[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
BIDEN ADMINISTRATION'S 2023 TRADE
POLICY AGENDA WITH UNITED STATES
TRADE REPRESENTATIVE, AMBASSADOR TAI
=======================================================================
HEARING
before the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
MARCH 24, 2023
__________
Serial No. 118-6
__________
Printed for the use of the Committee on Ways and Means
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U.S. GOVERNMENT PUBLISHING OFFICE
53-240 WASHINGTON : 2024
COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SANCHEZ, California
RON ESTES, Kansas BRIAN HIGGINS, New York
LLOYD SMUCKER, Pennsylvania TERRI SEWELL, Alabama
KEVIN HERN, Oklahoma SUZAN DelBENE, Washington
CAROL MILLER, West Virginia JUDY CHU, California
GREG MURPHY, North Carolina GWEN MOORE, Wisconsin
DAVID KUSTOFF, Tennessee DAN KILDEE, Michigan
BRIAN FITZPATRICK, Pennsylvania DON BEYER, Virginia
GREG STEUBE, Florida DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota JIMMY PANETTA, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
Mark Roman, Staff Director
Brandon Casey, Minority Chief Counsel
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C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Jason Smith, Missouri, Chairman............................. 1
Hon. Richard Neal, Massachusetts, Ranking Member................. 2
Advisory of March 24, 2023 announcing the hearing................ V
WITNESS
Katherine Tai, Ambassador, United States Trade Representative.... 4
MEMBER SUBMISSIONS FOR THE RECORD
Member Questions for the Record and Responses from Katherine Tai,
Ambassador, United States Trade Representative................. 80
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 134
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BIDEN ADMINISTRATION'S 2023 TRADE
POLICY AGENDA WITH UNITED STATES
TRADE REPRESENTATIVE, AMBASSADOR TAI
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FRIDAY, MARCH 24, 2023
House of Representatives,
Committee on Ways and Means,
Washington, DC.
The committee met, pursuant to call, at 9:05 a.m., in Room
1100, Longworth House Office Building, Hon. Jason Smith
[chairman of the committee] presiding.
Chairman SMITH. The committee will come to order.
Ambassador Tai, thank you for appearing here today. It is
my pleasure to welcome you back to the best committee in
Congress where you served with great distinction.
As you know, American families, they want and need results.
They have lost 2 months of wages in the Biden economy,
wholesale prices are continuing to weigh on small businesses,
and our economy continues to struggle. Making matters worse,
President Biden has left American workers on the sidelines,
surrendered our economic advantage to China, and refused to
consult with Congress.
To be clear, a country that cannot supply their own demand
for food, energy, and medicine but must instead rely on other
nations to fulfill those basic needs, they are no longer
independent, but they are politically dependent.
Given that this is your first time appearing before the
Ways and Means Committee in the new Republican majority, I
believe today's hearing is an opportunity to establish a new
path forward to put American workers first and China--and hold
China accountable.
U.S. trade policy has historically been bipartisan. For
example, President Trump's USMCA strengthened the trade
relationship between North American countries and gave a
stronger enforcement mechanism to stand up for American
workers. I am glad to see some positive developments with
regard to enforcement to ensure fairness for American farmers
and energy producers competing in Canada and Mexico. But the
American people expect us to go further and to use the tools at
our disposal to level the playing field for our workers,
farmers, and job creators.
Without a trade agenda that puts workers and jobs first,
the United States is falling behind China and other
competitors. China is forging ahead with an aggressive trade
agenda that cheats America. It shapes the global playing field
in its favor and threatens key American supply chains and the
livelihoods of American farmers and workers. But rather than
lead on trade, the Biden administration's tax and trade
policies surrender the world's customers to China and allow it
to profit using taxpayer dollars.
The U.S. must be clear about the Chinese Communist Party's
human rights abuses and predatory trade practices and work to
stop them. The Phase One agreement negotiated by President
Trump included specific enforcement provisions. Yet for some
reason, the administration has yet to provide a comprehensive
accounting of China's compliance.
Ambassador Tai, that should be a no-brainer, and we would
love to hear that information.
In the meantime, the committee is prepared to take common-
sense steps to strengthen our supply chains and reduce our
dependence on China. That includes more U.S. production and
deeper cooperation with allies. But during hearings in West
Virginia and in Oklahoma, witnesses representing America's
farmers, the energy producers, and manufacturers told this
committee that they are hamstrung by red tape and the Biden
administration's new taxes. They deserve better.
The Biden administration unfortunately has refused to
recognize that the Constitution requires Congress to be at the
center of U.S. trade policy. Through so-called trade frameworks
that sidesteps Congress and fail to establish durable
agreements, this administration is fueling the supply chain
crisis and plunging American workers, farmers, and
manufacturers into prolonged uncertainty. Endless dialogues and
frameworks are no substitute for exercising Congress'
constitutional authority--and giving the American people a
voice--over trade. In order to succeed, this administration
must recognize that Congress is in the driver's seat in setting
priorities and deciding whether to approve any trade
agreements. And trade at its core function should be used to
benefit the American people and increase the wealth of our
Nation and our economy. Trade plans are only worthwhile so much
as they accomplish those goals and advance the well-being of
the American people we all serve.
Ambassador, I am extremely optimistic that we can work
together and deliver some real results for the American people.
Together, we can stand up for workers and farmers and
manufacturers, build on USMCA's progress, hold the Chinese
Communist Party accountable, strengthen our supply chains, and
restore American leadership in the world.
I am pleased to recognize the ranking member from
Massachusetts, Mr. Neal, for his opening statement.
Mr. NEAL. Thank you, Mr. Chairman.
We want to welcome back Ambassador Tai, one of the
distinguished alums of the House of Representatives. We are
thrilled with the emphasis that she has placed upon the
enforcement of these trade agreements. She, with me and the
members of our side, along with former Chairman Brady, for
months, day after day after day, renegotiated USMCA.
I think perhaps the chairman and I have a slightly
different versions of how that happened, but we would also
recall that, in the end, 193 Republicans voted for the
agreement and 195 Democrats voted for a trade agreement that
was endorsed by the AFL-CIO and the Teamsters Union, almost
unheard of and thanks, in many ways, to the guidance that you
offered along the way. U.S. Chamber of Commerce, Business
Roundtable, Teamsters, and the AFL-CIO endorsed that trade
agreement.
So, this is your first appearance, and we want to
congratulate not just you but President Biden on the strong and
sustainable recovery that is focused on workers. More jobs have
been created under his leadership in the last 2 years than on
any other President's time in a full term. Wages are on the
rise, and our investments in supply chains and infrastructure
are bringing back ``Made in America.'' This is how you rebuild
an economy from the bottom up and the middle out, and I am
grateful for your leadership in connecting this to our worker-
centric trade agreement.
As our Nation's lead trade negotiator, you have put
American workers and businesses first, strengthening
relationships with global allies. And under your leadership, we
are now used to USMCA's Rapid Response Labor Mechanism, which
you have applied seven times already, standing up for workers'
rights and showing the world what is possible with strong
enforcement mechanisms.
Last year, the committee took decisive action on a
bipartisan basis to hold Russia accountable for its horrific,
unprovoked war in Ukraine. We banned Russian energy imports and
suspended normal trade relations to inflict substantial
economic pressure on Putin's regime.
Ambassador Tai, I encourage you to continue working with
our partners and allies in isolating Putin and improving global
supply chain resiliency.
Even in the face of these atrocities, we have seen
unparalleled unity amongst our allies. Now is the time to
capitalize on our connections and strengthen our economic ties,
especially in Europe and Africa.
I had the opportunity to visit the World Trade Organization
last year. I met with many of our allies yearning for a deeper
U.S. engagement. So, I applaud your commitment to strengthening
the institutions and commend you for delivering a successful
outcome for MC12. I have seen firsthand the positive impact of
WTO as it has had on global commerce, but more reforms are
still needed, and you and I know, share that same view,
especially with dispute settlement.
I share your concerns with recent rulings on national
security, and also understand clearly that it is the integrity
of that organization whose reputation is on the line.
You have embraced our climate goals as a key trade
priority. Ways and Means Democrats probably contributed the
largest Federal investment to protect our climate in the
Inflation Reduction Act. And I am delighted with the fact that
many who we might describe as climate deniers are attempting to
take advantage of those tax credits. That is a good thing.
These types of worker-focused economic trade investments
not only protect our planet, but they create good-paying jobs.
Strong environmental protections, workers' rights, and human
rights are all interconnected, which we established in USMCA
and other trade agreements. In combatting this crisis,
guardrails will need to be put in place to ensure that the
environmental problem is not replaced with another substantial
challenge. There are plenty of lessons to learn from the past,
and climate solutions of the future should be grounded in those
lessons.
Ambassador Tai, the House Democrats fought hard to
establish a new structure for enforcement, and you have
followed up on it, and we are grateful for it. USMCA now stands
as a powerful beacon for what is possible when it comes to
durable enforcement trade agreements, and I credit that work in
consensus building to Congress in a bipartisan manner. It is
the collaboration between Congress and the executive that
allows trade policy to live up to its fullest potential. In
this critical moment, that cannot be forgotten.
I saw our Senate colleagues deliver this message yesterday,
and I share many of their concerns. We seek long-lasting
solutions just as you do, and we firmly believe, when done
right, trade is a powerful driver of good-paying, quality jobs
in a thriving economy. Thanks for being here today. We welcome
you back enthusiastically. And I yield the balance of my time.
Thank you, Mr. Chairman.
Chairman SMITH. Thank you. Thank you, Ranking Member Neal.
Today's sole witness is United States Trade Representative,
Ambassador Katherine Tai. The committee has received your
written statement and it will be made part of the formal
hearing record. You have 5 minutes to deliver your oral
remarks.
Ambassador Tai, you may begin when you are ready.
STATEMENT OF MS. KATHERINE TAI, UNITED STATES TRADE
REPRESENTATIVE
Ambassador TAI. Thank you so much, Chairman Smith, Ranking
Member Neal, members of this august committee. Congress is our
constitutional partner on trade, and I appreciate the
opportunity to discuss the President's trade agenda with you
today.
Under President Biden's leadership, this administration is
writing a new story on trade, one that puts working families
first and reflects more voices across the American economy, one
that advances our global priorities and strengthens democracy
here at home and abroad.
Whether you have a college degree or not, whether you have
5 employees or 500, whether you are in rural Ohio or in the
heart of Baltimore, whether you are a small dairy farmer in
Michigan or a steelworker in Pennsylvania, we are restoring
fairness to our trade and economic system for you. This means
vigorously enforcing existing commitments to reestablish
confidence and trust in trade. And this starts with the USMCA,
which has a very special relationship with this committee,
which Congress and this committee passed on a strong bipartisan
basis.
We are pressing Canada to ensure that U.S. dairy farmers
are treated fairly, finally, and urging Mexico to address our
concerns with the energy sector and with agricultural
biotechnology. On the latter, we recently requested technical
consultations with Mexico under the USMCA, and we will continue
to consider all options available under that agreement to fix
the problem.
Restoring fairness to the system also means empowering
workers to compete fairly. We are using the USMCA's rapid
response mechanism to promote workers' rights in Mexico, and we
are seeing real change and success for workers in independent
unions. In the last year, we have secured wins for workers at
four different facilities. We have ongoing open cases, and will
continue to work with the Government of Mexico. We are also
working with the European Union, Japan, Canada, and Mexico
actively to eliminate forced labor from global supply chains.
Farmers, ranchers, fishers, and food manufacturers are also
key to our trade agenda. We secured real wins over the past few
years, and U.S. agricultural exports have reached a record $202
billion in 2022. We brought into force an agreement with Japan
to export more beef. We signed a Tariff Rate Quota Agreement
with the EU to open markets for U.S. rice, wheat, corn,
shellfish, and beef. And we have opened access for pork and
pecan exports for India. We have a nimble USTR team that is
opening markets, and we will continue to work with Congress to
find additional opportunities for as many of our stakeholders
as we can, especially for the small- and medium-sized ones.
Speaking of new opportunities, the United States is leading
with a positive economic vision around the world, and our
partners and our allies are joining us. The Indo-Pacific
Economic Framework is a major priority this year, and we are
making significant progress. This framework will level the
playing field for American workers and businesses, create more
resilient supply chains, boost agricultural exports, build an
inclusive digital economy, and help businesses compete in the
region.
We also kicked off the America's Partnership for Economic
Prosperity with 11 countries in our hemisphere. Regionalization
is an integral part of building resilience in the world
economy. By strengthening our relationships with our closest
neighbors, we can drive sustainable, economic growth and
bolster our collective prosperity.
We are also deepening ties at the bilateral level. Taiwan
is an essential partner, and our U.S.-Taiwan 21st Century Trade
Initiative is moving forward. We launched the U.S.-Kenya
Strategic Trade and Investment Partnership. And we continue to
work with the European Union through the Trade and Technology
Council to promote shared economic growth and, importantly, to
coordinate our actions against Russia and Belarus.
We are making progress on the world's first sectoral
arrangement on steel and aluminum trade. This will tackle both
emissions and nonmarket excess capacity, including from the
PRC, which threatens American workers and businesses.
On the multilateral front, our administration worked with
WTO members to deliver tangible outcomes during the last
Ministerial Conference, the first time in a decade, including
on COVID-19 vaccines, fishery subsidy disciplines, and food
insecurity. And we are committed to transforming the
institution to be more responsive to the rapidly changing
global economy and the needs of everyday people.
We are also taking full advantage of our APEC host year to
build a more durable, resilient, and inclusive Asia-Pacific
region. Another component of our trade agenda, of course, is
realigning the U.S.-China relationship. That means making
groundbreaking investments here at home to compete from a
position of strength. That also means renewing our engagement
with partners and allies to develop new tools to address the
challenges posed by the PRC.
The comprehensive 4-year review on the Section 301 tariffs
is a part of this realignment. We are taking a deliberate and
strategic look at how we can serve our economic interests in
light of the PRC's continued unfair policies and practices.
Lastly, but certainly not least, USTR will continue to
implement our equity action plan and work with the U.S. ITC to
better understand the distributional effects of trade on
American workers.
I want to close where I started. Congress is our
constitutional partner on trade. The success of our initiatives
depends on a robust partnership with all of you. Since last
year's trade agenda hearings, USTR has held over 380
congressional consultations, including more than 80 on IPEF
alone. And your feedback has been incredibly helpful in
informing and guiding our work.
I have also heard your concerns about Congress' role on
trade and transparency with the public, and I have asked my
team to make further enhancements. That includes making it
easier for congressional staff to review our negotiating text,
releasing public summaries of that text, and holding public
stakeholder meetings, especially with groups who traditionally
have not been involved in the process. Moving forward, I will
continue to work hand-in-hand with Members of Congress, your
staff, and the public to develop effective trade policy
together.
Chairman Smith, I want to say, I agree with you; I feel
that there is bipartisan strength behind American trade
policies, and there is a lot that we can do together. I look
forward to continuing this work in the year ahead with all of
you.
Thank you.
[The statement of Ambassador Tai follows:]
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Chairman SMITH. Thank you, Ambassador Tai.
Before we move on to questions, I want to welcome our
friend and colleague Greg Steube to the dais for the first time
since becoming a member of this committee.
As many of you may know, Greg had a terrible accident
earlier this year and was on the mend for some time. And as
example of Greg's passion for this committee and hard work, he
was out of the hospital just a few days calling me, saying, Can
I still get on my subcommittees? Can you help me get on the
right subcommittees?--while he was laying with a neck brace and
everything else.
But earlier this week, we were at the Republican retreat,
and I don't think that there was a dry eye in the room whenever
Greg gave his testimony of the miracle that happened that day
with Representative Vern Buchanan's staffer that actually saw
him at the accident and was able to call the paramedics, and
how everything worked right. It was an amazing, amazing story.
And I know I speak for everyone in this room, Greg, I
welcome you to the Ways and Means Committee, and we are glad
you are home.
Thank you.
And I would like to recognize Mr. Neal as well.
Mr. NEAL. Thank you, Mr. Chairman.
We are delighted you are back. And I want to say that the
Democrats' caucus, that we unanimously wish you a speedy
recovery.
Mr. STEUBE. Thank you.
I just want to thank everybody. It is weird to be on a
committee for 2 months and not step foot in the actual room.
But this is my first week back, and I want to thank the
chairman for his understanding and our leadership that was very
understanding of me going through the process to heal.
And I want to thank my colleagues on the other side of the
aisle. Quite a few of you reached out to me during that time,
and that was a blessing. And it shows that we are all human up
here, and we are all up here to do what we have been called to
do. So I want to thank you.
And I look forward to serving, and I look forward to
serving with you, Mr. Chairman.
I yield back.
Chairman SMITH. Thank you, Mr. Steube.
We will now proceed to the question and answer session, and
I will begin.
As you know, the Mexican Government is violating the terms
of USMCA by essentially banning U.S.-grown corn from Mexico's
market. Mexico is America's second largest export market for
corn.
I recently led a bipartisan delegation to Mexico last week
where we met with the President of Mexico and delivered the
message that Mexico must uphold its USMCA obligations.
USTR has taken a critical step by initiating technical
consultations with the Mexican Government. Effective
enforcement is required to protect American workers and
farmers, and I will insist on moving forward with dispute
settlement if our concerns are not addressed.
What are the next steps the administration is prepared to
take to ensure enforcement of USMCA in this matter?
Ambassador TAI. Chairman Smith, thank you for your very
strong voice and leadership on this issue. The issues here are
really critical to the integration of our economies and the
long-standing and fruitful partnership in terms of agricultural
trade between the United States and Mexico and Canada as well.
We requested technical consultations, as you referenced. We
are going through a pretty intensive process of our teams
sitting down, USTR with USDA, as well as the Mexican teams. And
we are looking forward to more helpful clarifications from the
Mexican side on exactly how the decree will work and what will
be impacted by it.
Of course, all of the tools in the USMCA are there for a
reason, and we stand ready to make use of those tools to help
us to resolve this issue. It is not just a matter of USMCA
rules. It is also truly a matter of vision for our shared
prosperity across North America. And the biotechnology
agricultural trade, the corn trade in particular, has been a
very important part of the strength of our integrated
agricultural markets.
Chairman SMITH. Last week, our delegation also visited
Ecuador and Guyana, because U.S. engagement in Latin America is
vital to securing key supply chains and countering China's
influence in that region as well. China is aggressively
investing in Latinerican countries to spread its
influence, just as it has done elsewhere in the world.
While the United States under this administration has been
sitting on the sidelines in a lot of degrees, over 2 years into
the administration, we have yet to see a comprehensive strategy
on China. What is the administration's plan for a more
proactive, aggressive strategy to counter China, not just in
Latin America, but globally?
Ambassador TAI. Well, Chairman Smith, as you know, China is
the second largest economy in the world. And the relationship
between the United States and China is one of profound
consequence, not just to each of us and our economies and our
workers and businesses, but to everyone's in the world at this
point for the global economy.
I would direct your attention to many of the actions the
administration has taken across the board with respect to
standing up to Chinese challenges. The PRC practices and
policies in the economic area are some of the most, again,
important ones for us to take on, but to take on deliberately,
strategically, thoughtfully, with a focus on ensuring that
realigning our competitive footing with China and the PRC is
ultimately effective.
So I want to assure you that every day that I am at work as
the U.S. Trade Representative, I am in one way or the other
working on China issues either directly or indirectly, as you
have noted. I will continue to work closely with you and keep
you apprised with respect to specific actions that we may take
in the trade lane especially.
Chairman SMITH. Thank you.
The committee still has not seen the final product of
USTR's China review and is still guessing when it comes to the
administration's views on several policies established under
the Trump administration. President Trump's Phase One agreement
entered into force over 3 years ago, yet this committee has yet
to see a full scorecard of China's compliance with the
agreement, including on issues related to IP theft and forced
tech transfer.
When do you think we could see a report on China's
compliance?
Ambassador TAI. So I think that you will have seen
conclusions from our own analysis in the speech that I gave in
October of 2021, in terms of our internal review of the U.S.
approach to the China economic relationship over the course of
the past several administrations.
In terms of--I take your question to be in terms of next
steps, specifically with respect to Phase One. On this one, let
me, again, commit to staying in close touch with you. This is
very much in our sights and something that we spend a lot of
time working on.
Chairman SMITH. Thank you.
U.S. imports from China currently enjoy most favored nation
status due to permanent normal trade relations legislation for
China that was passed in 2000 and remain in place today. I
recognize that you have maintained the Section 301 tariffs that
President Trump imposed, but China otherwise gets preferential
treatment when it comes to trade, including qualifying for
Column 1 in our harmonized tariff schedule.
Given China's aggressive and hostile approach toward the
United States, I think it is important that we evaluate all
aspects of our relationship, including trade. In addition to
our Section 301 tariffs, are there available trade tools you
see to hold China accountable?
Ambassador TAI. Chairman Smith, I think that there are a
lot of tools that we have been developing over time, and I
continue to believe that, with respect to our enforcement
tools, there are a lot of updates and there are a lot of new
tools that we can develop to ensure that this toolbox of
enforcement in trade can keep pace with the times.
A lot of our enforcement authorities and our statutes date
back to 1974, 1988, and probably the most recent one is 2002.
Those are the most significant contributions to the trade
toolbox. I think it is high time, if you think about how
different the world economy is today from even the early 2000s,
that we revisit how we can be most effective in competing in a
very different world economy, something that I would be very
interested in working with you on.
Chairman SMITH. As you know, child and forced labor abuses
are rampant in the production of cobalt and other critical
minerals, including in China and the Democratic Republic of the
Congo. No American taxpayer dollars should fund these horrific
practices, yet the administration is facilitating them through
its Green New Deal agenda. At the same time, U.S. cobalt mining
has essentially been taken offline in the United States.
Is this administration concerned that as it shutters
domestic development of cobalt, its new and generous so-called
green taxpayer handouts are going to activities that rely on
critical minerals extracted through forced labor and child
labor?
Ambassador TAI. So, Chairman Smith, I think that you are
highlighting a particular problem that also goes back to
remarks that you made in your opening relating to critical
supply chains and the need for us to have more supply chains
and more resilient supply chains.
In this area in particular, and I think across the board in
terms of trade, we are today, in 2023, asking questions that we
were not used to asking previously. We now want to know
specifically where the links in the supply chain are, who is
producing in that supply chain, and how they are producing.
This means that our approach to trade needs to evolve and on
critical minerals in particular.
I think that what we are doing with respect to the
Inflation Reduction Act, how we are thinking about our critical
supply chains, is changing very quickly. It is evolving. And
this is an area as well that I would love to work with you and
this committee on in terms of ensuring that the path for
economic development for, not just the United States, but for
the rest of the world and, in particular, those who have
systems like ours and values like ours, can continue to be
strong and can continue to be sustainable.
Chairman SMITH. Will the so-called critical minerals free
trade agreements you are pursuing require Japan and the EU to
ban the importation of minerals produced with forced labor
before their companies' cars are eligible to receive the tax
credits?
Ambassador TAI. So Japan and the EU have been two of our
strongest partners in working on the eradication of forced
labor, actually, in all global supply chains. So I am very
confident that wherever we may land with those two partners,
that this part of our agenda will continue to be strong and
apply.
Chairman SMITH. I now recognize the distinguished member
from Massachusetts, Mr. Neal.
Mr. NEAL. Thank you, Mr. Chairman.
Madam Ambassador, in your testimony, you noted that you are
writing a new story on trade that puts working families first
and creates a more resilient economy. We are delighted with
your emphasis on enforcement of these trade agreements. Nothing
is done more to diminish the reputation of international trade
from the American vantage point than the lack of enforcement.
So, I know your positions. You have expressed them to me
privately, and you have done a great job publicly. But we want,
clearly, a story that has a worker-centered trade policy.
Could you speak to that as well as what you were
successfully able to do in the USMCA trade agreement based upon
the enforcement mechanisms and the aggressive and assertive
manner in which you have embraced that concept?
Ambassador TAI. Certainly. I would be very, very pleased
to. And I think that this committee in particular has a lot to
be proud of in the USMCA.
The USMCA continues to be one of the most important
touchstones of the worker-centered trade policy and where we
want to grow that policy from.
If you think back to the renegotiation of the NAFTA, there
were at least two different reasons why NAFTA was renegotiated.
One was to update it and modernize it. It had been about 25
years old when that exercise started. The other one was to
correct for challenges in that agreement and areas where
concerns that were expressed at the outset around labor and
environmental dynamics between our economies bore out over our
experience with that agreement.
So one of the most important innovations and one of the
most important keys to why the USMCA was able to garner such
broad bipartisan support was the enhancements of the labor and
environmental protections in that agreement and also a labor-
specific enforcement mechanism that allows for the piercing
through of the agreement to focus on specific facilities and
how workers are treated there and whether or not those
facilities are denying rights to workers in contravention of
not just the agreement but also Mexican law.
Because of this mechanism and because we have been able to
successfully use it multiple times now, to allow for workers in
Mexico to vote for a truly independent union, to secure better
wages and better benefits, we are also championing the
interests of American workers who have had to compete with
those Mexican workers. As a result, we have turned the
narrative of trade on its head. We are now offering, through a
trade agreement, a mechanism to empower workers. And this runs
exactly counter to the narrative that we have collectively
struggled against, which is that trade is something that we
have done that has been hostile to the interests of our
workers.
So, to your point, we know that we are on to something,
that this is critical to establishing trade as a force for
good, that trade works for people, not just big companies. And
this is something that we are looking to replicate in our trade
engagements through our negotiations and, frankly, through all
the conversations that we have with our partners, to explain
how to make trade a force for good and how to make trade work
also for our people.
Mr. NEAL. Given your distinguished history with this
committee, I want to also thank you. I know on the inside; you
are an advocate for the congressional prerogative as it relates
to the responsibilities that the Constitution lays to this
committee and to the House of Representatives. If you want to
use the last 56 seconds just to talk and reemphasize your
support for the congressional role, that would be terrific.
Ambassador TAI. So I am on the administration team, but you
all know that I come from this family to the administration. So
I am keenly aware of USTR's own origin story, that we were
created by these committees inside the administration, and
where we sit at the intersection of the executive and the
legislative branches. So that is absolutely right.
And I have ideas that I would like to come back to you and
Chairman Smith about to show that there is a bipartisan path
for these two coequal branches to come together to do trade and
to do trade right by the American people and by the American
economy.
Mr. NEAL. Thank you.
Chairman SMITH. The gentleman from Florida, Mr. Buchanan,
is recognized.
Mr. BUCHANAN. Thank you, Mr. Chairman.
Ambassador, I also want to welcome you back. You are a big
asset on the committee, and everybody knows that. So thank you.
You mentioned something--before I get in my other--I got a
couple other questions. You mentioned that you had an action
plan. Is that something you have shared with us? I haven't seen
it, but is that something you are willing to do?
And I say that because we talked about working together. We
want to help you have more success. If we have a better sense
of what that plan is--or you got more time where we can talk
about it. Because many of us travel overseas and other places,
and it helps us because we meet with our embassies and other
things, have a better sense of where we are at but, more
importantly, where we are going.
So you said an action plan. Is that something you got that
we can get a copy of or something we can look at or talk about?
Ambassador TAI. So, Mr. Buchanan, absolutely. The answer is
yes. But let me just seek a little bit of clarification. An
action plan across the board for our trade agenda, or were you
asking more specifically about one part of the trade agenda?
Mr. BUCHANAN. I was just looking at what you said. You
mentioned the action plan. But let us talk a little bit more
about that a little bit later. But I just like the idea of a
shared plan, a shared vision, with the Congress, with you, so
we are all working together, because China is very active and
engaged on the planet. And you said the world is different
today. So the more we can work together, the more we will get
done.
Ninety-five percent of the jobs--95 percent of the jobs are
outside the U.S., so the opportunity--95 percent of the
marketplace, I should say. In Florida, one in five jobs is
trade-related. So it is a very, very big deal.
I want to talk to you about something we have talked about
for a couple of years. You are very familiar with this. It is
the reauthorization of MTB, Miscellaneous Tariff Bill, and GSP,
Generalized Systems of Preferences. This is something--it is a
job creator in our State. A lot of companies are saying, why
can't we get something done? It has been over 2 years. It
should be an easy layup. I know I have worked with my friends
on the other side, and we have talked about that. It was
something we thought we would get done a year and a half ago.
What is the holdup? And then give us your sense of a
commitment to that. It just seems like that is something that
should get done fairly quickly.
Ambassador TAI. Well, Mr. Buchanan, I think that there is a
deal on the table. Even when I was still in my job for Ways and
Means----
Mr. BUCHANAN. Bring it up here. Let's get this deal done.
Ambassador TAI. But, I mean, you know, I think that, again,
in terms of respecting the coequal branches, both MTB and GSP
are congressional programs. So I know that--I know that the
staffs, the teams up here, and the members are working on this.
I expressed yesterday when I was over at the Senate my support
for the reauthorization of the GSP, one that updates the
criteria to----
Mr. BUCHANAN. Okay. If I could reclaim my time just a
little bit. I just want to get on a couple other things.
I introduced legislation, myself and Chairman Brady back
then, a couple of years ago. That legislation, the companion
bill, is in the Senate. And as you know, it passed 91 to 4. So
it is related to these things.
Second, the other point I wanted to mention is just the
idea of where we are at. I read something the other day that is
kind of hopeful, that you said something about the EU, we are
making some progress, or you seemed--your comment seemed very
enthusiastic. But when you look at the U.K., EU, Kenya, over a
billion people on that continent. And I can tell you, I have
been there maybe 10 times. You know, China is very active and
engaged, not just there, but around the planet.
So when you look at--Taiwan and Japan would like to do
another--I guess we did program one, another step. So there is
a lot of opportunities out there. Is it we don't have enough
resources or is it--why don't we get to more of these
opportunities? Especially as it relates to, I think, the EU.
You know, we have a lot of the same shared values. The U.K., I
know they have had some challenges.
But I have traveled and met with a lot of these leaders
around the world, 80 different countries, and they want our
engagement. Everybody talks about--the first thing they want to
talk about is security. Second thing is trade and commerce. So
we just got to get more engaged in a big way, I think. That is
my opinion.
What are your thoughts?
Ambassador TAI. Mr. Buchanan, I spend most of my time on
the road. I am here in Washington all week this week because of
the hearing so that I can spend time with all of you. And I
have got to stay connected with the U.S. side, but also, I am
doing everything that I can. I am spending a lot of time
reestablishing old relationships, establishing new
relationships, and exactly to your point, engaging with the
European Union.
I haven't even counted how many times I have had meetings
with my counterpart, Executive Vice President Valdis
Dombrovskis. This year we have committed to each other that we
will see each other every month, and we have kept that up
January, February, and March, and I already have my appointment
set with him in April when I will see him again.
That is exactly to your point. There is so much that we
need to do together right now. And there is a lot that we need
to do to try to correct for the playing field being uneven
around the world, to innovate in terms of our trade policies
and to correct for, frankly, some very disruptive forces that
we have seen both----
Mr. BUCHANAN. I am out of time. I just want to mention, if
you can get us a copy of whatever plan and we can talk about
that, because I think a shared plan between the Congress and
yourself, the administration, would make a huge difference
going forward.
Thank you, and I yield back.
Chairman SMITH. I now recognize Mr. Doggett for questions.
Mr. DOGGETT. Thank you, Mr. Chairman. And thank you,
Ambassador, for your very valued leadership.
I know how you worked in a cooperative bipartisan fashion
with Ambassador Lighthizer in order to secure an important
trade agreement in this hemisphere, and I appreciate the
cooperative spirit that you bring here today. I very much favor
expanding trade so long as it is worker-centered and
environment is protected, and that includes Asia.
Now, I have been over personally to the secure room, left
my phone outside, didn't tell anybody what I read, to see the
provisions that are being negotiated now with trading partners
in Asia. I guess the first concern I have is why that process
is necessary. These documents have been shared with our foreign
trading partners, with stakeholders, but not with the American
people. And I think we would be better off if the language was
public.
Second concern I have, even greater, is that I found the
language to be good, helpful, with regard to the environment,
with regard to workers, but so long as it is not enforceable,
it is really fairly meaningless. And the only way to make it
enforceable is to engage the Congress more directly in setting
up that enforcement mechanism and honoring our constitutional
responsibility. And I hope you will continue to advocate that
point of view to others in the administration who may not share
it.
One specific success from the USMCA was a significant
limitation on the use of the investor-state dispute provision.
While it is important to protect investors and American
companies from systems that are not fair to them and other
countries, there has been clear abuse. And I appreciate the
fact that this administration and you have indicated that you
will continue to exclude such abusive provisions from future
trade agreements.
However, there are still a large number of investors-state
dispute settlement provisions in existing trade arrangements. I
am concerned about one particular example of abuse, and that is
in Honduras, where a U.S. company, Prospera Inc., is suing the
Honduran Government for close to $11 billion, nearly two-thirds
of the country's annual budget, questioning whether they should
have a private court system, a private -- essentially, a
country within a country.
Is the administration, are you evaluating existing a use of
investor-state dispute provisions to see if they are consistent
with a new 21st century trade policy?
Ambassador TAI. Well, thank you for all of your
observations and your insights, Mr. Doggett. They mean quite a
lot to me.
On this particular question in reevaluating existing trade
agreements and how they line up with our current practice, I
think in this area, and in a number of others as well, we know
that there has been an evolution in our practice, and our older
trade agreements reflect a previous era of how we have
negotiated trade agreements.
This issue comes up from time to time. Let me take this
back and give it a little bit more thought. It is not that we
haven't thought about it, but it hasn't been a major area of
focus. But let me take this back.
Mr. DOGGETT. Well, thank you very much. And I hope you will
review it, and particularly the situation in Honduras with this
whole private government structure.
As you know, one of my long-standing concerns going back to
at least the Obama administration has been the enforcement of
our agreement with Peru as a part of the overall concern about
the destruction of the world's rainforest and the impact that
that has on our planet.
The Obama administration failed to enforce provisions that
we negotiated for audits on illegal timber harvest in Peru. The
Trump administration expressed concern about it but failed to
secure an audit. Obviously, the Peruvian Government has been in
turmoil and chaos for recent months. But can you give me any
update on the enforcement of these provisions against illegal
logging in Peru and its consideration and new agreements you
are negotiating?
Ambassador TAI. Mr. Doggett, it remains very high on my
radar. As you have noted, the current turmoil in Peru is
something that informs our approach to raising issues around
this trade agreement. But I also wanted to share with you that
the logging annex in the Peru trade agreement continues to be a
touchstone for how we are thinking about issues like
deforestation, especially around the Amazon.
Mr. DOGGETT. Thank you very much.
Thank you, Mr. Chairman.
Chairman SMITH. I recognize the gentleman from Nebraska,
Mr. Smith.
Mr. SMITH of Nebraska. Thank you, Mr. Chairman.
And thank you, Ambassador Tai. Welcome back to the Ways and
Means Committee hearing room, where you spent a great deal of
time.
I know you spoke about a new story for trade, and I
understand that you are taking a different approach, and
certainly that is the prerogative of a new administration. But
I am very concerned that in this so-called new age of trade,
you know, 2 years into the Presidency, that we have actually
lost momentum on trade and that we have--I am concerned we have
lost ground. And this is all while China is being very
aggressive economically and building their own partnerships,
while we are not as aggressive.
I do ask unanimous consent to include for the record a
letter signed by 20 Ways and Means Committee members that I led
regarding the need for a strong proactive trade agenda. I ask
for unanimous consent.
Chairman SMITH. Without objection.
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Mr. SMITH of Nebraska. Thank you.
Now, despite calls for new trade promotion authority from
Democrats and Republicans in both Chambers--something I thought
I would never say--but the administration has decided to
attempt negotiation of new trade pacts without Congress. So
this has already been touched on briefly. But since there seems
to be some confusion, I do want to be clear that trade
agreements must be approved by Congress, and they should
provide real market opportunities for U.S. producers, reduce
tariffs, strengthen trade enforcement, and certainly reflect
American law and values.
I am glad to and honored to chair our committee's Trade
Subcommittee. I cannot express strongly enough that the
administration cannot just come up with new definitions of what
a trade agreement is for some reason, and certainly not to give
handouts for electric vehicles. And Congress will not, under
any circumstance, relinquish our constitutionally mandated
oversight of all trade matters. This concern, I believe, as we
have heard already, is bipartisan and bicameral, and I hope you
take the opportunity to address it today.
To compete in the global marketplace, we need real
enforceable trade agreements. The administration's preferred
framework approach, I am concerned, does not provide this.
Would it be accurate to say, Ambassador, that the executive
orders and frameworks like IPEF and APEC could be dismantled
when a new administration would take office?
Ambassador TAI. Well, Mr. SMITH, if I can back up just a
little bit. In terms of your----
Mr. SMITH of Nebraska. My time is limited. So I want to
give you a chance to respond, but if you could be brief.
Ambassador TAI. Let me put it this way: If you take a look
at the world economy and you look at our place in it, after
more than 3 years of pandemic and supply chain disruptions and
pressures on the energy market and food insecurity because of
Russia's invasion of Ukraine, you have to appreciate that we
live in a very different world. We can't keep doing things the
same way.
Mr. SMITH of Nebraska. I understand that.
Ambassador TAI. Those things have brought us to this world.
Mr. SMITH of Nebraska. And I appreciate that.
Ambassador TAI. And so our engagement with the rest of the
world is informed by, not a desire, certainly not on my part,
to bypass the Congress, but by a desire to adapt our trade
policies to be more successful because they are responding to
the world we are living in and not the world that we want to
live in.
Mr. SMITH of Nebraska. Okay. Well, I worry that a framework
might be considered successful, although still ineffective, in
terms of establishing what we need to establish in the world
economy, especially as leaders in the world economy. But I
think it is safe to say that, if we want a stable environment
to encourage investment and economic prosperity, that a
congressionally approved trade agreement is what is necessary.
But, you know, take IPEF, for example. Let's just say a
member nation were to blatantly go against the science, as
Mexico has done under USMCA. I mean, I fear that there would
not be tools for us to challenge what another country would be
doing, and especially as the chairman noted, the glaringly
noncompliant ways that Mexico is headed with corn, especially
when USMCA was approved and agreed upon by Mexico not long ago.
So changing gears just a little bit, let's focus on the
TRIPS waivers, the notion that our country would give away
intellectual property to other countries. In December, you
directed the ITC to conduct a study on the proposed TRIPS
waiver for COVID-related diagnostics and therapeutics.
Glaringly, I would say, though, that you did not seem to ask
ITC to perform any analysis on how such a waiver would actually
impact our economy and, more importantly, our workers.
Can you explain why that analysis was not asked of the ITC
in the letter that you sent?
Ambassador TAI. Well, Congressman Smith, I think that there
are aspects of our letter that get to those questions. So we
could sit down and take a look at that letter. I think it is
about a two-page long letter.
More specifically, the question that has been raised at the
WTO is the interaction between intellectual property rules and
where they have been set and the ability of people who need to
access them. And we thought that was a legitimate question. I
got a lot of feedback from this committee and over in the
Senate in terms of the process that we tried to run, and so I
have asked the ITC to run their process, which has included a
public hearing just a couple weeks ago.
Mr. SMITH of Nebraska. Okay. Yeah, asking the stakeholders
is one thing, but I would hope that, as you point out, that you
are able to get an actual analysis on the impact to our
economy, and like I said, more importantly the workers.
Thank you.
Chairman SMITH. Mr. Thompson, you are recognized.
Mr. THOMPSON. Mr. Chairman, thank you.
Ambassador Tai, welcome. It is always glad to have you here
in the committee room.
There are no shortage of trade challenges and, at the same
time, opportunities facing our country. As mentioned by Mr.
Neal, the work we did on this committee to pass the USMCA
showed that we can achieve a lot of high-quality trade
agreement work working together on this committee. We can
strengthen our economic and national security by creating good-
paying U.S. jobs and deepening our ties with other nations. We
can strengthen environmental and labor protections and raise
the international standard in these areas to create a strong
cycle of progress and trade.
While it is important to seek market access, labor, and
environmental provisions, none of these commitments are worth
anything unless they can be vigorously enforced. And that is
why the work you are doing to enforce the terms of the USMCA
trade agreement is setting the stage and expectations for
future trade negotiations that benefit all American workers.
I have got a couple of questions. I will give them to you,
and then you can take them in whatever order works best.
Mr. Smith--Nebraska Mr. Smith mentioned the corn issue, and
the USMCA dispute with Mexico in regard to that is important.
My district is home to a thriving biotech sector, and our
success is dependent in part on strong global intellectual
property rules and also the enforcement of the rules which
ensure the safe--that safe products can be sold and used
without unnecessary interference from protectionist policies.
So I would like to hear from you about the administration's
effort to hold Mexico accountable in the GMO corn case and what
other opportunities there may be for biotech as we move
forward.
I am also interested in Taiwan. And I would like to hear
about the progress we are making with Taiwan in similar
agreements that are helping to strengthen our national
security.
And then lastly, my third question, the Canadian lumber
issue. I understand that--we know it has been a long-standing
dispute, but I understand that some of Canada's top lumber
producers are interested in seeing this dispute resolve. So I
would like to hear your thoughts on this, and if the U.S. and
Canada can restart lumber negotiations.
Ambassador TAI. Thank you so much, Mr. Thompson. I will
take your questions in the order in which you have posed them.
Mr. THOMPSON. Okay.
Ambassador TAI. In terms of corn and the importance of our
biotechnology sector, especially in agriculture, I agree with
you. We have regulations and standards here in the United
States. We stand by the safety of our product. And we also know
that innovation and agricultural production is also critical to
food security as well as a responsible contribution to our
climate future.
So, this is one of the areas that we are engaging with
Mexico on, especially through this technical consultations
phase where we get deep into the science around the basis for
our confidence in the safety of our crop.
On Taiwan, I agree with you. Taiwan is in the top 10 of our
trading partners, an economy that shares our values, and also
has implications for our strategic outlook in the region. That
is why we are, right now, negotiating the 21st Century Trade
Initiative with Taiwan. We just published summaries of the
proposals that we tabled with Taiwan for our first negotiating
round and look forward to providing you with updates on the
status of those negotiations. We will continue to work with
Taiwan to enhance and strengthen our economic relationship with
each other.
On Canada and the developments in terms of the lumber
industry there, you are right, this is a long-standing
challenge that we have had with Canada, one of the areas which
our economies have traditionally not meshed well, and that
market conditions and the incentives of the industries are
really critical to creating opportunities for negotiation. So
let me go back and revisit with my team that are tracking this
and circle back with you.
Mr. THOMPSON. Thank you very much.
Thank you, Mr. Chairman.
Chairman SMITH. Thank you.
Floor votes have been called, but it is my intention to
proceed to as many members for questions before recessing for
the hearing. And then we will reconvene immediately after
votes--the last vote is called.
Mr. Kelly from Pennsylvania.
Mr. KELLY. Thank you, Mr. Chairman.
Ambassador Tai, always good to see you. I think there is
something that is uniquely American where people put service
above self. You are certainly an example of that. And for you
to come before us--it is so difficult. You are getting rapid
fire questions all across the board of what is important to me,
what is important to you, what is important to our country. And
you are the person standing there taking that and trying to
answer all this.
And, you know, I am going to come up with the same thing
you and I have talked about for many years, something called
GOES. And people say, what do you mean GOES? Well, it is grain-
oriented electric steel. And so why would you be worried about
that? And it comes down to, if we have not learned anything
from these last few years with the pandemic, is if you don't
produce it at home and you are relying on somebody else from
someplace else in the world, you are in trouble. You are in
trouble.
So Mexico comes up with this. And so Gloria and I have been
talking about what is going on with the steel. So Mexico agreed
they would limit their imports to historic levels in order for
President Trump to exempt them from Section 232 steel tariff
programs, but they are not living up to their end of that
agreement, which is pretty much consistent with all our
partners around the world; that they say one thing and then
they completely get up from the table and walk away from the
commitment that they made, maybe just touching it a little bit
at a time.
In Butler, Pennsylvania, about a quarter of a mile from my
real life, which as an automobile dealer, which was a lot
easier. I mean, back there, if somebody says, I have got your
back, you say, well, you know, I appreciate it. Here, if
somebody says, I have got your back, the answer is, I know. I
can feel the knife.
So this is what it comes down to. If we are not able to
work together and honestly--and honest brokers--what Mexico has
done--and they have made this end run about it. Canada also has
done the same thing to us. Grain-oriented electric steel is the
steel that goes inside the transformers. So I tell my friends,
if you don't know what that is, look at phone poles. And if you
see a gray canister up there, that is what I am talking about,
because that is what pushes the steel through. It doesn't flow
naturally--it pushes electricity through. It doesn't flow
naturally.
And I am to the point, I don't know what we can do when
that last producer of grain-oriented electric steel in America
is in Cleveland-Cliffs in Butler, Pennsylvania. If we lose that
mill because we have people around the world not living up to
their commitment of what they would import and what they would
not import--and you and I have talked about this. In the last
administration, they told me they would address it. And if they
had done that, you and I would not be having this conversation
today.
It's a really complicated issue. And tariffs are a really
complicated issue. So I would just ask you, because I know I
can rely on you for this. Let's keep that conversation going
and try to find out what it is we can do to limit this flow.
When I look at the people who make grain-oriented electric
steel--I am just going to go over this real quickly. Maybe I am
not. I think I just lost it on my phone.
Anyways, Cleveland Cliffs is the last producer of this
steel in America. The rest of it comes from all over the globe,
but mainly from people that we would think are our closest
allies because we have supported them so much in the past. So
let's keep working on it.
I know the language from the past administration was well
intended, but it should have been amended because it really
didn't address the issue when it came to what our partners were
going to live up to.
So if we can continue to have that discussion, I would sure
appreciate it. I know that you get tired of hearing from me. I
don't mean to be that much of a pest, but I am just looking at
a really, I think, a national security problem that we have a
blind eye to and are not paying attention.
So thank you for being here today. You do a tremendous job.
It is good to see you. And thank you so much. Mr. Chairman, I
yield back.
Chairman SMITH. Thank you. The gentleman from Connecticut
is recognized.
Mr. LARSON. Thank you, Mr. Chairman, and thank you
Ambassador Tai. And thank you for always bringing grace,
dignity, acumen, and principals, centered leadership to this
committee.
I want to associate myself with the remarks of Chairman
Neal and the efforts with regard to USMCA. And my question is
something again that you have done extraordinary work on, and I
hope you will expand on. You are leveling the playing field for
the American worker, and especially as it is related to rapid
response, but also what else you see can be done to assist the
American worker in your capacity.
Ambassador TAI. Well, thank you, Mr. Larson. And it was an
honor to work with you on the USMCA in renegotiations when I
was here on the committee. In terms of leveling the playing
field, I would say that this is where we are really focused on
terms of the worker-centered trade policy. I get asked quite a
bit what does worker centered trade policy mean. It means a lot
of things. First of all, it means remembering that our economy
isn't just a collection of data and numbers. We are more than
just trade flows and production numbers and GDP numbers. At the
end of the day, what is the American economy? The American
economy is comprised of people, our people. The American
economy has to work for our people. So workers centered trade
policy is putting that worker, that person right at the center
how we think about trade policy. And that is a correction.
I think for a long time we relied on the assumption that
what was good for bumping our numbers, what was good for, you
know, creating that big pie, would all trickle down and work
itself out. And that is what we have seen hasn't worked over
the past couple of decades. While the pie has gotten bigger, no
question, here at home and around the world, more than just the
United States, a lot of us are looking at where that pie has
ended up. And that leads to President Biden's mantra at this
point that what we need to do is grow the economy from the
bottom up and the middle out. Who is at the bottom of the
economy? It is people like us. It is regular people. And that
middle out is a vision for growing the middle class.
And so what we were doing in trade is understanding the
role that we have had in creating an imperfect world in which
the pie has gotten bigger, but not everyone has gotten access
or an opportunity to enjoy that pie. And then to think about
how we can advance trade policies. And this means that we are
thinking about trade policy in a different way. We are
reconfiguring our trade policies. We are going to do some of
the traditional things that promote what we are after, which is
more inclusive, sustainable, resilient growth, but also we are
going to be trying to do the new things. And that is our trade
agenda, which is to make sure that trade is a part of the
economic policy toolbox that is working in concert with the
investments that we are making in ourselves, as opposed to
undermining and undercutting what we are trying to do in terms
of our own growth and development trajectory.
Mr. LARSON. Thank you, Ambassador. As a former
schoolteacher, I used to have above my blackboard for students,
``Excellence Cannot Be Denied.'' Thank you for your
articulation of this and thank you for all the effort you bring
to this job. I yield back.
Chairman SMITH. The gentleman from Arizona is recognized.
Mr. SCHWEIKERT. Thank you, Mr. Chairman. Ambassador Tai,
the long-running conversation you and I have had, because you
know my intense concern, that is the economy move--becomes much
more technical, you know, whether it be biologics, whether it
be, you know, data management, those things, that the speed,
speeds up, speeds up, speeds up the value of that copyright,
that patent, that it becomes shorter and shorter because the
disruptions are coming faster. And, therefore, the constant
conversation you and I have had is the speed, the efficiency,
the fairness of the adjudication process, WTO ability dispute
resolution. Tell me where we are at?
Ambassador TAI. Great. Well, I am delighted, Mr.
Schweikert. And I know that you do like the technical aspects
of all that we do, and it is demonstrated by your question
about the WTO. Let me talk about the dispute settlement system
at the WTO.
First to put it in the context, that the dispute settlement
system doesn't exist in a vacuum. That it is part of the larger
WTO institution that we value very, very much for what it
stands for, for how it brings together 164 economies in the
world and provides us with a forum for dealing with each other
and being able to communicate with each other and to resolve
the disputes that we have when they come up.
So the reform of the WTO dispute settlement system is tied
to the consensus at the WTO that the entire WTO ought to be
reformed to reflect the economy that we are living in today,
and also to be able to keep up with the changes in our economy
since the WTO was established almost 30 years ago.
So on WTO reform broadly, because I also want to make very
clear the United States and our team at the mission to the WTO
in Geneva is engaging across the board. We have a special
responsibility on dispute settlement, but we are engaging at
the committee level. We are bringing written proposals every
meeting, and we are also leaning in on how to make this a more
functional negotiating forum.
Mr. SCHWEIKERT. Ambassador, you know my fixation also on
the clock.
Ambassador TAI. On the clock, here we go. On dispute
settlement, what we are doing is we are seeking a system that
is singularly focused on helping two parties resolve a trade
dispute, to be a dispute settlement system as the system was
intended. Dispute settlement has evolved into an avenue for
judicial rulemaking. It has become synonymous with litigation,
very expensive and time-consuming litigation, to your point
about the clock; and it allows countries to see through
litigation what they could not accomplish by negotiation. So
the results have significantly damaged U.S. interest through an
interpretation that, for example, shields China's nonmarket
practices and undermines our ability to defend U.S. workers and
businesses.
You may also be aware of the recent national security
decisions that have come out of the WTO system that are deeply
concerning to us and to our national security sovereignty.
Mr. SCHWEIKERT. So, I think one instance--and I--just
because I am staring at the clock----
Ambassador TAI. We are engaging on a reform process that
requires 164 economies and members of the WTO to agree. And
this is not about us dictating the terms, it is about us being
very honest about what our interests are, what we need the
dispute settlement to do for us, but also to craft a renewed
and better dispute settlement system with our partners at the
WTO.
Mr. SCHWEIKERT. And, Ambassador Tai, as the conversations
continue for the last few years, I know a number of our EU
trading partners, even some of our free market economies in
Asia have the same concerns as you have articulated and we have
articulated. I understand this is supposed to be a consensus
operation, but at some point we have some bad actors who may
not join that consensus. How do we use our ultimate leverage?
The vast majority of the world's trading partners believe that
the reforms are necessary.
Ambassador TAI. Yes, we have consensus around the fact that
reforms are necessary. It is reflected in the MC 12 joint
statement that came out. The hard work comes now in terms of
actually doing the reform. And I want to assure you that our
very dedicated team, led by our ambassador to the WTO
Ambassador, Maria Pagan, is doing that every single day in
Geneva.
Mr. SCHWEIKERT. Please let us know what we can do to be of
help, but to move it along. At some point, the calcification of
this discussion is getting tiresome.
Ambassador TAI. We would be happy to get back to you.
Mr. SCHWEIKERT. Thank you, Ambassador.
Chairman SMITH. The gentleman from New Jersey is
recognized.
Mr. PASCRELL. Good morning, Ambassador. It is always a
pleasure, and we have a lot of faith in you. And thank you for
your service.
I agree with the Independent Mexican Labor Export Board's
concern that Mexico's reform--you call it a transition period--
will end next May with a large segment, a large segment of the
old protection contract system still intact. I think you would
agree with me on that. To date, only 1 percent of the contracts
submitted to a vote have been rejected.
Please describe what you are doing to ensure the Mexican
Government has sufficient oversight to manage risks in this
transition period.
Ambassador TAI. Thank you so much, Congressman Pascrell. I
know how close to your heart these particular issues are. We
always knew that the Mexican Government had set out for itself
an extremely ambitious reform, and that was even before COVID
hit. I have a lot of confidence in that Independent Mexican
Labor Exports Board that was created by the USMCA implementing
legislation, and I know that they are very concerned about what
is happening on the ground.
This is an area, Mr. Pascrell, where I would like to stay
very close with you and to work with you on how we can continue
to work with Mexico using the tools that we have, both inside
the agreement, outside the agreement, tools from the
legislative branch to get Mexico on as positive a track as
possible. This is an area where the Lopez Obrador
administration and the Biden administration have overlapping
visions in an area where our counterparts in the labor
department in Mexico are really dedicated and have their hearts
absolutely in the right place. So, I would be happy to work
with you on what more that we can do.
Mr. PASCRELL. I also wanted to raise Canada and Mexico's
implementation of the forced labor provisions of the new NAFTA.
Please provide a status update, if you can, on the steps each
nation is taking to prohibit the importation of goods produced
with forced labor. I would appreciate that very much.
Ambassador TAI. Certainly.
Mr. PASCRELL. And I appreciate it, also, that your team is
energetic in using the new NAFTA's Rapid Response Mechanism to
hold labor rights' violations accountable and make them
serious, seriously a concern of our government and not papered
over. I ask you. That is very important. And there is a
marriage here. This is not just the Mexican Government. We are
talking about corporations, some of which have gone to Mexico
and made a laugh at what they have done. They think they can
get away with anything. And we talk about what you folks do,
day in and day out, but we ought to talk to the corporations
because we are going to need the cooperation, their
cooperation, if we are going to follow through on the mandates
of the new law that we are dealing with right now.
I appreciate the small number of cases actually filed, can
and should be more proportional to the number of labor rights'
violations we know are occurring in Mexico.
And, Chairman, I listened very carefully to what the
President of Mexico just said 2 days ago about us, and I didn't
like it. And we have had some battles, as you well know, and
you were at some of them. I don't know where he is coming from.
We have been pretty supportive, and we should be of Mexico. But
I am not going to be any wind player for the President of
Mexico. Don't ever think that. What do you think----
Well, my time is up. And I thank you, and I yield back, Mr.
Chairman.
Chairman SMITH. Thank you, gentleman. We had a lovely two-
and-a-half hour conversation with the President in Mexico on
our delegation, and I will be happy to talk to you more about
it later. I would like to recognize the gentleman from Kansas.
Mr. ESTES. Thank you, Mr. Chairman. And thank you,
Ambassador Tai, for being here today. I know with votes, we
have got people coming in and out, an impact there. I know you
are familiar with the process, familiar with the room, working
diligently both in your current role as well as here before
that with the committee.
So, you know, I guess I am a little concerned. I guess I
would like to see more. I mean, this is your third appearance
or the third year that you have been before the committee. And
a lot of things are just continuing on without much new being
accomplished through that and competed through that process.
And there is so many good trade things that we can address,
I think, that both Republicans and Democrats agree with. And I
think if we could get--in my opinion, I think we need the
administration to be engaged a little bit more on actually
getting some of these things done. I don't know if there are
some obstacles that are being put in your way that are keeping
you from doing some of the things, I think, we all agree with
you as well, once accomplished.
I want to talk about two or three things before my time
runs out. I will start with digital service taxes, and the OECD
process with Pillar One. You know, as we have talked for the
last couple of years about the digital services taxes that were
being implemented by various countries, how much of an impact
and a burden that was going to place on particularly American
companies.
And so I was very supportive of OECD's effort with Pillar
One and the effort moving forward there to help make sure that
we address that and get a consistent playing field across all
of the developed world and the world of the OECD community. But
I am concerned now that we have kind of dropped the ball on--
not dropped the ball, just paused with Pillar One in order to
look at Pillar Two. And then the Pillar Two discussion's taking
all of the time and energy and distraction away from that.
So I guess my questions, as we get closer and closer to
December of this year when the 301 suspension expires, are you
looking at reactivating that, moving that forward, because it
has taken so long to go through and bring closure to Pillar
One?
Ambassador TAI. Mr. Estes, this is a great question and
scenario where USTR has worked very closely with the Treasury
Department because they lead in the OECD negotiations, and of
course, we are responsible for the 301 action. I have to
confess that I am not up on the latest in terms of the OECD
work in the Pillar One, Pillar Two. But let me just affirm to
you that the 301 statute is one of our most important statutes,
and those DSTs are suspended pending successful conclusion.
Mr. ESTES. Well, thank you. And I understand there is some
dynamics there between Treasury, and I had some similar
questions with Secretary Yellen when she was here as well in
terms of what do we do going forward.
I want to talk a little bit about our trade, particularly,
with China. Obviously, as I think the United States, probably--
we should have gone in a different direction in terms of our
relationship with the Indo-Pacific region and trade
arrangements there. But I am concerned now with some of the
approaches China has made over the years that everybody agrees
with in terms of intellectual property theft and restrictions
that they put on American industry.
So where are you at now? What is your current status on the
view of China's aggressive approach to trade, and what should
the U.S. be doing more of to help counter the CCP?
Ambassador TAI. Well, thank you for that question. This is
something that we do a lot of thinking on and, also, are
working quite a bit on as well. As you may be aware, we are
currently in the process of a statutory, what we call
comprehensive four-year review of the section 301 actions which
are based on the 2018 301 findings around economic harm from
China's IP rights abuses and forced tech transfer policies.
Overall, we are using a lot of different approaches, both
domestically here and to continue to invest in ourselves to be
able to compete from a position of strength. We are working in
multilateral settings where we area members, along with China,
like the WTO, the G-20. We are also working in smaller
settings, like the G-7 and bilaterally with other parties. The
Indo-Pacific Economic Framework as well is an area where we are
really trying to work with parties with whom we have shared
interests across the board in terms of the challenges that we
face.
But in this area, you are right, I agree with you, there is
a lot more for us to do. We are primed to do it. And I commit
to staying in good touch with you and this committee as we
prepare for next steps.
Mr. ESTES [presiding]. All right. Well, thank you. In my
discussions with some of our countries from around the Indo-
Pacific region, they want us to be engaged. And so my time has
expired.
And so now the gentlelady from New York, Ms. Malliotakis,
is recognized.
Ms. MALLIOTAKIS. Thank you. I figured, usually, I am last
in asking questions, but I am smart, and I came here now. I
went and voted first, so now I can actually move up in the
timeframe here.
Thank you, Ambassador, for being with us. I appreciate the
discussion that we are having today. Obviously, trade is so
critical. It is critical for our allies, right? It is critical
for the United States to make sure that we are growing our GDP.
And I know in the third quarter, it was down comparatively to
previous years. And so there is one real opportunity for us to
grow our GDP; it is trade.
On that front, I would like to talk to you a little bit
about Taiwan. And, obviously, Taiwan is a great partner. And I
also want to talk about our neighbors to the south. And, you
know, we see China investing heavily in those areas. I think
some of the smart things for us to be looking at are ways that
we can build the trade relationship with our neighbors in
Central and South America, and as well as our allies, right;
talking to whether it is U.K.; whether it is Taiwan; whether it
is Poland, which is a great like-minded country where we are
seeing more pharmaceuticals being manufactured.
But, first, let's start with Taiwan, because many of us
here are friends of Taiwan, and I appreciate the U.S.-Taiwan
21st Century Initiative which began last year. However, the
initiative doesn't touch upon the issue of market access. And
this is something that I believe would be tremendously
beneficial to our ally and to the United States as we try to
reduce our dependency on China. With Taiwan being a U.S. top-
ten trading partner, I would hope that there is a plan to start
negotiations with Taiwan on furthering trade and market access
soon. Is there a pathway that you are taking at this moment to
do that?
Ambassador TAI. Congresswoman, it is nice to meet you.
Welcome to the committee. And I have to say that I really
admire your strategic thinking here, and I am very inspired by
it. I am delighted to engage on the specific question of Taiwan
and market access. This allows me to scale out a little bit,
and I don't want to take too much time because I know you want
to get to other topics as well. But there is an important
element of our traditional trade practice which not enough
people understand or see. And it gets way into the technical
aspects of how a traditional trade agreement works and how the
tariff liberalizations work as well. The tariff liberalizations
are generally--there are references that you get if you can
meet a certain rule. And so a certain amount of content in the
thing that is being traded has to have been created in the
partnership or in the region in order to qualify. That number
is never 100 percent. So there is always, by design, some
seepage from outside of the partnership or the region that you
are negotiating with that also benefits from the
liberalization.
One of the concerns that we have, and this is around the
world, but certainly in the Asia-Pacific region is we have seen
through the pandemic how far-reaching our supply chains go and
how many of them are concentrated in terms of production. In
one particular economy that is sometimes very open to us and
quite often not really open and where geopolitically
increasingly we have become very nervous.
And so when it comes to market access in the sense of
tariff liberalizations, we are trying to take very strategic
steps to make sure that when we do engage on these types of
topics with our partners in this region, that we are doing it
in a way where we can strengthen each other, where we are
building resilience for each other, and we are not further
entangling ourselves in dangerously vulnerable supply chains.
And that is why we have not moved there.
Ms. MALLIOTAKIS. I appreciate that, but are we at least
trying to work toward that with Taiwan? Because I think that is
important on market access, but also with regards to--and it is
another issue, it is a different hearing, but the double
taxation issue that Taiwan faces when trying to invest here in
the United States.
Ambassador TAI. I am happy to talk about double taxation.
That also involves my Treasury colleague, so I want to
acknowledge that.
Let me put it this way, in terms of trying to bring this
advanced and more strategic thinking, especially to the tariff
liberalization negotiation, I will tell you that it is a very
lonely place to be. But, Congresswoman, this is something where
you see the dots that we are trying to connect. I would be
delighted to work with you and anyone else who can bring
expertise to this conversation to help us advance it.
Ms. MALLIOTAKIS. I would certainly like to have a follow-up
meeting with you on that issue.
One last thing is, just--and I have no time, so I am just
going to leave it out there for you to consider--what COVID had
showed us was our dependency on China could be very dangerous
in the future. We need to be mindful of that. And I am
particularly concerned about active pharmaceutical ingredients
of which 95 percent U.S. imports for ibuprofen are from China;
45 percent of the penicillin. I just want to lay that out there
for this administration to consider. Let's not wait. Let's
start moving now. And I think, again, that is another
opportunity for us when we talk about near-shoring and friend-
shoring, working with our allies in like-minded nations, there
could be a very good strategic partnership there.
Ambassador TAI. I copy that.
Ms. MALLIOTAKIS [presiding]. And the committee stands in
recess. So I now became the chair, I guess, temporarily. Thank
you.
[Recess.]
Chairman SMITH. The committee will come back to order. Mr.
LaHood, you are recognized.
Mr. LaHOOD. Thank you, Mr. Chairman. And welcome back,
Ambassador Tai. Great to have you here, and thanks for being
with us.
As you know, Ambassador Tai, trade policy is incredibly
important to me in my district and my constituents. I represent
a heavy agricultural district and a manufacturing district
whose jobs and economic successes rely on market access around
the world and opportunities to send our great American products
all across the globe. Knowing that, I don't think it should be
a surprise to anyone here that I have been incredibly
frustrated that another year has passed without kind of a
proactive substantive policy on trade and progress on
enforceable trade agreements from the Biden administration.
I know you, Ambassador Tai, where you were, in the Senate
yesterday, or maybe the day before the Senate Finance
Committee, and I know there was frustration over there. There
was a Politico article yesterday. It said: Ambassador Tai plays
defense as Senate rips into trade agenda. In that article, it
says: Senators on both sides of the aisle criticized Ambassador
Tai for not initiating trade agreements with foreign partners,
opting instead for frameworks that lack the same market access
provisions and enforcement mechanisms as traditional pacts.
And, you know, we have talked about this a little bit
before, Ambassador Tai. But as we sit here today 2 years into
this job, we don't have an FTA with the U.K.; we don't have an
FTA, Free Trade Agreement with Kenya; we don't have an FTA with
Taiwan. We have no request to Congress for TPA. We continually
allow China to take advantage of our IP at the WTO. And we have
this issue with allowing Europe to set the playing field on
digital to the disadvantage of U.S. businesses and workers. So
those are just a few things that I think express my collective
frustration and others.
And as a member of the Trade Subcommittee, and I am also a
member of the new Select Committee on China, which has raised
awareness in a bipartisan way that what we see every day in the
Indo-Pacific region is the growing threats of China. And
considering that, having a really insufficient trade engagement
in that region, I believe, is unacceptable.
And I know you mentioned IPEF. And as I look at IPEF today,
I believe the framework is actually getting weaker.
Just take the digital pillar as an example. USTR has chosen
to engage in a framework that lacks tangible policy and avoids
congressional consultation or approval. And I am hoping to hear
your views on that. And I worry that we are not countering or
providing strong enough alternative to the growing pressure of
nonmarket economies.
Instead of increasing U.S. leadership in the Indo-Pacific
region, countering China's influence, and leaning in on
opportunities like digital trade to set global rules and
standards that would put countries like China at a
disadvantage, we are missing an opportunity to use trade as an
offensive tool.
And so I mentioned those things--again, as we look at every
conversation as part of the Select Committee on China when we
talk to our like-minded allies in the Indo-Pacific region,
whether it is Japan, whether it is South Korea, whether it is
Australia is they are craving our leadership economically. And
I just, I guess, express my frustration and my concerns about 2
years in, and we have not made any progress on any of these
things.
So with that, I would love to hear your specific ideas or
comments on IPEF, and whether it prevents real economic and
substantive alternatives to China's pressure in the Indo-
Pacific region.
Ambassador TAI. Well, it is good to see you, Mr. LaHood.
And let me say a couple of things before I get to your specific
question on IPEF. I hear your frustrations. And I think that in
your frustrations, I would have like to make two points. One is
you are seeing a key part of our trade agenda, which is that it
is not the traditional trade agenda. And that is out of a
recognition that a lot of the challenges that we were facing
today, whether it is supply chain challenges, whether it is the
challenges that we are facing from nonmarket economy practices,
like those from the PRC to Russia's invasion of Ukraine, that a
lot of these have roots in a traditional trade approach that
have brought us to where we were today.
So, yes, we were not pursuing traditional, fully
liberalizing trade agreements because we see those as part of
the problem that we were trying to correct for. So your
frustrations are affirming that, yes, we were not pursuing a
traditional trade agenda.
But what I would like to point out to you--and I would be
delighted spend more time with you as well--is to have you see
those things that we are doing. That we were putting forward a
trade agenda to try to correct for exactly some of those
challenges that you have highlighted, especially with respect
to nonmarket economic policies and practices that have really
made the playing field extremely tilted, and that we are going
to have to adapt to, respond to for as long as those practices
are there.
So I am delighted that you are a member of Way and Means
Committee. I think that there are two of you who are also on
the China Select Committee. I am looking for an opportunity to
come up to brief that committee and to get to know all of you
better to talk about some of the economic pieces of this.
Let me get to the Indo-Pacific Economic Framework. You are
absolutely right, our parties in the region are thirsting for
engagement with us on economic matters. That is what we are
bringing through the framework, including through the digital
engagement. We have got very robust, very enthusiastic
participation from 13 partners in the region, 12 of whom are
actively engaging with us through now two rounds of
negotiations. And I am happy to spend more time with you there
as well.
But our vision is for an economic engagement, in the Indo-
Pacific that is, first of all, durable and well-supported here
at home. And, second of all, that promotes the shared interest
that we have with all of our parties there around adapting to a
very disrupted global economy that will bring more resilience,
more sustainability and inclusiveness to all of our economies
by working together. And I would be delighted to spend more
time with you and explain how what we are doing here connects
with those goals.
Mr. LaHOOD. Well, I am out of time. I just appreciate your
willingness to meet with the Select Committee on China on this.
The last point I will make is what the CCP fears the most
is bipartisan support, engagement by the Congress in the Indo-
Pacific region. We look forward to working with you on it.
Thank you.
Chairman SMITH. Ms. Sanchez is recognized.
Ms. SANCHEZ. Thank you, Chairman Smith, and Ranking Member
Neal for the opportunity to discuss the Biden administration's
2023 trade agenda. And I want to thank you, Ambassador Tai, for
returning once again to brief us about the efforts you are
leading to advance a worker-centered trade agenda, and for
your, you know, always willingness to be accessible and
available.
Over the past 2 years, you have led the administration and
supporting U.S. leadership at the WTO, along with calling for
its much-needed reform. And I want to commend you for the
strong stance you have taken to defend our national security
while ensuring a commitment to a rules-based trading system. I
also want to highlight your continued leadership to support
implementation and enforcement of strong environmental
commitments and labor standards through the Rapid Response
Mechanism under the USMCA.
As a former labor lawyer, I am proud that our efforts have
led to an unprecedented number of union elections in Mexican
facilities. To that end, the USMCA model includes the updates
that many of us here in Congress want to see reflected across
our trade agreement under the Western Hemisphere.
Ambassador Tai, you have stated that the American
partnership for economic prosperity will build upon the strong
core of trade agreements in the hemisphere. Yet, the United
States has not effectively enforced several existing agreements
with countries in the region, including member states of the
Dominican Republican, Central American Free Trade Agreement,
CAFTA-DR. Therefore, I was hoping that maybe you could speak to
the administration's views on the best way to improve labor
enforcement under CAFTA. And would it be practical to undertake
a renegotiation of CAFTA with congressional approval to update
labor standards and include a Rapid Response Mechanism like we
see in the USMCA?
Ambassador TAI. Congressman Sanchez, it is wonderful to see
you. I really appreciate this question because we do care
deeply about our partnerships with our neighbors in the Western
Hemisphere.
In terms of the DR-CAFTA, as you will recall, DR-CAFTA is
one of our pre-made tan agreements. And there were enhancements
and improvements like the ones we made in USMCA. The earlier
version happened in May 10 to labor, environment provision,
enforceability of those.
So to your point about the opportunity for levelling up, if
you will, the DR-CAFTA, it is something that we think about in
a number of different ways with respect to that particular
agreement.
On the America's partnership, let me just touch on that
briefly, which is we know that in our own hemisphere, we have
the most existing traditional free trade agreements that we
have are in this hemisphere. And yet, the partners with whom we
have those agreements continue to want something different and
more from us. And I think it really does reflect the changing
nature of the world economy and the needs that we have around
promoting resilience, sustainability, and inclusiveness.
So whether it is with partners with whom we have an FTA
already, or those that we do not, the program we are advancing
right now through our trade agenda is meant to address those
items.
To your specific question about how to revisit some of
these pieces of the DR-CAFTA in the context of America's
partnership, I would be delighted to explore that with you. I
think there is a lot of potential here. We are really focused
on our regional resilience in a new way, and I think that there
is a lot of opportunity.
Ms. SANCHEZ. Thank you. I am wondering if you foresee any
tension between states that are parties to both APEC and CAFTA
and their compliance with differing agreements if one has a
stricter standard?
Ambassador TAI. I have been thinking about it differently
in terms of the America's partnership. There are 11 of us right
now. So that is the United States plus ten. Of those ten, eight
of them have free trade agreements with us; two of them do not.
We didn't want to make the FTAs a, you know, disqualifying
factor, because we want to think about the region as a whole.
We want to advance an agenda here that is complementary to
the existing arrangements that we have. And this is an area, as
we get into more detail, that I would be very happy to continue
to work with you on.
Ms. SANCHEZ. Great. I have one last question, and my time
is short. I will submit it for you to respond to in writing.
But thank you so much for your time, and, again, for always
being willing to be accessible for questions or input. I yield
back.
Chairman SMITH. The gentleman from Pennsylvania is
recognized.
Mr. SMUCKER. Thank you, Mr. Chairman. And thank you,
Ambassador Tai, for testifying today.
I have noticed the Biden administration has a bad habit of
redefining things that don't fit your agenda. For example, last
year, the administration redefined the definition of a
recession. Now the administration is redefining what is
considered a free trade agreement. USTR has also been working
to redefine Congress' role in developing trade arrangements as
exhibited in our lack of former involvement in IPEF and APEC.
And you are also redefining what consultation with Congress
means.
Before our Senate Finance counterparts yesterday, you told
multiple Senators that you have been in close consultation with
Congress as you negotiate critical mineral agreements with
Japan and the EU.
But I want people to know, I want my constituencies to know
what activities USTR is defining as close consultation.
Apparently, you believe that close consultation is leaving
documents in a SCIF for Members to review, but not share with
constituents, and then holding two staff-level Zoom hearings.
I don't believe that is sufficient consultation to move
forward with signing any critical mining agreement that our
constituents have not been allowed to see. I know many of my
colleagues have raised already today and will continue to raise
similar concerns, and I hope that it conveys the point that
Congress finds this wholly inadequate consultation with
Congress.
Pivoting from definitions, I want to raise a few
constituent-specific trade matters. The first relates to GSP.
And I hear from so many constituent companies about how GSP has
been an effective tool for them to strengthen their supply
chains, to create high-paying jobs at home and overseas, and to
invest in sustainability. And I know Congress is responsible
for renewal.
But I would like to ask, what tools does USTR have at its
disposal, or what tools could Congress provide as part of
renewal to ensure that any new eligibility criteria in GSP
promotes a race to the top, both across and within GSP
countries, but also avoids harming the GSP users like I have
heard from that are meeting or exceeding the program
development totals, or goals, I should say? I am sorry.
Ambassador TAI. Well, Mr. Smucker, I really like your
question, although your lineup was a little bit brutal. Let me
just say on consultation--look, I am here before you right now,
and so let me just commit to a desire to be as knit up with
this committee as possible on issues.
And if you have specific concerns with respect to the
critical minerals, which I am sure that you will, please always
feel free to reach out. And I am taking the feedback. And we
will commit to do better as well.
On about GSP--look, I think that GSP ought to reflect the
state of modern U.S. trade policy practice. We have an
established bipartisan, bicameral consensus in U.S. trade
policy that trade includes labor and the environment. And this
is something that I carry with me in all of my conversations
with my counterparts from around the world to say that you
should be like us and acknowledge that trade is more about just
goods crossing a border, but it is about economic engagement
and making our economies work together. So GSP in terms of----
Mr. SMUCKER. Ma'am, sorry, I would love to keep--I do want
to----
Ambassador TAI. I think it needs to reflect both labor and
environmental criteria. It should reflect that race to the top.
And, yes, it should be usable. But that is because GSP is at
heart a development tool. And I think we----
Mr. SMUCKER. We hope to--we hope to continue to work--there
is additional USMCA enforcement challenges that a Pennsylvania
company, QVC, is facing that I just wanted to the bring up as
well. As you know, Canada committed to ensuring U.S. home
shopping programming could distribute in the country under
annex 15-D of USMCA.
And I understand that President Biden is meeting with the
Prime Trudeau this week, and I am asking for your commitment to
work on this enforcement issue with my office. And we will also
be following up, by the way, with a formal letter. This has a
huge impact on the Pennsylvania-based company QVC.
Ambassador TAI. I know this issue well, and I would be
happy to work with you on it.
Mr. SMUCKER. Thank you, Ambassador.
Chairman SMITH. The gentleman from New York is recognized.
Mr. HIGGINS. Thank you, Mr. Chairman. Ambassador Tai, thank
you very much for being here. And, also, thank you very much
for being so responsive to our concerns on behalf of our
constituents in western New York about the ill-advised property
tax in Canada that is imposed on vacant and underutilized
properties.
It was intended to address a problem with foreign interest
purchasing large swats of land in both Toronto and Vancouver,
and then holding that, thus taking supply off the table,
increasing the cost of housing and the availability of housing,
or decreasing in the available of housing. So, I just want to
thank you for that.
China and Russia are involved in a big land grab in Africa
for rare earth elements: Cobalt, copper, and lithium. These are
essential elements to developing electric vehicles and
semiconductor manufacturing. They are the primary inputs for
future global economic growth.
So today, it is a global gold rush for these minerals.
Combined, China owns about 80 percent of these minerals,
followed by the United States at about 6 percent. Eighty
percent of the United States' refined materials are imports
from China. The production of electric vehicle batteries,
worldwide, China has 553 gigawatt hours; the United States has
44 gigawatt hours.
According to S & P Global, lithium-ion manufacturing
capacity will have more than double by 2025. China will have
65.2 percent; Germany will have 11.3 percent; the United States
6.3 percent. There are 200 battery mega factories being built
between now and 2030. 148 of them will be in China; 21 will be
in Europe, and 11 in the United States.
You know, there is a lot of tough talk here and generally
in the Congress about being tough on China. While that is true,
I think we have to be tougher on ourselves about China. The
Biden administration, I think, is responding to that with both
the Inflation Reduction Act and also the CHIPS and Science Act
to incentivize reshoring, friend-shoring, call it what you
will.
My concern is giving China's dominance in the continent of
Africa and in area of electric vehicle lithium ion and
manufacturing, is that too little too late relative to the
United States trying to catch up? And what is the vision with
the Inflation Reduction Act and the CHIPS and Science Act
relative to that competition?
Ambassador TAI. Thank you so much, Congressman Higgins. I
agree with you, and I really appreciate your highlighting all
of the data and statistics to demonstrate the dominance of the
PRC in the global marketplace in a lot of these areas. Let me
address your question with respect to Africa first, which is I
tend not to think about it as--well, first, I don't think it is
too little too late. First of all, we can't think like that,
but also I just don't think it is true.
With respect to Africa, where I would like to start in
terms of our partnership with Africa is to ground it in our
partnership with Africa being inherently valuable for being
good partners--a good partner to Africa. In terms of the
demographics of Africa, the use of its population, the growth
in terms of its population, as well as all of its other
resources, Africa has the potential to become the engine to
drive, not just its own growth as a continent in these next
decades, but a driver of global economic growth.
Our connections with Africa, historically, in terms of our
people, our communities, diaspora communities that are recent,
that have been here for hundreds of years are a part of this
strength and connectivity and the reason why we should be
partnering with Africa in the first place.
To the point in terms of industrial competition and looking
at some of these critical supply chains and where the
industries of today and the future are growing up, you are
absolutely right, it needs to be a combination of policy
approaches that we take that involve investing here at home,
but also working out how to secure supply chains that are more
resilient, that make us less vulnerable and open up more
opportunities for us and for our parties to be able to thrive
in the global economy as it continues to evolve.
So you are right, absolutely, that in terms of the
investments that we make, but also in terms of the adaptations
to our trade policy, we got to make a way for our industrial
vision and trade vision work together, and that is absolutely
what we are focused on.
Chairman SMITH. Mr. Feenstra is recognized.
Mr. FEENSTRA. Thank you, Mr. Chairman. And I thank you,
Ambassador Tai, for being here today. I am from Iowa. We are
the breadbasket to the world. We are the second largest
exporter of agricultural goods, number one, and when it comes
to grain as an export.
And so it has been a challenge for us. I mean, it has been
a real struggle to watch this administration that we are sort
of in a trade deficit right now when it comes to agricultural
goods for the first time in decades. And we have not seen any
new markets being opened.
I will say this, I do appreciate your work on Mexico and
the GMO issue. We got to get it resolved. This is paramount to
the Midwest and the agricultural markets. And I can't tell you
that--if you can pass along information to the administration
is that we are not flyover. We actually do a lot of good things
for the economy in the agricultural breadbasket of America. And
it just seems like we get neglected because he never mentions
us.
But that is not what I want to talk about. I want to talk
about continuing the section 301 tariffs on amino acids and
expanding those tariffs to include lysine and threonine.
After the African swine fever hit China and their hog
population, the demand for amino acids that went into their
food plummeted, and the excess was dumped here right here in
America.
To the detriment of amino acid producers in Iowa and across
the country, the United States and China are the world's major
amino acid producer. But if this dumping by China goes
unchecked, the America-based amino acid industry will be
devastated and actually go out of business. So this is critical
to our supply chain and offshoring and actually fighting
against our geopolitical rival in China.
So my ask to you is will you commit to continuing to work
on section 301 tariff, keep it, and then also expanding it to
include such things as lysine and threonine?
Ambassador TAI. Congressman, I have now been to your great
state of Iowa. In fact, I visited the Iowa State Fair last
summer with Secretary Vilsack. So I just want to say Iowa is
not flyover for me. I know how strong Iowa is for our
agricultural economy and care very deeply and am always
inspired and impressed by the farmers and the agricultural
producers from your State.
Let me say one thing on market access. We have been
expanding market access for our producers. And our agricultural
economy, we know, is one of the strongest producers in the
world. As we adapt our trade policies, we will not forget you.
We are not forgetting you. And I have a list with me that I
won't run through right now of all of the market opening that
we continue to do for our farmers, our ranchers, our producers,
and especially to champion the interest of the small ones and
the family farmers and producers as well.
Mr. FEENSTRA. Thank you.
Ambassador TAI. On the amino acids, let me say this,
because I think--I just want to highlight, in terms of the 301
program, it is a very important program for us. It is important
for us to bring a responsible, strategic approach to it. As a
result, we have an ongoing review of the section 301 actions
and those tariffs where we opened a portal, we invited a
stakeholder comment. I trust that the amino acid producers in
Iowa have participated in that process. And we have committed
to running a serious deliberative process where we do
everything to do right by our entire economy. So let me just
highlight for you that that is going on, and we take that very
seriously.
Mr. FEENSTRA. And it has got to be solution-based. We have
got to get it done, okay?
Yesterday, in a response to my great Senator, Senator
Grassley, you said that you weren't currently engaged on tariff
liberalization. But--this is your quote. But when it is fit for
the partner and when times are right, we are happy to do what
is right, the right thing for the economy. So what are the
conditions that indicate that is a right time to start tearing
done some of these tariff barriers and opening a lot of these
markets for Iowa farmers?
Ambassador TAI. Well, thank you for paying attention to
that hearing and not relying on the reporting by Politico which
is not always nice. But those do sound like my words. What I
want to say is there is no allergy to pushing on our partners
to reduce their barriers. The problem is that our traditional
approach has been a whole of economy, aggressively tariff
liberalizing approach, which has led to a lot of the
vulnerabilities that we are facing today.
So I am looking for parties from Congress, trading parties
from our stakeholders to think about how you can use a tool
like tariff liberalization to advance the greater cause of
resilience, sustainability, and inclusiveness in our trading
relationships. And in that context, if we can harvest this tool
to promote those goals, I am all for it.
Mr. FEENSTRA. And my time is up. But I just wanted to note,
you know, China continues to build their economic relations.
They opened ten new free trade agreements in this last 5 years,
and they are now trading with 120 countries. We are falling
behind. That is a real problem for the American farmer. Thank
you, and I yield back.
Chairman SMITH. Ms. Sewell from Alabama is recognized.
Ms. SEWELL. Thank you, Mr. Chairman. And welcome,
Ambassador Tai. First, I would like to thank you for coming to
my hometown of Selma, Alabama, to trace the footsteps of John
Lewis and the civil rights foot soldiers on the 50th
anniversary of the Bloody Sunday.
I know that you personally see the Office of the USTR as a
mechanism to promote human rights and civil rights around the
globe, so I hope that the pilgrimage to Selma was an inspiring
experience for you.
I also need to thank you and Secretary Blinken and
Ambassador Salazar and the entire Biden administration for your
tireless efforts to hold the Mexican Government accountable for
their illegal seizure of Vulcan facilities and ports in Mexico.
Just yesterday, I joined a letter with the rest of the
Alabama delegation to the Mexican ambassador demanding answers
for Alabama workers and Vulcan Materials, which is
headquartered in Birmingham, Alabama.
Ambassador Tai, I know that both of us are strong
supporters of the USMCA and the updated labor, environment, and
enforcement provisions that we negotiated and secured in the
new agreement. But I am very concerned that President Lopez
Obrador is seriously threatening the progress and good will
that has been established since the implementation of the
USMCA.
I think I already know the answer to this, but I was hoping
to get your commitment to continue to stay engaged on this
issue and to send a very clear message that this illegal
seizure is not acceptable.
Ambassador TAI. Yes, ma'am.
Ms. SEWELL. Thank you. As you know, I also represent the
steel workers in my district. I was a supporter of the Section
232 Steel Tariff, because I know that China and other bad
actors overseas are actually dumping steel on the global market
in an effort to kill the U.S. steel industry. We know that this
has a dramatic and a devastating action, but we have to make
sure that we are enforcing it correctly.
I also know that the Biden administration is negotiating a
global arrangement on steel and alluminum with the EU, so that
we can find a long-term decision to the steel overcapacity,
while also partnering with our allies to promote the production
of a more environmentally friendly steel like that produced in
Alabama.
Can you tell me how those negotiations are progressing? And
what happens if the EU walks away from the table? Do the 232
tariffs go back in the U.S., or in the EU?
Ambassador TAI. So Congressman Sewell, I will respond to
that question backwards. Yes, let me take it off of the EU and
say, if we don't succeed, that is right, the 232 tariffs come
back on EU steel and aluminum. And the EU retaliatory tariff
across the board, on a lot of our agricultural products min
particular, would come back as well.
I do want to let you know, and this is getting to the top
of your question, that I have very strong partnership with my
European counterpart, that is, Executive Vice-President
Dombrovskis. We have committed to staying in touch every single
month this year to ensuring that our team stay on track to meet
the deadline of October 31 that we have imposed on ourselves
for a successful conclusion of these negotiations.
The investigation is exactly as you have described it,
which is to update our steel and aluminum trade, create a new
framework that promotes fair trade, that combats overcapacity,
which has been so devastating to us in market-based economies,
and also to push for cleaner production and trade as we look to
the future. It has to do both of these things.
It is not easy. The technical aspects, in particular, are
quite challenging in terms of getting our two system to mesh,
but I want to assure you that we were working very hard, and I
remain very optimistic that our teams will get us there.
Ms. SEWELL. Well, thank you so much for all of your
engagement on these issues. Again, I can tell you that Vulcan
Materials in Alabama workers are really, really concerned about
that seizure and really hope that the United States will
continue to put pressure on the Mexican Government. Thank you.
Chairman SMITH. Mr. Arrington is recognized.
Mr. ARRINGTON. I thank the chairman. And, Ambassador Tai,
good to see you. I feel for you every time I see you and we
have this opportunity to have a conversation, especially
because it is public, and I want to be kind and polite and
sweet like my people back in West Texas, but my people are also
brutally honest, and they feel like that is only way that we
are going to ever accomplish anything if we are honest and
direct. I don't see any action out of the Presidency, out of
the White House and under his leadership, President Biden, that
demonstrates that trade is a priority.
We have worked with you as a former Ways and Means staff
person. I think I know what you are inclined to do. I think I
know that you believe that trade is critically important, not
just the agriculture, which is very trade dependent, and it is
the lifeblood of the region that I hail from. But you
understand how important it is to the overall U.S. economy and
our future growth.
For all of President Trump's shortcomings, and for all of
the reasons some people weren't crazy about his personality or
his leadership style, President Trump was totally committed to
trade. And Lighthizer had a boss who made trade a priority. And
the people we were doing trade with, other countries, took him
very seriously. And that is why we were able to come together
in a bipartisan way and actually accomplish something for the
United States, for our workers, for our producers, and
manufacturers.
I hate that you don't have that, because I think it is
wasted talent. I hate it more for the country because we are
getting whipped on the playing field. I can't stand to see
America lose when the game is rigged, when people are cheating,
but worst of all when we don't even show up to the game. And
that is how I feel about where we are today.
China and just about every other competitor country is
taking market share every day from the United States and from
our great farmers, ranchers, manufacturers, et cetera. And it
is because we do these--we do more talking than we do making
deals and having real substantive agreements that will improve
our economy and our situation.
Do this for me, it would be helpful, because I am the
Budget chair now, and we are looking at the various ways to get
our debt to GDP down because that is a threat to everything in
our total economy, in our security, in our future.
Quantify for me--this is not a gotcha question--it is just
a sort of broad-based question about the impact of trade to our
economy and to our growth. Can you just speak briefly to that,
how important is trade to growing our economy?
Ambassador TAI. I would be delighted to. And, Mr.
Arrington, I would like to let you know, I wasn't in West Texas
recently, but I did make a trip to Houston and got to go to the
rodeo, and it was really quite something to see. And so in
terms of the spirit of your people in Texas across the board, I
got to see something there. And there are aspects of the
hearing today that remind me a little bit of what I saw in the
rodeo of just a----
Mr. ARRINGTON. Probably the calf scramble is what it
reminds you of.
Ambassador TAI [continuing]. Different format.
Let me speak to your specific question. Let me put it this
way: Trade has the potential to be a tremendous tool for growth
and development if it is done the right way. And we have
pursued trade policies that have expanded the pie, certainly,
if you want to look at the GDP and from your budget
perspective.
But what we have found over time--and we have a U.S. ITC
report to back this up--the way we have pursued our trade
policy is focused too much on the big picture. And the
distributional effects of trade--we have seen that the benefits
have clustered in certain places, and they have not flowed
broadly enough.
Mr. ARRINGTON. Can I make----
Ambassador Tai. And so what you see in terms of our trade
policies now are to try to bring corrective aspects to trade by
continuing to do trade but by continuing to push ourselves to
do it better.
Mr. ARRINGTON. Thank you. And I am out of time to comment,
so I won't. Thank you.
Chairman SMITH. The gentlelady from Washington, Ms.
DelBene.
Ms. DelBENE. Thank you, Mr. Chairman.
And thank you so much, Ambassador, for being here with us
today. It is great to see you.
Mr. Chairman, I wanted to start and ask unanimous consent
to enter into the record a letter from members of the
Washington State delegation raising concern with Japan's
digital gaming market and its compliance with existing digital
trade commitments.
Chairman SMITH. Without objection, so ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. DelBENE. Thank you, Mr. Chairman.
Speaking of digital, Ambassador Tai, I know you have been
working very much on the digital economy as part of the Indo-
Pacific Economic Framework. And this is an area where we have
been behind. The world is deeply impacted by technology, and so
it is important that we have trade provisions that reflect
that, including nondiscriminatory treatment of digital
products, privacy protections, restrictions on data
localization, source code protections, and bans on internet
shutdowns. It is important that we have binding and enforceable
rules. And I do think that this is also very closely connected
to making sure that we are continuing to provide an engine for
job growth right here in the U.S. and promoting American values
like democracy and human rights around the world.
It is very clear that every industry is impacted by
digital. From agriculture to manufacturing, all increasingly
depend on digital tools and the transfer of data to stay
competitive. And so I wondered if you could speak a little bit
about how work on digital rules can help benefit small
businesses, help workers, and strengthen human rights.
Ambassador TAI. Congresswoman DelBene, I know this is near
and dear to your heart and to your areas of expertise. I think
that our engagement on digital is one of the most important
things that we are doing and one of the most important things
in terms of pushing the trade conversation into new areas. Not
only are we behind but, frankly, the international and the
international trade practice and conversation around digital is
behind. It is lagging behind the reality of the economy that we
are living in right now where so much of it has already been
affected by the digital transformation.
I also wanted to highlight and build on an aspect of your
question, which is, how do we engage on the digital economy and
digital trade in a way that is positive and affirmative, in a
way that is looking forward and acknowledging the fact that our
entire economy is touched by digitalization?
And I think that is a really important part of how we are
approaching the digital economy, digital trade conversations,
including in the Indo-Pacific Economic Framework, which is
acknowledging that the way that we engage with our partners and
lay the groundwork and draw out the blueprint for digital trade
negotiations has to reflect more than just the interests of our
biggest stakeholders in this area. It has got to reflect the
interests of our small companies, the lifeblood, the backbone
of our economies--not just ours, but others--but also reflect
the interests that our workers, that our environment, that our
content creators all have in this economic ecosystem.
I think this is also an area, as you and I have talked
about before, where our ability as negotiators to take forward
steps is going to be impacted by and really limited by how far
you as legislators have been able to go in terms of
establishing regulatory frameworks that are critical to the
digital economy.
And one example is privacy legislation. We know that the
rights to privacy of individual people and consumers in the
digital economy is an important right to be weighed against in
how we formulate our rules. But without that legislation here
in the United States, there is really a limit to how much we
can do in these negotiations because we have got to leave room
for all of you to make that decision first.
So this really is an area where congressional and executive
partnership and communication is going to be critical. I am
looking forward to working with you and as many of your
colleagues on this committee and in the Congress as possible.
Ms. DelBENE. Obviously, I am a big proponent of Federal
consumer data privacy legislation.
Just quickly, I also wanted to bring up Taiwan, which some
others have brought up, but clearly a key ally to the United
States and a major partner on defense, trade, technology in the
Indo-Pacific region. Taiwan is the seventh largest export
market for Washington farmers and a major export market for
aircraft and digital products that are built in Washington
State.
So our economic partnership with Taiwan is not as extensive
as it could be. I think we have talked about ways we can
continue to strengthen that. And so I encourage you to think
boldly about how we can strengthen our economic ties with
Taiwan as you proceed with the current initiative.
Thank you, Mr. Chairman. I yield back.
Chairman SMITH. Mr. Hern, you are recognized.
Mr. HERN. Thank you, Ambassador Tai, for being here today.
The Biden administration's timid approach to trade initiative
is concerning. Bold leadership is a necessity to ensure
Americans succeed on the world stage. Any weaknesses from the
United States will be exploited by our adversaries, mainly
China.
Our trade agenda must provide certainty that future
agreements will create new import and export opportunities to
the benefit of American businesses and workers. I think you
would agree with that. This administration has taken no steps
towards reviving a bipartisan Trade Promotion Authority that
has expired. Without TPA, we leave a vacuum in the
international marketplace that China is already capitalizing
on.
All free trade agreements have been approved and
implemented through TPA. It would be a mistake for the
administration to turn a blind eye to TPA while the
international marketplace is being actively manipulated by our
allies and competitors solely for their own priorities.
Other nations, even our allies, are not looking out for
American interests. It is on us to go after market share and
create access for our products around the world. If we fail to
create an aggressive and robust trade agenda, Americans are at
a disadvantage and China grows stronger.
TPA supports U.S. job growth with exports of Made in
America products and better trade agreements that make the U.S.
more competitive globally. That being said, with my limited
time today, I would want to focus on the digital service taxes
with you.
Ambassador, I am concerned with the Biden administration
unilaterally disarming the 301 investigations while other
countries are still charging digital service taxes today.
Today, I am even more concerned about the administration's
action because it is uncertain where we go from here now that
our leverage has been stripped away.
Ambassador, 30 out of the 38 OECD nations already have in
place or plan to have in place a digital service tax if Pillar
One talks fail. France has already expressed it needs to press
ahead with their digital service tax because of the
implementation challenges facing Pillar One. I am afraid other
countries are growing impatient as well.
My colleague, Mr. Estes, brought up a serious question and
concerns with you, and the response was not sufficient enough,
in my eyes, in the explanation. USTR is the tip of the spear
when U.S. companies are facing the discriminatory treatment
abroad.
What is USTR's plan B if Pillar One talks fail, if they
haven't already failed so far? Would you reinstate Section 301
investigations on those 30 countries' DSTs?
Ambassador Tai. So, Congressman Hern, I have engaged on
this as well. I disagree with so much of what you have laid out
at the beginning, but let me be responsive to this particular
question.
I don't think you have any unilateral disarming. I believe
our DSTs under our Section 301 are suspended, right. So that
means that they can be unsuspended. But I would also like to
take the opportunity, because you laid so much groundwork, to
correct for the record a couple of things that you stated.
One is that it is not true that all FTAs have gone through
the Congress under TPA. The Jordan FTA was passed by the
Congress without TPA in place. And the converse is also true,
that TPA does not always guarantee that an FTA makes its way
through. We need to look no further than the TPP, where a TPA
was tailor-made for TPP, and TPP never made its way through.
So this is all to say that pursuing failed trade policies
does not guarantee that we become stronger. What I am looking
for is bipartisan partnership on advancing trade policies that
make the United States more resilient, our economy more
sustainable, and our results more inclusive. And if Congress
and this committee can show me the money and can show me that
there is bipartisan work that we can do together, then let's do
that together. I would very much like to----
Mr. HERN. With all due respect, Ambassador, so what you are
implying then, it is the Congress' fault that we don't have any
trade agreements. It is not anything the administration is
putting forward throwing their energy behind this space. I
mean, you have been here a number of times and saying, you
know, we would love to move forward and you can work with us on
that. So help us with that.
Ambassador TAI. Meet me with the recognition around the
kind of world we are living in right now, where we are as an
economy, where we are strong, where we are vulnerable, and meet
me on the terms that we need to do things differently. Not
everything. You don't have to throw the baby out with the
bathwater. But meet me on the terms that we can work together
on adapting to the reality that we live in. And I think that
that is the path to having the kind of bipartisan
congressional-executive partnership that I think that we all
are interested in having.
So I am not casting blame. I am just saying, trade policy,
where USTR sits at the intersection of the executive and the
congressional, requires all of us to at least share the vision
in terms of where we are going. And if we can do that, I think
that that is where we all come together and get something done
to be on team United States.
Mr. HERN. Madam Ambassador, with all due respect, you
served in this committee a long time, and this committee has
been well known for working together with an administration
that wants to work on trade deals. So that would be a great
message for the administration to hear as well.
Thank you. I yield back.
Chairman SMITH. Mrs. Miller is recognized.
Mrs. MILLER. Thank you, Chairman Smith.
You certainly are on the hot seat today. I really always
enjoy working with you, and I want to continue working with you
as we move forward.
You know that I made a trip very early--I was still wet
behind the ears in Congress--to China and realized how
important trade was to my State and my country. Immediately I
wanted to be on the Ways and Means Committee and Trade, and as
some things happen, I am very grateful to be there.
I have been disappointed with the Biden administration's
lack of progress, of course, on restrengthening our position in
the global trade economy. And I have heard from so many of our
allies that your key trade program, IPEF, just isn't quite
enough. And as we continue to elevate our competition with
China in key regions of the world, especially in the Indo-
Pacific, I think it is important for the U.S. to advance trade
policies and agreements that feature real incentives such as
market access and tariff cuts. These kind of incentives are
critical if we truly want to link supply chains with our
partners and allies and if we want to give our companies an
incentive to move our supply chains out of China.
For example, I just traveled to Cambodia--well, this
summer--and Singapore and heard directly from their Prime
Minister. Singapore is a fantastic trading partner of the
United States. But on the other hand, Cambodia is hungry for
U.S. trade and investment. Unfortunately, we are doing too
little, too late. We also view IPEF as being too little, too
late.
China is outmaneuvering us by implementing the largest free
trade agreement in history with the Regional Comprehensive
Economic Partnership and trying to join CPTPP. We need to run
faster than China in this region and ensure that American
workers can compete globally.
Now, quickly, I am going to ask you a question. What are
you doing to directly counteract the tariff advantage that
Chinese products have over U.S. products in the Indo-Pacific as
a result of RCEP, and is there other trade agreements out
there?
Ambassador TAI. Congresswoman Miller, it is nice to see
you. And I always enjoy working with you as well.
You said something early on in your question about market
access and tariff cuts leading to better supply chains. And I
think that that is an area where we are going to have to really
disagree. And I lead an agency with a bunch of experts that get
way in the weeds of and the guts of all the trade agreements
that we negotiate. I think that there is work that we can do to
come up here to this committee, but also more broadly explain
how tariff cuts and the rules for accessing those preferences
have worked in different sectors.
In certain sectors--we have seen them in the textiles area,
for instance, in the CAFTA-DR--that the combination of the
tariffs and the tariff cuts and the rules of origin have
created really strong supply chains. In agriculture as well we
have tended to do better on rules of origin and tariff cuts to
favor our producers.
But across the industrial areas, what we have seen is the
combination of the tariff cuts and those rules of origin have
led to a deindustrialization and an erosion of our
capabilities. So this is just to say that----
Mrs. MILLER. I have to move on.
Ambassador Tai. This is just to say that----
Mrs. MILLER. A lot of words.
Ambassador TAI. It is a lot of words. It matters. It
matters to people on this committee how a trade agreement
actually works. It is not--what is inside of a trade agreement
matters in terms of what the result is going to be for your
economy. And we have seen very uneven results. So let me try to
be really specific in response to----
Mrs. MILLER. Well, okay. But I want to----
Ambassador TAI [continuing]. Your question, which is those
tariff advantages in the Asia-Pacific have driven already on
top of the liberalization program supply chains to be deeply
clustered inside of the Chinese economy. And so for our
approach, it is not to just go in and further liberalize. Our
approach needs to bring disciplines and strategic changes to
the trade program to make those supply chains more resilient.
And on that, I think we are agreed. Our supply chains need to
be more resilient.
Mrs. MILLER. Okay. Because I want to move on to Ecuador,
Guyana, and Mexico, because so many of the countries want to
improve their commercial ties with us as well. And just as in
the Indo-Pacific, China is all over the place, and they want to
be our trading partners.
Do Latin-American countries often raise market access and
GSP renewals as a priority in bilateral talks with you and
other administrative officials? And do you believe GSP renewal
would improve your ability to negotiate with these countries?
Ambassador TAI. Let me reaffirm, I am for the
reauthorization of GSP in a way that brings it in line with our
current trade practice.
In terms of my conversations with partners, especially
those that you have just highlighted, they are really important
partners to us. They are our neighbors. They are our allies.
Mrs. MILLER. Absolutely.
Ambassador TAI. Yes. And I think that--what I would like to
do is just say that, when I talk to them, I want to hear from
them what it is that they want from economic engagement with
the United States. They want--they want to be more closely tied
to us, integrated with us, and they want to be able to develop
their economies in a way that we can rely on each other. How we
get there----
Mrs. MILLER. Well, I think we can meet and go over these
things.
Ambassador TAI. Yes. How we get there, then, is the next
question.
Mrs. MILLER. Yes.
Ambassador TAI. And I think that--you know, does GSP get us
there? It may get us part of the way there. But here, I would
like to push all of you as well in terms of thinking outside of
the box. Where can we improve our trade programs to really
serve those interests that we are trying to accomplish as
opposed to relying on traditional trade practices that have
been really spotty in terms of their results?
Mrs. MILLER. We need to meet and really go through these
things.
Thank you. I yield back.
Chairman SMITH. Ms. CHU is recognized.
Ms. CHU. Ambassador Tai, it is wonderful to see you today,
and welcome back to the Ways and Means Committee.
I also want to bring up Taiwan. Last fall, at a hearing on
this committee, I expressed support for a free trade agreement
between the U.S. and Taiwan. Such an agreement should include
high enforceable standards for labor, environment, intellectual
property, and other priorities for Members of Congress and
stakeholders in the U.S. and Taiwan.
I want to thank you for your focus on deepening our trade
relationship with Taiwan through the Initiative on 21st Century
Trade. This is an encouraging step towards deepening economic
relations. But I believe this negotiation should be a first
step towards a comprehensive FTA with direction and approval
from Congress between the U.S. and Taiwan.
I understand that you had an agreement on five areas, which
you call the early harvest. Could you please elaborate on the
status of the remaining six trade areas on the negotiating
mandate? Specifically, will the remaining areas be negotiated
together or further divided? And will USTR continue to provide
transparent updates to Congress and the public on these
negotiations? And what is the timeline for completing the
initiative?
Ambassador TAI. Thank you, Congresswoman. We are very
excited about our trade initiative with Taiwan, and we are
making very good progress. So you are right that we have
started with five core areas scoped in light of our desire to
deepen and expand our economic engagement with Taiwan, which
already is quite significant. Taiwan is one of our top 10
trading partners.
We are making very good progress in terms of the first set.
And you are right, we have scoped another five or six, I think,
elements, which will follow. I don't have specifics for you in
terms of a schedule or timeline, except to say that we continue
to be encouraged by the progress that we are making and we are
looking forward to working on those additional areas with
Taiwan. And, yes, absolutely, we will keep you and others
updated as we continue to make progress.
Ms. CHU. Thank you for that.
On another topic, I am the co-chair of the bipartisan
Congressional Creative Rights Caucus, and I represent a
Southern California district that is the hub of our country's
creative economy and copyright industries. In 2021, the
copyright industries employed 9.6 million workers, accounting
for nearly 6 percent of all private employment and almost half
of all the workers in the U.S. digital economy.
I also strongly agree with the principle that the AFL-CIO
recently laid out in its policy agenda on the digital economy
and trade, which states that trade policy must aggressively
address the stolen or unlicensed use of copyrighted content on
digital platforms.
I believe that a worker-centric trade policy must ensure
that our trading partners protect intellectual property rights,
and I am disappointed that, thus far, these protections have
not been prioritized in the administration's initiatives,
including the Indo-Pacific Economic Framework.
Given that is the case, can you tell me how USTR is
ensuring that trading partners provide adequate protections for
copyrights in the digital environment? Like, for instance, will
IPEF countries be asked to join the World Intellectual Property
Organization Internet Treaties, which ensures that creators can
control and manage works online?
Ambassador TAI. Well, Congresswoman, our toolbox on
intellectual property is quite expansive. Know that my
Intellectual Property and Innovation Office is always in one
part of the cycle on the Notorious Markets report, the Special
301 report. That ends up being a very important tool of ours in
terms of tracking how intellectual property rights are being
observed, respected in our partner countries, where the
problems are, and also tracking progress when they make
progress.
In the Indo-Pacific Economic Framework right now, we are
deeply engaged on a digital conversation that also takes into
account that there are content creators who have rights and
interests in the digital economy. Let me leave that there.
In terms of things that are more specific to that, I will
have to come back to you. I do not believe that we are pressing
our partners on WIPO participation. But I am happy to continue
that conversation with you.
Ms. CHU. Thank you. I hope you encourage them to do that.
And I yield back.
Chairman SMITH. Mr. Wenstrup is recognized.
Mr. WENSTRUP. Thank you, Chairman. And thank you,
Ambassador, for being here.
We are talking about intellectual property quite a bit
here, and I have concerns when we waive intellectual property
rights. You know, we have inventors, creators, that develop and
manufacture in the United States. And there are situations in,
you know, talking about the vaccines as a concern of just
giving that intellectual property away. That is a disincentive
for people in the United States to want to produce and create
if they are concerned that their own government in the United
States is going to take their intellectual property rights away
from them.
And I believe that there are ways to produce our products
in another land, under our control, which is very, very
important for a lot of reasons, especially when it comes to
health. Because we know that, right now, we are in a huge
deficit, dependent upon China for our medical prescriptions.
Generic drugs. They control it, they control the world. It is a
problem. It leaves us extremely vulnerable. It is a national
health security issue and a national security issue.
If we turn over the intellectual property of a
pharmaceutical or a vaccine to another country that doesn't
produce it with the same quality, as we have seen from China--
250 people died from Heparin in the United States about 15
years ago. We turn that over to another company to then make
it, they tank that product. And then we have a problem.
And so I think that, you know, as we do look--and by the
way, the FDA isn't over there trying to make sure everything
is--they may have an office there, but they are not in there
every day.
You know, we now have--in the United States, we are testing
the drugs we get from other countries for being tainted or
inefficient, not the right dose. All of these things are
happening.
So all I just want to say is, if we in any way, shape, or
form are giving away our intellectual property--you know, we
are worried about others stealing our intellectual property,
but if we are stealing our own intellectual property, it leaves
us very vulnerable.
I see you raise your eyebrows. Maybe you are not engaged
with the situation on the medical side, but that is a shame
because maybe you need to get into and get a classified brief
on what is going on.
Thank you. I yield back.
Ambassador TAI. Sorry I was making faces a little bit. I
think it is because I was trying to track how you are
describing giving away intellectual property. And that doesn't
bear any resemblance to what we agreed to at the WTO last year.
So I am happy to clarify some of that.
In terms of your presentation, especially around our
reliance on others for API, let me affirm that I completely
agree with you that that is a critical supply chain that we
need to work to fix.
And the answer isn't just about IP. It does also connect to
this tariff conversation as well. The way that a lot of our
supply chains and the decisions that our producers have
prioritized, which is to chase cost efficiency at the expense
of resilience, at the expense of having more options in terms
of supply, is part of the change that we need to bring to our
trade policy.
So on all of the things that we agree on, I hope that we
will be able to find a way to work together. I want to say I am
engaged on the medical issues. They are really, really
important. And I look forward to continuing the conversation
and working with you on this.
Mr. CAREY [presiding]. Thank you.
The chair now recognizes the gentleman from North Carolina,
Dr. Murphy.
Mr. MURPHY. Thank you, sir. Thank you, Mr. Chairman.
And thank you, Ambassador Tai. I think you can sense the
frustration, at least over on this side of the dais, because it
just does not appear we are moving the needle on trade. And I
don't know you very well. You come very, very highly spoken of
from members who have worked with you previously.
I personally think you are too nice a person to be in the
job that you are in, because I think you are handicapped
because of administrative folks that you have to report to, et
cetera, that are handicapping you in your job. Negotiators are
usually very, very tough and sometimes mean people. They aren't
nice people like you are.
And if you look at what has happened with us, we are
absolutely handcuffing the United States because we worry more
about green things. It is all the other distractions. We are in
the Paris climate accord. We handcuff ourself, and we give
China the ability to buy--you know, build nine this past year,
27 more coal plants. And if you look at what we are doing to
the United States, all we are doing is giving the open door for
China. It is just a fact.
We don't negotiate--we were talking about critical rare
earth metals. You know, we are fine to tear them up and get
them from China where we are using slave labor, but we have
them in our own country and we are not able to do that. It puts
us absolutely at a disadvantage. And you are stuck--personally,
I feel sorry for you. You are stuck in the middle of that.
And so let me get to just some of the other issues. It is
just an absolute frustration, because you just see this country
swirling down the drain because we are just so distracted on so
many other different issues that China doesn't give a damn
about. And because they don't give a damn about it, they are
just swarming over the rest of the world with influence.
I am happy to hear that we are going to try to work on a
Taiwan free trade agreement. That is absolutely necessary. I
come from the second largest pork-producing district in the
country. It is a big deal. Pigs are a big deal for us. Pork is
a big deal for us. But unfortunately, with Taiwan, we have seen
our exports decline 35 percent, one-third, since 2021, in a
time when Taiwan's imports of pork went up 15 percent.
Can you help me understand that? Why has that happened? Why
have we hurt our own pork producers in a time when Taiwan has
been increasing their importation?
Ambassador TAI. So, Congressman, I can assure you that I
know to be nice to members of the Ways and Means Committee. And
I have never been faulted for being too nice.
Mr. MURPHY. You have too nice a smile.
Ambassador TAI. I also don't need you to feel sorry for me.
So please don't. Please don't do that.
Mr. MURPHY. I feel like you have been put in a tough spot,
personally, because there have just been--this administration
above you has just shown no interest in trade.
Ambassador TAI. Okay. Well, let me just take off the nice a
little bit. I don't need your pity. I stand up for the American
people. When I speak, people listen, because I represent the
interests of the United States.
Let me go to your specific question on what--your
frustrations around our trade policy. Look, I am hearing it
from this entire side of the dais. I have sat in the backseat
before also. You guys are staying very well on message, and it
is great work----
Mr. MURPHY. It is a good message. It is a true message.
Ambassador TAI. It is not. It is--I think that you have
completely missed the point. And you are from a great State,
which is also a textiles-producing State. I think that should
inform a particular perspective in terms of where our trade
policies have been strong for ag but also where our trade
policies have really bled out some of our critical industries.
And I do consider textiles to be a critical industry.
On rare earths, let me tell you a couple things here. Why
are rare earths important? Rare earths are important because,
especially now, they have significant applications in clean
energy and clean technology industries. So that is actually
part of the greening agenda.
Mr. MURPHY. We are not getting it from our own country.
Ambassador TAI. I will tell you why we are not producing
rare earths anymore. We used to. And I litigated a case at the
WTO on this 10 years ago, which we won. But it hasn't put us in
a better place. And that gets us into a WTO conversation. I am
not going to go down that rabbit hole with you right now. But
rare earths----
Mr. MURPHY. All right. Let me just ask this other question
because I really didn't want to go on rare earths.
Ambassador TAI [continuing]. Because of predatory Chinese
practices. Which you are right, we should be working together
on that. But blaming each other for and not being able to come
to an agreement on what is actually important for the U.S.
economy, that is what is holding us back.
Mr. MURPHY. Absolutely. I don't disagree with that at all.
All right. Ambassador, let me just ask this one other
question.
Ambassador TAI. Let's move on to the reality that we are
facing in facts.
Mr. MURPHY. All right. Thank you. I agree. I don't disagree
with you. I don't disagree with you. We are throttling
ourselves on some of this.
I am an original cosponsor of the bipartisan resolution of
disapproval which would roll back a regulation that suspends
tariffs on Chinese solar products that have circumvented U.S.
trade laws throughout four Southeast Asian countries. And I
hope the Biden administration will reverse the policy so
Congress isn't forced to act to protect American jobs and keep
subsidized Chinese products out.
Can you explain--can you explain the rationale behind the
decision?
Ambassador TAI. Do I have grace from the chairman to go a
little bit beyond time? Yes? Sure. Sure.
Look, on the solar issue, I think we are in a real bind.
And I think that this might be--let me see if you and I have
common cause here as well. As with many other industries, about
20 years ago, we had a growing, innovative, strong solar
industry here in the United States, which we lost.
Mr. MURPHY. Absolutely.
Ambassador TAI. When we lose industries like that--and it
is not to say we are not producing. It is just that we are not
producing at scale. We are not producing enough. When we are in
a bind like this, we end up fighting ourselves. Our industries
fight each other. Our regions fight each other. We end up,
basically, fighting ourselves over the scraps of what we have
got, and we are in a really hard place.
Where I would really like partnership with all of you is,
one, to figure out the really hard work in terms of how we get
to a better place in areas where we need to build back, but
also, can we look forward and anticipate the other industries
where we are at risk of losing and eroding our capacity and
work together to prevent that from happening.
Mr. MURPHY. Again, that really didn't answer my question.
Why were we behind this position? Why were we allowing the
Chinese to do workarounds?
Ambassador TAI. I am happy to continue this conversation.
Mr. MURPHY. Okay. All right. That is fine.
Ambassador TAI. This is one where our economy is quite
split.
Chairman SMITH [presiding]. Mr. Kildee is recognized.
Mr. KILDEE. Thank you, Mr. Chairman. And thank you,
Ambassador Tai, for being here.
Let me just start off by saying, you know, we don't agree
on everything across the aisle here, but I do want to associate
myself with the last comments. Not all of the comments, but the
last comments that Mr. Murphy made. I share his concern
regarding Chinese solar and the circumvention of American
tariffs. I disagree with the position the administration took
on this. And I am leading the effort on the last issue that Mr.
Murphy raised. I disagree with him that you are too nice. I
think you are just nice enough.
So let me first of all say, where I come from, the term
``free trade'' is a bit of a loaded term. The people that I
represent in Michigan, particularly in manufacturing and our
farmers, have seen trade deals come and go and never met the
promises that they were sold under. NAFTA being a good example,
where we saw auto workers lose their jobs and have those jobs
show up in Mexico, sometimes making $13 a day, undercutting
American workers. There were big promises under NAFTA that
didn't materialize.
And it is for that reason that I am equally enthusiastic
about USMCA. I didn't know that I would get to a place where I
could support it, but at the end of the day, I was enthusiastic
in supporting it because it rights the wrongs of some of the
past trade deals and I think provides a really important
framework.
I was proud of the work that the Democratic leadership,
particularly Mr. Neal, did to improve that trade agreement in
the late stages of the negotiation. I think that was the game
changer for many of us, particularly including the labor rapid
response mechanisms. That has been a lifeline for workers in
Mexico in plants like the General Motors plant in Silao, which
obviously you are quite familiar with. Our ability to stand up
against protectionist unions, against multinational companies
operating in Mexico taking advantage of workers, is really
remarkable.
Last month, I was in Mexico. I met with many of the workers
who are fighting for their new rights, including workers at the
VU Manufacturing plant. Right now, these brave workers are in a
battle at VU, fighting for better wages, for better working
conditions, for safer working conditions, despite pretty
significant threats, intimidation, bullying, from the company
leadership.
So, I just want to ask if you can assure me and more so
assure the workers at VU and workers all across Mexico that the
USTR and the U.S. Government is going to do everything we can
to help them exercise the new rights that are guaranteed to
them under USMCA?
Ambassador TAI. One hundred percent, Mr. Kildee. USTR, the
United States and, frankly, I think that this committee also
stand behind the tools that we have in the USMCA, which
critically are there to empower workers and to turn that
narrative to say that trade agreements can work in the favor of
workers.
Mr. KILDEE. Thank you. And I just want to say, likewise, I
am pleased with the work that you are doing in Mexico. I know
it has been raised before, so I won't go too deep into it at
all. But sticking up for our corn growers as Mexico, I think,
is trying to circumvent the agreement that they signed in order
to protect their interest, we need to make sure that doesn't
happen.
But I will say this. I do share the concern that some have
expressed about the new frameworks that the administration is
pursuing. APEC, I believe, is not the step in the right
direction that we ought to be taking. What we saw under USMCA,
I think, is a good example of how we ought to build the
framework, a high-standards type agreement, that provides us
the access to markets that we need but also elevates the
standards of those workers in other places.
You know, right now, we are seeing violence against union
organizers in Guatemala, in Honduras, in Colombia. And they
don't have the recourse that would be protected under USMCA. So
I am concerned about why we are pursuing this sort of APEC-type
approach rather than fixing existing trade agreements.
And one in particular--and I know Congresswoman Sanchez
raised is CAFTA-DR. I think we have an opportunity to elevate
our relationship in that region, but we are going to need the
kind of enforceability that we see in USMCA. And I would like
to see us pursue renegotiation or improvements to agreements
like CAFTA-DR in particular in order to achieve that. And I
wonder if you might be willing to comment on that.
Ambassador TAI. Mr. Kildee, I note your interest in that.
It makes sense. And I don't know that APEC and doing upgrading
work like that need to be mutually exclusive. So let's continue
to talk.
Mr. KILDEE. Thank you very much.
I yield back.
Chairman SMITH. Mr. Steube.
Mr. STEUBE. Thank you, Mr. Chairman.
Ambassador Tai, in your recent testimony before the Senate
Finance Committee, you dodged questions related to whether the
administration was taking a go-it-alone course in trade
negotiations, leaving out Congress and not making deals public
before signing them. Senator Crapo and Senator Wyden both
pushed you for a commitment to seek congressional approval and
make the terms of deals public, but you could not give such a
commitment.
What we have seen time and again from the Biden
administration is an unprecedented lack of transparency, even
on issues where there might be room for bipartisan consensus.
Much of your office's work should be bipartisan. A lot in
Congress is one team versus the other, but when it comes to
trade, that is not always the case. And that is why it is so
surprising that we are running into this lack of transparency.
Whether it is critical mineral agreements, potatoes, or
citrus from my State, Congress needs to be informed, my
constituents need to be informed, and the American people need
to be informed.
Along the lines of citrus, I have a question for you. Does
the U.S. allow for the importation of Chinese citrus?
Ambassador TAI. So, Congressman, I have to say that I
really have to object to----
Mr. STEUBE. Okay. Well, the answer to that question is,
yes, they do. You do allow for the importation of Chinese
citrus. And do you know roughly how much? Or do you want me to
answer that question for you too?
Ambassador TAI. Well, this is a hearing. But since you have
answered the first question, why don't you go ahead and answer.
Mr. STEUBE. Sure. Okay. 26.8 million tons of Chinese citrus
is imported into the United States roughly every year. We
shouldn't be importing Chinese citrus to the detriment of U.S.
producers.
I actually had a bill last Congress that would ban the
importation of Chinese citrus because of the challenges that
that faces, not just from a production standpoint, but from a
disease standpoint. And I intend to do that again this year.
What is your office specifically doing to promote American
citrus?
Ambassador TAI. There is a lot that we are doing to promote
American citrus. In fact, I believe that in Vietnam, we have
just gotten approval for the first shipment of American
grapefruits to Vietnam. So that is one example of something
that we have been doing with USDA.
In another area, we have been working closely with seasonal
produce and fruit growers in the southeast to address serious
import concerns that they have by setting up a committee to
allow them to provide us with advice and recommendations
specifically with respect to their interests.
So I care a lot about our farmers and our producers,
including the citrus growers. And if you have concerns with
respect to the imports and the export opportunities, I am happy
to talk to you about those.
Mr. STEUBE. Does the Chinese Communist Party allow for--do
they adhere to the same regulations that our domestic producers
have to adhere to here in the United States, related to labor,
EPA, all of the things that our domestic producers are abiding
by?
Ambassador TAI. I mean, I think that part of the bigger
question you are getting at is, is our trade relationship with
China reciprocal and does it feel fair?
Mr. STEUBE. No. I am specifically talking about citrus
right now.
Ambassador TAI. No. And on citrus--I mean, yes, you are
talking about citrus, but I think it is linked to this larger
issue, which is----
Mr. STEUBE. Well, it is not when you are bringing in
cichlids from China that then infect American citrus with
canker and other diseases that then are a detriment from the
health and safety and welfare of our groves. I don't understand
why that is funny that you think it is okay to allow the
importation of Chinese citrus to the detriment of Florida
farmers and ranchers that grow citrus every single day. We have
lost--I mean, all you have to do is look at the numbers--the
boxes of production because of greening and the diseases that
have been brought in from China.
So I am specifically talking about citrus. And I am
specifically concerned about the importation of Chinese citrus
to the detriment of our production in America, specifically
Florida, because the majority of citrus that goes into juice
comes from the State of Florida.
Ambassador TAI. So let's talk about this. We work very
closely with USDA and APHIS. And I think there is a
conversation to be had, which I don't think needs to be
oppositional.
Mr. STEUBE. Okay. Well, I am interested in your China
strategy as it relates to supply chains. You have been in this
role for over 2 years, and I would like to know how you plan to
combat the CCP through trade.
Ambassador TAI. So there are a lot of things that we are
doing with respect to the challenges from the PRC's economic
policies and practices. We have in place still the Section 301
actions from 4 years ago. We are in the process of reviewing
the effectiveness of that and taking in all of the comments
that we have received.
At the same time, we are working with partners and allies
consistently and on an everyday basis with respect to
challenges that we all experience, whether it is in terms of
large civil aircraft industry, steel and aluminum, economic
coercion, and overall an unlevel playing field and a lack of
reciprocity, which I was trying to link to your previous
questions, which includes with respect to the citrus trade.
There is a lot for us to do, and we are going to have to
bring our very best game. And I would be very interested to
work with you on making sure that what we do is effective and
puts our stakeholders in the very best position to compete.
Mr. STEUBE. My time has expired.
Chairman SMITH. Ms. Tenney is recognized.
Ms. TENNEY. Thank you, Mr. Chairman. And thank you,
Ambassador, for being here.
I just want to jump--I got three questions for you, because
it is very important. And my district, my new New York 24
District, is not only the number one ag district in the
Northeast, it is the number one dairy-producing district in the
Northeast. And our New York dairy producers rely on a
consistent access to international markets for their bottom
line.
Given my district's proximity to Canada--and we are
basically mostly the Canadian border with New York--I have deep
concerns that the dairy market access terms that were
negotiated with our trading partner to the north have not been
honored.
So, Ambassador Tai, can you provide an update on the
dispute settlement panel process and when we can expect to see
some tangible results for American dairy farmers?
Understanding, I mean, we didn't get everything we wanted in
USMCA, but we really need to--this is a huge issue that is
plaguing our dairy farmers.
Ambassador TAI. I would be delighted to give you some
updates here. As you know, this was actually the first dispute
settlement panel that we established under the USMCA. It was on
the dairy dispute, and it is precisely because dairy has been
such a contentious issue between us. And Canada made promises
in the USMCA that our dairy farmers would have better access,
which we have not seen translated into reality.
So we litigated through that first case, won it, and Canada
made some changes to claim that it has brought itself into
compliance. But that hasn't translated into that additional
access that we know that our dairy farmers deserve, which is
why we have now requested and moved into the panel phase the
second time.
Ms. TENNEY. Okay.
Ambassador TAI. This time I had my lawyers work very, very
closely with USDA and with our stakeholders to fashion a case
that we have a lot of confidence in. That panel----
Ms. TENNEY. Let me jump to this because----
Ambassador TAI. That panel is pending right now.
Ms. TENNEY. If I can reclaim my time. I appreciate the
second panel. But how far are we going to go to reinforce this?
And would we consider retaliatory measures against Canada on
this milk issue?
Ambassador TAI. We feel very confident in this dispute. And
I am just trying to check through my notes to look at when we
would expect that panel decision. But if justified by the panel
decision, yes, no, absolutely. Everything that we are going to
do is going to look to translate our rights into access.
Ms. TENNEY. Great. I appreciate that.
The second question I want to get to is, I would like to
follow up on the letter we sent--Representative Sewell and I
sent you a letter. This is about the European Union is on
course to impose significant restrictions on steel scrap
exports by changing its waste shipment regulations.
Steel scrap is critical to many of my constituents who rely
on it to be among the lowest cost and most efficient steel
producers in the world in Upstate New York, believe it or not.
Also in Ms. Sewell's district. The proposed EU regulations will
distort global scrap prices and reduce the domestic supply of
scrap, increasing costs for American steel producers and
putting them at significant disadvantage compared to their
competitors around the world.
Do you agree, if adopted, the EU's proposed regulations on
steel scrap exports would be detrimental to the American steel
industry?
Ambassador TAI. I care deeply about how the American----
Ms. TENNEY. Well, let me ask you, can you just answer the
question? Do you think it would be detrimental to the steel
industry if the EU proposed regulation?
Ambassador TAI. I have to say that I am not fully briefed
on this particular, but that we have so many channels of work
with the EU on steel, and I am happy to raise it.
Ms. TENNEY. Okay. I just want to get quick, because I want
to get you to the third question too. So let's work on that.
And is USTR engaging the European Commission and EU members
on this matter? Because we want to make sure that, you know, we
are not excluded from this and that you are on top of this.
Ambassador TAI. So I think I answered this one already,
which is to say, if we are not already doing so, we will.
Ms. TENNEY. Yes. Thanks. I appreciate it. Now, question
three.
My district is home to Wayne County, which ranks among the
top apple-producing counties in the Nation. How will the Indo-
Pacific Economic Framework work to address the significant
market access with countries in the region, particularly issues
surrounding the sanitary and phytosanitary measures?
And I am just looking at just some of these countries where
there is no market access here, and this is significant.
Obviously, it is one of the--Wayne County is literally the
second top apple-producing county in the Nation.
What are we going to be doing on that? And can we count on
your commitment to work with this and make sure that we get
some access?
Right now, we have, between Australia, no market access,
tariffs, no market access, Indonesia, Japan, Korea, Thailand,
Vietnam. How can we--is that something we can count on you to
make sure that we get access with this huge potentially
economic growth area for upstate New York?
Ambassador TAI. Absolutely. And in the Indo-Pacific
Economic Framework Trade Pillar, we have scoped in an
agricultural negotiation that goes directly to the SPS issues,
science- and risk-based regulatory processes, precisely to
improve market access.
Some of the countries you just listed we have, actually,
FTAs with. And we have seen that, even when we have pushed
tariffs down to zero, oftentimes it doesn't translate into
market access because of these SPS barriers. So that is scoped
in the work that we are doing. We are doing that work and happy
to keep you updated on our progress.
Ms. TENNEY. Thank you so much. I appreciate it. We are
looking forward to working with your office to get this done.
Thank you so much.
Chairman SMITH. Mr. Beyer is recognized.
Mr. BEYER. Thank you, Mr. Chairman.
Ambassador Tai, thank you so much for being with us today,
and thank you for remaining in close contact with the
Government of Ethiopia as they pursue reinstatement to the
African Growth and Opportunity Act trade preference program,
and for being so responsive to me and my staff as we work with
the diaspora.
As the Ethiopian Government implements the peace agreement
signed last year with the TPLF, I would like to stress the
importance of AGOA to Ethiopia's economic recovery from the
recent years of devastating conflict and the COVID pandemic.
Ethiopia's inclusion in AGOA in 2000 helped foster the growth
of a burgeoning manufacturing industry, which provides stable
employment for tens of thousands of Ethiopian workers. The
textile industry in particular saw tremendous growth and helped
provide thousands of jobs to Ethiopian women.
But since Ethiopia was delisted from AGOA, these jobs have
been disappearing, and I am concerned that the longer they are
denied access will push the nation deeper into poverty, further
destabilizing the country, and severely weakening our
bipartisan, bilateral relationship.
I know you have delivered to them a targeted list of
benchmarks that they have to meet, including deescalating the
conflict, removing barriers to humanitarian assistance,
addressing human rights violations. Can you provide an update
on where we are, and is an out-of-cycle review under
consideration?
Ambassador TAI. So, Congressman Beyer, an out-of-cycle
review is always available as part of the AGOA program. And you
know about the list of benchmarks that we have shared with
Ethiopia. And I also had the opportunity to meet with Prime
Minister Abbey on the margins of the Africa Leaders Summit here
in Washington in December.
This is something that we work on very closely with the
State Department. We have a special envoy for the Horn of
Africa as well. And in terms of the very, very latest, I would
be happy to have my team send over to yours where things are as
of today.
Mr. BEYER. Great. Great. Thank you very much.
And I really also appreciate your commitment to the WTO and
the belief that it can be a real force for good. And without
the WTO, it is a state of nature. And the work you did in the
last Ministerial Meeting, crucial wins on fisheries and COVID-
19 vaccines, illustrates that, despite the challenges, the WTO
actually can work under the right conditions.
To that end, I am a little concerned we are sending mixed
messages on our support for the WTO and our commitment to abide
by its decisions and rules even if we don't like the outcome of
individual cases.
I know you have worked hard on reform. Could you update us
on your progress in this area?
Ambassador TAI. I would be delighted to. In fact, we are
doing so much work on reform. It is a little frustrating for me
that not more people know about it, because the issues can get
technical. And all of this is happening in Geneva, which is far
away from Washington, D.C. But I know how much you care about
it.
Whether it is on the committee processes, whether it is on
the negotiation function or on dispute settlement, my team
shows up to every meeting with new ideas. Our motto is to
reform by doing and to put ourselves out there as a model for
reform. To not just talk about it, but to behave in the way
that we would like for members to behave, which is to be very,
very engaged with the WTO and see it as being there to serve
our interests and our needs, and not something that we go on
autopilot about and forget about.
So on dispute settlement, we are on phase three of work in
terms of driving an interest-based negotiation conversation, an
inclusive process that brings in all of the WTO members, with
the goal in mind that for real reform and change to happen at
the WTO, we can't dictate that change. It has got to be
negotiated and accepted by everyone.
That is just an example, but I would be delighted to
facilitate a follow-up for you and any others on the committee
to learn more about what we are doing.
Mr. BEYER. Great. Thank you.
And one last question. Given that USTR is not seeking,
well, congressional approval, at least the traditional way, for
initiatives like IPEF or APEC, for critical minerals
agreements. And I know you are constrained to what you can
formally offer in negotiations.
Are you concerned that we are not being ambitious enough on
environment and labor standards in these negotiations?
Ambassador TAI. I think that you will always find that we
will be ambitious because we speak on behalf of the United
States. And we are always going to be pushing for what we think
is right and our vision for, frankly, a better version of
globalization.
But to your point about the congressional role, this is
something that is very near and dear to my heart and an area
where, I hope in all the various interactions I have had with
members of this committee and the Senate Finance Committee
yesterday, that I have been effective in conveying my interest
in demonstrating that there are things that we can do, that we
can do them on a bipartisan basis, and that there is a robust
role for Congress. I am not afraid of those conversations. I
would be happy to build those with you and others.
Mr. BEYER. Thank you very much.
I yield back.
Chairman SMITH. Mrs. Fischbach. Mrs. Fischbach is
recognized.
Mrs. FISCHBACH. Thank you, Mr. Chair.
And first of all, Ambassador, I would just like to say,
Congresswoman Tenney brought up the Canadian border. The entire
northern part of my district borders Canada. And so that dairy
producer--that issue is very, very important to me, and so I
appreciate the update. I won't make you give it again since we
just got it.
But, you know, I also did want to just thank you for
pressing Mexico as it relates to the unscientific ban of the
GMO corn imports.
And I do want to say for the record that, while
consultations can be helpful, I fail to see an obvious reason
for delaying a formal dispute resolution process that you have
already used effectively for the Canadian dairy issue. I firmly
believe it is time to utilize this important tool and urge you
to do so as soon as possible, because I think it has been
mentioned--that issue has been mentioned a couple of times.
While I appreciate the work on the enforcement side,
Ambassador, I wanted to address something broader and more
consequential. I was reading through your written testimony,
and I saw a lot of words like ``framework,'' ``arrangement,''
and ``initiative,'' but I failed to see a single mention of
USTR pursuing the word ``agreement.''
And my district in western Minnesota is a top agricultural-
producing region in the country, and the rural economies in my
district depend on those products being exported to markets
across the world. Between a quarter to half of everything we
produce in western Minnesota is headed overseas.
This lack of ambition in pursuing new agreements,
particularly for ag exports, is putting farmers in my district
at a disadvantage. For the first time, the U.S. is set to be a
net importer of agricultural goods. I urge you to be more
aggressive in pursuing new export opportunities for farmers in
my district and across the country.
Getting a little bit more specific, I hear often about
nontariff trade barriers that our trading partners use to block
producers in my district to export into their markets. For
example, the EU's use of geographic indicators to monopolize
generic cheese name or Taiwan's barriers to U.S. pork exports.
Resolutions of these issues certainly won't promise the benefit
of full trade agreements but will help correct the current
trade imbalance we are seeing in agriculture.
What are you and your team doing to address these and other
issues of nontariff barriers blocking access to U.S.
agricultural goods?
Ambassador TAI. Well, thank you for this question. We are
doing a lot. I have an A-plus agricultural trade team. And I
just had my chief agricultural negotiator confirmed by the
Senate on December 22. We swore him in first week of January.
He has hit the ground running. He is exactly the amplifier that
we needed on top of the head of my ag office and a very
dedicated team.
So where nontariff trade barriers come up, especially in
ag, we have also got good reach in the USDA. We pursue those
with the specific country when they come up. I am delighted to
let you know that there are a number of wins that we have over
the course of the last 2 years--our pecan farmers, our beef
producers, and also our growers.
You know, the SPS and the science-based, risk-based
negotiations that we are doing right now in the Indo-Pacific
context and also in others are exactly key to that aspect of
nontariff barriers that a lot of our agricultural producers
face.
And we are also working very, very robustly. For example,
the East-African community has issued their first joint SPS
notification, which we welcomed. We have wins with Ecuador when
they declined to implement a ban on powdered milk imports. And
at the WTO as well, my team, again, as part of our very robust
Geneva work that often goes unsung is very, very robustly
engaged on SPS issues and other nontariff barrier issues with a
lot of focus on our agricultural sector.
Mrs. FISCHBACH. And, Ambassador, I really appreciate your
response, but I do want to reiterate the need for a more
aggressive stance when it comes pursuing new agreements and
more market access for our agricultural goods. It is just so
important to our economy, all across the country. And I look
forward to working with you on it.
And with that, Mr. Chair, I yield back.
Chairman SMITH. The gentleman from Utah, Mr. Moore.
Mr. MOORE of Utah. Thank you, Chairman and Ranking member,
Ambassador Tai, for being here. I think you have seen that
almost every question has a district angle as well as an
overarching U.S. angle. Those are special opportunities for us
as Representatives to be able to truly focus on, and I am no
different.
Utah is a very unique crossroads positioned in the western
United States within the mountain region, but a very huge
opportunity for us to lead on trade, you know, with individuals
like the former Governor and former Ambassador to China,
Governor Huntsman, Jr.
Like, there is a huge interest in this. GSP is a--there is
a huge interest. And I know we already talked a little bit
about it. And what you know--you have talked about that you do
overall support it. But the refunding and reauthorization of
GSP is--it is hugely important and for so many reasons. There
is an enforcement mechanism that exists. There is a competitive
nature to China that is essential, in my opinion. Costs--it
helps reduce the cost of goods.
Could you share a little bit--one of my Utah constituents,
they have leveraged this program. Great success. Since 2018,
their share of imports from China fell from over 90 percent to
less than 15 percent with much of that product now divided
among several GSP countries. So this program works. We have
seen good data come from it. And as it was expiring at the end
of 2020, they and hundreds of businesses across the country
have felt the pain. And U.S. importers have paid close to 2
billion in tariffs on GSP-eligible imports so.
All right. So it expired in 2020. I am new to this
committee. It was not reauthorized last year. You have
expressed support for it. I think there is broad bipartisan
support. Could you highlight some positives that can come from
this, maybe share some content on what this committee needs to
be able to think through the potential reauthorization.
Ambassador TAI. Well, Congressman Moore, I think of
Governor Huntsman's many titles.
Mr. MOORE of Utah. It may be hard--Secretary, Governor, it
is really hard to keep up.
Ambassador TAI. Well, and more closer to where I sit, he
was also a deputy U.S. trade representative and a good friend.
Mr. MOORE of Utah. Yeah.
Ambassador TAI. So you know, in terms of the case for GSP,
I think you have laid out a very, very strong case for GSP. I
would also say that, you know, it is one of our bedrocks, the
trade and development programs, and something that our
developing country trading partners have really come to rely
on. So that might be one additional dynamic here that wasn't
already listed in what I thought was a very robust and good
list of reasons for having the GSP program in place. And,
again, in terms of my commentary, I think if Congress can
update it, it is a really helpful tool for all of us in many
different ways.
Mr. MOORE of Utah. There are things that would be a barrier
to the administration and the USTR being supportive of this so
we can make sure to work these things out and on our
congressional side.
Ambassador TAI. I think that if our teams are not already
in conversation, I know that they have been, intermittently,
over the last 2 years when there has been a talk around it. We
will continue to stand ready to work with all of you.
Mr. MOORE of Utah. Okay. With regards to the WTO
arbitration dispute, you know, there is serious national
security implications here. I have taken a note of a series of
these concerning developments from the WTO related to our
national security and the challenge by China to the U.S. export
controls on semiconductors and multiple other WTO rulings
against the United States. WTO has no authority in matters of
national security. And members on this committee stand firmly
behind the USTR's rejection of their fraud conclusions.
Can you update the committee just on any context of how you
are thinking about this and other disputes related to national
security?
Ambassador TAI. Certainly, I think this gets to an area
where I think Congressman Beyer mentioned a little bit feeling
like I have sent mixed messages. Look, you know, you can be
strong on this principal that national security decisions taken
by a government by government in their sovereign authority
shouldn't be subject to WTO panels picking them apart from a
trade perspective, and at the same time, before the reform of
the WTO, including its dispute settlement system.
So, again, you know, I want to credit my WTO ambassador,
Ambassador Maria Pagan, for carrying the flag, being very
strong on our position with respect to where the WTO and its
jurisdiction should properly be while leaning into a reform
program on how to make the WTO work better for us, certainly,
and for all of its membership.
Mr. MOORE of Utah. And I will just, you know, conclude that
export controls are critical to maintaining our competitive
edge. We have to be firm and strong on this, particularly, with
respect to China that this sensitive technology does not end up
in the hands of our adversaries, and it is so clear of who
those adversaries are. Thank you. I yield back.
Chairman SMITH. Mr. Evans is recognized.
Mr. EVANS. Ambassador Tai, good to see you. I commend you
and the administration for making workers' rights an essential
element of our trade agreement. So I applaud you for the
leadership in the Biden administration.
I only have really one comment. Coming from Philadelphia,
the ethnically diverse city with immigrants from many African
nations, my focus is to expand the African connection.
Especially in Philadelphia and Pennsylvania, I understand the
importance of what it means. As a matter of fact, I have a very
good friend here, her name is San Strowder who is very active
in the African community in the Commonwealth of Pennsylvania.
So I share with you that we are willing to work any way we
can on expansion. So I just wanted to add those comments, and
thank you for all that you do. I yield back to the chairman.
Chairman SMITH. I recognize Mrs. Steel.
Mrs. STEEL. Thank you, Mr. Chairman. And thank you,
Ambassador Tai. It is how many hours that you are here, so I
really appreciate that.
And trade is highly important for my home state of
California. California companies exported over $185 billion
worth of goods in 2022. One area of concern is for California's
agricultural exports. We have been hearing this all day.
The USTR must continue to protect our farmers and the
agriculture industry. And I know you have been answering this,
that, you know, how hard you are working. So, please, continue
to fight against dumping, especially olives from springs and
other areas. So we are really fighting in California.
I have just one concern here is the Indo-Pacific region has
two major free trade agreements that CCP-controlled China is
already in regional cooperation, economic partnership, the
world's largest free trade agreement, and has applied to join
the CPTPP, Comprehensive Progressive Agreement for Trans-
Pacific Partnership. And currently the United States is not
part of neither agreement. When the United States leaves, we
get strong bipartisan free trade agreements that can outlast us
all.
How does the United States counter the CCP's, China's
Communist Party's growing trade and economic influences around
the world and Indo-Pacific region if we are on the sidelines?
And how can we counter the CCP's influence without trade deals
that require congressional approval?
Ambassador TAI. So thank you for all of those comments,
Congressman Steel. On the CCP's participation in trade
agreements in the Asia-Pacific region, we know how deeply
entangled the supply chains are in that region with China. And
we know that our partners there want us engaged in the region,
and not to force them to choose between two of their largest
trading partners and most important trading partners, but so
that we can come and provide them with a choice.
So we are engaged; that is the Indo-Pacific Economic
Framework. And in terms of how do we compete, I would say
this--I think a large part of how we compete with that--the
second largest economy in the world is by putting forward a
vision and following through on how the United States is a good
partner. What we stand for, what our principles are, what our
vision is for the kind of economic engagement that we have
which is that we provide each other all with more choices, not
to further restrict or to make vulnerable our partners'
economies. And that is informing all of our work in this area.
The other part of your question around the congressional
involvement, I would say that there has been a lot that has
happened in the Congress, in the past 5 to 8 years on trade.
Some of those things go to show how difficult it can be to get
a bipartisan consensus around here. But there is as strong a
narrative here around where we have succeeded in accomplishing
that bipartisan consensus, most recently, on the USMCA.
So I appreciate this opportunity you have given me to
reinforce that at USTR on behalf of the Biden administration,
we are for trade. And it is about how we can do trade right and
how we can improve the ways that we do trade for our
agricultural producers, but also for our industrial producers,
for our workers, and our companies so that make ourselves
stronger. I think that the way we have done it before has more
often split us from each other. We are absolutely seeing
ourselves as a country that leads economically as well, and
that the core of our leadership is around that affirmative
vision.
Mrs. STEEL. So let me just ask a quick question regarding
Indo-Pacific Economic Framework. That Taiwan is one of really
big partner, trade partner for the United States, but Taiwan
was not included. And at the same time, everybody--I think
everybody asked here that, you know, what is the progress here?
Because we have been hearing but it is not quite--I cannot
really say it is transparent, but we want to say the progress
because it seems it is just up in the air the way I have been
reading and the way I have been studying. So can you just give
us a quick answer for that?
Ambassador TAI. Absolutely. I would be delighted to. And my
team will follow up with your staff as well. We just published
the summaries of the proposals that we made to Taiwan in our
first round of negotiations, which was about 6 weeks ago. And I
want to let you know we made very, very good progress. And so
we are looking forward to coming back to you with an update
very soon.
Mrs. STEEL. Thank you so much. I yield back.
Chairman SMITH. Ms. Van Duyne.
Ms. VAN DUYNE. Thank you very much, Chairman. And thank
you, Ambassador. I really do appreciate you coming here today.
I would like to start out by saying I do not envy your job. As
you know very well, our trade agenda is important for the
strength around the world, and yet this administration does not
seem to have an agenda. And I appreciate your response to
Congressman Murphy. But it is not just Congressman Murphy, by
the way, who has shown sympathy for your position, we have been
talking to trade partners around the globe, and they have all
praised your skills. But they have all said that they feel bad
because it seems like you have been sidelined by this
administration; that you would want to be more aggressive in
making these trade agreements, but you are prevented from doing
that.
Last week, I joined the chairman and a number of my
colleagues in Mexico--this was on the heels of incredibly
concerning activities by the government encroaching on the
rights of private, and more specifically, U.S. businesses.
I will give you an example. Vulcan Corporation had their
deepwater port seized. I have got videos. You have probably
seen the videos. But seized because a state-owned Mexican
company did not like the terms of a contract negotiation. They
had a court order, and yet it seems as if this government has
done nothing--our government, our administration has done
nothing to respond to that abuse.
As you know, the trade relationship between Texas and
Mexico is so critical, but actions like this are detrimental. I
appreciate you saying, you know, you can be a strong voice, and
when you speak, people listen, and that you are standing up for
the United States.
Where are you in Mexico? Are you standing up for the
working families in Iowa, Nebraska, in South Dakota whose
livelihood is being threatened because President Obrador is
falsely attacking them and their quality and their safety
standards of their produce, which is in direct violation of the
USMCA?
Are you standing for the U.S. businesses who are encouraged
to invest in Mexico with a belief that this investment would
permit their much-needed help and much needed jobs and much
needed security to the people of Mexico, but instead these
companies have been abused and lied to by the Mexican
Government with little or no response from this administration
who is charged with enforcing our trade agreements.
I would love to know your response to Obrador's claims that
while Mexico is clearly, clearly not abiding by the terms of
the USMCA, it is actually the U.S.' fault because we are,
quote, misinterpreting the conditions of the contract.
And I would love to also know, are you standing up for the
U.S. while Mexico is partnering with China and Mexican drug
cartels are being empowered and enriched to bring thousands of
pounds of deadly drugs, fentanyl, specifically, into our
country that is targeting our youth in murdering over a hundred
thousand American lives, all the while making hundreds of
millions of dollars. Where is your voice in that?
Ambassador TAI. Well, thank you for the opportunity to
weigh in. Yes, we know Vulcan as a company very well, and we
have been in very close touch with them and with the Members of
Congress whose districts and states are affected and are deeply
invested in Vulcan success. So here I would say that we are in
a very good touch with----
Ms. VAN DUYNE. I am glad to hear that.
Ambassador TAI [continuing]. All right. On corn, we have
requested consultation----
Ms. VAN DUYNE. I do want to switch gears to China, because
I know that China has----
Ambassador TAI [continuing]. And you are asking----
Ms. VAN DUYNE [continuing]. Okay. Thank you. I appreciate
knowing that you are in touch with them. But trade is a tool to
improve work----
Ambassador TAI. You asked me if we are standing up for
them, and the answer is yes.
Ms. VAN DUYNE. Yeah, I appreciate it, but the first 30
seconds of your question is a lot of time spent----
Ambassador TAI. And on the drug issue, that is an
enforcement----
Ms. VAN DUYNE. And I would really like to be able to get an
answer because I have got one minute and 5 seconds left.
Trade is a tool to improve some of the workforce
conditions, enforce ethical business practices, and partner
with nations across our globe, extend our global influence and
partnerships, as opposed to using--having to use military
intervention. Specifically with China, are we effectively
utilizing our trade relations with China to achieve these
results? Does China use slave labor? It is a yes or no
question.
Ambassador TAI. Do you want me to answer this one? I am not
sure. I feel like you already know the answer.
Ms. VAN DUYNE. Does China use slave labor?
Ambassador TAI. I think you already know the answer, so I
am happy for you to continue----
Ms. VAN DUYNE. So I am asking you. You are here at the
hearing, our witness. Does China use slave labor?
Ambassador TAI. Well, all indications are yes.
Ms. VAN DUYNE. Okay. So are U.S. companies benefitting from
forced slave labor.
Ambassador TAI. All indications are yes.
Ms. VAN DUYNE. Do you recognize the genocide of the Uyghur
slaves as being committed in China.
Ambassador TAI. All indications, yes, that is happening.
Ms. VAN DUYNE. So how many coal plants is China building
each week?
Ambassador TAI. I don't know the answer, and that is not a
yes-or-no question. So I have a----
Ms. VAN DUYNE. I didn't say it was a yes or no question. I
asked. That is the question.
Ambassador TAI. I defer to you in terms of the point that
you would like to make.
Ms. VAN DUYNE. Okay. And then I would also love to know why
China is not being subjected to the same constraints that the
U.S. is in the Paris Climate Accord.
Ambassador TAI. Sorry, could you repeat that question?
Ms. VAN DUYNE. Why is China not subject to the same
constraints that the U.S. is in the Paris Climate Accords?
Ambassador TAI. Which constraints are those? Just----
Ms. VAN DUYNE. I yield back my time. Thank you very much.
Chairman SMITH. Mr. Panetta is recognized.
Mr. PANETTA. Thank you, Mr. Chairman. Madam Ambassador,
thank you for being here. And it is great to see you have grown
into this role tremendously. So, I appreciate it, especially
considering how busy you have been. Obviously, looking abroad
with IPEF and APEC and USMCA enforcement, but also looking
forward with our industrial policy at home and how it has been
fueled by incentives for electric vehicles and clean energy and
actually supercharged investment in the United States which
will inevitably spill over into our regional trading partners,
Canada and Mexico.
And I do believe that in regard to our trade policy, I
think we got to take more of a serious look at our regional
partnership in using trade to our strategic advantage,
especially when we compete with China. Because look, I think we
know U.S. has the biggest and most innovative companies. Mexico
has a very wide and inexpensive labor pool. And Canada has many
natural resources. And I read this lately, and I believe where
North America goes, the world will follow. But I think in order
to do that, we all got to pull in the same direction.
So, I was on that trip with Ms. Van Duyne to Mexico, and I
have to tell you I was a little disturbed by some of the
comments by the President of Mexico, but more so by his recent
actions. The populist and national President has proven that he
may be in our boat, but he may not be rowing in the same
direction. Looking that he has taken steps to weaken Mexico's
electoral agency. He has banned GMO corn for nonscientific and
non-health purposes. He is occupying the private property of
Vulcan materials in Mexico. And he has even talked taking steps
to get involved in our congressional elections.
Obviously, as you know, I have many agricultural companies
that have investments in Mexico. So, my question to you is what
actions and assurances can you, the United States Trade
Representative, provide to my companies in my district, that
their near-shoring investment in Mexico is safe and secure?
Ambassador TAI. We will do everything that we can using the
tools of the USMCA and tools that on are outside of the USMCA
to secure a positive investment environment in Mexico. At the
end of the day, though, I think we do have to recognize that
Mexico is a sovereign nation, and their leaders have the right
to make decisions that we may see are not in their best
interest.
But you are absolutely correct about the nature of the
relationship that we have with Mexico, we are neighbors. And
thanks to geography, we will always be neighbors, which means
that we are committed to using, whether they are powers of
persuasion, or whether they are tools of enforcement to right
the ship and to make sure that we are rowing in the same
direction.
Mr. PANETTA. Great. Thank you, Madam Ambassador. Going to
the other side of the world, let's talk Jackson-Vanik.
Obviously, as you know, that amendment was originally proposed
to promote free movement in response to Soviet restrictions on
Jewish emigration. But since the fall of the Soviet Union,
Kazakhstan has been subject to this requirement, which has been
lifted for other Soviet states, including Russia. Freeing
Kazakhstan of the Jackson-Vanik's outdated requirements will
bring it closer to the Western world. I think that is clear and
out of Russia and China's sphere of influence.
Ambassador TAI, the State Department, as you know, is
supportive of repealing Jackson-Vanik for Kazakhstan, what is
your position on that?
Ambassador TAI. My position is that PNTR is in the
jurisdiction of the U.S. Congress. Mr. PANETTA, it means a lot
to me to know that you are supportive, and I will be interested
in working with you and others as you work on PNTR for
Kazakhstan.
Mr. PANETTA. I look forward to working with you. Thank you
for that commitment to work together on removing Jackson-Vanik
from Kazakhstan. Would you support reinstating GSP for Ecuador?
Ambassador TAI. Do you mean as part of the reauthorization?
Mr. PANETTA. Yes. Thank you.
Ambassador TAI. Yes, I think that it would be--again, I am
interested in working with all of you as you work towards GSP
reauthorization.
Mr. PANETTA. I look forward to working with you. Thank you.
I yield back.
Chairman SMITH. The gentleman from Ohio is recognized.
Mr. CAREY. Thank you, Mr. Chairman. And thank you,
Ambassador Tai. It is a pleasure to speak with you. One thing
about being the last person on the list, so many of the
questions get asked. My dear friend to my left asked the one I
was going to ask you about, about Ecuador.
But just a little bit, I grew up in the 1980s, and I grew
up in a very rural town. Farming was very big. As I represent
agriculture, so I do support--applaud you guys on the work that
you are doing. As my colleague to the left mentioned, our
meeting with the Mexican President was very interesting, to say
the least.
So our corn growers in my district are very important. We
got to open up those markets. But, you know, living in that
small town, I also saw so many of the factories close down.
And I was almost going to quote the old Billy Joel song,
Allentown. You know, to my dear friends from Pennsylvania that
have all left us, but living in Allentown for the Pennsylvania
we never found.
And I just want to make sure that as we look at our trade
policies, I think one of your former colleagues used to say, we
want to sing from the same hymnal. We just got to make sure we
are singing from the same page.
So a couple of items I just wanted to touch on. You know,
we look at rare earth materials. There is really nothing about
rare earth. It is just rare that we can get a permit for a lot
of these rare earth materials, and also get the financing to
develop them. Secondly, as we do this rush to the new, the
renewable energy, we have to go cognizant of the fact--that is
why Jimmy brought it up--but we have got to look at our
regional partners when it comes to developing lithium.
If anybody has Googled or YouTubed a video cobalt mining,
the environmental practices there are horrendous; the youth
labor, child labor. And the fact that 14 out of the 16
companies that have the mines are all Chinese. And so as we
moved to this economy, we have got to be very cognizant of
that.
I am going to divert real quick, because I do have one
question. I want you to be able to answer it and give you as
much time as you can. Some foreign e-commerce companies have
been reported to as avoiding U.S. tariffs by selling directly
to American consumers under de minimis. Okay. It is estimated
that U.S. imported about 120 billion in de minimis shipments
last year. This treatment gives foreign e-commerce companies a
leg up on many of our U.S. retailers. We are paying millions of
dollars in tariffs for the exact same products. However, it is
a balancing act of trying to level the playing field without
raising costs, obviously, to American consumers, during the
inflationary times.
Regarding the foreign trade zones like the one that I have
in my district in central Ohio, it definitely impacts my
district, do you think that the U.S. should level the playing
field for domestic manufacturers by enduring de minimis as
applied to shipments from U.S. foreign trade zones?
Ambassador TAI. Congressman, I think I agree with
everything that you have laid out in your entire presentation.
Let me come to your specific question on leveling the playing
field for American producers, and I am sorry it would--I think
it is at this point in the hearing. The specific proposal was
by applying de minimis. That is right.
Mr. CAREY. Yeah.
Ambassador TAI. Let me just say this, I think that I
understand why it happened in 2015 when I was up here when we
expanded de minimis. And I think that the way it is operated
has raised really legitimate questions around whether or not
there are loopholes and exploitation and abuse other than how
it was intended. And so I am absolutely always interested in
levelling the playing field. And on this, in particular, I
would be very interested in following up with you to look at
the specific proposal you are suggesting.
Mr. CAREY. If you would, I would very much appreciate that.
Also, again, following up on my colleague to the left, you
know, we did have an opportunity--and I will tell you, and I
don't know when you served exactly on this committee--but the
chairman and the ranking member, I think, have really done a
great job of trying to get out and talking to real people with
our field hearings and, obviously, the trade trip that we just
did. And we got to hear from many different countries. They are
eager for American leadership around the world. And so it is
important that this committee work continually in the
bipartisan way that we have in the past to make sure that we
all again are singing from the same page and the same hymnal.
And I yield back, Mr. Chairman.
Chairman SMITH. Mr. Fitzpatrick is recognized.
Mr. FITZPATRICK. Thank you, Mr. Chairman. Thank you,
Ambassador TAI, for being here. Ambassador TAI, your team had
advised us that you and the administration had begun
negotiations with the EU and Japan and possibly others designed
to skirt the requirement in the IRA requiring that critical
mineral inputs for batteries that come from the United States
or other countries that the United States has free trade
agreement with. Obviously, I think we are all clear here the
agreements that are being sought are not free trade agreements.
Only Congress can pass FTAs.
Last week, I asked Secretary Yellen if she was aware that
both Japan and Germany withheld semiconductors from U.S.
automakers in favor of their own automakers. She indicated that
she was not aware of that. I also pointed out Japan's extensive
use of nontariff barriers that make it almost for the U.S. to
export autos to Japan. I informed her that cars exported to the
EU incur a 10 percent tariff compared to a 2 percent tariff on
European auto imports into our country. Perhaps, most
importantly, we made her aware that China itself is the biggest
supplier of battery, technology, and production to both Japan
and the EU. Which means allowing these foreign battery products
to take advantage of the IRA's risk benefits benefitting China.
Domestic investment in American jobs, obviously, in my
estimation will be clearly impacted by the administration's
attempt to circumvent the FTA requirements enacted by Congress.
So I have a few questions.
First, I--and I know I am not alone in this--am concerned
as to what, if anything, America is getting out of these
negotiations. Do you believe that U.S. automakers receive--will
U.S. automakers receive tariff relief and better market access,
or are these negotiations really a feel-good exercise?
Ambassador TAI. Congressman, you raise really legitimate
questions and concerns regarding the bigger picture of where we
are and also where we are trying to get to, which is to be in a
stronger position, especially in this industry. No on the
specific types of benefits you are talking about. Those are not
things that our automakers will see as a result of the types of
thing we are negotiating right now.
But what I would like to say is what I do feel strongly
about is the European Union, Japan, being important allies in
building towards more secure supply chains in the larger
picture and in the more medium term.
So I take your point on the specific question that you have
asked, but also wanted to say that in terms of a vision towards
near-shoring and friend-shoring, more secure supply chains,
that these are some of our strongest partners if we are doing
that work.
Mr. FITZPATRICK. Thank you. I mean, the concern is given
how integrated Chinese materials are, specifically, in the
battery components from these countries. What are we doing as a
country, what is the administration's plan to ensure these
Chinese entities, many of them controlled by the CCP, that
supply European and Japanese battery makers don't benefit from
this?
Ambassador TAI. I think part of the issue that we have is
given where we are, which is not an ideal place, and given
where we want to go to, there is no switch that we can flip to
get from where we are to where we want to go to. And so in a
number of areas we confront this all the time in terms of how
we are thinking about the U.S.-China trade relationship.
A lot of it is about how we envision a transition from
where we are today to where we are trying to get to that can be
effective and that will work given all of the needs of our
industries and where we are.
So I think--that is my best way of responding to your
question, which is what we need to do is figure out whether or
not the things that we are doing right now make sense as step
one in a longer transition that will take probably more medium-
term timeframe to successfully complete.
Mr. FITZPATRICK. Mr. Chairman, I yield back.
Chairman SMITH. Thank you, Ambassador TAI. Thank you for
your testimony and taking all the questions. We look forward to
partnering with you and working in a bipartisan fashion to make
sure we address our supply chains and, of course, the
aggression of China. I appreciate you being here, and I look
forward to working with you.
Ambassador TAI. Thank you very much.
Chairman SMITH. Please be advised that members have 2 weeks
to submit written questions to be answered later in writing.
Those questions and your answers will be made part of the
formal hearing record. With that, the committee stands
adjourned.
[Whereupon, at 1:24 p.m., the committee was adjourned.]
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