[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]






 
                            U.S. CHINA TRADE

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

                                HEARING

                               before the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 27, 2019

                               __________

                            Serial No. 116-6

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
         
         
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]         




               U.S. GOVERNMENT PUBLISHING OFFICE 
 36-236                  WASHINGTON : 2020


                      COMMITTEE ON WAYS AND MEANS

                RICHARD E. NEAL, Massachusetts, Chairman

JOHN LEWIS, Georgia                  KEVIN BRADY, Texas
LLOYD DOGGETT, Texas                 DEVIN NUNES, California
MIKE THOMPSON, California            VERN BUCHANAN, Florida
JOHN B. LARSON, Connecticut          ADRIAN SMITH, Nebraska
EARL BLUMENAUER, Oregon              KENNY MARCHANT, Texas
RON KIND, Wisconsin                  TOM REED, New York
BILL PASCRELL, JR., New Jersey       MIKE KELLY, Pennsylvania
JOSEPH CROWLEY, New York             GEORGE HOLDING, North Carolina
DANNY K. DAVIS, Illinois             JASON SMITH, Missouri
LINDA SANCHEZ, California            TOM RICE, South Carolina
BRIAN HIGGINS, New York              DAVID SCHWEIKERT, Arizona
TERRI A. SEWELL, Alabama             JACKIE WALORSKI, Indiana
SUZAN DELBENE, Washington            DARIN LAHOOD, Illinois
JUDY CHU, California                 BRAD R. WENSTRUP, Ohio
GWEN MOORE, Wisconsin                JODEY ARRINGTON, Texas
DAN KILDEE, Michigan                 DREW FERGUSON, Georgia
BRENDAN BOYLE, Pennsylvania          RON ESTES, Kansas
DON BEYER, Virginia
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
TOM SUOZZI, New York
JIMMY PANETTA, California
STEPHANIE MURPHY, Florida
JIMMY GOMEZ, California
STEVEN HORSFORD, Nevada

                     Brandon Casey, Staff Director

                 Gary J. Andres, Minority Chief Counsel


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of February 20, 2019, announcing the hearing............     2

                                WITNESS

The Honorable Robert E. Lighthizer, U.S. Trade Representative, 
  The Office of the U.S. Trade Representative....................     6

                        QUESTIONS FOR THE RECORD

From Chairman Richard E. Neal to Ambassador Robert E. Lighthizer.    87
From Trade Subcommittee Chairman Earl Blumenauer to Ambassador 
  Robert E. Lighthizer...........................................    91
From Representative Brad Wenstrup to Ambassador Robert E. 
  Lighthizer.....................................................    93
From Representative Kenny Marchant to Ambassador Robert E. 
  Lighthizer.....................................................    94
From Representative George Holding to Ambassador Robert E. 
  Lighthizer.....................................................    96
From Representative Linda Sanchez to Ambassador Robert E. 
  Lighthizer.....................................................    99
From Representative Jason Smith to Ambassador Robert E. 
  Lighthizer.....................................................   100
From Representative Suzan DelBene to Ambassador Robert E. 
  Lighthizer.....................................................   103
From Representative Darin LaHood to Ambassador Robert E. 
  Lighthizer.....................................................   105
From Representative Gwen Moore to Ambassador Robert E. Lighthizer   107
From Representative Stephanie Murphy to Ambassador Robert E. 
  Lighthizer.....................................................   109
From Representative Brian Higgins to Ambassador Robert E. 
  Lighthizer.....................................................   110
From Representative Jackie Walorski to Ambassador Robert E. 
  Lighthizer.....................................................   111
From Representative John Lewis to Ambassador Robert E. Lighthizer   113
From Representative John Larson to Ambassador Robert E. 
  Lighthizer.....................................................   114
From Representative Bill Pascrell, Jr. to Ambassador Robert E. 
  Lighthizer.....................................................   115

                       SUBMISSIONS FOR THE RECORD

The Hon. Kevin Brady and the Hon. Vern Buchanan, Letter..........   119
The Hon. Darin LaHood, Article...................................   121
Agricultural Trade Associations..................................   125
Air-Conditioning, Heating, and Refrigeration Institute (AHRI)....   127
American Apparel & Footwear Association (AAFA)...................   130
Center for Fiscal Equity.........................................   132
International Dairy Food Association (IDFA)......................   137
McGuireWoods Consulting LLC......................................   140
National Association of Foreign-Trade Zones......................   141
Software & Information Industry Association (SIIA)...............   142
Solar Energy Industries Association (SEIA).......................   151
Steel Manufacturers Association (SMA)............................   153


                          U.S.-CHINA TRADE

                              ----------                              


                      WEDNESDAY, FEBRUARY 27, 2019

                     U.S. House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:00 a.m., in 
Room 1100, Longworth House Office Building, Hon. Richard E. 
Neal [Chairman of the Committee] presiding.

    [The advisory announcing the hearing follows:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                                                CONTACT: (202) 225-3625
FOR IMMEDIATE RELEASE
Wednesday, February 20, 2019
FC-5

                  Chairman Neal Announces a Hearing on

                            U.S.-China Trade

    House Ways and Means Committee Chairman Richard E. Neal today 
announced that the Committee will hold a hearing on U.S.-China Trade. 
The hearing will take place on Wednesday, February 27, 2019, in the 
main Committee hearing room, 1100 Longworth House Office Building, 
beginning at 10:00 a.m. The only invited witness is Ambassador Robert 
E. Lighthizer, United States Trade Representative.
      
    In view of the limited time available, oral testimony at this 
hearing will be from the invited witness only. However, any individual 
or organization not scheduled for an oral appearance may submit a 
written statement for consideration by the Committee and for inclusion 
in the printed record of the hearing.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
written comments for the hearing record can do so here: 
[email protected].
      
    Please ATTACH your submission as a Word document, in compliance 
with the formatting requirements listed below, by the close of business 
on Wednesday, March 13, 2019.
      
    For questions, or if you encounter technical problems, please call 
(202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but reserves the right to 
format it according to guidelines. Any submission provided to the 
Committee by a witness, any materials submitted for the printed record, 
and any written comments in response to a request for written comments 
must conform to the guidelines listed below. Any submission not in 
compliance with these guidelines will not be printed, but will be 
maintained in the Committee files for review and use by the Committee.
      
    All submissions and supplementary materials must be submitted in a 
single document via email, provided in Word format and must not exceed 
a total of 10 pages. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    All submissions must include a list of all clients, persons and/or 
organizations on whose behalf the witness appears. The name, company, 
address, telephone, and fax numbers of each witness must be included in 
the body of the email. Please exclude any personal identifiable 
information in the attached submission.
      
    Failure to follow the formatting requirements may result in the 
exclusion of a submission. All submissions for the record are final.

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you require special accommodations, please call 
(202) 225-3625 in advance of the event (four business days' notice is 
requested). Questions regarding special accommodation needs in general 
(including availability of Committee materials in alternative formats) 
may be directed to the Committee as noted above.
      
    Note: All Committee advisories are available at
    http://www.waysandmeans.house.gov/

                                 

    Chairman NEAL. And the Committee will come to order. Good 
morning.
    Today we welcome Ambassador Robert E. Lighthizer, the 
United States Trade Representative, to discuss U.S.-China 
trade.
    One of the challenges for the Ambassador, Members of the 
Committee, and the Administration, indeed, is the following, 
that as trade issues play out, there is generally some truth to 
what everybody says about trade.
    At the direction of the Trump Administration, there are 
currently U.S. tariffs on $250 billion of Chinese imports. In 
retaliation, China has imposed tariffs on $110 billion of U.S. 
exports. This hearing is our opportunity to make clear what 
Congress stands for on U.S.-China trade, and what the American 
people need to see in any trade agreement as the Administration 
concludes its work and memorandums of understanding with China.
    At the outset, I want to acknowledge that Ambassador 
Lighthizer is leading negotiations with China, and that he may 
want to exercise discretion about the level of detail he gets 
into as we reach the delicate stage of finishing, hopefully, 
the agreement. At the same time, I encourage the Ambassador to 
be as forthcoming and vigorous, as we know he is capable of 
doing, as possible.
    I have often observed that there is truth, again, as I 
noted earlier, to what everybody says about China: China has 
been good for some, but it also has been bad for many others.
    In 2000, when Congress voted on normalizing trade relations 
with China, the promise was that China would reform and become 
market-based, democratic, and would respect human rights. But 
the China that we trade with and compete with today is very 
different from the one we had hoped would emerge.
    China's economy, which has taken on some market 
characteristics, remains fundamentally state-directed. China's 
companies, state-owned or not, are called upon to serve the 
government's interests. China's trade and economic policies are 
coordinated through 5-year and 10-year plans. Those plans are 
backed by China's resources. They are aimed at fostering 
national champions, advancing China's economic and 
technological ambitions, and ensuring full employment in China. 
They are implemented at the expense of other economies, through 
the theft of others' intellectual property, and without regard 
to the global trade rules or human rights of workers.
    These are structural economic challenges that American 
workers and companies face in trading and competing with China.
    While this Administration confronts the same challenges 
with China that previous Administrations have faced, it has 
chosen to use tactics and tools that previous Administrations 
of both parties did not. The Administration's tariffs have been 
sweeping, disruptive, controversial, and indeed, for some 
sectors, painful. The Administration's promise is that high-
risk approaches will yield high rewards.
    My concern is that we are about to see the Administration 
use the same, from time to time, ineffective playbook that has 
been applied in the past.
    Recall that in April 2017 President Trump met with 
President Xi at Mar-a-Lago, as part of a 100-day plan for a big 
China deal. The Commerce Secretary declared that the outcomes 
from the exercise represented more than has been done in the 
whole history of U.S.-China relations. Of course, when we 
examined the results of those negotiations, we found that some 
of the commitments were not quite as advertised. Other 
commitments that were made promising changes in China were 
already in the process of being made.
    But in May of last year China's trade negotiation seemed 
like it was about to lead to a package of large purchase 
commitments for commodities like soybeans and natural gas, 
along with aircraft. Those negotiations clearly were not 
leading to the solution that we had hoped for, in terms of 
significant trade challenges. They, indeed, were put on hold.
    This time around, on December 1st, the President announced 
the 90-day period to fix our complex trade problems with China. 
And as we near the finish line, we are hearing once again about 
very large purchase commitments for commodities like soybeans 
and natural gas, along with aircraft.
    There is a primary difference, however, with these 
negotiations: That is that Ambassador Lighthizer is at the 
helm. He has time and again, I think, developed a vision that 
many of us on this Committee will support vigorously. And we 
believe that the structural problems that face America as it 
faces its trade relationship with China are well observed by 
the Ambassador.
    This Administration has chosen to take a path of high-risk 
confrontation. It must hold out for the good deal, a structural 
deal. The future of America's economic prosperity is in the 
balance.
    And with that I would like to recognize the Ranking Member, 
Mr. Brady, for an opening statement.
    Mr. BRADY. Thank you, Chairman Neal, for convening this 
hearing on America's trade relationship with China.
    And thank you, Ambassador Lighthizer, for your leadership 
in the ongoing negotiations with China, and for consulting with 
us today about where those negotiations stand and what comes 
next.
    We can all strongly agree that China has cheated on trade 
for decades, severely harming American workers and businesses. 
President Trump deserves significant credit for being the first 
President to confront China's unfair and predatory trade 
practices head-on, and insist on a new, fairer trading 
relationship with the United States.
    While we want China to buy more U.S. goods that support 
farmers, manufacturers, and professionals here at home, it is 
even more important for us to hold China accountable to meeting 
high international standards on intellectual property rights, 
on subsidization, on overcapacity, and on the other structural 
ways in which China distorts the global economy.
    A new era of fairer trade between China and the United 
States is in everyone's interest. The solution must be 
enforceable at every level of Chinese governance, measurable, 
and subject to corrective action should it fall short of 
commitments. And it should provide as much predictability as 
possible for our American job creators seeking to serve China's 
market.
    With a more level playing field and now armed with a 
competitive, 21st century tax code, I am confident that our 
farmers, workers, and local businesses can compete and win 
anywhere in the world. U.S. companies face a wide range of 
trade barriers in China, and I look forward to a thoughtful 
discussion of them today.
    China's unfair treatment of U.S. investors is a huge part 
of the problem that the U.S. Trade Representative's Section 301 
report identifies in great detail. For example, China's equity 
caps and joint venture requirements prevent U.S. companies from 
controlling their own operations, as well as their own 
intellectual property when they invest in China, giving Chinese 
competitors an unfair advantage and costing American jobs.
    A high-standard, fully enforceable bilateral investment 
treaty with China can help us address many of these issues for 
the long term. And I am hopeful the substantive talks underway, 
including in Washington last week, will produce meaningful 
commitments from China that lower trade barriers, achieve 
structural reforms, and establish a new era of fair trade.
    But no one country can take on China entirely alone. The 
three-party initiative, Mr. Ambassador, that you are 
undertaking with the European Union and Japan, holds great 
promise that we must build on together. I am also encouraged 
that the Trump Administration is showing leadership in 
aggressively challenging China when it violates WTO rules, 
including in its intellectual property licensing policies, as 
well as its subsidies and tariff rate quotas for our key ag 
commodities.
    At the same time I am concerned about the very real impact 
of tariffs on American manufacturers, consumers, and farmers. I 
will continue to work closely with the President and his team 
to ensure we minimize the impact to the United States and our 
allies as we take on China. Fairly traded goods should be 
excluded from our tariff actions, as should products that are 
otherwise unavailable to U.S. companies. And I think having a 
real and workable exclusion process in place for any tariffs is 
essential, so that we can focus these impacts on the bad 
behavior of China.
    In sum, thank you for being here, Ambassador. I look 
forward to today's discussion about the challenges we face in 
China and our demand for China to negotiate in good faith to 
achieve a durable and enforceable solution to the structural 
issues we face.
    Mr. Chairman, with that I yield back.
    Chairman NEAL. Thank you, Mr. Brady. And without objection, 
all Members' opening statements will be made part of the 
record.
    Today's sole witness is Ambassador Robert E. Lighthizer, 
the United States Trade Representative.
    The Committee has received your written statement. It will 
be made part of the formal hearing record. You have 5 minutes 
to deliver your oral remarks.
    Ambassador Lighthizer, again, welcome. And you may begin 
your testimony as you are ready.

              STATEMENT OF ROBERT E. LIGHTHIZER, 
               UNITED STATES TRADE REPRESENTATIVE

    Ambassador LIGHTHIZER. Mr. Chairman, Ranking Member Brady, 
and distinguished Members of the Committee, it is a pleasure to 
be here today and to discuss this very important issue. As you 
said at the beginning, I can never hear anybody up there, so at 
some point you will have to get----
    Chairman NEAL. Mr. Ambassador, could you speak into the 
microphone?
    Ambassador LIGHTHIZER. Yeah. See, you can't hear me and I 
can't hear you. It is like a perfect room.
    [Laughter.]
    I want those 10 seconds back. I have to say that every time 
I come here.
    All right. I think at the beginning it is appropriate to 
take a minute and remind ourselves that, with all our pressing 
problems, we have a very successful economy. Under President 
Trump's leadership we are growing much faster than any other G7 
nation. We have created millions of new jobs, significantly the 
500,000 manufacturing jobs, and we have seen 2 million people 
join the workforce. These are people who were not in it before.
    These are real working people moving from despair to hope, 
and their kids from insecurity to a future. A lot needs to be 
done, and I salute all Members of the--of both parties--who are 
working so diligently on issues of worker training, opiate 
addiction, as well as trade and other issues.
    But we are here to talk about China. I agree with those who 
see our large and growing trade deficit and their unfair trade 
practices, including technology transfer issues, failure to 
protect intellectual property, large subsidies, cyber theft of 
commercial secrets, and other problems as major threats to our 
economy.
    We can compete with anyone in the world, but we must have 
rules, enforced rules, that make sure market outcomes, not 
state capitalism and technology theft, determine winners.
    President Trump has, for years, recognized this very 
serious and, I would say, existential problem. And he is 
determined to take action to defend our workers, farmers, and 
ranchers, and our economic system. He directed me to conduct a 
study under Section 301. After months of hard work the 
President ordered that certain tariffs be put in place. Because 
of his insight and grit, we are in a position to deal with this 
problem for the first time after decades of governmental 
inaction.
    I would like to note that, as with many extremely important 
issues facing our country, prescience has been bipartisan. The 
Speaker was an early, forceful, and foresighted leader on this 
issue. I have admired her perception and hard work over the 
years, and have counseled with her regularly in my current 
position.
    I would just like to read something briefly. Faced with the 
PNTR vote in April of 2000, the Speaker said, ``It is incumbent 
upon all of us in the public and private sectors to work for 
free and open trade with China that is real. The U.S.-China 
bilateral WTO agreement, however, is seriously deficient in 
substance, implementation, and enforcement. This issue is too 
important for our economy to be based on a pattern of broken 
promises, not proven performance. China can become a member of 
the WTO without Congress having to surrender its right to U.S.-
China trade review annually. There is no reason why we should 
permanently surrender that leverage at this time.'' I ask, if 
her position had prevailed, how different would things be right 
now?
    There are many other examples of bipartisan leadership, 
including a lot of people on this Committee, and I am going to 
get into--I am going to answer the question, if it is relevant.
    Let me close by saying that we have engaged in a very 
intense, extremely serious, and very specific negotiation with 
China on crucial structural issues for several months now. We 
are making real progress. If we can complete this effort--and 
again, I say if--and can reach a satisfactory solution to the 
all-important outstanding issue of enforceability, as well as 
some other concerns, we might be able to have an agreement that 
helps us turn the corner in our economic relationship with 
China.
    Let me be clear: Much still needs to be done both before an 
agreement is reached and, more importantly, after it is 
reached, if one is reached.
    I want to thank all Members for your bipartisan approach on 
this seminal effort, and I look forward to continuing our work 
together. I want to say that if this was not a bipartisan view, 
we would not be having the success that we are having.
    Thank you, Mr. Chairman. Thank you, Ranking Member. I look 
forward to your questions.
    [The prepared statement of Ambassador Lighthizer follows:]
    
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    Chairman NEAL. Thank you, Mr. Ambassador. We will now move 
to questioning.
    Without objection, Members will have 4 minutes to question 
the witness today, in order to ensure that all Members have an 
opportunity to inquire before the Ambassador's schedule 
requires him to depart.
    I will begin by recognizing myself. Members will be 
acknowledged in the order of what we call the Gibbons Rule, and 
that is when the Member took their seat.
    Mr. Ambassador, in my opening I referenced some of the 
earlier Administration efforts to negotiate trade with China. 
Those efforts seemed to overlook the deep and complex 
structural problems underlying our trade relationship.
    My question is this: What would be different this time, and 
what can we expect next?
    Ambassador LIGHTHIZER. Thank you, Mr. Chairman, and that is 
the fundamental question. What the President wants is an 
agreement that, number one, is enforceable, but the changes--
the pattern of practice of forced technology transfer, 
intellectual property protection, large industrial policy 
subsidies, and then a whole variety of specific impediments to 
trade and unfair practices in the area of agriculture, in the 
area of services.
    What we want is fair trade. That requires structural 
change, and it has to be enforceable. We have had--and I can go 
through them for the Members--many, many examples of the 
Chinese agreeing to specific--not this specific, but agreeing 
to take steps to forego certain unfair trade practices. And in 
very few cases have they actually kept their obligations.
    We have to, in this case, engage in--approach this with the 
view that there are reformers in China who want to change these 
practices, and we are working together with them. That has to 
be our approach. And if that is the case, our hope is to have 
specific language on specific issues that is enforceable 
through a very clear process.
    Chairman NEAL. So do you envision one negotiated package in 
the next few weeks that is going to resolve all these 
structural issues?
    Ambassador LIGHTHIZER. So I am not foolish enough to think 
that there is going to be one negotiation that is going to 
change all of the practices of China or our relationship with 
them. I don't believe that.
    I think that we have to take on the major issues, the ones 
that I just raised, and we have to specifically preclude anti-
market practices and practices that are unfair to our workers 
and ranchers and farmers, and there are lots of them.
    At the end of this negotiation, if we are successful, there 
will be a signing and then there is going to be a long process 
of me working with the Members of this Committee and the 
Finance Committee in the Senate and other Members to ensure 
that we actually live up to this. And I believe other problems 
will arise, and they are going to have to be dealt with.
    I view this as a process, but this is--well, I use the term 
``turning the corner.'' This is the first time, I believe, that 
it has been approached in this way. And the result--it is more 
the result of the creation of an enormous amount of leverage by 
the President.
    Chairman NEAL. Mr. Ambassador, as you reach an accord, will 
you envision putting the tariff threat in abeyance?
    Ambassador LIGHTHIZER. So this may not be the first time or 
the last time I say this in this hearing. But actually, 
specific provisions may be--I want to kind of hold off on--as 
the Chairman knows well, I am happy to talk to him about 
whatever is on my mind. I love it when you said there would 
have to be some discretion here. I wrote that down, because I 
am thinking that is, like, not my strongest suit, discretion. 
But I am trying. I am trying to do it.
    I will talk to you about that, specifically. Certainly, it 
is an objective of the Chinese that tariffs go away, and, I 
should just add a footnote that, in my judgement, does not 
mean--anti-dumping, kind of--that normal trade law--that is a 
separate process. That is a separate enforcement process. I am 
dealing with Section 301 in this agreement.
    Chairman NEAL. Thank you. Let me recognize Mr. Brady.
    Mr. BRADY. Thank you, Mr. Chairman. And I think you raise--
both you and Ambassador Lighthizer raised--an important point 
here, which is this is the first serious, substantive attempt 
to change China's misbehavior.
    And it is not just one issue. You are taking a 
comprehensive approach by challenging China at the World Trade 
Organization in cases, aligning with Europe and Japan on the 
WTO reforms that can address this, implementing investment 
restrictions Congress put in place last year to address China. 
And then the Section 301 case, the issue you are dealing with 
right now, it will take--this is the first comprehensive 
approach I have seen, and the one I think holds the most 
likelihood for success.
    I think, as people look at what is a successful win for 
America, you ought to really focus, as you just mentioned, on 
the Section 301 area, where you really pulled back the curtain 
on China's trade practices and predatory trade practices, and 
laid out that case.
    I know at home, in Texas, we have one of our best corporate 
citizens, Huntsman Corporation, with nearly 1,000 employees in 
my district; they are an example of how American companies have 
no recourse when their intellectual property rights are 
violated in China, because provincial Chinese courts simply 
don't uphold the rule of law.
    Not only did the court throw out this patent intellectual 
property case based on the expiration date of the dye, but they 
also appointed a court panel to review the case that had an 
employee of the company that stole the intellectual property. 
It is that hard for businesses to compete.
    So let's talk about 301 for a second. I think these are the 
key issues here that will define our success. You mentioned 
this earlier.
    Will the agreement that you are negotiating with China have 
measurable commitments in it?
    Will they be enforceable at all levels of China's 
governance? Because we know the play they have run before is 
to, you know, pretend to protect intellectual property at the 
central government level, but not at the provincial or local 
court and communities level.
    And finally, will there be an avenue for corrective action 
if China doesn't live up to its commitments in what we hope 
will be an agreement here in the near future?
    So measurable, enforceable at all levels of governance, and 
corrective action, make sure they live by those commitments.
    Ambassador LIGHTHIZER. So, you know, thank you, Mr. Brady. 
I appreciate that.
    First of all, in terms of what is successful, you know, I 
have been doing this a long time. But nonetheless, over the 
course of the last few months, I went to every statement that 
business groups have made, that agriculture groups have made, 
that labor unions have made, and that Members have made. Most 
of them, myself--in some cases having my immediate staff go 
through and tell me--``Tell me what that guy or that woman said 
is essential to a successful''--and that is my guide. I am 
taking that, and I am distilling that down. And it is--I 
could--I mean, for some of you it is one thing, for some of you 
it is another. But it is all right in a band, right?
    And so that is what I am measuring myself by, and that is 
what I have as my objective. It is not just what I think, it is 
what everybody--I have distilled down what the people who have 
spent time thinking about this think.
    So the Huntsman example is, like, unfortunately, one of 
many, many thousands.
    Mr. BRADY. Unfortunately.
    Ambassador LIGHTHIZER. And I could go on and on about that. 
I won't, because I only have 12 seconds or 10 seconds to go.
    So number one, yes. Clearly, it has to be specific and 
measurable.
    It has to be enforceable at all levels of government. Some 
things are not appropriate for that, but 99 percent, the core 
stuff, is all--and in the agreement it will say central, sub-
central, local, and--so it has to be across the board like 
that. And we have to have the ability to take proportional 
action unilaterally, to make sure that we have a situation 
where they are following----
    Mr. BRADY. Thank you, Ambassador.
    Chairman NEAL. Thank you, Mr. Brady. The Chair would now 
recognize the gentleman from Georgia, Mr. Lewis, to inquire.
    Mr. LEWIS. Thank you very much, Mr. Chairman and Ranking 
Member, for holding this hearing. Thank you, Mr. Ambassador, 
for being here.
    I have said it before and I will say it again. There is no 
way to compete in a race to the bottom. Like our friend and 
colleague, Ms. Sewell, I grew up in Alabama. She grew up in the 
big city, but I grew up in rural Alabama. And I watched 
American jobs disappear throughout my life and career.
    In my home State of Georgia, with many manufacturers, 
workers continue to struggle to find good, livable-wage jobs. 
Over the years, many of those businesses move overseas in 
search of cheap labor and lower environmental protection. What 
I witnessed in our community inspired me to oppose granting 
China permanent normal trade relations almost 20 years ago.
    At the same time, my congressional district is also home to 
a large number of manufacturers, both large and small, who rely 
on the aluminum. I do not need to tell you, Mr. Ambassador, 
that China plays by its own rules, and focuses on the long 
game. While we may differ on the tactics, everyone in this room 
will agree that we need a level playing field. And we don't 
have it. We can do better. We can do much better.
    As you note, Mr. Ambassador, this is not an easy matter. We 
must be thoughtful, we must be mindful, and we must get it 
right.
    Now, Mr. Ambassador, I want to thank you again for being 
here, and thank you for your service. The current negotiation 
focuses on a number of issues. I want to know about the labor 
and environment protection part of the discussion.
    Ambassador LIGHTHIZER. So I would say first of all the 
principal reason why I am spending my time doing this now is 
for the same reason that you just stated. That is to say we 
have lost--not all just to China, but since China joined the 
WTO, we have lost 5 million manufacturing jobs, and millions of 
additional jobs. And it would distress me if that was the 
result of economic forces. But it is not the result of economic 
forces, it is the result of state capitalism. So I am motivated 
by the same thing that you are, and I want to be judged by 
that, right? I want to ultimately be judged by that.
    On the aluminum question, you are completely right. We have 
a problem, a global problem in aluminum, precisely because 
China doesn't operate on an economic system. They have created, 
through controlling their market access and subsidies and other 
practices, an extraordinary amount of excess capacity that has 
basically wiped out the aluminum industry across the world.
    The issues that we are focusing on in this negotiation are 
not--they are labor and environment to the extent those are 
unfair trade practices. But it is not the same as we are, as 
you know, well in USMCA, where those are specific objectives 
that we are requiring change in. So to the extent they are 
unfair trade practices--I would say also we are constrained by 
the limits of 301, and by the statute that we have to work 
with. But those are also, as you know well, high priorities for 
me.
    Chairman NEAL. I thank the gentleman. Mr. Nunes is----
    Mr. NUNES. Thank you, Mr. Chairman.
    Chairman NEAL [continuing]. Recognized.
    Mr. NUNES. Thank you.
    Ambassador, thanks for being here. And I want to 
congratulate you for really being the first--being part of the 
first Administration in 20 years of complaining about China to 
actually do something.
    I associate myself with a lot of the comments that Mr. 
Lewis made, and I know it is tough, because I know the Chinese 
are trying to be very targeted in how the tariffs are being 
implemented on our side. But I can tell you, from the 
intelligence angle that we have been studying here in the 
Congress for several years, that, you know, the Chinese have 
moved into taking over the communications systems around the 
world. They have moved into building strategic military 
locations around the globe, and those are spreading.
    At the same time they have targeted major industries for 
either takeover through acquisition of banks, energy sectors, 
and others around the globe, in every continent, including here 
in the United States.
    So I would like to give you an opportunity, Ambassador, to 
get into a little bit of how the Chinese use the regulatory 
angle to encourage abuse and theft of intellectual property, 
because it is not something that I think a lot of Americans 
understand, but they are actively, on a daily basis, stealing 
intellectual property from right here in the United States, and 
transferring that to China to compete directly with our 
companies and our allies' companies around the globe.
    I will give you an opportunity to expand on that.
    Ambassador LIGHTHIZER. Yes, thank you very much, 
Congressman.
    So, number one, I think that the United States has the best 
technology in the world. It is probably our single biggest 
competitive advantage, and why we will be number one for a long 
time, if we protect our intellectual property, because it is 
not just a question of high-tech industries, it is steel, it is 
these combines. If you get into a modern combine, it is like 
a--you know, like a spaceship was in the sixties, right? 
These--you know, how they drive these things, they have all 
these computer operations and satellite operations.
    And so technology is our biggest advantage, and it runs 
absolutely across every part of our economy. It is the key, and 
that is why the President had me focus on it right here. And I 
think China, as you suggest, knows full well that it is the 
key. Technology is what is going to determine who rules the 
future. Chinese practices are--you could break them down into 
twofold: One is what they do there, and the other is what they 
do here.
    We are negotiating provisions that will, if enforced, 
restate, make far more specific, and clarify commitments 
against cyber theft, against physical theft, and against using 
investment practices to get technology.
    What happens now, I don't want to go through a lot of 
specific examples, and I know you know far more of them than I 
do, because this is part of your responsibility in the 
Intelligence Committee. But what happens very often is China 
comes in--for example, they invest in a company, the company 
develops technology, that technology ends up in China. And it 
could end up through investment, it could end up through cyber 
theft, it could end up through employees working for that 
company and then leaving and going to China.
    I mean, there is a whole group of things. And what we are 
trying to do is deal with them as much as we can in one 
agreement. And then that is one side of the problem, it is the 
one you are focused on.
    The whole other side is how they get technology from us 
through non-economic means in China, U.S. companies operating 
there. And that is another thing that we are trying to deal 
with in this.
    Mr. NUNES. Thank you, Ambassador.
    Thank you, Mr. Chairman.
    Chairman NEAL. Thank you, Mr. Nunes. The gentleman from 
Texas is recognized, Mr. Doggett.
    Mr. DOGGETT. Thank you, Ambassador. I think our country is 
fortunate that you are on the front lines of this very 
important negotiation. I did note with interest the exchange 
you had with the President last Friday that this ongoing 
negotiation with China is a trade agreement--that is the goal--
and not a memorandum of understanding.
    And I think you indicated that, since he is the boss, you 
agree with him and that your goal is to negotiate and complete 
a reasonable trade agreement. Is that right?
    Ambassador LIGHTHIZER. I am going to elaborate on that when 
it is my turn to talk.
    Mr. DOGGETT. Well, I am just referring to your precise 
words last Friday, that you would no longer use the term 
``memorandum of understanding,'' and that this is a trade 
agreement.
    Pardon? I think if you turn your microphone up----
    Chairman NEAL. We are having trouble hearing you, Mr. 
Ambassador.
    Ambassador LIGHTHIZER. Yes, and could you pause my time 
here? Is that better now?
    Chairman NEAL. Yes, thank you.
    Ambassador LIGHTHIZER. I actually felt pretty good when you 
couldn't hear me, either, for a minute.
    [Laughter.]
    Kind of like this is--it is finally a fair system here.
    There will be--I am not quite sure I know, Congressman 
Doggett, where you are going on this, but this will be a 
binding agreement.
    I should take a step back and say to the extent any 
agreement between nations is binding--right? I always have to 
make that clear. It is a great de Gaulle quote, which is that 
agreements between nations--I will slightly change it to update 
it to the current situation--agreements between nations, like 
flowers and children, last while they last.
    Mr. DOGGETT. Right. And so it is a binding trade agreement. 
A contract, as the President referred to it.
    And as a binding trade agreement, given the statutory 
authority that you and the President have to negotiate that is 
delegated by Congress, can you outline to us what you would 
anticipate after the agreement would be the timetable for 
submitting it to Congress for approval?
    Ambassador LIGHTHIZER. Thank you. We have no intentions of 
submitting it to Congress. It is----
    Mr. DOGGETT. Well, if it is a trade agreement, under 
Section 103, you are required to submit it to Congress, are you 
not?
    Ambassador LIGHTHIZER. It is an executive agreement. We are 
not required to submit it to Congress. We have to submit at 
some point----
    Mr. DOGGETT. It is----
    Ambassador LIGHTHIZER. The President has the--I am sorry, 
Congressman.
    Mr. DOGGETT. No, it is--yes, as you have agreed with the 
President, it is a binding trade agreement that you are 
seeking, you can seek it only through delegation of 
congressional authority. And you are required to submit such 
agreements back if you are lowering U.S. tariffs, which would 
appear to be the case.
    Ambassador LIGHTHIZER. Well, let me just say that we are in 
no way--this is a settlement of a 301 action. The President is 
using his power under Section 301, which has been delegated. 
And it is an executive agreement which the Constitution gives 
the President the right to enter into. We are not changing any 
tariff lines, we are not using TPA. And if we did, by the way, 
I wouldn't be here now anyway, because we wouldn't have gone 
through the process.
    So this is not a TPP process. This is a settlement of a 301 
action, and it is the President's constitutional authority to 
enter into executive agreement.
    Mr. DOGGETT. Since we may not agree on that, let me ask you 
if you do agree that unless you get meaningful structural 
changes to address this stealing of our intellectual property 
and the other issues that are out there structurally that you 
outlined in your testimony, if all we get is the sale of a few 
more soybeans and other products, then this is an agreement not 
worth having, isn't it?
    Ambassador LIGHTHIZER. I couldn't hear the last----
    Mr. DOGGETT. I am just saying that the goal here is 
meaningful structural changes. And if we don't get them, this 
is an agreement not worth having.
    Ambassador LIGHTHIZER. I agree completely with that 
statement. And right now we are 500, you and me----
    Mr. DOGGETT. And let me just add how----
    Ambassador LIGHTHIZER. I want----
    Mr. DOGGETT [continuing]. Important it is, given--and I 
realize this is not in your direct jurisdiction, but I agree 
with my Texas Senator, John Cornyn, and the others who express 
concern about Huawei and its national security threat, that if 
there is any bargaining away of our national security to get 
this agreement, it would be with great harm to our country. 
Thank you.
    Ambassador LIGHTHIZER. So let me just say, one, I agree 
with you on 50 percent of the things. And that is a--you get to 
the Hall of Fame if you----
    Mr. DOGGETT. That is progress.
    Ambassador LIGHTHIZER. Yes, that is. Now, we are usually at 
90 percent. But I do not think it should just be a purchase 
agreement. I agree with that completely. The law enforcement 
provisions are outside of my purview; I have nothing to do with 
them.
    Chairman NEAL. Thank you. The Chair would recognize Mr. 
Buchanan to inquire.
    Mr. BUCHANAN. Thank you, Mr. Chairman, for this important 
hearing. I also want to thank the Ambassador for reaching out, 
really, to both sides. I know you have had a lot of meetings, 
you have a lot more meetings you are going to do. So I 
appreciate you doing that on a bipartisan basis.
    I also want to just echo what many of my colleagues have 
said, in terms of enforcement. My experience--I happened to be 
in Beijing 20 years ago as a part of the U.S. Chamber, in a 
delegation there. Intellectual property was a big issue back 20 
years ago, in terms of the theft. And I am not sure how far--
there hasn't been any or much progress on that. It is still, as 
you know, a big challenge.
    And the thought is whether the agreement is 150 pages or 
1,000 pages, what I have learned in my business career, the 
agreement is only as good as the 2 parties involved. So I just 
want to go on record also concerned about the enforcement. I am 
for free trade, but it has to be fair, and we have to level the 
playing field.
    I want to switch gears to--I touched base with you the 
other day, but it is a big issue in Florida and, I think, 
across the country: Fentanyl. Last year, there was a 77 percent 
increase in deaths in Florida. China is one of the leading 
sources for Fentanyl. I know the President has had some 
discussions, and I think he said he had some commitments. Can 
you maybe expound on where that is at, in terms of Fentanyl and 
the Chinese ability to produce that, what we are trying to do 
as a part of this document, ideally?
    Ambassador LIGHTHIZER. Yes. Well, thank you, Congressman. 
First of all, you are right. There is a long history of failure 
by China to protect intellectual property.
    The first kind of modern example of it was a 301 that was 
brought in 1991 during the George Herbert Walker Bush 
Administration, and then between 2010 to 2016 there were 10 
different commitments where they agreed to do certain things, 
which commitments I would suggest were not lived up to. And 
therefore, enforcement really is the biggest thing.
    The President completely agrees with you on the issue of 
Fentanyl. He specifically raised it with President Xi when we 
were in Buenos Aires out to dinner. President Xi--I don't want 
to suggest that this is my area of expertise, because it 
isn't--but President Xi agreed that he would treat it as 
whatever the equivalent of a controlled substance is in China.
    And this is something that the President views himself as 
having a commitment on. It may very well be something that we 
end up writing into this agreement. But it clearly is something 
the President views himself as having a commitment on, and that 
we are monitoring to see if there, in fact, are changes. It is 
very important to the country for all the reasons you said. I 
even made a veiled allusion to it in my opening statement: This 
idea of fighting opioids is as important as job training.
    Mr. BUCHANAN. Let me add one other thing. I just want to 
put on your radar--I know you have a lot of things on your 
radar, but the ag community in Florida, forestry, a couple of 
years ago it did $8.4 billion. It is a big industry in our 
State. And in terms of exports to China, that has dried up for 
various reasons. We can talk about that at a later date. I just 
want to make sure that is something you are considering or 
looking at, as well, as part of the agreement.
    Ambassador LIGHTHIZER. No, I am. I actually--I have a list 
of specific issues that have been raised by Members that are 
appropriate for the agreement, and it is something that we have 
raised and will continue to raise.
    Mr. BUCHANAN. Thank you, and I yield back.
    Chairman NEAL. We recognize the gentleman from California, 
Mr. Thompson, to inquire.
    Mr. THOMPSON. Thank you, Mr. Chairman. Thank you for 
holding the hearing.
    Ambassador, thank you for being here. And thank you for 
your willingness to work with us and meet with us. You have 
been very open and very helpful during your time in this spot.
    I have three issues. You have heard from me on a couple of 
them before. I would just like to reiterate those and raise one 
new one to you, and then let you respond accordingly.
    As you know, my district produces the finest wine in the 
world, and China is the largest and the fastest-growing wine 
marketplace in the world. The 232 and 301 tariffs put a 39 
percent tariff on our products. And we are having to compete 
with other new wine areas, Australia and Chile, with zero 
tariffs. So I just--I would like some assurance that you are 
doing everything you can to ensure that high-value-added 
specialty crop products have the enhanced entrance or enhanced 
access to the market. I know you are working on all 
agricultural issues and products.
    And then the other ag issue is rice. You know, milled rice 
in California has been waiting for the promised access to the 
Chinese market ever since China joined the WTO. And they have 
been very, very helpful, as you know, and very understanding. 
And I guess I would like to have some idea as to how much 
longer they are going to have to wait, or whether or not we are 
close to the promised access.
    And then the new issue that I want to raise today are the 
tariffs on building and construction materials. The National 
Homebuilders Association suggests that these tariffs equal 
about $1 billion worth of tax on residential construction. And, 
as you know, affordable housing, the lack of affordable 
housing, is something that impacts all of our districts, every 
district in the country. And this just makes it harder to be 
able to build homes and get people into homes.
    And in my district, in particular, we just went through a 
horrific fire, where we lost about 7,000 homes. And home owners 
are trying to rebuild, and they have seen the cost of building 
materials, coupled with the shortage of supply and the shortage 
of labor, just drive the cost of replacement to a point where 
they can't rebuild the home that they lost in the fire.
    We have had these 7,000 homes in my district, and then the 
new fires up in the northern part of the State, in Congressman 
LaMalfa's area, and down in the southern part of the State 
there are thousands more. And this is really a setback for home 
owners who have already been through a lot.
    And so I am just wondering: Is that $1 billion tax really 
the best way to hold China accountable? And I concur that, you 
know, we need to hold them accountable, but is this the best 
way to do it, at the expense of people who are trying to 
rebuild and move into their homes?
    Ambassador LIGHTHIZER. So thank you, Congressman. I would 
say, first of all, on the wine issue and, as you call them, 
high-value-added specialty crops, yes, they are very important. 
This negotiation is, we have all said, about structural change, 
structural change and enforcement.
    But it is important that we have purchases, because the 
purchases will be good for specific people, and it will also 
get the deficit down, which I think is an important thing to 
do, directionally, for sure. And in that context we very much 
talk about high-value-added specialty crops. And wine, of 
course, is a great example of one. I mean, there is--it is a 
product where the United States makes the best products in the 
world, so I would--I can attest to that, personally.
    The second thing, rice, is complicated, all right? First of 
all, we are talking about rice in the context of the purchases, 
number one. Number two, as you know, we have WTO cases which we 
have--is the second one public yet? No? Well, we have one that 
we have won and one that is in the process. It will become 
public at some point. So, trying to resolve those in the 
context of this agreement is something that we are trying to 
do. So that is something that we have raised. But, as you know, 
rice is a funny issue in China. It is not--it has a different 
political context than a lot of these other things we are 
talking about. But nonetheless, we are trying to do that.
    In terms of the billion dollars, I don't know the letter. I 
should look at it. I presume they are talking about softwood 
lumber, which I would say is a litigation matter, and I presume 
also steel and aluminum. I presume those are the things they 
are talking about. Yes, yes, I would assume that.
    And each of them has their own context. I would say 
softwood lumber is a litigation thing that we would have to 
work our way through. Steel and aluminum, my objective, as many 
Members know, is to try to work out something with Mexico and 
Canada on those things. But I----
    Mr. THOMPSON. We have run out of time, but thank you. And 
any other information you have you can get back to me with.
    Ambassador LIGHTHIZER. All right, I am sorry. I will----
    Mr. THOMPSON. Thank you.
    Chairman NEAL. Now that we have established that California 
produces the best wine in the world, the Chair would recognize 
the gentleman from Nebraska, Mr. Smith, to inquire.
    Mr. SMITH OF NEBRASKA. Thank you.
    Ambassador LIGHTHIZER. I want to say Oregon and there are 
some other States that also have very good wine.
    [Laughter.]
    Maybe even--maybe Georgia, I don't know.
    Mr. SMITH OF NEBRASKA. And the Nebraska wine industry is 
coming right along, as well.
    Thank you, Ambassador, for joining us this morning. I 
appreciate that, certainly, you are dealing with a lot of 
issues, and we appreciate that you took the time to be here 
this morning.
    President Trump has time and again expressed his concerns 
for our farmers and ranchers. He has certainly made the 
National Farm Bureau Federation annual conference and annual 
event part of his schedule. He has been steadfast in his 
insistence that agriculture be a part of any negotiations we 
undertake with the European Union. For this and much more, the 
rural community is appreciative.
    There are many long-term issues to be considered in the 
China negotiations, including intellectual property issues, 
barriers to biotech products, and many other non-tariff trade 
barriers. However, I do want to make sure that we don't lose 
sight of the fact that commodity prices are down. And the bread 
basket of the world, being America, has been negatively 
impacted by the cumulative impacts of the tariffs and, 
certainly, non-tariff trade barriers, as well. We should never 
lose sight of this fact in our deliberations.
    Because it is so crucial, and these talks come to a 
successful conclusion, I am grateful for the President's 
personal involvement. I, along with many Members of this 
Committee, asked, last summer, that the President engage 
directly with President Xi to move these talks forward. I urge 
him to continue to do so, and to remember the sacrifices being 
made by our producers, ag producers, in your daily discussions.
    In addition to China we need to continue to move forward 
with USMCA, we need to bring down the 232 tariffs on Canada and 
Mexico, and eliminate the retaliation our producers continue to 
endure in order to facilitate the agreement's approval.
    I am grateful for the progress made in the Japan talks. 
Every day our producers face tariff rates higher than their 
competitors when doing business in Japan, which is a lost 
opportunity to expand and defend their market share.
    So once again, time is of the essence. With the President's 
commitment to U.S. agriculture in mind, I would appreciate your 
thoughts on the 232 tariffs on Canada and Mexico, and also your 
outlook for the Japan negotiations.
    Ambassador LIGHTHIZER. Yes, thank you very much, 
Congressman.
    First of all, in the context of China, it is not just about 
purchases. We had many, many hours of discussion about a whole 
variety of issues which I won't go through, because most 
Members--well, most Members have at least some interest from 
biotechnology to specific issues involving beef, poultry, 
aquatics, or meats. I mean, it is just--I could go through it 
all. There is a lot on rice. I mean, beyond the purchase, there 
is a lot on just the SPS issues.
    So we spend a lot of time on those. We actually had long 
discussions on Ractopamine, for those of you who are from the 
beef producing areas, with the Vice Premiere of China. So it 
was a pretty detailed discussion.
    So, having said that, to sort of jump ahead, I want to go 
to Japan very soon. The date is probably going to be in the 
next month. I want to have a trilateral meeting there on this 
issue of China. I want to start our negotiations, which we have 
now--remember, we have gone through the process of TPA with 
everyone, with the Congress, and now we are beyond our 90 days, 
so we can start the actual negotiating.
    We feel a certain urgency, a real urgency, because of the 
combination of market access from TPP and Europe and this sort 
of thing you alluded to that is going to have a real effect on 
our farmers. So it is something that we feel very strongly 
about.
    On Canada and Mexico, in the context of maintaining the 
integrity of the steel and aluminum program, we want very much 
to work out an agreement with Canada and Mexico, and we are in 
the process of doing that. Whether we will succeed or not, I 
don't know. But it certainly is my hope that we will do that.
    Mr. SMITH OF NEBRASKA. Thank you. I yield back.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentleman from Connecticut, Mr. Larson, to 
inquire.
    Mr. LARSON. Thank you, Mr. Chairman. Thank you for holding 
this hearing.
    Mr. Ambassador, thank you so much for your candor over the 
last several days. My question--and I hope to give you as much 
time as we can to answer--is we all--I think you can sense up 
here the bipartisan nature of our concern, as it relates to 
China. And so my question would be pretty straightforward.
    How will you define success in our meetings with China and 
with a specific focus from the standpoint of a number of us 
here on both labor standards and environmental standards?
    And how will that play into whether or not you feel the 
pending negotiations will be successful?
    Ambassador LIGHTHIZER. Thank you, Congressman. I would say 
what we are doing and what we have to remind ourselves is in 
this context of settling a 301 case. So how I would define 
success--and, once again, I will try to repeat what I said 
before.
    I really went through and tried to distill what everyone 
else--Members, business groups, farm groups, but also experts, 
people who actually study these things--and for me, success is, 
number one, enforceable; number two, real rules on forced 
technology transfer at every level of government, as Mr. Brady 
said, which is absolutely essential. Intellectual--minimum, 
intellectual property requirements.
    And once again, this section is probably going to be--if we 
have an agreement, the IP section alone will be about 27 or 28 
pages. It is going to be--this is long, detailed. But every one 
of you would say, ``Oh, yes, that is what I would expect normal 
IP protection to be, right?'' In other words, I am not 
inventing anything at all.
    We have a series of items involving services. There are 
specific provisions that China has that keep us out of banking, 
out of electronic payment, out of a whole variety of things 
like that. And we--on many of those we have made substantial 
progress. And I would consider that to be--another chapter, I 
would say, would be non-tariff barriers. And this is, 
literally, how we negotiated this thing.
    Non-tariff barriers, what is a big non-tariff barrier? That 
is these subsidies, these industrial subsidies which have the 
effect of making it possible for our people not only to 
compete, in many cases, in China, but to compete around the 
world. So that is another thing. There is a whole lot of things 
that we expect to gather on agriculture, and I kind of went 
through it on that. And we have made progress on a number of 
those.
    One thing that we haven't mentioned is we are negotiating 
currency restraints. A lot of Members are very concerned about 
currency manipulation and having access to the information that 
allows you to make a decision. So that is another part of these 
negotiations. And I am--to be honest, there actually are more, 
and I could make it even more detailed. But to me, that is how 
I am going to determine whether or not this is a trade 
agreement.
    Now, keep in mind it is not like an FTA in the sense that 
we are going in there and going across the board. What we are 
going in there with is focusing on what was raised by--for the 
most part, what was raised by our 301. And if we do all of 
those things--and the Speaker said this, and it is not 
enforceable, and she said it in the context of USMCA, and it is 
not enforceable, and it is not very valuable. So we have to 
have it be enforceable. And that--I think it will be for the 
first time. I think we will have an enforceable agreement.
    Mr. LARSON. Thank you. I yield back.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentleman from Texas, Mr. Marchant, to inquire.
    Mr. MARCHANT. Thank you, Mr. Chairman. Ambassador 
Lighthizer, thanks for being here today.
    I don't know if you are familiar with the district that I 
represent, but when you land at the Dallas-Fort Worth Airport, 
you are in the middle of my district. It is the headquarters, 
the national headquarters for Toyota, Exxon Mobile, Fluor, 
Kimberly-Clark, et cetera. The businesses and major employers 
in my district are very vitally interested in what you are 
doing, and deeply appreciate your hard work on behalf of the 
country.
    DFW Airport facilitates $35 billion worth of trade. The 
Ranking Member, Mr. Brady, has an airport of similar stature in 
his district. So to us, in Texas, our ports are not only 
Houston, but our ports are the airports. And because of that, 
trade is very vitally important in my district.
    I have a letter here from our Governor, Greg Abbott, that 
is a full-throated support of your negotiations. And I would 
like to put that in the record, Mr. Chairman.
    Chairman NEAL. Without objection.
    [The submission of the Hon. Kenny Marchant follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
   
    Mr. MARCHANT. It is in support of your work on the USMCA. 
And he recognizes the importance of that. And we would like to 
make sure that this goes in the record, and make sure that you 
know he is in full support of the work that you are doing.
    Because I have such an interest in my district, when I go 
to town hall meetings, what am I going to be able to tell my 
constituents is being accomplished in the China agreements and 
the China discussions that will be very important in getting 
things changed for my district?
    Ambassador LIGHTHIZER. So thank you, Congressman. First of 
all, I have spent a lot of time at DFW. And if that entire 
airport is in your district, you have a very large district 
because I think that airport is bigger than some districts that 
Members have. It is the biggest thing I have ever seen. And I 
appreciate very much the Governor's support, and hopefully your 
support, for USMCA.
    If USMCA doesn't pass--I have said this before--it would be 
a catastrophe across the country. But it would particularly be 
a catastrophe in Texas. It is just--I mean, it is just--it 
would be very bad on every level, way beyond economics, right?
    And you know what I am talking about, and I won't dwell on 
that. But I am very appreciative of the--and the President is 
very appreciative of the Governor's--so when I look at this--
and this is not just your district.
    I don't know if you have--you must have a big district, if 
it has that airport in it. But if you have any agricultural 
products, there will be a substantial increase in those and a 
substantial reduction in barriers.
    But I would say, when I talk to Members generally, the most 
important single thing that we are going to do is stop the non-
economic transfer of technology; that technology really is what 
separates us from the rest of the world. And it is, for me--and 
I think this is true for most of you--it is, for me, what is 
going to ensure that our kids have the kind of jobs that we 
had, and better jobs, jobs that we want them to have. If we end 
up losing that technological edge, where we are number two in 
technology, then the world is going to look very different for 
our children. And that, literally, is what I think is--but I 
could talk about the various specific provisions.
    But if we make headway to stop this transfer of technology 
and this unfair trade by this trading partner, it is going to 
have a huge impact in terms of jobs, and high-end jobs, in 
America.
    Mr. MARCHANT. Thank you for the work you are doing, 
Ambassador.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the Trade Subcommittee Chairman, Mr. Blumenauer, to 
inquire.
    Mr. BLUMENAUER. Thank you, Mr. Chairman. Mr. Ambassador, I 
think you have one of the toughest jobs in the Administration, 
and we appreciate your being here, we appreciate your openness 
and candor and discussions you have had with me and so many 
Members of the Committee on both sides of the aisle.
    Frankly, I am a little concerned about the 301 tariffs. It 
is kind of a blunt instrument, a tax on everyday Americans and 
most businesses. And I am concerned that we have some sort of 
agreement that results just in purchasing soybeans and 
airplanes. That is not sustainable. I am hopeful that this 
effort you have been involved with, and using the tariffs, that 
the negotiations result in some structural changes in order to 
be termed a success. And I am confident that is your goal, as 
well.
    Any meaningful deal, I feel, must effectively deal with 
another long-term problem that has been vexing us for the last 
couple decades: Currency manipulation. The President made a 
campaign promise that he would have the Treasury Secretary 
label China a currency manipulator on day one of his 
presidency. Well, I am not so much concerned about that broken 
promise as I am whether or not we are moving forward.
    It doesn't appear as though China has been actually 
manipulating in the last 25 months. I am concerned whether the 
Administration is focusing on ensuring China commits to 
transparency regarding its currency practices, addressing the 
potential that China will resume aggressive currency 
manipulation, damaging our economy.
    In the past you have testified before this Committee 
regarding the detrimental impact of Chinese currency 
manipulation on our economy--and manufacturing, in particular. 
You have even called on the United States to change our trade 
remedy laws and bring a WTO case against it.
    I have four questions. It has been claimed that there is 
already a deal reached on currency. Is that true? If so, can 
you tell us anything about the substance of that agreement?
    In the past I have made a point in my support for trade 
agreements that we need to have our trading partners commit to 
stronger worker protections, environmental standards, currency 
disciplines, and that the commitments need to be meaningful. 
Are you seeking enforceable currency commitments from China?
    And last, but not least, if you see indications that China 
is manipulating, what will the United States do? Does 
enforcement mean more across-the-board tariffs?
    Ambassador LIGHTHIZER. Thank you, Mr. Chairman. So I would 
say, as you say, currency problems are something I have spent a 
fair amount of my time, not necessarily in my current job, but 
in previous jobs, worrying about.
    And I would also say that it is not just a problem with 
China. It is a problem with a lot of other areas in Asia. And a 
reasonable case can be made that it has, at times, been a 
serious problem with Japan. And I know those of you who are in 
the automobile industry realize that. It was a substantial 
problem, and we lost a lot of jobs because of that, but also in 
some other areas. I don't want to name any other countries, but 
it has been a problem from time to time.
    So it is something we have to focus on. There are costs in 
being the reserve currency, but one of them can't be that we 
lose--that, you know, the good people that go to work every day 
and have a competitive job lose their jobs. So it is something 
we have to focus on.
    In here, is there agreement? There is no agreement on 
anything until there is agreement on everything. You know that 
from how these things work. But the reality is that we have 
spent a lot of time on currency. And it will be enforceable. 
But the agreement will be enforceable. And I think there will 
be something on it. But I will talk to you offline.
    Mr. BLUMENAUER. Yes, I would appreciate that.
    Ambassador LIGHTHIZER. Yes.
    Chairman NEAL. The Chair would recognize the gentlelady 
from Indiana, Mrs. Walorski, to inquire.
    Mrs. WALORSKI. Thank you, Mr. Chairman. Thank you, 
Ambassador Lighthizer, for being here today.
    Mr. Chairman, I ask permission to insert into the record a 
letter signed by over 150 trade associations, asking for a 
Federal Register notice that formally delays the increase of 
the List 3 tariffs from 10 percent to 25 percent.
    Chairman NEAL. Without objection.
    [The submission of the Hon. Jackie Walorski follows:]
    
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    Mrs. WALORSKI. Thank you.
    Mr. Ambassador, it is great to see you again. We are always 
glad to have you here. When can we expect that Federal Register 
notice?
    Ambassador LIGHTHIZER. Oh, that Federal Register notice is 
being worked on right now. The President has made the decision, 
and it is sort of in process. In the next day or so--the 
President has made that decision, he has made the announcement, 
and it will--we are following the legal process. We have a 
process where we go through--we have a process, as you know----
    Mrs. WALORSKI. Right.
    Ambassador LIGHTHIZER [continuing]. With other agencies, 
and there are certain steps we have to go through. But that is 
something that will happen, and it will happen according to the 
normal course.
    Mrs. WALORSKI. And with that, when do you anticipate 
releasing more decisions for exclusion requests from Lists 1 or 
2 of the 301 tariffs?
    Ambassador LIGHTHIZER. So we are in the process of doing 
that right now. And those--in the first place, we have already 
granted more than 1,000, or almost 1,000, as you know. And 
things were sort of slowed down because of the government 
closure, but we are in the process of doing that right now. We 
expect another sort of tranche to come out fairly soon.
    Mrs. WALORSKI. Mr. Chairman, I ask permission to insert 
into the record a letter myself and my friend, Mr. Kind, led 
that was signed by 167 of our colleagues, asking for an 
exclusion process for List 3 of the 301 tariffs.
    [No response.]
    Mr. Chairman?
    Mr. KIND [presiding]. Without objection.
    [The second submission of the Hon. Jackie Walorski 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    [Laughter.]
    Mrs. WALORSKI. Thank you.
    Mr. Ambassador, there is obviously great support in 
Congress for an exclusion process for List 3, and we have 
chatted about it, and I appreciate that.
    In fact, the most recent spending bill instructed USTR to 
establish a process within 30 days. We are almost halfway to 
that deadline. Do you expect to meet that 30-day deadline?
    Mr. Chairman, I can't hear----
    Mr. BRADY. Can you get that microphone, Mr. Ambassador?
    Mrs. WALORSKI. Thank you.
    Ambassador LIGHTHIZER. I would say, first of all, that was 
a report from the Appropriations Committee. I understand there 
are people in Congress who want us to have an exclusion 
process. It is something that we are looking at.
    Our view until now has been that we would have the 
exclusion process for the $50 billion, which was at 25 percent. 
The 10 percent, which is what you are referring to in this 
case, there would not be any exclusion process for.
    I would note since the date that we put that into place, 
there has been a seven or an eight, depending on when you stop, 
devaluation of the Chinese currency. So the effect has been 
less significant than fully 10 percent on those people who are 
affected. And our hope is that we can deal with this in the 
context of our negotiations with the Chinese.
    Mrs. WALORSKI. I----
    Ambassador LIGHTHIZER. I--I am sorry?
    Mrs. WALORSKI. Sorry to interrupt, I just--I also 
appreciate--I know you and I chatted--the constraints on 
resources that I understand you are facing with this exclusion 
process.
    I recognize that the process for Lists 1 and 2 is tough to 
administer, and I know it is moving slowly, and that List 3 is 
kind of looming out there, at 4 times the size. And I 
understand that, as well. But can I just ask you this, as a 
close, here?
    Is there a way to simplify things a little to take a load 
off of your agency? For instance, what about companies who are 
hurt because their only competitors are foreign, and are able 
to export finished products to the United States at little or 
no tariffs?
    Ambassador LIGHTHIZER. We have a process right now that we 
are following that we think is fair, and it looks at the 
competitive effect, whether products are available in other 
areas, and whether or not it is a focus of China 2025. So we 
are happy with our current process. But it is a--as you say, it 
is a big, big process.
    Mrs. WALORSKI. Mr. Chairman, thank you. I yield back.
    Chairman NEAL [presiding]. I thank the gentlelady. Let me 
recognize the gentleman from Wisconsin, Mr. Kind, to inquire.
    Mr. KIND. Thank you, Mr. Chairman.
    Mr. Ambassador, thank you for your testimony today and for 
the outreach that you have been making so far this year. I am 
going to ask you to respond to a couple of questions in a 
moment, Mr. Ambassador, one of which is the level of 
cooperation and coordination you have with other nations in 
regard to what you are trying to accomplish, as it relates to 
China.
    And the second one is in regard to the concern I have, that 
the longer this trade war with China lasts, the more market 
share we start losing in China, China pivots to other 
countries, and how difficult it is going to be to regain that 
market share. Because back home in my district in Wisconsin, my 
family farmers and manufacturers are getting hammered. We had 
record bankruptcies for family farms last year alone, with well 
over 800. That trend is continuing.
    I am not saying this trade war is the sole cause, but it 
certainly is piling on right now. So those are the two 
questions.
    But before I do that, I think it is safe to assume--and you 
probably heard it from most Members--that there is bipartisan 
consensus on the challenges that we face with China: The IP 
theft, forced technology transfer, forced joint ventures, what 
you are trying to accomplish in these negotiations. And there 
is bipartisan agreement on where we need to go and how we need 
to resolve this.
    But there is a difference of opinion on the tactics being 
used. There was another approach, through a multilateral 
effort. I still believe that our summarily rejecting the Trans-
Pacific Partnership is going to go down as one of the great 
strategic mistakes we made in the 21st century. This President, 
this Administration summarily rejected it without due 
consideration. Twelve nations in the largest and fastest-
growing economic region in the world, the Pacific Rim area, 
came up with standards and rules that elevate up to where we 
are, and China would have been on the outside looking in.
    It would have isolated them and put great pressure on them, 
whether it was prohibition on IP theft, on forced technology 
transfer, on joint ventures. It has strong labor and 
environmental chapters that are fully enforceable. An e-
commerce and digital trade chapter; everything that we are 
trying to accomplish right now to elevate standards to where we 
are. A prohibition against localization rules was contained in 
the Trans-Pacific Partnership. Moving forward on that would 
have put, I think, incredible leverage on China, isolating them 
in the region.
    And now we are on the outside, looking in. And China is 
able to help establish those rules of trade. At some point we 
hope to be able to find a way to get back in that agreement, 
rather than disadvantaging us from that.
    But having said that, let me go back to the original 
questions I asked in regard to the level of cooperation and 
coordination with other nations right now in regard to China. 
There is strength in numbers. And I think, ultimately, China 
will respond to the collective will of the international 
community much better than the unilateral action that we are 
taking against them today.
    And then, finally, the lost market access issue.
    Ambassador LIGHTHIZER. So thank you, Congressman. I would 
say, first of all, getting out of TPP was the right decision. 
It was a bad agreement. It was poorly negotiated, and a car 
could have been manufactured 45 percent in Vietnam and 55 
percent in China and sold in the United States duty free. It 
didn't do much on currency, it had a whole lot of problems.
    And in any event, to get to your geopolitical problem, had 
China joined it, they wouldn't have lived up to the rules. We 
would have a problem, number one.
    Number two, as you know well, we have FTAs with six of the 
eleven countries that are in it already. And of the other five, 
95 percent of the GDP is in Japan, where, with your support and 
help, we are negotiating. Now I have stated my view, but I--
this period of time prevents me from going into detail.
    In terms of cooperation, we are trying to do it on two 
tracks. We do want to cooperate with other countries. As I say, 
we have the trilateral thing. We are trying your approach. I 
would say, though, that your approach by itself is less likely 
to be successful. And, indeed, was tried by prior 
Administrations unsuccessfully. So what we want to do is 
continue that approach, but also put in place unilateral action 
that the President has taken. And I would note that unilateral 
action is what has brought us to the point where we are now. We 
are, hopefully, on the verge of beginning to turn the corner.
    In terms of----
    Chairman NEAL. The gentleman will finish.
    Ambassador LIGHTHIZER. Well, in terms of trade with China, 
we hope that we can get these barriers down, and we can do this 
before we lose our supply chains and our customers.
    Mr. KIND. Okay.
    Chairman NEAL. Thank you.
    Mr. KIND. Thank you, Mr. Chair.
    Chairman NEAL. Let me recognize the gentleman from Ohio, 
Dr. Wenstrup, to inquire.
    Mr. WENSTRUP. Thank you, Mr. Chairman. Thank you, 
Ambassador, for being here with us today. A question a little 
off track from China, but it does relate to China.
    My colleague, Terri Sewell, and I have introduced 
legislation to extend the Caribbean Basin Trade Partnership Act 
for another 10 years, from 2020 to 2030. It is an important 
program to the U.S. textile industry because it required the 
use of U.S.-made yarns. And for a country like Haiti, this Act 
allows their garment industry a fighting chance to compete with 
large Asian suppliers such as China and Vietnam.
    And with the program set to expire and people trying to 
make investment decisions and production plans, certainty is 
important, important to U.S. companies. But especially when 
doing business in a least-developed country like Haiti, do you 
foresee support for re-authorization of this Act?
    Ambassador LIGHTHIZER. Well, I am not prepared to say. I 
haven't studied it, I don't have an idea. The fact that you and 
Congresswoman Sewell are in favor of it certainly is a very 
positive indicator, from my point of view.
    But I want to look at it. And I would also say that, 
generally, the requirements of U.S.-made yarn and textiles 
going forward is something that I have supported, as a matter 
of policy, in a variety of other areas. But I want to look at 
that so I can give you an informed opinion.
    Mr. WENSTRUP. So it hasn't come up in any talks with China, 
and how it might affect them. So----
    Ambassador LIGHTHIZER. Pardon me?
    Mr. WENSTRUP. It hasn't come up in any conversations with 
China as how it might affect them, that they have a concern 
about it.
    Ambassador LIGHTHIZER. No, that--it has not.
    Mr. WENSTRUP. One other question when it comes to China's 
retaliation, if you will, and some of the effects on 
agriculture and their access to markets, you talk about some of 
the non-tariff barriers. And one of the things that has come to 
my attention is inspection requirements that aren't 
scientifically-based.
    Can you elaborate on some of the things that they are doing 
in that arena, if you will?
    Ambassador LIGHTHIZER. I would be happy to do that, 
Congressman. This is something that we spent an awful lot of 
time on. There are a whole lot of, as you know, technical 
barriers to trade, or non-tariff barriers to trade, depending 
on what term you want to use.
    One of them that we spent probably the most time on, is 
this whole issue of biotechnology and their approval processes. 
In the United States, it can take 18 to 24 months to get an 
approval. In China, there are ones that after 7 and 8 years 
haven't had approval. It is a very complicated process, and it 
is one that has a very, very negative effect on the United 
States, because in many cases U.S. farmers will not introduce 
the technology themselves in the United States until it is 
approved in their major markets, one of which is China.
    So we spent a lot of time on that. Hopefully, we made some 
headway. The time was spent both to change things systemically, 
and to put in time limits and the like. Whether we succeed on 
that, we will see. I don't want to suggest that we will, but we 
did raise it and talked about it a great deal, that there would 
be science-based decisionmaking, because right now there is not 
science-based decisionmaking in many, many cases. That there be 
time, and that--and we have a long pipeline of things that have 
been stacked up for years and years and years and years and 
years.
    So we understand how important this is. They are changing 
their process and getting it, really, more in line with the 
international norms, which is something we spend a lot of time 
on, and have it be science-based. So we will see how that turns 
out. I don't want to suggest that those talks are over. We 
spent a lot of time on it, though, and we realize how important 
it is.
    Mr. WENSTRUP. Yes, thank you very much. I appreciate it.
    Chairman NEAL. I thank the gentleman. Let me recognize the 
gentleman from New Jersey to inquire, Mr. Pascrell.
    Mr. PASCRELL. Thank you, Mr. Chairman, and thank you, 
Ambassador, for fulfilling article 1 section 8. It is very 
clear that the Congress has a major role, the major role, under 
article 1 in trade negotiations. And I thank you for appearing 
before us.
    China needs to provide, we agree, greater access for U.S. 
services firms and allow them the ability to invest and operate 
independently from state-owned enterprises and competitively in 
the financial services technology and audio-visual sectors.
    Beyond the scope of the 301 report I want to ask you about 
two things quickly. One, it has been reported that there will 
be a memorandum of agreement on currency in this deal. I have 
read your comments from the 2010 U.S.-China Security and 
Economic Commission, in which you laid out your standards for 
combating currency manipulation. You laid them out very 
clearly.
    You argued in that presentation that China's practice of 
currency manipulation, it constitutes a countervailable subsidy 
under our CVD law. I agree. I have a bill that would treat it 
as such. You argued we should be ``imaginative'' in dealing 
with this issue, including restricting imports, or even 
requesting compensation for value of lost market access.
    Do the terms you have reached with China on currency live 
up to your own standards on currency? Mr. Ambassador, make it 
as short as possible, thank you.
    Ambassador LIGHTHIZER. I am not very good at that.
    [Laughter.]
    Mr. PASCRELL. None of us are.
    Ambassador LIGHTHIZER. I would say, first of all, I would 
think, without question, that the President has been 
imaginative, right? The whole 301 approach we have used has 
been something that people haven't used before, and it has had 
a huge difference. So I feel very comfortable that I passed my 
own standard of imaginative.
    And I might say in the case of the President, gritty, 
right? He had the grit to get this done.
    In terms of currency, there is--it is certainly our 
objective--and once again, these provisions are never agreed--
the only thing that is agreed to is that there be commitments 
not to do competitive devaluations. As Congressman--I think it 
was Thompson said, it is complicated, what has happened in the 
last couple of years, where we are on that. And I could argue 
that round or I could argue it square.
    Those kind of decisions on currency manipulation are not 
made by me, of course. They are made by the Secretary of 
Treasury. But they are complicated issues. But without 
question, in the past China has used currency manipulation. And 
our desire is there be commitments like that, as well as 
commitments to a certain amount of transparency.
    Mr. PASCRELL. I hope for another meeting, Ambassador. We 
will talk about the relationship between your job and the 
Treasury's job, in terms of trade, and where exactly does the 
Congress fit in.
    Do you think labor or environmental issues are in the scope 
of the 301 negotiations?
    Ambassador LIGHTHIZER. I would say, to the extent that they 
are involved in these unfair trade practices, they are. But 
this is not like a free trade agreement, where we are going 
across the board and looking at a whole variety of very 
important issues. So my scope is narrow here, because it is 
based on 301.
    And by the way, I would love to work with you and other 
Members who want to sit back and figure out a way that we can 
create new statutory authority that allows me to use something 
like 301 in these areas. I would love to sit down and talk to 
you----
    Mr. PASCRELL. Mr. Chairman, can I just add one sentence?
    Chairman NEAL. Please.
    Mr. PASCRELL. All right. If your answer to my question is 
that, as I point out, the agricultural market access is not in 
the scope of the 301 report, but you are negotiating these 
anyway.
    And so, you know, consistency, consistency. I am not 
really--that is not my--the essence of my question, my point, 
which--my time is up. But I wanted you to take a look at that, 
because it has caused some confusion. And I would like some 
clarity on it, if at all possible. Call me, write me, whatever 
you can do.
    Thank you, Mr. Chairman. I yield back.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentleman from Kansas, Mr. Estes, to inquire.
    Mr. ESTES. Thank you, Mr. Chairman, and thank you, 
Ambassador Lighthizer, for joining us today.
    You know, as a Representative from the bread basket of 
America, trade is a critical issue for my district and for the 
State of Kansas. In fact, according to the U.S. Chamber of 
Commerce, trade supports over 108,000 jobs for these exports, 
and a value over $17 billion for the economy in our State.
    Before I focus on trade relationships with China, I want to 
first thank you for your work on upgrading NAFTA and replacing 
it with a U.S.-Mexico-Canada free trade agreement. You know, 
Canada and Mexico are Kansas' top export markets worth about 
$3.5 billion. And since its adoption, NAFTA was really 
beneficial for my district, particularly the farmers, ranchers, 
and aerospace manufacturers.
    But the 20-year-old agreement did need some upgrading, and 
some reform efforts, and I am thankful that they have done 
that. And hopefully, we can get through this process and get 
that ratified quickly, so that we can move forward with some of 
the other important issues that you are working on.
    So let's go back today and focus, as we want to, on China. 
You know, tariff retaliation from China has threatened Kansas 
exports worth about $525 million to China, led by a lot of 
grain products--soybeans, sorghum, cotton, and beef--as well as 
aircraft manufacturing and other manufacturing.
    As a big supporter of free and fair trade, I believe a 
prolonged trade war with these tariffs is not the final outcome 
that any of us want.
    You know, as I talk to Kansas farmers and manufacturers in 
the district, I have heard over and over again how they support 
the President and believe we can get a better trade deal 
negotiating through their strength.
    One of the things I think our colleagues on both sides of 
the aisle would agree with is that China has been harming 
American businesses and workers for decades. In fact, we have 
seen so much cheating over the years that it is having a 
drastic impact.
    You know, for example, in 2013 a Chinese national was 
arrested in Kansas for attempting to steal some intellectual 
property regarding research pertaining to rice seeds, and 
trying to send that to scientists in China. So I am proud that 
President Trump has been one of the first Presidents to stand 
up to these unfair trade practices, and hope to bring China to 
the table in a meaningful way to help make sure we have free 
and fair trade agreements.
    Since we have entered these negotiations with China, there 
has been a lot of positive steps. And we want to make sure that 
we continue moving forward with some of those positive 
activities.
    I don't want to stop there. You know, as I mentioned 
earlier, China has threatened exports from Kansas worth $525 
million. And one of the things we want to make sure that--you 
know, as I talk with constituents, particularly with--both in 
the farming community, as well as aerospace--hopefully, we can 
work on making sure that the retaliatory and regulatory 
practices are fixed.
    And so I just want to talk a little bit about what you are 
seeing in that regard, in your negotiation of correcting those 
unfair practices.
    Ambassador LIGHTHIZER. Well, you know, thank you very much, 
Congressman. Thank you, specifically, for your support of 
USMCA. As you know, that is our top priority. And if the 
Congress doesn't see fit to pass that, then everything else we 
are talking about is kind of like a footnote, because it will 
mean we can't do trade deals, and we can't--we are not going to 
be in the trade space. I mean it is just--it would be such an 
admission of failure by all of us. So I am very grateful for 
your support in that area.
    I would also note that we talk about manufacturing jobs 
being lost because of Chinese practices. The reality is that 
farmers have been hurt as much as anyone by their practices. 
That is a huge market. They are the second or third biggest 
agricultural market, if you skip over 2018 and go back to 2017 
and traditional years. But the reality is they should be buying 
much, much more agricultural products. And my hope is that 
these purchases, as part of this, while not central, will lead 
to that, will lead to new markets that will go on for years and 
years and years.
    Mr. ESTES. All right. Thank you, Ambassador.
    Mr. Chairman, I yield back.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentleman from Illinois, Mr. Davis, to inquire.
    Mr. DAVIS. Thank you very much, Mr. Chairman.
    And, Mr. Ambassador, thank you. I thank you for the work 
you have done and the work you are doing, and for the candor in 
responding to inquiries and questions.
    I represent an area in Chicago known as Chinatown. And I am 
trying to figure out what it is that I say to the Chinese-
American Chamber of Commerce there when I go and meet with 
them. And so I would like to know as specifically as you could, 
when it comes to disregard for intellectual property 
protection, currency manipulation, and market access for U.S. 
businesses that are trying to do business in China, given the 
fact that it is an enormous market, what can I say and tell the 
Chamber of Commerce in Chinatown that I am doing, or we are 
doing, or you are doing?
    Ambassador LIGHTHIZER. Well, you know, thank you very much, 
Congressman.
    I would say this, first of all. Chinese-Americans and 
Chinese--many Chinese businessmen themselves, but Chinese-
American businessmen universally--have said to the President 
and to me for the President, ``Hang tough. This is really, 
really, really important. We have to do things that lead to 
reform in China. We are not forcing reform in China. We are 
working with reformers in China who want to reform China.'' And 
nobody knows better how important that is than Chinese-American 
business people, men and women. They absolutely know what the 
problem is.
    And they realize also what the potential is if China takes 
a step forward and changes these practices, the potential for 
them--and, really, the potential for us--but also I would say 
the potential for China is enormous. And that is why, in fact, 
China has reformers, and that is why it has people who want to 
change some of these policies.
    The reality is that all of our businesses--and their group 
probably more than any--are afraid to do business. At some tier 
they are afraid to do business with China because they will 
lose not only what we think of as technology, but also know-
how, just how they do business, that they will not have their 
intellectual property protected and respected, and there are 
huge markets that they could open up if we get this kind of 
thing reformed.
    But I would be really interested the next time you go back 
and do that and talk to them. If you call me and tell me, I 
will come up and talk to you, because I would be very 
interested to know what their reaction is to what we are doing. 
I find these people follow this stuff really a lot closer than 
most Americans do. And when I talk to them, they are like, 
``Hang tough. Don't go for the soybean solution. Go for the 
structural change. This is our one chance.'' I would be really 
interested to get your feedback after you talk to these men and 
women.
    Mr. DAVIS. We will make sure we do that.
    Thank you very much, Mr. Chairman, and I yield back.
    Chairman NEAL. I thank the gentleman. Let me recognize Mr. 
Schweikert to inquire.
    Mr. SCHWEIKERT. Thank you, Mr. Chairman.
    Mr. Ambassador, let's face it. Some of the best questions 
have already been asked. So I actually have a one-off. How do 
we future-proof? Let's say you have amazing success. You know, 
the angels sing, whatever happens. What do we do to future-
proof a success?
    Is it time that those of us here in Congress have a serious 
discussion on streamlining the WTO? Should we discuss its level 
of being almost ineffectual, you know, the number of filings 
that, when we read through them we are a decade later and a 
tweak has been made, and the bad acts are still happening?
    What do we do so we are not back having this same 
discussion a year, 2 years, 3 years from now?
    Ambassador LIGHTHIZER. Okay, well, thank you, Congressman. 
I want you to know that after the number of hearings that I 
have done before the Committee, whenever I think of the future 
I think of you. You are always going to ask me a question 
about--that I should be thinking more about the future. So I--
--
    Mr. SCHWEIKERT. That is either a good thing or an annoying 
thing.
    Ambassador LIGHTHIZER. Well, I--it is a good thing, in my 
opinion. It is--we all have a tendency to think about the here 
and now probably more than we should. So thinking about going 
off into the future is something we should be doing.
    I would say, number one, having a--realistically, having a 
real enforcement process. That enforcement process is going 
to--as you resolve issues, if you are doing it properly, you 
are going to be resolving issues in ways that turn up new 
problems and new trends. And I think you have to be able to 
deal with it in that process.
    And, as I have tried to say, I am not Pollyanna. I don't 
believe that this is going to solve all the problems between 
the United States and China. We have very different systems. 
They are in a process of reform, or they are not. It depends on 
who you talk to. If they are in a process of reform, we will 
make headway. If they are not, we are going to go right back to 
having problems.
    But I think there is a role for the international bodies. I 
absolutely do. And I think WTO reform is an important part of 
it.
    Mr. SCHWEIKERT. With that, if it is a process, the sins on 
the bilateral organizations, is it the timeline, the ability to 
stall, or is it just the actual adjudication process itself? 
What can we help in reforming so we are not doing this all the 
time?
    Ambassador LIGHTHIZER. I would say, first of all, trying to 
look to the future and to reduce problems is a healthy and 
important process. But I believe we are going to have problems, 
anyway. So I think we are going to be back here and we are 
going to be working our way through problems, and trying to 
work through those problems always with one eye to the future.
    But this enforcement process, if we have an agreement--and 
once again, we don't have an agreement--will be very specific. 
It will have layers, it will have timeframes, and there will be 
reaction. And working with Congress on WTO reform is something 
that I am eager to engage in at--you know, when your schedule 
permits it. I think there are problems at the WTO that we have 
to address, and it hasn't risen to the occasion with respect to 
at least non-market economies.
    Mr. SCHWEIKERT. Mr. Chairman, look, to that point, one of 
my great interests is, you know, I believe there are technology 
disruptions, there are always economic disruptions, there is, 
you know, financing technology that is going to create 
international disruptions. And we will need some types of 
dispute mechanisms that move efficiently.
    How many times have we had constituents come into our 
office saying, ``Well, we were part of this WTO complaint, but 
by the time we dealt with the lawyer fees and everything else, 
we are sitting here, you know, a decade later, we gave up.'' 
And I am--it would be a powerful thing, as we look at this all 
over the world. Can we be helpful in fixing that process?
    And with that I yield back, Mr. Chairman.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentlelady from California, Ms. Sanchez, to 
inquire.
    Ms. SANCHEZ. Thank you, Mr. Chairman, and thank you to 
Ambassador Lighthizer for joining us today.
    A number of my colleagues have mentioned enforcement 
mechanisms. And I am wondering if you are able to share with 
any specificity how you intend any agreement with China to be 
enforced.
    Ambassador LIGHTHIZER. Well, thank you very much, 
Congresswoman. I would say I will do it with limited 
specificity.
    Ms. SANCHEZ. Okay.
    Ambassador LIGHTHIZER. So there will be--if we have an 
agreement there will be a process that has been agreed to 
where, at the office-director level, there will be monthly 
meetings, and then I will go through the process and then I 
will take a step back. At the vice-ministerial level there will 
be quarterly meetings. And then there will be semi-annual 
meetings at the ministerial level. That would be me and the 
Vice Premiere, who is my counterpart in this.
    And the idea is two things: One, individual companies will 
come to us with complaints about practices, and we will be able 
to work those through the process. In many cases, those are 
going to have to be anonymous, because companies are afraid to 
come forward, because they know what will happen if they do. 
They will have real-world effects. It will be negative.
    And then, in addition to that, there will be systemic 
problems, where we will see patterns developing, and a series 
of things that we disagree with, and we will bring those 
through the process. Hopefully, in most cases, they will be 
resolved at the first or second level. If not, they will be 
resolved at my level. And if there is disagreement on my level, 
then the United States would expect to act proportionately, but 
unilaterally, to insist on enforcement.
    But without that kind of thing--and I should say this is a 
fairly unique idea, right? I mean, this is not something that 
has a lot of precedent. But without that sort of thing, to me, 
we don't have real commitments.
    Ms. SANCHEZ. Thank you. That is helpful because, of course, 
many people complain that if there is no enforceability, then 
our trade agreements are not really worth the paper that they 
are written on.
    And I know that there are a number of moving parts in the 
ongoing negotiations. But one sector that I want to call to 
your attention, because it is very important to the economic 
viability of southern California, is the creative industry.
    Ninety-five percent of people who are involved in the 
creative industry in LA are union workers who have quality 
negotiated benefits and retirement plans. And the audio-visual 
sector at large is pretty much hamstrung by how to invest and 
distribute in China.
    Specifically, I want to call your attention to current MOU 
negotiations. I want to call to your attention a commitment 
that was made by the Chinese in 2012, in the 2012 film 
agreement. They said that in 2017 they would provide 
``additional meaningful compensation'' in terms of increasing 
revenue shares to U.S. studios. And it seems clear that a 
revenue share of at least 40 percent of gross box office would 
be consistent with international norms.
    Given that resolving this issue would be indicative of 
China's compliance with the WTO obligations under a trade 
dispute settlement, can you confirm that is a priority for the 
negotiations in a trade deal with China?
    Ambassador LIGHTHIZER. Yes, Congresswoman. Absolutely, it 
is a priority. It is something we have spent a fair amount of 
time talking about. They know precisely where we are. As you 
know, it is a complicated issue. The key point--revenue 
sharing--isn't that complicated, though.
    They can try--I mean, Secretary Mnuchin has been very much 
involved and he, of course, knows a great deal about that 
industry, a lot more than I do. The distribution thing becomes 
more complicated. There should be some changes there, too.
    But what we haven't done is things that will challenge 
control, right? It is not something that we want to bring into 
this, the idea of challenging control in China. But this idea, 
the revenue sharing, the--I don't want to get into the details, 
but I think you probably know them exactly as well as I do. 
That is something that has not been resolved, and something we 
have spent time on, it is something we understand the 
importance of.
    Ms. SANCHEZ. Thank you. I appreciate that, and I yield 
back.
    Chairman NEAL. I thank the gentlelady. Let me recognize the 
gentleman from Texas, Mr. Arrington, to inquire.
    Mr. ARRINGTON. Thank you, Mr. Chairman. I was going to 
refrain from bragging about west Texas, but I had so many of my 
colleagues talk about their districts, so let me just say, Mr. 
Lighthizer, west Texas is the food, fuel, and fiber capital of 
the United States of America. We feed and clothe the American 
people, we fuel the American economy--that is fossil and 
renewable--and we provide energy independence and food 
security. And I am proud to represent our hard-working farmers 
and ranchers, and they are concerned. And these are desperate 
times.
    And I know you know this, Mr. Ambassador, but--and by the 
way, good work, great work, hard work. And I know this is a 
long-term proposition, it is a long-term game-changer, and 
nobody knows about the inequities and the unfairness and the 
way the Chinese--their bad actions and unfair trade practices 
better than our farmers out in west Texas, especially our 
cotton farmers. So keep up the great work.
    But times are tough. And I just want to remind you that 
over the last few years we have seen a decline of over 50 
percent in farm income in the United States ag industry. That 
is the steepest decline since the Great Depression. We have 
seen a 40 percent, roughly, increase in bankruptcies. And I am 
sad to report that farmers have the highest suicide rate in the 
United States of any profession, five times the national 
average. Times are desperate.
    And our farmers, in spite of that, and our ranchers, they 
stand with this President 100 percent. They will stand with him 
right up until they have to sell the family farm. But they love 
him, and they appreciate him, and they know that he is fighting 
for them.
    Let me talk about cotton, because when you fly into Lubbock 
International Airport, you are going to land in the largest 
cotton patch in the world. We produce about a third of the 
world's cotton that we export out of the United States. But we 
have lost 50 percent of our market share in China, and it is an 
awfully big market.
    We want reforms, Mr. Ambassador. We want the equitable, 
reciprocal, and enforceable, structural reforms that you talk 
about. We are Americans first. We want that for every American 
job creator, manufacturer, and producer.
    But you have mentioned this, the purchase commitment, and 
we have heard a lot about soybeans, a little bit about pork. 
Talk about cotton, because we have a 17-State Cotton Belt, a 
$21 billion industry. We produce the most and the best cotton 
in the world. But that Chinese market, as a result of that 50 
percent loss, our guys are suffering. Can you talk about cotton 
being mentioned in your purchase commitment discussions with 
the Chinese, please?
    Ambassador LIGHTHIZER. So, first of all, thank you for 
that, and particularly for the comments about the support for 
the President. As you know well, you can't talk to the 
President about trade without having the farmers come up, 
right? It is like the first thing he talks about, it is usually 
the loudest thing he talks about, too.
    He is--and Secretary Perdue, as you know, is--I don't know 
all the secretaries of agriculture, but I can't imagine there 
was ever a better one. He is just full-on everything for 
agriculture. And we happen to be in the middle of a long-term 
trend that has been very bad, so all of that is appreciated, 
and the President keeps us very focused on it, as does the 
Secretary.
    In terms of the purchase commitment, absolutely, cotton is 
a factor. It is something that China needs, has traditionally 
bought, and it is easy to buy more of. So it is something we 
understand--that these people have suffered--and it is 
something that is on the list of things we expect them to have 
substantial increases on, and it is something the President 
keeps us very focused on.
    And I have specifically gone through with the President the 
various items, so I am talking to the President of the United 
States about these numbers for these ag products--and, by the 
way, it is these big commodity items--it is hazel nuts--I mean, 
there are a lot of things that I have had Members talk to me 
about, and I keep track of them, and I go through them 
dutifully.
    Mr. ARRINGTON. You are doing a great job. Thank you.
    Thank you, Mr. Chairman, I yield back.
    Chairman NEAL. I thank the gentleman. Now, based upon the 
ratio present in the room, we will now move to two Democrats 
and then recognize one Republican.
    Ms. DelBene is recognized to inquire.
    Ms. DELBENE. Thank you, Mr. Chairman, and thank you, Mr. 
Ambassador, for being here with us today.
    I was pleased last month. We saw 76 countries agree to 
start negotiations to develop global rules on e-commerce. 
However, I am concerned that the recent inclusion of China in 
these talks could weaken those overall efforts and lead to a 
watered-down agreement, since their current digital regime is 
so radically different than ours.
    In your bilateral talks with the Chinese, are you pushing 
them to address critical issues like data localization, forced 
disclosure of source code, restrictions on cloud service 
providers, and banning customs duties on electronic 
transmissions? This would not only help many American companies 
operating in China, but would also help make China a more 
constructive partner in important multilateral negotiations 
like the e-commerce initiative.
    And if we don't address these issues immediately, we risk 
creating new digital borders, and those digital borders could 
create massive disruptions in the digital supply chains that we 
have. So I would love your thoughts on how you are addressing 
these issues.
    Ambassador LIGHTHIZER. Well, thank you very much, 
Congresswoman, but you know this is something that I care 
about. So I am putting this in the soft ball category.
    Number one, I completely agree with you. Strategically, 
what we should be doing is having a small group that writes 
real rules on e-commerce, and then expand the group to other 
people. The more people you bring into the negotiation, the 
harder it is to get any rules that you and I would think of, 
and many other Members would think of, as actually world-class 
kinds of rules.
    The kind of rules we need, by the way, I would just point 
out, are in USMCA, right? That is, like, the gold standard for 
all of this stuff. It is the absolute gold standard for all 
this stuff. And it is probably a bridge too far, with respect 
to some of these people. But I think bringing China in will not 
help these negotiations. That is number one.
    Number two, are we dealing with these issues with China? 
Absolutely. We spend an enormous amount of time on data 
localization, on data transfer, on source codes, and on 
requirements in a whole variety of areas. And I mean down to 
absolutely the most minute detail. And I am happy to sit down 
with you at some point and kind of go through it, just so you 
can get some actual appreciation. But, I mean, it is me sitting 
down with the--you know, among the most senior officials there, 
talking about precisely where there are circumstances, and 
which is appropriate to require source codes.
    And there are some, I mean, you know, emergency meetings. I 
mean, there are some strange things. But we have had a very--we 
haven't concluded, we are not done yet, but we have made 
headway. It is--whatever it is, it is not going to be what you 
and I think of as a model agreement, but we will make 
substantial progress, I believe.
    And these are really, really important issues that--and I 
agree completely with you, this is one of those things where we 
should lock in rules that stop barriers in the beginning of an 
industry. Once you get protectionism set in all over the world 
it is much harder to change practices than it is to have people 
adopt best practices at the beginning. And so it is very 
important.
    It is also a big issue for--just colloquially, for us. We 
are good at it, and we ought to have that----
    Ms. DELBENE. So, as you know, U.S. technology companies, 
and specifically cloud service providers, face significant 
market restrictions and forced technology transfer requirements 
in China. The 301 tariffs also impact them because other key 
inputs to data centers are subject to these tariffs.
    And so, particularly talk about that. I would like to know 
what your commitments are to pursuing forced technology 
transfers. But also, are you looking at things like eliminating 
foreign equity caps and licensing requirements, so that U.S. 
companies don't have to rely on Chinese companies to operate?
    Ambassador LIGHTHIZER. Yes.
    Ms. DELBENE. Thank you. I know we are out of time. We can 
follow up more at a later date.
    Thank you, Mr. Chairman.
    Chairman NEAL. I thank the gentlelady. With that, let me 
recognize the gentlelady from California, Ms. Chu, to inquire.
    Ms. CHU. Yes, Ambassador Lighthizer. I represent Los 
Angeles, the heart of the film, television, and music industry. 
And also, I am Co-Chair of the congressional Creative Rights 
Caucus. And I wanted to follow up on what you said earlier 
about the unfair practices affecting the film industry.
    Part of the unfair practices has to do with the revenue 
share, of course. The average for the nation in terms of 
revenue sharing with regard to films in China is 40 percent. 
But for the United States, the revenue sharing is 25 percent. 
And so that, I believe, is so important to address.
    But on top of all of this, the U.S. film industry brought a 
market access case against China to the World Trade 
Organization. The World Trade Organization ruled in favor of 
the film industry, and an MOU was entered into by both parties. 
And in that MOU the Chinese committed to engaging in 
consultations in 2017, and to providing additional meaningful 
compensation, in terms of that revenue share.
    So my question is have they engaged in those consultations, 
which were supposed to be done in 2017? And if not, what is 
your plan for enforceability in this regard?
    Ambassador LIGHTHIZER. So we have had discussions, and we 
have had discussions that predated the current 301 process. But 
now, because we haven't made sufficient progress, we are 
folding them into this 301 process. And it is one of the 
services issues.
    The revenue share, as you said, is crucial, but crucial 
also is trying to make some improvement on the distribution 
side of things, because the reality is that competition there 
helps also.
    You know, I don't know if I can predict success. I would 
say they are very difficult negotiations, you know, as of the 
last time they were here. But your industry is very well 
represented by you and other Members, and by MPAA. We are 
focused very much on it. And I think making it part of these 
negotiations increases the likelihood of a successful outcome.
    But it is a difficult issue. You find, just 
philosophically, all these kinds of areas that you sort of dig 
in, and you say why is there this or that protectionism, and it 
is almost always the situation where there is an interest in 
the other country because that country is getting richer as a 
result of it. It is very seldom philosophy, although there are 
cases where it is.
    But in this case, there are people there who make money on, 
basically, squeezing us, number one. Number two, they want to 
develop their own industry.
    Ms. CHU. Yes.
    Ambassador LIGHTHIZER. So there are--I don't have to go 
through it. You know the reasons why we have this problem. But 
it is something that we are focused on. Hopefully, we will come 
to a conclusion. We are not asking for the moon at all. What we 
are asking for is what is normal.
    Ms. CHU. Well, I thank you for continuing to press on that 
issue in these trade negotiations.
    Also I wanted to make a statement about a company in my 
district, iRobot, which employs 675 American workers, 
engineers, scientists, and which developed the famous Roomba, 
the robotic vacuum. So it employs many people in my district, 
but the Roomba is manufactured in China. And the iRobot is on 
that third list of tariffs. Right now, iRobot is paying 10 
percent in retaliatory duties, but it may go up to 25 percent 
if the deal is not reached.
    And so they are very, very anxious about having some way to 
apply for exclusions for that third list, and I just hope that 
you can make that process happen.
    Ambassador LIGHTHIZER. Well, I have certainly taken the 
position that if we go to 25 percent, we will--I have made that 
commitment--have an exclusion process. Short of that, I want to 
see where we are. And I hope that they are thinking about ways 
to manufacture more in the United States.
    Ms. CHU. Yes----
    Chairman NEAL. I thank the gentlelady. With that, let me 
recognize the gentleman from North Carolina, Mr. Holding, to 
inquire.
    Mr. HOLDING. Thank you, Mr. Chairman.
    Mr. Ambassador, it is always a pleasure. I am very glad to 
see that the Administration is willing to tackle China's unfair 
trade practices, rather than just talking about it and 
complaining about it. I think we have bipartisan support in the 
room to agree that China is a strategic trading partner that 
plays by the rules when it behooves them, but otherwise ignores 
them.
    And, Mr. Ambassador, as you know, I am from North Carolina, 
which not only has the best barbeque in the country, but we are 
also one of the leading pork-producing States in the country. I 
am glad I didn't hear any objection to that.
    Chairman NEAL. We won't subtract that from the gentleman's 
time.
    [Laughter.]
    Mr. HOLDING. In 2017 the United States shipped over $1 
billion in pork to China. But with punitive tariffs, over 50 
percent, our pork exports to China have slowed down to a 
trickle. Lost sales to China have caused producers in my State 
to lose $8 per hog, and collectively, an annualized loss of $1 
billion.
    And I know you have made progress with agricultural 
purchases, especially for soy and poultry, and I appreciate 
your good work there on behalf of my farmers. But obviously, 
there is a tremendous demand for pork in China. And with 
Chinese pork production in steep decline because of African 
swine fever, it seems like it is time for significant U.S. pork 
shipments to China, which would, of course, put a big dent in 
the trade imbalance.
    So can you give us any indications as to where you are on 
pork market access in the negotiations?
    Ambassador LIGHTHIZER. So thank you, Congressman. Yes, that 
is--you are absolutely right. Pork is one of the issues that is 
very important to us. Before we talk about the purchasing, it 
is also important in the SPS area, where we have specific 
problems with, I would say, lack of a scientific basis for some 
of their restrictions. So that is another area in which we have 
issues.
    Pork is something that we have talked about. We would 
expect, if we have a deal, that there would be substantial pork 
improvements, particularly, as you know well, given the fact 
that China has issues with their own pork production right now 
that are substantial. And this is something we have talked 
about, it has been quite specifically addressed, and we have 
gone back and forth with numbers. And I am happy to talk to you 
about it offline.
    But we are making headway. And if there is a deal, and if 
there is a package, I am confident that there will be 
substantial good news for our pork producers.
    Mr. HOLDING. Thank you. Switching to 301 tariffs, you know, 
we are working with you to find ways to work on the exclusion 
process. One option in particular I would like to work with you 
on is the criteria that excludes products that are regulated by 
other U.S. Government agencies, where those regulations already 
constrain the ability of importers to access those products.
    For example, products regulated by the FDA, where the FDA's 
regulatory framework means that consumers cannot quickly shift 
to other suppliers. The existing regulations by our government 
already constrained supply for the consumer. And I believe we 
have an opportunity with the List 3 exclusion process to 
address these products and minimize consumer impact. So that is 
an area which I, you know, hope that we can work on together in 
the future.
    That doesn't really require an answer, and I am out of 
time, and that works well. I yield back.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentlelady from Wisconsin to inquire.
    Ms. Moore.
    Ms. MOORE. Thank you so much, Mr. Chairman, and I do want 
to thank the Ambassador for his patience and indulgence. A lot 
of stuff has been covered already, so I won't regale you with 
repetition.
    I do want to say that while these tariffs have had 
draconian impacts on all of our constituents and districts, 
they are having an impact on China, as well. But many 
economists seem to think that China is adapting, and that they 
are recovering. One of the things they are doing is expanding 
their export markets.
    So a question that hasn't been asked is we don't have a 
functioning Export-Import Bank now. Do you think that is having 
an adverse impact on our trade position?
    Ambassador LIGHTHIZER. Thank you for that question. Yes, 
the answer is yes, it is having an impact, and it is way beyond 
China, and it is costing us jobs, and there is no excuse for 
it, in my opinion.
    Ms. MOORE. Okay, thank you.
    Ambassador LIGHTHIZER. So I don't know what else to say. 
I----
    Ms. MOORE. All right. I know what to say, but I won't carry 
you there.
    You have talked a lot about science-based decisionmaking. 
One of the things that our companies have leaned into was a 
provision of Dodd-Frank, where companies would report and 
refrain from using conflict minerals in their products.
    I was wondering. Is that a consideration--in terms of 
unfair trade practices--for China to use conflict minerals, 
thus undercutting the prices of their products?
    Ambassador LIGHTHIZER. It is. I am, of course, sympathetic 
to your objective--it is not something that we have talked 
about. And if there is a specific unfair trade action that we 
should be thinking about, I would be happy to work with you on 
it.
    Ms. MOORE. Okay.
    Ambassador LIGHTHIZER. But it is not something we have 
spent----
    Ms. MOORE. Okay, I would love to work with you on that, 
because that could severely undercut our products, our iPhones 
with these minerals in them. We want to make sure that they are 
not being produced or taken from countries where people are 
being murdered and that have unfair labor practices.
    Ambassador LIGHTHIZER. I am very sympathetic to your----
    Ms. MOORE. I do want to follow up with--my colleague on the 
Republican side talked about lists of things that are really 
critical. And I know that my colleague from Wisconsin probably 
waxed on about how this is hurting our folks in Wisconsin.
    More specifically, I have an initiative to try to prevent 
sudden infant death syndrome. And one of the products that we 
have found to be very effective and cost-effective, especially 
for poor women, is something that is marketed in the United 
States as a Pack 'n Play. It is a crib that is only made in 
China, and it has been subject to these 10 percent tariffs. And 
if we were to continue these tariffs, it would be out of the 
reach for many consumers.
    And so I was wondering how to get these Pack 'n Plays on 
that list of don't-touch items, because we can't get these Pack 
'n Plays from anywhere else.
    Ambassador LIGHTHIZER. Well, thank you, first of all. And I 
can't help but say how important USMCA is for Wisconsin.
    Now, having said that, my guess is we ought to be 
manufacturing Pack 'n Plays in the United States. Why is it 
that they can't be manufactured here?
    Ms. MOORE. Well, can you manufacture them before my great-
granddaughter is born on March 23rd?
    [Laughter.]
    Ambassador LIGHTHIZER. Maybe we will just let you use my 
granddaughter's. She doesn't need it anymore, she has outgrown 
it, so--no, I don't want to be flip about it. You know, I am 
sympathetic. The bottom line is we ought to be manufacturing 
these things in the United States. That is what our objective 
is. We ought to be paying people here to manufacture these 
things.
    And I would also say a 10 percent tariff on that product, 
assuming it doesn't go up, a 10 percent tariff on that product 
versus what it would have cost 6 months ago with the 
devaluation of the Chinese currency, is probably a 2 or 3 
percent increase in price. My guess is it is not going to price 
too many people out.
    And if the cost of that 2 or 3 percent on the price of that 
is a bunch of people have jobs they wouldn't otherwise have, 
personally, that is a trade I would make.
    Chairman NEAL. I thank the gentlelady. Let me recognize the 
gentleman from Michigan to inquire.
    Mr. Kildee.
    Mr. KILDEE. Thank you, Mr. Chairman, for holding this 
hearing. And thank you, Ambassador Lighthizer, for being here. 
And beyond that, thank you for your willingness to engage with 
us on a regular basis. It makes a difference, and I very much 
appreciate that. You have been quite accessible.
    And I have a question, but before I get into that, I also 
want to note how much I appreciate you bringing up the 
polysilicon issue with the Chinese during these negotiations. 
It is important that we address China's retaliatory tariffs in 
response to legitimate American trade remedies. That is 
important to me, it is important to my district, and I 
appreciate your efforts in that regard.
    Obviously, the Congress and the Administration need to work 
together to deal with China, and hold China accountable for 
unfair practices that are costing American jobs. And there, I 
think, is general agreement on that score, bipartisan 
agreement, and many of us wish that it was more of a 
multilateral approach.
    One area that I know was addressed, but I wasn't here to 
hear your answer, has to do with currency manipulation. 
President Trump promised to label China a currency manipulator 
on his first day in office during his campaign. Obviously, that 
didn't happen. And I know you agree with the President's 
general sentiment that China engages in bad behavior and 
manipulates currency. In fact, in 2010 you testified to this 
Committee that China would be labeled--should be labeled--a 
currency manipulator, and was in violation of its WTO 
obligations.
    You have thoughtfully outlined a list of actions that the 
United States needs to take to address China's currency 
manipulation, but I would like to get your perspective on 
whether or not the understanding that the President recently 
announced with China on currency issues meets the requirements 
that you had laid out in your previous testimony.
    Simply put, does this deal meet the standards that you laid 
out in 2010?
    Ambassador LIGHTHIZER. Well, thank you, I appreciate that.
    I would say, first of all, whether or not China is 
manipulating its currency right now, being competitive is an 
issue that we can talk about. It probably is, but it is 
probably not manipulating it to lower its currency, it is 
probably manipulating it to raise its currency, because they 
are at a different position than they were in 2010. So that is 
one thing I would say. It is not a foregone conclusion that 
China is manipulating its currency down right now.
    And I would say that this is a decision that the Secretary 
of Treasury makes in conjunction with the President, not me. 
But I do not think you can make a case that, right now, China 
is intervening in the market to have their currency be weaker, 
right? That is not in their interest, and they are probably 
doing the exact opposite of it.
    Have they done it in the past, in my judgement? That is 
absolutely true. And were they doing it when I made that 
testimony? That is absolutely true.
    Mr. KILDEE. And I don't think you could rule out the 
possibility that at some moment in the future we could see that 
happen again. And that is why the structural approach to these 
issues is more important than looking at this moment in time, 
or even in the context of a deal that we might see negotiated 
founded on some temporary transactional benefits, as opposed to 
structural benefits.
    Ambassador LIGHTHIZER. I completely agree with your 
statement, absolutely 100 percent. And what we are trying--what 
we want to get is commitments to not have competitive 
devaluations in the future, and a certain level of 
transparency.
    If you have those two things, and they are enforceable, 
then you can guard against that problem in the future. The 
other point I made before you were here is that this is an 
issue beyond China. We think of it as China. But there are a 
lot of places in Asia where this is a problem, and a lot of 
places where it has been a problem in the past.
    And there are a lot of people in the United States that 
aren't working right now because of this issue, a lot of people 
who were told, ``Well, you just didn't do a good job,'' and 
they were doing a fine job, they were just cheated on currency.
    Mr. KILDEE. My time has expired. I appreciate your 
attention to these issues. Thank you.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentleman from Missouri, Mr. Smith, to inquire.
    Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. Thank you, 
Mr. Ambassador, for making time to be here today. Today we are 
here to talk about China. China has been taking advantage of 
U.S. workers for a long time. And I think that the President, 
along with yourself, Ambassador, deserve a lot of credit for 
sticking your necks out on this very difficult issue.
    It is clear that progress is being made, and that there is 
real potential for positive structural change after years of 
deception and false promises from China. A lot has been 
reported on the recent negotiations, and I appreciate the light 
you are able to shed on this process.
    The news we heard last week about new Chinese purchases of 
U.S. soybeans is especially encouraging for someone who 
represents a very large agricultural district in southeast 
Missouri. I am hopeful that we can achieve more than just the 
status quo with China, and go well beyond current market 
access.
    I would like to reiterate the comments that were made by 
the gentleman from Texas, Mr. Arrington, in regard to cotton. 
There is only one thing I would disagree with. Missouri cotton 
is a little bit better than Texas cotton. But we definitely are 
like-minded when it is about opening up the markets.
    I do want to bring up rice, which is extremely important to 
the Bootheel. Rice farmers have been fighting for over a decade 
for access to Chinese markets. While the Administration has 
made progress in gaining access, since 2017, China has been 
displacing U.S. rice in our territories by undercutting the 
price. So while U.S. rice struggles for access, China's access 
to our domestic market below traded prices continues to grow.
    Are you and the Administration investigating the situation? 
And what are you doing to address it?
    Ambassador LIGHTHIZER. So thank you, Congressman. Yes, 
absolutely.
    First of all, to your first point, structural issues are 
fundamental to what we are talking about. And I have tried to 
make that point. I read in the media all the time--I read today 
in the New York Times--that we weren't making any headway on 
structural issues, and it didn't even cite anybody. It made 
some other comments, by the way, and then cited ``contacts of 
Lighthizer.''
    I thought, ``What is a contact?'' Is that like somebody I 
bump into at the grocery store? Contacts? That is a source, not 
a contact. But that is another issue. I won't get into it, in 
any event, any further than I already have.
    The fact is that we are making headway on structural 
issues, contrary to what maybe you read here and there. And the 
President believes they are central to having what anyone would 
consider to be a great agreement. And that is what his 
instructions to me--his instructions to me were you have to get 
a great agreement or we have no agreement. We will just wait 
until we can get a great agreement.
    So now, on the specific issue of rice, yes. Rice, number 
one, is the subject of purchasing that we have to have. Number 
two, we have, as you know well, we have two WTO cases, one of 
which has been announced. The other, which has been decided, 
hasn't become public, so I won't tell you where we are on that. 
But those are two cases. And resolving those cases in the 
context of this agreement is something else that we are talking 
about. So whether we succeed in that, we will see.
    And on the issue of unfair Chinese access in the United 
States, if there are issues where someone has a case that they 
want to bring to my office and talk about, I am happy to talk 
about it.
    As you know very well, because we have talked a lot, I am 
completely into enforcement. I think if we don't enforce these 
laws, the whole basic consensus that favors the trading system 
breaks down. And I think it has broken down. So I am happy to 
act on that, you know, very quickly.
    Mr. SMITH OF MISSOURI. Thank you, Ambassador. I have 
several other questions I will just submit for the record, 
hopefully, to get responses. But I appreciate your responses.
    Chairman NEAL. I thank the gentleman. With that let me 
recognize the gentleman from Virginia, Mr. Beyer.
    Mr. BEYER. Mr. Chairman, thank you. And Ambassador, thank 
you so much for being with us all this time.
    You know, Ambassador, we have been discussing--and, of 
course, you are particularly compelling on the point about how 
China simply refuses to operate under what we consider to be a 
lawful and rules-based trading system. And, of course, this 
extends beyond just trading rules.
    On Monday, Deputy Attorney General Rosenstein spoke at CSIS 
about what he called China's transactional approach to the law, 
citing China's willingness to detain foreign nationals on 
specious charges to gain negotiating leverage or force an 
outcome from a foreign government. This isn't how our justice 
system works, or it is not supposed to work that way.
    After the Huawei CFO's arrest, the President said, ``If I 
think it is good for what will certainly be the largest trade 
deal ever made, which is a very important thing, what is good 
for national security, I would certainly intervene if I thought 
it was necessary.''
    And during your meeting in the Oval Office with the Chinese 
Vice Premier the President again discussed the possibility of 
``talking to the U.S. attorneys,'' and talking to the Attorney 
General. He hinted further this would be a subject for trade 
talks.
    I know you are not responsible for law enforcement. I know 
you are not responsible for the Huawei prosecution. But you are 
certainly responsible for the trade deal. Are you familiar at 
all with any further discussions within the Administration 
regarding using this case as leverage for trade negotiations?
    We have seen firsthand that you are willing to be 
forthright with the President. Are you not concerned that 
adopting a transactional approach to the criminal justice 
system, close to what the Chinese would do, will undermine our 
own legal system and incentivize reciprocal actions, as we have 
already seen with the Chinese targeting of Canadian citizens?
    Ambassador LIGHTHIZER. I am not aware of anything on this 
subject. I don't get involved with it, and I am not aware of it 
at all. I am too involved in what I am doing.
    Mr. BEYER. All right, thank you. And most of our national 
trade discourse, particularly the popular discourse, centers 
around heavy manufacturing and agriculture, despite the fact 
that 75 percent of Americans employed in the private sector 
work in services of one form or another.
    In my district we have tens of thousands that support their 
families with good jobs across a wide range of services. I know 
you really focus on the trade deficit and goods, and leave out 
services all together. I just wanted to make sure that we know 
we run a surplus on services.
    But, nevertheless, both the national trade estimate and the 
Chinese WTO compliance report note that American service 
companies face significant trade barriers across a number of 
sectors. And given our general competitive advantage in these 
areas, it is safe to assume the service surplus could be a lot 
larger.
    China places significant restrictions on legal services, 
ICT, cloud services, a whole range of things. Can you provide 
us just some detail on how the concerns raised about services 
are addressed in your current talks, and can we expect concrete 
changes in Chinese competitive behavior in this sector, too?
    Ambassador LIGHTHIZER. Yes, thank you very much. And I am 
remiss in not making that point clearly.
    Services are the crucial part of what we talked about, and 
we spent a lot of time on them. I brought my--one of my many--
negotiation book, which I will be happy to show you at some 
time. Somebody looked at it and saw all the notes, and they 
said, ``God, that really is a terrible job you have, 
Lighthizer,'' but here it is. We spent a lot of time on banking 
services, cloud computing services, credit rating services, 
electronic payment, and express delivery. I won't go through 
all of them here, because someone will say--my God, insurance 
services--I mean, we spent a lot of time in great detail, right 
down to the sub-sub-sub-section on pages and pages and pages of 
services.
    And you are exactly right, services jobs are equally good 
jobs. The United States has a surplus in services, which is 
very important, and millions and millions of people work in 
them. And we should be doing much better, because in many areas 
we are, by far, the most competitive in the world. So this had 
an enormous amount of time spent on it.
    And it is sort of less thematic, and more specific, right--
if you can follow what I mean--in these negotiations. But there 
was progress made on a number of these fronts.
    Mr. BEYER. Thank you very much, Mr. Ambassador.
    Chairman NEAL. I thank the gentleman. Let me recognize the 
gentleman from Pennsylvania, Mr. Evans, to inquire.
    Mr. EVANS. I too, Mr. Ambassador, would like to thank you 
for coming before this Committee today.
    There are 100 Chinese firms operating in Pennsylvania, 
supporting over 3,000 jobs. Pennsylvania imports over $17 
billion from China, and Pennsylvania exports $2.5 billion to 
China. Mandarin is the third most spoken language in 
Philadelphia. But the question that keeps coming up--and this 
came from our Department of Economic Development--is the issue 
around intellectual property, when it comes to investment.
    The concern--and this question has probably been asked over 
and over again to you, so forgive me for repeating it again--
the issue about intellectual property, or the ability to 
protect our domestic companies long term, can you speak 
specifically to that again?
    Ambassador LIGHTHIZER. Well, absolutely, Congressman.
    First of all, I will repeat what I said before, and that is 
that I have found that Chinese-Americans are the ones who will 
say, ``Hang tough. We need structural change. This is the only 
way we are going to get structural change. Don't cave, don't 
sell out for soybeans,'' all the kinds of things that you and I 
have talked about and we both agree on.
    And I think that Chinese-Americans will be people who 
will--number one, they have a stake in a change in that system. 
And, number two, they will be beneficiaries, from a business 
point of view.
    On the IP front, China has very little IP protection right 
now. What we did in this negotiation--and I am going to talk to 
you later, and I am going to stick all this in front of you--we 
went through section by section by section what normal--what we 
would consider to be sort of best practices for intellectual 
property protection. And we negotiated those provisions.
    We didn't get everything we wanted, but you need things 
like a proper definition of what intellectual property is, a 
proper definition of what trade secrets are. You have to make 
sure you have criminal enforcement at some point in the 
process. You have to make sure you have deterrent-level 
penalties, because if you don't have that, you have a problem. 
You have to make sure you have neutral people making decisions. 
It is all the kinds of things that you would say, ``Yes, that 
is more or less what we would expect in a system.''
    Now, there is variation, and we didn't get all of it. But 
the people with whom we dealt in China want to--they want to 
reform this process. I think they legitimately want to reform 
it. I think they legitimately view themselves as creators of 
intellectual property, instead of just consumers of it. And 
that is--when that changes, people have a different attitude. 
So Chinese creators of intellectual property now want 
protection, and have more power than they would have in the 
past.
    So we have an enormous amount of detail. I will just spend 
10 seconds and show you my book when we are together, and you 
can see. But this was a detailed discussion. It is extremely 
important.
    And I would say the final thing, when they put this in 
place, to the extent it is agreed to because they think it is 
in their interest, then there will be the enforcement issue, 
right? And we will be going down, and it will be--it is a 
change for China to do this, but it is something they seem to 
want to do.
    Mr. EVANS. Real quick, Mr. Ambassador, you raised the issue 
about banking. Development projects and companies rely on 
Chinese investment to infuse capital into their projects and 
work. The restrictions on capital inflow is a concern for 
future investment.
    Ambassador LIGHTHIZER. Well, okay, the President wants 
Chinese investment, just like he wants everybody else's 
investment. That creates jobs, and it helps Americans. What we 
don't want is investment in areas where they are going to end 
up taking crucial technology from the United States. So there 
is a balance there, and some people will come in, and what they 
really want is technology and not investment. In other cases, 
they want investment.
    The President's position and the Secretary of Treasury's 
position is quite clear: We want investment from China, just 
like we do from everyone else. But we don't want investment 
where it is going to go into crucial technologies and we end up 
losing those technologies, which is going to hurt us in the 
kind of things that Mr. Beyer talked about. He cares a lot 
about it.
    So there is a balance there, and it is very important that 
we meet that, you know, balance properly.
    Mr. EVANS. Thank you, Mr. Chairman.
    Thank you, Mr. Ambassador.
    Chairman NEAL. I thank the gentleman. With that we will 
recognize the gentleman from Illinois, Mr. LaHood, to inquire.
    Mr. LAHOOD. Thank you, Mr. Chairman. And, Ambassador 
Lighthizer, welcome back, and thank you for your toughness on 
China. And we are lucky to have you as our negotiator going up 
against China.
    I have the eighth largest ag district in the country, in 
terms of corn and soybean production, a heavy manufacturing 
base, and there is a lot of anxiety in both of those 
industries, as we have heard today.
    The Wall Street Journal just came out with an article in 
the last couple months. The ag economy is down 13 percent over 
last year, directly related to tariffs, directly related to the 
trade war with China. And so there is a lot of stress and 
concern there.
    However, most of my constituents in my district support the 
President in going after China. And you mention at the 
beginning of your statement, ``Technology is going to rule the 
future.'' And how we change the behavior with China is--seems 
to be--the crux of what you are getting at with your 
negotiations.
    And, historically, looking over the last 25 years, no 
President, from Clinton to Bush to Obama, has been able to do 
anything on this front, whether it is cyber threats, forced 
technology transfers, or stealing intellectual property, we 
have not been able to change that behavior to put China on the 
same playing field as every other industrialized country in the 
world. And that really seems to be what we are trying to get 
at.
    Having said that, you have talked a little bit about our 
leverage in this negotiating process. And as I look at what you 
are trying to do here, I am wondering whether this is going to 
be different in terms of--what is going to be different this 
time in changing the behavior in China?
    And I am going to submit for the record--this is an article 
from Reuters within the last 2 months, and the title is, 
``China says U.S. accusations of unfair trade practices 
`groundless'.'' And in there, the spokesman from China says the 
U.S. side made groundless accusations, and China finds that 
totally unacceptable. That is from their spokesperson. And I 
will submit that for the record, Mr. Chairman.
    I guess, as we look at what you said earlier, how do we 
have structural change, how do we get to a more laws-based 
system? And I know that is what you are getting at. So two 
questions, Mr. Ambassador.
    First of all, on the ag side. As we begin planting season 
for our farmers, what assurances can you give my corn and 
soybean farmers and pork producers that the market share in 
China will be there when we resolve this, eventually?
    And then, second, as we look at this different approach 
that you are taking, what gives you confidence that this 
approach is going to be different? And what if it is not? What 
are the consequences to China if we are not able to hold them 
accountable, moving forward, and are not able to change that 
bad behavior? Thank you.
    Ambassador LIGHTHIZER. Yes, thank you very much, 
Congressman, for that question. It covered a lot of territory. 
And I have one minute now to respond, but I will do it as 
quickly as I can.
    First of all, in terms of the soy and corn, we are trying 
to, number one, get more sales, more purchases, not only on the 
question of corn, it is also on the question of ethanol.
    Mr. LAHOOD. Yes.
    Ambassador LIGHTHIZER. Which, of course, is a huge user of 
corn. So I believe if we have a deal, there will be a 
substantial--in the case of soy we have already seen a 
substantial amount of additional purchase, and we see the 
certain moving together of soy prices back to traditional 
levels, in terms of the foreign competition. So we have seen 
some impact, particularly with the most recent 10 million 
metric ton purchases that the Chinese have gotten into the 
market for.
    So if we have a deal, I think we will see substantial new 
sales there, and hopefully some other improvements, in terms of 
SPS stuff.
    How is this different? You know, we are--it has to be 
enforceable, it has to be specific. And we are covering many 
more areas than anyone has ever covered. But it requires the 
grit and determination of the President, and it really requires 
the cooperation of people who want reform in China. And there 
are people who want that.
    And the alternative is what has been going on. And that, 
for sure, fails. So we know that approach doesn't fail, and 
hopefully ours will succeed.
    Mr. LAHOOD. Thank you, Mr. Ambassador.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentleman from Illinois, Mr. Schneider, to 
inquire.
    Mr. SCHNEIDER. Thank you, Mr. Chairman. And, Ambassador, 
thank you again, not just for your time here today, but the 
availability you have given us throughout this whole process.
    Being from Illinois, I share the concerns of my colleague 
for the farmers in our State. I represent the suburbs of 
Chicago. And I just want to share a quick story of a 
constituent's firsthand experience with some of China's bad 
practices.
    They were working on some product designs, trying to get 
some samples. A company in China was delaying, and ultimately 
the company in my district started seeing their product showing 
up on shelves here in the United States, a clear theft of 
intellectual property. And this is something that is happening 
throughout the country, it is happening to businesses large and 
small.
    So I agree with you that China is a bad actor, and that we 
cannot let their devious behavior go unchecked. We need to 
level the playing field for American businesses. On a level 
field our businesses can absolutely succeed. But I have real 
concerns with the way the Administration has approached the 
problem, creating and escalating a trade war that has caused 
harm to many businesses, and many businesses throughout my 
district.
    Last summer I visited a number of companies to talk about 
the impact tariffs were having on them. And everyone was very 
concerned that it was hurting their ability to compete. But it 
is not just businesses. A local school in my district had to 
spend $2 million in contingency funding to cover the increased 
cost in materials for a remodeling project. So I was pleased to 
hear that you have made progress in the discussions, and the 
March deadline was delayed.
    In your testimony you mentioned that this Administration is 
pressing for significant structural changes to allow for that 
more level playing field. What specific structural reforms or 
other policies are you pursuing in these negotiations to help 
our businesses that are experiencing hardships in the Chinese 
market? And can you ensure to me that these reforms will be not 
just meaningful, but long-lasting, and that they are looking 
toward the long term?
    And can you please share with the Committee what outcomes 
you have secured thus far to help businesses like my 
constituent and those throughout the country that have been 
harmed by these Chinese companies?
    Ambassador LIGHTHIZER. Thank you, Congressman. I would say, 
first of all, your example of intellectual property theft--and 
you heard it from your constituents--I have gotten many, many 
more. We could sit down and exchange stories at some point. And 
that is a pattern that has to change, right? That is real 
people losing money, losing market share, not only overseas and 
in China, but actually in the United States, right? I mean, 
they literally are competing against people that have sold the 
stuff in the United States.
    And so we are making headway. People say, ``Well, tariffs 
are a blunt instrument.'' And my response always is, ``But we 
don't have any other instrument, right?'' If Congress wants to 
sit down and talk to me and worry about creating new tools, I 
am happy to do that. I would love to do it. We are using the 
tools we have.
    We know that just sitting around blathering hasn't worked 
for 25 or 30 years, so we have to try something new. And I 
think we have gotten to a point where we might have success. We 
will find out. Hopefully, we will have success.
    How will it be long-lasting? We will see. The reality is 
this is going to be a challenge, it goes on for a long, long 
time. My guess is it goes on long after I have left, and 
hopefully by the time you are sitting in this chair, you will 
be sitting here making sure that the people who are in my job 
are continuing to do that, because enforcement tends to be 
about people. And if we are not going to enforce this 
agreement, they will figure it out pretty quickly, and that 
will be the end of it.
    All we can do is try to set up a situation where we have 
the potential that if people go in here and have the right 
attitude, the tools will be there that they can be successful. 
And that is what our objective is.
    And we are using the tools that Congress has given us as 
imaginatively--I told one of your colleagues--as imaginatively 
as possible. I testified in 2010 I thought we had to have 
imagination. I think that is what the President has shown here, 
imagination. And then grit, right, because----
    Mr. SCHNEIDER. If I can use my last couple of seconds to 
emphasize something else that you said, as well--so thank you 
for that.
    You mentioned that technology is our biggest asset, and we 
have to protect that intellectual property, that technology. 
But it is more than that. It is the application of that 
technology in this country. It is the continued innovation to 
think about the next technology, and it is the alliances we 
build around the world to apply those. So I appreciate that. 
And with my time up, I yield back.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentleman from New York, Mr. Suozzi, to inquire.
    Mr. SUOZZI. Thank you, Mr. Chairman.
    Ambassador, thank you so much for your public service. We 
really do appreciate the hard work that you do on behalf of the 
country.
    For decades, since President Nixon and Secretary Kissinger, 
and certainly since the end of the Cold War, the United States 
has operated under the assumption that, with increased economic 
integration and exposure to our system of capitalism and 
democracy, China would ultimately adopt some of our systems, at 
least in part. That simply hasn't happened.
    Not only has Communist China eschewed democracy and engaged 
in awful human rights abuses, repression, and abuse of 
religious minorities such as the Uyghurs and the Tibetan 
Buddhists, not only have they polluted the air, the land, and 
the water, and treated their workers poorly, but they have not 
transitioned to capitalism or a market economy. The Chinese 
State Communist Government not only cheats, by stealing 
intellectual property and restricting access to their markets, 
but the Chinese government subsidizes its industry.
    The 2019 Fortune Global 500 includes 111 Chinese companies, 
of which 78 of those companies are viewed to be 50 percent or 
more owned by the state. Could you share with us your sense of 
what the long-term policy of the United States is, and the 
goals that you have as part of this negotiation to have long-
term structural change on this relationship?
    Ambassador LIGHTHIZER. Thank you for that question. That is 
a great opportunity and all of your colleagues are saying, ``I 
hope Lighthizer is unusually short-winded.''
    I would say this. You raise the fundamental question. There 
was a myth that grew up. And if you look at my 2010 testimony, 
which I think is really quite good testimony--it has been 
referred to on several occasions here today and in the past--
the myth was that if you open up a market, if you have an 
economy, you will become democratic--small D, democratic. That 
is the myth. You will open up and that will lead to an open 
economy, and to an open political system, and all of a sudden 
we are all a bunch of, you know, people from Ohio, where I am 
from, right? That is the myth.
    And the reality--and that was, literally, professed by all 
the smart people, all the clever people. And that, really, is 
what led us to--really, to PNTR, and it is precisely what I 
read--you weren't here, I read the Speaker's quote, which was 
very prescient, saying this ain't so. She said it, and she was 
right. And all those smart people were wrong. The reality is 
that it doesn't--you can have a very good economy and not have 
any freedom, or have very little freedom, right? Well, I didn't 
make them, but assumptions were made that were incorrect. So I 
completely agree.
    And your--the tone of your remarks were, without saying 
every specific part of it, why do we have a bipartisan view on 
this, and why are we making success. It is because of people 
like you that we have success. If this was a partisan thing, it 
wouldn't be. The fact that it is bipartisan is why we are 
making success on this.
    Mr. SUOZZI. So what are the goals of this negotiation, 
specifically, to try to have long-term structural impact?
    And will we ever get to a place where we think that China 
represents something closer to what our system of capitalism 
is? I am not going to put democracy on your shoulders, too.
    Ambassador LIGHTHIZER. So I would say on the second 
question, you know, we will find out. You are younger than I 
am, you are more likely to have a better view, right, because 
you will get there and see it. I don't know.
    What are our objectives? Our objectives are to foster 
reform in China, which a group of people want to do, to lead to 
structural reforms on the kinds of things that we can, within 
the confines of the statute that you have given us, and the 
report that we did. Here is our report--if you haven't seen 
it--and here is our supplement. And it is----
    Mr. SUOZZI. Well, we can't get to the whole report in the 
last 3 seconds I have left, so I am going to take you up on 
your offer to try to work with you to see if there are other 
tools that Congress can give you and people like you to be more 
effective in the future.
    Ambassador LIGHTHIZER. Fantastic, thank you.
    Mr. SUOZZI. Thank you, Mr. Chairman.
    Chairman NEAL. I thank the gentleman. With that, let me 
recognize the gentleman from Pennsylvania, Mr. Kelly, to 
inquire.
    Mr. KELLY. Thank you, Mr. Chairman.
    And, Mr. Ambassador, thank you so much for being here. You 
know, part of what we do, we get a chance to go around our 
district and talk to people when we are back home during our 
district work weeks. And last summer I stopped at a place in 
New Castle, Pennsylvania, called Blair Steel. Blair Steel got 
started in the late 1800s, when Pittsburgh was known as the 
Iron City, before steel became the product of choice, and took 
off.
    So I asked Mr. Kinney. I said, ``Mr. Kinney, looking at 
what is going on right now, what could we have done 
differently?''
    And he looked at me. He said, ``I will tell you what we 
could have done differently. We should have elected this guy 39 
years ago.''
    [Laughter.]
    Now, people say, ``Oh, no, no, no.'' No, no, that is 
exactly what happened, because we have taken a back seat, and 
somehow we think that if we are just nice, other people will 
play by the rules.
    I think Mr. Suozzi is right on top of this, and a lot of my 
colleagues have said the same thing. We have to be damn fools 
if we don't think we haven't been in a trade war for decades, 
and we are afraid of a trade war today that has already taken 
place, and has taken heavy casualties. We just never stood up 
to it to say, ``Hey, you are taking advantage of us. But we are 
so damn nice, we are not going to call you out on it.''
    Other than what you are doing right now--I mean this 
sincerely, because you said maybe Congress could help out. This 
Administration and your tireless efforts to make sure that 
everybody is playing for the--I am so damn tired of forfeiting 
the game and then crying because we lost. This is absolutely 
stupid. We have allowed ourselves to get into this position.
    What could we do differently? And I want to tell you I 
think most of it is stand 100 percent behind this 
Administration, and don't let these people get away with what 
they have been getting away with for so many years. An old 
saying--and this is very crude--but there is an old saying out 
there. If you are in a peeing contest with a skunk, the only 
way to beat him is to out-pee him.
    I have to tell you right now, I think we are in a trade war 
that has taken a heavy toll across the United States, and we 
sit back and we just don't want to offend anybody. I am so 
offended by us not being offensive, that it is sickening, what 
we allowed to happen to manufacturing and intellectual 
properties, and you name it. We have been gamed so badly for so 
long.
    Is there anything else we can do to help you, Mr. 
Ambassador?
    Ambassador LIGHTHIZER. Well, let me say, first of all, it 
really is important, and I have said this, this is my theme--
well, it has been my theme for 2 years, that these things have 
to be bipartisan. They cannot be partisan. This is just 
different than a lot of other stuff we deal with. And hearing 
the last two questions shows why exactly it is bipartisan, 
right? Why this is a fundamental both intellectual and gut 
reaction to what is going on.
    And I think supporting us, supporting the President when we 
get this package together--if there is a package, and I am not 
there yet, as I say all the time--that we have to look at it 
and get behind it and say this is a great step forward. But you 
have to--you know, you have to keep your eye on making sure 
that we enforce it, and that I enforce it, and that my 
successors enforce it, and that, you know, years down the road, 
that new Presidents enforce it.
    And the second thing I would suggest, which I have said 
before, I would love to work with Members on new tools. I think 
we need new tools.
    Mr. KELLY. Yes.
    Ambassador LIGHTHIZER. I won't go through it here, because 
what has happened to 301 is troubling, right? So I don't want 
to go through all----
    Mr. KELLY. Yes, just because we talk about 232 and 301--I 
have to tell you. When I go back home to western Pennsylvania, 
people don't look at me and say, ``Tell me exactly what is in 
232,'' or, ``Tell me what is happening with 301.'' That goes 
back to 1974. And the reason we did it is because of unfair, 
unreasonable discriminatory trade practices, right? So these 
are things that Congress created for the President of the 
United States, for the executive branch to handle.
    I believe it is going to take eternal vigilance. I think 
that what you said earlier--our trade agreements are like 
children, they last as long as they last--holds true. We are in 
grave danger, I think, in this country of thinking that somehow 
people will play fair with us because we are nice, as opposed 
to being vigilant.
    Thank you so much for your time and your effort. I know you 
don't sleep very often, because we have talked before. You are 
doing one hell of a job. Thank you.
    I yield back, Mr. Chairman.
    Chairman NEAL. I thank the gentleman. With that let me 
recognize the gentleman from California, Mr. Panetta, to 
inquire.
    Mr. PANETTA. Thank you, Mr. Chairman, Ranking Member Brady, 
and, of course, Ambassador Lighthizer. Thank you very much for 
being here. I think in the 116th, just on the Ways and Means 
Committee alone, you have been here three times within the last 
2 months, and I think that says a lot about you and your 
commitment to working with us. And we look forward to 
continuing to work with you, not just on this, but, of course, 
on the USMCA, as well.
    That, as well as trade with China, is very important to me 
and my district in California. As you know well, California is 
the number-one ag-producing State in the Nation. Although I 
appreciate the questions from my other Members here on the 
dais, California is what it is about when it comes to 
agriculture. And the central coast of California being the 
salad bowl of the world is what it is about, when it comes to 
agriculture. And it contributes to that title that we are the 
number-one ag-producing State.
    But, obviously, these tariffs, these retaliatory tariffs, 
have affected our farmers. I have over 800 food and 
agricultural products that are being taxed. And, unfortunately, 
a lot of those products can be obtained from other non-U.S. 
trading partners. And so, what we are seeing is a closing of 
certain markets.
    Now, I appreciate the fact that there is an aid package of 
$12 billion, and I actually spoke with some of my almond 
growers yesterday who were benefiting from that. But I can tell 
you--and what we have heard, and what you have heard, I am 
sure--it is not about aid, it is about trade. And it is not 
about short-term bailouts, it is about long-term business.
    And so my question to you is, in regard to these markets 
that are potentially being shut off, that are being closed, 
what are we doing to recoup those markets in regard to your 
negotiations with China?
    Ambassador LIGHTHIZER. Well, thank you, Congressman.
    First of all, the problem on retaliatory tariffs and market 
opening goes beyond China. I should say that. And one of the 
things we are doing is we are having negotiations in a variety 
of areas; we're at a bit of a stalemate with Europe right now, 
because they won't include agriculture, and we want to include 
it.
    We have our talks with Japan, which have a very big 
agriculture component. We have USMCA and the 232, and I am 
looking forward to working with you on passing USMCA, because 
it is so important for California and Illinois and everywhere 
else. So I am looking forward to that.
    Now, in terms of China, which, unfortunately, is only part 
of where we have had retaliatory tariffs, if we get an 
agreement those tariffs will come off. And then the President's 
hope is--although it is not the purpose of the negotiation--
that the purchases will have the effect of not only giving 
short-term sales--and by the way, we are looking at numbers 
that go out several years.
    We are not--it is not like I should make this point, even 
within the purchases, which, contrary to what is in the 
newspaper, is not the function, the purpose of this. Those 
purchases are going to have targets and amounts that go out for 
several years. But our hope is that if you increase those 
agriculture sales, and you do it for a period of years, you 
will create new customers that will have results that go on 
years and years and years and years into the future.
    So this is a--it is a very real thing that the President is 
worried about. Obviously, when you get into a situation where 
you are trying to bring change about, it is going to have 
costs. No one has been treated less fairly than the farmers, 
right? I mean, they are in a position where they should have 
enormous markets in China. China is a big market for us. As I 
say, they are our second or third--depending on the year--
market, excluding, of course, 2018. But there is a much bigger 
market there. I mean, there is a lot of people there. And with 
any kind of fair trade, farmers would be beneficiaries too.
    Mr. PANETTA. Thank you for bringing that understanding into 
these negotiations.
    I yield back. Thank you, Mr. Chairman.
    Chairman NEAL. Thank you. We will now revert to one for one 
on both sides. And with that, the Chair would recognize the 
gentleman from New York, Mr. Reed.
    Mr. REED. Well, thank you, Mr. Chairman. And, Ambassador, 
it is always great to be with you. And I really do echo what my 
colleagues have said about you. I think you are the right 
person at the right time to take on this much-needed 
negotiation with China.
    One of the things I want to bring to your attention, and 
maybe your thoughts on, as well as my colleagues, to focus on a 
little bit as we deal with these tariffs and the future after 
we negotiate this agreement--I do believe we are going to be 
able to negotiate an agreement. And you have one chance, a very 
limited runway to do this right, to make a fundamental shift in 
our trade relations with China.
    But, you know, one of the things I see--and I see the 
Chinese position. You know, they are thinking long term. They 
are always thinking long term. They are not looking 
transactional. And so, as I see the negotiations proceed, and 
the tariffs that are on the books, and the reaction in China, I 
see their commitment, as a Co-Chair of the U.S. Manufacturing 
Caucus, to build up excess capacity.
    And I will add another issue to it: Excess inventory of 
certain products. So when that new marketplace is created, what 
are we going to do to protect American markets from that excess 
capacity and inventory that would then be dumped or thrown into 
the U.S. market in a very dangerous way, in my opinion?
    Do you understand what I am getting at? Because as I see 
manufacturers, as I see folks--especially in advanced 
manufacturing--I see China reacting to this transaction of what 
we are dealing with in these negotiations. But as these tariffs 
come off, as we operate under this new agreement, how are we 
going to minimize the adverse potential impact of what the 
Chinese 2025 long-term vision of positioning themselves as a 
world leader in manufacturing does in order to protect our 
manufacturing bases here on domestic soil?
    Ambassador LIGHTHIZER. Let me just thank you for that 
question, Congressman. That is a fundamental question.
    I want to make one point clearly, and that is I think the 
United States has been guilty of short-term thinking and short-
term view, for sure. But I don't think that is true of 
President Trump; that is why he is going after structural 
change.
    Mr. REED. Amen.
    Ambassador LIGHTHIZER. He is looking down the road. He is 
thinking. He wants to know what is going on way down the road, 
and have the United States still have this advantage.
    We have to be number one. We just have to stay number one. 
And, by the way, most people in the world want us to be number 
one, right? I mean----
    Mr. REED. I totally agree with you. So what are you going 
to do when that valve is potentially opened up? Are there going 
to be strict enforcement mechanisms----
    Ambassador LIGHTHIZER. So you have to have strict 
enforcement----
    Mr. REED [continuing]. To make sure that----
    Ambassador LIGHTHIZER. Let's remember that no matter what 
happens, we have to maintain strong laws against unfair trade. 
We have to remain strong on anti-dumping laws, and have strong 
countervailing duty laws.
    Mr. REED. So if that inventory is dumped on the U.S. 
market, what are we going to do to make sure that enforcement 
is there, and easily executable by us to take on that Chinese 
action?
    Ambassador LIGHTHIZER. So, number one, we have in here 
provisions, if it is agreed to, that will limit subsidies 
specifically in cases of so-called competitive industries. That 
is to say where there is this problem of excess capacity. What 
you are talking about is what has happened in steel, what has 
happened in aluminum, what has happened in solar panels, what 
has happened in, Christ, washing machines----
    Mr. REED. Advanced manufacturing----
    Ambassador LIGHTHIZER. I could go on and on and on and on.
    Mr. REED. Yes.
    Ambassador LIGHTHIZER. There is an agreement to limit 
subsidies in those kinds of cases. There are unfair trade laws, 
and then there is the enforcement provisions in here. This is a 
pattern.
    And, by the way, it is not always even a plan. Sometimes it 
is just they start this, and the provincial governments and the 
local governments all kind of get into it. And they don't even 
have a way to put their own brakes on, right?
    Mr. REED. So do we at least agree that potential threat is 
there that I am raising?
    Ambassador LIGHTHIZER. Well, I absolutely think it is 
there. I mean----
    Mr. REED. And we want to----
    Ambassador LIGHTHIZER. It is undeniable that it is there.
    Mr. REED. And we want to put in enforcement mechanisms 
readily available to us as partners in this agreement that we 
can then deploy against China. And we may need to make it very 
clear, I think, to China that we are ready to use those. Is 
that fair to say?
    Ambassador LIGHTHIZER. Yes, absolutely.
    Mr. REED. Thank you.
    Ambassador LIGHTHIZER. Absolutely.
    Mr. REED. With that, I yield back.
    Chairman NEAL. I thank the gentleman. Let me recognize the 
gentlelady from Florida, Mrs. Murphy, to inquire.
    Mrs. MURPHY. Thank you, Mr. Chairman. Mr. Ambassador, 
presumably the goal of Section 301 tariffs is to cause China 
enough economic pain to persuade China's leadership to 
negotiate an enforceable agreement, curtailing its abuse of 
trade practices. And in a previous answer you noted yourself 
that tariffs are a blunt instrument. You know, not only are 
they not precision-guided, they can have unintended 
consequences, often for U.S. consumers and small businesses.
    And I imagine that before you made the unilateral decision 
to impose tariffs on China, you weighed the cost and benefits 
and designed those tariffs to maximize the damage to China and 
minimize the self-inflicted damage to companies and consumers 
in the United States, and to the broader American economy.
    Whatever your intentions were, I have to tell you the 
evidence on the ground is really grim. I have had small 
business owners in my community in central Florida break down 
when they talk to me about the impact the tariffs are having on 
the companies that they have spent a lifetime building, and on 
the workers that they view more like family than they do 
employees.
    Take, for example, David. He is the owner of a 30-person 
electronics firm in Orlando that imports components from China 
and sells finished products to American retailers. His business 
has been upended by this third tranche of 10 percent tariffs 
that took effect on September 24th. When he went to work that 
day he had to pay an up-front bill of $280,000 to release his 
goods from China that had already landed at a U.S. port. No 
notice from his government, no time to adjust. And since 
September, David has paid over $800,000 in tariffs. It is a lot 
of money for a small business.
    So what he has had to do is raise the cost of his products. 
Some of the big retailers have agreed to pay more, but they are 
just passing those costs onto consumers. And some smaller 
retailers just simply won't accept the price increase, and so 
that means that David has lost business. These tariffs have 
decimated his cash flow, jeopardized his financing, and made 
him unprofitable, placing his workers' jobs--my constituents' 
jobs--at risk.
    And unlike his bigger competitors, David doesn't always 
have ways to mitigate the harm. So if this 10 percent tariff 
endures, the damage could be really severe. And if it increases 
to 25 percent, the damage could be fatal. In 40 years as a 
business owner, he tells me he has never seen government 
actions interfere so directly with his businesses.
    And I know you are not insensitive to this issue, but what 
do I tell these small business owners, like David, whose 
livelihoods are on the line? When is this going to end? What 
will their sacrifices have allowed you to achieve? And do you 
think you are going to be willing to accept a deal that falls 
short of what you have indicated you want to achieve in order 
to end this trade war?
    Ambassador LIGHTHIZER. So first of all, we are sympathetic 
to situations like David's, although I don't purport to know 
the details of it. But there clearly are people who import 
products who are negatively affected.
    I would suggest that this is a 10 percent tariff, and that 
with the depreciation of the Chinese currency, it is probably 
having a 4 or 5 percent--maybe less, maybe 2 or 3 percent 
effect on his business. So I would just make that statement.
    In terms of notice, of course, you know that this--we go 
through a notice and comment process. This process of putting 
these tariffs in place was months going through, with hearings 
and all the--I don't want to let anybody have the impression 
that this is something that we just woke up and did. No, there 
are laws, and we followed them. And there were months and 
months and months and months and months of process going 
through here.
    I always start with a proposition of do you think we have a 
problem with China. If you don't think we have one, then all of 
this is crazy. If you think we have a problem with China, then 
we have to weigh what is necessary to move forward.
    And in terms of what we are willing to accept, no, I don't 
think we should accept anything that doesn't have structural 
change and is enforceable. Absolutely not.
    Mrs. MURPHY. Thank you, and I yield back.
    Chairman NEAL. I thank the gentlelady. With that, let me 
recognize the gentleman from South Carolina, Mr. Rice, to 
inquire.
    Mr. RICE. Ambassador Lighthizer, thank you so much for 
being here. I have told you repeatedly that one of the things 
that gives me the greatest confidence in this Administration is 
people like you and Secretary Ross that have taken on these 
jobs to lift up American workers. I am heartened by your 
observation about the loss of the 5 million jobs since China 
entered the WTO, and your objective in taking this job and 
doing something about that, and lifting up our middle class.
    Because, you see, I believe that our middle class--that 
American workers--can compete with anybody in the world on a 
level playing field, and that we here in Washington have 
allowed that playing field to be tilted against them for far 
too long.
    Beginning around 1990 we were competitive at that time in 
the world, but we sat on our hands and allowed everybody else 
to change their economic systems, including their tax system, 
regulatory structure, trade policies, and so forth, to take 
advantage of American workers. And 30 years ago we could accept 
trade agreements that weren't necessarily in our favor, we were 
so far ahead of the rest of the world. But we can't do that 
anymore.
    So I am really proud of what the President has done, 
restructuring our tax code, restructuring our regulatory 
system. I think the next most important thing we can do is to 
balance our trade agreements. Your progress on NAFTA is so 
important and so impressive. Your progress with China gives us 
great hope, although I heard you say at least a dozen times 
today that it is not done yet. But I just want to applaud you 
on how far we have come, because I don't think there is 
anything more important at this point, after tax reform, after 
regulatory reform, that we can use to make our economy 
competitive and allow our workers to compete on a level playing 
field.
    Once we get through this, we need to move on to 
infrastructure.
    I want to tell you that I had a town hall in Loris, South 
Carolina, last week. And a group of farmers came to my little 
town hall in Loris. And they are worried. They grow peanuts, 
tobacco, cotton and soybeans, primarily. And they said to me, 
you know, ``We are worried about this disruption with China. It 
is certainly affecting our business. What can we expect? When 
can we expect it?'' You know, ``How quickly is it going to be 
resolved?''
    And we talked about all that, and I promised them that I 
would raise these issues to you here in this hearing. So they 
are watching you right now.
    Hello, everybody back home.
    But that being said, when we were through, they also asked 
me to tell you that they are behind you, and they are rooting 
for this President, and they recognize that this has to be 
done, and they recognize how important it is.
    So, in my last minute I am going to turn it over to you, 
and I am going to ask you to tell my farmers back home, as best 
you can, what they can expect.
    Ambassador LIGHTHIZER. Well, thank you very much, 
Congressman. And thank you for your comments about me. I am 
grateful for that.
    I would just make the obvious statement, and that is that, 
like other Members in my position, people in my position, we 
are inspired by and empowered entirely by the President. If it 
wasn't for the President, I would have no power and no 
inspiration. So I am happy to have this opportunity to be able 
to at least fight for the things that we all care about. And so 
we will see how that turns out.
    I would say to these farmers I think they have been 
victims, as much as anybody in America, of what goes on in 
China. And I think they are more vulnerable than a lot of other 
people, for a whole variety of reasons that we all know about. 
And that if we have an agreement, there is a likelihood that we 
will begin the process of the payoff.
    Once again, if we don't enforce and we don't keep on it, it 
is not going to happen. Unfortunately, we are not in a world 
where good things just happen automatically, right? So if we do 
our job, and if we get an agreement, I think there is going to 
be a good payoff for them.
    And the President is very grateful for their support. He 
understands exactly that these are real people putting it on 
the line for him. So thank you.
    Chairman NEAL. We thank the gentleman. And with that, let 
me recognize the gentleman from Nevada to inquire.
    Mr. Horsford.
    Mr. HORSFORD. Thank you very much, Mr. Chairman, and to the 
Ranking Member, for this opportunity and the hearing. I 
appreciate, Mr. Ambassador, that though these negotiations have 
been ongoing and fraught, our congressional Committee is 
finally getting an opportunity to address concerns that we have 
heard from our constituents about, and that directly impact 
each of our districts.
    So I wanted to first say, Mr. Ambassador, we want you to be 
successful. On behalf of the American worker, the American 
business owner, the American consumer, all of whom are 
depending upon the successful outcome of your negotiations.
    I wanted to share with you that in Nevada it is estimated 
that $107 million worth of exports are threatened by new 
tariffs. Nevada's exports to China total $28.7 million, and 
these exports affect an estimated 367,000 jobs in Nevada.
    As the price of steel rises, so does the construction cost 
across our State. There is currently an estimated $25 billion 
of planned, proposed, and currently under-construction major 
projects in southern Nevada, projects like the Raiders Stadium, 
the Las Vegas Convention Center expansion, and public projects 
including expansion in our universities. All have become more 
expensive.
    Food is also a big component of exports threatened by the 
U.S.-China trade deal, everything from bread, pastries, 
condiments, and even milk. So companies that make everything 
from metal castings to appliances to the dairy sector, and even 
bakeries, are impacted. And since last March the Administration 
embarked on a series of tariff actions that drew retaliation 
from trading partners.
    And I know, Mr. Ambassador, you have talked about the need 
to focus on enforcement and structural change as part of this 
process. But what hope and relief can we give to our 
constituents about some of these pressing impacts that we see 
right now, based on this ongoing trade war with China?
    Ambassador LIGHTHIZER. Well, thank you, Congressman. I 
would say, first of all, in these circumstances, one has to 
begin the analysis, as I said a minute ago: Is there a problem, 
right? And if you believe there is a problem where we are right 
now, between the United States and China, and that problem 
threatens our future and our kids' future and all of those 
people who we are very concerned about, and who are adversely 
affected, if you don't believe those people are potentially 
very seriously affected unless we change policies there, then 
there is no point in this.
    But if you do think those people's futures are threatened, 
then you have to go through this process. And our objective has 
been to try to minimize the effect, as the Congresswoman said. 
We have to minimize our effect on our own consumers, and 
maximize the effect on others, and we try to go through that 
process. But when we get to the other end we have to be in a 
position where we have actually defended our workers and our 
farmers and our ranchers, and we have the potential for 
structural change in China.
    And I think we have done a reasonably good job of 
minimizing that effect on our own consumers. That isn't to say 
the individuals aren't particularly affected substantially, and 
we have an exclusion process to try to help them out. So we are 
sympathetic, and focused on it.
    In terms of the steel, I would just say generally I want to 
get a steel agreement. The President wants me to get some kind 
of a steel agreement, if I can, with Canada and Mexico. I think 
that will alleviate some of that problem.
    Mr. HORSFORD. Thank you very much, Mr. Ambassador.
    Thank you, Mr. Chairman. I yield back.
    Chairman NEAL. I thank the gentleman. And with that, let me 
recognize the gentlelady from Alabama, Ms. Sewell, to inquire.
    Ms. SEWELL. Last, but not least.
    [Laughter.]
    Thank you, Mr. Chairman.
    I also want to thank you, Mr. Ambassador, for being here 
today. This discussion is long overdue. In fact, since the last 
time you publicly appeared before the Ways and Means Committee, 
this Administration has imposed a 25 percent tariff on $50 
billion of imports from China, and another 10 percent tariff on 
$200 billion of Chinese imports. The Chinese, predictably, 
retaliated with a tariff of $100 billion on U.S. exports.
    We are all aware of China's unfair trade practices. And, 
you are right, the fundamental question is not just do we 
believe there is a problem with China and trading. We do. I 
think, universally, all of us will agree with that. I think the 
more fundamental question is: What do we do about it? I think 
it is important that we do something about it, but I can also 
tell you that the tariffs have had a really devastating effect 
on the folks back home in Alabama.
    In fact, I have three concerns about the 301 tariffs as 
enforcement mechanisms.
    First, it is a go-it-alone strategy I am concerned about 
that this Administration is taking, when I really think we 
could have put to use our alliances and created a multilateral 
pressure on China, and probably been a little bit more 
effective, quicker.
    Second, while we in Alabama do believe trade works for us, 
we really believe that retaliatory tariffs don't. And the 
retaliation that has the most impact on my district has been 
both with farmers, as well as with my manufacturers. According 
to a Brookings study, Birmingham, Alabama, has the fifth 
highest exposure to retaliatory tariffs in the country. Since 
the trade war with China has begun, Alabama exports have faced 
over $254 million in retaliatory tariffs. Moreover, my cotton 
and soybean growers' supply chains have been dramatically 
affected.
    The longer the tariffs are in place, the more likely it is 
that a lot of the shifts in the supply chain will become more 
permanent, causing more concerns for lots of my constituents. 
In fact, the forest industry in my district is suffering from a 
25 percent tariff on southern pine logs, and a 10 percent 
tariff on the softwood lumber.
    So I guess my question, really, is one of a fundamental 
belief that, while there is definitely a problem, a trade 
problem, with China, is the enforceability of tariffs the way 
we are doing them the best way to get at that problem?
    So my question is, especially given the fact that we are 
looking for Section 301 tariffs as a tool to enforce other 
trade agreements, my question to you really is do you see 
Section 301 tariffs as an enforcement tool of last resort when 
all of our options have been exhausted? Or do you see it as a 
weapon that can be deployed regularly to exert concessions from 
other economic rivals and allies?
    Ambassador LIGHTHIZER. Well, I would say, first of all, I 
don't want to conflate tariffs with other tariffs, right? 
Because, I mean, as you know well, there is the softwood 
lumber, and that is a litigation matter by private people. The 
steel and aluminum is something entirely different, in my 
opinion.
    I think 301 is an effective tool. I think we should be 
working with Members to find more effective tools. And I can--
at some point I want to sit down and take you through the 
history of 301. When you are just ready to go to sleep and you 
can't get to sleep, I will take you through it because it is 
kind of interesting----
    Ms. SEWELL. Since I sit on the Intelligence Committee, too, 
there are many sleepless nights for me.
    [Laughter.]
    Ambassador LIGHTHIZER. I guess that is right.
    So there is a history there. I think we need better tools. 
But in terms of whether or not we should have done what we did, 
or done a multilateral approach, I honestly believe that good 
people tried for 20 years the multilateral approach and the 
talk approach, and the let's all go along and get along 
approach. And I can tell you it is not--I will show you. I 
brought along--I have a chart here that shows the trade 
deficit, what every one of these go along and get along--there 
it is, right there.
    So here is the trade deficit, and here is every one of 
these go along and get along joint things. They just 
demonstrably failed. And when you are in a situation where 
something really, really matters in our kids' lives, you know, 
jobs depend on it, and you have tried something and it has 
failed, failed, failed for 20 years, you would have to be 
crazy, in my judgement, not to try something else.
    Now, is this perfect? I am not going to say it is perfect. 
But at least it is leading to results, where everything else 
didn't.
    Ms. SEWELL. Now I just want to say thank you for allowing 
the Ambassador to complete his answer, and I just really want 
to say, in closing, we are all really, really--your success is 
our success. We do want to get a better balance when it comes 
to trade with China. And I want to thank you for being open 
enough to come and talk to us on a regular basis with respect 
to these tariffs and the trade agreements.
    Chairman NEAL. We thank the gentlelady, and we will 
conclude with the gentleman from Georgia, Mr. Ferguson.
    Mr. FERGUSON. Thank you, Mr. Chairman.
    Ambassador, thank you so much for being here today. You 
know, it has been fascinating, sitting here and listening to 
both sides recognize a few common threads. Number one, China 
has been participating in unfair practices for years, and it 
has hurt American business, it has hurt American innovation. 
And most importantly, it has hurt the American worker.
    Consistently, I hear throughout my district the support for 
these efforts to really put China into a new trading position 
with the United States. Across the board, whether it is 
Republican or Democrat, small business, large business, they 
all understand the need to do this, and they also understand 
the need that, because we have not done it in the past, there 
is going to be a rough transition period while this fight takes 
place. But it will be worth it in the end. So I want to commend 
you and the Administration for fighting so hard on behalf of 
the American worker.
    You know, as I look at this, another thing that I have 
heard a couple of comments on along these lines, is talking 
about the context of the China deal, and with everything else 
that is going on in trade. Could you speak--because we all 
recognize the problem with China, and we all recognize that it 
is a very large problem to deal with--can you speak to the 
importance of getting the USMCA deal done on the heels of the 
South Korean deal, and then bringing Japan into the fold, and 
then moving to the Europeans? Can you speak to how important it 
is that we all develop these trade deals so that we can 
collectively work to change China's behavior?
    Ambassador LIGHTHIZER. Thank you very much, Congressman, 
and thank you for your comments about the President's program, 
which I think is working, and I am certainly going to pass 
along to him the various comments people have made about what 
we are trying to do.
    But you are right, and I said this at one point, and I will 
say it again. There is no trade program in the United States if 
we don't pass USMCA. There just isn't one. What it says is we 
don't have a consensus, and that we don't want to stand up for 
our workers and our farmers and our ranchers. I think there is 
no less than that at stake.
    We have an agreement. It is clearly better than its 
predecessor, there is no question. It is $1.3 trillion worth of 
business. Millions and millions of people are affected. And it 
just has to pass. If it doesn't, you have no credibility at all 
with China, and you will have no credibility on any deals with 
your other trading partners.
    I have Members come to me, as I talked--every day I talk to 
two or three Members, just, literally, every day. And they are 
all--it is always constructive. They have this idea, and that 
idea, and they have thoughts, and all this. And I always in the 
back of my head think if we don't pass USMCA, just don't 
bother. Just sit down and say we will just wait a few years 
before we say anything.
    Mr. FERGUSON. I want to thank you for that, and addressing 
that, but I want to switch gears for just a minute.
    In my home town we have an automaker, Kia Motors 
Manufacturing Georgia. We have seen the benefits of having a 
good trade agreement with South Korea. We want to continue to 
see that.
    One concern that I have--and if you could address it very 
quickly--the timelines both on the USMCA and potentially any 
trade deal, 3 to 5 years for implementation, talk about how 
that--that, to me, seems like a relatively tight timeline. Is 
there opportunity, if companies are moving in the right 
direction, to give some leeway as they try to bring jobs back 
to America?
    Ambassador LIGHTHIZER. USMCA requires a very short 
transition. They can get the additional 2 years if they are 
meeting certain requirements. We have worked with the 
manufacturers. Is it a tight timeframe? Yes. Is it a doable 
timeframe? Yes. We have to make changes as soon as we can. By 
extending this out, I mean, we have consensus among 
manufacturers, and by extending it out you are just postponing 
Americans getting their new jobs, and I don't want to do that. 
We want these people to be employed as soon as possible.
    So this is a doable thing. And, by the way, we want them to 
be manufacturing more engines and more transmissions in 
Georgia, and I think they are going to. And they are going to 
quit using the Korean engines and transmissions to a large 
extent. So this is going to be a big win for you.
    But I don't want to defend them. I already pushed it off as 
far as I am going to push it off. Who knows where I am going to 
be in 5 years?
    Mr. FERGUSON. Thank you, Mr. Ambassador. And thank you, Mr. 
Chairman.
    Chairman NEAL. I thank the gentleman.
    Mr. Ambassador, let me thank you for joining us today. As 
always, your accessibility is appreciated by the Committee.
    Please be advised that Members have 2 weeks to submit 
written questions to be answered later in writing. Those 
questions and your answers will be made part of the formal 
hearing record.
    And with that, the Committee stands adjourned.
    [Whereupon, at 1:06 p.m., the Committee was adjourned.]
    [Questions for the Record follow:]
    
    
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