[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
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web:
http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
40-390 PDF WASHINGTON : 2020
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
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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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