    [Senate Hearing 117-486]
    [From the U.S. Government Publishing Office]

                                                          S. Hrg. 117-486

                    THE PRESIDENT'S 2021 TRADE POLICY AGENDA

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

                                    HEARING

                                   BEFORE THE

                              COMMITTEE ON FINANCE
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 12, 2021

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                Printed for the use of the Committee on Finance

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    49-526-PDF                     WASHINGTON : 2022

    -----------------------------------------------------------------------------------

                              COMMITTEE ON FINANCE

                          RON WYDEN, Oregon, Chairman

    DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
    MARIA CANTWELL, Washington           CHUCK GRASSLEY, Iowa
    ROBERT MENENDEZ, New Jersey          JOHN CORNYN, Texas
    THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
    BENJAMIN L. CARDIN, Maryland         RICHARD BURR, North Carolina
    SHERROD BROWN, Ohio                  ROB PORTMAN, Ohio
    MICHAEL F. BENNET, Colorado          PATRICK J. TOOMEY, Pennsylvania
    ROBERT P. CASEY, Jr., Pennsylvania   TIM SCOTT, South Carolina
    MARK R. WARNER, Virginia             BILL CASSIDY, Louisiana
    SHELDON WHITEHOUSE, Rhode Island     JAMES LANKFORD, Oklahoma
    MAGGIE HASSAN, New Hampshire         STEVE DAINES, Montana
    CATHERINE CORTEZ MASTO, Nevada       TODD YOUNG, Indiana
    ELIZABETH WARREN, Massachusetts      BEN SASSE, Nebraska
                                         JOHN BARRASSO, Wyoming

                        Joshua Sheinkman, Staff Director

                    Gregg Richard, Republican Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee
      on Finance.....................................................     1
    Crapo, Hon. Mike, a U.S. Senator from Idaho......................     3
    .................................................................

                             ADMINISTRATION WITNESS

    Tai, Hon. Katherine C., United States Trade Representative,
      Executive Office of the President, Washington, DC..............     5

                   ALPHABETICAL LISTING AND APPENDIX MATERIAL

    Crapo, Hon. Mike:
        Opening statement............................................     3
        Prepared statement...........................................    49
    Tai, Hon. Katherine C.:
        Testimony....................................................     5
        Prepared statement...........................................    50
        Responses to questions from committee members................    52
    Wyden, Hon. Ron:
        Opening statement............................................     1
        Prepared statement...........................................    95

                                 Communications

    American Chemistry Council.......................................    97
    American Farm Bureau Federation..................................   101
    Americans for Free Trade.........................................   102
    Association of Equipment Manufacturers...........................   106
    Center for Fiscal Equity.........................................   107
    Engine Advocacy..................................................   111
    U.S. Global Value Chain Coalition................................   113

                                     (iii)

                          THE PRESIDENT'S 2021 TRADE
                                 POLICY AGENDA

                                  ----------

                            WEDNESDAY, MAY 12, 2021

                                           U.S. Senate,
                                          Committee on Finance,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 9:30 a.m.,
    via Webex, in the Dirksen Senate Office Building, Hon. Ron
    Wyden (chairman of the committee) presiding.
        Present: Senators Stabenow, Menendez, Carper, Cardin,
    Brown, Bennet, Casey, Warner, Whitehouse, Hassan, Cortez Masto,
    Warren, Crapo, Grassley, Cornyn, Thune, Portman, Toomey,
    Cassidy, Lankford, Daines, and Barrasso.
        Also present: Democratic staff: Sally Laing, Senior
    International Trade Counsel; and Joshua Sheinkman, Staff
    Director. Republican staff: Gregg Richard, Staff Director;
    Mayur Patel, Chief International Trade Counsel; and John
    O'Hara, Trade Policy Director and Counsel.

       OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM
                 OREGON, CHAIRMAN, COMMITTEE ON FINANCE

        The Chairman. The Finance Committee will come to order.
    This morning the Finance Committee is pleased to welcome United
    States Trade Representative Tai for our annual hearing on the
    President's trade agenda. In 2021, just about every major trade
    policy needs to be based on a straightforward proposition: out-
    competing China for jobs and economic growth. The reality is,
    too often, the Chinese Government has feasted on weaknesses in
    the global trading system to the disadvantage of American
    workers.
        The Finance Committee examined many of the key issues in a
    hearing last month. American factories and plants have shut
    down because of unfair subsidies and overproduction in China.
    American websites and digital service providers are blocked by
    the Great Firewall, and they watch as homegrown Chinese firms
    rip off their ideas and grow into tech giants intolerant of
    free speech. American workers cannot and must not ever have to
    compete against forced labor, which is an atrocity on its own,
    regardless of what it means for international trade.
        The bottom line is, our country has been playing catch-up
    ball in the competition with China for too long. It is going to
    take higher standards and stronger enforcement policies as a
    key component to move faster, to have more American jobs and
    growth, particularly in our smallest businesses. The older,
    slower approach--the one that responds to China's rip-offs long
    after the damage is done--clearly has not worked.
        The committee is working now on bipartisan legislation to
    address these challenges directly. We are going to have
    progress to announce on that bill in the days ahead, and I am
    looking forward to discussing these issues with Ambassador Tai
    today.
        Now, apropos of showing what tough, quick-moving trade
    enforcement looks like in practice, there are two brand new
    examples that have been making some news this week. The AFL-CIO
    announced Monday that it was bringing forward the first major
    complaint dealing with labor rights under the new USMCA rapid
    response mechanism. And as Ambassador Tai is going to tell us
    shortly, USTR announced just this morning that it has self-
    initiated the first rapid response action to protect workers'
    rights to organize and collectively bargain. Senator Brown of
    Ohio and I proposed this new system some time ago because the
    Trump administration's version of the new NAFTA deal simply was
    not strong enough to ensure enforcement to protect American
    jobs.
        The new petition and action announced this week are taking
    on what really are classic labor violations in Mexico, such as
    firing or harassing workers who try to organize, and failing to
    ensure a legitimate vote on bargaining agreements. That sort of
    abuse is a threat to workers everywhere, including in my home
    State of Oregon and across the country, because it is part of
    the race to the bottom on worker's rights.
        The committee is going to have questions, as I know the
    Ambassador expects today, and there will be questions on other
    areas of trade enforcement implementation.
        Finally, USTR is also going to be leading negotiations
    dealing with intellectual property and the COVID-19 vaccine.
    Entering negotiations on the IP waiver was the right decision.
    The Biden administration is working hard to get shots in arms
    across the country, and COVID-19 cases are dropping in many
    areas. However, new coronavirus variants still clearly pose a
    danger to Americans as long as there are terrible outbreaks
    around the world.
        My view is, our system ought to include IP protections and
    exceptions that promote the common good, and it is
    unquestionably in the common good to squash the virus as
    quickly as possible around the world.
        The waiver negotiations are an important step, but as the
    Ambassador and I have talked about, the waiver alone does not
    unlock a vaccination miracle; there is more to do. That
    includes manufacturing capacity, it includes building out
    supply chains; it could also include making sure other
    countries are actually going to be able to afford the vaccine.
        So we have a lot to talk about today. We want to welcome
    you again, Ambassador Tai. We are going to have, first your
    testimony, then questions and answers.
        And now we will hear from our friend Senator Crapo.
        [The prepared statement of Chairman Wyden appears in the
    appendix.]

                 OPENING STATEMENT OF HON. MIKE CRAPO,
                       A U.S. SENATOR FROM IDAHO

        Senator Crapo. Thank you very much, Mr. Chairman. And
    welcome, Ambassador Tai. Senator Wyden and I are in strong
    agreement about how critical it is for us to step up our game
    in trade, particularly in terms of dealing with China. And I
    appreciate the opportunity for us to visit with you about that
    here today, Ambassador.
        The President's 2021 trade policy agenda opens with two
    objectives: one, ending the COVID-19 pandemic; and two,
    strengthening the economy.
        Significant progress is being made on the first, with
    record vaccine development thanks to Operation Warp Speed and
    continued efforts by the Biden administration to get shots in
    the arms.
        Unfortunately, with regard to the second objective,
    progress is disappointing. Last month the United States added
    only 266,000 jobs--far less than the 1 million jobs that
    economists predicted.
        President Biden's response is that we have a long way to
    go. Yes, we do. In fact, more Americans are out of work at the
    moment than during the worst point in the Great Recession.
        Of course, Americans have crossed unimaginable distances
    before--and they will do so again. But why counsel Americans to
    be patient? It is not in their nature. What we need to do right
    now is to speed up the journey for everyone by fully reopening
    our economy and executing an ambitious and sound trade policy.
        According to President Biden's trade agenda, exports
    facilitate greater productivity and wages. In fact, President
    Obama's White House determined that every billion dollars in
    increased annual exports supports between 5,300 and 7,300 jobs.
        If the Biden administration wants a worker-centered trade
    policy, then the logical--and only sensible course--is to adopt
    a trade policy that creates as many high-paying jobs as
    possible.
        That kind of successful trade policy requires at least
    three components. First, enforcement must be a priority. The
    trade agenda notes there will be comprehensive enforcement of
    the labor and environmental obligations in our free trade
    agreements. I support that, because America's businesses,
    workers, and farmers need to compete on a level playing field.
        We can do that, and also stand up for them by challenging
    other market access barriers at the same time. Enforcement in
    these areas is complementary, not exclusive.
        Make no mistake, there is a great deal to enforce. For
    example, the United States-Mexico-Canada Agreement, the USMCA,
    contains groundbreaking market access commitments. These
    commitments are particularly important to our farmers, who have
    faced a decline in demand from restaurants, school systems, and
    hotel customers.
        We must make sure American farmers get the access to our
    trading partners to which they are entitled. But the story on
    enforcement must become better.
        An important U.S. tariff-rate quotas case against Canada
    remains stalled in the USMCA process. It is time to see
    progress on it, or the United States must proceed with a
    dispute settlement panel so that American farmers, ranchers,
    and businesses can enjoy the benefits they bargained for under
    the agreement.
        Mexico is adopting a host of measures that undermine our
    agricultural rights, including restrictions on biotech crops,
    glyphosate, and unreasonable food packaging labels.
        Ambassador Tai, I encourage you to press for action on
    these barriers at the meeting of the USMCA Free Trade
    Commission later this month. If our partners should refuse, you
    must use the enforcement tools at your disposal.
        The second component of an effective trade policy is
    negotiating new rules and market access opportunities. To that
    end, I support the Biden administration's call to work with
    allies. Yet, the President's trade agenda is silent on whether
    we will continue to negotiate with the United Kingdom and
    Kenya.
        I encourage you to work with the United Kingdom--one of the
    United States' oldest allies--and with Kenya, which can serve
    as a replicable model for future trade deals in a country where
    China has failed to get an FTA, and that will also establish
    our commitment, over China's, to the people of Africa.
        Furthermore, we must deepen our engagement in the Asia-
    Pacific, or risk losing U.S. allies there to China's predation.
        While I understand you believe the Trans-Pacific
    Partnership is dated, I see value in an agreement with new
    disciplines, including on digital trade. However, that means we
    must start thinking about how to modernize the TPP, or what
    other structures we can use for U.S. engagement in the Asia-
    Pacific. We cannot simply take a ``time-out'' from the region.
        Last month, Japan ratified the Regional Comprehensive
    Economic Partnership, which is China's model for what trading
    relationships in the region should look like. In the absence of
    U.S. leadership in the region, our allies will have to look
    elsewhere. If the United States is to pursue a worker-centered
    trade policy, we need to be mindful that American workers lose
    when China writes the rules.
        The final but most important component of a successful
    trade policy is consultation. The Supreme Court noted 60 years
    ago that the President is strongest when he acts pursuant to an
    authorization of Congress--and is potentially powerless when he
    acts in defiance.
        The administration must be strong when it comes to trade
    policy, and that requires a close partnership between Congress
    and the U.S. Trade Representative. We recently had a test of
    that partnership: the administration's decision to support a
    waiver to the intellectual property protections in the WTO
    TRIPS Agreement.
        The WTO TRIPS Agreement was approved by Congress. The law
    says Congress's approval can only be withdrawn, quote ``if and
    only if'' Congress enacts a joint resolution to that effect.
    Last summer, during the height of the pandemic, both houses of
    Congress declined to act on such a resolution. Yet without any
    consultation with this committee, you announced via a tweet
    that the administration unilaterally supports waiving the
    patent obligations of the TRIPS Agreement.
        Chancellor Merkel of Germany asserts the problem with
    vaccine distribution is not patents, but manufacturing capacity
    and production standards. Albert Bourla, the CEO of Pfizer,
    said the decision will ``categorically create more problems for
    vaccine distribution.'' He added that it will ``disincentivize
    anyone else in the future from taking a big risk'' like Pfizer
    did, laying the groundwork for classic moral hazard.
        Iconic American innovators, like Bill Gates, have also said
    the decision will not advance vaccine distribution. In short,
    these observers assert a TRIPS waiver will undermine the very
    objective on which I said the administration showed some
    progress; ending the pandemic.
        Conversely, Vladimir Putin, in fact, supports this decision
    to pursue a waiver. Neither did it surprise me that a bureau
    chief for one of China's propaganda outlets replied to your
    tweet by asserting that ``global pressure works.''
        You may, of course, have your own good reasons, but to date
    you have not offered an adequate explanation. You will hear
    more on this subject from me and my colleagues.
        Ambassador Tai, I know that you like the expression that
    ``USTR can walk, chew gum, and play chess at the same time.''
    But what we need is a USTR that can enforce, negotiate, and
    consult at the same time. The American people and members of
    Congress, including myself, are counting on you to prove that
    is the case.
        Thank you, Mr. Chairman. I look forward to the testimony
    from our witness.
        [The prepared statement of Senator Crapo appears in the
    appendix.]
        The Chairman. Thank you, Senator Crapo; and I look forward
    to working with you.
        Ambassador Tai, welcome. Please go ahead.

        STATEMENT OF HON. KATHERINE C. TAI, UNITED STATES TRADE
    REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON,
                                   DC

        Ambassador Tai. Thank you, Chairman Wyden, Ranking Member
    Crapo, members of the committee, for inviting me to testify on
    the President's trade agenda.
        Our worker-centric trade policy is a key part of the Biden-
    Harris administration's effort to Build Back Better. We are
    making real strides towards ending the pandemic. There are
    pockets of progress and hope, but we still have a lot of work
    ahead.
        I want to thank Congress for passing the American Rescue
    Plan, which has already helped gets shots in arms and money in
    the pockets of millions of Americans. We are seeing the
    economic benefits of that quick action here in the United
    States; we are on track for a full economic recovery. More
    needs to be done.
        The American Jobs Plan and the American Family Plan would
    combine to make the United States a healthier, safer, more
    prosperous, fairer, and a more competitive nation. They would
    make full investments that build a better foundation for
    decades of economic growth.
        These extraordinary times demand extraordinary leadership
    and creativity to defeat COVID-19. The announcement last week
    that the United States will not let intellectual property
    rights get in the way of saving lives is just one part of the
    administration's global effort.
        We will pursue text-based negotiations at the WTO, which
    may take time, but I am encouraged that other countries have
    already announced that they will roll up their sleeves and join
    us.
        We will also continue to ramp up our efforts working with
    the private sector and other partners to expand vaccine
    manufacturing and distribution around the world. This
    comprehensive effort will not only save lives but also help
    heal the economy.
        And as we reengage the world from a position of strength,
    support from Congress gives us more authority and opportunity
    to deliver results for the American people. We want a fair
    international trading system that promotes inclusive growth and
    reflects America's universal values. For too long, we have
    overlooked the effect of our trade policies on individual
    workers, who are human beings living in a community trying to
    survive and to thrive.
        The worker-centered trade policy outlined in the
    President's trade report will foster broad-based equitable
    growth, increase innovation, and give workers a seat at the
    table.
        Last week, I announced our transparency principles and the
    appointment of our Chief Transparency Officer, whom Chairman
    Wyden knows well. Together they show our commitment to
    comprehensive public participation, and they are just the
    starting point.
        For the first time, the President's trade agenda included
    the goal of racial equity. Our thoughtful, sustained engagement
    will help us better understand how our proposed policies affect
    all communities, and we will consider those effects before
    making policy decisions.
        Trade policy must also help protect the environment and
    fight climate change. For too long, we have seen a race to the
    bottom, but we can use trade tools to incentivize a race to the
    top and build a cleaner and brighter future with high-paying,
    quality jobs.
        Our farmers, ranchers, fishers, and food processors will
    also benefit from our new approach. We are turning the page on
    erratic trade policies and looking to expand global market
    opportunity while enforcing global trade standards and ensuring
    that trade partners live up to their commitments.
        Sustained American leadership and reengagement with our
    allies, trading partners, and economic competitors will be key.
    The Leaders Climate Summit in April showed that we can rally
    the world to tackle big challenges. We will work with the World
    Trade Organization's new Director General, Dr. Ngozi Okonjo-
    Iweala, and like-minded countries to reform the WTO's rules and
    procedures so they can be a relevant force for good in the 21st
    century.
        We are also working to resolve the ongoing Boeing/Airbus
    dispute and addressing the real problem of overcapacity in the
    steel and aluminum sectors coming primarily from China.
        These talks will take time, but I believe a resolution is
    possible. We will not hesitate to call out China's coercive and
    unfair trade practices that harm American workers, undermine
    the multilateral system, or violate basic human rights. And we
    are working towards a strong strategic approach to our trade
    and economic relationship with China.
        We welcome fair competition, and if China cannot or will
    not adapt to international rules and norms, we must take steps
    to level the playing field.
        Closer to home, we are using every tool available to make
    sure our existing agreements work and have a positive impact on
    real people. The USMCA gives me confidence that this approach
    is worthwhile.
        USMCA is a starting point for future efforts in the region
    that will explicitly acknowledge climate change, aggressively
    address global forced labor issues, and expand the benefits of
    trade to women and historically underserved communities.
        I will enforce the new standards, follow through on our
    commitments, and use the agreement to ensure that Canada and
    Mexico do too. This week you have seen that we are committed to
    using these tools. The innovative rapid response mechanism will
    allow us to address longstanding labor issues in Mexico. Today
    I am proud to announce the inaugural use of this mechanism in
    our request that Mexico review whether workers at a General
    Motors facility are being denied the right of free association
    and collective bargaining. I commend the Government of Mexico
    for stepping in when it became aware of voting irregularities
    earlier this year.
        I am proud to partner on this shared goal of helping both
    Mexican and American workers prevent a race to the bottom.
        As you can see, we have our work cut out for us, but I am
    confident that we can walk, chew gum, and play chess at the
    same time. The professional and dedicated public servants at
    USTR are working hard to implement the President's trade
    agenda, and I am proud to carry the strength and creativity of
    our small but mighty agency into the room today.
        Thank you for your time, and I look forward to your
    questions.
        [The prepared statement of Ambassador Tai appears in the
    appendix.]
        The Chairman. Thank you, Ambassador. And when we think
    about you, we think particularly about your mighty role in
    particular.
        Thank you also for the good news with respect to the
    stepped-up effort on transparency, on trade enforcement in
    particular, where Senator Brown and I have put a lot of sweat
    equity into doing that. So that is good news.
        What I would like to start with--you heard Senator Crapo
    and I talk about our joint efforts with respect to China. The
    bottom line here is, we've got to out-compete them, and we can
    do that on a level playing field.
        Now China has not exactly been secretive about its
    aspirations; they have all these plans: 5-year plans, 10-year
    plans, this plan, that plan. The fact, however, is that their
    bottom line is, they are targeting industries today that we
    care deeply about--that Senator Crapo and I care deeply about
    in the Pacific Northwest--semiconductors, the question of
    solar. These are hugely important to our part of the country
    and the United States.
        My first question to you is, are there tools that you need
    this committee to give you now so that you can better ensure
    that we have that level playing field for American companies,
    both at home and abroad?
        Ambassador Tai. As I turn on my microphone here, this is
    one of the most important questions that we face, which is how
    we make use of the tools that we have; and as we survey the
    landscape in 2021 in terms of the economic challenges that we
    have and the competitive challenges, what tools do we still
    need? I appreciate the spirit of this question tremendously.
        Let me just offer one example. We do need new tools, in my
    opinion, and I think that this is an area where the
    administration and this committee and the Congress can really
    make strides towards strengthening our trade enforcement, our
    leveling of the playing field.
        The steel and aluminum tariffs that have really roiled our
    economy but were necessary to address a global overcapacity
    program, driven largely but not solely by China--one of the
    awkward aspects of the use of these carrots is the section 232
    authority that I know so many members of this committee have
    really been studying and focused on reforming over the past
    several years. What I would like to offer is this thought, that
    for my predecessor and the Trump administration, they did the
    best that they could, given the tools that we have existing on
    the books.
        Section 232 is a statute from 1962, I believe it was,
    created at a very different time, certainly created long before
    the WTO was founded. And what I would observe is that part of
    the tensions that have arisen over this important trade remedy
    is the discordance between the authority provided and the
    nature of the problem we are dealing with now.
        What I would propose is that we need 2021 tools for
    addressing the 2021 challenges we have, rather than relying on
    1962 tools and retrofitting them for the challenges we have
    now. So I think that there is a lot of opportunity here for us
    to look at the problems and challenges that we are facing and
    to devise tools here in the United States, but also to work
    with our allies and our partners on tools that we can
    coordinate using, to address really what should be shared
    interests on our part.
        The Chairman. I very much appreciate your interest in
    updating that particular area of trade policy. I can tell you,
    and I think my colleagues would agree--I think colleagues on
    both sides--not a day goes by when I do not have a Senator talk
    to me about 232, and particularly this idea of modernizing the
    statute. That is what trade is all about: having a tool box
    that we can use to deal with our challenges. So we will look
    forward to working with you on that.
        Let me, in my remaining time, just touch on a question with
    respect to the TRIPS waiver and the situation with the
    vaccines.
        I like your point about multitasking, where you are saying,
    ``Hey, look, we can walk and chew gum, we can do all of this
    simultaneously.'' We are going to need some guiding principles
    with respect to the full issue, and let me submit three and
    kind of get your reaction.
        First, we have to have a balanced vaccine IP waiver that
    spurs timely manufacturing safely and ensures deployment.
    Second, we need to deal with any kind of potential
    restrictions, questions with export restrictions, non-tariff
    barriers, regulatory hurdles, tariffs; the kinds of things that
    slow down manufacturing would be the second kind of principle.
    And third, we have to engage with other countries in the WTO to
    understand what obstacles we may see in the WTO process.
        That would be my take of how USTR--and our conversation is
    going to be working with other agencies and other officials.
    These are all areas where it seems to me your office can lead,
    and with your expertise, strike me as a solid set of principles
    we can begin with.
        What is your take on that?
        Ambassador Tai. Chairman Wyden, I had prepared a slightly
    different set of words, but they essentially track your three
    principles, and so let me just reflect to you the way I have
    been thinking about it, but I think that they match up quite
    nicely.
        The first one is to educate, really, around the waiver
    proposal and the way the WTO works. Our expression of support
    for the waiver is an endorsement and an exercise of U.S.
    leadership at the WTO to begin a process, and to encourage all
    164 members of the WTO to roll up their sleeves and come
    together. It is a process, and if we are going to succeed at
    the WTO in making the WTO relevant here in responding to the
    needs of our people worldwide and our economy, it will
    necessarily be something that has to be supported by all 164
    members of the WTO. We see our role as critical to facilitating
    that conversation and process.
        The second point I wanted to make was that there is
    precedent of a temporary waiver of intellectual property rights
    at the WTO, and the earlier incident happened in the early
    2000s around the HIV/AIDS epidemic. And what happened was
    effective in addressing the needs, especially on the African
    continent.
        The third point I wanted to make was the need for
    partnership. That is across the administration--certainly with
    Congress--I am here today to consult. I will consult, and I
    always have; I have made that commitment. We will need a
    partnership at the WTO and here in the United States to be able
    to make the kind of difference that will allow us to have the
    ability to get through the pandemic to an economic recovery.
        The Chairman. I am well over my time.
        Senator Crapo?
        Senator Crapo. Thank you very much, Mr. Chairman.
        And I would like to follow up on that very same line of
    questioning with regard to TRIPS.
        Ambassador Tai, are you saying that there is authority,
    there is precedent for waiving the TRIPS process without
    approval of Congress? As I indicated in my opening statement,
    the law says that that can be waived only if Congress agrees.
        Do you disagree with that?
        Ambassador Tai. So, Senator Crapo, I think it is incredibly
    instructive to look at the early 2000s, the leadership of
    President George W. Bush, working with the Congress across the
    board. The TRIPS piece was just one piece of what has become
    PEPFAR. I believe it stands for the President's Emergency
    Program For AIDS Relief.
        I think that was really a remarkable model of
    bipartisanship and leadership by the United States to address a
    problem that had really become untenable in terms of the
    ability of those suffering most acutely from HIV-AIDS to get
    access to the life-saving medicines that were----
        Senator Crapo. Well, I understand that, but because of
    time, I want to get right to the question.
        Do you believe that you have the authority to waive the WTO
    TRIPS provisions without congressional approval?
        Ambassador Tai. Senator Crapo, let us put it this way: I
    believe I have the authority to negotiate at the WTO, and I
    think that what I would say is, the provision that you cited
    earlier really has more to do with withdrawing the United
    States from the WTO as opposed to the authority of the United
    States to participate at the WTO as a full member.
        Senator Crapo. Well then, I do not agree with that, but
    given that, will you commit that in these negotiations in
    Geneva to discuss the waiver--will you commit to this committee
    that you will oppose allowing any waiver to be extended to
    China and Russia?
        Ambassador Tai. Senator Crapo, I think that what I want to
    make clear right now is, in terms of the objective of the
    waiver, it is to remove intellectual property restrictions as
    an obstacle to the ability to get the world vaccinated.
        And what I would draw your attention to is that the
    proponent, the main proponents are India and South Africa. And
    if you look at where vaccine inequity is most striking, it is
    on the African continent.
        So let me just say this, that I am committed to a full,
    good faith effort at the WTO, but the focus really is on
    promoting vaccine equity. And we will have to address the
    concerns of all parties involved, and those whose partnership
    we require in order to come to a kind of resolution at the WTO.
        Senator Crapo. Now, if I understand what you are saying,
    let me ask you this. At a minimum, can you confirm that this
    committee will see the text of any proposal you are dealing
    with or negotiating well in advance of you tabling it to the
    other trading partners?
        Ambassador Tai. Senator Crapo, I commit to consulting with
    this committee; that is why I am here, that is why I will be
    here when you ask me to come; that is why I will pick up the
    phone and pick up any call that is ever made to me.
        Let me put it this way in terms of the process that we are
    embarking on: it will require engagement in groups collectively
    and on a bilateral case basis with WTO members. I commit to
    keeping this committee fully informed of how those
    conversations develop.
        Senator Crapo. Finally, on this issue, I would just note to
    you, I think that this all shows that it is really important
    for the administration to promptly name nominees for the Chief
    IP Negotiator and for Ambassador to the WTO.
        Do you agree with that?
        Ambassador Tai. Senator Crapo, I take staffing at USTR very
    seriously. Right now, I am the leader at USTR. Having USTR
    staff up is going to be incredibly helpful to me, and obviously
    those positions that you just identified are ones that will
    have to come through this committee, and we are working on
    those issues right now.
        Senator Crapo. Well, I encourage you to try to press for
    that quickly.
        I see I only have a few seconds left, so let me get my last
    question in, and it is going to relate to the UK and Kenya.
        Your experience allows you to make sure that trade is not
    on the back burner; you have great experience. And to me it is
    imperative that we reengage with the UK and Kenya. I mentioned
    in my opening remarks why that is so important in both places.
        Where is the USTR in its review of these negotiations, and
    when do you reasonably expect them to conclude?
        Ambassador Tai. Well, Ranking Member Crapo, I think that,
    given the level of intensity and the conversations I expect to
    have today, that it should be clear that trade is not on the
    back burner.
        For your question specifically on the UK and Kenya, I think
    it was in my first 2 weeks on the job that I had conversations
    with my counterparts in both countries, and we at USTR are
    working through the process of assessing the progress and
    thinking through how these engagements will support goals on
    both sides, including on our side to support the Build Back
    Better agenda.
        So we are very much engaged in a review, and I look forward
    to coming back to you and to our trading partners on next
    steps.
        Senator Crapo. Can you commit to any timeline there?
        Ambassador Tai. Senator Crapo, I understand that--let me
    say this: in terms of Building Back Better, first we have to
    get through the pandemic. Second of all, we need to be engaging
    on all fronts. I want to convey to you the degree to which all
    engines and all thrusters are on go at USTR right now.
        Senator Crapo. All right; thank you.
        The Chairman. We are going to go now to Senator Stabenow
    and then to Senator Grassley.
        Senator Stabenow is on the web.
        Senator Stabenow. Well, thank you very much, Mr. Chairman.
    Really important hearing. And welcome back, Ambassador Tai. It
    is wonderful to have you with us, and obviously there are so
    many issues on your plate that are critical to all of us.
        From my perspective in Michigan--we are an exporting State.
    We also are very concerned about having a level playing field
    when it comes to trade, and making sure that we also have that
    supply chain that the President is talking about all the time,
    here in the United States.
        And I want to follow up with part of what the chairman was
    talking about in terms of a level playing field, but ask you
    specifically relating to something that is a really serious
    issue for us right now in Michigan and in the country, and that
    is the fact that we have such a serious global shortage of
    semiconductor chips and wafers. And this has had a cascading
    effect on, not only the auto industry, but other industries as
    well. We have idled plants and we do shifts; we have laid off
    workers right now. We are working to make significant
    investments in semiconductor chip fabrication facilities now at
    home, to stop the overreliance on overseas fabrication in the
    long run. And frankly, if we are investing significant taxpayer
    dollars in R&D, in production, then we need to ensure these
    investments are going to our key industries: auto and aerospace
    and defense and so on.
        But could you talk about any tools right now that the USTR
    has to address this semiconductor supply chain issue in the
    short run as well as the long term? What are ways that you can
    help us get through this right now?
        Ambassador Tai. Senator Stabenow, the chips issue is very
    much on our mind, both for itself and the industries most
    directly impacted by the shortage, but also in the bigger
    picture, as you highlighted: the short-term and the long-term
    question.
        I want to emphasize the importance on our side in terms of
    the whole government approach to this particular issue. I know
    how very much semiconductors strategically are on the minds of
    you and your colleagues on this committee.
        There is currently a supply chain review that is going on,
    that is focused on four areas; semiconductor chips is one of
    them. I want to indicate to you that the Department of Commerce
    is a lead agency on the chips issue, and that I speak to
    Secretary Raimondo quite often on this. I would reinforce her
    comment on the short-term issue, which is: there is no silver
    bullet that will solve this problem in the short term.
        But in terms of the longer term, strategically thinking
    about chips and harnessing the policy power of the U.S.
    Government, I actually have a lot of confidence in this area,
    because I know how much leadership there is in the Congress, on
    this very committee, and how much motivation there is on our
    side to look at resilience in supply in this area.
        Senator Stabenow. Thank you. Another key piece of this is
    the whole clean energy economy and how we move, again, to
    compete internationally, particularly with China, which is
    heavily invested in using massive subsidies, frankly, and
    predatory practices also.
        And so we know for example, China holds almost three-
    fourths of the world's manufacturing capacity for lithium ion
    battery cells, which are a critical component for a lot of
    things, including our capacity to move forward on electric
    vehicles.
        So we are all working on the committee, the chairman,
    myself, on a bipartisan basis on a number of different issues,
    tax policy issues, other ways to be able to again have American
    competitiveness put us and keep us at the front of the line on
    that.
        So what is the USTR doing to help our manufacturers better
    compete in the clean energy markets that are so integral to the
    future? What kind of a role do you see USTR playing?
        Ambassador Tai. Well, Senator Stabenow, thank you for
    raising the issue of batteries, which are critical to the
    supply chain for clean energy and critical, frankly, to the
    clean energy economy, new industry jobs that we need and that
    we have such great potential for building here in the United
    States.
        I wanted to reference--I think this is now maybe a month,
    month and a half ago--the resolution of a section 337
    International Trade Commission dilemma that pitted intellectual
    property enforcement against investments that have been made
    here in some of our important southern States that are part of
    the auto industry supply chain. And in that instance, I am very
    happy to report that there really truly was a classic win-win
    solution that came out of that exercise at the end of the 337
    process that is going to make the U.S. footprint in battery
    production even stronger.
        To your question about USTR's role, let me say this. I was
    very proud to make the topic of my first trade policy speech
    one about harnessing trade tools to support environmental
    protection, but even more importantly, the building of a clean
    energy economy here in the United States. And I think it is all
    about designing our trade rules to push that race to the top as
    opposed to the race to the bottom, where countries try to
    compete with each other to lower their standards in order to
    attract investment and to promote their economies.
        What we really need at USTR is the promotion of trade
    policies that will create a race to the top.
        Senator Stabenow. Absolutely: I could not agree more. And
    final question, let me turn to agriculture. With my agriculture
    hat on, frankly, I do not think we have an economy unless we
    make things and grow things; that is what we do in Michigan as
    well as across the country.
        But when we look at--you know, Michigan is second in
    diversity of agricultural products, second only to California.
    So we have some 300 different commodities, and exports are a
    serious, important driver for all of us, and I share Senator
    Crapo's comments about the importance of agriculture.
        So our producers, a lot of them particularly in specialty
    crops, are concerned that these crops are increasingly facing
    unscientific sanitary and phytosanitary and other technical
    barriers to trade; SPS, as you know. And I am wondering about
    how you intend to focus in support on these export markets when
    we are looking at these barriers that we continue to see.
        Ambassador Tai. Well, the plan is that you address these
    concerns by engaging; and I know that there are concerns about
    these types of barriers, and a lot of different economies will
    depend on them. And whether or not we are using free trade
    agreement tools, regional trade agreement tools, or WTO tools,
    that is what the game is about. It is about engaging in order
    to resolve problems, in order to create the policies and the
    policy solutions that will empower the U.S. economy and our
    growers and our workers.
        Senator Stabenow. Thank you. I look for the Chief
    Agricultural Negotiator coming on board soon, so we can work
    with them on these issues as well as with you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Stabenow.
        Senator Grassley?
        Senator Grassley. I have so many questions, I am going to
    have to submit some for you to answer in writing. I am going to
    start with the fact that we try to keep countries from stealing
    our intellectual property, and lately this movement towards
    giving some of it away bothers me, particularly when it comes
    to how we were able to have Pfizer and other companies through
    the platform mRNA develop quickly these pharmaceuticals; and
    then they are going to have a broader application than just to
    COVID.
        So other countries have long tried to steal these
    innovations and undermine our competitive edge. How are you
    going to limit the forced transfer of these advanced
    technologies just to COVID, and have you evaluated how forced
    technology transfers under the proposed waiver would affect
    U.S. competitiveness in advanced life sciences?
        Ambassador Tai. Yes. Senator Grassley, you raise very
    important issues, and they are ones that are very much on our
    mind. The waiver that has been proposed at the WTO is a
    temporary waiver that is seeking to ensure that intellectual
    property protections, these IP rights, do not obstruct our
    ability to save lives, to have more vaccines produced, to have
    the vaccines equitably distributed so that there can be a
    global economic recovery.
        Let me try to take apart some of the main components of
    your question as I have heard them. Let me also try to
    distinguish what I think the proposal is intending to do at the
    WTO. I think this is less about stealing technology; it is more
    about the impact of our trade policies on intellectual property
    protections on regular people.
        Right now there is nothing more directly impactful on the
    hope of regular people to be able to resume their lives, to
    become active members of their economies, than their ability to
    get a vaccine. And that is what I understand to be driving the
    proponents of the waiver proposal at the WTO.
        So you know, in terms of weighing the balance of rights to
    intellectual property, the need to have incentives for
    innovation--absolutely, those are critical. But I think that in
    terms of this particular proposal and this question that has
    been posed at the WTO, it is about how we get through this
    moment in our global economic history so that there will be
    still a world and people here to innovate and to enjoy those
    innovations.
        Senator Grassley. Yesterday I met with the Iowa Association
    of Home Builders. They told me lumber prices have skyrocketed
    tremendously. They gave me a figure of 300 percent since April
    2020. I heard in Iowa last week so many times, big percentage
    increases, not quite that bad, but increasing the price of a
    home by about $36,000.
        Have you had conversations within the administration on
    what can be done to lower the 9-percent tariff on Canadian
    lumber?
        Ambassador Tai. Senator Grassley, this is not just
    something we have been talking about within the administration
    but something that I have raised directly with my Canadian
    counterpart. And I have certainly heard a lot from members of
    Congress about this as well.
        I want to assure you that I will be raising this again with
    my Canadian counterpart at the Free Trade Commission meeting of
    the USMCA, and I will continue to push for solutions to the
    lumber pricing issues that we are experiencing.
        Senator Grassley. This will have to be my last question in
    person. Mexico was the top market for U.S. corn exports, valued
    at $3 billion last year. Iowa farmers have been some of the
    strongest advocates for the USMCA; however, they are concerned
    that Mexico is erecting non-tariff trade barriers, like
    rejecting imports of glyphosates and stopping the approval
    process for biotech products. In December, the Mexican
    President issued a decree banning glyphosates and GMO corn in
    Mexican diets by 2024.
        What do you think of that? Will you raise these concerns at
    the upcoming USMCA meeting and pursue enforcement actions if
    these issues remain unresolved?
        Ambassador Tai. Yes.
        Senator Grassley. Okay.
        The Chairman. Thank you, Senator Grassley.
        Senator Cornyn is next.
        Senator Cornyn. I want to start by thanking the chairman
    and ranking member for their work on this hearing, and also the
    bipartisan negotiations on the Finance Committee trade title
    that I hope will be included in the larger Senate package that
    we are dealing with, the so-called China package. And I hope
    this package will include important provisions and priorities
    that, first, identify foreign censorship as a trade barrier,
    especially in digital trade. It prevents foreign governments
    from restricting free speech in the United States, which
    follows on my work with Senator Casey on the subcommittee last
    year and the ITC investigation to quantify the effects of this
    practice on U.S. businesses.
        I also hope it will include review of critical supply
    chains--which has been a very constant theme here recently,
    particularly post-pandemic--through the creation of a committee
    to examine trade in essential supplies and also to codify the
    tariff exclusion process for those experiencing severe economic
    harm, and keep our States open for business while not letting
    up on China's unfair trade practices.
        And also to extend the Generalized System of Preferences to
    incentivize job creators for moving their supply chains away
    from China, especially to the Western Hemisphere.
        Also to provide additional tariff relief through inclusion
    and authorization of the Miscellaneous Tariff Bill, expressing
    support for reform and not removal of the World Trade
    Organization, and finally to create an Inspector General for
    the USTR--the only Ambassador in the Cabinet not covered--as
    trade policy increasingly plays an important role in the life
    of everyday Americans, and as the USTR gains more
    responsibility.
        Additionally, I hope to continue to work with our
    colleagues on creation of an ex parte national security
    critical hold order under a new section of the Tariff Act of
    1930; and I want to ask the Ambassador about that in a moment.
        I look forward to continuing to work on reengagement on a
    regional trade agreement with our Asia-Pacific trading
    partners, which I am working on with Trade Subcommittee chair
    Carper, as well as the larger committee.
        A number of us have talked about the TPP, whether in some
    revised and updated form, but the geopolitics of that seem very
    obvious, as well as the economic benefits. The one thing that
    we have in the United States that China does not have is
    friends; and I think it will do nothing but enhance our
    national security and our economic security by banding together
    with like-minded countries in the region.
        I also look forward to reforming the authority for the
    imposition of national security tariffs with Senator Toomey,
    which the Ambassador has talked about, and to continue working
    on a whole-of-
    government targeted review of outgoing investment to China,
    again with Senator Casey.
        And finally, coordination with our allies over the rare
    earth minerals critical supply chain issue, working with
    Senator Lankford on that.
        Finally, before I ask the question, I also want to join
    with Senator Crapo and Senator Grassley in expressing concerns
    about the waiver of intellectual property rights, not just in
    an effort to provide additional vaccines to nations that do not
    have enough, or because of logistics are not getting it in the
    arms of the people who need it the most; but this has broad
    implications, including the use of U.S. Government funds to
    develop a vaccine, and obviously the detriment to the taxpayer
    and intellectual property rights in general.
        It is because of strong intellectual property rights in
    America that we see huge investment into cutting-edge,
    innovative lifesaving therapeutics and vaccines, so I am very
    concerned about that.
        So finally, let me get to the question, Madam Ambassador. I
    have been exploring the creation of an authority to put in
    place a temporary restraining order, or a national security
    critical hold order under a new section of the Tariff Act of
    1930, that would block the importation of goods on an ex parte
    basis--importation of goods, ex parte, created through secret
    theft by a foreign government or state-owned enterprise.
        This would provide a quick action or response mechanism
    that would create a deterrent and a chilling effect on future
    trade secret theft by foreign states.
        Can you briefly, because I know my time is running out,
    could you briefly talk about, are there any existing mechanisms
    in trade statutes that allow for that sort of ex parte
    preemptive injunction of imports that contain theft of
    intellectual property rights? Are there any existing
    protections?
        Ambassador Tai. Senator Cornyn, I am not aware of any, but
    obviously I would be happy to go and do our research on this. I
    suspect that you and your staff have looked at this. I would be
    very interested in talking to you more about this.
        The Chairman. Okay.
        I want to say to colleagues, we are seeing a particularly
    hectic morning in the Senate. We are going to try to be fair to
    everybody, and we have people coming shortly.
        And Senator Portman, you are next.
        Senator Portman. Thank you, Mr. Chairman. And, Ambassador
    Tai, it is good to see you again, as always.
        Your opening statement focused a lot on China, saying, ``We
    welcome competition, but competition needs to be fair.'' And a
    level playing field is not there with China now. I want to
    focus on how we can get tough on China by encouraging trade,
    and I do not think that those two are countering one another.
    In fact, I think that they are complementary. I think the ideal
    trade policy is one that is pro-trade and yet anti-cheating.
        In our WTO resolution, Senator Cardin and I proposed the
    United States pursue centrist Pacific trade agreements with
    like-minded countries; in other words, plurilateral agreements.
    The best example of that would be the WTO agreement on
    procurement, the GPA, Government Procurement Agreement.
        And basically what you do is, you ensure the benefits only
    flow to those parties to the agreement rather than the typical
    Most Favored Nation approach. My concern is that right now
    China is able to get a free ride, often; and they are getting a
    free ride on the global trading system, and they are often a
    spoiler as to the negotiating progress at the WTO. And the WTO
    is constrained right now; since negotiation is not successful,
    they are turning to judicial activism, which typically hurts
    America's interests.
        So I do believe that we have an opportunity here to change
    our approach and focus on these plurilateral agreements. You
    have spoken possibly about that; we have talked about it, in
    fact, in response to some questions I asked after the last
    hearing.
        Let me ask you today, are you ready to pursue those kinds
    of agreements? Do you agree that specific plurilateral
    agreements without MFN are an effective way to work with
    allies, but also to put pressure on China?
        Ambassador Tai. Senator Portman, I think that this is a
    very promising set of parameters in terms of how to support the
    WTO as a negotiating forum, to spur the kind of strategic trade
    that we want to have.
        To your example about the Government Procurement Agreement,
    I think that one of the things that is really special about
    that plurilateral that addresses the free riding concern that
    you have is that our market is inherently closed to competition
    here, and it requires opening, and that you can do that opening
    on a country-by-country basis.
        That is something we should think about, and I would be
    very interested in talking through with you whether or not that
    framework holds for other types of policies and where we do
    have a natural fit for that kind of agreement.
        Senator Portman. Great. I think we have some other ideas in
    addition to government procurement that I think could be quite
    effective. But I appreciate your openness to it and your
    willingness to commit to exploring other types of agreements.
        On the UK agreement, as you know, I am disappointed it was
    not noticed last month so we could have gotten it under current
    TPA. But I think it is a really important agreement for us to
    complete. Senator Coons and I, as you know, cochair the UK
    trade caucus. I think it would put us on track toward not just
    getting back into trade agreements and expanding trade, but
    also put pressure on China.
        Can you tell us where you are on the UK negotiations? And
    given the fact that we were not able to get it under the
    current TPA because we did not notice it by April, are you
    prepared to extend TPA authority, to ask us here in Congress to
    extend it, to be able to include at least the UK agreement,
    which is so close to being completed?
        Ambassador Tai. Senator Portman, I am glad you asked me
    about the UK agreement and the UK in general. I know how
    important this topic is to you, and this partnership.
        Let me say this. In terms of the agreement not being
    noticed already, I will share with you that, in my review of
    the progress made in the negotiations, there have been five
    rounds. The very critical issue areas are still open in terms
    of those negotiations. So there is still quite a road to go
    there.
        There are so many ways in which we are engaging with the
    United Kingdom right now. On the agreement itself, let me say
    this. From my perspective, it is really important for us to
    think through the objectives for this agreement now that we
    have some of the issues settled with the UK's exit from the
    European Union. I will note that I hear a lot of concerns from
    members of Congress around the situation in Northern Ireland;
    that is something that we are keeping our eye on in terms of
    steps forward with the UK on an agreement.
        But most importantly I think--and I will get to the end
    here so you can follow up--we want to think through how we
    devise this agreement so that it supports the significant
    domestic investments that this administration wants to make
    with Congress so that we have an agreement that is supporting
    the competitiveness and the growth of the U.S. economy, and
    will also serve the UK's interests.
        Senator Portman. Can we look forward to the exclusion
    process going forward, as we talked about in our letter from
    Senator Carper and myself?
        Ambassador Tai. So I am really glad you asked this
    question. I am sorry that--I am running out of time here.
        Per your request and your recommendation at my confirmation
    hearing, we are undertaking----
        Senator Portman. Setting up a new exclusion process?
        Ambassador Tai [continuing]. A top-to-bottom review on
    China at USTR. And the tariffs and the exclusion process will
    be a critical component of that review, through which we will
    be soliciting robust feedback from the public, from Congress,
    and from everyone who is affected by these.
        Senator Portman. Thank you, Ambassador.
        Thank you, Mr. Chairman.
        The Chairman. Senator Menendez is next, and then Senator
    Lankford.
        Senator Menendez. Thank you, Mr. Chairman.
        Ambassador Tai, good to see you. Thank you for your work in
    addressing the large civil aircraft dispute, and New Jersey's
    food and wine importers certainly appreciate the 4-month pause
    in the tariffs. But since we are now about halfway through that
    suspension, I want to get a better understanding of the status
    of the path forward.
        How are negotiations with the EU and UK progressing on this
    issue?
        Ambassador Tai. They are progressing, and I----
        Senator Menendez. The question is, how are they
    progressing?
        Ambassador Tai. I understand. I understand.
        I am encouraged. I have made clear that we are interested
    in resolving these disputes in this 4-month period. And I would
    very much like for us to make the kind of progress between now
    and July that will bring us to that resolution.
        Senator Menendez. So would you expect that you will get
    it--July; let us see, it is May--in the next 2 months or so?
        Ambassador Tai. We are halfway through the 4-month period.
        Senator Menendez. If not, do you expect the tariffs to go
    back into place, or will the pause be extended until an
    agreement can be reached?
        Ambassador Tai. What I have told my counterparts is that we
    are very serious about this 4-month deadline. So let me put
    that out there--we would like to have, we really need to have
    these disputes resolved.
        Senator Menendez. Well, I really hope you get an agreement,
    too; but if you do not, I would urge you to avoid hitting
    restaurants and food and wine importers again with tariffs.
    They were not particularly successful in bringing a resolution
    to the dispute. I know you need leverage, but I just call that
    to your attention. Hopefully you can be successful.
        As you know, I have a longstanding concern with the current
    lack of oversight over U.S. trade policy, which precedes this
    administration. And the announcement last week that the United
    States would back a TRIPS waiver negotiation highlights to me
    how important better oversight is to ensuring that we have
    transparent trade policy with appropriate congressional
    consultation.
        During your confirmation hearing you said you would commit
    to, quote, ``close negotiations with the Senate Finance
    Committee on trade negotiations,'' and would work closely with
    the committee to identify ways to, quote, ``improve the flow of
    information and development of trade policy.''
        Yet, at least from my perspective, we were not closely
    consulted on this announcement, which is a good example of why
    we think it is critical that we establish an Inspector General
    for USTR to provide independent oversight, transparency, and
    accountability--and ultimately help USTR develop better trade
    policy.
        I appreciate that the chairman at this point has that in
    the bill, and I strongly support it, and we are working with
    the administration on refining it to make sure that it
    ultimately can be agreeable.
        So can you commit to briefing the committee on the status
    of the negotiations, both before and after each negotiating
    session?
        Ambassador Tai. Senator Menendez, the negotiations just in
    general, or are you talking about TRIPS specifically?
        Senator Menendez. TRIPS, specifically.
        Ambassador Tai. Sure; yes.
        Senator Menendez. Okay. Now let me ask you: it is clear
    that if the United States is going to successfully diversify
    away from China, we need to deepen our trading relationships
    with our neighbors in the Western Hemisphere.
        Last week you said you wanted to reexamine the CAFTA-DR
    agreement and find out why it has not stimulated economic
    development in the region, and to the extent that many people
    expected. I certainly appreciate your taking a look at it.
        What are your initial thoughts on why the agreement has not
    panned out the way we would have hoped for? And what is your
    timeline for your review?
        Ambassador Tai. Senator Menendez, my initial thoughts are
    that, you know, there is often a disconnect between all of the
    energy that we have in getting an agreement across the finish
    line and then giving the agreement the care and attention and
    maintenance that it requires over the years.
        In terms of the timeline, I do not have a particular
    timeline. I would be very interested in the views of this
    committee, certainly Congress. I know that there is a certain
    member of this committee who probably knows more about this
    agreement than I ever will, and that would be Senator Portman,
    who was the U.S. Trade Representative who got the CAFTA-DR over
    the finish line. And I think that we all want our trade
    agreements to succeed.
        But let us give all of them, not just the USMCA, the care
    and attention that they require.
        Senator Menendez. Well, I appreciate that. I would just
    simply say, obviously when we are facing the challenges with
    Central America that we are facing right now, in terms of those
    who are fleeing those countries, it is critically important to
    look at every leverage of government in order to meet the
    challenge. Economic development is a critical part of that. If
    CAFTA-DR is failing for some reason, we should know what its
    shortcomings are at the end of the day.
        And I will submit a question to you about whether you are
    working on the new softwood lumber agreement with Canada. I
    keep hearing from housing people that it is incredibly
    challenging.
        Ambassador Tai. Thank you.
        The Chairman. Thank you, Senator Menendez.
        Senator Lankford?
        Senator Lankford. Mr. Chairman, it is incredibly
    challenging right now, with a lot of supply and demand issues.
    A lot of our manufacturers here domestically are having a hard
    time getting labor--and that is a conversation for a different
    day--but the labor folks in my State say over and over again it
    is an issue of the additional unemployment benefits that are
    there. They are having a hard time getting enough labor to
    provide supply, but that is a different conversation for a
    different day.
        As I read through the 2021 trade agenda, a lot of things in
    there I like; I am grateful you are engaging in them. Some
    glaring things are missing that are a big deal in Oklahoma.
    Oklahomans are always looking for what new markets we are going
    after to be able to continue to expand our markets. I do not
    find a lot of conversation there about pursuing new free trade
    agreements, adding new countries. Is that coming in the 2022
    trade agenda, or why is that not in this trade agenda?
        Ambassador Tai. Well, Senator Lankford, I think that the
    trade agenda report--there are two reports that come out. I
    believe that they were at the very, very beginning of my time
    or may have even predated my confirmation. Just because they
    are not in the trade agenda report doesn't mean that issues,
    certainly ones that you are raising here, are not important.
    And I think that with respect to agricultural market access,
    our work is focused on looking at, creating, maintaining
    reliable, transparent, sustainable market access for our
    agricultural producers.
        Senator Lankford. Great. We are always looking for new
    markets. Obviously, existing markets are facing competition. We
    want to know there is another market that is out there we can
    continue to pursue if other markets fall through.
        One of the folks who deals with steel in my State asked a
    very interesting question of me. His question is, he has got a
    lot of capital that he wants to invest into what they are
    doing, but they have a very hard time planning right now
    because they do not know what to count on with the 232. Is it
    still going to be there for another 6 months, 6 years, 60
    years? There is no way to be able to plan for the expanse for
    him.
        So give us a good idea, give him a good idea of how you are
    trying to be able to plan for this for the future of what
    happens with 232.
        Ambassador Tai. So I think there are two levels to this
    question. One is, what is going to happen to 232 as a tool. The
    other one is whether or not the administration has a commitment
    to supporting steel production here in the United States.
        And let me take that second question. Yes, clearly we have
    a commitment to being a strong country that produces and is
    able to produce steel for itself. In terms of the tools and the
    policies, you know, I am open to improving and perfecting the
    tools that we have to make them more effective.
        Senator Lankford. Right. Being more predictable would be
    helpful in the process, and that is--just people need to know
    how to plan. They have been there for multiple years; they just
    want to know how to plan.
        Senator Portman brought up the issue about 301 exclusions;
    that also continues to be a big issue. I know you are in the
    process of studying it. In reviewing this, can I ask you a
    simple ``when'' question? When can we anticipate some kind of
    response coming out about what the plan is? Because this is
    obviously not new; this has gone on for several years. Folks
    are not thinking about the reset of a new administration; they
    are thinking about what is happening right now and has been
    happening for months. When can they expect an answer?
        Ambassador Tai. As soon as we can, and ensure that what we
    are doing has been thought through and is strategic and has a
    clear objective. So there is a push-pull here a little bit. I
    know that there is a lot of desire for us to act quickly. We
    definitely feel that pressure. We want to be able to act
    quickly and to make some of these decisions, but we are also
    very, very mindful of the need to not just be reactive, to not
    be chasing our tails, but to have a vision that we are working
    towards.
        And so we are trying to balance that to be as effective as
    possible.
        Senator Lankford. Sooner is better than later on that. Is
    it December that would come out? Is that July that would come
    out? Is that next July? Give me a ballpark.
        Ambassador Tai. Oh, goodness, I think December would be way
    too late.
        Senator Lankford. I would hope, yes.
        So earlier is better than later on that. We will watch for
    that.
        Intellectual property we have already had a conversation
    on, dealing with the vaccines. I understand we have a worldwide
    pandemic; I understand trying to be able to get the whole world
    vaccinated will be very important to be able to help global
    economic activity.
        Here is the challenge: just giving away the intellectual
    property does not solve the problem. J&J outsourced some of its
    manufacturing to a location. They had the connection to it, and
    the manufacturing failed for the vaccine, and they threw out
    whole batches with millions of doses that are there.
        So just giving away intellectual property does not solve
    the issue if the manufacturing does not have good oversight.
        We also have other vaccines that are coming on the market
    right now, like malaria. That is what we would be talking about
    if we were not talking about the COVID vaccine, finally a good
    malaria vaccine coming on the market. That is also a global
    issue, and the concern is for cancer, for Alzheimer's research,
    for Parkinson's, for so many issues that are out there. If
    every pharmaceutical company suddenly gets a pause in
    investment thinking, ``I am going to get a breakthrough, but
    the intellectual property is going to be given away because it
    is also a global issue,'' that becomes a challenge of getting
    future investment.
        So what I am trying to figure out is twofold here. How do
    we protect the integrity of the vaccine as it goes out? It is
    typically done with good oversight in the generic market or
    whatever it may be, rather than just giving away the formula.
    We lose that ability to have good oversight on it, so we may
    not have good batches coming out, as we have already seen. Or,
    how do we make sure that we are still continuing to protect
    future innovation here for vaccines like malaria that are
    coming on the market right now? Is there any assurance from the
    administration they are not going to also give the intellectual
    property rights away for that?
        Ambassador Tai. Oh, Senator Lankford, let me just say that
    the questions that you are asking are actually critical
    questions; they are really important questions.
        They are ones that I have discussed with the heads of all
    of the manufacturers who are manufacturing or soon will be
    manufacturing for the U.S. market. Over the course of April, I
    think I had over a dozen consultations that I provided
    transparent read-outs of.
        So that is all to say that I know how important this issue
    is; I know what the stakes are in terms of global economic
    recovery, and also in terms of these intellectual property
    protections.
        And I look forward to continuing this conversation with
    you, because it is so important for us to get this right, and
    it is so important for us to be able to show that the WTO can
    produce results that are effective and relevant to people's
    lives.
        Senator Lankford. Thank you.
        The Chairman. Thank you, Senator Lankford.
        Our next two Senators are going to be Senator Cardin, then
    Senator Toomey.
        Senator Cardin. Thank you, Mr. Chairman. And let me thank
    the Ambassador for her service.
        I understand that you are reviewing the 2021 trade agenda
    for promoting equitable growth around the world, and secondly
    to make sure our trading partners live up to their commitments.
    So first you are reviewing the existing trade programs to
    evaluate their contributions to equitable economic development;
    and secondly, enforcing the rules as it relates to labor and
    environment. I strongly support that formula for the review of
    our trading agreements and where we need to move forward.
        I was disappointed I did not see in the enforcement agenda
    the enforcement dealing with good governance and
    anticorruption. We talked about that during your nomination
    process, and there was a strong commitment by the Biden
    administration to embrace one of our principal trade objectives
    of good governance.
        Can you reassure me that, in your evaluations, governance
    and anticorruption could be a similar goal as to what we are
    trying to accomplish?
        Ambassador Tai. Senator Cardin, yes; good governance,
    addressing corruption, having anticorruption efforts and using
    trade tools to advance those goals is absolutely critical. Let
    me just say that some of our programs do have very useful tools
    in this regard.
        There are more tools that we need, and I look forward to
    working with you and members of this committee to ensure that
    we are able to build those tools in to make for really
    comprehensive efforts that we can undertake as the U.S.
    Government to create that race to the top, in terms of
    incentives for our trading partners to abide by good governance
    and to have anticorruption programs that are effective.
        Senator Cardin. I will just caution you that language is
    very important, so at every opportunity, I would hope that you
    would reinforce that. We see a significant backsliding in
    Central America today, and around other of our traditional
    trading partners.
        So I would hope that we would always underscore the
    importance of good governance as we do on labor and
    environment.
        I want to talk about two areas where I would hope we would
    expand trade opportunities. One is very close to home, the
    Caribbean, where we see China expressing a great deal of
    interest. It does not take too much effort to see a stronger
    U.S. presence in the Caribbean island states, and it could go a
    long way to helping us not only with their economies and their
    stability, but also having closer allies in international
    organizations or in regional organizations.
        The second is Mongolia, which is in a very difficult part
    of the world. It is the most recent member state of the OSCE,
    and one which we have developed a pretty strong relationship
    with, and one that we can nurture through trade to help us with
    a strategic partner against China.
        So I would hope that you would give a careful look to
    expanding opportunities in these two areas as part of our
    strategic agenda.
        Ambassador Tai. Thank you, Senator Cardin. I hear you loud
    and clear, and I think that you have raised good points, and
    good partners for us to be engaging with.
        Senator Cardin. I look forward to working with you on both
    of those areas. In those circumstances, there is bipartisan
    interest on our committee to deal with both of those regions.
    There are obviously complications whenever we open up issues;
    there was some concern about Kashmir as related to Mongolia,
    but I would hope that we could work through this and strengthen
    our ties.
        I can tell you, there is a great deal of interest in that
    region, as you know. Our China policy is one that will be on
    the floor of the Senate, we hope as early as this month, and
    the trade issues are also part of dealing with our concerns
    about China. You heard that in the enforcement discussion by
    members of our committee.
        But it is also important that we expand our trading
    opportunities with countries in that region. We are not a
    member of the Trans-Pacific Partnership; we find China
    extremely engaged.
        So what is our strategy to deal with China's influence? Let
    us start first in the Asian-Pacific area. What is our strategy
    in order to try to counter what China is doing, recognizing
    that we are not part of the Trans-Pacific Partnership?
        Ambassador Tai. Well, this is really a critical question,
    Senator Cardin. I spent a lot of time thinking about this, and
    I know there is a lot of energy here on the Hill, and that is
    going to be important for us to work together on these issues.
        In terms of our strategy, first of all I think that we need
    to be engaging with the rest of the world--and certainly in
    this part of the world--from a position of strength. And so
    first of all, I think that the investment that our economy
    needs will be first and foremost, that position of strength
    that we are looking for.
        The second piece is to work with others, and to your point,
    there are a lot of others, good partners, partners that are
    very interested in engaging with U.S. leadership again. That
    will be done.
        I think third, from my perspective, is to ensure that, as
    we are taking steps, that we are thinking through the strategy
    to make sure that we are effective and that we are pursuing a
    vision that is well-supported here at home on a very strong and
    robust bipartisan basis.
        So those are some of the components that I am thinking
    about, but obviously the conversation and partnership with
    Congress is going to be critical.
        The Chairman. Thank you, Senator Cardin.
        Next is Senator Toomey.
        Senator Toomey. Thank you, Mr. Chairman.
        Ambassador, thank you for joining us. Let me start with
    just a quick point. I would strongly push back on the idea that
    we should leave the 232 trade policy as the status quo. Look,
    we know for a fact the previous administration abused this
    authority and claimed national security when it was not in fact
    the case; Canadian and Mexican steel is not a threat to
    American national security. It was used as a way to coerce a
    more restrictive trade agreement under USMCA. That is what the
    purpose was.
        And the idea that we should leave it around, available for
    other administrations to similarly abuse this power until such
    time as some other greater latitude is passed, I think would be
    a big mistake. This is a responsibility the Constitution
    assigned to the Congress; we should reclaim that
    responsibility.
        But I really want to talk about the TRIPS waiver. I have to
    tell you, I was shocked and very disturbed to see that the
    administration is going to be supporting waiving the
    intellectual property rights of American companies for COVID-19
    vaccines. And let me just tell you, I am aware of no evidence
    whatsoever that this step is going to enhance vaccine
    availability in developing countries. In fact, it could quite
    possibly be the contrary.
        Senator Lankford alluded to several of the concerns; there
    are many safety concerns, for instance, facilities around the
    world that just do not have the technology to make this
    properly. There are dangers of access to inputs for this.
    Frankly, I think it undermines our ability to deal with the
    next crisis, including the possibility of the next iteration of
    this crisis.
        I mean, I think there would be very broad support in
    Congress to devoting whatever resources would be necessary to
    gear up production as much as we can and shift vaccine to
    countries that need it. But the idea that we would give away
    our intellectual property--the White House Chief of Staff
    himself, Ron Klain, said on May 2nd that, and I quote,
    ``Really, manufacturing is the biggest problem,'' end quote.
    The CEO of Pfizer said, and I quote: ``Entities with little or
    no experience in manufacturing vaccines are likely to chase the
    very raw materials we require to scale our production, putting
    the safety and security of all at risk,'' end quote.
        There are serious logistical and distributive challenges
    like how you move these sensitive, unstable materials in
    climate-controlled conditions. It is not at all clear that all
    these companies have that capability, not to mention whether
    they have sufficient front-line workers who have the training
    to get this done.
        So there are limiting factors here, but there is no
    evidence that it is access to American intellectual property.
    And that we ought to be giving away to foreign countries
    American intellectual property as a way to solve this is just
    completely wrong. It is incredible to me that while we are
    spending so much time and effort trying to figure out how we
    limit Chinese theft of U.S. intellectual property, here we have
    an administration proposing ``we will just give it to them.''
    It is unbelievable.
        Now it is likely that this will never take place, because,
    of course, all WTO countries would need to agree. And
    fortunately for us, it looks like the Germans understand the
    value of intellectual property better than the American
    administration does at the moment, and we may be able to count
    on the Germans to save us from ourselves.
        But what message does it send to American companies,
    especially companies that are in industries that are intensive
    intellectual property industries, when their government is
    offering to essentially give away their intellectual property?
    That is what the Biden administration is proposing here.
        This is one of the most important industries we have; the
    U.S. leads the world in pharmaceuticals and medicines, and it
    is extremely intellectual property-intensive.
        What is the limiting factor here? Are we going to start
    taking the IP for important medicines? What about basic
    chemicals? Medical devices? Who knows what other products would
    be valuable in other parts of the world?
        This is shocking to me, and I think a terrible idea. Here
    is my question for you. All else being equal, on the margin can
    you actually believe that this policy, the policy of supporting
    the TRIPS waiver, is going to encourage more investment in U.S.
    R&D, including in the pharmaceutical industry?
        Ambassador Tai. Senator Toomey, you have given 20 seconds
    to reply, and there is so much that I want to say.
        Senator Toomey. I hope the chairman will indulge you and
    give you a little bit more time.
        Ambassador Tai. I hope that too. I hope that too.
        First, on 232, I just want to say I am not quite sure if
    you are reacting to something you thought I said, but I want
    you to know that your views on the 232 statute and its use are
    very, very clear.
        You have also made very clear your position on the TRIPS
    waiver. Thank you for allowing me the opportunity to reply on
    this. You know I respect you a very, very great deal, and so I
    look forward to continuing this conversation.
        But let me just be clear. I think, in terms of the message
    to American companies, we collectively have an obligation to
    help to save the world right now, and these companies have done
    incredible work in coming up with these vaccines that are
    effective and are safe. The issue is, the message I want to
    give to them is, ``you can be a hero here.''
        And I also want to be clear about this, that what we are
    trying to accomplish is the saving of lives. That is going to
    be the first step to any longer-term trade policies and the
    opening of markets that we are going to work on. Unless we are
    able effectively to bring the rest of the world's economy back
    on line, there is not a lot of upside for us in what we are
    going to be doing.
        The Chairman. The time of my colleague has expired.
        Just so we are clear about the record, my colleague said
    that the Ambassador was for the status quo on 232. I think the
    transcript will show that she made it clear she was for an
    updated policy and she wanted to modernize trade tools. So I
    just wanted to make that clear.
        Next will be Senator Cassidy, and then Senator Brown. I
    believe they are both on the web.
        [Pause.]
        The Chairman. Is Senator Cassidy out there in cyberspace?
        Senator Cassidy. Yes; can you hear me?
        The Chairman. Senator Brown?
        Senator Cassidy. Can you hear me?
        The Chairman. Is that Senator Cassidy? We cannot hear you.
        Senator Brown. I can hear Senator Cassidy, and I am on too.
        The Chairman. Okay; we will go with Senator Cassidy next,
    and then Senator Brown.
        Senator Cassidy. Madam Ambassador, I will echo what all my
    colleagues have said about the TRIPS waiver, but you did not
    answer his question as regards what would be the perspective of
    a future venture capitalist as to whether or not they would
    fund research to find a cure rapidly for the next pandemic. Of
    course the answer is, they will not. Nor will they do it for
    Alzheimer's, because the same excuse will be given then; it is
    about saving lives.
        Why don't you just pay Pfizer a lot of money to expand
    their production capacity and let them produce the vaccine that
    then can be shipped around the world? This is a march-in of
    intellectual property, something that folks from the left have
    been advocating on various other things, and this is a way to
    excuse a march-in of intellectual property.
        You do not have to respond to that because you have been
    kind of responding to that already, but I will just say that
    for the record.
        Let me ask you about something which is important for
    Louisiana. USTR has published a list of potential retaliatory
    tariffs against Indian imports of shrimp. One of the categories
    listed is cold water shrimp, but cold water shrimp are not
    harvested in India because of its geography. Cold water shrimp
    are harvested from the ocean floors of the North Atlantic and
    the Arctic.
        Putting duties on cold water shrimp would be ineffective;
    they would just flip their shrimp back to the warm water and
    avoid the tariff. So stakeholders tell me that they believe
    that the cold water shrimp entering the U.S. from India are
    actually warm water, mislabeled to avoid antidumping tariffs.
        So what are your thoughts? How do we ensure that the U.S.
    has taken appropriate action to protect Americans from
    consuming shrimp farmed by an industry overseas which has faced
    disease outbreaks, chemical overuse, illegal and unreported,
    unregulated activities, phytosanitary, et cetera; how do we
    more effectively address that?
        Ambassador Tai. Senator Cassidy, on your question on
    shrimp, thank you for raising this. As you may know, those
    digital services tax, section 301 actions are still open, and
    these types of comments are very helpful in our work to refine
    the list that will come out from this process.
        I think the other part of your question really has to do
    with Customs enforcement, to catch the kind of avoidance that
    you were talking about, and that is something that we are
    always interested in working on and improving. And it is an
    area where USTR traditionally and will in this administration
    work closely on with the CBP at the Homeland Security
    Department.
        Senator Cassidy. Thank you. At the outset, I heard you
    mention how the U.S. is asking Mexico to enforce labor
    protection. I fully agree with that; that is an appropriate
    thing to do.
        One thing you have heard me say before, though--and I think
    I have somewhat of agreement--the fact that China does not
    enforce such labor protections allows them to effectively
    subsidize the cost of production, lower the cost of production
    of a given product in China vis-a-vis other countries.
        I am concerned about CAFTA. Clearly, we need our Central
    American countries to be doing better economically so that
    folks are more likely to stay in Central America as opposed to
    migrating and attempting to enter the United States illegally.
        I understand Senator Menendez asked you about this. But as
    we consider near-shoring products out of China for national
    security purposes, CAFTA is a logical place to go; Central
    America is a logical place to go because their cost of labor is
    so much less.
        There are some things that we just cannot compete with,
    given our cost of labor. Tell me again what we are doing to
    kind of address the fact that China effectively subsidizes, by
    having lax or slave labor, for example--the ultimate example--
    that undermines the ability of these countries to prosper, and
    what can we do to increase their ability to prosper as a way to
    address our immigration crisis?
        Ambassador Tai. So you have two questions: one on China,
    one on Central America. Let me take the China question first.
    Obviously, when it comes to forced labor, we have an incredibly
    powerful tool, a United States statute that bars the
    importation of products that are produced using forced labor.
        Senator Cassidy. If I may say, there are other lax labor
    standards aside from forced labor.
        Ambassador Tai. That is right. And on that piece, let me
    say to you, Senator Cassidy, I know what your views are on
    this, and I look forward to working with you on other tools
    that we can use, potentially new tools that we can devise.
        So I hear you loud and clear; it is a very, very critical
    concern. It has been an unfair competitive advantage that we
    need to level the playing field for.
        On Central America, we are engaging in an administration-
    wide effort here, and USTR has tools within the CAFTA-DR as it
    is structured; but I also want to reinforce that, in the
    executive order that was issued on this administration-wide
    effort, USTR specifically has been charged with making sure
    that efforts that we take do not undermine labor protections in
    those regions and in those countries.
        And on this as well, I am very interested in working with
    you on how we can do more to raise the standards for workers
    and their protections in this region.
        The Chairman. Thank you, Senator Cassidy.
        Senator Brown is next.
        Senator Brown. Thank you, Mr. Chairman. And, Ambassador,
    welcome back; good to see you. Thanks for all your team has
    done in the first--there has not been a Trade Rep in American
    history who has come out doing the smart, engaging things you
    have done so quickly. Thank you on what you did with TRIPS; you
    are going to put shots in people's arms around the world. It is
    an opportunity, it is our duty; you have support on this
    committee for that. At least a couple of us on this committee
    have written letters to you asking you to step in there.
        So please call on me and my staff--and I know the chairman
    is engaged in this, and many of the rest of us--for what we can
    do to support your efforts at the WTO in this.
        Let me talk about what you would expect we would ask about:
    the Brown-Wyden rapid response mechanism. During your
    confirmation hearing, you committed to fully enforcing the
    USMCA agreement with Brown-Wyden. Today under your leadership,
    for the first time, USTR self-initiated an enforcement case
    under that mechanism. Thank you for that. We have now two
    Brown-Wyden cases, as you know.
        I would like to ask you two or three questions. I will ask
    them together, just get you talking a little more about Brown-
    Wyden, to explain it to people, how it is working, a sense of
    how many cases we might expect under this mechanism, some sort
    of ballpark estimate. Talk to me about how the hotline works,
    if you would, how do workers file complaints; do you take tips
    that come in through the hotline seriously; and tell me what
    this full use of the Brown-Wyden mechanism will look like to
    you in the months and years ahead.
        Ambassador Tai. Thank you very much, Senator Brown, for
    your kind words.
        On the Brown-Wyden rapid response labor enforcement
    mechanism, let me just distinguish a little bit between the two
    announcements this week. The first one was a petition that was
    filed by the AFL-CIO in partnership with several other labor
    organizations. That is the very, very beginning of a petition
    process, and as constructed, there is a 30-day period during
    which USTR, working with the Department of Labor, will review
    that petition for whether follow-up is needed and whether USTR
    should then request Mexico to review whether a denial of rights
    has happened.
        In the second case that has been initiated today, that was
    self-initiated; and as you have noted, that is USTR initiating
    the request to Mexico today that will start the next timeline
    under the mechanism that has been created.
        In terms of the tips and the hotline, and taking in
    information from people with experience of what is happening on
    the ground at some of these facilities, absolutely we take that
    information extremely seriously.
        And, Senator Brown, if there are other questions that you
    asked that I have not responded to specifically, I ask you to
    remind me of them.
        Senator Brown. Well, we will follow up with the latter,
    because I want to get to something else. But thank you for
    just, in such a fulsome way if you will, approaching this and
    doing what you need to do.
        There are a number of us on this committee--I see most
    prominently Senator Casey and I--whose States have been
    victimized by bad trade policies for decades, and I would like
    you to come to Ohio, if you would be willing to, once the
    pandemic is over--so you can travel safely--and get you with
    some people to talk about Brown-Wyden and what is next, and how
    we enforce trade policies that actually work for our
    manufacturers.
        So I guess I would ask you publicly now: would you at some
    point be willing to come to my State to do that?
        Ambassador Tai. Absolutely, Senator Brown. It would be my
    honor, and I would be delighted to do it. It will be so
    important for us in formulating our trade policies to be
    talking to people, regular Americans who are impacted by our
    policy.
        Senator Brown. Thank you. And if you come to northeast
    Ohio, maybe you can spend 12 minutes in Pittsburgh or something
    too. But do not overdo that part of it. [Laughter.]
        One last question. We see now corporations that prioritize
    profit maximization over accountability are leading a race to
    the bottom that has resulted in that hollowing out of economic
    security for families all over this country. Brown-Wyden is
    intended to make sure corporations cannot violate worker rights
    in Mexico to make a profit. But, in addition to putting workers
    back at the center of our policies, we need to do more to
    ensure corporate accountability.
        We are looking at ways--and I look to the chairman of this
    committee for this, and his leadership--in conjunction with my
    committee to do that across the financial industry as part of
    my work on the Senate Banking and Housing Committee. Senator
    Cortez Masto is on that committee; Senator Warner is also on
    Banking and Housing.
        Would you work with us on corporate accountability, trade
    policies that help prevent the race to the bottom, and
    financial services also?
        Ambassador Tai. Absolutely, Senator Brown.
        Senator Brown. Okay; thank you.
        Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Brown.
        And I also want to note for colleagues that, obviously,
    there are tremendous differences between the State of Ohio and
    the State of Oregon in terms of economics, and it was a
    pleasure to work with Senator Brown to try to bring the
    Congress together around enforcement issues. And I just really
    appreciate all of the leadership.
        Senator Bennet?
        Senator Bennet. Thank you, Mr. Chairman. And thank you,
    Ambassador Tai, for your service and for being here today.
        If our experience with 5G has taught us anything, it is
    that we cannot afford to play catch-up on technologies that are
    critical, fundamental, foundational to our economic security
    and our national security. For years the Chinese Government
    subsidized companies like Huawei and ZTE to achieve a dominant
    market share for 5G internationally, and we have been
    struggling to catch up ever since; we are still struggling to
    catch up.
        And it is a similar story, as you said earlier, for
    semiconductors and many other critical supply chains, and I
    think we all want to make sure that we are not letting what
    happened to 5G happen again. And I just wonder, in your mind,
    what do you see as the next 5G--in other words, a technology or
    technologies that experts tell us are going to make an enormous
    difference for our security and our competitiveness? And feel
    free, if there is more than one, to give a sense of what that
    landscape looks like.
        Ambassador Tai. Certainly. Thank you, Senator Bennet, for
    the question. I think it is absolutely critical to be thinking
    ahead in so many areas in terms of technology, and also in
    terms of manufacturing as well.
        But your question is focused on the technology. And I would
    say you just look at the Chinese planning documents and they
    have talked about AI, quantum computing--you know, the new
    technologies, new energy technologies. These are all about
    cornering the market of the future economy, and we absolutely
    have to be lighting the fires underneath ourselves, making the
    investments that are going to capitalize on the strength that
    we have in terms of innovation, in terms of workforce, in terms
    of speed and agility, to allow us to compete and compete
    effectively, because we can. But we need to focus our energies
    there.
        Senator Bennet. I hope you are hearing--I think it is
    interesting--almost unanimity, I think, from this committee
    today, saying that if you look back over the last 30 years or
    so, in many ways our approach has really been an abject
    failure. And it is not just--as you say, it is not just about
    trade; it is a question of our investment in our own critical
    technologies in this country, and if we continue to do that for
    the next 5 years, I think we are going to be in real trouble.
        So the committee is going to want to know how the
    administration is working together--not just with its trade
    policy, but all of its policies--to make sure that we turn the
    corner here with respect to China.
        I think that when you and I were speaking about your
    nomination, one of the things you said to me--and I hope you do
    not mind--was that it is wrong to think of China as taking over
    the world; they are pursuing a China-first policy. The question
    is, do we want to be collateral damage? And we do not want to
    be collateral damage. Which means, I think, we have to have a
    much more robust diplomatic and trading relationship with other
    folks around the world who have similar equities with respect
    to the Chinese Government's mercantilist, authoritarian
    approach to the world.
        And I wonder, in the remaining moments--in the 20th
    century, American trade policy was a powerful lever for free
    markets and competition and the rule of law around the world as
    a counter to Soviet communism. How should we think about an
    American trade policy in the 21st century that promotes those
    values as well as democratic values like privacy and free
    speech, especially when compared to the Chinese regime?
        Ambassador Tai. Certainly. I think that we were guided for
    a very long time by the principle that more trade is better,
    and more trade would lead to a better world, and in some ways
    it has gotten us very far. The world today is very different
    from the one 70 years ago. But I think that what these policies
    have also shown us is that we need to also be trading smart; we
    need to be trading strategically, knowing the challenges and
    the competition that we are up against.
        We have to have more effective and thoughtful policies that
    get us beyond just ``more is better,'' but we also need to be
    asking, ``How do we do this smartly?''
        Senator Bennet. Thank you, Mr. Chairman. With the last 5
    seconds I have, I just wanted to call your attention to a
    recent Mexican Supreme Court decision on potatoes. Finally,
    finally, finally, after all these years we have the opportunity
    to open access for the potato farmers in the San Luis Valley in
    Colorado, and I just hope that you are aware of that decision
    and that we are working hard with Mexico to achieve that
    access.
        Ambassador Tai. I am very aware of it, Senator, and I am a
    little surprised that Senator Crapo has not mentioned it also.
        Senator Bennet. Well, I mention it on his behalf.
        Senator Crapo. I appreciate you covering me on that. That
    is a very important point.
        The Chairman. We all care about potatoes up here.
        Next is Senator Casey.
        Senator Casey. Thank you, Mr. Chairman. And, Ambassador
    Tai, great to be with you. And again, I want to congratulate
    you on an overwhelming confirmation, I guess now about 2 months
    ago, but we are grateful for your continuing commitment to
    public service at a time when public service can be pretty
    difficult.
        I also want to thank you as well for some of the work you
    have already begun. I know it is early in your tenure, but I
    want to thank you for the work you have done, continuing to
    work on issues that relate to steel and aluminum overcapacity,
    as well as the ongoing issues and concerns that I have and I
    know many have regarding electrical steel. And I hope you will
    continue to support efforts to protect our last domestic
    electrical steel manufacturer, which is AK Steel, recently
    acquired by Cleveland-Cliffs.
        I just have two questions; one is on climate and trade, and
    the other is about our supply chains. I am breaking new ground
    talking about climate, but maybe we do not talk enough about
    the impact that climate has on trade.
        We know that climate change is a threat to human life; it
    is a challenge we have to confront. I think we are just
    beginning to get to that, but as urgent as it is, we also have
    to remember that workers can be both left behind and exploited
    if we do not pay attention to their concerns as we address
    climate change.
        For a long time we have had this fixation, across the
    world, on cheap goods, and that ignores conditions under which
    those very cheap goods are produced--whether it is distorted
    markets or poor labor conditions or a disregard for the
    environment.
        So if democracies ignore how goods and commodities are
    produced, we perpetuate these authoritarian regimes that thrive
    on repressing their own citizens as well as workers around the
    world.
        So can you discuss how your office, your team, will ensure
    that workers and labor rights are central to your efforts to
    combat climate change?
        Ambassador Tai. Absolutely. Senator Casey, you have put
    your finger on it completely, which is that for a very, very
    long time our trade policies have driven protections and
    standards for workers and for the environment lower and lower
    to facilitate the attraction of trade and investment
    opportunities.
        And what we need to do right now--knowing that our goals
    are to work towards a robust, clean energy jobs economy and
    just a cleaner environment for us to have an economic future--
    is that we are going to need to really focus on trading harder
    and ensuring that the trading rules that we put in place and
    that we agree to with other countries, and especially our
    fellow democracies, as you say, are going to be driving
    incentives that put a premium on standards and protections for
    the environment and workers, as we stimulate our own
    competitive position in this world and the industries of the
    future.
        Senator Casey. Well, I appreciate that.
        And I wanted to raise one additional issue in the remaining
    time I have. I do not think you need to be an expert on the
    pandemic or PPE to realize how dependent we were on non-market
    economies like China for something as simple as PPE, protective
    equipment that folks needed. And at the same time we are
    dependent, we have very little visibility on the
    vulnerabilities that exist right now with respect to production
    dependencies that we have in other sectors.
        I have worked in a bipartisan way with Senator Cornyn and
    Senator Stabenow to try to focus on providing more visibility
    on these vulnerable supply chains and to review outbound
    investment, just like we reviewed for the last 40-some years
    inbound investment with regard to critical capabilities that
    foreign adversaries and non-market economies are connected to.
        So I hope we can continue to engage with you and your team
    as we work to both secure and diversify these supply chains.
        Ambassador Tai. Absolutely, and this is an issue of concern
    across the administration, and you will have good partners in
    other parts of the administration to work on this as well.
        Senator Casey. Well, thanks very much. And just to rebut
    Senator Brown, Pennsylvania is on the way to Ohio, so you can
    spend a lot more time in our State; we would love to have you.
    Thanks.
        Ambassador Tai. Thank you.
        The Chairman. They are friends, even though we are having
    this sparring between Ohio and Pennsylvania.
        Senator Carper?
        Senator Carper. Thanks, Mr. Chairman. I cannot pass this
    up. Before William Penn arrived in Pennsylvania, he stopped off
    in Delaware. Later he was asked why; he said, ``Because it is
    the home of tax-free shopping.'' And he had a wonderful 2 days
    there.
        Ambassador Tai, Lucy Xiao sends her best. Some of you heard
    me say before--Lucy is a member of our staff, and now she is
    our Legislative Director. She was good enough to say to me
    before President-elect Biden had nominated anyone for the Trade
    Rep, ``You know, there is a great person who works over there
    for Richie Neal, Congressman Neal in Ways and Means, who helped
    us a lot on the environmental provisions of USMCA. Her name is
    Katherine Tai, and you should take a look at her.'' And we did,
    and I was pleased to, as you know, suggest that you be
    considered for the position. Thrilled that they nominated you
    and thrilled that you are sitting before us today.
        I want to thank you and welcome you again to the hearing
    before this committee, and thank you for testifying before us
    as well and for the leadership you are now providing.
        I would like to quote an old African proverb that goes
    something like this: ``If you want to go fast, travel alone. If
    you want to go far, travel together.''
        Many of my colleagues today have expressed their concerns
    about China's growing influence. I believe that one of the best
    ways to counter China's rise and their anti-competitive trade
    practices is to work together with our allies, to work together
    with our trading partners, to constructively write and, in some
    cases, rewrite the global rules of trade.
        Recently, I had the privilege of leading a letter with one
    of our colleagues, Senator Cornyn of Texas, emphasizing the
    need for strategic engagement in the Asia-Pacific region,
    similar to what the Trans-Pacific Partnership sought to
    achieve.
        I wonder if you might take a couple of minutes, if you will
    this morning, to share with us your thoughts on the benefits of
    taking a multilateral approach to trade in order to remain
    competitive with China. Please.
        Ambassador Tai. Well, Senator Carper, I just want to offer
    my response to that question, which is: yes, I think we should
    work in multilateral ways, in multilateral forums, to compete
    with China and to compete with China effectively.
        Senator Carper. All right. In your view, is there a
    possibility that negotiations can resume on TPP in some form?
        Ambassador Tai. I know this is a question on a lot of
    people's minds, especially those who were around during the
    negotiation of TPP. So I thank you for this opportunity to talk
    a little bit about this.
        What I would say is this. In advancing a worker-centric
    trade policy on behalf of the Biden-Harris administration,
    really a focus of this is to examine our trade policies and put
    the worker at the center of our policy formulation, and to
    create a discipline so that we think through what the impacts
    of our policies are going to be on individual human beings and
    their communities.
        So that translates into a desire to formulate trade
    policies that enjoy really broad bipartisan support. And in
    terms of your question on the TPP, I think that we have seen
    through our recent history that, while there was bipartisan
    support for TPP, there was also bipartisan opposition for TPP.
    And really what we are looking for are trade policies,
    multilateral ones, looking at China competition, that are going
    to have the kind of broad bipartisan support that we need.
        Senator Carper. Yes. I will go to my grave wondering why in
    the world we walked away from a trade agreement that allowed us
    and 11 other nations, in this hemisphere and across the globe,
    that together create about 40 percent of the trade that is
    going on on our planet, why we would walk away from that
    agreement that would leave China on the outside because of
    their bad behavior. Why we would walk away from that agreement
    is beyond me. And I will continue to raise this issue.
        Ambassador Tai, if you could, one last quick question. I
    was happy to hear about your speech last month where you
    elevated the importance of combating climate change in U.S.
    trade policy. The Finance Committee is working on legislation
    that will bolster U.S. competitiveness and ensure that we are
    able to compete with China, as you know.
        As part of this legislation, we are working to reauthorize
    the Generalized System of Preferences program, GSP, for
    developing nations. I understand that we have a key opportunity
    to include environmental criteria in GSP, giving this
    administration another tool in its toolbox to combat climate
    change through trade.
        Would you be supportive of including environmental criteria
    in GSP, and what additional opportunities exist for advancing
    environmental enforcement measures in future trade deals?
    Please.
        Ambassador Tai. Absolutely. Yes.
        Senator Carper. That was the kind of answer I was hoping
    for; crisp and to the point. Thank you so much.
        The Chairman. A one-word win. Thank you.
        Senator Carper. My time has expired.
        The Chairman. All right.
        Senator Barrasso?
        Senator Barrasso. Thank you very much, Mr. Chairman and
    Ranking Member Crapo, and thank you, Ambassador Tai; nice to
    see you again.
        The President has called for waiving intellectual property
    rights for vaccines. He has called for that, he said, because
    we have a global health crisis. I disagree with that decision
    by the President; I want to be very clear on that.
        At the same time, he has made it very clear that this
    administration believes that we are facing a world climate
    crisis. As a matter of fact, on April 22nd, the President
    called on countries to step up, take further action on climate
    change in order to, quote, ``overcome'' what he described as
    ``the existential crisis of our time.''
        He did not say that coronavirus was the existential crisis
    of our time; he said climate change is the existential crisis
    of our time. But the President is willing to waive intellectual
    property rights on something that is less than the existential
    crisis of our time.
        So how do you square that? Do you think we should waive
    intellectual property rights on green energy technology to
    combat climate change? Where is this administration going, and
    you as the Trade Rep? I do not see how you can support the one
    without the other, and is all of it out the window?
        Ambassador Tai. Well, Senator Barrasso, I respect your
    opinion and where you are on the waiver issue.
        Let me say this. I do not think we think about our
    challenges in a kind of a totem poll hierarchy. But with
    respect to the COVID-19 pandemic, all you need to do is open a
    newspaper or turn on the TV and see the scenes in India and
    appreciate the reality that we are not through this pandemic,
    and that even for those countries that think that they are in a
    good spot, things can really turn on a dime if you are not
    careful.
        So with respect to COVID-19, I would say that for the
    people of India, for all of the people who live in countries
    where there is less than 2 percent access to vaccines as of
    today, that that is an existential crisis today.
        Once we are through this pandemic--God willing, knock on
    wood that it will be sooner rather than later--the climate
    crisis will still be with us. And so let me just say that; let
    me put in context or acknowledge that we can have more than one
    crisis at a time, but also really put a point on the issue
    around the vaccine and how it impacts individual people and
    their access to hope that they will be able to have a future,
    and that their kids will be able to have a future.
        Senator Barrasso. So we can have more than one crisis at a
    time; does that mean this administration has really very little
    respect for intellectual property rights? And as long as the
    administration can describe four or five or six crises, that
    anyone who has done work, to spend time, effort, research, has
    no protection?
        I am just going to go with what you had said during your
    confirmation process. I asked you the following question: ``How
    does the U.S. Trade Rep intend to pursue a trade agenda that
    protects American intellectual property abroad and ensures that
    our trading partners value the important contributions of
    America's innovative industries?''
        You said: ``If confirmed, I commit to using the trade tools
    at my disposal to ensure that American workers and innovators
    are able to reap the benefits of their innovation, including
    overseas.''
        So that was my question to you and your answer. So I just
    ask, how and why has your position with respect to U.S.
    intellectual property protection evolved since that hearing and
    the vote on your confirmation?
        Ambassador Tai. I guess the answer is, it really has not,
    Senator Barrasso, and I would direct your attention to the
    statement that we put out. By the way, we put that statement
    out through an e-mail; we also tweeted it out--just referring
    to an earlier comment by Senator Crapo that it was just a
    tweet.
        But that statement really was carefully crafted as a
    statement of our values: that saving lives is absolutely
    important and that intellectual property protections, as long
    as there are partners at the WTO who feel so strongly that
    intellectual property protections are getting in the way of
    their ability to access vaccines and to save their
    populations--that is absolutely worth our engaging with.
        Senator Barrasso. So I guess the question is, why would we
    expect American innovators to make massive new investments in
    medical research, in carbon capture, in clean energy, in
    advanced technologies, if they risk losing intellectual
    property during the next thing that is truly a global crisis?
        Ambassador Tai. Well, I guess I would just say in terms of
    the acute nature of what we are experiencing right now, the
    entire health infrastructure of India, for example, being
    overcome--that that is distinguishable from the kind of crisis
    that we are facing with respect to the climate.
        And so I would just say I disagree with your analogy that
    one necessarily leads to the other, that there is a slippery
    slope here.
        Senator Barrasso. Thank you, Mr. Chairman.
        The Chairman. I thank my colleague.
        Next is Senator Warner. Is he out in cyberspace?
        Senator Warner. Ambassador Tai, first of all, it is great
    to see you.
        Can you hear me?
        The Chairman. Senator Warner, I can hear you, I believe.
        Senator Warner. Ron, can you hear me, see me?
        The Chairman. Gotcha; go.
        Senator Warner. Thanks so much.
        Let me first of all just say, having just heard the last
    exchange, I spent a whole career in venture capital and valuing
    American intellectual property. I think it is a very close
    call, what the administration has done.
        But I also want to give--Ambassador Tai, I think,
    acknowledged that this is a moment in a global pandemic, and as
    I think you laid out very clearly, starting something as a WTO
    process is a long way from coming to some kind of overall
    consensus, the way the WTO works. And as cochair of the U.S.-
    India caucus, I think the humanitarian crisis in India requires
    extraordinary actions.
        I also think there is no more significant long-term
    geopolitical strategy in Asia than building strong ties with
    India; and I think that taking a once-in-a-century action on a
    once-in-a-century pandemic is not an indication of some retreat
    of protecting intellectual property rights in this country. I
    again differ with some of my colleagues.
        I also want to point out--I think somebody else has raised
    this issue as well, and I wanted to weigh in. Semiconductors, I
    think most of this panel knows, are the key to virtually any
    electronic device, and it is absolutely critical that we make
    sure we have that domestic supply of semiconductors.
        Next week, Senator Cornyn and I and a number of others will
    be introducing a bipartisan amendment to the Endless Frontier
    Act to commit $50 billion to both advance where America is
    ahead on semiconductors and also hopefully lead to the domestic
    construction of eight to 10 new fabrication facilities,
    fabrication facilities that will do memory chips, that will do
    logic chips, that will do cutting-edge chips, that will help
    ensure manufacturing legacy chips are still in the supply
    chain.
        I hope my colleagues will support this.
        Right now, we have no new fabrication facilities being
    built. Taiwan creates 63 percent of all the chips made in the
    world. That is a supply chain vulnerability, as well as the
    fact that we need to continue to make, design the equipment,
    the packaging, and I appreciate very much the administration's
    support of this effort, and again I hope it will enable us to
    get it done.
        Let me get to a question. I am concerned--when you think
    about allies, one of our strongest allies is Australia,
    particularly as they grapple with the challenges coming from
    China. They are a front-line nation. It is one of the reasons I
    have been concerned that some of USTR's practices around
    digital trade have frankly involved at times siding
    disproportionately with the platforms in terms of some of the
    recent debate--internal to Australia--about the news flow,
    where many American companies actually sided with the
    Australians.
        I just hope, Ambassador Tai, that you can say that, around
    digital trade efforts, we ought to try to work to be more in
    concert with allies like Australia, with some of our European
    allies. And let me just say, the fact that we have seen many of
    our European friends put on hold some of their ongoing trading
    relationships with China as they reassessed, particularly, the
    Chinese treatment of the people of Hong Kong and the Uighurs,
    this opens up an opportunity, I think, around these digital
    issues, both in terms of Australia and in terms of our European
    friends, to find greater levels of cooperation and
    collaboration. If you could speak to that, I would appreciate
    it, knowing I have taken up 4 minutes and 30 seconds getting to
    the question.
        Ambassador Tai. Senator Warner, I appreciate your question;
    it is an important one, especially in terms of thinking about
    formulating the trade rules that are going to be relevant today
    and far into the future.
        I hear you. I think that we do need to be in concert with
    our trading partners. And on the types of issues you are
    talking about, USTR will need to be in concert with Congress
    over these important issues too.
        Senator Warner. A great short answer. You got me done even
    within my 5-minute time period.
        Back to you, Mr. Chairman.
        The Chairman. Thank you, Senator Warner. Important issue.
        Senator Thune is next, and is he out there in cyberspace?
        Okay, I believe Senator Thune is coming in person, which
    would make Senator Whitehouse next, and he too, I think, is on
    the web.
        Senator Whitehouse. I am here, Mr. Chairman.
        The Chairman. Great.
        Senator Whitehouse. Ambassador Tai, welcome. I am delighted
    that you are here.
        There is a famous description of Senators by the Pulitzer
    Prize-winning author, William S. White: ``A Senator of the
    United States is an ambulance converging point for pressures
    and counter-
    pressures of high, medium, and low purposes.'' And if there is
    anybody who is more of a converging point for such pressures
    and counter-pressures than a U.S. Senator, it is the U.S. Trade
    Representative. And in the midst of all of that, I would like
    to focus a little bit on the marine ocean plastic problem,
    because there is not much of an organized pressure or counter-
    pressure on ocean plastic.
        And the U.S. has had a very unfortunate role recently,
    despite nominal support from President Trump, Secretary Pompeo,
    and Ambassador Lighthizer. We came out of the Nairobi
    conference with press reports saying that the U.S. had not only
    been weak, but it actually tried to weaken proposals that
    everybody else was trying to agree to. In Geneva, we were, I
    guess, unhelpful with regard to the Basel Convention, which we
    are not even a part of.
        So we do not have a great record on this. But there is
    bipartisan support for stronger action here in Congress, and I
    want to recognize Senator Dan Sullivan of Alaska, who has done
    so much good work in this area.
        Our original Save Our Seas bill encourages the Trade
    Representative to consider in our trade agreements the impact
    of land-based waste from countries that contribute most to
    marine debris. That was an encouragement; that was the best we
    could do the first time.
        In our bigger, stronger, better Save Our Seas 2.0 bill, it
    directs the executive branch, including the Trade
    Representative, to lead and coordinate efforts to implement
    U.S. policy on marine debris and support plastic waste
    mitigation; it directs the U.S. representatives to appropriate
    international bodies and conferences to push for plastic waste
    progress; and it directs the President to consider marine
    debris issues when negotiating new international agreements.
    And of course you would be in the middle of that chain, between
    the President and those agreements.
        So I am hoping that you can tell me something good about
    what has happened, how you are staffed up, what is going to be
    done to implement these congressional directives with regard to
    ocean plastic waste, when they could easily fall through the
    cracks of the pressures and counter-pressures you are facing on
    so many other issues.
        Ambassador Tai. Well, I think we do have a good, very good
    story here--and a lot of it leads back to the USMCA--which is,
    as part of the USMCA implementing act and its passage, there
    were supplemental appropriations that were provided. So,
    between enhanced rules on the environment and also the
    appropriations, what we have is an infrastructure that we are
    building out that enhances the integration between USTR and
    partner agencies within the administration to coordinate and to
    work on environmental issues, including marine ocean debris.
        So that is a very good place to start. We have
    environmental attaches who have been deployed in Mexico; we
    have a committee that has been created to enhance our work and
    cooperation here in Washington; and I would say there is room
    for us to build out here. And I would certainly be interested
    in working with you on directions for us to build on how we can
    strategically expand out our focus on this issue.
        Senator Whitehouse. Who is in charge of the ocean plastic
    waste issue in your office?
        Ambassador Tai. Our environmental office leads on this
    issue, and they work closely with NOAA.
        Senator Whitehouse. And who is the person we should be in
    touch with?
        Ambassador Tai. I will have my people send the name to your
    people, if that is okay with you.
        Senator Whitehouse. That is okay; I would have felt better
    if that name was top of mind for you----
        Ambassador Tai. Oh, I am happy to name our staff,
    absolutely, if that is what you would like.
        Jamila Thompson is one of my senior advisers, who leads on
    environmental issues, and she works closely with----
        Senator Whitehouse. She would be the ocean plastic contact?
        Ambassador Tai. Absolutely. Absolutely.
        Senator Whitehouse. Great. All right. Well, I am going to
    keep pressing on this, because I know there are, as I said,
    lots of pressures and counter-pressures on you from a whole
    variety of industries, and the ocean does not have much of a
    voice of its own. So I hope you do not mind if I continue to
    pursue this.
        Ambassador Tai. I look forward to it.
        The Chairman. Thank you, Senator Whitehouse.
        Next is Senator Cortez Masto.
        Senator Cortez Masto. Thank you, Mr. Chairman. And to the
    Ambassador, thank you for being here today. Thanks for all of
    your hard work so far.
        Let me start with an issue--again, you talked a little bit
    about this--the 301s and 232s. I am curious about the exclusion
    process, because I have met just recently, when we were home on
    recess, with a company that is interested in moving to Nevada.
    It is Haas Automation, and they are building a new
    manufacturing facility in Henderson, and they have committed to
    creating 2,000 new jobs for workers in my home State.
        These workers will make machine tools that require cast
    iron components, which, as you well know, there is a limited
    domestic supply for. And so I guess my question to you is--
    based on the conversation that I have heard today around this
    subject--can you reassure the businesses, not just in my home
    State but across the country, that you are working towards a
    viable solution to address the tariffs and reopen a stable and
    responsive exclusion process once again?
        Ambassador Tai. Senator Cortez Masto, I am happy to
    reiterate my commitment to USTR's top-to-bottom China review
    that will have as an important component the review of existing
    tariffs and also the exclusion process. And it will be built
    around a robust engagement process where companies like the
    ones that are talking to you will be able to engage and tell us
    exactly what their concerns are and what their plans are, so
    that we can take them into account as we are conducting our
    review.
        Senator Cortez Masto. Thank you. And then again, will you
    work with Secretary Raimondo in your whole-of-government tariff
    review to address the underlying issues as well that relate to
    232?
        Ambassador Tai. Absolutely. Secretary Raimondo and I speak
    quite often, and the section 232 issue is one area where USTR
    and Commerce have and will continue to work closely together.
        Senator Cortez Masto. Thank you, Ambassador. I know you are
    also familiar with section 201, the solar tariffs. And I
    support the President's effort to bolster the domestic clean
    energy manufacturing, but we do not have the domestic solar
    panel production capacity to meet current demand, and it is
    going to take time, resources, and the same commitment to build
    this capacity.
        I recognize that you have to balance a variety of concerns,
    but can you assure me that, as you deal with the section 201
    solar tariffs, you will take into account the concerns of
    domestic solar stakeholders who deploy the solar projects we
    need to meet our climate and job-creation goals while we ramp
    up our domestic production capabilities?
        Ambassador Tai. Senator Cortez Masto, I appreciate your
    recognition of the balance that we are trying to create to
    ensure that there are reliable sources of domestic supplies,
    but also reliable sources for imports to address the gaps
    between what our domestic supply can produce right now to
    respond to our demand.
        So yes, absolutely. We hear from both sides, both from the
    stakeholder community, but also from members of Congress. So
    absolutely, this is important to get right, and we are
    cognizant of the interests on both sides of this issue.
        Senator Cortez Masto. Thank you.
        And then finally--you mentioned this in your opening
    statement--as Congress and the administration engage in
    revising and renewing trade preference programs, can you
    discuss the importance of prioritizing womens' interests in
    national trade policies?
        Ambassador Tai. Absolutely, Senator Cortez Masto. Women
    make up half of the world's population; I think that maybe the
    statistics are more than half. Economies, in order to realize
    their potential, have to provide for opportunities for their
    women. There is so much potential to unlock, and this is such
    an important area for all of us to work on.
        Senator Cortez Masto. Thank you, Ambassador. Thank you so
    much for joining us today.
        The Chairman. Thank you very much to my colleague from
    Nevada.
        Senator Thune?
        Senator Thune. Thank you, Mr. Chairman. Ambassador, nice to
    have you here; welcome.
        I understand that the question of intellectual property and
    the issue surrounding whether or not that ought to be waived
    with respect to dealing with the coronavirus has been talked
    about at some length already, but I would associate myself with
    the comments, I think, of a number of my colleagues here, that
    that is an issue that we cannot--in my view at least, what we
    need to address is the production capability, manufacturing,
    scaling that up big time here, rather than giving away our IP
    from our pharmaceutical companies and the important work that
    they do, the R&D work that they do to continue to come up with
    solutions to treat these types of pandemics when they come up.
        I wanted to ask you, one of the things I hear repeatedly
    back home--and if you have been asked this already today,
    perhaps I should apologize as well--but the home builders, the
    realtors, everybody in my State is talking about the cost of
    lumber and how that is driving up housing costs in this country
    and really curtailing new construction, just pricing homes in a
    way that is outside the reach of a lot of families in this
    country.
        And one of the issues they consistently raise are the
    tariffs on lumber coming from Canada. Could you speak to that
    issue, and what is being done to address that and the impact
    that those tariffs have on the cost of lumber in this country,
    and ultimately on the cost of housing?
        Ambassador Tai. Certainly. The issue of lumber--I think
    there are probably volumes of books written about the U.S.-
    Canada disagreement over our lumber policies. And what I would
    say is this: that this is an issue that we have worked on for
    it feels like as long as time with Canada. Our trade remedies
    are there to address unfair practices in terms of Canada's
    production and its structure for lumber production.
        We will raise our concerns with Canada, but there are
    obviously needs for us to really be honest about with the
    Canadians in addressing ways of resolving some of these
    concerns.
        So let me center myself a little bit here in terms of
    focusing on your question. The Free Trade Commission, which is
    required to meet within the first year of the USMCA, is meeting
    next week, and I will be raising our concerns with the
    Canadians. But obviously I look forward to continuing this
    conversation with you and the many other members of Congress
    who have raised concerns about this on both sides of the issue.
        Senator Thune. Let me just follow up. What is the
    administration doing to prioritize a new softwood lumber
    agreement between the U.S. and Canada?
        Ambassador Tai. So in order to have an agreement, in order
    to have negotiations, we need to have a partner. And thus far,
    the Canadians have not expressed interest in engaging. So on
    that, I would also welcome your intervention right now in terms
    of raising the profile of how important this is to the United
    States.
        Senator Thune. Well, it is having a tremendous impact on
    the ground, I can tell you that, on the economy out there.
        On agriculture, you have not yet announced--or the
    administration I should say, has not announced a nominee for
    USTR Chief Ag Negotiator. It is an important role when it comes
    to representing our agricultural interests, in particular
    expanding market access for producers, products in trade
    negotiations.
        So I ask you when we can expect to have a nominee for that
    position. And then secondly, TPA expires July 1st, and I think
    when asked in February whether you support TPA renewal, you
    stated in your QFR responses that you would consult closely
    with Congress and work to pursue trade policies that receive
    bipartisan support. All of that is welcome, but we need
    leadership in the administration in order to move TPA forward
    to grow jobs and exports.
        And so, a lot of questions in there, and I am out of time,
    but if you could also address if there is any discussion in the
    administration about rejoining TPP. Because many of us here
    thought that was a good agreement that went a long ways towards
    expanding access into markets in Asia, and were disappointed
    when the previous administration withdrew from it.
        So I know there are several questions in there, but if you
    could speak to those issues, it would be appreciated.
        Ambassador Tai. Senator Thune, let me try to be particular
    and responsive at the same time. Our Chief Ag Negotiator, this
    is a priority for the administration, this is a priority for me
    in terms of wrapping up at USTR, so I hope soon.
        On TPA and TPP--maybe I will take both of them and give you
    a bottom-line response here, which is, my interest in engaging
    with Congress is primarily going to be focused on a version of
    TPA and a version of working with others in the Asia-Pacific
    with shared interests that is going to take the form of
    something that is going to have robust bipartisan support. And
    if there is a way that we can accomplish these that can achieve
    robust bipartisan support, that is the key to what we are
    looking to accomplish in this administration.
        Senator Thune. Thanks.
        The Chairman. I thank my colleague.
        Senator Daines, I believe, is next. Is he out there?
        Senator Daines. Yes. Can you hear me?
        The Chairman. Go ahead.
        Senator Daines. Thank you. Ambassador Tai, thanks for
    coming here today. Congratulations on your new role.
        The importance of expanding access to important markets
    around the world and assuring that our Montana small
    businesses, workers, our farmers, our ranchers are able to
    compete on a level playing field in this global committee,
    frankly cannot be overstated.
        It is also very essential that the U.S. make badly needed
    investments in the research into next-generation technologies,
    protecting IP so that we can run faster, create better jobs,
    and win this race against China to be more competitive and to
    be more innovative.
        As you know, China has been a long serial abuser of IP, and
    the China Phase One trade deal made progress in that space. Our
    focus, I believe, needs to be on fully and aggressively
    enforcing that deal. We need to strengthen and enforce IP
    protections, not weaken or waive them.
        I am very concerned that the recent decision to support
    waiving vaccine IP protections will harm U.S. innovation; it
    will harm our leadership in vaccines; it will provide a
    windfall for adversaries such as China and Russia, as well as
    not necessarily expedite vaccination globally.
        My question is, what kind of message do you think it sends
    to China, when under pressure from foreign competitors and
    international interest groups, we are willing to cave and
    disregard WTO IP commitments?
        Ambassador Tai. Senator Daines, let me say this. In terms
    of the U.S. support for the waiver at the WTO and the U.S.
    support for the waiver proponents, the message that I think it
    sends is that the United States is back to exercise leadership,
    and the United States cares about saving lives.
        And so I hope that is the message that everyone is
    receiving, in particular the waiver's primary proponents, which
    are India and South Africa. And let me just say one word; India
    right now is going through a crisis of unimaginable scale and
    experiencing human tragedy. South Africa is strategically
    situated in Africa to speak up for the fact that Africa as a
    continent does not have vaccine production capacity and will
    need to have that to get through this pandemic and future
    epidemics and pandemics.
        So that really is the focus of the message that is
    motivating me and this administration in supporting the
    beginning of a process at the WTO to respond to a collective
    and humanitarian tragedy that we are all experiencing right
    now.
        Senator Daines. Well, I appreciate that response. I would
    probably respectfully disagree. There is no doubt that we need
    to work as fast as we can to save lives. At the same time, we
    need to protect these IP rights so we continue to foster the
    innovation that allowed these breakthroughs to occur to get
    these effective vaccines out to market as quickly as we did.
        I think we should be prioritizing fighting the pandemic
    internationally by getting more shots in arms in countries who
    need them without transferring this critical technology to
    China and Russia and really undermining our global leadership
    position. It is sending a chilling message for future
    innovation, and I think we could actually accomplish both by
    protecting IP and in accelerating production by working with
    those who have the IP.
        Ambassador Tai, while in the Senate, I have urged both the
    Trump and Biden administrations to reengage in the Trans-
    Pacific Partnership. Senator Thune talked about that a minute
    ago. I led a letter in fact to President Trump then with
    Senators supporting reengaging in the TPP. Given China's
    growing economic and geopolitical influence, it is essential we
    work in a strategic manner with our allies and our partners in
    the region in more of a multilateral approach.
        In your nomination hearing, you referenced that TPP was a,
    quote, ``sound formula,'' but it is a different world than 2015
    or 2016. Notwithstanding any improvements you may view as
    necessary, would you agree that the geopolitical and strategic
    benefits of pursuing a multilateral approach like TPP as a
    counter to China still remain?
        Ambassador Tai. Yes, a multilateral approach working with
    like-minded countries on a shared competitive challenge like
    China, is a sound equation. And I think that, as with all
    things in trade--which I live and breathe--the devil is in the
    details. And my focus will be on formulating trade policy here
    to find a path that has broad bipartisan support that is going
    to be effective and not allow for free ridership on what we put
    together with our partners.
        The Chairman. Thank you, Senator Daines.
        We have a vote on the floor. We are going to have to
    finish, because we have a series of votes, I believe.
        Senator Warren is next.
        Senator Warren. Thank you, Mr. Chairman.
        So COVID-19 has already infected over 156 million people;
    it has killed more than 3 million people globally. It is great
    that companies have developed safe and effective vaccines, but
    we cannot seem to make them quickly enough to stop the global
    spread that threatens all of us. The world needs more vaccine.
        Part of the problem is that the drug companies own the
    recipes even if taxpayers paid for the research. And the drug
    companies are using exclusive intellectual property rules that
    they lobbied for in order to keep others from making more of
    these lifesaving products.
        Ambassador Tai, I was glad to see you announce last week
    that the United States supports waiving some of the
    international intellectual property rules to help end the
    pandemic. But I have some questions about how this waiver is
    going to work.
        I am concerned that your announcement last week committed
    only to negotiating a waiver on IP rights for COVID-19
    vaccines. As you know, testing, treatment, PPE are also vital
    to combating this virus. Drug companies can use patent
    protections to block countries from making their own versions
    of these products as well.
        So, Ambassador Tai, does the administration also support a
    TRIPS waiver for COVID-19-related diagnostics, therapeutics,
    and PPE in addition to a waiver on vaccines?
        Ambassador Tai. Senator Warren, thank you for paying
    attention to that statement, and for your words on framing what
    we are encountering right now as a reality to many of us.
        Let me just say this. We are focused right now on the
    intellectual property waiver at the WTO with respect to
    vaccines. I know your question is broader, but for my efforts
    at the moment, it is a focus on access to vaccines and
    inequality in terms of the access to vaccines----
        Senator Warren. So I am hearing you not rule out that we
    will also focus on waivers for these other products?
        Let me ask the question differently if that helps. Do you
    agree that the U.S. should be doing everything it can to help
    other countries ramp up their testing, treatment, and PPE
    production?
        Ambassador Tai. Sure.
        Senator Warren. We will go there for right now.
        You know, testing, treatment, PPE are critical, and that is
    why India and South Africa asked 7 months ago for the world's
    help to make those items without running a risk that a drug
    company was going to sue them.
        So I believe that the U.S. should be backing these
    countries on this point too and not try to wiggle out of
    helping. Time is also of the essence here; millions of people
    are dying; millions more will die if it takes another 7 months
    to reach any kind of meaningful agreement.
        The special protections for drug companies are an even
    bigger issue than COVID-19 alone. For years the U.S. Government
    has let giant corporations write the rules of our international
    trade system; so it is no surprise that when drug companies
    draft our trade agreements, they include provisions protecting
    pharma monopolies and putting profits ahead of the lives of
    people all around the world.
        We are fighting over a waiver to rules, rules that never
    should have existed in the first place. Ambassador Tai, as you
    negotiate new trade agreements, or as you revisit some outdated
    ones, do you agree that it is time to eliminate provisions that
    drive up drug prices for consumers by strengthening monopoly
    protections for big pharma?
        Ambassador Tai. Senator Warren, thank you so much for the
    question. I am committed to reviewing everything about how we
    have done trade agreements and looking at them through the lens
    of what we have experienced, in particular the negative impacts
    our trade agreements have had, especially on individuals,
    workers, and communities.
        Senator Warren. Well, I am glad that Congress forced the
    previous administration to strike a part of the USMCA that
    never should have been drafted, but I think it is time now for
    our trade negotiators to take leadership and actively set rules
    that lower drug costs for American families instead of focusing
    on boosting profits for drug companies.
        Drug companies are kicking and screaming about this waiver
    over the COVID vaccine because they are worried that the
    Federal Government may finally have the spine to lower drug
    prices through global trade agreements and here at home.
        So the U.S. Trade Rep's commitment on the waiver is a good
    first step, but I am very much expecting you, Ambassador Tai,
    to follow through at the negotiating table.
        I have also urged President Biden to take executive action
    to lower drug prices for tens of millions of American families
    by allowing the generic production of products like insulin and
    EpiPens. I am glad that the drug companies are worried that
    their enormous profits may shrink. I am going to keep pushing
    the administration to take more steps to put patients ahead of
    drug company profits.
        Thank you for being here today, Ambassador Tai.
        And thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Warren.
        We are going to get Senator Hassan in, and then we are
    going to have to run and vote.
        Senator Hassan. Well, thank you so much, Mr. Chair and
    Ranking Member Crapo, for this hearing. And, Ambassador Tai,
    welcome and thank you. You have put in a very long morning, and
    I greatly appreciate it.
        The President's ongoing strategic review of critical supply
    chains is a necessary step to strengthening our economic
    security and out-competing China. Another important step would
    be passing the bipartisan Endless Frontier Act, legislation led
    by Senators Schumer and Young, which I cosponsored. And it
    would invest in U.S. leadership in science and technology
    innovation.
        Ambassador Tai, what role has USTR played in the
    President's supply chain review, and how does USTR plan to use
    trade policy to promote our leadership and competitiveness in
    advanced technology?
        Ambassador Tai. Senator Hassan, USTR is doing our part to
    support and participate in, and bring our expertise to the
    ongoing critical supply chain review, and we will continue to
    do so.
        In terms of what we can do with our trade policy, I think
    it really is about reexamining the trade policies that we have
    pursued and thinking about how we devise a different approach
    to trade policy that does not simply prioritize the lowest cost
    and the lowest levels of protection so that we are creating
    supply chains that are going to be driving a race to the top,
    but that are also going to be resilient and have in mind that
    crises happen, and that our supply chains need to be strong and
    reliable.
        Senator Hassan. Thank you. I am working on a bipartisan
    basis to promote domestic R&D, including through bipartisan tax
    legislation with Senators Young, Cortez Masto, Portman, and
    Sasse.
        Because, again to the point you just made, promoting R&D
    investment in the U.S. is key to out-competing China. The
    Chinese Government uses trade restrictions, tax incentives,
    direct subsidies, and other policies to try to drive R&D
    investments into China.
        Ambassador Tai, how does USTR plan to use trade policy and
    coordinate with other agencies to help promote domestic R&D?
        Ambassador Tai. Well, I think there are two ways. One is to
    continue to push for leveling of the playing field, calling out
    and holding others to account when we see practices and
    measures that are inconsistent with the norms and rules that
    have been set out there.
        The other is to really support and to reimagine trade
    policy as supporting our domestic investment policies, as
    opposed to undermining them. That is going to be so critical,
    and I would just add that it is not just the R&D; the R&D is
    critical to our competitiveness, and that is absolutely the
    right area to focus on.
        But we should also focus on that chain that translates R&D
    into production, into manufacturing. As we have seen, without
    that ability to produce the scalability, the ability to pivot,
    we remain really vulnerable.
        So I would just say that USTR stands ready to work with you
    and your colleagues on the R&D and investment pieces, and also
    the pieces to build out the supply chain.
        Senator Hassan. Thank you.
        Last question, because I would like to have follow-up on an
    issue we discussed at your confirmation hearing regarding the
    small business chapter of the bipartisan U.S.-Mexico-Canada
    agreement.
        In addition to cutting red tape for small exporters, the
    agreement created a committee to give small businesses a voice
    in shaping our trade policy. In implementing the USMCA,
    including the provisions cutting red tape for small businesses,
    how has USTR coordinated with this committee and the small
    business community generally?
        Ambassador Tai. Well, Senator Hassan, I have started
    conversations with Small Business Administrator Guzman about
    partnering on the USMCA, and we have the great fortune that she
    has background in this area, and brings with her to her job an
    understanding of where the synergies are between the SBA and
    USTR.
        With respect to working with this committee, my door is
    open. I am so excited about working with you, your colleagues
    on this committee, on the Small Business Committee here, to
    really capitalize on the opportunities that we have in the
    USMCA.
        Senator Hassan. Well, I thank you for that, and I
    specifically look forward to working with you to bolster the
    committees that the USMCA created, to really make sure the
    voices of small businesses are heard. So I look forward to
    that.
        Thank you, Mr. Chair.
        The Chairman. I thank my colleague, and particularly for
    closing with the emphasis on small business.
        Ambassador, it has been a long morning, and with you, they
    are always productive sessions. We thank you, and let me just
    give a couple of quick thoughts.
        First, I think it was clear--you heard from Senator Crapo,
    you heard from myself, you heard from Democrats and Republicans
    on the Senate Finance Committee--that we are laser-focused on
    this proposition of being able to out-compete China. We
    understand this is the economic challenge of our time, and for
    me, priority one is to stop China from feasting on the
    weaknesses of the global trading system. And in various ways,
    my colleagues made essentially that kind of point.
        And what it really comes down to, and I think you recognize
    this, is that this is going to take more than vague calls for
    reform. This is going to take decisive action in two areas:
    one, the question of enforcement, and we are pleased--Senator
    Brown and I have both discussed it today--that you all came out
    of the gate so quickly on enforcing USMCA under the law that we
    authored.
        And second, modernizing those trade laws that are simply
    outdated. We need to have modern policies, we need to have
    modern policies in our trade toolbox, and at the end of the day
    it comes down to something you and I talked about in our first
    conversation, and that is to get more workers in that winner's
    circle.
        So I think this has been a productive morning. We look
    forward to working with you; and as I and a number of Senators
    indicated, you let us know what we need to do to modernize
    those trade tools, update those trade tools. We will be working
    with you, and I think you saw evidence of strong bipartisan
    interest in that.
        Colleagues, for those who are still following this, and
    staff of course, questions for the record are due Monday, May
    17th. And with that, the Finance Committee is adjourned.
        [Whereupon, at 12:15 p.m., the hearing was concluded.]

                                A P P E N D I X

                  Additional Material Submitted for the Record

                                  ----------

                    Prepared Statement of Hon. Mike Crapo,
                           a U.S. Senator From Idaho
        The President's 2021 trade policy agenda opens with two objectives:
    ``[1] ending the COVID-19 pandemic and [2] strengthening the economy. .
    . .'' Significant progress is being made on the first, with record
    vaccine development thanks to Operation Warp Speed and continued
    efforts by the Biden administration to get shots in arms.
    Unfortunately, with regard to the second objective, the progress is
    disappointing.

        Last month, the United States added only 266,000 jobs--far less
    than the 1 million that most economists expected. President Biden's
    response is that ``we have a long way to go.'' Yes, we do. In fact,
    more Americans are out of work at the moment than during the worst
    point of the Great Recession.

        Of course, Americans have crossed unimaginable distances before--
    and they will do so again. But why counsel Americans to be patient?
    It's not in their nature. What we need to do, right now, is to speed up
    the journey for everyone by fully reopening the economy, and executing
    an ambitious and sound trade policy.

        According to President Biden's trade agenda, exports facilitate
    greater productivity and wages. In fact, President Obama's White House
    determined that every billion dollars in increased annual exports
    supports between 5,300 and 7,300 jobs. If the Biden administration
    wants a worker-centered trade policy, then the logical--and only
    sensible--course is to adopt a trade policy that creates as many high-
    paying jobs as possible. That kind of successful trade policy requires
    at least three components.

        First, enforcement must be a priority. The trade agenda notes there
    will be comprehensive enforcement of the labor and environmental
    obligations in our free trade agreements. I support that, because
    America's businesses, workers, and farmers need to compete on a level
    playing field. We can do that--and also stand up for them by
    challenging other market access barriers at the same time. Enforcement
    in these areas is complementary, not exclusive.

        Make no mistake, there is a great deal to enforce. For example, the
    United States-Mexico-Canada Agreement (USMCA) contains groundbreaking
    market access commitments. These commitments are particularly important
    to our farmers, who have faced a decline in demand from restaurants,
    school systems, and hotel customers. We must make sure American farmers
    get the access to our trading partners to which they are entitled. But
    the story on enforcement must become better.

        An important U.S. tariff-rate quotas case against Canada remains
    stalled in the USMCA process. It is time to see progress on it, or the
    United States must proceed with a dispute settlement panel so that
    American farmers, ranchers, and businesses can enjoy the benefits they
    bargained for under the agreement. Mexico is adopting a host of
    measures that undermine our agricultural rights, including restrictions
    on biotech crops, glyphosate, and unreasonable food packaging labels.

        Ambassador Tai, I encourage you to press for action on these
    barriers at the meeting of the USMCA Free Trade Commission later this
    month. If our partners should refuse, you must use the enforcement
    tools at your disposal.

        The second component of an effective trade policy is negotiating
    new rules and market access opportunities. To that end, I support the
    Biden administration's call to work with allies. Yet, the President's
    trade agenda is silent on whether we will continue to negotiate with
    the United Kingdom and Kenya.

        I encourage you to work with the United Kingdom--one of the United
    States' oldest allies--and with Kenya, which can serve as a replicable
    model for future trade deals in a country where China has failed to get
    an FTA, and that will also establish our commitment to the people of
    Africa.

        Furthermore, we must deepen our engagement in the Asia-Pacific, or
    risk losing U.S. allies there to China's predations. While I understand
    you believe the Trans-Pacific Partnership (TPP) may have become dated,
    I see value in an agreement with new disciplines, including on digital
    trade. However, that means we must start thinking about how to
    modernize TPP, or what other structures we can use for U.S. engagement
    in the Asia-Pacific. We cannot simply take a ``time-out'' from the
    region.

        Last month, Japan ratified the Regional Comprehensive Economic
    Partnership (RCEP)--which is China's model for what trading
    relationships in the region should look like. In the absence of U.S.
    leadership in the region, our allies will have to look elsewhere. If
    the United States is to pursue a worker-centered trade policy, we need
    to be mindful that American workers lose when China writes the rules.

        The final--but most important--component of a successful trade
    policy is consultation. The Supreme Court noted 60 years ago that the
    President is strongest when he acts pursuant to an authorization of
    Congress--and is potentially powerless when he acts in defiance. The
    administration must be strong when it comes to trade policy, and that
    requires a close partnership between Congress and the U.S. Trade
    Representative.

        We recently had a test of that partnership: the administration's
    decision to support a waiver to the intellectual property protections
    in the WTO TRIPS Agreement. The WTO TRIPS Agreement was approved by
    Congress. The law says Congress's approval can only be withdrawn ``if,
    and only if'' Congress enacts a joint resolution to that effect. Last
    summer, during the height of the pandemic, both Houses of Congress
    declined to act on such a resolution. Yet, without any consultation
    with this committee, you announced via a tweet that the administration
    unilaterally supports waiving the patent obligations of the TRIPS
    Agreement.

        Chancellor Merkel of Germany asserts the problem with vaccine
    distribution is not patents, but manufacturing capacity and production
    standards. Albert Bourla, the CEO of Pfizer, said the decision will
    ``categorically'' create more problems for vaccine distribution. He
    added that it will ``disincentivize anyone else in the future from
    taking a big risk'' like Pfizer did, laying the groundwork for the
    classic moral hazard problem. Iconic American innovators, like Bill
    Gates, have also said the decision will not advance vaccine
    distribution.

        In short, these observers assert a TRIPS waiver will undermine the
    very objective I said the administration was making progress on: ending
    the pandemic. Conversely, Vladimir Putin, in fact, supports your
    decision to pursue a waiver. Neither did it surprise me that a bureau
    chief for one of China's propaganda outlets replied to your tweet by
    asserting that ``global pressure works.''

        You may, of course, have your own good reasons. But to date, you
    have not offered an adequate explanation. You will hear more on this
    subject from me and my colleagues.

        Ambassador Tai, I know that you like the expression that ``USTR can
    walk, chew gum, and play chess at the same time.'' But what we need is
    a USTR that can enforce, negotiate, and consult at the same time. The
    American people--and members of Congress, including myself--are
    counting on you to prove that is the case.

                                     ______

       Prepared Statement of Hon. Katherine C. Tai, United States Trade
               Representative, Executive Office of the President
        Thank you, Chairman Wyden, Ranking Member Crapo, and members of the
    committee, for inviting me here today to testify on the President's
    trade agenda.

        Our worker-centric trade policy is a key part of the Biden-Harris
    administration's effort to Build Back Better. We are making real
    strides towards ending the pandemic. There are pockets of progress and
    hope. But we still have a lot of work ahead.

        I want to thank Congress for passing the American Rescue Plan,
    which has already helped get shots in arms and money in the pockets of
    millions of Americans. We're seeing the economic benefits of that quick
    action here in the United States. We're on track for a full economic
    recovery, though more needs to be done.

        The American Jobs Plan and the American Families Plan would combine
    to make the United States a healthier, safer, more prosperous, fairer,
    and more competitive nation. They would make bold investments that
    build a better foundation for decades of economic growth.

        We know these extraordinary times demand extraordinary leadership
    and creativity to find solutions that can defeat COVID-19. The
    announcement last week that the United States will not let intellectual
    property rights get in the way of saving lives is just one part of the
    administration's global effort. We will pursue text-based negotiations
    at the WTO, which may take time. But I am encouraged that other
    countries have already announced that they will roll up their sleeves
    and join us.

        We will also continue to ramp up our efforts--working with the
    private sector and all possible partners--to expand vaccine
    manufacturing and distribution around the world, including access to
    the raw materials needed to produce those vaccines. This comprehensive
    effort will not only save lives, but also help heal the economy. And as
    we reengage the world, our trading partners, and international
    institutions from a position of strength, support from Congress gives
    us more authority and opportunity to deliver results for the American
    people.

        We want a fair international trading system that promotes inclusive
    growth and reflects America's universal values. Trade policy must
    respect the dignity of work and value Americans as workers and wage-
    earners. For too long, we have overlooked the effect of our trade
    policies on individual workers, who are human beings, living in a
    community trying to survive and thrive. The worker-centered trade
    policy outlined in the President's trade agenda builds on progress made
    in the USMCA. Our goal is to foster broad-based, equitable growth,
    increase innovation, and give workers a seat at the table.

        The transparency principles I announced last week reflect the
    administration's commitment to comprehensive public involvement in
    developing trade policy. The principles, along with the appointment of
    our Chief Transparency Officer, are just the starting point.

        For the first time, the President's trade agenda included the goal
    of racial equity. Our thoughtful, sustained engagement with new--and
    all too frequently silenced--voices will give the Biden-Harris
    administration a better understanding of how our proposed policies
    affect all communities. And we will consider those effects on people of
    color, minority-owned businesses, and aspirational entrepreneurs before
    making policy decisions.

        Trade policy must also help protect the environment and fight
    climate change. For too long, we've seen a race to the bottom that
    suppressed environmental protection to attract investment. We can use
    trade tools to incentivize a race to the top and build a cleaner and
    brighter future, with new market opportunities and high-paying, quality
    jobs. And by encouraging fresh, collaborative thinking, we can forge
    consensus among diverse groups and find solutions that we never knew
    existed.

        Our farmers, ranchers, fishers, and food processors will benefit
    from our new approach, and they are essential to meeting our climate
    and sustainability goals. We are turning the page on erratic trade
    policies. USTR's goal is to pursue smarter policies that expand global
    market opportunities while enforcing global trade standards and
    ensuring that trading partners live up to their commitments.

        Sustained, American leadership and reengagement with our allies,
    trading partners, and economic competitors will be key. The Leaders'
    Climate Summit in April showed that we can rally the world to tackle
    big challenges. In the early meetings with my counterparts, I have
    stressed that the United States will be a constructive partner, and we
    welcome the frank and open dialogue.

        We will work with the World Trade Organization's new Director-
    General, Dr. Ngozi Okonjo-Iweala, and like-minded countries to reform
    the WTO's rules and procedures so it can be a relevant force for good
    in the 21st-century global economy.

        We are also working with the European Union and the United Kingdom
    to resolve the ongoing Boeing/Airbus dispute and are having
    constructive discussions to address the real problem of overcapacity in
    the steel and aluminum sectors coming primarily from China. These talks
    will take time, but I believe a resolution is possible and worth
    pursuing.

        Those two issues underscore the importance of our ongoing
    comprehensive efforts to address trade frictions with our allies and
    strategic partners so that we can turn to focusing on the challenges
    facing us today and tomorrow. We will not hesitate to call out China's
    coercive and unfair trade practices that harm American workers,
    undermine the multilateral system, or violate basic human rights. We
    are working towards a strong, strategic approach to our trade and
    economic relationship with China.

        We welcome the competition. But the competition must be fair, and
    if China cannot or will not adapt to international rules and norms, we
    must be bold and creative in taking steps to level the playing field
    and enhance our own capabilities and partnerships. I've been encouraged
    that our trading partners also recognize this challenge, and they are
    willing to find a common approach to our shared concerns. Our security
    will depend on diversifying and securing the supply lines for products.
    Improving our trade relations with trusted allies and partners will not
    only improve our prosperity but our national security.

        Closer to home, we are using every tool available to make sure our
    existing agreements work and have a positive impact on real people. The
    United States-Mexico-Canada Agreement gives me confidence that this
    approach is worthwhile. We must invest and commit to the agreement's
    full and successful implementation. USMCA is a starting point for
    future efforts in the region that explicitly acknowledges climate
    change, aggressively addresses global forced labor issues, and expands
    the benefits of trade to women and historically underserved
    communities.

        I will enforce the new standards, follow through on our
    commitments, and use the agreement to ensure that Canada and Mexico do
    too. The updated agreement now includes the most comprehensive,
    enforceable labor and environmental standards of any U.S. trade
    agreement--and, I would argue, any trade agreement. And this week,
    you've seen that we're committed to using the tools.

        The innovative rapid response mechanism will allow us to address
    longstanding labor issues in Mexico. Today I am proud to announce the
    inaugural use of this mechanism in our request that Mexico review
    whether workers at a General Motors facility in Silao, located in the
    State of Guanajuato, are being denied the right of free association and
    collective bargaining.

        I commend the Government of Mexico for stepping in when it became
    aware of voting irregularities earlier this year. I am proud to partner
    on this shared goal of helping both Mexican and American workers
    prevent a race to the bottom. This use of the rapid response mechanism
    demonstrates that we will act when workers in certain facilities are
    denied their rights under laws necessary to fulfill Mexico's labor
    obligations.

        As you can see, we have our work cut out for us. But I'm confident
    that we can walk, chew gum, and play chess at the same time. The
    professional and dedicated public servants at USTR are working hard to
    implement the President's trade agenda. And I am proud to carry the
    strength and creativity of our small, but mighty agency into the room
    today.

        Thank you for your time, and I look forward to your questions.

                                     ______

          Questions Submitted for the Record to Hon. Katherine C. Tai
                     Questions Submitted by Hon. Ron Wyden
        Question. The U.S.-China Phase One agreement has now been in place
    for over a year, and the results are mixed. In addition to a number of
    commitments on intellectual property rights, trade in agricultural
    goods, and services, the deal obligated China to buy $468 billion of
    U.S. products and services over 2 years. Unfortunately, China's
    purchases in 2020 fell below its commitments and, in many sectors, were
    well below 2017 trade levels. At the same time, while China appears to
    have improved certain intellectual property practices, it continues to
    engage in unfair trade practices and distort global markets through
    forced technology transfer, state-
    directed investment in sensitive technology, and large-scale industrial
    subsidies. Under the Phase One agreement, USTR has a schedule of
    meetings with its Chinese counterparts to gauge compliance with the
    agreement.

        In addition to these regular meetings, what is USTR doing to ensure
    compliance with the written obligations made by China in the Phase One
    agreement?

        Answer. The U.S.-China Economic and Trade Agreement (i.e., Phase
    One agreement) is the agreement that we have, and this is the agreement
    that needs to stand up as we engage with China across the board in our
    trade and economic relationship. We will continue to make use of and
    push the existing tools that we have for the benefit of U.S. workers,
    farmers, ranchers, manufacturers, service suppliers, and small
    businesses. Under the Phase One agreement, the primary mechanism for
    reviewing China's implementation progress involves monthly meetings of
    the two sides' ``designated officials.'' We continue to hold these
    meetings and supplement them with various technical-level engagements.

        In addition, on May 26, 2021, I held an introductory call with Vice
    Premier Liu He, my counterpart under the Phase One agreement. In that
    call, I raised issues of concern and explained that USTR's review of
    the U.S.-China trade relationship is ongoing.

        Question. The Phase One agreement was named ``Phase One'' because
    it reportedly anticipated the further work to be done with China in
    addressing forced technology transfer, intellectual property theft, and
    other anti-competitive trade practices. Moreover, the section 301
    tariffs, which were intended to create leverage to encourage China to
    address these issues, are still in place.

        What is USTR doing to get China back to the negotiating table? Are
    you planning to engage further on the issues underlying the section 301
    investigation--forced technology transfer and intellectual property
    rights violations--in a meaningful way?

        Answer. The administration is currently engaged in a comprehensive
    and coordinated review of U.S. strategy for addressing the many
    challenges that China poses, both for the United States and the world.
    USTR is actively participating in the development of this strategy,
    which will encompass all policy areas, including trade policy.

        With regard to the administration's trade policy toward China, USTR
    is currently conducting a top-to-bottom review of the U.S.-China trade
    relationship, with a view toward ensuring that our trade policy
    supports and complements the administration's broader China strategy. A
    key focus of this effort is on China's non-market and unfair policies
    and practices that are inadequately disciplined by the WTO or the Phase
    One agreement, such as industrial subsidies, excess capacity, forced
    technology transfer, and state-owned enterprises. The results of this
    review, as well as our ongoing engagement with allies and like-minded
    partners, with whom we share values and interests, will inform our
    thinking of how we proceed.

        Question. The Phase One agreement states in Article 7.4 that
    ``[t]he Appeal and any information and matters related to it are
    confidential and shall not be shared beyond the Bilateral Evaluation
    and Dispute Resolution Office, absent the agreement of the Parties.''
    Article 7.4 appears to prevent the existence of an ``Appeal and any
    information and matter related to the Appeal'' to be disclosed beyond
    the dispute resolution office without China's consent.

        Is China's permission required for USTR to share information with
    members of this committee regarding an appeal under the Phase One
    agreement? Will you commit to consult with Congress regarding any
    dispute or appeal under the Phase One agreement?

        Answer. USTR is committed to remain open and transparent with
    members on all relevant information related to the enforcement of the
    Phase One agreement.

        Question. The United States must ensure that its trade agreements,
    including the United States-Mexico-Canada Agreement (USMCA), are fully
    enforced. To this day, Canada has not come into compliance on dairy
    tariff rate quota (TRQ) obligations, and Mexico is lagging on
    implementation of its labor laws. Additionally, the list of trade
    issues between our three countries is growing, rather than contracting,
    as problematic new laws and regulations on everything from products of
    biotechnology to electricity are introduced. It is critical that we
    ensure the USMCA is more than a piece of paper. It must be the bedrock
    of our trading relationship with Mexico and Canada, and the foundation
    on which we make our economy work for American workers, farmers, and
    businesses.

        What do you anticipate happening over the next 6 to 12 months in
    terms of implementation and enforcement of USMCA? In particular, how
    does USTR expect to keep the pressure on Mexico and Canada to ensure
    the agreement is fully implemented--as it should have been July 1,
    2020, prior to entry into force?

        Answer. Full implementation of the USMCA, including the labor and
    environment provisions, is a top priority for the Biden-Harris
    administration. I stressed this with my Mexican and Canadian
    counterparts during the first USMCA FTC meeting last month. On the eve
    of the FTC meeting, I raised with Secretary Clouthier the importance of
    an energy policy that respects U.S. investment and is consistent with
    efforts to tackle climate change and an immediate resumption of
    authorizations of agricultural biotechnology products, among other
    concerning issues.

        Regarding Canada's dairy TRQs, on May 25, 2021, the United States
    requested and established a dispute settlement panel under the USMCA to
    review allocation measures that undermine the value of these TRQs by
    limiting access to in-quota quantities negotiated under the USMCA. USTR
    will continue to engage on these issues and we have committed to hold a
    deputies' meeting before the end of this year.

        For additional questions on the state of section 232 tariffs on
    steel and aluminum, I would refer you to the Department of Commerce,
    which has the statutory lead on section 232.

        Question. On June 15, 2020, prior to entry into force, Canada
    issued new regulations describing its updated tariff rate quota (TRQ)
    administration for dairy products under the USMCA. The TRQ regulations
    specify that large portions of the TRQs will be allocated to Canadian
    ``processors'' who produce competing products and have a vested
    interest in limiting imports of competitive products. American
    producers of award-winning Oregon cheese and other dairy products have
    expressed concerns that Canada distributed the TRQs in a way that
    discourages certain American products from entering the Canadian
    market.

        With regard to Canada's implementation of the dairy TRQs, do you
    anticipate a change of approach in Canada's TRQ licensing? If Canada
    does not agree to reform its approach to handling USMCA dairy TRQs,
    will you continue with the dispute started under the previous
    administration? If not, how do you intend to enforce these obligations
    under the USMCA?

        Answer. On December 9, 2020, USTR requested USMCA consultations
    with Canada regarding its dairy TRQ allocation measures and the parties
    held consultations on December 21, 2020. However, Canada did not
    indicate any willingness in the consultations to address U.S. concerns.
    As a result, on May 25, 2021, USTR requested and established a dispute
    settlement panel under the USMCA to review Canada's dairy TRQ measures.
    A top priority for the Biden-Harris administration is fully enforcing
    the USMCA and ensuring that it benefits American workers. Launching the
    first panel request under the agreement will ensure our dairy industry
    and its workers can seize new opportunities under the USMCA to market
    and sell U.S. products to Canadian consumers.

        Question. I have been pleased to see both the filing of petitions
    and the self-
    initiation of a case under the Brown-Wyden rapid response mechanism.
    These represent an important test of this critical enforcement
    mechanism, which will provide timely relief to workers in Mexico and
    raise the standards for workers throughout North America.

        In addition to using the rapid response mechanism, what is USTR
    doing to ensure Mexico's labor laws as written and as enforced meet the
    standard set by the USMCA?

        Answer. USTR has taken and continues to take many relevant steps.
    We are engaging with the Government of Mexico on a regular basis to
    support Mexico's efforts to implement the reforms required by the
    agreement. USTR hosted the first Free Trade Commission meeting under
    the USMCA on May 18th. At the end of June, USTR, in coordination with
    the Department of Labor, plans to hold the first Labor Council meeting
    under the USMCA, which will include a public session. USTR routinely
    consults with interested stakeholders, including members of the Labor
    Advisory Committee for Trade Policy and Negotiation, to support our
    monitoring efforts and to help ensure Mexico's laws are enforced on the
    ground. We have considered the information and recommendations included
    in the interim report of the Independent Mexico Labor Expert Board and
    have taken steps in response to the report's recommendations. In
    addition, the Department of Labor has launched several significant
    technical assistance projects to support the Government of Mexico in
    its labor reform and enforcement efforts and to strengthen workers'
    ability to exercise their labor rights. USTR collaborates closely with
    the Department of Labor. USTR also has identified and posted to Mexico
    City an official to serve as Senior Trade Representative, and the
    Department of Labor has hired four labor attaches, two of whom have
    already been posted in Mexico City. The Senior Trade Representative and
    the labor attaches engage with the Government of Mexico and civil
    society in Mexico on an ongoing basis on labor matters.

        Question. A consistent theme from this administration has been the
    need to work closely with our allies to counteract China's trade
    cheating. The European Union has long been both an ally and a source of
    serious ``trade irritants.'' For this reason, I was pleased to see that
    the Biden administration has reinvigorated the negotiations with the
    European Union to settle the longstanding Boeing/Airbus dispute and
    provided a pause on tariffs.

        What concrete action are you taking to engage with your European
    counterparts to ensure a meaningful and timely conclusion to this
    dispute? And ultimately, what would a positive outcome look like?

        Answer. Our negotiations with the EU and the UK have resulted in
    agreement to move past the 16-year WTO dispute regarding aircraft
    subsidies. We have agreed to suspend tariffs related to the dispute for
    5 years, while retaining flexibility for the United States to reapply
    tariffs if we're no longer competing on a level playing field. We, the
    EU, and the UK have also adopted clear statements on acceptable support
    for large civil aircraft producers and a cooperative process to address
    support between the parties and overcome longstanding differences.

        With respect to China, we pledged to:

            Meaningful cooperation on countering (1) investments in the
    aircraft sector by non-market actors in our economies to acquire
    technology and know-how; and (2) outward investments that involve
    moving production into China pursuant to non-market forces.
            Identifying where joint work is needed to take parallel action
    against other non-market practices.
            Sharing information regarding these and other areas in the
    large civil aircraft sector.

        Question. The EU has also announced that it will suspend its tariff
    hike on U.S. products, which was in retaliation for the U.S. section
    232 tariffs on steel and aluminum. The U.S. announcement highlighted
    the need to address global steel and aluminum excess capacity, as a
    means of preserving these critical industries.

        What concrete actions can the EU and the United States take in
    concert to address global overcapacity?

        Answer. With respect to the section 232 tariffs on steel and
    aluminum, we have a very significant problem in the global steel and
    aluminum markets that is driven primarily by overcapacity in China and
    other countries, particularly in Southeast Asia and the Middle East.
    The administration is working to address the market distorting measures
    in economies that have led to overcapacity in the global steel and
    aluminum industries and the resulting national security threats.

        In addition to the thorough review of the section 232 measures and
    product and country exclusions that is currently underway, the
    administration is also consulting closely with domestic stakeholders
    and partners around the world that share similar national security
    interests. We seek to address market distorting measures that pose a
    serious threat to the U.S. steel and aluminum industries and the
    workers in those industries. On May 17, 2021, the United States and the
    European Union (EU) announced the start of discussions to address
    global steel and aluminum excess capacity and the market distortions
    that result from this excess capacity, and we will be engaging
    intensively with the EU in the coming weeks. The administration is
    committed to working with the EU and other like-minded partners to
    address excess capacity, ensure the long-term viability of our steel
    and aluminum industries, and strengthen our democratic alliance.

        For additional questions on the state of section 232 tariffs on
    steel and aluminum, I would refer you to the Department of Commerce,
    which has the statutory lead on section 232.

        Question. I put out a report in 2009 highlighting the opportunities
    and challenges for U.S. exports of environmental goods, which have only
    become more prominent over the last 10 years. You have spoken about the
    development of innovative environmental technologies, goods, and
    services, as well as the need to cultivate strategic international
    supply chains. Reducing greenhouse gases and turning the tide on
    climate change is a key priority for the Biden administration; it is
    also an opportunity for U.S. innovators, manufacturers, and workers who
    make the technology the world so desperately needs.

        What are you and your team currently doing to facilitate trade in
    environmental goods? For instance, are you considering revamping the
    list of what is considered an environmental good?

        Answer. Facilitating trade in particular environmental goods and
    technologies is a key component to address climate change and the
    transition to a low-emissions future. USTR is actively engaged in
    regional and multilateral discussions regarding issues pertaining to
    trade in environmental goods. We continue to examine how we can
    leverage U.S. companies' innovation and domestic production of
    environmental goods to benefit U.S. jobs and increase exports. This may
    include updating lists of what is considered an environmental good, to
    ensure our objectives for achieving a net zero economy no later than
    2050 are consistent with pursuit of trade facilitation of such goods
    and technologies.

        Question. The COVID-19 pandemic has put significant pressure on
    U.S. supply chains for products well beyond personal protective
    equipment and medicines. A sudden shift in lifestyle meant products
    from office chairs to outdoor furniture have seen booms, while other
    goods and services have flatlined. Adding to this distortion are delays
    at ports and shortages of containers caused by the pandemic. One item
    that has received a lot of attention lately is the high price of
    lumber, but other products used in home construction like fixture and
    building materials are also subject to higher prices because of the
    section 301 or section 232 tariffs.

        What are USTR and the Biden administration doing to address the
    high price of certain goods attributable to these supply and demand
    shocks in the United States?

        Answer. Recognizing the supply chain vulnerabilities exposed by the
    COVID-19 pandemic and the resulting economic dislocations, President
    Biden signed Executive Order (E.O.) 14017, ``America's Supply Chains,''
    in which he directed the U.S. Government to undertake a comprehensive
    review of critical U.S. supply chains to identify risks, address
    vulnerabilities and develop a strategy to promote resilience. The first
    of the reports in response to this E.O. was released on June 8th and
    focuses on four critical products: semiconductor manufacturing and
    advanced packaging; large capacity batteries; critical minerals and
    materials; and pharmaceuticals and active pharmaceutical ingredients.
    It also recommends the creation of a Supply Chains Disruptions Task
    Force that will examine how to alleviate bottlenecks and supply
    constraints as the economy recovers.

        I am also closely watching the historic movement in lumber prices.
    The United States is open to resolving our differences with Canada over
    softwood lumber, but it would require addressing Canadian policies that
    create an uneven playing field for the U.S. industry. Unfortunately, to
    date, Canada has not been willing to address these concerns adequately.

        In addition, I have committed to doing a top-to-bottom review of
    our China trade policy, with the goal of making our trade policies more
    effective and more strategic. As part of that review, we are looking at
    the China 301 tariffs and the exclusions process. Our plan to re-
    examine the tariffs provides us with important opportunities to craft
    thoughtful and effective responses to China's unfair trade practices.

        For additional questions on the state of section 232 tariffs on
    steel and aluminum, including the 232 exclusion process, I would refer
    you to the Department of Commerce, which has the statutory lead on
    section 232.

        Question. The United States is a global leader in innovation and
    digital trade. However, the United States is facing increased digital
    protectionism around the world, including barriers to digital trade
    that modern U.S. trade provisions were designed to prevent.

        How is USTR prioritizing digital trade in its broader agenda, and
    what steps do you intend to take to counter protectionist trends in
    digital policy, especially in the markets of some of the United States'
    largest trading partners?

        Answer. The administration recognizes the importance of the digital
    economy to American jobs, prosperity and security, as well as U.S.
    companies' unique competitive advantages in this area. For example,
    every year in the last 15 years, the United States achieved a
    substantial surplus for trade in ICT-enabled and potentially ICT-
    enabled services, with that trade surplus exceeding $100 billion
    annually in each of the last 6 years. Trade rules must work to maintain
    and advance U.S. strengths in digital trade. USTR will use a wide range
    of trade tools to address discriminatory practices that hinder U.S.
    workers and firms, including practices that discriminate against U.S.
    digital and technology exports.

        Question. The WTO has been trying to conclude the fisheries
    subsidies negotiations for over a year. I am pleased to see the vigor
    with which the negotiations have been pursued, both because they can
    demonstrate the utility of the WTO's negotiating function and because
    of the critical topic this negotiation covers.

        What is the United States doing to push these negotiations toward
    an ambitious outcome that applies to countries across the board? What
    is the likelihood of coming to an agreement before the rescheduled WTO
    ministerial meeting?

        Answer. The United States has continued to play a leadership role
    in the WTO fisheries subsidies negotiations, seeking a meaningful
    outcome that both effectively disciplines harmful subsidies in order to
    protect our oceans and fisheries resources, and supports our fishers
    and workers. The United States recently submitted a proposal calling
    attention to the use of forced labor on fishing vessels. The proposal
    urges WTO members to pursue an approach in the negotiations that would
    contribute to efforts to address this global problem, including by
    agreeing to effective disciplines on harmful subsidies to fishing
    activities associated with the use of forced labor. The United States
    will continue to engage constructively with other WTO members to
    achieve a meaningful outcome. However, if we are to successfully
    conclude the negotiations by the 12th Ministerial Conference, members
    will need to put aside calls for exclusions and flexibilities, and
    focus on agreeing to disciplines that actually improve the status quo
    and have a positive impact not just on the sustainability of fisheries
    resources but on the lives of fishers and workers.

                                     ______

                     Questions Submitted by Hon. Mike Crapo
        Question. Congress granted China and Russia permanent normal
    trading relations as part of their accession to the WTO in significant
    part because of the commitment made by prior administrations that this
    would allow us to hold China and Russia accountable to WTO rules.
    Particularly important for many members was the ability to hold China
    and Russia to the WTO TRIPs Agreement, given their penchant for
    disregarding U.S. intellectual property rights.

        China and Russia are engaged in so-called ``vaccine diplomacy,''
    albeit with currently less than effective vaccines. I am very concerned
    about letting them profit off U.S. funded research on MRNA in order to
    develop their own capabilities in this space.

        You have referenced text-based negotiations in Geneva to discuss
    the waiver. Will you commit to this committee that you oppose allowing
    any waiver to extend to China and Russia?

        Congress approved the WTO TRIPS Agreement. I have serious
    reservations about your ability to renegotiate or suspend it absent
    congressional consent. At a minimum, will you confirm that this
    committee will see the text of any proposal well in advance of you
    tabling it to other trading partners?

        In light of these negotiations, do you see the value in the
    administration promptly naming nominees for Chief IP Negotiator and for
    Ambassador to the WTO?

        Answer. In supporting a waiver of intellectual property protections
    for COVID-19 vaccines, the administration is committed to starting a
    process at the World Trade Organization (WTO) to find a solution there
    that is effective and practical in saving lives. We are committed to
    working with the WTO members and will be clear-eyed about potential
    risks as we enter text-based negotiations.

        I am committed to keeping Congress fully informed of developments
    in the process in the WTO. With respect to nominees for Chief IP
    Negotiator and for Ambassador to the WTO, I take staffing on those and
    all positions at USTR very seriously. Those nominations are ones that
    will have to come through the Senate Committee on Finance, and we are
    working on those issues right now.

        Question. One of the reasons I supported your nomination was your
    extensive experience. In particular, as Chief Trade Counsel on the
    Democratic staff of the Ways and Means Committee, you had the
    opportunity to see all of the U.S. negotiating proposals in the UK and
    Kenya discussions. Given that, one advantage you have over most people
    is that you could hit the ground running--or as you put it during your
    confirmation hearing: make sure trade was not on the ``back burner.''
    To me, we must reengage with the UK and Kenya. The UK is a massive
    market, and one of our most important allies. In Africa, China is
    engaged in a number of predatory practices. We need to show we are
    engaged economically.

        Where is USTR in its review of these negotiations, and when do you
    reasonably expect them to conclude?

        Answer. The President recently met Prime Minister Johnson and
    committed to deepening and strengthening our vital economic and trading
    partnership. As a first step, we agreed to move past the 16-year WTO
    dispute regarding aircraft subsidies. We have agreed to suspend tariffs
    related to the dispute for 5 years, while retaining flexibility for the
    United States to reapply tariffs if we're no longer competing on a
    level playing field. We and the UK have also adopted clear statements
    on acceptable support for large civil aircraft producers and a
    cooperative process to address support between the parties and overcome
    longstanding differences. Second, the President and Prime Minister
    agreed to work closely to identify and pursue opportunities to deepen
    our already extensive trade relationship. As part of the Biden-
    Harris administration's focus on the Build Back Better agenda and
    supporting a worker-centric trade policy, I am continuing my review of
    the objectives of the negotiations with the United Kingdom that were
    begun under the prior administration.

        As I mentioned during the hearing, connecting with my Kenyan
    counterpart was one of my first meetings and priorities upon assuming
    office. The negotiations launched last year during the pandemic, and
    two rounds were completed. My team and I continue to study and consider
    how these negotiations could fit into the Biden-Harris administration's
    agenda.

        Question. When asked about the Trans-Pacific Partnership--or TPP--
    during your confirmation hearing, you noted that ``that the world is
    very different in important ways from the way the world was in 2015 and
    2016.'' One thing not changed is that there are many countries that
    share strategic and economic interests with the United States. It is
    critical that we partner with these countries to ensure that we write
    the rules of trade rather than China. Moreover, in light of RCEP, China
    may now have better market access to many TPP countries than the United
    States.

        What developments, since 2015, do you think in particular are
    relevant in evaluating our position with respect to TPP?

        Answer. As compared to 2015, we have a better understanding of
    China's deep-seated commitment to its economic model, industrial
    subsidies, and industrial policy, and of the distortive and harmful
    impact of China's policies on U.S. producers and workers. The pandemic
    has highlighted supply chain fragility, including a dependence on
    production in China that left Americans short of critical goods, such
    as personal protective equipment. We are more informed about the
    operation of supply chain rules in trade agreements, and how these
    rules can allow free-riding by non-parties to the agreements. We have
    also seen how certain countries within the Asia-Pacific region continue
    to seek to integrate certain supply chains with China, including CPTPP
    countries, despite greater awareness of China's economic strategy. In
    addition, we have witnessed recent technological developments are
    impacting regional patterns of trade and affecting trade's distributive
    impact. Finally, there have been other regional developments,
    particularly in Hong Kong and Xinjiang, that affect considerations of
    technology, supply chains, and trade. All of these factors are relevant
    for our analyses on how to proceed.

        Question. Chairman Wyden asked, during your confirmation hearing,
    if you could provide, within 30 days of taking office, your ideas on
    promoting transparency. Promoting transparency and accountability in
    trade negotiations is a priority I share with the chairman. Last
    Friday, USTR published its transparency principles.

        It is not clear what new practices USTR is adopting. For example,
    the principles state that USTR will use tools like virtual hearings and
    website updates, which has been done by prior administrations.
    Additionally, the principles say USTR will adhere to the 2015
    consultation guidelines it promulgated--which clearly are not new.
    Likewise, the guidelines promise to ensure that its advisory committees
    will have an array of perspectives, yet the Federal Advisory Committee
    Act has required, since the 1970s, that advisory committees promote a
    balance of perspectives.

        Can you detail for me what is different or new with respect to
    USTR's transparency policies?

        Answer. The USTR Transparency Principles published on May 7th
    reflect the agency's commitment to comprehensive, two-way public
    engagement, including outreach to historically overlooked and
    underrepresented communities, as it develops and implements a trade
    policy that advances the interests of all Americans. While it is true
    that USTR, under prior administrations, has engaged tools such as
    virtual hearings and sought to ensure a range of perspectives in
    advisory committee membership, it is equally true that those efforts
    have not always reached all American communities. The recognition that
    our trade agenda will only succeed if it reflects the views, and serves
    the interests, of all Americans will inform USTR's implementation of
    the Transparency Principles in its day-to-day operations. For example,
    under the Transparency Principles USTR will seek public input with
    respect to new major trade initiatives when feasible even beyond those
    circumstances when it is required by law. It is important to note that
    the Transparency Principles are a first step. We will continue to build
    on those principles and identify further opportunities for meaningful
    engagement with the American public.

        Question. The Trade Policy Agenda notes that the administration
    will work with ``like-minded trading partners to implement necessary
    reforms to the WTO's substantive rules.'' As you know, many of our
    allies want to address the situation regarding the WTO Appellate Body.
    The U.S. critique of the Appellate Body is well-founded. However, we
    have yet to provide a proposal for what reform might look like. Many
    members of Congress are interested in this issue, and want to be a part
    of this process--as is their right.

        Can you share your thoughts on what some elements of resolving
    dispute settlement at the WTO might include?

        Answer. The WTO dispute settlement system requires fundamental
    reform in order to preserve the rights and obligations of WTO members
    and to enforce the rules negotiated, drafted, and agreed to by the WTO
    members. A well-functioning dispute settlement system should improve
    the WTO as a forum for negotiations. We will seek reform of the WTO
    dispute settlement system to ensure that it functions appropriately by
    assisting parties in resolving their dispute and does not add to or
    diminish the rights and obligations of WTO members.

        Question. Your time to get outcomes tied to purchases and critical
    structural issues under the Phase One deal is running out. There are
    also inconsistencies between your domestic and international policies,
    and it looks like the prospect of your top-to-bottom review to
    deliberate over your China trade policy is going to take even more time
    off the clock.

        All this, while the administration presses needless subsidies, even
    unrelated to infrastructure, together with Buy American and other
    policies, that will further reduce U.S. negotiating leverage on
    structural issues with China, and other governments, including the EU.
    At face value, there seems to be a lot of deliberation and
    inconsistency, but little action.

        What is your strategy to get results for the American people with
    China?

        Answer. The administration is currently engaged in a comprehensive
    and coordinated review of U.S. strategy for addressing the many
    challenges that China poses, both for the United States and the world.
    USTR is actively participating in the development of this strategy,
    which will encompass all policy areas, including trade policy.

        With regard to the administration's trade policy toward China, USTR
    is currently conducting a top-to-bottom review of the U.S.-China trade
    relationship, with a view toward ensuring that our trade policy
    supports and complements the administration's broader China strategy. A
    key focus of this effort is on China's non-market and unfair policies
    and practices that are inadequately disciplined by the WTO or the Phase
    One agreement, such as industrial subsidies, excess capacity, forced
    technology transfer, and state-owned enterprises. In addition, the
    administration is actively engaged in discussing issues related to
    China's distortive economic policies with allies and like-minded
    partners, with whom we share values and interests. The results of our
    top-to-bottom review, as well as our engagement with trading partners,
    will inform our thinking of how we proceed.

        Question. During your nomination hearing, five Senators raised
    questions about attempts to include liability protections like section
    230 of the Communications Decency Act (CDA) into trade agreements. Your
    answer indicated that you were still developing your position.

        Given the on-going WTO e-commerce negotiations where inclusion of
    such liability protections is a matter of contention, when do you
    anticipate being in a position to share your position with Congress?

        Answer. There is a wide variety of views on this issue. I have
    committed to consult with the relevant stakeholders, including
    Congress, on this and other provisions of our trade agreements. We are
    doing the work and when we have made sufficient progress, we will look
    forward to consulting with you and other members.

        Question. Japan is once again the largest export market for U.S.
    beef due, in large part, to the U.S.-Japan Trade Agreement signed in
    October 2019. Strong demand, combined with the tariff reductions for
    U.S. beef established under the agreement, caused U.S. beef exports to
    surpass Japan's threshold for annual import volumes of U.S. beef
    products, triggering a 30-day tariff increase for U.S. beef. The U.S.
    is the only country subject to Japan's safeguard on beef imports, and
    at the current levels negotiated in the U.S.-Japan agreement, the U.S.
    is likely to trigger the safeguard every year over the next 15 years.
    The agreement stipulates that Japan will agree to consult with the U.S.
    to adjust the safeguard if it is ever triggered.

        What is the status of the consultations between the U.S. and Japan?

        Is USTR seeking to increase the level of Japan's safeguard on U.S.
    beef products?

        Answer. USTR is engaged actively in consultations with Japan on the
    beef safeguard pursuant to the side letter to the U.S.-Japan Trade
    Agreement. The U.S. goal in these consultations is to achieve an
    adjustment in the safeguard trigger in order to avoid future
    disruptions in U.S. beef exports to Japan.

        Question. You told this committee that, if confirmed, you would
    review the status of the dispute initiated with Canada late last year
    regarding Canada's administration of its dairy tariff-rate quotas
    (TRQs). You also pledged to use all of the tools available to you in
    doing so.

        Has Canada indicated any intention to change course on its dairy
    TRQ measures?

        If not, when will USTR move forward with formal USMCA enforcement
    actions against Canada to ensure our dairy farmers and processors
    receive the full benefit of the bargain that was negotiated with Canada
    under USMCA?

        Answer. On December 9, 2020, USTR requested USMCA consultations
    with Canada regarding its dairy TRQ allocation measures and the Parties
    held consultations on December 21, 2020. However, Canada did not
    indicate any willingness in the consultations to address U.S. concerns.
    As a result, on May 25, 2021, USTR requested and established a dispute
    settlement panel under the USMCA to review Canada's dairy TRQ measures.

        A top priority for the Biden-Harris administration is fully
    enforcing the USMCA and ensuring that it benefits American workers.
    Launching the first panel request under the agreement will ensure our
    dairy industry and its workers can seize new opportunities under the
    USMCA to market and sell U.S. products to Canadian consumers.

        Question. I am concerned by countries continuing to develop and
    implement discriminatory digital services taxes rather than engage
    constructively through the OCED/G20 Inclusive Framework, and then
    adopting measures that are consistent with that framework. For example,
    the European Union continues to move forward with a digital levy that
    would apply on top of whatever negotiating governments are achieved
    multilaterally. Canada is advancing a digital services tax that would
    be effective as of January 1, 2022. India has even further expanded its
    Equalisation Levy to retroactively capture otherwise offline
    transactions in which only one aspect takes place online. There are
    still other jurisdictions that actively adopt and collect these taxes.

        What steps are you taking to make clear to these governments--
    including the European Union and Canada--that the advancement of
    digital services taxes that target U.S. companies is not acceptable?

        Answer. The Office of the United States Trade Representative
    recently completed its investigations into the digital services taxes
    of Austria, India, Italy, Spain, Turkey and the United Kingdom. The
    investigations found that these taxes were discriminatory and a burden
    on U.S. commerce, and as a result tariff lists have been prepared. To
    allow more time for the multilateral tax negotiations, the
    implementation of these tariffs has been suspended for 180 days. The
    investigation into France's digital services tax resulted in a similar
    outcome.

        I have raised the United States' concerns about Canada's digital
    services tax with Minister Ng, and I would encourage the European Union
    to refrain from moving forward with any new digital tax proposals while
    the OECD and G20 negotiations are ongoing.

        Question. The United States has underscored that the standstill and
    rollback of unilateral measures is critical to the success of the
    multilateral project to address the tax challenges arising from the
    digitalization of the global economy. How are you working with your
    colleagues, at the Treasury Department, to identify measures that must
    be withdrawn at the time of political agreement?

        Answer. USTR has been in close contact with the Treasury Department
    throughout the OECD and G20 negotiations. It is critical that any
    agreement on OECD's pillar one include a standstill and rollback
    provision that provides a clear path to the removal of existing
    discriminatory digital services taxes.

                                     ______

                  Questions Submitted by Hon. Debbie Stabenow
        Question. Polysilicon trade affects many of the President's trade
    priorities: supporting American workers, combating climate change,
    enhancing U.S. competitiveness, and confronting China's state-directed
    policies.

        For years, China's unfair trade and industrial policies have
    specifically targeted and threatened the U.S. polysilicon industry. As
    a result, China's policies have captured nearly the entire solar supply
    chain, putting critical manufacturing in Michigan at risk.

        The Chinese Government committed to open its market to U.S.
    polysilicon exports as part of Phase One, but that has yet to occur. We
    need a long-term solution and smart domestic policies to re-shore the
    missing pieces of the solar supply chain in the United States.

        What role does USTR play in this process? Do you have the right
    trade tools to support reshoring the solar supply chain? What tools do
    you need?

        Answer. USTR leads the administration's efforts to ensure that
    China complies with its Phase One agreement obligations, including with
    regard to polysilicon. USTR is currently conducting a top-to-bottom
    review of the U.S.-China trade relationship, with a view toward
    ensuring that our trade policy supports and complements the
    administration's broader China strategy. A key focus of this effort is
    on China's non-market and unfair policies, as well as problematic
    practices surrounding the use of forced labor in particular supply
    chains. We would expect that review to identify any new tools that are
    needed.

        Question. Agricultural trade is not only about supporting exports
    to customers abroad. Many Michigan fruit and vegetable growers also
    face challenges with unfair competition from imports here at home. In
    past years growers have struggled with foreign cherries and asparagus
    being unfairly subsidized and dumped on the U.S. market.

        I continue to hear from Michigan blueberry, squash, cucumber,
    onion, and other perishable fruit and vegetable growers concerned that
    increased imports at low prices, especially during the U.S. growing
    season, are threatening the viability of the domestic produce industry.

        How does this fit into the President's agenda to defend U.S.
    producers, and do you have any ideas for how we can work to keep our
    domestic fruit and vegetable growers in business as they struggle with
    import competition?

        Answer. The U.S. International Trade Commission (ITC) is currently
    conducting section 332 investigations for several seasonal and
    perishable products, including squash and cucumbers. I look forward to
    receiving the information resulting from the ITC's section 332
    investigations. I welcome input and ideas from you and other members of
    Congress as to how USTR can further utilize the wide range of tools
    that are available to address the challenges facing U.S. producers.

        Question. Many countries outside of North America exploit
    protections meant for valid geographical indications to limit
    competition and block imports. During your confirmation process, you
    committed to building on the success in USMCA of beginning to establish
    specific protections for common food names used by our food
    manufacturers, exporters, and producers and prioritize this issue
    during future negotiations.

        What steps have you taken to advance this goal with existing Free
    Trade Agreement partners and in new trade negotiations under
    consideration?

        Answer. We are actively engaging with our trading partners--both
    those with whom we have existing trade agreements and those with whom
    we do not--to ensure that obligations they take on as part of their
    negotiations with other trading partners do not impose barriers on
    existing and future market access for U.S.-made goods that rely on the
    use of common names.

                                     ______

                   Questions Submitted by Hon. Maria Cantwell
        Question. I was pleased that in March, the United States, the
    United Kingdom, and the European Union agreed to a 4-month suspension
    of all tariffs that were authorized by the WTO in the Boeing/Airbus
    dispute. The British and Europeans committed to working with the United
    States towards a negotiated settlement.

        However, if no permanent resolution on the underlying dispute is
    reached, American businesses and consumers could once again pay extra
    tariffs on European goods and we will continue to face subsidized
    competition from Europe.

        How close are we to coming to a negotiated settlement on the
    Boeing/Airbus dispute? What is the timeline and what are the benchmarks
    for progress?

        Can you describe broadly what a settlement should entail and what
    are the biggest obstacles to reaching that settlement?

        We have less than 60 days until we see the reimposition of tariffs.
    Will there be an extension of the suspension of all relevant tariffs?

        Answer. Our negotiations with the EU and the UK have resulted in
    agreement to move past the 16-year WTO dispute regarding aircraft
    subsidies. We have agreed to suspend tariffs related to the dispute for
    5 years, while retaining flexibility for the United States to reapply
    tariffs if we're no longer competing on a level playing field. We, the
    EU, and the UK have also adopted clear statements on acceptable support
    for large civil aircraft producers and a cooperative process to address
    support between the parties and overcome longstanding differences.

        With respect to China, we pledged to:

            Meaningful cooperation on countering (1) investments in the
    aircraft sector by non-market actors in our economies to acquire
    technology and know-how; and (2) outward investments into China that
    are made pursuant to non-market forces.
            Identifying where joint work is needed to take parallel action
    against other non-market practices.
            Sharing information regarding these and other areas in the
    large civil aircraft sector.

        Question. Washington State companies have been facing real
    challenges after their 301 China tariff exclusions expired. These are
    businesses that were previously approved for tariff exclusions by USTR
    and are in significant need of tariff relief as their revenues were
    seriously impacted by the COVID-19 pandemic.

        For example, Rad Power Bikes in Ballard, WA imports electric-
    powered bikes. Their tariff exclusion ended in December. They now face
    $20 million in estimated tariff-related costs this year if they don't
    receive an exclusion renewal. If granted, they plan to hire a couple
    hundred new U.S. employees this year. Without a new tariff exclusion,
    those new jobs will not happen.

        Tariff relief on seafood products caught by Seattle-based fishing
    companies expired at the end of last year. These products are sent to
    China for additional processing before being imported back into the
    United States. We are now paying a 25-percent tariff on seafood
    products caught in our own waters.

        These companies need relief through exclusions immediately. They
    have reached a critical point where jobs are being lost and eventually
    businesses may close.

        Will you commit to restarting the 301 tariff exclusion process and
    to the timely renewal of tariff exclusions for American companies that
    have previously been vetted and granted exclusions?

        Will you ensure that any new processes for reviewing 301 tariff
    exclusions are transparent, consistent, and prioritizes companies that
    need immediate relief?

        When can my companies expect to get more information from USTR on
    what will happen with the 301 exclusions?

        Answer. At the request and recommendation of Senator Portman, I
    have committed to doing a top-to-bottom review of our China trade
    policy, with the goal of making our trade policies more effective and
    more strategic. As part of that review, we are looking at the China 301
    tariffs and the exclusions process which provides us with important
    opportunities to craft thoughtful and effective responses to China's
    unfair trade practices.

        Question. Following your meeting in March with India's Commerce
    Minister, USTR announced a commitment to restart the U.S.-India Trade
    Policy Forum this year to resolve trade disputes. Apple growers in
    Washington State still are struggling with real challenges in India. In
    March, the market closed for nearly 3 weeks during peak shipping season
    due to India's requirement that apple shipments be certified free of
    genetically modified materials.

        Meanwhile, U.S. apples still face a 70-percent tariff! U.S. apple
    exporters face a 20-percent higher tariff than their foreign
    competitors because of retaliatory tariffs that resulted from President
    Trump's trade wars.

        India was the second largest export market for Washington apples
    before the Trump administration's trade war--a $120-million market. It
    is now an $11.3-
    million market. On average, growers have lost $83 million in exports to
    India each year since the trade war started.

        Do you plan to raise concerns about tariffs and market access for
    American apples in the U.S.--India Trade Policy Forum?

        What is the timeline for addressing India's retaliatory tariffs
    within the U.S.-India Trade Policy Forum?

        How else are you working to end retaliatory tariffs in India that
    were imposed because of President Trump's trade wars?

        Answer. India is an important market for U.S. apple exports. I am
    aware of the tariff and non-tariff barriers facing U.S. apple exports
    to India and the challenges faced by U.S. apple growers over the last
    several years. We will continue to push India to follow a science-based
    approach to agricultural trade policy. In my call with India's Minister
    of Commerce and Industry Goyal, we agreed to work constructively to
    resolve outstanding bilateral trade issues, including agricultural
    issues and tariffs. As we reengage with India through the U.S.-India
    Trade Policy Forum, apple market access remains a priority for USTR,
    and we look forward to working with you and your constituents on these
    important issues.

        Question. It was great news that the Mexican Supreme Court ruled
    unanimously last month to allow the importation of fresh U.S. potatoes
    throughout Mexico. I have been fighting to get fresh potatoes from the
    Pacific Northwest into Mexico for more than a decade.

        Mexico is the third largest export market for U.S. potatoes and
    products--a $270-million market in 2020. The U.S. potato industry
    believes that access to the entire country for fresh U.S. potatoes may
    have a market potential of an additional $200 million per year.

        While Washington State exported $37 million in processed potatoes
    to Mexico last year, it only exported about $424,000 in fresh potatoes.
    There is a great potential to expand fresh potato exports.

        What are the next steps you expect the Mexican Government to take
    to reinstate market access for U.S. fresh potatoes to the entire
    country?

        What is the timeline expected to be? Would the Mexican Government
    be able to act rapidly to restore full market access?

        Answer. I have stressed the importance of timely access for U.S.
    fresh potatoes to all of Mexico with my counterpart Secretary
    Clouthier. USTR and USDA continue to work with the Government of Mexico
    to bring this longstanding issue to resolution for the benefit of
    potato growers in Washington and other States.

        Question. A key area where the U.S. is a global leader is in
    digital trade. It is essential to American global competitiveness.

        U.S. digital services exports are now $517 billion per year,
    generating a U.S. digital trade surplus of $220 billion that is shared
    by small and large companies and workers far outside the traditional
    tech sector.

        One in three small and medium-sized businesses report that they
    would not have survived the pandemic without digital tools, and two-
    thirds of small business employers say that technology can help them
    overcome export barriers.

        It is clear, especially over that last year that without the
    ability to trade digitally, American workers and businesses would have
    been put at a significant disadvantage. It is imperative that we create
    more opportunities for US exporters to harness digital trade and push
    back on the growing threat of digital protectionism.

        I believe we need a bold new strategy on digital trade; one that
    modernizes our existing Free Trade Agreements, and seeks new bilateral
    and plurilateral digital rules that ensure America stays competitive in
    the 21st century and our workers and that businesses can compete on a
    level playing field.

        Beyond dealing with foreign Digital Service Taxes (DSTs), what is
    the Biden administration's strategy on digital trade and how do we
    create new opportunities for American digital exporters?

        Where do the ongoing negotiations at the WTO on e-commerce stand
    and how can we increase the pace of the negotiations?

        Answer. The administration recognizes the importance of the digital
    economy to American jobs, prosperity and security, as well as U.S.
    companies' unique competitive advantages in this area. For example,
    every year in the last 15 years, the United States achieved a
    substantial surplus for trade in information and communications
    technology-enabled (ICT-enabled) and potentially ICT-enabled services,
    with that trade surplus exceeding $100 billion annually in each of the
    last 6 years.

        Trade rules must work to maintain and advance U.S. strengths in
    digital trade. USTR will use a wide range of trade tools to address
    discriminatory practices that hinder U.S. workers and innovators,
    including practices that discriminate against U.S. digital and
    technology exports. The United States is focused on ensuring that the
    plurilateral e-commerce negotiations reflect high-standard rules that
    support U.S. workers, innovators, and consumers. The e-commerce
    negotiations involve more than 80 WTO Members, and the pace has
    reflected the need to find common ground across a range of issues.

        Question. Exports are critical to helping support the milk prices
    Washington State dairy farmers receive and to offering an expanded pool
    of global buyers for our dairy manufacturers. The United Kingdom is a
    very large dairy-importing market that would offer tremendous
    opportunities if our farmers and dairy manufacturers had a level
    playing field there.

        The United Kingdom imports approximately $4.5 billion a year, but
    virtually all of that comes from European suppliers right now.
    Unfortunately, U.S. exporters are at a significant disadvantage to
    European suppliers due to the more favorable tariff and nontariff
    trading terms the European Union has with the United Kingdom.

        U.S. cheese exporters are faced with having to pay steep out of
    quota tariffs such as $194 per 100 kilogram, whereas E.U. suppliers pay
    nothing. Similarly, U.S. exporters are banned from using generic cheese
    terms such as parmesan and feta, and are required to meet excessively
    detailed dairy import certification requirements that far exceed the
    type of food safety assurances required by other markets.

        Where do the U.S.-U.K. free trade agreement talks stand?

        Answer. The President recently met Prime Minister Johnson and
    committed to deepening and strengthening our vital economic and trading
    partnership. As a first step, we agreed to move past the 16-year WTO
    dispute regarding aircraft subsidies. We have agreed to suspend tariffs
    related to the dispute for 5 years, while retaining flexibility for the
    United States to reapply tariffs if we're no longer competing on a
    level playing field. We and the UK have also adopted clear statements
    on acceptable support for large civil aircraft producers and a
    cooperative process to address support between the parties and overcome
    longstanding differences. Second, the President and Prime Minister
    agreed to work closely to identify and pursue opportunities to deepen
    our already extensive trade relationship. As part of the Biden-
    Harris administration's focus on the Build Back Better agenda and
    supporting a worker-centric trade policy, I am continuing my review of
    the objectives of the negotiations with the United Kingdom that were
    begun under the prior administration.

        Question. Will market access for U.S. dairy and removing tariffs on
    dairy exports be priorities?

        Answer. I am currently in the process of reviewing both the status
    and objectives of the previous U.S.-UK negotiations, and the prospect
    of U.S. dairy access will play a large role in any future actions.

        Question. How will you ensure that the United Kingdom removes the
    dairy tariff and nontariff barriers that impede our exporters' ability
    to compete effectively in the UK market?

        Answer. I intend to engage with any trading partner to resolve
    unwarranted nontariff barriers to U.S. dairy exports that undermine
    market access for U.S. products. We continue to encourage the UK to use
    science as the basis for its regulatory policies and to provide risk
    assessments to justify its sanitary measures.

                                     ______

                  Questions Submitted by Hon. Robert Menendez
        Question. USTR has proposed a 25-percent tariff on building
    material products in response to digital services taxes being imposed
    by some of our European trade partners. I am concerned that this could
    negatively impact housing prices by increasing building costs, putting
    homeownership further out of reach of low-income Americans.
    Furthermore, such tariffs would be harmful to small and medium-sized
    construction businesses in New Jersey.

        What is the rationale for setting tariffs on building materials in
    particular as a response to DSTs?

        Has USTR conducted any analysis on how such proposed tariffs will
    impact housing affordability, and if so, would you share that analysis
    with the committee?

        Answer. The final tariff lists for the DST actions reflect the
    USTR's judgment of what would be most effective in obtaining a
    satisfactory resolution to our concerns over unilateral DSTs. In
    determining the final lists, USTR considered the hundreds of written
    comments received during the notice and comment period, the testimony
    provided during seven public hearings, and advice from other U.S.
    government agencies.

        Question. Increased lumber prices have exacerbated the existing
    housing affordability crisis, causing the price of an average new
    single-family home to increase by more than $36,000 since the middle of
    last April according to estimates by the National Association of
    Homebuilders. Meanwhile the softwood lumber agreement we have with
    Canada, our leading trade partner in wood products, expired in 2015 and
    has not been renewed since.

        Are you working on a new softwood lumber agreement with Canada? Is
    this a priority for you?

        Answer. I am closely watching the historic movement in lumber
    prices. I discussed softwood lumber with my Canadian counterpart in our
    first USMCA FTC meeting and we agreed to keep in touch on the issue.
    The United States is open to resolving our differences with Canada over
    softwood lumber, but it would require addressing Canadian policies that
    create an uneven playing field for the U.S. industry. Unfortunately, to
    date, Canada has not been willing to address these concerns adequately.

        Question. I was pleased to hear back in April that USTR extended
    product exclusions for certain products related to medical care.
    However, there are many more small businesses that still cannot obtain
    extensions of their product exclusions. The administration previously
    promised to conduct a full review of section 301 tariffs as part of the
    development of a more cohesive China strategy.

        Could you give us an update on where this review stands?

        In order to minimize the impact these tariffs have on U.S.
    businesses, workers, and consumers, do you have plans in place to
    reopen the exclusion process or extend previous product exclusions?

        Answer. At the request and recommendation of Senator Portman, I
    have committed to doing a top-to-bottom review of our China trade
    policy, with the goal of making our trade policies more effective and
    more strategic. As part of that review, we are looking at the China 301
    tariffs and the exclusions process which provides us with important
    opportunities to craft thoughtful and effective responses to China's
    unfair trade practices.

        Question. Another aspect of this issue that has gone overlooked is
    that some companies may be owed refunds by CBP due to delays in the
    section 301 product exclusion process.

        Will you work with CBP in order to ensure that companies that were
    granted a product exclusion receive a refund for tariffs paid while
    waiting for their product exclusions?

        Answer. USTR has worked closely with Customs and Border Protection
    on all aspects of the implementation of the China 301 tariffs, and will
    continue to do so.

        Question. As the committee is considering options for renewing the
    GSP program, I have heard concerns about USTR's process for the GSP
    Annual Product reviews. USTR Regulations (15 CFR part 2007.0 et seq.)
    state: ``Requests which conform to the requirements set forth above or
    for which petitioners have demonstrated a good faith effort to obtain
    information in order to meet the requirements set forth above, and for
    which further consideration is deemed warranted, shall be accepted for
    review.'' Yet according to the USTR's 2021 Trade Policy Agenda and 2020
    Annual Report, USTR declined to review every one of 16 petitions
    covering new competitive needs limitation waivers or redesignations. It
    also declined petitions for 33 of the 36 requested product additions.
    These figures suggest that our constituents may not be receiving the
    due process they deserve.

        Can you please provide any substantive information used as the
    basis for rejecting the aforementioned petitions as part of the 2020
    GSP Annual Review?

        Answer. Consistent with USTR's regulations, Ambassador Robert
    Lighthizer--who served as USTR during the period covered by the 2020
    Annual Report--did not consider that the CNL petitions filed in that
    year warranted further consideration.

        Question. Can you clarify how USTR determines, in the parlance of
    the relevant regulation, whether ``further consideration [of a
    petition] is deemed warranted''?

        Answer. To determine whether further consideration of a petition is
    warranted, USTR looks at the relevant provisions laid out in sections
    501, 502(c), and 503. Generally, USTR accepts petitions for which we
    believe there is a reasonable chance that further examination of the
    petition will lead to a recommendation to the President to add products
    to, or remove products from, GSP; to grant CNL waivers; or to
    redesignate products as eligible for duty-free treatment under the GSP
    program.

        Question. The regulations also state that ``[u]pon written request,
    requests which are not accepted for review will be returned together
    with a written statement of the reasons why the request was not
    accepted.''

        How many such written requests has USTR received in the past 10
    years? Has USTR provided a written statement of the reasons why the
    request was not accepted in all those cases? If not, please explain why
    USTR failed to abide by the regulation. Please also provide copies of
    all USTR written statements explaining why requests were not accepted
    for the past 10 years.

        Answer. USTR does not receive many requests for explanations as to
    why petitions were not accepted for review. These discussions typically
    occur through verbal exchanges with the requestors. USTR recognizes the
    importance of transparency and would welcome the opportunity to work
    with your office to ensure that we are providing sufficient information
    to stakeholders with respect to these decisions.

                                     ______

                  Questions Submitted by Hon. Thomas R. Carper
        Question. Over the past several years, tariffs on China and
    subsequent retaliatory tariffs have caused significant economic
    disruptions for U.S. businesses and farmers. I have heard from many
    constituent companies who have invested significant time, money, and
    resources navigating the process for securing an exclusion from these
    tariffs. However, unfortunately, these exclusions expired at the end of
    last year, and no new exclusion process has opened. Recently, I joined
    Senator Portman, and several of my Senate colleagues on both sides of
    the aisle, to encourage USTR to re-start an exclusion process.

        However, the last exclusion process was far from perfect, and left
    many questions about speed, transparency, and fairness. I understand
    that the administration is currently engaged in a review of our trade
    policy with China, and that a decision whether to restart an exclusions
    process has not yet been made.

        Could you please provide an anticipated timeframe as to when we can
    expect a decision will be made with regard to restarting an exclusions
    process?

        What criteria will USTR use to determine whether or not to restart
    an exclusion process?

        Moving forward, in your view, and assuming an exclusions process
    will be restarted, what should Congress and the administration do to
    reform this process in order to provide greater certainty and
    predictability to American companies?

        Answer. At the request and recommendation of Senator Portman, I
    have committed to doing a top-to-bottom review of our China trade
    policy, with the goal of making our trade policies more effective and
    more strategic. As part of that review, we are looking at the China 301
    tariffs and the exclusions process which provides us with important
    opportunities to craft thoughtful and effective responses to China's
    unfair trade practices.

        Question. I think we both acknowledge that the U.S. has a moral
    obligation to lead the world in rapidly providing COVID vaccines to
    nations in need of these lifesaving shots, even as we provide vaccines
    to our own citizens. Quick and efficient distribution of vaccines
    around the globe is the best way to stop the spread of the coronavirus
    and finally put this pandemic in our rear-view mirror. With that in
    mind, I worry that waiving intellectual property protections for these
    vaccines may not be the quickest and most efficient way to ensure quick
    access to vaccines around the world.

        With this in mind, what other U.S. trade policy objectives should
    the administration pursue to ensure U.S. manufacturers can rapidly
    export our life-saving vaccines around the world?

        With regard to the waiver, what guard rails will you seek to
    protect intellectual property rights for U.S. manufacturers and our
    ability to rapidly produce life-saving vaccines in the event of another
    pandemic?

        Will you commit to keeping Congress fully informed regarding the
    status of negotiations concerning the COVID-19 TRIPS waiver?

        Further, concerns have been raised regarding the long-term
    availability of raw materials to produce the COVID-19 vaccine in light
    of the administration's announcement of its intent to engage in text-
    based negotiations over the COVID-19 intellectual property waiver at
    the World Trade Organization.

        How will the administration help ensure the availability of raw
    materials used in manufacturing the COVID-19 vaccine as it pursues
    discussion of a waiver for intellectual property rights for the
    vaccine?

        Answer. The administration's aim is to get as many safe and
    effective vaccines to as many people as fast as possible. As our
    vaccine supply for the American people is secured, the administration
    will continue to ramp up its efforts--working with the private sector
    and all possible partners--to expand vaccine manufacturing and
    distribution. We will also work to increase the raw materials needed to
    produce those vaccines. In supporting a waiver of intellectual property
    protections for COVID-19 vaccines, the administration is committed to
    pursuing a process at the World Trade Organization (WTO) to find a
    solution there that is effective and practical in saving lives. I am
    committed to keeping Congress fully informed of developments in the
    process in the WTO.

        Question. Concerns have been raised about Mexico's recently enacted
    electricity reform legislation and its potential to undermine new
    private investment in Mexico's renewable energy sector by American
    companies and others, and its potential to violate agreements set out
    in the United States Mexico Canada agreement.

        Will you commit to monitoring this issue and to keeping Congress
    informed about any further action needed to address this issue?

        Answer. The recently passed legislation, stalled by Mexican courts,
    threatens significant U.S. investment in clean energy projects in
    Mexico and directly implicates several of Mexico's USMCA obligations. I
    made these points clearly to the Mexican Government during the
    inaugural meeting of the USMCA Free Trade Commission on May 18th. USTR
    will continue to monitor these issues and will keep Congress informed
    of our next steps.

        Question. As you know, I strongly support adding an environmental
    criterion to the Generalized System of Preferences (GSP) program and
    was pleased to hear your unequivocal support for this during the
    hearing.

        What new measures should Congress consider to incentivize countries
    to meet the higher standards? What steps can the administration take to
    ensure that new criteria lead to improved standards as opposed to non-
    compliance or increased GSP country terminations?

        Answer. Adding an environmental criterion to GSP would
    appropriately recognize the importance of environmental protection to
    sustainable development. It would also provide an additional tool for
    the U.S. Government to use to support the administration's priority to
    improve environmental protection and tackle the climate crisis
    worldwide. Beneficiary countries tend to value their GSP designation,
    and it incentivizes efforts to comply with the criteria.

        How can Congress and the administration work to build capacity
    within GSP countries to ensure that they are able to reach, and exceed,
    any environmental standards that are added to the GSP program?

        Answer. I fully agree that it will be important for Congress and
    the administration to carefully consider the capacity of GSP
    beneficiaries to ensure that they will be able to reach and exceed any
    environmental criterion that is added to GSP. I welcome discussions
    with you and your colleagues as to how we can build capacity to support
    improved environmental conditions in these countries.

                                     ______

                Question Submitted by Hon. Robert P. Casey, Jr.
        Question. The Chinese Government has a well-established track
    record of using unfair practices to acquire U.S. technology and steal
    innovation; their efforts related to vaccine technology are no
    exception. U.S. security officials have found that Chinese state-backed
    hackers have attempted to break in to vaccine manufacturers and
    producers in the U.S. and India.

        As the administration works to support access to the COVID-19
    vaccine in the U.S. and around the world can you discuss how you will
    ensure the Chinese government cannot acquire our strategically
    important biotechnology? And will you commit to engaging with Congress
    as you negotiate on these matters?

        Answer. The administration believes strongly in intellectual
    property (IP) protections and the importance of safeguarding American
    innovation from illicit acquisition. The decision to support a waiver
    of IP protections for COVID-19 vaccines reflects the extraordinary
    circumstances of this pandemic. We will be working with the World Trade
    Organization members and will be clear-eyed about potential risks as we
    enter text-based negotiations. I am committed to keeping Congress fully
    informed of developments in the process in the WTO.

                                     ______

                   Question Submitted by Hon. Mark R. Warner
        Question. USTR's Advisory Committee process has historically been
    an important tool for USTR to get input on trade-related concerns. The
    former USTR made limited use of those Advisory Committees.

        Does USTR plan to reinvigorate the Advisory Committee process and
    get their input?

        Answer. The Trade Advisory Committee system and the expertise its
    members bring are an important component of creating good trade policy.
    USTR plans to regularly utilize this important feedback tool to help
    inform our decision-making process to help further the goal of having a
    comprehensive worker-centered trade policy.

                                     ______

                 Question Submitted by Hon. Sheldon Whitehouse
        Question. The Climate Leadership Council examined the average
    carbon intensity of the U.S. economy compared to our major trading
    partners (https://clcouncil.org/reports/americas-carbon-advantage.pdf).
    It found that the Chinese economy is more than three times as carbon-
    intensive as the U.S. economy, the Indian economy is almost four times
    as carbon-intensive, and the trade-weighted average of the rest of the
    world's economy is nearly two times as carbon-intensive as our own.

        Given the significant advantage that the U.S. economy enjoys with
    respect to carbon intensity, if the U.S. were to adopt a border
    adjustable domestic carbon price, it would also provide a significant
    advantage to domestic manufacturers vis-a-vis foreign importers,
    correct?

        Answer. The impact of a border carbon adjustment (BCA) on imports
    would be contingent on a number of policy and technical decisions,
    including which products or goods are covered under a BCA, where the
    benchmark carbon intensity is set, and how carbon content and price are
    calculated. It is unclear if an advantage would accrue to domestic
    manufacturers. The purpose of a BCA is to ensure that carbon leakage
    does not occur by industries moving production overseas, which would
    effectively offshore the U.S. carbon footprint.

                                     ______

                  Questions Submitted by Hon. Elizabeth Warren
        Question. As part of their opposition to a waiver of certain
    provisions under the WTO Agreement on Trade-Related Aspects of
    Intellectual Property Rights (TRIPS), pharmaceutical companies have
    argued that foreign nations have limited technological capacity to
    develop COVID-19 vaccines. Qualified manufacturers in countries like
    India, however, have asserted that they have the capacity necessary to
    produce vaccines.

        What specific steps will USTR take, and on what timeline, to
    identify foreign manufacturers capable of producing mRNA and other
    vaccines? What specific steps, if any, does USTR plan to take to
    coordinate communication regarding technological capacity between those
    manufacturers and U.S. companies? If USTR does not plan to take these
    steps, is USTR aware of which Federal entity will take point on
    coordinating these communications?

        Answer. Starting in mid-April, USTR began consultations with
    interested parties: labor organizations, civil society, public health
    advocates, public health experts both inside and outside of the
    government, and vaccine manufacturers themselves. USTR, in coordination
    with the rest of the administration, will continue to ramp up efforts
    to work with the private sector and other partners to expand vaccine
    manufacturing and distribution around the world.

        Question. In your testimony, you said that USTR was currently
    ``focused . . . on the intellectual property [TRIPS] waiver at the WTO
    with respect to vaccines'' but agreed that ``the U.S. should be doing
    everything it can to help other countries ramp up their testing,
    treatment, and PPE production.''

        Which tests, treatments, and types of personal protective equipment
    is USTR considering for future intellectual property waivers at the
    WTO? What is USTR's timeline to decide on whether to expand the TRIPS
    waiver to these products? If no timeline exists, why not?

        Answer. The World Trade Organization is a consensus-based
    institution. In supporting a waiver of intellectual property
    protections for COVID-19 vaccines, the administration has facilitated a
    process for WTO members to devise a solution that is effective and
    practical in saving lives. We are actively engaged in discussions of
    proposals that have been put forward by WTO members for trade policy
    responses to the COVID-19 pandemic to date. Our timeline will be shaped
    by the course of those ongoing discussions.

                                     ______

                   Questions Submitted by Hon. Chuck Grassley
        Question. Could you share with the committee any progress you have
    made on free-trade agreements with the United Kingdom and Kenya?

        Answer. The President recently met Prime Minister Johnson and
    committed to deepening and strengthening our vital economic and trading
    partnership. As a first step, we agreed to move past the 16-year WTO
    dispute regarding aircraft subsidies. We have agreed to suspend tariffs
    related to the dispute for 5 years, while retaining flexibility for the
    United States to reapply tariffs if we're no longer competing on a
    level playing field. We and the UK have also adopted clear statements
    on acceptable support for large civil aircraft producers and a
    cooperative process to address support between the parties and overcome
    longstanding differences. Second, the President and Prime Minister
    agreed to work closely to identify and pursue opportunities to deepen
    our already extensive trade relationship. As part of the Biden-
    Harris administration's focus on the Build Back Better agenda and
    supporting a worker-centric trade policy, I am continuing my review of
    the objectives of the negotiations with the United Kingdom that were
    begun under the prior administration.

        As I mentioned during the hearing, connecting with my Kenyan
    counterpart was one my first meetings and priorities upon assuming
    office. The negotiations launched last year during the pandemic, and
    two rounds were completed. My team and I continue to study and consider
    how these negotiations could fit into the Biden-Harris administration's
    agenda.

        Question. According to the recent Special 301 report, ``IP
    infringement undermines U.S. competitive advantages in innovation and
    creativity, to the detriment of American businesses and workers. In its
    most pernicious forms, IP infringement endangers the public, including
    through exposure to health and safety risks from counterfeit products.
    In addition, trade in counterfeit and pirated products often fuels
    cross-border organized criminal networks and hinders sustainable
    economic development in many countries.''

        Have you evaluated the impact the proposed waiver at the WTO would
    have on these concerns?

        Answer. This is a global health crisis, and the extraordinary
    circumstances of the COVID-19 pandemic call for extraordinary measures.
    The administration believes strongly in intellectual property
    protections, but in service of ending this pandemic, supports a waiver
    of those protections for COVID-19 vaccines. We are committed to working
    with the World Trade Organization members and will be clear-eyed about
    potential risks as we enter text- based negotiations. The United States
    is committed to using its leadership to reach consensus at the WTO.

        Question. Since any infringement of intellectual property rights
    under the proposed WTO waiver would occur outside the WTO and TRIPS
    regime, what recourse would an American innovator or the United States
    have if that infringement were to occur in ways not contemplated by the
    proposed waiver?

        Answer. The administration believes strongly in intellectual
    property (IP) protections and the importance of safeguarding American
    innovation from illicit acquisition. The decision to support a waiver
    of IP protections for COVID-19 vaccines reflects the extraordinary
    circumstances of this pandemic. We are committed to working with the
    World Trade Organization members and will be clear-eyed about potential
    risks as we enter text-based negotiations.

        Question. The Special 301 report specifically identifies
    ``inadequacies in trade secret protection and enforcement in China,
    Russia, and elsewhere'' as well as ``troubling `indigenous innovation'
    and forced technology transfer policies that may unfairly disadvantage
    U.S. right holders in markets abroad.''

        Won't the proposed waiver just exacerbate these problems?

        Answer. The administration believes strongly in intellectual
    property (IP) protections and the importance of safeguarding American
    innovation from illicit acquisition. The decision to support a waiver
    of IP protections for COVID-19 vaccines reflects the extraordinary
    circumstances of this pandemic. We are committed to working with the
    World Trade Organization members and will be clear-eyed about potential
    risks as we enter text-based negotiations.

        Question. Before the Biden administration made the decision to
    support waiving intellectual property rights for COVID-19 vaccines
    currently under consideration at the World Trade Organization, were you
    aware that Pfizer expects to produce 3 billion doses this year and at
    least 4 billion doses in 2022?

        Answer. Starting in mid-April, USTR began consultations, including
    on issues related to manufacturing capacity, with interested parties:
    labor organizations, civil society, public health advocates, public
    health experts both inside and outside of the government, and vaccine
    manufacturers themselves. USTR will continue to ramp up efforts to work
    with the private sector and other partners to expand vaccine
    manufacturing and distribution around the world. This comprehensive
    effort will not only save lives but also help heal the economy.

        Question. Before the Biden administration made the decision to
    support waiving intellectual property rights for COVID-19 vaccines
    currently under consideration at the World Trade Organization did the
    administration know that U.S. drug companies have already voluntarily
    entered into dozens of licensing agreements with other manufacturers,
    many in low-income countries before?

        Answer. Starting in mid-April, USTR began consultations, including
    on issues related to licensing agreements, with interested parties:
    labor organizations, civil society, public health advocates, public
    health experts both inside and outside of the government, and also
    vaccine manufacturers. USTR will continue to ramp up efforts to work
    with the private sector and other partners to expand vaccine
    manufacturing and distribution around the world.

        Question. When you are negotiating trade deals, where do you
    prioritize climate in these negotiations compared to the economic
    impact on Americans of possible reductions in trade due to a border
    adjustment?

        Answer. USTR has, in the past, faced limitations regarding
    inclusion of climate change provisions in trade deals. In pursuit of a
    whole of government approach to tackling the climate crisis, I look
    forward to using trade tools--including trade deals with trading
    partners--to meet the challenge. Regarding border adjustments, at this
    stage, it is unclear whether there would be reductions in trade due to
    these mechanisms. The impact of a border carbon adjustment (BCA) on
    imports would be contingent on a number of policy and technical
    decisions, including which products or goods would be covered under a
    BCA, where the benchmark carbon intensity is set, and how the carbon
    content and price are calculated. In general, I do not see trade and
    climate change as competing interests in trade negotiations, but rather
    an opportunity to ensure strong and enforceable environmental
    obligations protect the interests of U.S. consumers and support our
    jobs at home.

        Question. I am alarmed by rhetoric from European politicians in
    which they advocate for policies to undermine the competitiveness of
    U.S. technology companies. EU leaders regularly stress the need for
    ``digital sovereignty'' while advocating for new unilateral tools to
    steal American innovation.

        Unfortunately, the EU, which has sat on the sideline for decades on
    tech, is now targeting U.S. businesses with an unfair, discriminatory
    agenda to try and gain a competitive advantage. I'm am not opposed to
    appropriate regulation. But what the EU is proposing is protectionism.

        What are you doing to confront this protectionist agenda in Europe?

        Answer. I am aware of the concerns that U.S. companies have raised
    about digital services taxes (DSTs), other European Commission
    regulatory initiatives, such as the Digital Markets Act (DMA), and the
    continued free flow of data across the Atlantic. I will consider the
    full range of trade tools available to me to address discrimination
    against U.S. workers and U.S. companies.

        Question. After the United States, Brazil is the world's second
    largest producer of ethanol in the world and has also enjoyed nearly
    tariff-free access into the United States for a decade. Meanwhile, our
    domestic producers face a 20-percent tariff for ethanol heading into
    Brazil, creating an extreme, uneven playing field. With new U.S. trade
    negotiators coming into place, it provides a chance to reset and
    reestablish negotiations with Brazil on ethanol.

        What steps will you and the administration take to push the
    Brazilian government to remove the tariff on imported American ethanol?

        Answer. I understand the importance of this issue to U.S. ethanol
    producers. I will emphasize in engagements with Brazil the importance
    of more reciprocal conditions for trade in regards to American ethanol.
    I will also emphasize the common domestic statutory mandates for
    blending ethanol into gasoline that we share and our shared interest in
    addressing barriers to trade with third countries.

        Question. I sent Ambassador Lighthizer a letter encouraging him to
    drop section 230 from the U.S.-UK trade agreement negotiations. We each
    also raised concerns about the issue with you during your confirmation
    process. To date, though, you've refused to take a position on the
    issue. Your boss called for outright repeal of section 230 at one
    point. Secretary Raimondo agreed it needed to be reformed during her
    confirmation process. The Department of Justice has put forth a number
    of concrete reform proposals.

        Will you commit to drop this provision from future trade
    agreements?

        Answer. There is a wide variety of views on this issue. I have
    committed to consulting with the relevant stakeholders, including
    Congress, on this and other provisions of our trade agreements. We are
    doing the work and when we have made sufficient progress, we will look
    forward to consulting with you and other members.

                                     ______

                    Questions Submitted by Hon. John Cornyn
        Question. In 2012, the U.S. and China entered into a memorandum of
    understanding to settle a 2009 WTO case that the U.S. initiated and won
    regarding significant market barriers employed by China preventing the
    importation and distribution of theatrical films from the U.S. Due for
    an update to further open up distribution since 2017 as described in
    the original agreement, the bilateral discussions to update the
    agreement have so far come up fruitless. However, the ``USTR's 2020
    Report to Congress on China's WTO Compliance'' which was released in
    January 2021, specifically states, ``The United States will continue
    pressing China to fulfill its obligations.''

        What is the administration's plan to appropriately update the
    existing MOU and address the China's longstanding market access
    barriers in the forms of foreign film restrictions and revenue caps?

        Answer. The United States will continue pressing China to fulfill
    its obligations relating to the importation and distribution of
    theatrical films, as set forth in the 2012 memorandum of understanding.
    As you have noted, among other things, that memorandum of understanding
    calls for China to provide further meaningful compensation to the
    United States in terms of the number of films to be imported each year
    and the share of gross box office receipts from such films retained by
    U.S. enterprises, but China has not yet followed through on those
    important obligations. Our view is that China needs to keep the
    promises that it has made. Currently, USTR is conducting a top-to-
    bottom review of the U.S.-China trade relationship. The results of this
    review will inform our thinking as to how we proceed.

        Question. What is the administration doing to ensure that foreign
    films and digital content are not blocked due to ``censorship''
    concerns when they are in fact a barrier to market access?

        Answer. China is well aware of U.S. concerns. Over the years, the
    United States has repeatedly expressed concerns to China regarding the
    impact of its content-
    related policies on market access. For example, regarding the online
    provision of content, the United States has raised concerns regarding
    China's requirement that foreign companies license their content to
    Chinese distribution platforms. The United States also has raised
    concerns regarding China's other burdensome restrictions on content,
    which are implemented through exhaustive content review requirements
    that are based on vague and otherwise non-transparent criteria.
    Currently, USTR is conducting a top-to-bottom review of the U.S.-China
    trade relationship. The results of this review will inform our thinking
    as to how we proceed.

        Question. While I understand that USTR may still be reviewing
    China's compliance with the Phase One agreement, there are a number of
    third-party indicators that show China is still behind in meeting the
    requirements of the deal.

        IP licensing of services purchases are a major component of these
    purchasing requirements, correct? What can the U.S. do to see to it
    that China meets these commitments in the Phase One deal, particularly
    in addressing the IP licensing of services purchasing requirements?

        Answer. Under the Phase One agreement, China's purchase commitments
    cover calendar years 2020 and 2021 and fall into four broad categories
    and 23 sub-
    categories of U.S. goods and services. ``Charges for use of
    intellectual property'' is one of the services sub-categories. During
    meetings held under the Phase One agreement to review China's
    implementation progress, the U.S. side has repeatedly pressed China to
    increase the pace of its purchases of U.S. goods and services. China's
    purchases shortfall in 2020 is certainly in our sights. China's
    purchase commitments are important to the United States economically,
    but they are also important as commitments that China undertook of its
    own free will to make, and we need to ensure that its promises are
    worth the paper that they are written on. We will continue to make use
    of and push the tools that we have for the benefit of all U.S.
    stakeholders, including service suppliers.

        Question. While innovative technologies have offered a variety of
    new goods and services that benefit consumers and businesses, it also
    has proliferated access to copyright infringed content as well. For
    example, a 2019 study estimated that global online piracy drains at
    least $29.2 billion annually from the U.S. economy and that 80 percent
    of copyright piracy occurs via streaming technologies. In addition to
    the significant economic harm posed by these technologies, there are
    significant malware and fraud threats posed to U.S. consumers by
    streaming piracy websites identified by the Federal Trade Commission
    and Department of Homeland Security. How do these evolving threats to
    US-based copyrights and intellectual property in general impact the
    United States' economic and strategic competitiveness? What steps does
    USTR plan to take to effectively account for these threats?

        Answer. Fostering innovation and creativity is essential to U.S.
    economic growth, competitiveness, and the estimated 45 million American
    jobs that directly or indirectly rely on intellectual property (IP)-
    intensive industries. IP infringement undermines U.S. competitive
    advantages in innovation and creativity, to the detriment of American
    businesses and workers. We will take appropriate actions necessary to
    combat unfair trade practices and to ensure that trading partners
    follow through with their international commitments

        Question. The UK and the EU continue to impose a damaging 25-
    percent tariff on American whiskey. This tariff was imposed in June
    2018 in response to U.S. tariffs on steel and aluminum, and will double
    to 50 percent on June 1st. In March, the administration reached
    agreements with the EU and UK to suspend tariffs for four months in
    connection to the WTO large civil aircraft dispute, including tariffs
    on U.S. rum, brandy, vodka and certain UK and EU spirits and wines.
    Absent urgent action to fully suspend these tariffs, American whiskey
    will remain at a serious competitive disadvantage in our two most
    important export markets.

        Will you commit to ensuring these damaging tariffs are eliminated,
    and what is the administration's plan to secure the immediate
    suspension of UK and EU tariffs on American whiskey and agreements that
    result in the permanent removal of all tariffs on U.S., EU, and UK
    distilled spirits and wine?

        Answer. With respect to the section 232 tariffs on steel and
    aluminum, we have a very significant problem in the global steel and
    aluminum markets that is driven primarily by overcapacity in China and
    other countries, particularly in Southeast Asia and the Middle East.
    The administration is working to address the market-
    distorting measures in economies that have led to overcapacity in the
    global steel and aluminum industries and the resulting national
    security threats.

        In addition to the thorough review of the section 232 measures and
    product and country exclusions that is currently underway, the
    administration is also consulting closely with domestic stakeholders
    and partners around the world that share similar national security
    interests. We seek to address market distorting measures that pose a
    serious threat to the U.S. steel and aluminum industries and the
    workers in those industries. On May 17, 2021, the United States and the
    European Union (EU) announced the start of discussions to address
    global steel and aluminum excess capacity and the market distortions
    that result from this excess capacity, and we will be engaging
    intensively with the EU in the coming weeks. The EU announced its
    intention to temporarily suspend the planned increase in retaliatory
    duties, including duties on American whiskey. We believe the EU's
    duties are inconsistent with WTO rules and we are challenging them
    before the WTO. The administration is committed to working with the EU
    and other like-minded partners to address excess capacity, ensure the
    long-term viability of our steel and aluminum industries, and
    strengthen our democratic alliance.

        For additional questions on the state of section 232 tariffs on
    steel and aluminum, I would refer you to the Department of Commerce,
    which has the statutory lead on section 232.

        Question. Korea is an important U.S. ally in the Indo-Pacific, and
    the upcoming summit between President Biden and President Moon will be
    an important opportunity to strengthen this critical bilateral
    relationship and partnership, particularly in strategic industries. For
    example, while American cloud service providers offer the most secure
    and technologically advanced storage and computing solutions on the
    market today, and are certified to the highest international security
    and privacy standards, Korea has imposed a unilateral security
    certification scheme that USTR recognized in the 2021 National Trade
    Estimate as ``a key barrier for U.S. cloud service providers (CSPs) in
    the Korean public sector market.'' These same barriers are spreading to
    other sectors of Korea's economy, further blocking access to Korea's
    cloud market for U.S. cloud providers and undermining our bilateral and
    regional security goals.

        Given the strategic nature of the cloud services industry to the
    U.S. economy and our security interests in the Indo-Pacific, will you
    commit to working with the Government of Korea to remove these
    discriminatory requirements, adopt international security standards,
    and allow American cloud providers to compete in the public sector
    cloud market?

        Answer. We are actively engaged in working with Korea, both
    bilaterally and in relevant WTO committees, to further our bilateral
    and regional security and economic goals.

        Question. Some are concerned about actions by Mexico on data
    localization issues under USMCA, such as the recent regulation that
    requires financial technology companies to localize data, making it
    more complex and expensive for them to operate in Mexico, and
    disadvantaging U.S. companies in the process. Data localization is also
    a worrisome trend emerging in Latin America, as Ecuador and Uruguay
    also have data localization blockers that are impeding US services
    exporters, such as cloud service providers.

        Are you committed to addressing these data localization blockers in
    Mexico and other countries, and do you have a plan for implementation
    of USMCA's digital chapter commitments in particular?

        Answer. USTR is committed to ensuring that Mexico fulfills its
    commitments under the USMCA and that barriers to digital trade are
    effectively addressed. We are in touch with Mexico regarding our
    concerns relating to Mexico's recently finalized requirements on use of
    cloud services by electronic payment fund institutions.

        USTR will continue to engage with countries in Latin America and
    other regions across the world that adopt or consider any such measures
    that impede cross-border data flows or impose data localization
    requirements.

        Question. May is National Beef Month. For many Americans, we will
    celebrate National Beef Month by enjoying ribeyes, filets, and
    hamburgers with our families and friends. But we are not the only
    consumers celebrating U.S. beef. In fact, there has been a tremendous
    growth in demand for U.S. beef among many of our trade partners in
    Asia, where cuts like short plate, tongue, short ribs, and offal are in
    strong demand. Earlier this year, Korea surpassed Japan to become our
    number one export market. While sales in Japan remain strong, we have
    seen a 1,500-percent increase in U.S. beef sales in China. These
    remarkable developments are a combination of strong consumer demand
    coupled with strong trade policy that opened these markets for U.S.
    beef. Our trade agreement with Korea removed a 40-percent tariff, our
    agreement with Japan removed a 38.5-percent tariff, and the Phase One
    agreement with China removed numerous non-tariff barriers that acted as
    a ban on U.S. beef. Trade policy rooted in market-based, science-based,
    and rules-based principles has opened doors for U.S. cattle producers.

        What does USTR need from Congress to ensure we will successfully
    implement this winning formula for U.S. cattle producers and our
    growing international consumer base?

        Answer. I appreciate your offer of support as we continue
    advocating on behalf of U.S. beef producers by holding trading partners
    accountable to their international commitments and bilateral
    obligations under our trade agreements. There is a demand for high
    quality and nutritious beef products from the United States, and USTR
    will continue its work to ensure that U.S. beef exporters are able to
    supply this growing demand by addressing unjustified non-tariff
    barriers to trade and encouraging tariff liberalization wherever
    possible.

        Question. The United States has a strong history of defending and
    advancing science-based trade. The U.S. cattle industry has some of the
    most efficient and sustainable production practices in the world, with
    some of the healthiest cattle and safest beef, because we incorporate
    science at every level of production. We use well-established, FDA-
    approved technologies like hormones and beta agonists to raise cattle
    efficiently and use fewer resources to produce more beef. We use low-
    stress animal handling techniques taught in our Beef Quality Assurance
    Program. As a result of these efficient production practices, the
    United States produces 18 percent of the world's beef with only 6
    percent of the world's cattle. Unfortunately, the European Union and
    others apply protectionist measures not rooted in science, with the
    purpose of restricting U.S. beef exports and to discourage developing
    countries from adopting our safe and sustainable production practices.
    Over the next year, the United States will be involved in different
    global forums to discuss economic recovery efforts, strengthening
    global supply chains, and address food security.

        If we want to feed a growing global population with safe,
    nutritious food, we must embrace technology and science-based standards
    in food production. Will USTR continue to expand access for U.S. cattle
    producers by prioritizing and enforcing science-based standards in our
    trade agreements?

        Answer. As you noted, the United States has a long history of
    defending and advancing science-based trade through our active
    engagement in global forums. USTR will continue to advocate for access
    to safe, innovative tools, including those used by U.S. cattle
    producers, that are essential to improve efficiency and support
    sustainable agricultural production to address the challenges facing
    agriculture worldwide.

        Question. Forced technology transfer and intellectual property
    theft in China have long concerned U.S. trade and national security
    officials and culminated in WTO disputes, punitive tariffs, and other
    actions. When it comes to COVID vaccines developed using U.S. taxpayer
    dollars, it is particularly concerning that the administration would
    waive our previously agreed to commitments under the WTO Agreement on
    Trade-Related Aspects of Intellectual Property Rights (TRIPS).

        Does not the support for the WTO waiver amount to a giveaway of
    American intellectual property and a voluntary technology transfer of
    America's mRNA technology to China and the rest of the world?

        Answer. The administration believes strongly in intellectual
    property (IP) protections and the importance of safeguarding American
    innovation from illicit acquisition. The decision to support a waiver
    of IP protections for COVID-19 vaccines reflects the extraordinary
    circumstances of this pandemic. We are committed to working with the
    World Trade Organization members and will be clear-eyed about potential
    risks as we enter text-based negotiations. Support for a waiver of
    intellectual property rules for the WTO waiver does not amount to a
    giveaway of American intellectual property, nor does it represent
    voluntary technology transfer.

        Question. As you prepare to meet with your counterparts from China
    for a review of the Phase One agreement and progress to date, there is
    support to focus on the importance of the purchase commitments made.
    Additionally, a close review of progress to date with an objective of
    China fulfilling its commitments under Phase One as we are nearing the
    half way point should be considered.

        What are your perspectives on the current status of the agreement
    and how to facilitate fulfillment of the terms?

        Answer. China's purchases shortfall is certainly in our sights.
    China's purchase commitments are important to the United States
    economically, but they are also important as commitments that China
    undertook of its own free will to make, and we need to ensure that its
    promises are worth the paper that they are written on. We will continue
    to make use of and push the tools that we have for the benefit of U.S.
    workers, farmers, ranchers, manufacturers, service suppliers, and small
    businesses.

        Question. One of the challenges continuing to face many of our
    agricultural exporters and shippers is port congestion and shortage of
    shipping containers available for agricultural products being shipped
    from the U.S. to Asia and other destinations. These issues are causing
    increased shipping costs, order delays and penalties that can reduce
    the value/price paid to farmers, and potentially harm our
    competitiveness in export markets. These shipping concerns need to be
    addressed aggressively across the administration and constituents urge
    you to coordinate with your colleagues at USDA, Federal Maritime
    Commission, and other agencies to ensure all steps are being taken to
    resolve these challenges.

        What thoughts do you have on how the administration can work to
    address these concerns and what is currently being done?

        Answer. I understand that recent port congestion issues are one of
    the consequences of the economic disruption created by the COVID-19
    pandemic and have put even more pressure on global supply chains. I am
    committed to working with other agencies as well as allies to address
    supply chain challenges. As part of the supply chain initiative
    established by President Biden in Executive Order 14017, ``America's
    Supply Chains,'' an internal task force spanning more than a dozen
    Federal Departments and Agencies is closely examining the supply chain
    vulnerabilities to recommend actions that increase supply chain
    resilience in critical industrial base sectors that underpin America's
    economic and national security, including the transportation industrial
    base and the role of transportation systems in supporting existing
    supply chains.

        Question. As you know, during your nomination process a number of
    Senators, including me, raised their concerns about the negative impact
    of the section 301 tariffs that the last administration re-imposed on
    January 1, 2021. Many Senators urged you and the President to take
    action on these tariffs in advance of completing the new
    administration's critically important review of China policy.

        It is now a few days short of 2 months since your confirmation, and
    while the administration's review is underway, these companies and
    their consumers have already paid billions in new tariffs in 2021 which
    often are undercutting their ability to compete globally, and in some
    cases even advantaging their Chinese competitors. Additionally, many of
    these companies have invested significant time and funds to move their
    manufacturing out of China, but have been stalled in those efforts by
    the more than year-long international travel bans.

        Can you share where the administration is today on a decision to
    either open a new exclusion process or extend the exclusions for some
    defined period of time, perhaps through the end of the year?

        Answer. At the request and recommendation of Senator Portman, I
    have committed to doing a top-to-bottom review of our China trade
    policy, with the goal of making our trade policies more effective and
    more strategic. As part of that review, we are looking at the China 301
    tariffs and the exclusions process which provides us with important
    opportunities to craft thoughtful and effective responses to China's
    unfair trade practices.

        Question. You have stated that the Biden administration will ensure
    that our trading partners fulfill their commitments under existing
    agreements. Since entry into force of the USMCA, the government of
    Mexico has announced and enacted policies that threaten our access to
    the Mexican market. This is particularly true in energy where
    government policy is discriminating against U.S. energy companies and
    instead favoring state-owned enterprises. These discriminatory
    provisions have been approved and signed into law in Mexico in recent
    months.

        Many in America's energy industry are wondering at what point the
    United States will begin enforcing the agreement. Are you prepared to
    present a case under the dispute settlement provisions of the USMCA?

        Answer. Mexico's energy policies are undermining existing
    investments and directly implicate several of Mexico's USMCA
    obligations. I made these points clearly to the Mexican government
    during the inaugural meeting of the USMCA Free Trade Commission on May
    18th. USTR continues to analyze Mexico's energy measures, including
    recently passed legislation. I will use all dispute settlement tools to
    fully enforce the USMCA. I am also aware that U.S. companies are
    considering potential remedies under the agreement.

        Question. You have held up the USMCA as a model for future trade
    agreements. For that reason, one of my overarching concerns is that a
    lack of enforcement of the agreement could put the credibility of the
    USMCA at risk.

        Will you take actions in the short term if the Free Trade
    Commission meeting this month does not result in concrete steps by
    Mexico to address these apparent violations of the agreement?

        Answer. Full implementation of the USMCA is a top priority for the
    Biden-Harris administration. Last month, we initiated the first dispute
    settlement panel under the USMCA to review dairy TRQ allocation
    measures adopted by Canada. We also utilized the USMCA's rapid response
    mechanism last month to request that Mexico review whether workers are
    experiencing a denial of their rights to free association and
    collective bargaining. We continue to analyze other issues we are
    tracking with Mexico, and will to use all dispute settlement tools to
    fully enforce the USMCA.

        Question. The United States has long used efforts to negotiate--and
    fully enforce--next-generation free trade agreements to strengthen our
    economy and our workforce. America's free trade agreement partners buy
    nearly half of all U.S.-
    manufactured exports--highlighting the importance of pursuing,
    utilizing, and enforcing a robust and revitalized rules-based
    international trading system that enhances the role of free market
    forces, promotes respect for the rule of law, and propels manufacturing
    innovation in the United States and globally.

        We've seen lots of discussion about enforcing these agreements and
    look forward to work with you to ensure comprehensive enforcement of
    key commitments related to critical areas like labor, environment,
    market access and innovation. But we also must look at negotiating new
    agreements: we cannot afford to fall behind other trading partners like
    the EU and China that are continuing to lock in market access for our
    competitors through agreements.

        How will you approach new trade agreements to combat unfair
    barriers and practices around the world?

        Answer. The administration is in the process of reviewing the
    objectives of the UK and Kenya trade agreement negotiations, which were
    launched under the prior administration. In these reviews, and in
    thinking about potential future engagements, the administration wants
    to ensure that new trade agreements meet the objectives of the Biden-
    Harris administration for a worker-centric trade policy.

        Question. Recent tech regulations out of Europe speak to a broader
    need for the U.S. to engage with like- minded democracies on a wide
    range of tech issues. Legislation like the Digital Markets Act (DMA),
    if implemented, would likely discriminatorily target U.S. companies,
    while avoiding any regulation of European companies.

        Such efforts relate to what certain European leaders refer to as
    ``digital sovereignty,'' which means building European champions to
    replace U.S. companies. While competition is desired, it must be fair.
    Using discriminatory regulations is clearly not.

        Is resolving such discriminatory practices against U.S. companies a
    priority to USTR and if so, how is USTR working with the EU to ensure
    actions are nondiscriminatory?

        Answer. I am aware of the concerns that U.S. companies have raised
    about digital services taxes (DSTs), other European Commission
    regulatory initiatives, such as the Digital Markets Act (DMA), and the
    continued free flow of data. I will consider the full range of trade
    tools available to me to address discrimination against U.S. workers
    and U.S. companies.

        Question. Numerous companies around the country are collectively
    owed millions of dollars in refunds by U.S. Customs and Border
    Protection (CBP), which have gone unpaid due to the way the previous
    administration administered the section 301 China tariff exclusion
    process. In short, when exclusions from China 301 tariffs were granted,
    they were applied retroactively to when the China tariffs were
    initially put in place, which should have resulted in a refund of China
    tariffs already paid. However, because it took so long to approve many
    of the 301 exclusions, many companies are unable to recoup money that
    is otherwise owed to them.

        If a company imported a product that qualified for an exclusion,
    they should be able to take advantage of that exclusion, regardless of
    when the exclusion was granted. As the current United States Trade
    Representative, will you commit to working with CBP and this committee
    to ensure these companies receive all of the money that is owed to
    them?

        Answer. USTR has worked closely with Customs and Border Protection
    on all aspects of the implementation of the China 301 tariffs, and will
    continue to do so.

        Question. Two critical trade preference programs--the Generalized
    System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB)--
    lapsed at the end of 2020 imposing a tax increase on American workers,
    American consumers, and American businesses at a time when they can
    least afford it. Both the GSP and MTB programs have been supported for
    decades by overwhelming bipartisan majorities. The COVID-19 pandemic
    has caused great uncertainty for American companies and their U.S.
    workers. This is not the time to impose new costs on U.S. supply
    chains, particularly on American job creators who are still recovering
    from the impacts of the COVID-19 pandemic.

        Can you confirm the administration's support for retroactive
    renewal of GSP and MTB in short order?

        Answer. I look forward to working with you and other members of
    this committee to ensure reauthorization of these programs is
    consistent with the President's
    worker-centered trade policy.

        Question. Some are concerned about the wave of regulations in
    Mexico targeting the packaged food and beverage industry. As you may be
    familiar, the restrictions include sales bans (already in effect in two
    Mexican states, with proposals in 23 others and at the Federal level),
    as well as excessive packaging and marketing rules which infringe on IP
    rights (trademarks and patents) and stifle innovation. These measures
    lack scientific justification and provide incomplete and misleading
    information to consumers.

        What is USTR doing to ensure that Mexico lives up to its
    international trade commitments, including USMCA?

        Answer. On the subject of Mexico's prepackaged foods front-of-
    package labeling, Mexico exempted food service products, raw materials,
    and unfinished products from its labeling requirements, and in April
    2021, Mexico notified an inter-institutional agreement allowing
    continued use of stickers on imported products to comply with its
    front-of-package labeling requirements indefinitely.

        We continue to closely monitor and raise concerns with any State or
    Federal level bans that would impact foods that are required to carry
    front-of-package warning symbols.

        Question. There has been a lot of focus on moving supply chains out
    of China. The Generalized System of Preferences (GSP), which excludes
    China but eliminates U.S. tariffs on developing countries that could be
    viable sourcing alternatives, seems like a natural fit to encourage
    such sourcing shifts. In fact, expanding GSP to cover travel goods in
    2016/2017 has led to a rapid relocation of supply chains for backpacks,
    luggage, and other travel goods from China to GSP countries in
    Southeast Asia in recent years.

        How can programs such as GSP fit into the administration's broader
    China strategy?

        Are there aspects of the current GSP program that you believe limit
    its effectiveness for companies seeking sourcing alternatives to China?

        As Congress considers GSP renewal legislation, what changes could
    we make to increase its effectiveness in this regard?

        Answer. As the 2021 President's Trade Agenda Report notes, one of
    the Biden-Harris administration's core international and trade policy
    goals is to strengthen relationships with America's allies and friends
    to tackle pressing global challenges, including the China policy
    challenges we face.

        As conceived by Congress in 1974, GSP is a development program,
    intended to improve the conditions of people in those beneficiary
    countries. However, GSP can also be an important tool that helps build
    relationships with many low- and middle-income countries, through
    support for their development and economic diversification. Economic
    diversification among beneficiaries can also promote economic
    diversification away from countries such as China.

        I look forward to working with you and other members of this
    committee to ensure that GSP renewal is effective in tackling our China
    policy challenges.

        Question. What are your thoughts on incentives, through GSP or
    otherwise, to move supply chains away from China and to the Western
    Hemisphere, given the increased cooperation between the EU and China
    for example?

        Answer. President Biden's executive order on America's supply
    chains sets out to establish resilient, diverse, and secure supply
    chains to ensure our economic prosperity and national security. The
    2021 President's Trade Agenda Report also notes one of the Biden-Harris
    administration's core international and trade policy goals is to
    strengthen relationships with America's allies and friends to tackle
    pressing global challenges, including the China policy challenges we
    face. I welcome the opportunity to work with Congress on how USTR can
    achieve these two objectives.

        Question. What are your thoughts on creating specific incentives,
    in contrast to the current tariffs, for companies currently operating
    in China but looking to diversify their supply chains away from the
    country?

        Answer. As set out in the President's executive order on America's
    supply chain, USTR is actively participating in the administration's
    supply chain review, including by considering reforms to international
    trade rules and agreements in order to support supply chain resilience,
    security, diversity, and strength. I welcome the opportunity to work
    with Congress on these goals as well.

        Question. June 5th will mark 2 years since India's eligibility
    under the Generalized System of Preferences (GSP) program was
    terminated. Since then, American companies have paid as much as $600
    million in new tariffs, yet none of the issues raised when the review
    was launched 3 years ago have been resolved. I view cooperation with
    India not just from an economic benefit but as a geo-strategic way to
    counter Chinese influence.

        What are your plans to engage on a trade agreement of any type with
    India which has never successfully negotiated?

        Answer. India is an important, but challenging market for US
    businesses. In my initial discussions with India's Minister of Commerce
    and Industry Goyal, we have agreed to revitalize the U.S.-India Trade
    Policy Forum to resolve outstanding trade concerns before exploring
    additional prospects for expanding the bilateral trade relationship.

        Question. It's good that we are using the tools of the USMCA. We
    also put a lot of work into the state-to-state mechanism in Chapter 31.
    It's important to show that mechanism works too. Mexico has proposed or
    enacted many domestic trade-
    affecting measures inconsistent with its USMCA obligations and failed
    to carry out other obligations.

        Which commercial USMCA implementation concerns are ripe for
    consultations, the first step in the process?

        Answer. We are tracking issues across several sectors with Mexico,
    including in the agricultural and energy sectors. We continue to
    analyze these issues, and will use all dispute settlement tools to
    fully enforce the USMCA.

        Question. U.S. companies are reporting a long and growing list of
    USMCA implementation challenges in Mexico. Some have catalogued
    concerns across 13 chapters and annexes, covering agriculture, national
    treatment, government procurement, biopharmaceuticals, medical
    equipment, financial services, telecommunications and broadcasting,
    Customs, and more.

        Can you discuss how enforcement of USMCA's commercial provisions is
    critical to the President's worker-centric trade agenda and
    strengthening our industrial and innovation base?

        Answer. We are tracking issues across several sectors with Mexico,
    and I have been in touch with several stakeholders directly about their
    concerns. The President's worker-centric trade agenda is based on
    ensuring that America's workers don't face unfair competition from
    competitors beyond our shores--and especially from our closest trading
    partners like Mexico. Ensuring that Mexico lives up to its obligations
    in the USMCA is critical to avoiding a race to the bottom, and I will
    use all dispute settlement tools to fully enforce the agreement.

        Question. A new bill in the Mexican Senate would, if passed, force
    a 10-percent local content quota for video streaming services. This
    would violate USMCA commitments that prohibit performance requirements
    and require Mexico to accord non-
    discriminatory treatment. It would unfairly restrict U.S. services
    exports that support tens of thousands of U.S. jobs.

        How will USTR act to prevent this initiative from coming into force
    and protect U.S. audiovisual exports to Mexico?

        Answer. Since the first version of this bill appeared in March
    2020, USTR has coordinated closely with the U.S. Embassy in Mexico City
    and our counterparts in the Ministry of Economy to ensure that the
    USMCA implications of this bill are widely understood. USTR will
    continue with these efforts.

        Question. A common stated goal in U.S. trade policy is the
    promotion and expansion of U.S.-based manufacturing, employment, and
    exports. However, apart from trade remedies, there are notable examples
    of tariff policies in trade agreements and adopted by the United States
    and other countries with whom the United States has negotiated a free-
    trade agreement that undermine those broader trade-policy goals by
    undercutting the cost competitiveness of U.S. based manufacturing in
    our domestic and export markets.

        Would the Office of the U.S. Trade Representative support and be
    willing to request that the U.S. International Trade Commission (ITC)
    conduct a study of this problem and develop recommendations to address
    it, including how existing programs, especially the U.S. Foreign-Trade
    Zones Program, that are designed to advance broader trade-policy goals,
    could be used most effectively?

        Specifically, would you be willing to consider reviewing the USMCA
    restriction on goods produced in FTZs?

        Answer. This issue was considered by Congress as part of the
    implementation of USMCA. I would be happy to discuss your concerns
    about this issue.

        Question. The EU has made it clear that they seek ``tech
    sovereignty'' and have set forth an ambitious agenda that proposes a
    range of regulatory efforts that at times clearly targets American
    firms.

        Are you closely watching these worrisome developments and how are
    you engaging Europe to ensure American companies are treated fairly in
    its market?

        Answer. I am aware of the concerns that U.S. companies have raised
    about digital services taxes (DSTs), other European Commission
    regulatory initiatives, such as the Digital Markets Act (DMA), and the
    continued free flow of data. I will consider the full range of trade
    tools available to me to address discrimination against U.S. workers
    and U.S. companies.

                                     ______

                    Questions Submitted by Hon. Richard Burr
        Question. The partnerships formed to develop and manufacture the
    COVID-19 vaccines have been one of the biggest scientific success
    stories in generations. As part of the global response to COVID-19,
    over 275 partnerships have been created to further the collaborative
    efforts to scale up vaccine manufacturing for global health security. I
    am gravely concerned by the Biden administration's decision to support
    waiving intellectual property protections for COVID-19 vaccines under
    the WTO framework. Intellectual property rights are not a credible
    barrier to increasing vaccine supply to countries in need. This
    counterproductive approach will jeopardize ongoing efforts to ramp up
    vaccine production and undermine our ability to respond to this and the
    next pandemic.

        On April 23rd, international vaccine innovators and manufacturers
    raised concerns regarding existing supply challenges impacting COVID-19
    vaccine production.

        As part of the deliberation regarding this decision to undercut
    innovators, what steps has the administration taken to address the
    identified supply challenges to help increase vaccine production and
    distribution immediately, such as working to help address export
    controls?

        Answer. Starting in mid-April, USTR began consultations with
    interested parties: labor organizations, civil society, public health
    advocates, public health experts both inside and outside of the
    government, and also vaccine manufacturers. USTR, along with the rest
    of the administration, will continue to ramp up efforts to work with
    the private sector and other partners to expand vaccine manufacturing
    and distribution around the world.

        Question. We are not going to get this pandemic under control if we
    do not work together to address the global vaccine needs. According to
    the WHO, there have been more than 2.3 million new cases of COVID-19
    reported in India within the last 7 days.

        What specific actions has the administration taken to help get
    COVID-19 vaccines to other countries in need, such as India?

        Answer. The top priority of the United States is saving lives and
    ending the pandemic in the United States and around the world. This
    includes investing in the COVAX Facility, sharing our surplus vaccine
    doses, and working with our international partners, such as the Quad
    Vaccine Partnership, to surge production and delivery, including
    through efforts to achieve greater regional and local manufacturing
    capacity, in recognition of the importance of widespread vaccination
    against COVID-19 to combat the pandemic and hasten economic recovery.
    In particular, the United States and India have closely worked together
    to respond to the COVID-19 pandemic. U.S. COVID-19 assistance has
    reached more than 9.7 million Indians across more than 20 States and
    union territories, providing life-saving treatments, disseminating
    public health messages to local communities, strengthening case-finding
    and surveillance, and mobilizing innovative financing mechanisms to
    bolster emergency preparedness.

        Question. I have significant concerns with how Mexico has
    implemented USMCA. I am tracking recent actions by Mexico that violate,
    or threaten to violate, commitments in multiple chapters and annexes,
    covering agriculture, national treatment, government procurement,
    biopharmaceuticals, medical equipment, financial services,
    telecommunications and broadcasting, customs and more. The first Free
    Trade Commission meeting is next week.

        What actions will the United States take to get Mexico to abide by
    its commercial USMCA commitments?

        Answer. We are tracking issues across several sectors with Mexico,
    including in the agricultural and energy sectors. We continue to
    analyze these issues, and will use all dispute settlement tools to
    fully enforce the USMCA.

        Question. The 2021 Trade Policy Agenda states that ``Opening
    markets and reducing trade barriers are fundamental to any trade
    agenda.'' In addition to being a strong ally, the United Kingdom is one
    of the top export markets for U.S. goods and services, and U.S.
    businesses and workers stand to benefit tremendously from an agreement
    to further lower tariffs and streamline regulations. You previously
    noted, in your response to my question for the record, that you would
    review the status of these negotiations.

        Can you speak about your review and provide an update on your
    plans?

        Answer. The President recently met Prime Minister Johnson and
    committed to deepening and strengthening our vital economic and trading
    partnership. As a first step, we agreed to move past the 16-year WTO
    dispute regarding aircraft subsidies. We have agreed to suspend tariffs
    related to the dispute for 5 years, while retaining flexibility for the
    United States to reapply tariffs if we're no longer competing on a
    level playing field. We and the UK have also adopted clear statements
    on acceptable support for large civil aircraft producers and a
    cooperative process to address support between the parties and overcome
    longstanding differences. Second, the President and Prime Minister
    agreed to work closely to identify and pursue opportunities to deepen
    our already extensive trade relationship. As part of the Biden-
    Harris administration's focus on the Build Back Better agenda and
    supporting a worker-centric trade policy, I am continuing my review of
    the objectives of the negotiations with the United Kingdom that were
    begun under the prior administration.

        Question. The U.S.-China Phase One agreement is important to U.S.
    farmers and ranchers for the purchase goals and for the commitments on
    standards.

        Can you provide an update on their fulfillment of the agreement,
    particularly with regards to agriculture purchases, and how is USTR
    working to ensure China fulfills its obligations under the agreement?
    How is USTR working to expand the opportunities in China for U.S.
    farmers and ranchers for the next year and beyond?

        Answer. I agree on the importance of holding China fully
    accountable for the numerous agriculture commitments that it made in
    the Phase One agreement, including the purchase commitments. To date,
    while China has made progress in implementing many of the agriculture
    commitments under the Agreement, more work needs to be done. Especially
    with regard to China's commitments to purchase agricultural
    commodities, China's efforts so far have fallen short. Through the
    extensive consultation processes established by the Phase One
    agreement, USTR regularly engages China on all of these commitments to
    discuss China's implementation progress and our concerns as they arise.
    Going forward, we will continue to make use of the Phase One agreement
    and other tools at our disposal in order to expand opportunities in
    China for U.S. farmers and ranchers.

                                     ______

                    Questions Submitted by Hon. Rob Portman
        Question. At the hearing you indicated that there is need for new,
    21st-century trade tools to respond to emerging non-market practices by
    countries, such as China.

        Do you agree that modifications to the anti-dumping and
    countervailing duty laws should be included within the scope of
    conversations about the development of new tools to respond to such
    non-market practices?

        Answer. As you underline, at the hearing I discussed the need for
    trade tools that address the challenges to our values and interests
    today and anticipate those of tomorrow. Statutes developed several
    decades ago may not fully address the economic and anticompetitive
    challenges that have arisen more recently. A prime example is China's
    industrial policies and role in global excess capacity. In this spirit,
    as discussed at the hearing, we now have an opportunity to think
    through the tensions or gaps between the existing authorities and the
    particular non-market, coercive, or other unfair practices we now face.
    Last time, we discussed this dynamic in the context of section 232 of
    the Trade Expansion Act of 1962.

        Our antidumping and countervailing duty laws may also need to be
    part of this conversation. To that end, I welcome ideas from you,
    Senator, and other members of Congress, on how we can enhance our tools
    to remedy unfair foreign dumping and subsidization, particularly when
    non-market practices are at play.

        Question. In November 2020, 15 countries, including China, signed
    the Regional Comprehensive Economic Partnership. If the United States
    does not open new markets--such as the United Kingdom--for made in
    America products, China and other countries will vie for that market
    access.

        How many trade agreements and entered into force among our largest
    trading partners over the past 15 years? Do you intend to launch
    negotiations for any comprehensive agreements in 2021?

        Answer. As noted in the President's trade agenda, opening markets
    and reducing trade barriers, while ensuring that U.S. businesses and
    workers as a whole benefit from these efforts, will be a priority for
    the Biden administration. USTR is actively engaged in discussions with
    our partners in on how we can best work toward these aims.

        Question. Efforts to waive the TRIPS Agreement for intellectual
    property related to the COVID-19 vaccines are concerning because those
    efforts may not actually expand vaccine access.

        Can you provide an example of a factory in the world which would be
    able to start producing safe and effective COVID-19 vaccines if IP
    rights were waived at this moment? Are you considering efforts to
    increase the supply of raw materials needed for COVID-19 vaccines?

        Answer. The administration's aim is to get as many safe and
    effective vaccines to as many people as fast as possible. As our
    vaccine supply for the American people is secured, the administration
    will continue to ramp up its efforts--working with the private sector
    and all possible partners--to expand vaccine manufacturing and
    distribution. We will also work to increase the raw materials needed to
    produce those vaccines. In supporting a waiver of intellectual property
    protections for COVID-19 vaccines, the administration is committed to
    starting a process at the World Trade Organization to find a solution
    there that is effective and practical in saving lives.

        Question. Last month, you testified that the United States and the
    European Union need to find ways to come together and resolve
    differences in order to meet emerging challenges. One outstanding
    difference is the Boeing/Airbus dispute.

        Do you need a path forward to resolving that dispute?

        Answer. Our negotiations with the EU and the UK have resulted in
    agreement to move past the 16-year WTO dispute regarding aircraft
    subsidies. We have agreed to suspend tariffs related to the dispute for
    5 years, while retaining flexibility for the United States to reapply
    tariffs if we're no longer competing on a level playing field. We, the
    EU, and the UK have also adopted clear statements on acceptable support
    for large civil aircraft producers and a cooperative process to address
    support between the parties and overcome longstanding differences.

        With respect to China, we pledged to:

            Meaningful cooperation on countering (1) investments in the
    aircraft sector by non-market actors in our economies to acquire
    technology and know-how; and (2) outward investments that involve
    moving production into China pursuant to non-market forces.
            Identifying where joint work is needed to take parallel action
    against other non-market practices.
            Sharing information regarding these and other areas in the
    large civil aircraft sector.

        Question. I understand that Customs and Border Protection (CBP) is
    applying tariffs to used vehicles imported from Canada and Mexico.

        Do you agree that the intent of the U.S.-Mexico-Canada Agreement
    (USMCA) is for the agreement's rules of origin to apply only to newly
    manufactured vehicles?

        Answer. The USMCA rules of origin do not differentiate between any
    new and used products. As a result, the rules of origin for autos are
    the same for both new and used vehicles. No U.S. free trade agreement
    has a separate rule of origin for used vehicles.

        Question. As the Republican chair of the Friends of Switzerland
    Caucus, I support closer ties between the United States and
    Switzerland.

        Do you believe that a trade agreement between the United States and
    Switzerland should be a priority? Do you agree that it would open up
    new agricultural markets for American farmers, ranchers, and growers?

        Answer. The Biden administration highly values our relationship
    with Switzerland. We regularly engage Switzerland bilaterally to
    explore ways to expand and enhance our trade ties.

        As the President has made clear, however, we will not be engaging
    in new trade agreements before we make the necessary investments at
    home.

                                     ______

                     Questions Submitted by Hon. Tim Scott
        Question. As you know, South Carolina is home to some of the most
    dynamic research institutions and biomedical manufacturers in the
    country. Robust IP protections are critical to the work they do, which
    is why I fought hard against the removal of IP protections for U.S.
    biologics in USCMA. It has always been clear to me that removing--or
    even threatening to remove--these protections doesn't just reduce
    incentives to innovate, it will deprive innovative U.S. companies of
    the fruits of their research and put them at a competitive
    disadvantage. Researchers and innovators in the Palmetto State provide
    us with a competitive edge in the global economy. It is alarming to
    think that our own government would not have their back, especially
    when their value has never been more clear.

        Would you agree that this trend of increasingly reduced IP
    protections for U.S. biologics threatens our economic and national
    security?

        How does this administration plan to reverse course and shore up
    protections in the future so that we may avoid losing countless jobs
    and our position as the world leader in biotech innovation?

        Answer. The COVID-19 pandemic has highlighted the importance of
    pharmaceutical, medical device, and other health-related innovation and
    revealed the relatively concentrated distribution of resulting
    products. USTR continues to seek adequate and effective protection for
    pharmaceutical and other health-related intellectual property (IP)
    around the world to ensure robust American innovation in these critical
    industries to fight not only the current, but also future pandemics.

        This is a global health crisis, and the extraordinary circumstances
    of the COVID-19 pandemic call for extraordinary measures. The
    administration believes strongly in IP protections, but in service of
    ending this pandemic, supports the waiver of IP protections for COVID-
    19 vaccines.

        Question. As you may know, I joined 38 other members of Congress in
    the submission of a bicameral letter to you earlier this month, asking
    to coordinate with you to expeditiously develop a concrete action plan
    to deliver effective and enforceable relief to help our seasonal fruit
    and vegetable producers compete against unfair trade practices. As you
    may recall from our previous discussions, this remains a critical issue
    for the producers in my State who are continually forced to compete on
    an uneven playing field.

        Will you commit to working with me to develop and implement new,
    effective ways to help deliver long-overdue relief to our country's
    seasonal producers?

        Will you commit to keeping me updated as to the status of these
    efforts?

        Answer. I commit to working closely with you and Congress on all
    trade legislation and crafting trade policy consistent with the Build
    Back Better agenda that prioritizes the interests of America's workers,
    including producers of seasonal and perishable produce. I am also
    committed to ensuring that U.S. producers are not unfairly
    disadvantaged by our trading partners' policies. I welcome input and
    ideas from you, Senator, and the other members of Congress as to how
    USTR can further utilize the wide range of tools that are available to
    address the challenges facing U.S. producers.

        Question. As you know, the continued growth of the automotive
    industry is critically important to my home State. In South Carolina,
    the automotive industry is responsible for nearly 80,000 jobs and is
    one of the top 10 fastest-growing labor forces in the Nation. Roughly
    half a million vehicles were produced in South Carolina in 2019 alone,
    providing billions of dollars in employee compensation, support for
    U.S. suppliers, and State and Federal revenues. With the advent of the
    inaugural meeting of the USMCA Free Trade Commission, I have the
    following questions for you. Do you plan to make discussing the
    automotive rule of origin a priority at the Free Trade Commission
    meeting, and will you commit to working with your counterparts in
    Canada and Mexico to ensure timely and efficient implementation?

        Will you also agree to keep me updated on the progress of these
    efforts?

        Answer. During the first-ever USMCA Free Trade Commission meeting,
    the committee on Rules of Origin and Origin Procedures provided an
    update on its work related to the implementation of the automotive
    rules of origin. I will maintain close communication with Mexico and
    Canada on this issue. I will continue to keep you and other members
    updated as we continue our engagement with both Mexico and Canada.

        Question. As you know, two critical trade preference programs, the
    Generalized System of Preferences (GSP) and the Miscellaneous Tariff
    Bill (MTB), lapsed at the end of 2020. This has created a significant
    burden on our workers, consumers, and businesses in the midst of an on-
    going pandemic and ensuing recession.

        Can you confirm the administration's support for the renewal of GSP
    and MTB?

        Can you share what steps the administration has taken, or plans to
    take, to support congressional approval?

        Answer. I look forward to working with you and other members of
    this committee to ensure reauthorization of these programs is
    consistent with the President's
    worker-centered trade policy.

        Question. As you may know, I have long been concerned about China's
    unfair trade practices and continue to support efforts to challenge the
    inequities in our relationship with China. At the same time, we must
    also recognize the reality that certain inputs for domestic
    manufacturers remain unavailable outside of China at this time. It is
    critical, especially now, that we take the necessary steps to mitigate
    undue harm to our small businesses, domestic manufacturers, and job
    creators. For this reason, I was pleased to see a tariff exclusion
    process that attempted to address these realities; unfortunately, that
    process expired at the end of 2020.

        In light of these realities, will you commit to launching a new
    China section 301 product exclusion process and when can we expect that
    to occur? Can you also expand upon the administration's perspective of
    this form of relief as it currently stands, and, more specifically,
    what actions we can expect to see in the short term?

        Answer. At the request and recommendation of Senator Portman, I
    have committed to doing a top-to-bottom review of our China trade
    policy, with the goal of making our trade policies more effective and
    more strategic. As part of that review, we are looking at the China 301
    tariffs and the exclusions process which provides us with important
    opportunities to craft thoughtful and effective responses to China's
    unfair trade practices.

                                     ______

                    Questions Submitted by Hon. Bill Cassidy
        Question. Stakeholders in the U.S. energy sector tell me President
    Lopez Obrador has recently spearheaded major amendments to laws to
    change market rules in favor of Petroleos Mexicanos (Pemex) and
    Comision Federal de Electricidad (CFE) and against private companies.
    This comes after having already directed energy regulatory agencies to
    expressly favor Pemex and CFE over private investment in all energy
    production and generation. The common denominator is to hinder new
    private investment in the energy sector and minimize the value of
    already operating private assets. I'm told this could be in violation
    of Mexico's commitments under both NAFTA and USMCA. Issues such as non-
    discriminatory treatment, minimum standard of treatment and unlawful
    indirect expropriation each seem to be issues. These regulatory abuses
    are an affront to the fair and equitable protections clauses under
    USMCA. AMLO's repeated false claims that natural gas and oil are not
    covered under USMCA, with encouragement from his legislature, are
    highly concerning following the energy liberalization reforms that
    opened up investment partnerships for U.S. and Western investors.

        Can you state for the record whether natural gas and oil are
    included under USCMA and detail for the committee the options USTR has
    at its disposal to ensure interests are protected?

        What options does USTR have available to counter any reprisals from
    Mexico if they retaliate against companies who raise these concerns
    with the Mexican government?

        How will USTR address systemic regulatory abuses by Mexican
    agencies toward U.S. and Western investors in Mexico that seem to only
    serve to advantage Pemex and CFE?

        Will you raise this matter during your upcoming Free Trade
    Commission meeting with Mexican leaders?

        Answer. There is no doubt that the USMCA applies to Mexico's energy
    sector; this is very clear in the USMCA text. Mexico's energy policies
    are undermining existing investments and directly implicate several of
    Mexico's USMCA obligations. I made these points clearly to the Mexican
    Government during the inaugural meeting of the USMCA Free Trade
    Commission on May 18th. USTR continues to analyze Mexico's energy
    measures, including recently passed legislation. I will use all dispute
    settlement tools to fully enforce the USMCA. I am also aware that U.S.
    companies are considering potential remedies under the agreement.

        Question. As of this moment, the European Union, Canada, and the
    Biden administration have all expressed support for carbon border
    adjustment policies specific to their countries. A paper published this
    month entitled ``Trade, Firm-Delocation, and Optimal Climate Policy''
    suggests that border carbon adjustments created as a part of a ``carbon
    club''--consisting of countries undertaking harmonized emissions
    reductions--could reduce global CO2 emissions by 81 percent.
    However, if these same countries unilaterally imposed domestic border
    carbon adjustments, the global carbon reduction would only be 3 percent
    of the reduction achieved under the carbon club proposal.

        Do you worry that domestic border carbon adjustments may actually
    create a system where carbon reduction does not occur and instead
    serves solely as a tariff on imports?

        In a scenario where individual countries each possess their own
    domestic border adjustment, do you worry about the ability for U.S.
    companies to export their goods abroad?

        How can we take advantage of global interest in decreasing carbon
    emissions to create a global system that helps U.S. companies export
    their low-carbon goods?

        Answer. I agree that the United States should seize the opportunity
    to support global ambitions to lower carbon emissions, and leverage
    this opportunity to support U.S. companies that export technologies,
    goods, and services that are low-carbon and that will support a global
    shift to low-carbon economic models. I share your concern that, if not
    designed appropriately, a border adjustment could undermine global
    ambition to achieve net zero emissions. USTR is engaged with the USG
    interagency and with key trading partners on these issues, to ensure
    that U.S. companies are not disadvantaged in the global marketplace and
    measures are designed to help achieve our environmental goals with the
    least disruption to efficient trade.

        Question. In a speech last month, however, you stated that the
    trade ``system itself'' creates an incentive to lower environmental
    standards.

        Can you elaborate with some examples?

        Answer. The United States designs, develops, and implements
    mutually supportive trade and environmental policies. This includes
    ensuring that our trade agreements contain strong and enforceable
    environment obligations. Without such an approach, there is an
    incentive for companies, and governments, to seek to maximize profits
    while lowering costs, including through lower environmental standards.
    Over time, U.S. trade agreements have included environment provisions
    that evolved from cooperative to fully enforceable and subject to the
    same dispute settlement process as other provisions in those
    agreements.

        Question. On March 4th and 5th, the administration announced a
    suspension of tariffs on the UK and the EU in connection with the
    ongoing WTO Boeing/Airbus dispute for a period of 4 months (expires
    July 4th and July 11th). As you know, this suspension now allows for
    all EU and UK distilled spirits, including Scotch and Irish whiskey, to
    enter the U.S. duty-free, while our American-made whiskeys remain
    subject to a 25-percent tariff in the EU and in the UK, possibly a 50-
    percent tariff in the EU by June 1st if nothing is done.

        Can you help me better understand how we plan to avoid a 50-percent
    tariff on our whiskey and what we're doing to secure a level playing
    field for American-made whiskey to fairly compete in our largest export
    markets?

        Answer. With respect to the section 232 tariffs on steel and
    aluminum, we have a very significant problem in the global steel and
    aluminum markets that is driven primarily by overcapacity in China and
    other countries, particularly in Southeast Asia and the Middle East.
    The administration is working to address the market distorting measures
    in economies that have led to overcapacity in the global steel and
    aluminum industries and the resulting national security threats.

        In addition to the thorough review of the section 232 measures and
    product and country exclusions that is currently underway, the
    administration is also consulting closely with domestic stakeholders
    and partners around the world that share similar national security
    interests. We seek to address market distorting measures that pose a
    serious threat to the U.S. steel and aluminum industries and the
    workers in those industries. On May 17, 2021, the United States and the
    European Union (EU) announced the start of discussions to address
    global steel and aluminum excess capacity and the market distortions
    that result from this excess capacity, and we will be engaging
    intensively with the EU in the coming weeks. The EU announced its
    intention to temporarily suspend the planned increase in retaliatory
    duties, including duties on American whiskey. We believe the EU's
    duties are inconsistent with WTO rules and we are challenging them
    before the WTO. The administration is committed to working with the EU
    and other like-minded partners to address excess capacity, ensure the
    long-term viability of our steel and aluminum industries, and
    strengthen our democratic alliance.

        For additional questions on the state of section 232 tariffs on
    steel and aluminum, I would refer you to the Department of Commerce,
    which has the statutory lead on section 232.

        Question. The section 301 product exclusion process expired at the
    end of last year, except for a small number of exclusions that were
    extended for products needed to respond to the COVID-19 pandemic. The
    product exclusion process was deeply flawed--it lacked transparency and
    consistency and placed significant burdens on those wishing to apply
    for exclusions. Despite its flaws, the economic benefits were important
    for those who were able to secure exclusions, and the relief from these
    additional taxes became even more crucial during the economic
    recession. Allowing the exclusions to expire and raising taxes on
    American businesses of all sizes during this particularly difficult
    economic time should not have happened.

        You recently received two bipartisan letters that were signed by
    over 100 House members and 40 Senators calling for a reinstatement of a
    fair and transparent exclusion process. Understanding that time is of
    the essence, can you provide us any further update on this front?

        Answer. At the request and recommendation of Senator Portman, I
    have committed to doing a top-to-bottom review of our China trade
    policy, with the goal of making our trade policies more effective and
    more strategic. As part of that review, we are looking at the China 301
    tariffs and the exclusions process which provides us with important
    opportunities to craft thoughtful and effective responses to China's
    unfair trade practices.

        Question. I have been following your commentary about the future of
    the WTO and the potential for the trade body to be workable with some
    revisions. One major issue on the radar of the rice producers in my
    State, and growers of other commodities around the country, are the
    believed WTO violations by India.

        Could you look at formally filing a request for consultations and
    take a serious look at filing a WTO case?

        Answer. India's agricultural trade policies are a serious concern
    for U.S. agricultural producers. Resolving agricultural trade barriers
    and unfair competition are a priority for USTR, and I am committed to
    ensuring trade partners live up to their international obligations.

                                     ______

                   Questions Submitted by Hon. James Lankford
        Question. Why did you not consult with Congress on your decision to
    support a TRIPS waiver? Does the administration plan to submit the text
    of any waiver to TRIPS that it negotiates at the WTO to Congress for
    approval?

        Answer. In supporting a waiver of intellectual property protections
    for COVID-19 vaccines, the administration is committed to pursuing a
    process at the World Trade Organization (WTO) to find a solution there
    that is effective and practical in saving lives. I am committed to
    keeping Congress fully informed of developments in the process in the
    WTO.

        Question. The decision to issue a TRIPS waiver blindsided many in
    the United States as well as allies like the UK, Canada, and Germany
    who do not want our intellectual property going to China and other bad
    actors.

        Have you considered how ceding our intellectual property to China
    allows them to buy influence and boosts their predatory vaccine
    diplomacy, thereby undermining U.S. leadership on vaccine distribution
    throughout the developing world?

        Answer. The administration believes strongly in intellectual
    property (IP) protections and the importance of safeguarding American
    innovation from illicit acquisition. The decision to support a waiver
    of IP protections for COVID-19 vaccines reflects the extraordinary
    circumstances of this pandemic. We are committed to working with the
    World Trade Organization members and will be clear-eyed about potential
    risks as we enter text-based negotiations.

        Question. The decision to issue a TRIPS waiver raised concerns
    that, in the future, the administration would pursue additional TRIPS
    waivers for other vaccines or biotechnologies, such as treatments for
    malaria, Alzheimer's, or Parkinson's that are currently in development.

        Can you commit to the American people that the administration will
    not pursue a TRIPS waiver for future vaccines and biotechnologies
    without seeking the approval of Congress? Have you considered how this
    decision will adversely affect the financing of future vaccines due to
    the lack of confidence in this administration to defend American
    intellectual property protections?

        Answer. COVID-19 is a global health crisis, and the extraordinary
    circumstances of the COVID-19 pandemic call for extraordinary measures.
    The administration believes strongly in intellectual property (IP)
    protections, but in service of ending this pandemic, supports a waiver
    of those protections for COVID-19 vaccines. In supporting a waiver of
    IP protections for COVID-19 vaccines, the administration is committed
    to pursuing a process at the World Trade Organization (WTO) to find a
    solution there that is effective and practical in saving lives. I am
    committed to keeping Congress fully informed of developments in the
    process in the WTO.

        Question. The 2021 trade agenda does not indicate a desire for new
    free trade agreements or to expand market access for Americans to new
    places. Instead, the primary areas of focus appear to be climate
    change, supporting American labor, and racial equity.

        Do you believe that expanding trade opportunities benefits U.S.
    businesses and their employees? If so, why is the administration
    opposed to pursuing new FTAs or not making them a priority this year?
    Why is the administration not working on TPP or alternative agreements
    with our Indo-Pacific partners, even bilaterally?

        Answer. As noted in the President's trade agenda, opening markets
    and reducing trade barriers, while ensuring that U.S. businesses and
    workers as a whole benefit from these efforts, will be a priority for
    the Biden administration. USTR is actively engaged in discussions with
    our partners in the Indo-Pacific region on how we can best work toward
    these aims.

        Question. In your confirmation hearing, you indicated the 301
    exclusion process was ``very high on your radar.'' However, we have not
    seen any action to resume the 301 exclusion process.

        What have you done since your confirmation to get your arms around
    the 301 exclusion process? How close are you to resuming that process
    and reinstating expired exclusions? Will you commit to having a robust
    and fair exclusion application process in place for American importers
    for the duration that the 301 tariffs are in place?

        Answer. At the request and recommendation of Senator Portman, I
    have committed to doing a top-to-bottom review of our China trade
    policy, with the goal of making our trade policies more effective and
    more strategic. As part of that review, we are looking at the China 301
    tariffs and the exclusions process which provides us with important
    opportunities to craft thoughtful and effective responses to China's
    unfair trade practices.

        Question. On February 24, 2021, President Biden issued an executive
    order beginning a whole-of-government review of supply chain
    vulnerabilities, including on critical minerals. I believe that in
    order to reduce reliance on China, we must use our Indo-Pacific
    partnerships to pursue a critical minerals agreement.

        What have you recommended as part of that supply chain review on
    critical minerals specifically? Have you been in touch with other
    countries about working together to reduce reliance on China?
    Specifically, have you pursued conversations with the Quad countries on
    an agreement to jointly develop rare earth minerals? What is your plan
    to leverage our alliances, and the Quad in particular, to counter
    China's dominance in this area?

        Answer. Executive Order 14017, the first report on supply chains,
    ``Building Resilient Supply Chains, Revitalizing American
    Manufacturing, and Fostering Broad-Based Growth,'' was released on June
    8th, and one of its overall recommendations to the President is that
    the United States work with allies and partners to decrease
    vulnerabilities in global supply chains. Specifically, the report
    recommends expanding multilateral diplomatic engagement on supply chain
    vulnerabilities, particularly through groupings of like-minded allies
    such as the Quad and G7, to collectively assess vulnerabilities and
    develop collective approaches to supply chain resilience.

        Question. President Trump initiated FTA negotiations with the UK,
    our closest ally and a top trading partner in Europe. The
    administration held five rounds of talks in 2020 and made considerable
    progress towards a comprehensive FTA. However, the trade agenda for
    2021 does not outline any subsequent steps that the Biden
    administration plans to take to complete the U.S.-UK FTA.

        Why is the administration not prioritizing completing this FTA when
    it is so close to completion? Can we expect progress in the area in the
    coming months?

        Answer. The President recently met Prime Minister Johnson and
    committed to deepening and strengthening our vital economic and trading
    partnership. As a first step, we agreed to move past the 16-year WTO
    dispute regarding aircraft subsidies. We have agreed to suspend tariffs
    related to the dispute for 5 years, while retaining flexibility for the
    United States to reapply tariffs if we're no longer competing on a
    level playing field. We and the UK have also adopted clear statements
    on acceptable support for large civil aircraft producers and a
    cooperative process to address support between the parties and overcome
    longstanding differences. Second, the President and Prime Minister
    agreed to work closely to identify and pursue opportunities to deepen
    our already extensive trade relationship. As part of the Biden-
    Harris administration's focus on the Build Back Better agenda and
    supporting a worker-centric trade policy, I am continuing my review of
    the objectives of the negotiations with the United Kingdom that were
    begun under the prior administration.

        Question. The price of lumber has drastically increased and is
    affecting housing affordability across the United States.

        Is your team working on a new softwood lumber agreement with
    Canada? Have you discussed within the administration how to lower the 9
    percent Canadian lumber tariff?

        Answer. I am closely watching the historic movement in lumber
    prices. I discussed softwood lumber with my Canadian counterpart in our
    first USMCA FTC meeting and we agreed to keep in touch on the issue.
    The United States is open to resolving our differences with Canada over
    softwood lumber, but it would require addressing Canadian policies that
    create an uneven playing field for the U.S. industry. Unfortunately, to
    date, Canada has not been willing to address these concerns adequately.

        Question. New Zealand has expressed a desire to improve trade ties
    with the United States. Since our countries are close security and
    intelligence partners, I support taking steps to bolster our economic
    ties and work together in countering China.

        Is the administration considering an FTA or smaller, sector-
    specific agreements with New Zealand? Do you see improving trade ties
    with New Zealand as a priority?

        Answer. The Biden administration highly values our economic and
    security relationship with New Zealand. We regularly engage New Zealand
    bilaterally, including through our Trade and Investment Framework
    Agreements (TIFA), to explore ways to expand and enhance our trade
    ties.

        As the President has made clear, however, we will not be engaging
    in new trade agreements before we make the necessary investments at
    home.

        Question. Mexico continues to violate the USMCA with their state-
    owned oil company, and recent laws favor Mexican state energy companies
    at the expenses of private investment in the energy sector. It appears
    that permits for private-sector energy projects have been blocked,
    raising concerns about Mexico's commitment to the USMCA.

        What is your plan to pursue correction action on these issues? How
    will you stop the damage these measures are causing to U.S. energy
    companies, and ensure that Mexico lives up to its commitments under the
    USMCA?

        Answer. Mexico's energy policies are undermining existing
    investments and directly implicate several of Mexico's USMCA
    obligations. I made these points clearly to the Mexican Government
    during the inaugural meeting of the USMCA Free Trade Commission on May
    18th. USTR continues to analyze Mexico's energy measures, including
    recently passed legislation. I recommit to using all dispute settlement
    tools to fully enforce the USMCA. I am also aware that U.S. companies
    are considering potential remedies under the agreement.

                                     ______

                    Questions Submitted by Hon. Steve Daines
        Question. What is the current status of Chinese implementation of
    the Phase One agreement's IP provisions?

        Answer. The intellectual property chapter of the Phase One
    agreement addresses numerous long-standing concerns of a wide range of
    U.S. stakeholders, including in the areas of trade secrets, patents,
    pharmaceutical-related intellectual property, trademarks, copyrights,
    and geographical indications. The United States has been closely
    monitoring China's progress in implementing its commitments. In 2020,
    China published a large number of draft intellectual property-related
    legal and regulatory measures and finalized over a dozen measures.
    Notably, China amended the patent law, the copyright law, and the
    criminal law over the past year. However, additional legal changes are
    needed and all steps toward reform will require effective
    implementation at the local level. In addition, China's commitments
    fall short of requiring the full range of fundamental changes needed to
    improve the intellectual property landscape in China.

        Question. What current actions is USTR taking to enforce the IP
    provisions in the Phase One agreement?

        Answer. The United States has been closely monitoring China's
    progress in implementing its numerous commitments under the Phase One
    agreement and has regularly engaged China using the extensive
    consultation processes established by the agreement to discuss China's
    implementation progress and concerns that we have as they arise.

        Question. Is USTR currently tracking the number of instances of IP
    theft or forced technology transfer since the Phase One agreement was
    signed?

        Answer. USTR is continuing to engage with both U.S. stakeholders
    and other U.S. government agencies to track intellectual property theft
    and forced technology transfer in China.

        Question. Has the administration met with or received approval from
    any of the U.S. companies that currently hold IP rights to the COVID-19
    vaccines about the administrations WTO waiver proposal?

        Answer. Starting in mid-April, USTR began consultations with
    interested parties: labor organizations, civil society, public health
    advocates, public health experts both inside and outside of the
    government, and also vaccine manufacturers themselves. USTR will
    continue to ramp up efforts to work with the private sector and other
    partners to expand vaccine manufacturing and distribution around the
    world.

        Question. If the waiver is agreed to, what existing authorities
    will the administration use to acquire and share COVID-19 vaccine IP?
    Will the administration need to come to Congress for any additional
    authorities in order to share vaccine IP?

        Answer. In supporting a waiver of intellectual property protections
    for COVID-19 vaccines, the administration is committed to pursuing a
    process at the World Trade Organization (WTO) to find a solution there
    that is effective and practical in saving lives. I am committed to
    keeping Congress fully informed of developments in the process in the
    WTO.

        Question. Has the administration assessed whether increased U.S.
    production and distribution to countries in need would provide more
    shots in the near term than would that same country acquiring U.S. IP
    and building out the necessary infrastructure to administer their own
    shots?

        Answer. The top priority of the United States is saving lives and
    ending the pandemic in the United States and around the world. This
    includes investing in the COVAX facility, sharing our surplus vaccine
    doses, and working with our international partners, such as the Quad
    Vaccine Partnership, to surge production and delivery, including
    through efforts to achieve greater regional and local manufacturing
    capacity, in recognition of the importance of widespread vaccination
    against COVID-19 to combat the pandemic and hasten economic recovery.
    In supporting a waiver of intellectual property protections for COVID-
    19 vaccines, the administration is committed to pursuing a process at
    the World Trade Organization to find a solution there that is effective
    and practical in saving lives.

        Question. As you know, the USTR's Chief Agricultural Negotiator is
    an essential role and key to addressing market access challenges
    Montana farmers and ranchers face in critical markets around the world.
    A nominee for this important role has yet to be named though.

        When can we expect a nominee for Chief Agricultural Negotiator to
    be named?

        Answer. The Chief Agriculture Negotiator is a priority position for
    the Biden-
    Harris administration. It is important that this position be filled by
    someone who will put America's farmers and farming communities first,
    and I look forward to working with Congress to confirming a nominee
    soon.

        Question. In your nomination hearing, you referenced that TPP was a
    ``sound formula'' but that it's a different world than 2015 or 2016.

        What specific changes would you seek in TPP, whether provisions in
    USMCA or other agreements, in order to seek to rejoin that agreement?

        Answer. We are evaluating how best to ensure that provisions in our
    future trade agreements be made consistent with the core principles of
    the President's Trade Agenda and the administration's Build Back Better
    agenda. This includes evaluating how best to craft rules of origin to
    benefit parties to the agreement rather than third parties, advancing
    labor and environmental priorities, safeguarding against the harmful
    practices of non- market economies, and adopting other innovations
    learned through our recent experiences with USMCA, other trade
    negotiations, and the pandemic.

        Question. Trade Promotion Authority is set to expire in just a few
    months. I believe it is critical we reauthorize TPA in a prompt manner
    and look forward to working with both my colleagues on this committee
    and you to get it done.

        Will you commit to supporting and prioritizing reauthorizing TPA
    this year?

        Answer. There are strong views on both sides of the Trade Promotion
    Authority issue, and I look forward to working with this committee
    should you decide to advance TPA legislation. Regardless, I commit to
    consulting closely with members of this committee on trade policy as
    long as I am USTR.

                                     ______

                     Questions Submitted by Hon. Todd Young
        Question. American businesses have been working tirelessly to
    address the domestic and global health challenges from the pandemic.
    Innovators made careful and considerate decisions to ensure patient
    safety first and foremost. Building more production capacity is the
    logical next step, but your recent decision to pursue a waiver on
    intellectual property protections for the COVID-19 vaccine undermines
    the distribution pipeline and could allow access to replicates without
    quality controls. We can protect patients and also support innovation--
    it does not have to be one or the other. Even more alarming, right
    after your statement on twitter, China's government controlled media
    said, ``So--global pressure works. And I hope it does not take forever
    for this to be a reality.'' A survey last month conducted by Teneo
    Research further showed that 60 percent of all voters opposed sharing
    sensitive biotech intellectual property with China.

        After all we know of China's deliberate decisions to undermine the
    strength of America's economy, should we be concerned of the
    implications of the waiver, especially given China's public mockery of
    the United States?

        How is this waiver in the best interest of the United States?

        How did the administration decide to pursue waiving these
    intellectual property (IP) protections?

        Was an analysis completed that identified key reasons why vaccines
    were not produced at scale, and were IP protections identified as the
    contributing factor to this issue?

        Answer. The top priority of the United States is saving lives and
    ending the pandemic in the United States and around the world. In
    addition, the administration believes strongly in intellectual property
    (IP) protections and the importance of safeguarding American innovation
    from illicit acquisition. The decision to support a waiver of IP
    protections for COVID-19 vaccines reflects the extraordinary
    circumstances of this pandemic. We are committed to working with the
    World Trade Organization members and will be clear-eyed about potential
    risks as we enter text-based negotiations.

        Question. Our economy is rapidly changing as new technologies
    constantly emerge and businesses adapt to the changing landscape.
    Countries, like China, that assert protectionist policies cause
    barriers that hurt customers and leave American businesses at a severe
    disadvantage. You affirmed this conclusion in the section 301 Special
    Report that placed China on the Priority Watch List and identified key
    areas of immediate concern.

        The USMCA and the U.S.-Japan digital trade agreement contain
    comprehensive and high standards indicative of the digital age we live
    in. Enforcing cyber-theft penalties, prohibiting forced data transfer,
    and removing localization requirements are some provisions that
    increase integrity in digital trade.

        How does the administration view the importance of strong digital
    trade provisions, and how will you build on the strides made under the
    USMCA and U.S.-Japan agreement?

        What strategies will you employ to hold China accountable for
    digital trade practices that specifically target and place barriers on
    American businesses?

        Answer. The administration recognizes the importance of the digital
    economy to American jobs, prosperity and security, as well as U.S.
    companies' unique competitive advantages in this area. For example,
    every year in the last 15 years, the United States achieved a
    substantial surplus for trade in ICT-enabled and potentially ICT-
    enabled services, with that trade surplus exceeding $100 billion
    annually in each of the last 6 years.

        Trade rules must work to maintain and advance U.S. strengths in
    digital trade. USTR will use a wide range of trade tools to address
    discriminatory practices that hinder U.S. workers and firms, including
    practices that discriminate against U.S. digital and technology
    exports.

        Question. President Biden and President Moon of Korea will meet
    this week for a summit here in Washington. Korea is a linchpin of any
    successful Indo-Pacific strategy, but we have also seen an explosion in
    digital trade barriers coming out of Korea recently that have created
    challenges in our bilateral trade relationship.

        How are you and President Biden planning to work with your
    counterparts in Seoul to rein in the protectionist measures recently
    taken on data flows, cloud market access, competition, and other areas
    so that we can build a stronger technological alliance going forward?

        Answer. We are engaging with Korea in numerous fora, primarily
    under KORUS committees, to address the challenges relating to digital
    trade in the Korean market.

        Question. Last week, I sent you and Secretary Raimondo a letter
    with 17 bipartisan Senators expressing concern with the June 1st
    scheduled increase of tariffs on distilled spirits and wine. I
    understand that the European Union announced on May 17, 2021 that they
    would not double the tariffs while discussions are ongoing to address
    global capacity issues. As you know, adverse action on the distilled
    spirits industry harms job creators and employees in Indiana and many
    other States. Many of these jobs are located in rural communities in my
    State, like Borden, Lawrenceburg, and New Albany. Further, boat
    manufacturers employing over 14,000 Hoosiers are also subject to these
    tariffs and would have been harmed by the subsequent increases. With
    businesses attempting to recover from the pandemic, we should be
    looking to strategies that minimize harm to industries while seeking to
    hold countries accountable for adverse action that hurts American
    manufacturers.

        Did you receive this letter?

        How will you provide certainty and relief to industries affected by
    these tariffs?

        Answer. I did receive your letter. With respect to the section 232
    tariffs on steel and aluminum, we have a very significant problem in
    the global steel and aluminum markets that is driven primarily by
    overcapacity in China and other countries, particularly in Southeast
    Asia and the Middle East. The administration is working to address the
    market distorting measures in economies that have led to overcapacity
    in the global steel and aluminum industries and the resulting national
    security threats.

        In addition to the thorough review of the section 232 measures and
    product and country exclusions that is currently underway, the
    administration is also consulting closely with domestic stakeholders
    and partners around the world that share similar national security
    interests. We seek to address market distorting measures that pose a
    serious threat to the U.S. steel and aluminum industries and the
    workers in those industries. On May 17, 2021, the United States and the
    European Union (EU) announced the start of discussions to address
    global steel and aluminum excesscapacity and the market distortions
    that result from this excess capacity, and we will be engaging
    intensively with the EU in the coming weeks. The EU announced its
    intention to temporarily suspend the planned increase in retaliatory
    duties, including duties on American whiskey. We believe the EU's
    duties are inconsistent with WTO rules and we are challenging them
    before the WTO. The administration is committed to working with the EU
    and other like-minded partners to address excess capacity, ensure the
    long-term viability of our steel and aluminum industries, and
    strengthen our democratic alliance.

        For additional questions on the state of section 232 tariffs on
    steel and aluminum, I would refer you to the Department of Commerce,
    which has the statutory lead on section 232.

        Question. I have repeatedly heard from businesses requesting relief
    and certainty in the section 301 tariff exclusion process. During this
    hearing, you iterated that the administration is conducting a top-down
    review of the current exclusions and subsequent process, and alluded
    that American businesses and Congress could expect details before
    December and likely in the summer. Can companies expect more details on
    the administration's section 301 exclusion process in June, or July?

        Answer. At the request and recommendation of Senator Portman, I
    have committed to doing a top-to-bottom review of our China trade
    policy, with the goal of making our trade policies more effective and
    more strategic. As part of that review, we are looking at the China 301
    tariffs and the exclusions process which provides us with important
    opportunities to craft thoughtful and effective responses to China's
    unfair trade practices.

        Question. The United States exports over $6 billion in medical
    devices to China. The Chinese volume-based procurement (VBP) tendering
    system seriously threatens access to this important market and could
    undermine the stability of U.S. exports and American jobs. The medical
    device industry develops and produces these innovations on American
    soil, and accessing the Chinese market is critical to support this
    workforce.

        Are you aware of the ongoing implementation of volume-based
    procurement in China at both the national and provincial levels?

        How will the administration plan to address this issue as part of
    the broader trade agenda?

        Do you believe there is an opportunity to work closely with other
    medical tech-intensive countries on this critical market access issue?

        Answer. USTR is closely tracking China's implementation of its
    volume-based procurement approach to medical devices, both at the
    national and provincial levels. As the 2021 President's Trade Agenda
    Report notes, one of the Biden-Harris administration's core policy
    goals is to strengthen relationships with America's allies and friends
    to tackle pressing global challenges, including in the China trade
    policy challenges we face. USTR remains committed to confronting
    China's unfair trade practices and to promoting the success of the U.S.
    medical devices sector.

                                     ______

                   Questions Submitted by Hon. John Barrasso
        Question. The Phase One agreement negotiated by the Trump
    administration was very important to American exporters. Wyoming's
    farmers, ranchers, and energy producers applauded the deal. While
    agriculture purchases have been positive for U.S. agriculture exports
    to China, American energy exporters, services and manufacturing
    industries are still waiting for China to fulfil their commitments.

        What can we do today in Congress to ensure China meets its Phase
    One purchase obligations with respect to energy, services, and
    manufacturing? And should the U.S. proceed with a Phase Two agreement
    prior to China meeting its commitments under the Phase One deal?

        Answer. China's purchases shortfall is certainly in our sights. Not
    only are these commitments important to the United States economically,
    they are also important as commitments that China undertook of its own
    free will to make, and therefore, we need to ensure that its promises
    are worth the paper that they are written on. We will continue to make
    use of and push the tools that we have for the benefit of U.S. workers,
    farmers, ranchers, manufacturers, service suppliers, and small
    businesses.

        Currently, USTR is conducting a top-to-bottom review of the U.S.-
    China trade relationship. The results of this review will inform our
    thinking as to how we proceed with regard to the possible negotiation
    of a further agreement with China.

        Question. The WTO was formed to establish a trading system based on
    ``open, market-oriented policies'' per the 1994 Marrakesh Agreement
    which established the organization. Despite modest improvements,
    China's markets are not ``open.'' Their policies are not ``market-
    oriented.'' China is no longer a ``developing nation'' despite its WTO
    status. Market-distorting subsidies, intellectual property theft,
    forced technology transfer, forced labor and industrial overcapacity in
    China aren't anomalies. They are the cornerstones of China's economic
    policy.

        Is there any reason to believe the WTO has the necessary tools to
    address the challenges the world is facing with respect to China? And
    what WTO reforms are needed to make it a more effective ``cop on the
    beat'' with respect to China?

        Answer. USTR is currently conducting a top-to-bottom review of the
    U.S.-China trade relationship, with a view toward ensuring that our
    trade policy supports and complements the administration's broader
    China strategy. A key focus of this effort is on China's non-market and
    unfair policies and practices that are inadequately disciplined by the
    WTO. Our review is ongoing and we will share details of those findings
    in the future.

        Question. Chinese overcapacity of steel, aluminum, cement,
    chemicals, and numerous other industrial inputs is part of a broader
    strategy to drive down prices and put international competitors out of
    business. China's rapid global expansion has been fueled by forced
    technology transfers, intellectual property theft, human rights
    violations and the use of forced labor. This is unacceptable and cannot
    continue.

        Can you elaborate on how we can work with our allies to achieve
    lasting and meaningful change in how China conducts business in the
    international markets? And could the EU-China investment agreement
    impact our ability to work with our allies in Europe to counter China's
    manipulative market practices and human rights abuses?

        Answer. It is a priority of the Biden-Harris administration to work
    with allies to take effective action to address the many challenges
    posed by China, including its coercive and non-market practices and
    human rights abuses.

        For instance, we are working on strengthening our relationships
    with the European Union and the United Kingdom, including through
    engaging with them to resolve the ongoing Boeing/Airbus dispute, and we
    are having constructive discussions with these trading partners to
    address the problems of excess capacity in the steel and aluminum
    sectors coming primarily from China. Further, as part of the
    administration's effort to work with allies, we recently confirmed with
    our partners in the G7 our shared commitment to address non-market
    policies and practices and their harmful impact on our citizens and
    businesses. As a result, all have agreed to cooperate to address non-
    market policies and practices that create unfair competitive
    conditions, hinder the development and use of innovative technologies
    and undermine the proper functioning of international trade.

        Question. American cattle producers raise some of the best beef in
    the world. In the past, I have raised concerns with United States
    Department of Agriculture (USDA) about fresh beef imports from Brazil,
    which can carry foot and mouth disease.

        Will you coordinate closely with USDA's Animal and Plant Health
    Inspection Service and the USDA's Food Safety and Inspection Service
    (FSIS) to ensure that the United States does not allow the import of
    meat and meat products from countries that have livestock diseases that
    could be transmitted to our domestic industry?

        Answer. USTR will coordinate very closely with USDA on issues
    related to the bilateral trade of fresh and frozen beef products
    between the United States and Brazil, including to ensure that imports
    of beef from Brazil comply with relevant U.S. sanitary and
    phytosanitary measures.

        Question. USTR is currently working through the notice and comment
    process for section 301 tariffs in response to digital service taxes in
    Austria, India, Italy, Spain, Turkey, and the UK. The Treasury
    Department has indicated that this administration will pursue a global
    minimum tax through the OECD even absent the repeal of these tax
    regimes targeting American companies.

        Given the fact the goal of these section 301 investigations is
    apparently to protect U.S. interests, is the Treasury's global minimum
    tax negotiating stance working in opposition to the USTR's goals?

        Answer. The Biden administration is seeking to resolve the digital
    taxation dispute in the context of the multilateral effort to address
    base erosion and profit shifting through the OECD/G20 process.

        Any multilateral agreement must include both a strong international
    minimum tax and a path to resolution of the issues around Digital
    Services Taxes (DSTs). A higher global corporate minimum tax is central
    to reducing tax competition globally and removing incentives to move
    profits to low tax jurisdictions. The OECD estimates that governments
    lose $240 billion annually due to tax avoidance by multinational
    companies.

        The standstill and rollback of existing unilateral tax measures,
    including discriminatory digital services taxes, is an essential part
    of the OECD's proposed framework. A successful conclusion of these
    negotiations is thus critical to the resolution of the issues raised in
    the section 301 investigations.

        Question. Canada and Mexico are our largest energy export partners,
    and the United States-Mexico-Canada Agreement (USMCA) recognized that
    fact and encouraged trade flows and investments in energy between the
    three countries. Over the past year, the Mexican government has heavily
    tilted market rules to favor state-run enterprises over private
    companies. These actions against American companies run contrary to
    several commitments Mexico made in signing the USMCA. What actions have
    you taken, or do you plan on taking, to ensure that Mexico lives up to
    its commitment under the USMCA?

        Answer. Mexico's energy policies are undermining existing
    investments and directly implicate several of Mexico's USMCA
    obligations. I made these points clearly to the Mexican government
    during the inaugural meeting of the USMCA Free Trade Commission on May
    18th. USTR continues to analyze Mexico's energy measures, including
    recently passed legislation. I will use all dispute settlement tools to
    fully enforce the USMCA. I am also aware that U.S. companies are
    considering potential remedies under the agreement.

        Question. American cattle producers are responsible stewards of
    pasture and rangelands, who sequester carbon while producing a premium
    product on land that is not suitable for growing other food products.
    As we enter fire season, it is important to emphasize that livestock
    grazing can be used as a tool to lower wildfire risk by controlling the
    amount, height, and distribution of grasses and forage that fuel
    wildfires. Additionally, our natural landscape allows cattle producers
    to graze livestock without deforesting, and EPA data shows that direct
    greenhouse gas emissions from beef cattle only represent 2 percent of
    greenhouse gas in the U.S.

        As the United States engages in global forums, will USTR continue
    to advocate for science-based trade and highlight the safe, efficient,
    and sustainable production practices of U.S. cattle producers as part
    of the solution to address climate concerns?

        Answer. Through our active engagement in global forums, including
    the World Trade Organization (WTO) Committee on Sanitary and
    Phytosanitary Measures (SPS Committee), USTR will continue to support
    and defend science-based trade while promoting our safe, efficient, and
    sustainable production practices.

                                     ______

                     Prepared Statement of Hon. Ron Wyden,
                           a U.S. Senator From Oregon
        This morning the Finance Committee welcomes U.S. Trade
    Representative Tai for our annual hearing on the president's trade
    agenda. In 2021, just about every major trade policy needs to be based
    on a straightforward agenda: out-competing China for jobs and economic
    growth. The reality is, too often, the Chinese Government has feasted
    on weaknesses in the global trading system to the disadvantage of
    American workers.

        The Finance Committee examined many of the key issues in a hearing
    last month. American factories and plants have shut down because of
    unfair subsidies and overproduction in China. American websites and
    digital service providers are blocked by the Great Firewall, and they
    watch as homegrown Chinese firms rip off their ideas and grow into tech
    giants intolerant of free speech. American workers cannot and must not
    ever have to compete against forced labor, which is an atrocity on its
    own regardless of what it means for international trade.

        Bottom line, the U.S. has been playing catch-up ball in the
    competition with China for too long. It's going to take higher
    standards and stronger enforcement policies that move faster to protect
    American jobs and businesses. The old, slower approach--one that
    responds to China's rip-offs long after the damage is done--clearly
    hasn't worked.

        This committee is working on bipartisan legislation addressing
    these challenges directly. There will be progress on that bill to
    announce in the days ahead, and I'm looking forward to discussing these
    issues with Ambassador Tai today.

        Apropos of showing what tough, quick-moving trade enforcement looks
    like in practice, there are two brand new examples making news this
    week. The AFL-CIO announced Monday that it was bringing forward the
    first major complaint dealing with labor rights under the new USMCA
    rapid response mechanism. And as Ambassador Tai will tell us about
    shortly, USTR announced just this morning that it has self-initiated
    the first rapid response action to protect workers' rights to organize
    and collectively bargain. Senator Brown and I proposed this new system
    because the Trump administration's new NAFTA deal wasn't strong enough
    on enforcement to protect American jobs.

        The new petition and action announced this week are taking on
    classic labor violations in Mexico, such as firing or harassing workers
    who try to organize, and failing to ensure a legitimate vote on
    bargaining agreements. That sort of abuse becomes a threat to workers
    everywhere, including in Oregon and across the country, because it
    perpetuates the race to the bottom on worker rights. This is a new
    approach and a new day for labor rights enforcement. The committee will
    have questions on this issue today, as well as other areas of USMCA
    implementation.

        USTR is also going to be leading negotiations dealing with
    intellectual property and the COVID-19 vaccines. Entering negotiations
    on an IP waiver was the right decision. The Biden administration is
    working hard to get shots into arms across America, and COVID-19 cases
    are dropping. However, new coronavirus variants will still pose a
    danger to Americans as long as there are terrible outbreaks around the
    world.

        My view is, our system ought to include IP protections and
    exceptions that promote the common good, and it's unquestionably in the
    common good to squash this virus as quickly as possible all around the
    world.

        The waiver negotiations are one important step, but the waiver
    alone will not unlock a vaccination miracle. There's a lot more to this
    challenge. That includes manufacturing capacity. It includes building
    out supply chains. It could also include helping make sure other
    countries can afford the vaccine.

        So there's a lot for the committee and Ambassador Tai to discuss
    today on a wide range of topics. Again I'd like to welcome Ambassador
    Tai to the committee. I look forward to hearing her testimony and Q&A.

                                     ______

                                 Communications

                                  ----------

                           American Chemistry Council

                               700 Second St., NE

                              Washington, DC 20002

                                 (202) 249.7000

                       https://www.americanchemistry.com/

    The American Chemistry Council (ACC) appreciates the opportunity to
    provide a statement for the record regarding the May 12-13 hearings on
    the 2021 U.S. Trade Policy Agenda at the Senate Finance and House Ways
    and Means Committees. These hearings were important opportunities for
    ACC to hear Ambassador Tai further define the Biden Administration's
    vision for U.S. trade policy and learn how the business of chemistry
    can contribute to and benefit from that vision.They also shined a
    spotlight on the impact of past U.S. trade policy on the U.S. economy,
    U.S. manufacturing competitiveness, and the international trading
    system.

    In our view, a smarter U.S. trade policy tied to competitiveness can
    better serve the U.S. economy, workers, businesses, families,
    consumers, and communities achieve a healthier, safer, more secure, and
    more just society. For our statement, ACC would like to provide our
    2021 Trade Policy Priorities, which are outlined below. These
    priorities contain five imperatives for immediate action:

        1.  Open new markets for U.S. exports of innovative chemicals and
    plastics;
        2.  Deliver much-needed tariff relief to American businesses and
    consumers;
        3.  Reduce and prevent non-tariff barriers to trade through greater
    regulatory cooperation in key regions and markets;
        4.  Cultivate resilient and strategically integrated global supply
    chains, particularly with key trading partners; and
        5.  Modernize the World Trade Organization (WTO) and the rules-
    based international trading system.

    Within imperative 2 on tariff relief, ACC urges the Congress to pass
    the Miscellaneous Tariff Bill (MTB) as soon as possible with meaningful
    retroactivity and renew the Generalized System of Preferences (GSP)
    program. In that regard, we are encouraged by Senate Finance Chairman
    Wyden's release of the ``Trade Preferences and American Manufacturing
    Competitiveness Act'' on May 18th and will work closely with the
    Congress to secure its passage and enactment.

    We also urge the Congress to request that Ambassador Tai launch a new
    product exclusion process for the Section 301 additional tariffs on
    imports from China BEFORE the conclusion of the top-to-bottom review of
    U.S. trade policy concerning China. U.S. chemical manufacturers would
    appreciate the opportunity to seek exclusions from these tariffs. With
    this tariff relief, they will be able to create high-paying and high-
    skilled jobs, expand production, make supply chains more resilient, and
    contribute to the broad and sustainable revival of the U.S. economy.

                          ACC TRADE POLICY PRIORITIES

                                      2021

    Smart Trade Policy to Enhance U.S. Chemical Industry Competitiveness,
    and Achieve a Healthier, Safer, More Secure, and More Just Society.

    Industry Profile

    The business of chemistry is a $565 billion enterprise in the United
    States, directly employing over a half a million workers and indirectly
    supporting over 4 million jobs in other industries. Our industry plays
    an important role in many elements of the Biden Administration agenda.
    For example, we are:

          Developing innovations and technologies critical to combating
    climate change and making our world more sustainable;
          Manufacturing goods and inputs necessary for combatting the
    COVID-19 pandemic and a range of United Nations Sustainable Development
    Goals (SDGs);
          Increasing investments in manufacturing in the United States and
    growing jobs;
          Fostering inclusiveness and diversity in our industry, which
    relies on a highly skilled, educated, and well-paid workforce; and
          Scaling up advanced recycling technologies to convert hard-to-
    recycle plastics into feedstocks for manufacturing, which increases
    circularity by putting used plastics back to work and keeping them out
    of the environment.

    [GRAPHIC] [TIFF OMITTED] T1221.001

    .epsACC Trade Policy Vision

    U.S. chemical manufacturers share the U.S. Administration's vision for
    a trade policy that benefits all Americans by:

          Accelerating a wide-scale, equitable recovery from the
    devastation of the COVID-19 pandemic, and supporting American workers
    and businesses that may experience supply chain shocks caused by future
    public health crises;
          Fostering innovation in sustainable materials, products, and
    technologies to reduce emissions and increase energy efficiency;
          Mobilizing every segment of society to fight climate change; and
          Achieving tangible progress in improving the social,
    environmental, and economic health of underserved communities around
    the globe.

    Our industry's ability to contribute to this vision depends on a robust
    partnership with the U.S. Administration on:

          Incentivizing investment in U.S. chemicals production capacity
    to enhance competitiveness and spur new jobs, economic growth, and
    innovation;
          Cultivating resilient and strategically integrated global supply
    chains that help keep business costs low, workers' wages high, and
    essential products readily available;
          Facilitating imports of intermediate inputs that enhance U.S.
    manufacturing processes and strengthen our industry's competitive
    advantage; and
          Boosting exports of innovative chemicals and plastics products
    that are the foundation of sustainable materials, products, and
    technologies.

                       5 Imperatives for Immediate Action

    To maximize the U.S. chemical industry's ability to support the Biden
    Trade Policy Agenda, ACC and our coalition partners throughout the
    value chain are advocating for the U.S. Administration to:

        1.  Open new markets for U.S. exports of innovative chemicals and
    plastics;
        2.  Deliver much-needed tariff relief to U.S. businesses and
    consumers;
        3.  Reduce and prevent non-tariff barriers to trade through greater
    regulatory cooperation in key regions and markets;
        4.  Cultivate resilient and strategically integrated global supply
    chains, particularly with key trading partners; and
        5.  Modernize the World Trade Organization (WTO) and the rules-
    based international trading system.

    (1) Creating New Market Access

    Identify and open new growth markets for exports of innovative U.S.
    chemicals and plastics, and negotiate to reduce or eliminate tariffs.

          Open new export destinations for U.S.-made chemicals and
    plastics through bilateral, regional, plurilateral, and multilateral
    agreements and negotiations, including by:
              Continuing and concluding ongoing free trade
    agreement negotiations;
              Reaching a China Phase 2 trade deal that repeals
    additional U.S. tariffs and China's retaliatory tariffs, and lowers
    China's most-favored-nation (MFN) tariffs;
              Entering into new free trade agreement
    negotiations with key trading partners and emerging markets;
              Exploring entry into existing regional agreements
    such as the Comprehensive and Progressive Trans-Pacific Partnership;
              Pursuing accessions to the World Trade
    Organization (WTO) Chemical Tariff Harmonization Agreement (CTHA); and
              Pursuing focused tariff elimination with key
    trading partners and emerging markets wherever possible.

    (2) Tariff Review, Reform, Relief, and Avoidance

    Fully and transparently assess economic and social impact of U.S.
    additional tariffs to facilitate their repeal; lift retaliatory
    tariffs; and achieve a collective de-escalation of tariff wars.

          Launch a U.S. International Trade Commission (USITC) or
    Government Accountability Office (GAO) study on the impact of
    additional tariffs--under Section 301, Section 232, and Section 201--on
    the U.S. economy;
          Pursue common-sense reform of Section 301 and Section 232 to
    make their use more transparent, more strategic, and less burdensome on
    critical industries that use imports to enhance their competitiveness;
          Seek concessions from trading partners or alternative approaches
    to addressing problems that would enable full repeal of Section 301 and
    Section 232 tariffs;
          Exclude products from the Section 301 tariffs if those products
    also receive MFN duty suspensions or reductions under the Miscellaneous
    Tariff Bill (MTB);
          Suspend MFN and Section 301 tariffs on COVID-19 essential goods
    and input as identified by the USITC;
          Pursue full reauthorization of MTB with retroactivity as well as
    renewal of the Generalized System of Preferences (GSP);
          Eliminate tariffs on chemicals that support the manufacturing of
    goods essential to combating climate change and addressing other
    sustainable development goals (e.g., clean water, energy efficiency,
    food safety, and food security); and
          Avoid imposing further additional tariffs on imports of
    chemicals, and avoid inviting retaliation by U.S. trading partners on
    U.S. exports of chemicals.

    (3)  Addressing Non-Tariff Barriers

    Resolve existing trade barriers, and prevent future ones, by
    incorporating and enforcing regulatory cooperation provisions in both
    current and future trade agreements.

          Fully implement all provisions of the United-States-Mexico-
    Canada Agreement (USMCA), paying particular attention to the provisions
    on regulatory cooperation for chemical substances, technical barriers
    to trade, good regulatory practices, the Rules of Origin (ROO) for
    chemical substances, trade facilitation, digital trade, and marine
    litter provisions;
              Continuously identify improvements to USMCA in
    advance of its six-year review in 2026;
          Ensure trade negotiations achieve greater regulatory cooperation
    between the United States and priority trading partners (e.g., United
    Kingdom, European Union, Brazil, India, China, and Republic of Korea)
    and emerging markets (e.g., Argentina, Colombia, Philippines, Thailand,
    and Vietnam);
          Ensure U.S. trading partners abide by their transparency
    commitments in FTAs and at the WTO;
          Reinforce Asia-Pacific Economic Cooperation (APEC) work on
    regulatory cooperation and good regulatory practices (within the
    Chemical Dialogue and across APEC fora); and
          Support effective dispute settlement in trade agreements,
    including through investor-state dispute settlement provisions.

    (4) Building Resilient Supply Chains

    Cultivate resilient and strategically integrated global supply chains
    that help keep business costs low, workers' wages high, and essential
    products readily available.

          Refocus U.S. efforts toward making supply chains more resilient,
    including through greater cooperation with allies;
          Prioritize intermediate inputs neither made in the United States
    nor made in sufficient quantity/quality, and with necessary access to
    customer markets;
          Collaboratively identify and assess exogenous shocks to supply
    chains of concern to the chemical industry and potential impacts on
    downstream industries;
          Identify opportunities in key customer industries that support
    increased market base for U.S. producers;
          Identify and establish appropriate incentives for U.S. chemical
    manufacturers to continue to invest in manufacturing in the United
    States. Incentives could include:
              Tax credits and abatements;
              Expedited permitting for plant construction or
    upgrading;
              Timely review and approval of new chemistries
    under the U.S. Toxic Substances Control Act (TSCA);
              Programs to educate the workforce in response to
    industry needs;
              Facilitation of high skilled immigration;
              Access to worker training/retraining programs;
              Public-private partnerships for research and
    development of new materials and technologies;
              Potential cost-shared grants to support domestic
    capital investments for key upstream materials, including chemical
    inputs, as well as infrastructure;
              Low-interest loans that support critical mineral
    mine development;
              Funding to support new downstream industry
    development if new on-shore supply of critical minerals comes online;
    and
              Relief/insurance for domestic supply chain
    disruptions, e.g., hurricanes, wildfires, and winter storms.

    (5) WTO Modernization

    Modernize the World Trade Organization and the rules-based
    international trading system to protect, promote, and enforce free and
    fair trade around the globe.

          Facilitate update of WTO dispute settlement process by
    identifying and promoting a package of reforms that can generate
    consensus within WTO membership on restoring Appellate Body;
          Advance negotiations on digital trade and investment
    facilitation;
          Enhance WTO operational/procedural transparency and stakeholder
    engagement, with:
              Full notification of proposed and final measures;
    and
              Greater opportunities for chemical industry
    stakeholder input and participation in WTO meetings and events.
          Explore how trade relates to climate change, circular economy,
    plastic pollution, biodiversity, fossil fuel subsidies, decarbonizing
    supply chains, and carbon border adjustment;
          Ensure regulatory cooperation is an integral part of WTO
    modernization;
          Seek tariff elimination/reduction for chemicals via appropriate
    mechanisms, such as:
              Accessions to Chemical Tariff Harmonization
    Agreement (e.g., Argentina, Brazil, Chile, Colombia, select ASEANs);
    and
              Plurilateral initiatives on sustainable materials
    and environmental goods.

                                     ______

                        American Farm Bureau Federation

                      600 Maryland Avenue, SW, Suite 1000W

                              Washington, DC 20024

                                p. 202-406-3600

                                f. 202-406-3606

                              https://www.fb.org/

    The American Farm Bureau Federation, the nation's largest general farm
    organization, submits this statement for the Senate Committee hearing
    on the President's 2021 trade policy agenda. Trade is critically
    important to the current welfare and future prosperity of U.S. farmers
    and ranchers. America's farmers and ranchers depend on growing and
    stable export markets for the success of their businesses.

    U.S.-China Phase 1 Agreement

    The U.S.-China Phase 1 Agreement has and will continue to result in
    real progress toward a mutually beneficial trade relationship. We are
    already seeing positive results for agricultural trade and substantial
    progress in the removal of barriers that impact the competitiveness of
    U.S. products in this important market. In the Phase 1 Agreement, China
    committed to increase purchases of U.S. agricultural products by $32
    billion over two years. Working from the 2017 baseline of $24 billion,
    China has agreed to purchase no less than an additional $12.5 billion
    of U.S. farm and ranch goods in calendar year 2020 and no less than
    $19.5 billion in calendar year 2021. Over the first two years of the
    Agreement, China is expected to purchase a total of $80 billion of U.S.
    agricultural products. For 2020, China purchased over $27 billion of
    U.S. agricultural products.

    Chinese purchases of soybeans, corn, wheat, sorghum, beef, pork and
    other products are strongly improving, driving up demand--and prices--
    for these goods.

    China has also been meeting the commitments they made to improve and
    reform many standards in the Agreement. Longstanding barriers to the
    export of U.S. beef, pork, poultry and other products have been or are
    being resolved, pursuant to the Agreement. An improved process for
    biotechnology product approvals by China is also being addressed. As
    these barriers go down, the opportunity for increased U.S. commodity
    sales goes up.

    Also helping our sales growth is China's granting, upon application by
    importers, waivers of their retaliatory tariffs on U.S. agricultural
    products, which were put in place in 2018 and 2019, with direct,
    substantial impacts on agricultural sales.

    The Biden Administration is conducting an overall review of relations
    with China, U.S. agriculture's number one export destination. As such,
    an ongoing trade relationship with China is critical for U.S. farmers
    and ranchers.

    U.S.-Mexico-Canada Agreement

    The USMCA went into force on July 1, 2020. The implementation of
    expanded access for U.S. dairy products by Canada through the new
    tariff-rate quotas is of importance and concern to our dairy producers
    and needs to be resolved. Concerns about agricultural trade with Mexico
    include the approval process for biotech products, dairy product
    labeling and the country's ban on glyphosate beginning in 2024.

    U.S.-U.K. Negotiations

    Five rounds of comprehensive negotiations have been completed. With the
    negotiations on food safety focused on U.S. standards for chicken, beef
    and pork, the U.K. needs to recognize the science-based approach of the
    U.S. We support continuing the negotiations toward a trade agreement
    with the United Kingdom.

    U.S.-European Union

    The U.S. has imposed $7.5 billion in WTO-authorized tariffs from the
    Boeing-Airbus dispute on various EU products. The EU recently added $4
    billion in authorized tariffs on U.S. imports, including agricultural
    products such as cheeses, wine, tobacco, spirits, wheat and other
    goods. We are encouraged by the four-month tariff suspension and
    support a resolution of the underlying dispute and an end to the
    retaliatory tariffs.

    Retaliatory tariffs imposed on U.S. agricultural products by the EU due
    to steel and aluminum tariffs are a continuing issue that needs to be
    resolved.

    U.S.-Japan Agreement

    The U.S.-Japan Trade Agreement went into effect on January 1, 2020. The
    tariffs applied to U.S. products are now the same as those applied to
    the products of the other countries with a trade agreement with Japan.
    Tariffs are being reduced or eliminated on a variety of U.S.
    agricultural exports to Japan. The U.S. and Japan should continue talks
    on the remaining issues, such as SPS rules, that would lead to a
    comprehensive FTA between the U.S. and Japan. Also, rice and some dairy
    products were not covered in the agreement.

    U.S.-Kenya

    The trade negotiations with the Republic of Kenya offer the opportunity
    for a trade relationship with a nation that has growth potential for
    U.S. agricultural exports. The ambitious effort also sets the precedent
    for future discussions with other nations in the region. Eliminating
    and lowering tariffs, improving science-based sanitary standards,
    addressing the products of biotechnology and recognizing the common
    names for food products, not restrictive EU-style geographic
    indications, will allow for continued growth of agricultural trade in
    Kenya. The U.S. exported $53 million in agricultural products to Kenya
    in calendar year 2020.

    Trade Promotion Authority

    The current Bipartisan Congressional Trade Priorities and
    Accountability Act of 2015 (Trade Promotion Authority) ends on July 1,
    2021. Farm Bureau recognizes the crucial importance of Trade Promotion
    Authority and supports its extension or reauthorization. The
    negotiating objectives set by Congress, the consultation requirements
    of the Administration with Congress and the voting procedures
    established under TPA are important to the successful negotiation and
    conclusion of trade discussions.

    Seasonal Produce Investigations

    On September 1, 2020, USTR, USDA and Commerce released a plan of future
    actions that includes investigations and assistance for the seasonal
    produce industry related to the impacts of increased seasonal imports.

    The U.S. International Trade Commission (USITC) has begun a Section 332
    investigation into imports of strawberries and bell peppers.
    Investigations under this section are fact-finding only. Investigations
    have also begun for squash and cucumber imports. A recently concluded
    investigation into blueberry imports resulted in no action by the ITC.

    Farm Bureau submitted comments to the USITC on the blueberry and
    strawberry investigations and on the cucumber and squash investigation.
    We encourage USTR to continue to engage on U.S. produce growers'
    concerns about imports of seasonal produce.

    World Trade Organization

    The Biden Administration will need to deal with various WTO reform
    issues such as the operation of the Appellate Body. The discussions on
    agriculture before the next Ministerial meeting require the engagement
    of USTR. We support working toward increased transparency through an
    improved notifications process. We do not support discussion of subsidy
    levels without a full discussion of market access initiatives.

    As Congress considers future discussions with the nations that are our
    most important export destinations, and those that have the potential
    to grow in importance, we ask you to consider the opportunities to
    expand agricultural exports to the benefit of U.S. farmers and
    ranchers.

                                     ______

                            Americans for Free Trade
    May 26, 2021

    The Honorable Ron Wyden             The Honorable Mike Crapo
    Chairman                            Ranking Member
    U.S. Senate                         U.S. Senate
    Committee on Finance                Committee on Finance
    Washington, DC 20510                Washington, DC 20510

    The Honorable Richard Neal          The Honorable Kevin Brady
    Chairman                            Ranking Member
    House Ways and Means Committee      House Ways and Means Committee
    Washington, DC 20515                Washington, DC 20515

    Dear Chairman Wyden, Ranking Member Crapo, Chairman Neal, and Ranking
    Member Brady,

    The Americans for Free Trade coalition, a broad alliance of American
    businesses, trade organizations, and workers united against tariffs,
    respectfully submits this written statement to include in the public
    record of the Senate Finance Committee and House Ways and Means
    Committee's 2021 Trade Policy Agenda hearings, which took place on May
    12 and 13, respectfully. We appreciate the Committees holding hearings
    on this important matter.

    By way of background, Americans for Free Trade represents every part of
    the U.S. economy including manufacturers, farmers and agribusinesses,
    retailers, technology companies, service suppliers, natural gas and oil
    companies, importers, exporters, and other supply chain stakeholders.
    Collectively, we employ tens of millions of Americans through our vast
    supply chains.

    As the Administration and Congress continue focusing on the U.S.
    economic recovery from the pandemic, a strategic trade agenda is a key
    element in ensuring this recovery succeeds. A robust economic recovery
    requires the U.S. to create and expand import and export opportunities
    for American businesses to reach new markets, create jobs here at home,
    and compete globally. It also requires the U.S. to craft a defined
    China policy that addresses unfair trading practices but removes ill-
    conceived tariffs that continue to harm all American businesses whether
    they are importing inputs to manufacture products domestically or
    finished goods. To date the U.S. has collected over $87 billion in
    tariffs, which are taxes paid by U.S. importers. In other words, these
    tariffs are paid by Americans, not China. They have caused significant
    financial hardship for U.S. businesses, the millions of workers they
    employ, and the millions of American consumers they serve. At the same
    time, they have failed to effectively address China's unfair trading
    practices.

    We appreciate that several members of the Committees inquired about the
    status of USTR's China review during the hearings. The China review is
    of critical importance and must be a top priority for the
    Administration. The tariffs continue to cause economic harm to
    businesses both small and large across the country, as well as to
    American consumers and workers who bear the downstream impacts of these
    tariffs. In fact, Moody's Investor Services just released a new report
    finding that the tariffs ``hit American businesses and consumers
    hardest,'' with China absorbing only 7.6 percent of the tariffs ``while
    the rest of the tab was picked up by Americans.'' Any delay in
    reviewing the China trade policy means delaying relief to these
    Americans--the same Americans whom Congress worked so hard to support
    in multiple major pieces of pandemic legislation.

    We also appreciate that the Administration plans to review the section
    301 tariffs on products from China as part of its ``top-to-bottom''
    review and applaud it for wanting to take a thoughtful and deliberate
    approach. It is critical that this review begin immediately and
    identify a clear timeline for the review's completion. This review must
    also include a determination as to whether the tariffs are achieving
    the stated objective of changing China's policies and behavior and
    whether they provide any actual leverage in negotiations.

    Unfortunately, the tariffs continue to cause economic harm to
    businesses both small and large across the country, as well as to
    American consumers and workers who bear the downstream impacts of these
    tariffs. Any delay in reviewing the China trade policy means delaying
    relief to these Americans--the same Americans whom Congress worked so
    hard to support in multiple major pieces of pandemic legislation. Time
    is of the essence.

    This is why we support the Administration launching a new product
    exclusion process sooner rather than later. We are therefore deeply
    concerned that the Administration will not decide on whether to resume
    the exclusions process until it completes its overall China review.
    Reinstatement of a product exclusion process to provide targeted relief
    to Americans can happen while this review is ongoing. We strongly
    encourage the Committees to urge the Administration to immediately
    reinstate a product exclusion process and to reinstate all product
    exclusions that expired in 2020.

    Furthermore, the previous section 301 product exclusion process had
    significant flaws, and we agree it needs improvement. We also
    appreciate that the Administration is interested in stakeholder
    feedback to better understand the shortcomings of the previous process.
    However, we are concerned that during the hearing, the Administration
    offered no timeline regarding when this stakeholder engagement might
    take place or when the broader review might be concluded.We support the
    Administration reaching out to stakeholders to solicit feedback on the
    exclusions process, and such stakeholder engagement should include
    American companies impacted by the tariffs. However, ample feedback has
    been provided to the Administration over the last several years
    identifying transparency, consistency, and fairness issues with the
    previous process, and we believe this outreach should not delay
    instituting a targeted process for providing relief to American
    businesses.

    As the Administration and Congress continue to focus on the economic
    recovery from the COVID-19 pandemic, lifting the section 301 tariffs on
    products from China is a simple, straightforward way to provide an
    economic boost to American families, American workers, and American
    businesses and to help ensure a successful economic recovery. It is
    also an important step to repairing relationships with U.S. trading
    partners and allies and restoring our standing on the world stage.

    We appreciate the Committees' continued engagement on these important
    issues and urge it to continue weighing in with the Administration to
    ensure that destructive tariffs are lifted, and that a new and more
    effective approach to addressing China's unfair trading practices is
    adopted. We thank the Committees for holding these hearings and look
    forward to working with you on these important issues.

                Sincerely,

    Accessories Council                 California Retailers Association
    ACT | The App Association           Can Manufacturers Institute
    Agriculture Transportation
    Coalition (AgTC)                    Carolina Loggers Association
    ALMA, International (Association of
    Loudspeaker Manufacturing and
    Acoustics)                          Chemical Industry Council of
                                        Delaware (CICD)
    American Apparel and Footwear
    Association (AAFA)                  Coalition of New England Companies
                                        for Trade (CONECT)
    American Association of Exporters
    and Importers (AAEI)                Coalition of Services Industries
                                        (CSI)
    American Association of Port
    Authorities                         Colorado Retail Council
    American Bakers Association         Columbia River Customs Brokers and
                                        Forwarders Assn.
    American Bridal and Prom Industry
    Association (ABPIA)                 Computer and Communications
                                        Industry Association (CCIA)
    American Chemistry Council          Computing Technology Industry
                                        Association (CompTIA)
    American Down and Feather Council   Consumer Brands Association
    American Fly Fishing Trade
    Association                         Consumer Technology Association
    American Home Furnishings Alliance  Council of Fashion Designers of
                                        America (CFDA)
    American Lighting Association       CropLife America
    American Petroleum Institute        Customs Brokers and Freight
                                        Forwarders Assn. of Washington
                                        State
    American Pyrotechnics Association   Customs Brokers and Freight
                                        Forwarders of Northern California
    American Rental Association         Distilled Spirits Council of the
                                        United States
    American Specialty Toy Retailing
    Association                         Electronic Transactions Association
    American Wind Energy Association    Experiential Designers and
                                        Producers Association
    Arizona Technology Council          Fashion Accessories Shippers
                                        Association (FASA)
    Arkansas Grocers and Retail
    Merchants Association               Fashion Jewelry and Accessories
                                        Trade Association
    Association For Creative Industries Flexible Packaging Association
    Association for PRINT Technologies  Florida Ports Council
    Association of American Publishers   Florida Retail Federation
    Association of Equipment
    Manufacturers (AEM)                 Footwear Distributors and Retailers
                                        of America (FDRA)
    Association of Home Appliance
    Manufacturers                       Fragrance Creators Association
    Auto Care Association               Game Manufacturers Association
    Beer Institute                      Gemini Shippers Association
    BSA | The Software Alliance         Georgia Retailers
    Global Business Alliance            NAPIM (National Association of
                                        Printing Ink Manufacturers)
    Global Chamber                     National Association of Chain Drug
                                        Stores (NACDS)
    Global Cold Chain Alliance          National Association of Chemical
                                        Distributors (NACD)
    Greeting Card Association           National Association of Foreign-
                                        Trade Zones (NAFTZ)
    Halloween Industry Association      National Association of Home
                                        Builders
    Home Fashion Products Association   National Association of Music
                                        Merchants
    Home Furnishings Association        National Association of Printing
                                        Ink Manufacturers
    Household and Commercial Products
    Association                         National Association of Trailer
                                        Manufacturers (NATM)
    Idaho Retailers Association         National Confectioners Association
    Illinois Retail Merchants
    Association                         National Council of Chain
                                        Restaurants
    Independent Office Products and
    Furniture Dealers Association
    (IOPFDA)                            National Customs Brokers and
                                        Freight Forwarders Association of
                                        America
    Indiana Retail Council              National Electrical Manufacturers
                                        Association (NEMA)
    Information Technology Industry
    Council (ITI)                       National Fisheries Institute
    International Association of
    Amusement Parks and Attractions
    (IAAPA)                             National Foreign Trade Council
                                        National Grocers Association
    International Bottled Water
    Association (IBWA)                  National Lumber and Building
                                        Material Dealers Association
    International Foodservice
    Distributors Association            National Marine Manufacturers
                                        Association
    International Housewares
    Association                         National Restaurant Association
    International Warehouse and
    Logistics Association               National Retail Federation
    International Wood Products
    Association                         National Ski and Snowboard
                                        Retailers Association
    Internet Association                National Sporting Goods Association
    ISSA--The Worldwide Cleaning
    Industry Association                Natural Products Association
    Jeweler's Vigilance Committee       New Jersey Retail Merchants
                                        Association
    Juice Products Association (JPA)    North American Association of
                                        Uniform Manufacturers and
                                        Distributors (NAUMD)
    Juvenile Products Manufacturers
    Association                         North Carolina Retail Merchants
                                        Association
    Leather and Hide Council of America Ohio Council of Retail Merchants
    Licensing Industry Merchandisers'
    Association                         Outdoor Industry Association
    Los Angeles Customs Brokers and
    Freight Forwarders Assn.            Pacific Coast Council of Customs
                                        Brokers and Freight Forwarders
                                        Assns. Inc.
    Louisiana Retailers Association     Pennsylvania Retailers' Association
    Maine Grocers and Food Producers
    Association                         PeopleforBikes
    Maine Lobster Dealers' Association  Personal Care Products Council
    Maritime Exchange for the Delaware
    River and Bay                       Pet Industry Joint Advisory Council
    Maryland Retailers Association      Petroleum Equipment and Services
                                        Association
    Methanol Institute                  Plumbing Manufacturers
                                        International
    Michigan Chemistry Council          Power Tool Institute (PTI)
    Michigan Retailers Association      Promotional Products Association
                                        International
    Minnesota Retailers Association     Recreational Off-Highway Vehicle
                                        Association
    Missouri Retailers Association      Retail Association of Maine
    Motor and Equipment Manufacturers
    Association                         Retail Council of New York State
    Motorcycle Industry Council         Retail Industry Leaders Association
    RISE (Responsible Industry for a
    Sound Environment)                  Retailers Association of
                                        Massachusetts
    San Diego Customs Brokers and
    Forwarders Assn.                    Texas Water Infrastructure Network
    SEMI                                The Airforwarders Association
    Semiconductor Industry Association
    (SIA)                               The Fertilizer Institute
    Snowsports Industries America       The Hardwood Federation
    Society of Chemical Manufacturers
    and Affiliates                      The Toy Association
    Software and Information Industry
    Association (SIIA)                  The Vinyl Institute
    South Dakota Retailers Association  Travel Goods Association
    Specialty Equipment Market
    Association                         Truck and Engine Manufacturers
                                        Association (EMA)
    Specialty Vehicle Institute of
    America                             United States Council for
                                        International Business
    Sports and Fitness Industry
    Association                         United States Fashion Industry
                                        Association
    TechNet                             U.S. Global Value Chain Coalition
    Telecommunications Industry
    Association (TIA)                   U.S.-China Business Council
    Texas Retailers Association         Washington Retail Association
    Virginia Retail Merchants
    Association                         Window and Door Manufacturers
                                        Association
    Virginia-DC District Export Council
    (VA-DC DEC)                         World Pet Association, Inc. (WPA)

                                     ______

                     Association of Equipment Manufacturers

                       1300 I Street, NW, Suite 520 West

                           Washington, DC 20005-3314

                                T: 202-898-9064

                              https://www.aem.org/

    Thank you, Chairman Wyden, Ranking Member Crapo, and members of the
    Committee, for the opportunity to offer the views of the U.S. equipment
    manufacturing industry on the important topics you are examining today.

    The Association of Equipment Manufacturers represents more than 1,000-
    member companies manufacturing equipment and providing services for the
    agriculture, construction, utility, mining and forestry sectors
    worldwide. Our industry supports 2.8 million jobs across all 50 states,
    representing 12 percent of all manufacturing jobs in America, and
    contributes $288 billion a year to the U.S. economy.

    With nearly 30% of equipment manufactured in the United States destined
    for export, our industry depends on policies that reduce global trade
    and investment barriers and promote an open, transparent, and
    nondiscriminatory rules-based trading system.

    In today's global economy, U.S. equipment manufacturers rely on
    international supply chains to source critical components not
    manufactured in sufficient quantity or quality domestically. Starting
    in 2018, many critical manufacturing inputs have been subject to
    Section 232 steel and aluminum tariffs and Section 301 tariffs on goods
    imported from China. These tariffs and the retaliatory countermeasures
    by many of our trading partners have significantly driven up costs for
    U.S. equipment manufacturers, particularly as it relates to the costs
    of steel.

    Domestic steel prices have risen more than 160% since August of last
    year, while delivery times have increased to a point where
    manufacturing operations are facing mounting delays. Throughout the
    industry, manufacturers are halting production as they wait for
    additional components and steel to arrive. Lead times have gone from 3
    months to 8 months and surcharges ranging from 2%-5% for end-delivery
    of equipment are now commonplace. These stoppages and surcharges hurt
    U.S. employment as shifts and work hours are reduced, and U.S.
    agricultural producers and end-users of construction equipment are now
    forced to pay additional costs for domestically produced equipment.

    Domestic steel mills are purposefully not increasing capacity to meet
    customer demand to keep prices artificially high. This has resulted in
    a huge price difference between U.S. steel and steel available on the
    global market, undermining our national manufacturing base and
    jeopardizing family-sustaining jobs in the steel industry.

    The Biden-Harris administration must address this de facto competitive
    advantage enjoyed by our foreign competitors by reducing or removing
    the Section 232 tariffs on steel, particularly from our close trading
    partners and allies. As long as these tariffs remain in place, they
    will continue to undermine American workers and significantly undermine
    U.S. equipment manufacturers' competitiveness in the global economy.
    The Biden-Harris administration should instead bolster American
    manufacturing strength, strengthen our nation's global competitiveness,
    and increase exports of U.S. goods and services.

    The Biden-Harris administration must request--and Congress must grant--
    Trade Promotion Authority and should work closely with Congress on new
    high-standard free-trade agreements that provide increased market
    access for U.S. goods and services, confer originating status on
    remanufactured products, ensure customs procedures are transparent,
    predicable, and consistent, and guarantee intellectual property
    protections.

    As the U.S. economy begins to recover from the COVID-19 pandemic and
    the economic crisis, the United States must rebuild our manufacturing
    base. Opening up new markets for American made products must be a
    priority. Failing to renew Trade Promotion Authority sends a clear
    signal to our global competitors that America is not open for business,
    and only incentivizes customers in other markets to buy their goods and
    services from outside the U.S.

    The Biden-Harris administration should move to rapidly complete ongoing
    negotiations for high-standard free-trade agreements with Kenya and the
    United Kingdom. In Kenya, consumers are demanding upgraded
    infrastructure systems and producers want to invest in modern
    agricultural production. American made equipment should help them
    achieve these goals, and not our Chinese competitors. Concluding a
    high-standard free-trade will not only boost exports of U.S. equipment
    but will also incentivize additional foreign direct investment, helping
    improve the Kenyan economy and lifting additional people out of
    poverty.

    A high-standard free-trade agreement with the United Kingdom will
    strengthen transatlantic trade and investment with one of our nation's
    largest trading partners, and will also create a regulatory regime
    favorable to the adoption of U.S. technology and manufactured products.
    Brexit has put the United Kingdom on a new economic path, and the
    United States must seize this opportunity to formalize a high-
    standard free-trade agreement that reflects the importance of the
    ``special relationship'' and the substantial commercial ties that
    uphold it.

    Thank you again for the opportunity to express the views of the U.S.
    equipment manufacturing industry on the President's 2021 trade policy
    agenda. We look forward to working with all members of the Committee as
    well as the Biden-Harris administration to advance free and fair trade
    policies and agreements that will strengthen American manufacturing and
    secure our nation's long-term prosperity.

                                     ______

                            Center for Fiscal Equity

                          14448 Parkvale Road, Suite 6

                              Rockville, MD 20853

                          fiscalequitycenter@yahoo.com

                        Statement of Michael G. Bindner

    Chairman Wyden and the Ranking Member Crapo, thank you for the
    opportunity to submit these comments for the record to the Committee on
    Finance.

    The last 4 years have shown us an extreme example of how not to use
    tariffs. The prior administration used economic policy as gunboat
    diplomacy, but without having a navy. We trust that from now on, trade
    policy will be handled by professionals, leading to a return to
    normalcy.

    This is not to say that change is not needed. Donald Trump was
    originally elected by voters who saw the impact that bipartisan trade
    policy on their lives. Trump did not help, but for them, he at least
    tried something. In the long run, employee ownership is the solution
    for worker well-being on both sides of the border or ocean. Tax reform,
    including a border adjustable credit invoice VAT, a subtraction VAT to
    distribute benefits to workers and their families and an Asset VAT to
    close the tax gap, channel more ownership shares to employees and a
    negotiated rate to establish better international cooperation on
    business taxation.The United States leaves millions of dollars on the
    table because we do not have a value added tax that is zero rated at
    the border, while applying to all goods and services imported. Please
    see the attachment, distilled from prior year comments, which explains
    how we propose to do this. Note that adding border-adjustable goods and
    services taxes allows the removal of other trade barriers with no loss
    of jobs.

    We do not agree with the Administration's resolve to not raise taxes on
    anyone making under $400,000 per year. This proposal led to constant
    attempts to repeal the Affordable Care Act, not because of any flaw in
    the Act, but because of how it was funded with surtaxes on unearned
    income over $200,000. It is almost as if the Majority was setting a
    future Republican Majority up (which happened rather quickly) to make
    itself look bad by having these votes. The constant repeal votes,
    however, provided no electoral advantage.

    Still, we agree that initially, VAT should not make some people poorer.
    When subtraction and a credit invoice VAT is first implemented, we
    propose doubling the child tax credit again so that families with
    children are not affected. A higher minimum wage ($10 now, $12 soon--or
    $11 with a 32 work week--and eventually $15) will indemnify the rest.

    During the transition, income tax withholding will be adjusted to
    increase net income by 13%. The additional 6.5% invoice VAT rate comes
    from eliminating employer payments for FICA (which has the effect of
    eliminating the cap) and crediting each worker with the same amount.

    All in all, our proposals are better for most of the working class than
    the status quo, although not everyone. Some people deserve to pay more.
    Please see our attachment on Tax Reform for more information.

    We also propose a Carbon VAT, which is necessary for people to make
    spending decisions on the health of the planet (which is why carbon
    levies will be receipt visible rather than simply changing the price).

    We propose an asset value tax with a compromise 26% rate (halfway
    between the current 24% and the Biden 28%). The asset VAT would mark
    option exercise and the first sale after inheritance, gift or donation,
    with zero rating for sales to Employee Stock Ownership Plans.

    The first attachment on trade policy and the VAT includes how expanding
    employee ownership is the best trade policy for workers. Briefly,
    employee owners in the United States have an incentive to give foreign
    subsidiary and supply chain workers the same ownership rights and
    standard of living they receive. In order to do this, however,
    amendments to ERISA are necessary, as on paper owners will be paying
    more for the same products than they are paying now.

    Thank you for the opportunity to address the committee. We are, of
    course, available for direct testimony or to answer questions by
    members and staff.

    Attachment--Trade Policy and Value-Added Taxes

    Consumption taxes could have a big impact on workers, industry and
    consumers. Enacting an I-VAT is far superior to a tariff. The more
    government costs are loaded onto an I-VAT the better.

    If the employer portion of Old-Age and Survivors Insurance, as well as
    all of disability and hospital insurance are decoupled from income and
    credited equally and personal retirement accounts are not used, there
    is no reason not to load them onto an I-VAT. This tax is zero rated at
    export and fully burdens imports.

    Seen another way, to not put as much taxation into VAT as possible is
    to enact an unconstitutional export tax. Adopting an I-VAT is superior
    to it's weak sister, the Destination Based Cash Flow Tax that was
    contemplated for inclusion in the TCJA. It would have run afoul of WTO
    rules on taxing corporate income. I-VAT, which taxes both labor and
    profit, does not.

    The second tax applicable to trade is a Subtraction VAT or S-VAT. This
    tax is designed to benefit the families of workers through direct
    subsidies, such as an enlarged child tax credit, or indirect subsidies
    used by employers to provide health insurance or tuition reimbursement,
    even including direct medical care and elementary school tuition. As
    such, S-VAT cannot be border adjustable. Doing so would take away
    needed family benefits. As such, it is really part of compensation.
    While we could run all compensation through the public sector.

    The S-VAT could have a huge impact on long-term trade policy, probably
    much more than trade treaties, if one of the deductions from the tax is
    purchase of employer voting stock (in equal dollar amounts for each
    worker). Over a fairly short period of time, much of American industry,
    if not employee-owned outright (and there are other policies to
    accelerate this, like ESOP conversion) will give workers enough of a
    share to greatly impact wages, management hiring and compensation and
    dealing with overseas subsidiaries and the supply chain--as well as
    impacting certain legal provisions that limit the fiduciary impact of
    management decision to improving short-term profitability (at least
    that is the excuse managers give for not privileging job retention).

    Employee owners will find it in their own interest to give their
    overseas subsidiaries and their supply chain's employees the same deal
    that they get as far as employee ownership plus an equivalent standard
    of living. The same pay is not necessary, currency markets will adjust
    once worker standards of living rise.

    Over time, ownership will change the economies of the nations we trade
    with, as working in employee-owned companies will become the market
    preference and force other firms to adopt similar policies (in much the
    same way that, even without a tax benefit for purchasing stock,
    employee-owned companies that become more democratic or even more
    socialistic, will force all other employers to adopt similar measures
    to compete for the best workers and professionals).

    In the long run, trade will no longer be an issue. Internal company
    dynamics will replace the need for trade agreements as capitalists lose
    the ability to pit the interest of one nation's workers against the
    others. This approach is also the most effective way to deal with the
    advance of robotics. If the workers own the robots, wages are swapped
    for profits with the profits going where they will enhance consumption
    without such devices as a guaranteed income.

    Attachment--Tax Reform, Center for Fiscal Equity, May 10, 2021

    Individual payroll taxes. These are optional taxes for Old-Age and
    Survivors Insurance after age 60 for widows or 62 for retirees. We say
    optional because the collection of these taxes occurs if an income
    sensitive retirement income is deemed necessary for program acceptance.
    Higher incomes for most seniors would result if an employer
    contribution funded by the Subtraction VAT described below were
    credited on an equal dollar basis to all workers. If employee taxes are
    retained, the ceiling should be lowered to $85,000 to reduce benefits
    paid to wealthier individuals and a $16,000 floor should be established
    so that Earned Income Tax Credits are no longer needed. Subsidies for
    single workers should be abandoned in favor of radically higher minimum
    wages.

    Wage Surtaxes. Individual income taxes on salaries, which exclude
    business taxes, above an individual standard deduction of $85,000 per
    year, will range from 6.5% to 26%. This tax will fund net interest on
    the debt (which will no longer be rolled over into new borrowing),
    redemption of the Social Security Trust Fund, strategic, sea and non-
    continental U.S. military deployments, veterans' health benefits as the
    result of battlefield injuries, including mental health and addiction
    and eventual debt reduction. Transferring OASDI employer funding from
    existing payroll taxes would increase the rate but would allow it to
    decline over time. So would peace.

    Asset Value-Added Tax (A-VAT). A replacement for capital gains taxes,
    dividend taxes, and the estate tax. It will apply to asset sales,
    dividend distributions, exercised options, rental income, inherited and
    gifted assets and the profits from short sales. Tax payments for option
    exercises and inherited assets will be reset, with prior tax payments
    for that asset eliminated so that the seller gets no benefit from them.
    In this perspective, it is the owner's increase in value that is taxed.

    As with any sale of liquid or real assets, sales to a qualified broad-
    based Employee Stock Ownership Plan will be tax free. These taxes will
    fund the same spending items as income or S-VAT surtaxes. This tax will
    end Tax Gap issues owed by high income individuals. A 26% rate is
    between the GOP 24% rate (including ACA-SM and Pease surtaxes) and the
    Democratic 28% rate. It's time to quit playing football with tax rates
    to attract side bets.

    Lower rates are not as regressive as they seem. Only the wealthy have
    capital gains in any significant amount. The defacto rate for everyone
    else is zero.

    The mutual fund exemption will be repealed. It is the biggest tax
    shelter is the use of money market funds to accumulate capital gains
    and income without taxation. This practice must end if salary surtaxes
    no longer include non-salaried income. 75% of such funds are held by
    the top 10% of households as measured by the 2019 Survey of Consumer
    Finance by the Federal Reserve. I suspect the other 20% are held by
    high income retirees. The working class will not be harmed. Applying
    the Pareto Rule to higher income households leaves the top 1450
    households with 30% of wealth. The proof of the proposition is the
    holders of Berkshire Hathaway.

    Subtraction Value-Added Tax (S-VAT). These are employer paid Net
    Business Receipts Taxes. S-VAT is a vehicle for tax benefits,
    including:

          Health insurance or direct care, including veterans' health care
    for non-
    battlefield injuries and long-term care.
          Employer paid educational costs in lieu of taxes are provided as
    either
    employee-directed contributions to the public or private unionized
    school of their choice or direct tuition payments for employee children
    or for workers (including ESL and remedial skills). Wages will be paid
    to students to meet opportunity costs.
          Most importantly, a refundable child tax credit at median income
    levels (with inflation adjustments) distributed with pay.

    Subsistence-level benefits force the poor into servile labor. Wages and
    benefits must be high enough to provide justice and human dignity. This
    allows the ending of state administered subsidy programs and
    discourages abortions, and as such enactment must be scored as a must
    pass in voting rankings by pro-life organizations (and feminist
    organizations as well). To assure child subsidies are distributed, S-
    VAT will not be border adjustable.

    The S-VAT is also used for personal accounts in Social Security,
    provided that these accounts are insured through an insurance fund for
    all such accounts, that accounts go toward employee ownership rather
    than for a subsidy for the investment industry. Both employers and
    employees must consent to a shift to these accounts, which will occur
    if corporate democracy in existing ESOPs is given a thorough test. So
    far it has not. S-VAT funded retirement accounts will be equal-dollar
    credited for every worker. They also have the advantage of drawing on
    both payroll and profit, making it less regressive.

    A multi-tier S-VAT could replace income surtaxes in the same range.
    Some will use corporations to avoid these taxes, but that corporation
    would then pay all invoice and subtraction VAT payments (which would
    distribute tax benefits). Distributions from such corporations will be
    considered salary, not dividends.

    Invoice Value-Added Tax (I-VAT). Border adjustable taxes will appear on
    purchase invoices. The rate varies according to what is being financed.
    If Medicare for All does not contain offsets for employers who fund
    their own medical personnel or for personal retirement accounts, both
    of which would otherwise be funded by an S-VAT, then they would be
    funded by the I-VAT to take advantage of border adjustability. I-VAT
    also forces everyone, from the working poor to the beneficiaries of
    inherited wealth, to pay taxes and share in the cost of government.
    Enactment of both the A-VAT and I-VAT ends the need for capital gains
    and inheritance taxes (apart from any initial payout). This tax would
    take care of the low-income Tax Gap.

    I-VAT will fund domestic discretionary spending, equal dollar employer
    OASI contributions, and non-nuclear, non-deployed military spending,
    possibly on a regional basis. Regional I-VAT would both require a
    constitutional amendment to change the requirement that all excises be
    national and to discourage unnecessary spending, especially when
    allocated for electoral reasons rather than program needs. The latter
    could also be funded by the asset VAT (decreasing the rate by from
    19.5% to 13%).

    As part of enactment, gross wages will be reduced to take into account
    the shift to S-VAT and I-VAT, however net income will be increased by
    the same percentage as the I-VAT. Adoption of S-VAT and I-VAT will
    replace pass-through and proprietary business and corporate income
    taxes.

    Carbon Value-Added Tax (C-VAT). A Carbon tax with receipt visibility,
    which allows comparison shopping based on carbon content, even if it
    means a more expensive item with lower carbon is purchased. C-VAT would
    also replace fuel taxes. It will fund transportation costs, including
    mass transit, and research into alternative fuels (including fusion).
    This tax would not be border adjustable.

    Summary

    This plan can be summarized as a list of specific actions:

    1.  Increase the standard deduction to workers making salaried income
    of $425,001 and over, shifting business filing to a separate tax on
    employers and eliminating all credits and deductions--starting at 6.5%,
    going up to 26%, in $85,000 brackets.

    2.  Shift special rate taxes on capital income and gains from the
    income tax to an asset VAT. Expand the exclusion for sales to an ESOP
    to cooperatives and include sales of common and preferred stock. Mark
    option exercise and the first sale after inheritance, gift or donation
    to market.

    3.  End personal filing for incomes under $425,000.

    4.  Employers distribute the child tax credit with wages as an offset
    to their quarterly tax filing (ending annual filings).

    5.  Employers collect and pay lower tier income taxes, starting at
    $85,000 at 6.5%, with an increase to 13% for all salary payments over
    $170,000 going up 6.5% for every $85,000--up to $340,000.

    6.  Shift payment of HI, DI, SM (ACA) payroll taxes employee taxes to
    employers, remove caps on employer payroll taxes and credit them to
    workers on an equal dollar basis.

    7.  Employer paid taxes could as easily be called a subtraction VAT,
    abolishing corporate income taxes. These should not be zero rated at
    the border.

    8.  Expand current state/federal intergovernmental subtraction VAT to a
    full GST with limited exclusions (food would be taxed) and add a
    federal portion, which would also be collected by the states. Make
    these taxes zero rated at the border. Rate should be 19.5% and replace
    employer OASI contributions. Credit workers on an equal dollar basis.

    9.  Change employee OASI of 6.5% from $18,000 to $85,000 income.

                                     ______

                                Engine Advocacy

                          700 Pennsylvania Avenue, SE

                              Washington, DC 20003

                                policy@engine.is

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

    The Honorable Richard Neal          The Honorable Kevin Brady
    Chairman                            Ranking Member
    U.S. House of Representatives       U.S. House of Representatives
    Committee on Ways and Means         Committee on Ways and Means
    1102 Longworth House Office
    Building                            1139 Longworth House Office
                                        Building
    Washington, DC 20515                Washington, DC 20515

    Dear Chairman Wyden, Ranking Member Crapo, Chairman Neal, and Ranking
    Member Brady:

        Thank you for holding hearings on May 12th and 13th on the
    President's 2021 Trade Policy Agenda. Engine is a non-profit technology
    policy, research, and advocacy organization that works with government
    and a community of thousands of high-technology, growth-oriented
    startups across the nation to support the development of technology
    entrepreneurship. Strong, forward thinking digital trade measures are
    critical to reduce and eliminate non-tariff barriers and enable U.S.
    startups to succeed and expand into new markets. To that end, we value
    your commitment to working with the Administration to promote sound
    trade policy and appreciate the opportunity to share trade-related
    priorities for startups.

        Non-tariff barriers to trade hamper digital trade generally and
    uniquely hinder the ability of U.S. startups to compete abroad. U.S.
    trade policy must seek to reduce and eliminate these barriers. In
    future negotiations and updates to current trade agreements, strong
    digital trade provisions should be included. Such provisions would
    reject data localization requirements and ensure cross-border data
    flows, include balanced intermediary liability frameworks similar to 47
    U.S.C. Sec. 230, and implement certain, balanced, and consistent IP
    frameworks globally.

        Many startups are unable to surmount the compliance burden that
    data localization measures impose, leaving them at a competitive
    disadvantage to larger companies. Similarly, large companies can afford
    the moderation tools and potential legal exposure occurring in a world
    without balanced intermediary liability frameworks, but startups
    cannot.\1\ And commonsense IP frameworks like 17 U.S.C. Sec. 512 and
    U.S. Courts' use of actual harm and proportionate relief in patent
    litigation are needed in agreements to ensure startups can expand
    abroad.\2\
    ---------------------------------------------------------------------------
        \1\ Evan Engstrom, ``Primer: Value of Section 230,'' Engine, 31
    Jan. 2019, https://www.engine.is/news/primer/section230costs.
        \2\ The Engine Team, ``The Importance of DMCA for Startups,''
    Engine, 4 June 2020, https://www.engine.is/news/the-importance-of-dmca-
    for-startups.

        Digital Services Taxes are discriminatory, and, while targeting
    large, mostly American companies, they impact American startups through
    increases in the cost of services like advertising and cloud computing
    that startups rely on to launch and grow. In jurisdictions that have
    implemented DSTs, large companies have increased costs, something that
    is likely to continue as these onerous levies spread.\3\ As the
    pandemic continues and countries search for additional revenue sources,
    more countries are likely to adopt DSTs at lower and lower thresholds
    for companies subject to the tax. For example, the Indian equalization
    levy has a revenue threshold of roughly $265,000.\4\ And the patchwork
    of varying taxes popping up stands to be impossible for startups to
    navigate given the compliance costs and difficulty of determining if
    they are subject to the tax jurisdiction-by-jurisdiction.
    ---------------------------------------------------------------------------
        \3\ James Vincent, ``Apple, Google, and Amazon respond to European
    tech taxes by passing on costs,'' The Verge, 2 Sept. 2020, https://
    www.theverge.com/2020/9/2/21418114/european-uk-digital-tax-services-
    apple-google-amazon-raise-prices.
        \4\ Asim Choudhury and Aesa Dey, ``INSIGHT: Indian Equalization
    Levy Under U.S. Scrutiny--What Comes Next?'', Bloomberg Tax, 2 July
    2020, https://news.bloombergtax.com/daily-tax-report-international/
    insight-indian-equalization-levy-under-u-s-scrutiny-what-comes-next.

        These taxes contravene international taxation norms by
    discriminating against U.S. companies, excluding domestic players, and
    taxing revenue, rather than profit--especially damaging for startups
    that might meet the threshold but not yet turn a profit. To combat
    these issues, the framework for digital taxation should receive new
    ---------------------------------------------------------------------------
    attention at the OECD.

        Through the Digital Markets Act (DMA), Digital Services Act (DSA),
    and Artificial Intelligence Act (AIA), the European Union is leveraging
    the notion of digital sovereignty as they attempt to achieve a
    technology market comparable to that of the United States. But the
    imposition of these heavy-handed regulations is misguided, likely
    counterproductive to their goals, and harmful to U.S. startups. As
    Engine has long noted, enacting strict rules designed to regulate the
    practices of large companies without considering the impacts on the
    entire innovation ecosystem is likely to actually cement the standing
    of those large companies, while burdening their smaller rivals with
    elevated barriers to entry and proportionately higher compliance
    costs.\5\
    ---------------------------------------------------------------------------
        \5\ Edward Graham, ``Competition Policy Needs Startup
    Perspective,'' Engine, 10 Sept. 2019, https://www.engine.is/news/this-
    week-in-startup-policy-9/10/19?rq=enacting%20strict%20rules.

        The DMA's proposed rules on competition discourage growth by
    creating thresholds that impose different rules for companies that
    reach a certain size.\6\ Startups shouldn't be discouraged from
    attracting users, expanding into new markets, or boosting revenue, as
    these thresholds would. The rules would negatively impact mergers and
    acquisitions, an integral element of the innovation ecosystem related
    to investment in new startups.\7\ Startups rely on the so-called
    ``gatekeepers'' for low cost services--any regulation that
    significantly increases costs for ``gatekeepers,'' could cause an
    increase in price of these services and would restrict startup
    formation, growth, and their ability to compete abroad. And these
    potential consequences mean the U.S. should not import and impose
    similar regulations domestically.
    ---------------------------------------------------------------------------
        \6\ Jennifer Huddleston, ``The Digital Markets Act: A Primer,''
    American Action Forum, 7 Apr. 2021, https://
    www.americanactionforum.org/insight/the-digital-markets-act-a-primer/.
        \7\  ``The State of the Startup Ecosystem,'' Engine, April 2021,
    https://static1.squarespace.com/static/571681753c44d835a440c8b5/t/
    60819983b7f8bela2a99972d/1619106194054/The+State+of
    +the+Startup+Ecosystem.pdf.

        The DSA fails to recognize the difficult and expensive nature of
    content moderation for small platforms and startups. Even though
    startups would likely be subject to the lowest threshold under the DSA,
    these requirements, along with the potential for significant fines,
    could disincentivize content moderation due to increased liability that
    nascent platforms cannot afford to shoulder. Sound regulation should
    instead balance user safety with preserving opportunities for user
    ---------------------------------------------------------------------------
    expression in a way that will allow startups to grow and succeed.

        The AIA amounts to another non-tariff barrier to trade. The
    proposed law treats both the AI provider and the user as the creator of
    the AI.\8\ It imposes burdens such that European SMEs that might
    otherwise use American startups' AI-powered business solutions e.g.,
    for hiring or customer service, will likely avoid such technology
    solutions altogether. Larger businesses that can afford the compliance
    burden might still use AI solutions, but AI startups are unlikely to
    overcome the compliance costs and thus will not be able to compete.
    This means the law will likely cement the standing of larger players,
    while U.S. startups are likely to be shut out of European markets.
    ---------------------------------------------------------------------------
        \8\ Benjamin Mueller, ``The Artificial Intelligence Act: A Quick
    Explainer,'' Center for Data Innovation, 4 May 2021, https://
    datainnovation.org/2021/05/the-artificial-intelligence-act-a-quick-
    explainer/.

        Onerous regulations like these have a disproportionate impact on
    nascent startups. Ultimately, small American startups may be
    disincentivized from expanding into the EU given barriers from these
    regulations' costs of compliance, potential for fines, and probable
    need for legal representation in the EU. In specifically targeting U.S.
    companies through digital protectionism, the EU risks hampering
    transatlantic trade, limiting options for consumers, and limiting
    ---------------------------------------------------------------------------
    opportunity for American startups to enter new markets.

        Engine appreciates the opportunity to share the startup perspective
    on the importance of robust digital trade measures in a forward-
    thinking trade policy, and we look forward to being a resource for your
    committees on these issues. We look forward to further engaging with
    you on issues affecting startups in the future.

                Sincerely,

                Engine Advocacy

                                     ______

                       U.S. Global Value Chain Coalition

                               740 6th Street, NW

                              Washington, DC 20001

                        https://usglobalvaluechain.com/

    This statement is being filed on behalf of the U.S. Global Value Chain
    Coalition--a coalition of U.S. companies and associations--that is on a
    mission to educate policymakers and the public about the American jobs
    and the domestic economic growth our companies generate through their
    global value chains.

    Global value chains include those jobs we traditionally associate with
    the creation of a product--such as those in a factory or on a farm--as
    well as those positions involved in the conceiving of and delivery of
    those products--such as design, marketing, research and development,
    logistics, compliance, and sales. Simply put, the global value chain
    accounts for all jobs that add value from beginning to end to the good
    or service sold in the global marketplace. These positions are
    essential to the creation or sale of a good or service. Moreover, these
    jobs are primarily here in the United States and are usually high-
    paying, accounting for much of the value that is paid at the register.

    China

    Global value chains are dependent upon trade with China to create jobs
    and economic opportunities across the United States. For instance,
    American companies, and the American workers they employ, design and
    market consumer products that are sold in China, in the United States,
    and around the world. Although these everyday items--articles such as
    U.S. branded clothes, shoes, and backpacks--might be physically
    produced in China, they support millions of U.S. jobs in such
    disciplines as design, quality control, marketing, and compliance.

    Furthermore, chemicals imported from China make their way through a
    network of U.S. distributors, employing tens of thousands of Americans
    who reformulate, manufacture, market, and distribute into American
    industries, including agriculture, automotive, pharmaceuticals,
    textiles, plastics, paints and coatings, and more.

    The punitive tariffs on U.S. imports from China have been very damaging
    to these U.S. global value chains. These tariffs have led to
    considerable costs and uncertainty for our members because tariffs are
    no more than taxes that U.S. companies pay, which are then passed on to
    U.S. consumers in the form of higher prices. In fact, a recent report
    by Moody's Investors Services \1\ found ``that U.S. importers absorbed
    more than 90% of additional costs'' resulting from the section 301
    China tariffs. Even before the coronavirus pandemic, these tariffs have
    required companies to make painful choices--usually at the expense of
    American jobs--as they figure out ways to manage these new costs.
    ---------------------------------------------------------------------------
        \1\ https://www.cnbc.com/2021/05/18/us-companies-bearing-the-brunt-
    of-trumps-china-tariffs-says-moodys.html.

    We understand USTR is currently reviewing its China policy, but as we
    work to reopen the U.S. economy and get Americans back to work, we
    request Congress: (1) urge a retroactive extension for product
    exclusions that expired in 2020; (2) demand the Administration
    reinstate and improve the Section 301 product exclusion process without
    further delay; and (3) demand the Administration lift all punitive
    China tariffs.

    Diversification

    It is not easy for companies to shift their global value chains. While
    many have worked to diversify their value chains from the start of the
    trade war, there are others where it is just not feasible in a short
    period of time--if at all. There are many challenges such as ensuring
    new vendors can meet capacity, quality, product safety, sustainability,
    and social responsibility requirements, the availability of a skilled
    work force and needed infrastructure, and testing and auditing
    capabilities--just to name a few. In some instances, a product may not
    be available from any other source. Further, the coronavirus pandemic
    has made shifting supply chains even more complicated with travel
    essentially shut down due to global stay at home orders and limits on
    corporate travel. This should certainly be factored in as the
    Administration reviews current policies.

     Generalized System of Preferences (GSP) and Miscellaneous Tariff Bill
                        (MTB)

    The Generalized System of Preferences (GSP) and the Miscellaneous
    Tariff Bill (MTB) expired at the end of 2020. Both programs allow
    American businesses to use duty-savings to compete internationally,
    lower costs for American families, hire more American workers, and
    invest in new products. GSP promotes economic and sustainable
    development in developing countries by eliminating duties on thousands
    of products imported from 119 designated beneficiary countries. The MTB
    allows American companies the ability to eliminate or reduce duties on
    nearly 2,500 inputs and finished goods not available or manufactured in
    the United States. We request Congress renew these critical trade
    preference programs quickly to provide certainty and predictability to
    American businesses, many of whom are utilizing these programs to help
    make and distribute urgently needed personal protective equipment in
    response to the coronavirus outbreak.

    Punitive Tariffs

    Punitive tariffs, and the threat of them, have resulted in price
    increases for American consumers, American job losses, and other
    irreversible economic damage to the U.S. The retaliation on unrelated
    industries by our trading partners due to the Section 232 tariffs on
    steel and aluminum is a prime example of how tariffs do not change the
    behavior of countries in international trade disputes. Further, the
    threat of punitive tariffs from the Boeing-Airbus dispute and the
    digital services tax (DST) issue will unnecessarily bring harm to
    unrelated industries. Lastly, we do not believe punitive tariffs align
    with the worker-centric trade policy agenda of the Biden
    Administration.

    Thank you for this opportunity to provide a statement.

                                      [all]