[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                     
          
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                          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

                      [email protected]

                    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

                            [email protected]

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\
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    \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.
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    \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 
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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\
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    \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.
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    \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 
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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.
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    \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 
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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.
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    \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]