other Senators on both sides of the aisle, some 
legislation I mentioned in our first panel, the bipartisan 
National Economic Security Strategy Act of 2018, S. 2757. It 
would create a statutory requirement for, not just this 
administration, but for future administrations to periodically 
produce and submit to Congress a National Economic Security 
Strategy, just as we do a National Security Strategy, a very 
sensitive topic, but there is an unclassified version with a 
classified annex. Members of Congress respectfully engage back 
and forth, kick the tires of the strategy, and then we sort of 
move forward together as a country. I would just ask you, sir, 
Are you aware of the legislation I just referenced? And, if so, 
what are your initial or general impressions of it?
    Mr. Bolten Senator Young, the--we are now aware of your 
legislation. We are taking a look at it, so I do not have an 
official Business Roundtable position for you. But, I will give 
a personal view now, is, it is a good idea. I served in 
administrations where the exercise that the National Security 
Council goes through on a regular basis to produce a National 
Security Strategy is hugely beneficial, both to forming 
priorities within the administration and then holding 
yourselves accountable for, How are you doing against your 
priorities? And I am inclined to agree with you that doing the 
same on the economic front would be enormously beneficial, not 
just for the Trump administration, but any administration.
    Senator Young. And, Mr. Fuchs, you just, earlier, indicated 
that a strategy is an effective component making sure that we 
respond optimally to China; in particular, their predatory 
economic practices. My words, not yours. But, I am going to 
allow you to explain to me and others why you believe a 
strategy is needed, sir.
    Mr. Fuchs. Well, thank you, Senator.
    I am aware of your legislation and am closely reviewing it, 
as well. But, to your question, I absolutely believe that this 
country needs a coherent and comprehensive strategy that sees 
the trade aspects in the broader picture of how best we can 
grow the economy here at home in a way that works for all 
Americans, and that protects our international interests and 
our national security at the same time. So, I absolutely 
believe that a strategy in this regard is necessary, and I am 
encouraged, frankly, by some of the efforts that I have seen in 
Congress for Congress to push the administration to develop 
such a strategy, especially in this case.
    Senator Young. Thank you, much.
    I would note that there is a real distinction that needs to 
be made between objectives, on one hand, and a more rigorous, 
more thorough and comprehensive strategy developed across 
different departments of government, working with, say, the 
National Economic Council, National Security Council. Some 
bullet points on a PowerPoint slide with five pillars, frankly, 
is not a strategy. And you know that. To the extent I have 
any--there is a lot of energy behind that comment, it is just 
conviction. So, thank you for your remarks about the importance 
of a strategy.
    So, Indiana is not only a major producer of agricultural 
products, as it is generally perceived to be, we are also the 
most manufacturing-intensive state in the country and home to 
major automobile producers. Companies like Toyota and Subaru 
and Nissan, they employ tens of thousands of Hoosiers. These 
companies operate by making sure that their global supply 
chains go uninterrupted.
    And, Mr. Bolten, in your prepared testimony, you say the 
administration is now investigating whether to employ the same 
national security argument to restrict imports of automobiles 
and auto parts under Section 232. Sir, can you describe in more 
detail what you think would be the consequences of this 
approach for companies producing automobiles in Indiana and 
beyond, and for American consumers?
    Mr. Bolten In a word, disastrous. The steel and aluminum 
tariffs are already having a really detrimental effect on a lot 
of downstream users of steel and aluminum that will ripple 
throughout the economy. Now, take that and multiply by 10, 
because the automobile trade in this country is much larger. It 
is in--you know, we import close to $400 billion per year in 
autos and auto parts. Now, if those supply chains are 
disrupted, you know, who knows how long it takes to reestablish 
them. There probably are not ways to--for the companies to get 
the products they need to put into their autos. It just makes 
the entire industry less competitive, putting aside, even, the 
fact that--of the dramatic price increase, a tax on the 
American people. And the people who will end up paying that tax 
are the people who can least afford to do it.
    So, one of the reasons why we are here, testifying so 
strongly, Mr. Chairman, is not just because of the effect that 
the use of 232 has had on steel and aluminum tariffs, but the 
threat to broaden it to a--products like autos and auto parts 
would really be devastating to this economy.
    Senator Young. Thank you, gentlemen.
    The Chairman. Thank you.
    Senator Cardin.
    Senator Cardin. Well, thank you both for your testimony.
    There is a common theme, here, about having a plan and 
strategy. We have not--we do not understand what it is in 
regards to the trade actions taken by this administration, but 
we could say the same thing in regard to so many other areas 
under this committee's jurisdiction, including North Korea.
    I have been asked a question, Mr. Chairman, as I go through 
the halls, as to North Korea questions, and I can respond 
pretty easily by saying I do not know what the administration 
is doing, because they have not briefed us. So, we do not know 
their strategies. And that presents a problem, because, quite 
frankly, many of us think they do not have one. And it would be 
very comforting to understand that.
    The same thing with trade. We had several meetings with the 
USTR in Finance, and we could not yet figure out a strategy.
    Either one can respond, but I want to go to Mr. Bolten's 
statement which you gave, which I thought laid out pretty 
simplistically what needs to be done. I want to start with 
China, if I might.
    The way you laid out China's trade practices, I think just 
about every member of this committee would agree. I think just 
about every Member of Congress would agree that we want to see 
a change in China's trade policies. But, you start off by 
saying you need to detail how their current practices must 
change with a realistic timeframe for being able to achieve 
that. And the last point I will get to in one minute: working 
with our allies.
    So, do we have a detailed understanding of where this 
administration would like to see us end up with China, and a 
timeframe that is understandable to achieve that? Have you--has 
that been shared with either one of you?
    Mr. Bolten It has not been, Senator Cardin. And that is why 
we are here, speaking out about it. We have tried to have that 
dialogue with the administration. And, by and large, by the 
way, the administration has been very receptive when our 
business community comes in to express concerns, and have 
always given us a good hearing. We feel like we have had a good 
hearing on these trade issues, but have not broken through on 
the risks that are being posed by the way the administration is 
going about it.
    Now, on the China question, there is still time. And I 
believe that, if Ambassador Lighthizer were here right now, he 
would say, ``Yes, we have a strategy, and we are--you know, we 
are working on a negotiating position.'' But, the anxiety 
throughout the business community, big and small, is that that 
strategy is not one that is coherent and designed to produce 
success. Success, in this case, is not having a tit-for-tat 
trade tariff imposition between us and the Chinese. Success, in 
this case, is some reform of Chinese trade policies and 
practices. There is time for the administration to do that. I 
am hopeful they are doing that. We are here, speaking out, 
because we do not see evidence that they are.
    Senator Cardin. Mr. Fuchs, let me have you focus on this. 
The complaints against China are global. We are not the only 
country that has major concern by the way China behaves. The 
question I asked the Secretary in the former panel is if she 
can name even one country that agrees with the Trump strategy 
to get China to change their practices. And she could not even 
name one country. Do you know of any of our trading partners 
that believe America is moving in the right strategy direction 
to get China to change these policies?
    Mr. Fuchs. No, Senator. I believe that there is not one 
that I can think of. And, in fact, I can only think of 
countries that believe that we are going in exactly the wrong 
direction. And for a few reasons, some of which have already 
come up.
    First, I think that the kinds of sanctions--tariffs, excuse 
me, that we are imposing right now with China in an all-out 
trade war, basically, are not going to actually solve the 
specific problems that we have with China.
    Second of all, we need our allies and partners in order to 
actually pressure China here. But, of course, as we have 
pointed out earlier here, we are actually making enemies of our 
partners and our allies instead of actually enlisting them to 
help us with China.
    The third issue here is that I would say we also need to 
look a little bit beyond the trade space here, and to see our 
broader national security interests, as well. When we are going 
after China right now with over-the-top, across-the-board 
tariffs on everything, which are going to be counterproductive, 
we also undermine our own position, vis-a-vis North Korea, 
right now. We are not helping ourselves as we try to engage in 
diplomacy to get North Korea to change its behavior, for which 
we need China's help. Right now, we are taking away our own 
leverage with China when it comes to North Korea.
    Senator Cardin. Thank you.
    Mr. Chairman, I am--just one more point. I am not going to 
ask for a response.
    The Secretary testified about a robust interagency process 
in regards to the 232 process. And I challenged her on that as 
to how much time Commerce spent and how much with interagency. 
And she could not give me any definitive judgment. I understand 
that there are members of the administration that are open for 
your meetings, but I question whether there was any input--
meaningful input into this process by the decision maker before 
these tariffs were, in fact, imposed.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Rubio.
    Senator Rubio. Thank you both for being here.
    Mr. Bolten, as I saw your written testimony, I want to sort 
of--the path forward that you outlined is one that I think, by 
and large, is a consensus, but there is a one point that I 
would disagree with, and I wanted to detail it. But, your plan, 
as I understand it--and many have argued, as well--is, number 
one, we need to detail the problems that we have with China. 
And you have accurately outlined them: the unfair restrictions 
on access and investment, the IP theft, the forced transfer of 
technology, subsidies to domestic production, and then 
restricting the digital trade, you know, forcing them to have 
computing services facilities located within China; the 
requirement on Apple, for example, to place the cloud there, 
and the like. The second part of your--so, you have detailed 
those right--the second is giving them a deadline to change 
these things, and telling them how we want to see those 
changes. And the third is, ``And here is a list of things we 
are going to do if you do not meet it by this deadline.'' The 
fourth is working with our allies--and, in particular, I would 
imagine, you know, Canada, Mexico, and the EU, which are three 
of our four largest export markets--by giving them an exemption 
from the 232 tariffs. And I would agree with all of those 
pieces, certainly one and four. I agree with the things you 
have described in--as the problems--and I would agree with the 
fact that we would be in a much stronger position if we were 
working with Canada, Mexico, and the EU. We just heard the 
testimony from the State Department that, in every one of these 
meetings, we raised the China issue. But, I assure you--I am 
confident that it is very difficult to get that message across 
when these other things are ongoing.
    The problem that I have is with them giving them the 
deadline, and this is what we are going to do, and we are going 
to have a serious negotiation. Number one, the history of 
serious negotiations with China on matters such as this is not 
promising. By and large, they have shown a propensity to sort 
of try to get us to accept symbolic measures in exchange for 
nothing, really. I mean, in exchange for us walking away from 
whatever it is we are threatening to do. But, here is the 
bigger problem. And that is that, on two of these items, which 
are the ones the President's memorandum in March focused on--IP 
theft and, in some ways, forced technology transfer--I think 
there is an argument, a very strong argument to be made that 
what China is doing on that now is a clear and very serious 
national security threat to the United States. These are acts, 
in my opinion, of direct economic aggression, not simply for 
purposes of economic prosperity, but to displace the United 
States, supplant us in the world as a dominant power in many of 
these fields.
    And when you combine that with what they have outlined in 
China 2025, which, interestingly, they are now seeking to not 
talk about as much anymore, but it is most clearly the design 
they have in place--when you combine that with statements that 
have been made by President Xi about how there can only be two 
suns in the universe, and implying that, ``There can only be 
one great power in the world, and it is going to be us''--when 
you combine it with all these other factors, this is not just a 
conflict that we have, here, with a nation that simply seeks to 
have a bigger economy. They want to supplant us in all of these 
critical fields.
    I do not know if you see some of the technology that is 
being stolen and transferred, some of the stuff becomes 
irreversible. As an example, any gains they make in 5G 
technology--if they establish supremacy in 5G, which they are 
on the path to doing, potentially, all of the technologies and 
industries of the 21st century depended upon by 5G will be 
built to Chinese standards, meaning we will now be out of place 
in regards to that. If they dominate biotechnology and the 
like----
    And so, it seems like the biggest issue you have with the 
administration's approach on China is that we are not working 
with our allies under 232, which I agree, we would be stronger, 
but that they did not--that they took the actions first, as 
opposed to giving them a moment to--is that an accurate 
assessment? I mean, your biggest complaint is, we did not--we 
could do these things, but first we should have given serious 
negotiations a chance to work.
    Mr. Bolten Yeah, that is roughly it. But, I agree with 
everything you just said, and, were I the negotiator, I would 
put at the top of the list exactly the issues you mentioned, on 
intellectual property theft, technology transfer and subsidies 
in critical industries. I would put those at the top of the 
list, and I would make clear what the consequences for the 
Chinese would be if they do not change their policies or 
practices.
    But, I would also put on paper, ``Here is what we want you 
to do. Here are the specific policies we want you to adopt.'' 
One thing that almost everybody that is in the business 
community that has interacted with the Chinese government--and 
I imagine members of the--this committee have had a similar 
experience--finds that, when they talk to folks in the Chinese 
government, the Chinese government says, ``Well, what do you 
want? Tell us what you want.'' And waving our hands and saying, 
``We want the--all of these problems fixed immediately''--that 
is true, and that would be great, but we need to give the 
Chinese a coherent and practical list of the stuff we want them 
to do, put it on paper. You do not have to show it to those of 
us in the private sector. It is probably confidential. It ought 
to be shared with you, so that you know what is on the priority 
list of the administration. It ought to be possible to write it 
down. And the administration ought to put that piece of paper 
on the table in front of the Chinese before they just jump off 
and announce huge retaliation.
    Senator Rubio. Well, my last question, Mr. Chairman, 
because I am out of time, is, assuming they refuse to do 
anything, would the list of things that we would threaten to do 
include the things that are being done now under the memorandum 
and the actions the President has taken?
    Mr. Bolten They could. I mean, the--you know, the 301 
authority is an operation outside the inter--the rules of the 
WTO, although----
    Senator Rubio. So is stealing intellectual property.
    Mr. Bolten So is stealing intellectual property. And the 
WTO does not provide adequate protections for intellectual 
property. And we ought to pursue our rights under the WTO, 
where we have them. WTO does not provide enough rights. So, we, 
in the Business Roundtable, are not ruling out the possibility 
of the administration using authorities--its statutory 
authorities that are not sanctioned by the WTO, but they ought 
to be a last resort, not a first.
    The Chairman. I want to thank you for that last point. I 
think that, actually, Congress and the world, except for China, 
would be unified around our efforts if we focused on the things 
that you and Senator Rubio just laid out. I do not think there 
would be any dissension whatsoever in Congress. It would be 
very difficult to find a witness that would counter an effort 
that was solely focused on intellectual property theft, 
subsidizing state-owned enterprises, and that type of thing. 
And that is what is interesting about this, is, there is a 
problem that does need to be solved, and if you dealt with it 
in a coherent way, with your friends around the world, you 
could solve that problem.
    Let me ask you this question. You alluded to understanding 
politics. You were in the White House, and you understand that 
people make statements during a campaign. We have been getting 
some signals that, ``Hey, you know, your 232 effort, is there 
any way you guys would wait until after the election?'' And 
then there has been other statements made by the administration 
about, ``Well, we are going to wait and deal with NAFTA after 
the election.'' And I do not know what is driving this. Again, 
it is so incoherent, it would be difficult to even begin to 
understand what is driving the policy that is in place today. 
But, let us say that this policy is 100 percent about politics. 
Let's say this is really about the midterm elections, and that, 
really, the NAFTA issue will be dealt with after the elections. 
The tariff issues that we are currently dealing with will be 
dealt with after the elections, the auto car--the auto industry 
tariffs will be dealt with after the elections. So, let us just 
say that this policy that we now have, that cannot be 
articulated, that lacks coherency, were to stay in place 
between now and the first Tuesday in November. What would be 
the effect, if you will, on the business community and on our 
relationships around the world?
    Mr. Bolten A lot of damage is being caused every day. Bear 
in mind, we are only a few weeks into the first phases of the 
steel and aluminum tariffs. We are only in the first few days 
of the retaliation that has been put in place against those 
tariffs. There is more to come, even on the steel and aluminum 
side, much less the auto side. So, significant damage is being 
done every day.
    I have heard people in the administration say, ``You know, 
oh, okay, but do not worry, it is going to get resolved. It 
will just take a little time. Everybody needs to absorb a 
little pain in the shortrun.'' The pain in the shortrun is not 
small, to begin with. It is getting larger by the day. And the 
additional measures that the administration is now threatening 
threaten to exponentially increase that. And it is not a 
situation, from the business standpoint, where, okay, we suffer 
a little bit of damage today, but everything is okay 2 weeks 
from now. When you disrupt supply chains, when you demonstrate 
that we are an unreliable trading partner, you lose those 
relationships permanently. When you stop selling to a 
customer--Harley-Davidson is faced with a choice of either 
stopping selling in Europe, because they are the subject now of 
retaliation from Europe, or building their Harleys for Europe 
someplace else in order to send them into the--into Europe 
without a 25 percent tariff. That is a terrible Hobson's Choice 
for Harley-Davidson to make. But, I think they are making the 
right one by going someplace else to sell into Europe, because, 
once they stop selling in--Harleys in Europe, even for a few 
months, they may be knocked out of that market permanently.
    So, the damage is incremental, day by day, but no one 
should assume that that incremental damage does not last a 
whole lot longer than the trade dispute does.
    The Chairman. Thank you.
    You want to say something?
    Mr. Fuchs. Yes. I would just fully agree with Mr. Bolten, 
and I would say that, for our relationships around the world, 
and our alliances and our national security, the--without a 
doubt, the longer this goes on, the worse it is. There were 
reports, in the recent weeks, that in anticipation of a China-
EU summit that is happening next week, China has been pitching 
our European allies on an--on forging an anti-U.S. trade 
alliance. I mean, just stop to think about that for a second, 
right? Now, for the moment, it sounds like the Europeans are 
not game for it. But, if this continues to go on for months and 
months and longer, I wonder how long they will hold out.
    The Chairman. Yeah.
    I wonder what we would be discussing today if we had 
continued along the path of negotiating TPP, continued along 
the path of negotiating TTIP. We would be having a whole 
different kind of conversation, and be in a much better place 
to counter the real threat, that is what China is doing.
    Senator Coons.
    Senator Coons. Thank you, Chairman Corker. And thank you 
for your clear-eyed and determined leadership on this issue.
    And, Mr. Bolten, if I might, it is terrific to have your 
clear and forceful testimony today. Let me just take a few 
minutes, if I could, and make sure I have understood it 
correctly.
    You have testified that Trump's tariffs are a tax hike on 
American businesses and consumers. Is that right?
    Mr. Bolten Correct.
    Senator Coons. And you have testified that it hurts 
American companies by making our products less competitive. It 
leads to lower revenue, lost profits, and fewer jobs.
    Mr. Bolten Correct.
    Senator Coons. And you say that it invites harmful 
retaliatory tariffs from many of our allies--in fact, I think 
you called it a ``cascade of retaliatory tariffs''--that could 
cost 16 jobs for every job that we might protect. And that is 
just with this early round of tariffs for steel and aluminum.
    Mr. Bolten Correct.
    Senator Coons. And you anticipate a dramatically greater 
impact if the administration does, indeed, go ahead with 
another 200 billion in tariffs, correct?
    Mr. Bolten Correct.
    Senator Coons. And last, you view this as a misuse of the 
President's statutory authority under Section 232, and you urge 
congressional action.
    Mr. Bolten Yes.
    Senator Coons. You are a Republican, are you not, sir?
    Mr. Bolten I am.
    Senator Coons. A former Chief of Staff to the last 
Republican President?
    Mr. Bolten Yes.
    Senator Coons. And the head of an organization known for 
its leftist and radical views, the Business Roundtable?
    [Laughter.]
    Mr. Bolten We are a bipartisan organization that advocates 
in support of a strong U.S. economy and----
    Senator Coons. All joking----
    Mr. Bolten --tries to work with both parties in achieving 
that.
    Senator Coons. All joking aside, Mr. Bolten, I just think 
it is striking that someone of your experience and pedigree and 
representing the organization you do is so forceful in asking 
for congressional action, something--I cannot remember when a 
BRT president came before us and urged congressional action 
against a sitting Republican President.
    How does this end? How does this end? You were here for the 
previous round of questioning, where we had the current 
Assistant Secretary from the administration. And questioners, 
Republican and Democrat, asked for--demanded--a strategy, more 
clarification, ``Where is the off ramp? When does this stop?'' 
And, as I said, in questioning Assistant Secretary Singh, I am 
hearing from dockworkers in Wilmington, Delaware, who know that 
shiploads of steel from Sweden and Finland may not be coming 
this winter, that we may face a loss of revenue and employment 
in our Wilmington dockyards; and from farmers downstate, our 
soybean farmers, folks who were, generally speaking, pretty 
strong supporters of the Trump agenda, are now concerned that 
they are facing the lowest prices for their commodity in a 
decade. And this is just the first round.
    If I understand your testimony correctly, it is going to be 
very difficult to reverse this, it is going to have significant 
unintended consequences, and it is Americans who are going to 
pay increased taxes, whether it is an increased tariff burden 
as consumers of products or as employees of companies that will 
be less competitive. In your view, how urgent is it that we 
take action, and how does this end?
    Mr. Bolten Well, we are here, speaking out so strongly, 
because we are concerned about exactly the things you have 
mentioned. You know, it is not necessarily a comfortable thing 
for the head of the Business Roundtable to come forward and 
speak out against an administration that has been so effective 
for American business on issues like taxes and regulation and 
workforce training and skilling. On all of those issues, we 
have cooperated tremendously well with the administration. And 
I think the results are showing up in a strong economy and very 
strong business optimism. So, it is a difficult thing for the 
head of this organization to come forward and speak out so 
strongly against the administration's trade policies, but we 
believe they are headed in a very dangerous direction.
    Now, as I said in response to questions about China, I 
think there is time to put it on a constructive path. The 
administration may be in the process of pulling together a 
serious negotiating agenda with the Chinese that will produce--
that could easily, at this moment, produce significant reforms 
in China. The question is, Are they prepared to do so? And are 
they prepared to remove some of the impediments that they put 
in the--in place, of having all of our friends and allies 
support us? Because the likelihood of success with China is 
dramatically improved if we get the rest of the world, which 
basically agrees with us, behind our negotiating strategy.
    So, I do not know how it ends. I--it can--this story can 
have a good ending, but there is relatively little time to 
point it in that direction.
    Senator Coons. What I hear you saying is that it is urgent 
that the Trump administration reverse course, in terms of 
broadly imposing tariffs on our closest and most vital allies 
that will have very negative consequences in my home State of 
Delaware, from farmers downstate to dockworkers in Wilmington, 
and instead focus on building a team of allies to confront 
China's real, aggressive actions that have undermined global 
trade, and that, if we do not act soon, the consequences will 
be large, they will be lasting, they will undermine our 
alliances and our national security, and they will harm 
American competitiveness and jobs. That strikes me as a pretty 
urgent call to action. And I appreciate your testimony today.
    Mr. Chairman, I appreciate the chance to work with you on 
what is an important agenda for America.
    The Chairman. Thank you. Thank you so much.
    Senator Gardner.
    Senator Gardner. Thank you, Mr. Chairman.
    I thank you both for the opportunity to have you before the 
committee today to hear your expertise and wisdom for this 
committee. And I know that you have both probably had at least 
some time to watch the previous panel and some of the questions 
that were asked. So, thank you for being with us still.
    I wanted to follow up, Mr. Bolten, on some of the questions 
that I asked to Secretary Singh about China's actions and 
activities. You know, as I mentioned to--in the question to 
her, in January of this year China suspended access to 
Marriott's website for referring to Taiwan as a country. This 
blockage was lifted only after Marriott's chief executive 
issued a public apology. You heard me say that. We now know 
that China is going after U.S. airlines for a potential action 
because they referred to--did not refer to Taiwan as part of 
China. I worry about what they are trying to do to U.S. 
companies.
    Then--and then I mentioned Micron. And I know Senator Risch 
mentioned Micron. This is the case of a company, a U.S. company 
that had a facility in Taiwan. A Taiwan employee was hired by a 
company in China. And when I met with the Foreign Minister in 
Taiwan, they said China is doing more and more of this, they 
are hiring people from Taiwan, trying to brain-drain Taiwan, 
take it, and take their intellectual property with them, if 
they can get away with it, to China. And, in this case, this 
individual gave, apparently, a lot of information to China. 
They set up a facility and plant replicating what Micron had 
done. They went to court, they got a court injunction. And now 
a U.S. idea is being stopped by China, claiming it is their own 
completely stolen information.
    There was a company in my State of Colorado that sold a 
product to China, that sent the product to China. A couple of 
weeks later, it got the schematics back from China, reverse-
engineered the product. This company in China that they have 
sold the equipment to had a couple of questions for the company 
in Colorado that manufactured it. The name of the new company 
in China, though, was the exact same name of the company in 
Colorado.
    And so, with this airline activity, with the Marriott 
activity, should we--what should we be doing to help make sure 
that American--American airlines, American hotels, American 
businesses overall are not falling for the bullying of Chinese, 
sort of, public diplomatic berating?
    Mr. Bolten Countering the Chinese bullying of American 
companies is one of the most difficult problems. The kinds of 
problems you described, for example, with Micron, those are 
happening throughout the member companies of--the 200 member 
companies of the Business Roundtable. They wisely do not talk 
about it publicly very much, because the bullying will get 
worse if they raise their heads above the parapet. But, almost 
everybody that deals in high technology and is either trying to 
do business in or competing with Chinese entities has faced 
some similar serious kinds of problems.
    That is what needs to be at the top of a serious 
negotiating agenda. And we ought to be able to write down what 
specifically it is that we are demanding that the Chinese do, 
and have that negotiation. Not an easy negotiation. The Chinese 
are not easy to deal with. They will stretch us out, as Senator 
Rubio was suggesting, over long periods, and give only partial 
concessions, and so on. That has been the history of 
negotiations with China. But, that is the road that has to be 
traveled. That is the tough work of trade diplomacy. And we are 
here to call on the administration to do it.
    Senator Gardner. Well, and I just hope, to these companies 
that are being bullied, that they will not fall for it, that 
these airlines will not fall for it, because if they fall for 
it, they will be soon subject to the same kind of antics that 
Micron has found themselves subject to. They can remove--they 
can follow what China wants to do, when it comes to Taiwan on 
their website, but pretty soon they may find other kinds of 
activities that they are also subject to in China, because they 
have allowed that kind of corruption, that kind of bullying, 
that kind of lawlessness to occur when it comes to intellectual 
property rights, when it comes to standards of trade, when it 
comes to how they are acting in response to--how they are not 
acting in accordance with standards that we hope all people are 
living up to.
    So, thank you both for the opportunity to be here today and 
to have your testimony.
    Thank you.
    The Chairman. Thank you.
    We thank you both for being here and for your patience. We, 
for some reason, have a protocol in this committee, where we 
have administration witnesses come in and then panelists like 
yourselves. And, unfortunately, by the time it gets to the real 
intellect, if you will, most people are gone. But again, we 
thank you both for spending time to be here.
    There will be some questions after. We are going to ask for 
questions to come in before the close of business Friday. And, 
to the extent you could get to those fairly quickly, we would 
appreciate it.
    But, you have added a lot both to the record, but also to 
people's thinking. We thank you both for what you do in your 
respective roles to help shape policy. And we look forward to 
seeing you again.
    Thank you so much.
    The meeting is adjourned.
    [Whereupon, at 12:35 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


                Responses of Manisha Singh to Questions 
                  Submitted by Senator Robert Menendez

                  input by state into the 232 process
    The administration has consistently weakened and devalued our 
diplomats and the decades of experience and expertise that the State 
Department has provided. At the same time, it has cited national 
security grounds as justification for tariffs on our allies.

    Question. Can you share with the Committee any data or analysis 
your Bureau provided to the Commerce Department related to the 232 
investigations into steel, aluminum, and automobiles and automobile 
parts?

    Answer. I cannot comment on the Department's analysis or position 
in interagency deliberations. The Department of Commerce issued an 
extensive public report on the impact of imports of foreign steel and 
aluminum on the national security of the United States. These reports 
provide significant data and analysis justifying the administration's 
policy. The Department of State has provided foreign policy guidance to 
the 232 process. I anticipate similar reporting will be made available 
when the Department of Commerce concludes its automobile and automobile 
parts investigation.
                        breastfeeding resolution
    As mentioned in the hearing, a July 8th New York Times article 
reported that in May, the State Department threatened Ecuador with 
punitive trade measures if it refused to drop a resolution on 
breastfeeding at the World Health Organization:

    Question. Is there any statute that authorizes the administration 
to take trade actions against a country if they refuse to support the 
U.S. position on a global health issue in an international forum like 
the WHO?

    Answer. I am not aware of any statute that expressly authorizes 
trade actions in response to discussions ongoing in the World Health 
Organization.

    Question. Has the department made similar threats before?

    Answer. As the Department has stated publicly, media reports 
suggesting the United States threatened a partner nation related in 
connection with a recent World Health Assembly resolution are false. 
The United States works constructively in international venues to 
identify common cause when possible and does not shy away from 
expressing its disagreement when necessary. On the resolution in 
question, the United States was a leading voice in negotiations that 
led to adoption of the resolution by consensus.

    Question. Is it the view of the State Department that trade threats 
should be used to gain leverage in other areas?

    Answer. The Department believes that trade is a tool that can be 
used to support our overarching foreign policy objectives. The 
President has made clear that economic security is a fundamental 
component of our national security.

    Question. Were you consulted on this tactic?

    Answer. As the Department has stated publicly, media reports 
suggesting the United States threatened a partner nation in connection 
with a recent World Health Assembly resolution are false. The United 
States works constructively in international venues to identify common 
cause when possible and does not shy away from expressing its 
disagreement when necessary. On the resolution in question, the United 
States was a leading voice in negotiations that led to adoption of the 
resolution by consensus.
                  country exclusions from 232 tariffs
    Earlier this year, the administration announced that it reached 
agreements with South Korea, Australia, Brazil, and Argentina to 
address the national security threats from steel or aluminum imports 
from those countries. As a result, the administration agreed to suspend 
tariffs on imports from these countries and instead implement a quota 
system.

    Question. When will the administration share the text of those 
agreements with Congress?

    Answer. The United States and certain other countries have 
successfully concluded discussions on satisfactory alternative means to 
address the threatened impairment to our national security caused by 
steel or aluminum imports from those countries. The President's 
proclamations describe the nature of the measures agreed with those 
partners.
                           quota allocations
    One of my constituents in New Jersey uses specialty Korean steel to 
manufacture life-saving medical devices. It is my understanding that 
the Korean authority that implements the quota is allocating the lion's 
share to Korea's large steel producers to the detriment of specialty 
manufacturers like my constituent's supplier.

    Question. Is the administration monitoring how countries with quota 
arrangements are allocating their quota?

    Answer. I cannot speak for the rest of the administration, but the 
Department of State is not monitoring how countries are allocating 
their quotas.

    Question. Given that the administration is not accepting product 
exclusion applications for imports from countries with quota 
arrangements, what other avenues are available for my constituents to 
get the imports they need to sustain manufacturing jobs in New Jersey?

    Answer. I would encourage any company, including your constituent, 
to consider alternate U.S. and third country suppliers.
                               __________

                Responses of Manisha Singh to Question 
                     Submitted by Senator Tim Kaine

    As we discussed at the Foreign Relations Committee hearing, I am 
concerned about the administration's recent tactics at the World Trade 
Organization (WTO). The postwar international rules-based trading 
system is being paralyzed by actions being taken by the administration, 
from unilateral protectionist trade actions like collecting tariffs on 
our allies over spurious national security claims, to withholding 
support for the appointment of new appellate body members to the WTO. 
The appellate body is where governments go when trade partners are 
violating WTO rules. The appellate body currently has only 4 of 7 
appellate body members in place with another appellate body member has 
a term ending in September. If an appointment to fill that slot is 
blocked by the Trump administration, the appellate body could no longer 
be able to fully function or take on new appeals. Around 80 percent of 
WTO cases go to appeal. The U.S. has cases pending at the WTO and a 
non-functioning appellate body would put these businesses in a 
difficult position:

    Question. What is the strategy and justification for withholding 
support for the appointment of appellate body members at the WTO?

    Answer. The Office of the United States Trade Representative (USTR) 
leads on WTO issues for the administration. The current administration, 
as well as past administrations, have been clear that the United States 
has significant concerns with the Appellate Body. It has been the 
longstanding position of the United States that panels and the 
Appellate Body are required to apply the rules of the WTO agreements in 
a manner that adheres strictly to the text of those agreements, as 
negotiated and agreed by its Members.
    We have concerns that the Appellate Body, however, has issued 
reports that would seek to add to or diminish rights and obligations 
under the WTO Agreement. We also have serious concerns with the 
Appellate Body disregard for the rules governing the Appellate Body 
itself. For example, without any support in the text of the agreement, 
the Appellate Body has taken the position that it can deem persons 
whose terms have expired to remain Appellate Body Members for the 
purposes of particular disputes.
    Unless and until U.S. concerns with the Appellate Body have been 
addressed, it is difficult to see on what basis we would agree to move 
forward with the nomination of new Appellate Body members.

    Question. What specific events need to occur for the 
administration's to lift those holds?

    Answer. We have serious concerns with the Appellate Body's 
disregard for the rules governing the Appellate Body itself. For 
example, without any support in the text of the agreement, the 
Appellate Body has taken the position that it can deem persons whose 
terms have expired to remain Appellate Body Members for the purposes of 
particular disputes. Unless and until U.S. concerns with the Appellate 
Body have been addressed, it is difficult to see on what basis we would 
agree to move forward with the nomination of new Appellate Body 
members.

    Question. Will the administration allow the WTO appellate body to 
fall below a quorum, where it can't continue functioning?

    Answer. I am not in a position to comment on a hypothetical 
question for which the administration has not made a policy 
determination.

    Question. If it does, how does the administration plan to resolve 
U.S. offensive cases that cannot be resolved without a functioning 
appellate body?

    Answer. I am not in a position to comment on a hypothetical 
question for which the administration has not made a policy 
determination.
                               __________

The New York Times Article Submitted for the Record by Senator Menendez




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