[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
HEARING ON COUNTERING CHINA'S TRADE
AND INVESTMENT AGENDA: OPPORTUNITIES
FOR AMERICAN LEADERSHIP
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HEARING
BEFORE THE
SUBCOMMITTEE ON TRADE
OF THE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
APRIL 18, 2023
__________
Serial No. 118-9
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
53-242 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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SUBCOMMITTEE ON TRADE
ADRIAN SMITH, Nebraska, Chairman
VERN BUCHANAN, Florida EARL BLUMENAUER, Oregon
DARIN LaHOOD, Illinois BRIAN HIGGINS, New York
JODEY ARRINGTON, Texas DAN KILDEE, Michigan
RON ESTES, Kansas JIMMY PANETTA, California
CAROL MILLER, West Virginia SUZAN DelBENE, Washington
LLOYD SMUCKER, Pennsylvania DON BEYER, Virginia
GREG MURPHY, North Carolina LINDA SANCHEZ, California
GREG STEUBE, Florida TERRI SEWELL, Alabama
MICHELLE FISHBACH, Minnesota
DAVID KUSTOFF, Tennessee
C O N T E N T S
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Page
OPENING STATEMENTS
Hon. Adrian Smith, Nebraska, Chairman............................ 1
Hon. Earl Blumenauer, Oregon, Ranking Member..................... 2
Advisory of April 18, 2023 announcing the hearing................ V
WITNESSES
Mark McHargue, President, Nebraska Farm Bureau................... 5
Jamieson Greer, Partner, International Trade, King & Spalding.... 10
Thomas Duesterberg, Senior Fellow, Hudson Institute.............. 32
Matthew P. Goodman, Senior Vice President for Economics, Center
for Strategic & International Studies.......................... 50
Ray Houseman, Legislative Director, United Steelworkers.......... 60
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 99
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CHINA'S TRADE AND INVESTMENT AGENDA:
OPPORTUNITIES FOR AMERICAN
LEADERSHIP
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TUESDAY, APRIL 18, 2023
House of Representatives,
Subcommittee on Trade,
Committee on Ways and Means,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:15 p.m., in
Room 1100, Longworth House Office Building, Hon. Adrian Smith
[chairman of the subcommittee] presiding.
Chairman SMITH of Nebraska. The subcommittee will come to
order.
Good afternoon. The subcommittee I am glad to lead here. I
appreciate the opportunity to work with all of you this
Congress, especially Ranking Member Blumenauer and each member
of this committee.
I would also like to thank our witnesses for being here
today. This is, as you know, an important topic. Today's
hearing examines why the United States must lead on trade,
especially in the face of China's aggressive trade and
investment agenda.
Concerns about the Chinese Communist Party's global
influence and predatory trade practices are not only shared by
every member of this committee. These concerns are bipartisan
and bicameral. We have seen firsthand how China seeks to
weaponize trade to expand its influence and undercut U.S.
workers and values. These actions should create a mandate for
the United States of America to lead on trade issues.
But unfortunately, such a mandate has seemingly gone
unnoticed by the Administration. Across the board, China seeks
to dominate global trade and supply chains. They are using all
tools at their disposal to advance their Made in China 2025
initiative.
Today we will hear why the United States must lead from a
position of strength. We can do this by addressing the CCP's
practices directly, while simultaneously using trade programs,
agreements, and other tools to show we are a reliable and
attractive alternative for nations around the world.
The CCP seeks to erode America's competitive edge through
intellectual property theft, discrimination against American
exporters and investors, and a wide range of advantages
provided to state-owned enterprises within China. They have
made no secret of their desire to replace the United States as
the dominant global power. We cannot and will not allow this to
happen.
China continues to grow its global ambitions. Take, for
example, the Belt and Road Initiative, which has become a tool
for the CCP to trap partners in developing countries into
endless cycles of debt and control. This is happening in every
region of the world, from the Indo-Pacific to our own backyard
right here, in the Western Hemisphere. No country is immune to
this aggressive behavior. Partners like Australia, South Korea,
and Lithuania have experienced this firsthand. While we can be
encouraged these instances of attempted economic coercion
backfired, Beijing continues its brazen attempts to bully
nations into submission.
In my view, there is no treading water on trade matters.
You are either moving ahead or you are losing ground. And right
now we are losing ground while China forges ahead with a trade
agenda that cheats to shape the global playing field in its
favor.
Our trading partners around the world are hoping the U.S.
will stand up and provide a unified, bipartisan American trade
agenda to hold the CCP and other bad actors accountable. We can
do this while partnering in a deeper and more consequential way
with our allies.
The role of Congress cannot be ignored for this effort,
which is why Congress must use its constitutionally-given
authority to set deliverables and provide critical oversight of
all trade matters. Crafting a Trade Promotion Authority bill to
put Congress in the driver's seat, reauthorizing critical trade
programs aimed at increasing American competitiveness, and
continuing efforts to add consequences for trades--for China's
trade practices are all things we can and should pursue right
now.
Our trade policy is at its strongest, its most durable,
effective, sustainable, and inclusive when elected
representatives are driving and shaping it. We saw this
firsthand as this committee reinvigorated our North American
trading relationships through the United States-Mexico-Canada
Agreement, USMCA. We need to build on and replicate this
important work, and I am confident this committee can do so. I
am excited to get to work.
Chairman SMITH of Nebraska. With that, I am pleased to
recognize the ranking member from Oregon, Mr. Blumenauer, for
his opening statement.
Mr. BLUMENAUER. Thank you much, Mr. Chairman. I agree with
your enthusiasm and some of the optimistic things that we can
do. We had similar hearings in the last Congress to highlight
the Chinese Government's state-led, non-market, anti-
competitive approach that threatens American workers and
business. I hope we can all agree that now is the time to move
from rhetoric to action.
We led efforts to pass forceful legislation in the trade
title in the America COMPETES Act that helped workers and firms
who have been displaced by offshoring to China. It incorporated
many of the concepts and values that enjoyed the broad
bipartisan support that you mentioned in terms of the NAFTA
revisions. We would close the de minimis loophole, strengthen
our trade remedy laws, create an outbound screen for Chinese
investments, and update the miscellaneous tariff bill to
exclude finished goods, more than half of which come from China
and undercut American manufacturers. This legislation is meant
to level the playing field so that American workers and
businesses are no longer disadvantaged by the Chinese double
standard.
For some reason, Mr. Chairman, we were unable to move this
forward with Republican support in the last Congress. But I
hope that we can do that now to match again the rhetoric with
legislative action. American workers and businesses can no
longer wait.
The USTR's report on Congress on China's WTO compliance
makes clear that China has an abominable record: 20 years of
WTO membership, and they still embrace a non-market approach,
despite China's own commitments that it would pursue open-
market-oriented policies. If anything, China has doubled down
on its anti-competitive, trade-distorting practices.
Today China is the world's leading offender in creating
non-market capacity, as evidenced by the severe and persistent
excess capacity in several industries, particularly steel and
aluminum. And of course, the Chinese production methods are
some of the dirtiest in the world.
The resulting overproduction and pollution has distorted
global markets and contributed to massive increase in carbon
pollution, harming American workers and manufacturers, as well
as third countries, where American exports of steel products
compete with exports from China.
We will hear from one of our witnesses today, Roy Houseman
from the United Steelworkers, and about legislation my friend,
Terri Sewell, has introduced to address some of these unfair
trade practices.
China continues to exploit the loophole in our customs
laws. Some Chinese companies have developed a business model
centered on exploiting the de minimis provision to evade
oversight at the border, avoid paying duties, and undercutting
American companies who are playing by the rules. Because of
this loophole, there is no way to tell how many of the more
than two million packages a day contain products made from self
forced labor, intellectual property theft, or otherwise
dangerous.
The Chinese textile industry benefits from the deplorable
treatment and forced labor of the Uyghurs and other minorities
in the Xinjiang region of China. Lack of oversight at the
American border makes it even more difficult for CBP to
intercept these shipments. And as noted by Mr. Houseman, the de
minimis loophole can even allow evasion of the Uyghur Forced
Labor Prevention Act. Closing the de minimis loophole and
addressing forced labor, the fruits of modern-day slavery have
no place in the American market.
This subcommittee can send a clear signal to China that the
United States will unequivocally protect worker and human
rights, and we must continue to encourage our allies to boldly
respond to China's unfair practices. I stand ready to work with
my Republican colleagues on China-related legislation and turn
our rhetoric into action.
I appreciated the optimistic tone that you took, Mr.
Chairman. I think there is a lot of common ground that we can
build upon, and I look forward to working with you and the
committee on that.
Chairman SMITH of Nebraska. Thank you. Now I am pleased to
recognize the chairman of the full Ways and Means Committee,
Chairman Smith, for his opening statement.
Chairman SMITH of Missouri. Thank you, Chairman Smith,
Ranking Member Blumenauer, for holding this hearing.
Today's subcommittee hearing comes at a time when Americans
are increasingly concerned about the Chinese Communist Party
and its harmful influence around the world, especially here at
home. Republicans and Democrats often talk about our
differences, but today we are here to share a common message:
the folks who fuel, feed, and build our country have become
collateral damage in China's aggressive trade agenda; it's time
we stood up for them; it's time to combat China's human rights
abuses, predatory trade practices, espionage, and theft that
for too long have threatened our supply chains and cheated
American farmers, manufacturers, families, and workers.
As we sit here, the Communist--the Chinese Communist Party
is unleashing a wide range of aggressive tactics in its attempt
to dominate critical supply chains, including massive
industrial subsidies, forced technology transfers, and
intellectual property theft. The CCP is spreading its harmful
influence across the globe. I saw this firsthand in South
America, during my first international trip as Ways and Means
Chairman.
China is increasingly active, including in our own
backyard, and a bipartisan response is needed. I am concerned
that the White House's decision to exclude Congress from trade
only emboldens China, and ignores the voices of the American
people. Frameworks and dialogues are no substitute for
congressionally binding action on trade.
We ought to put workers and farmers at the center of
American trade policy. Americans are still owed clarity and
answers from the White House about China's compliance with
Phase One obligations and plans to hold it accountable.
We should build on USMCA's progress through strong
enforcement, including standing with Americans who are harmed
when our trading partners do not live up to their end of the
agreement.
We should be developing a plan to use our authority over
trade, and to use our leverage as a nation to strengthen
critical supply chains and reduce dependence on adversarial
nations like China and Russia.
This is a bipartisan effort, and I am hopeful we can make
headway today.
Chairman SMITH of Missouri. I yield back my time, Mr.
Chairman.
Chairman SMITH of Nebraska. Thank you. I will now introduce
our witnesses.
Today we are joined by five witnesses. First, Mark
McHargue, president of none other than the Nebraska Farm
Bureau.
It is great to have you before the subcommittee, to----
Mr. BLUMENAUER. The Nebraska Farm Bureau?
Chairman SMITH of Nebraska. That is right, the Nebraska
Farm Bureau.
For your perspective, it is certainly helpful for you to be
on the panel. Thank you for making the trip to Washington.
Second, we have Jamieson Greer, a partner at King and
Spalding, and former USTR chief of staff.
Thank you for being here.
Third, we have Thomas Duesterberg, senior fellow at the
Hudson Institute.
Fourth, we have Matthew Goodman, senior vice president and
Simon chair in political economy at the Center for Strategic
and International Studies, otherwise known as CSIS.
And fifth, we have Roy Houseman, the legislative director
of the United Steelworkers.
Mr. McHargue, your written statement will be made a part of
the record, and you are now recognized for five minutes.
STATEMENT OF MARK McHARGUE, PRESIDENT, NEBRASKA FARM BUREAU
Mr. McHARGUE. Well, good afternoon, Chairman Smith, and
Chairman Smith, and Ranking Member Blumenauer, and members of
the subcommittee. Thank you for the opportunity to testify
today.
My name is Mark McHargue. I am a conventional and organic
row crop farmer and hog producer from Merrick County, Nebraska.
I currently serve as president of Nebraska Farm Bureau, and I
also serve on the board of American Farm Bureau, as well as
serve on their trade committee. Nebraska Farm Bureau Federation
is pleased to offer these comments on the current state of the
agricultural trade relationship between the United States and
China.
China remains a vital market for Nebraska goods, and is
consistently a top-three market for Nebraska products year in
and year out. At the same time, American and Nebraskan farmers
and ranchers are also aware and are also concerned about the
current geopolitical and national security concerns that exist
between our nations.
Prior to 2018, Nebraska's agricultural exports to China
ranged about $936 million to a little over a billion.
Currently, that equates to about 15 percent of Nebraska's total
exports. The value at that time, prior to 2018, was about
$20,000 per farm. That would equate to my farm, as well. In
2022 we set a new record of selling agricultural goods into
China at $40 billion or so. When you divide that by per farm,
that's about $55,000 per farmer or rancher in Nebraska.
But I also need to point out that, despite these
significant growths, U.S. market share in China's market
remained relatively stagnant in 2022, and about 18 percent of
the ag market was U.S. market. That has declined from about 22
percent from 2013 to 2017.
I run through all this data to highlight just how complex
the relationship is between the significant competitor and
customers. Farmers and ranchers have the same geopolitical and
national security, copyright, and trade law concerns that most
of you have and many in the industry have. At the same time,
China's role as a significant consumer of raw U.S.
commodities--not just high-value, processed foods, but raw
commodities--they are also able to move grain and livestock
markets any day by simply making an order or, in the case of
2018 or 2019, not placing an order.
Given everything happening in the world today, the United
States should be actively working every day to diversify our
list of trading partners. Quite frankly, the biggest
disappointment that we in agriculture have with the Biden
Administration has been their non-existent effort to find new
trading partners and pursue negotiations on any new free trade
agreement. If I had the opportunity to sit down with President
Biden today, I would tell him two things as it relates to
trade, specifically with China.
Number one, sitting back and allowing the rest of the world
to finalize new free trade agreements that increase market
access and lower tariffs isn't leading, and it sure doesn't
send the right message to our competitors or allies. Rejoining
the CPTPP and re-engaging with the UK, as well as countries
like Kenya or--on actual free trade agreements would be a great
place to start.
Whether we like it or not, number two, China is an
important customer. Again, we need them; they need us. At the
same time, we absolutely have to hold China accountable to
their WTO trade obligations. Fixing market access issues that
remain on several sanitary and phytosanitary issues on
agricultural products such as the use of ractopamine in pork
and protecting against issues like intellectual property theft
are all key.
We must do what we can to ensure our own national security.
We must ensure China is playing by the rules.
We must also ensure that we aren't continuing to lose
access to vital markets.
In closing, I want to again thank you for the opportunity
to testify today. Trade is a foundational issue that serves on
the basis for our modern global economy. It is an issue that
helps lift millions out of poverty, and it is an issue that
helps U.S. farmers and ranchers feed billions of families
around the globe. At this time of continued economic and
geopolitical uncertainty, the United States must tell the world
we are open for business.
Thank you for your time today.
[The statement of Mr. McHargue follows:]
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Chairman SMITH of Nebraska. Thank you.
Mr. Greer, you are recognized.
STATEMENT OF JAMIESON GREER, PARTNER, INTERNATIONAL TRADE, KING
AND SPALDING
Mr. GREER. Good morning, Chairman, Ranking Member, and
members.
As Ambassador Lighthizer's chief of staff, I had the
opportunity to sit with him in many meetings with you in groups
and individually and hear your nuanced and thoughtful views on
trade. I am happy to be here today.
I should note before beginning that I am appearing in my
personal capacity, and that none of my comments today can be
attributed to any current or former employer or client.
This hearing is focused on how America can be successful in
our competition with China in the face of its aggressive trade
and investment policies.
Although certain companies or discrete industries have
found some success in relying on China in their supply chains
or export business, Chinese unfair trading practices have
sapped the competitiveness of U.S. companies and workers,
resulting in hundreds of billions of dollars in annual trade
deficits with China. Economic studies estimate that at--that
the U.S. has lost at least 3.7 million manufacturing jobs, tens
of thousands of factories, following China's accession to the
World Trade Organization.
WTO membership enabled China's meteoric rise, which has
been fueled and funded by China's exports to and investment
received from the United States. Thus, while our working
classes have lost jobs and our supply chains have foundered,
China's manufacturing base is incredibly robust, and its
military position has strengthened. These trends have a direct
impact on the global balances of power and international peace
and security.
China has a plan to be the economic leader of the world,
and then to use that position to export its own model of
governance globally, and so we can't lose sight of that as we
talk about trade and economic relationship with China. You will
see this idea referred to in Chinese Government discourse by
the term ``the great rejuvenation of the Chinese nation.''
According to writings and speeches of Chinese officials,
including Xi Jinping, the plan is to achieve overwhelming
global hegemony by 2049. In describing this strategy, Xi
Jinping has said that China is--and I quote--``building a
socialism that is superior to capitalism, and laying the
foundation for a future where we win the initiative, win the
advantage, and win the future.''
China's trade policies and practices are a key part of
this. My written testimony goes into more detail, but they have
a number of non-market practices that are harmful, including
pursuing a strategy of dual circulation that prioritizes
Chinese domestic production and discourages imports; massive
subsidies to favored companies or industries regardless of
their profitability, market demand, or natural comparative
advantages; construction of excess capacity in key
manufacturing industries; high, non-reciprocal tariffs on U.S.
imports; non-tariff barriers on imports like pseudoscientific
requirements and other regulatory obstacles; forced technology
transfer, which we could talk about for days; discrimination
against U.S. goods and services; opaque and discriminatory
government procurement programs; periodic currency
manipulation. The list goes on.
As I noted, these practices have contributed to the
hollowing out of our own manufacturing base. The question is,
what do we do?
While many policies can affect our economy, such as tax,
monetary, industrial policy, energy policy, trade policy plays
a key role as well. We can talk about negotiations and market
access, which are important, but I want to focus a little bit
on enforcement.
In 2018, when I was at USTR, you will know that we started
an investigation under Section 301 of forced technology
transfer. After enforcing the results of that investigation, we
ended up with substantial tariffs on Chinese imports,
especially including those that benefited from forced
technology transfer. And then we concluded with the Phase One
agreement with China, where they allowed us to keep the tariffs
in place, which gives us some room for leverage and
enforcement, and importantly, where they also agree to
substantive changes with respect to agricultural regulations,
financial services, intellectual property. They made
commitments.
And the important thing as well about the agreement is that
it had an enforcement mechanism, one that was established where
on a monthly, quarterly, and semiannual basis, leaders in the
United States and China could get together to resolve these
issues and resolve them before they became conflagrations. I
haven't seen that enforcement mechanism being used, and maybe
things are going on behind the scenes, but I don't know. I
think it would behoove the government to do an assessment of
Chinese compliance--or non-compliance, as the case may be--with
the Phase One trade agreement, and how to enforce it.
There are a variety of other ways we can enforce. I would
say we should consider either revoking permanent normal trade
relations with China, or at least going back to a world where
we look at where we were with the Jackson-Vanik amendment, an
annual--on an annual basis, Congress and/or the President
looking at whether China should continue to receive most
favored nation status. And we should use sanctions on China
where appropriate. We should continue to use export controls.
We should use Section 301, Section 232, where appropriate. We
should take actions in government procurement to ensure that we
don't have products used in our contracts and programs from
suspect Chinese companies.
I do want to note diversification of trade, which we just
heard from Mr. McHargue, it is very important. I think we
should engage in sectoral negotiations with places like the
Philippines and Kenya and the United Kingdom to make sure we
can get market access. We need to be very careful to the extent
there are any trade agreements, they should incorporate the
great things you all agreed to in the USMCA on labor and
environment and rules of origin.
And I will yield back my time. Thank you.
[The statement of Mr. Greer follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH of Nebraska. Thank you, Mr. Greer.
Mr. Duesterberg, please proceed. You want to turn on your
microphone.
STATEMENT OF THOMAS DUESTERBERG, SENIOR FELLOW, HUDSON
INSTITUTE
Mr. DUESTERBERG. Chairman Smith, Ranking Member Blumenauer,
and members of the subcommittee, thanks for having me today to
comment on this important topic.
I want to note first from the outset that China, under the
leadership of Xi Jinping and the CCP, has pursued a policy of
achieving economic independence and as much dominance in the
world economy as possible. In a real sense they are pursuing a
possible policy of decoupling using the tools of mercantilist
policies which many of you have already noted.
They also want to free their economy from dependence on the
dollar, so that economic sanctions using the financial system
cannot be used against them. The economic impact on U.S.
manufacturing and increasingly on the financial and digital
commerce sectors is well known.
I want to emphasize in my work that the Chinese economy
exhibits growing weaknesses under CCP leadership. The policies
I will suggest to address the Chinese mercantilism are in part
designed to take advantage of these weaknesses and undermine
the ability of the Chinese leadership to achieve its economic
and political goals.
The IMF and the World Bank are both projecting much weaker
growth in China, and I believe they under-estimate this
weakness. My written testimony has some detail about why I
think the Chinese economy is weak.
Growth in China in the past has been driven by massive
capital investment, growth in consumption, and aggressive
exploitation of open global markets to create persistent trade
surpluses. But in recent years investment returns have
weakened, the housing bubble has burst, the government and
banking balance sheets have been over-leveraged, and consumer
spending constrained by the demographic decline and the need
for precautionary savings to pay for education, health care,
and old age.
In these circumstances, China is even more dependent on
access to Western finance and foreign markets for driving
growth. Because of this dependency, the U.S. trade and
investment policies such as those already in place can and
should be reinforced to take advantage of these growing
weaknesses and, hopefully, to induce change in Chinese
mercantilist policies.
The policies I want to emphasize first are in trade
enforcement of WTO obligations and deployment of U.S.
unilateral trade instruments. Mr. Greer and others have already
commented on some of these. I agree that the Phase One
agreement should be enforced, but also that many U.S.--because
of the weaknesses of the WTO structure, we should continue to
use unilateral tools available in the United States to pursue
our goals.
Finally, I want to emphasize that the U.S. should
reemphasize the WTO concept of reciprocity. Chinese
protectionist practices, such as its failure to provide access
to Western digital platforms, payment systems, and social media
while its firms enjoy access to Western markets should be
fought back against by prohibiting online retailers such as
Alibaba and Shein to be banned, and also social platforms like
TikTok and WeChat.
Finally, the United States should emphasize the creation
and use of regional trade agreements. I think we need to be
present on the playing field, including negotiating to rejoin
the CPTPP.
In terms of investment tools, the U.S. should consider more
vigorous efforts to discourage or prohibit investments in
Chinese firms where national security is endangered. We do need
a reverse CFIUS process. We should cover research projects and
venture capital investment as part of the reverse CFIUS
process.
We should also, in terms of financial policy, label
Chinese--China as a currency manipulator. This action should
undermine confidence in the renminbi as Beijing tries to
attract more foreign investment and make it a bigger part of
trade finance.
Finally, the United States should address the growing debt
crisis in the developing world, which is linked in important
ways to China's Belt and Road initiative. Nearly half of
foreign debt in the developing world is now in the form of
Chinese loans, which are normally at market rates and not
subject to Paris Club negotiations. According to the IMF, up to
60 percent of the developing world countries show clear signs
of financial distress. And at a minimum, the United States and
allies should require China to participate in restructuring
using Paris Club norms.
Thank you, Mr. Chairman.
[The statement of Mr. Duesterberg follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH of Nebraska. Thank you.
Mr. Goodman, please proceed.
STATEMENT OF MATTHEW P. GOODMAN, SENIOR VICE PRESIDENT FOR
ECONOMICS, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES
Mr. GOODMAN. Thank you, Mr. Chairman, Mr. Ranking Member,
distinguished members of the subcommittee.
I was asked to talk about a recent CSIS report on China's
economic coercion, and I will do that in a moment. But I would
like to first make two broader points about trade, if I may.
The first is the United States needs trade. Trade creates
growth. It creates jobs. It creates export opportunities for
U.S. businesses, farmers, ranchers. Trade lowers costs for not
only individual consumers, but for downstream producers that
can then invest in more jobs. So, yes, trade does dislocate
some jobs, and we need a more robust set of domestic policies,
real adjustment assistance, worker retraining, incentives for
investment, and new jobs to deal with that dislocation. But we
should still trade.
We also need trade agreements to amplify the growth, jobs,
and cost reduction benefits of trade itself, but also for
strategic reasons, which leads to my second point. Frankly, we
are losing ground in the critical Indo-Pacific region, which is
what I mainly focus on, both economically and strategically,
because we are not willing to negotiate formal trade
agreements.
When I say losing ground, I mean not only to China, but
also we are losing the confidence of our own allies and
partners in the region. I hear this all the time. Yes, we have
offered the Indo-Pacific Economic Framework or IPEF, which has
some value, but our partners are skeptical about what's in it
for them, and they want us back in formal trade negotiations.
China is doing trade agreements. It has even applied to
join the successor to the Trans-Pacific Partnership, which we
created. Almost everyone else in the region is doing trade
agreements. The United States is standing on the sidelines
while new rules are being set and markets are being divvied up
by others. We need to get back in the game.
Another reason to do trade agreements, and the one I was
asked to speak about today in particular, is to counter China's
economic coercion. In our recent report we looked at eight case
studies over the past decade-plus from Japan rare earths in
2010 to Lithuania today. And we concluded that China is a
serial coercer, using its growing market power to take swipes
at our allies and partners for perceived slights to Beijing's
interests.
Although China's coercion often fails in its tactical aims,
and can be counterproductive to Beijing's own strategic
interests, pushing countries away from China and toward us,
China's behavior is disruptive and divisive, and we need to do
more to deter Beijing from doing it.
There are two basic ways to deter someone from doing
something. One is to make them fear punishment, and the other
is to make them fear failure. Tit for tat retaliation is
tempting, but it has three big problems.
First, if it is proportional to China's typically low-level
coercion, it isn't likely to change Chinese behavior.
But if we escalate, we lose credibility. How much of a cost
are we realistically willing to pay to defend other countries'
bananas or wine?
And finally, we found in our study that most of our trading
partners don't want us to retaliate, since the bullying of them
is likely to resume as soon as we leave the playground.
In the end, we were drawn to a counter strategy of
resilience and relief, helping partners find new markets, which
makes them less exposed to China, and offering them relief if
they do get coerced. Trade policy plays a role in both
resilience and relief. By negotiating trade agreements, we
expand partners' options and make them less fearful of losing
China's market. By offering trade relief we help offset the
costs of coercion and persuade our allies that we have their
back.
Combined with a number of other recommended policy
responses in our report, we believe these resilience and relief
measures will help persuade Beijing over time that its coercion
won't succeed.
So to sum up my main three points: first, the United States
needs trade to promote our economic interests; second, we need
trade agreements to promote our economic and strategic
interests, including countering China's coercion; and third, we
need to get back in the business of negotiating trade
agreements in the critical Indo-Pacific region.
Thank you for your attention. I am happy to take your
questions.
[The statement of Mr. Goodman follows:]
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Chairman SMITH of Nebraska. Thank you.
Mr. Houseman, you are recognized.
STATEMENT OF ROY HOUSEMAN, LEGISLATIVE DIRECTOR, UNITED
STEELWORKERS
Mr. HOUSEMAN. Chairman Smith, Ranking Member Blumenauer,
thank you for the opportunity to testify today.
The United Steelworkers, or USW, is the largest
manufacturing union in North America, and our members mine and
make everything from aluminum to zinc. Our union has
highlighted for over 20 years concerns for U.S. workers, our
local communities, and the weakening of our country's
resilience caused by unfettered trade between the U.S. and the
People's Republic of China, or PRC.
Countering the PRC's trade and investment agenda starts by
ensuring the American labor movement is at the table in a
tripartite collaboration with business and government. Working
together we need to ensure our democratic ideals move across
the globe as much as goods on ships and planes.
The challenge cannot be under-estimated, and we cannot
compete against--compete using classic free trade tools
developed in the 1970s with the naive hope that unfettered
trade would push back authoritarian governments. Russia's
invasion of the Ukraine and China's exports to Russia
increasing by double digits last year expose the limits of
outdated trade models.
Focusing on three broad categories, the union encourages
Congress to modernize trade agreement rules; update our trade
tools to better account for China's outward expansion; and at
every step of the way ensure workers across the globe have
democratic rights to freedom of association and independent
labor unions.
Outgoing and recent trade--ongoing and recent trade
initiatives provide building blocks for Congress to radically
rework trade in a pro-worker manner. By focusing less on the
immediate profits and more on building resilient communities,
we must ensure goods and services across the globe are traded
fairly.
My written testimony goes into detail, but future trade
initiatives will need to include items like the USMCA--added in
USMCA like the labor value content provisions and the rapid
response mechanism.
Future agreements should also ensure American global
financing initiatives support U.S. procurement over those goods
from the PRC.
Other initiatives, like the Indo-Pacific Economic
Framework, or IPEF, have significant potential to modernize and
facilitate trade without having to change domestic tariff
lines. The union sees the potential of the framework, but urges
Congress to monitor negotiations to ensure we are defending
U.S. workers, and not inadvertently exploiting foreign
communities.
Another initiative Congress should also approach with an
open mind is the steel and aluminum global arrangement. This
negotiation between the EU and the U.S. has real potential to
limit sales--limit state-fueled, non-market, and carbon-
intensive steel and aluminum production from entering our
market.
Countering the PRC's trade and investment strategy will
also require retooling our trade enforcement regime to address
China's third-country subsidies, commonly known as the Belt and
Road Initiative. This includes passing legislation like the
Leveling the Playing Field Act 2.0, introduced last Congress by
Representative Sewell and Bill Johnson. It also means closely
looking at the GSP program to ensure that we are not letting
content from the PRC seep through GSP beneficiary countries.
This committee should also focus on how to defend against
market concentration of commodities by the PRC. When nearly 100
million tons of PRC-funded steel projects, the equivalent of
one year's U.S. production, are going into Southeast Asia using
carbon intensive technology, and a new state-owned PRC entity
will centralize iron ore buying to push down prices, we need to
prepare tools to defend our country's modern steel industry
against the PRC's market concentration.
Finally, I have in my hands here a TA petition from
Waynesville workers in North Carolina. The state filed this
petition for over 1,000 workers because of Chinese and other
country imports idling their mill. Last Congress appropriated
money for the TA program in a simple reauthorization, but this
committee--but a simple reauthorization by this committee would
mean this petition and for--and others for over 24,000 workers
could be heard so that they can get job retraining benefits in
their time of need. If we want to compete against China, it
makes sense for us to provide robust job training benefits to
workers negatively impacted by Chinese trade.
In conclusion, the largest difference between the U.S. and
the PRC trade and investment agenda are the values we put
behind our country's trade and expansion efforts. Ensuring our
trade initiatives do not exploit workers globally and ensuring
U.S. workers benefit from our country's trade initiatives must
be at the forefront of policymakers' decisions. President
Reagan recognized this in 1981 when workers in Poland rose up
and fought to have their rights for an independent trade union.
Congress should begin to defend American workers through
aproactive, pro-worker trade agenda built on fostering exports
and deflecting China's market concentration in a host of goods
being dumped on our shores.
Thank you for your time, and I look forward to answering
any questions you may have.
[The statement of Mr. Houseman follows:]
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Chairman SMITH of Nebraska. Thank you. Thanks again to all
of our panelists. Now we will move into the question-and-answer
session, and I will begin with that. And again, I can't thank
you enough for sharing your expertise.
Mr. McHargue, obviously you represent a great state, a
vibrant agriculture sector. Incidentally, you live in the
largest ag district in America, and I am grateful for your
engagement.
You spoke about the need to diversify our exports, and
identifying markets, and market access, and so that we don't
become too reliant on any single trading partner. And I
certainly agree. And we must increase market access in the
Indo-Pacific Region, specifically. I do worry that the
Administration just sees things much differently than that,
unfortunately.
But could you highlight some examples of markets in the
Indo-Pacific Region that would be great opportunities for
growth in ag exports?
And do you believe that the Indo-Pacific Economic
Framework, IPEF, will do enough to level the playing field for
producers themselves?
Mr. McHARGUE. Well, I think when we look at the Indo-
Pacific Region, I think there is tremendous opportunity, quite
frankly. And when we have these conversations about just
agreeing to talk about trade, I think that just really falls
short versus actually looking at true trade agreements.
You know, when we--when I visit with my farming neighbors,
and we are at the coffee shop or we are having conversations
about trade, many of them don't really understand the dynamics
of trade and how it all works. They just know that when they
hear on the radio that, for instance, China is in the market
and they are purchasing grain, they know that the market goes
up.
They also know that if there is a down day, a lot of times
you will listen to the commentaries and there will be something
related to one of our large trading partners deciding not to
purchase product.
So when you think about the Indo-Pacific, you think about
the population base, you think about the potential growth
there. We need countries like that as well to, when they talk
about doing a purchase of ag products, they move the market as
well.
So when you think about the concept of possibly decoupling
from China, within the agriculture sector the only way that
that really works for me--when you think about our trade with
China is $55,000 per farmer or rancher--what are we going to
replace that with?
And I think we need to do it with regions like the Indo-
Pacific, but you think about also Africa, Kenya. We need these
countries that are actually purchasing raw commodity products.
So on our farm we sell commodities. We don't actually sell
a processed food. So when we sell $1 million of raw
commodities, that has a huge impact that is directly related to
my farm. When we say $1 million of processed food, 10 percent
of that may be going to the ag sector. So it is really
important whoever we trade with, that--in the agriculture
sector--that we talk about raw commodities. That is very
different than some of these other trading types of products.
Chairman SMITH of Nebraska. Okay, thank you.
My next question, Mr. Greer, I appreciate you sharing your
perspective, a unique and helpful perspective.
The Trump Administration rightly highlighted China's IP
theft and forced technology transfer policies. China is also
aggressively seeking to dominate global medical supply chains,
as we know. In the face of this, it is deeply concerning that
the Biden Administration has completely undermined, in my
opinion, the American innovation through the TRIPS waiver.
It seems the Administration is content to see the medical
supply chains shift abroad because of this. And so, given your
perspective, how would you say the TRIPS waiver impacts our
credibility when it comes to protecting our innovative edge?
And could you speak to China's ambitions in the greater
medical sector?
Mr. GREER. Certainly, Mr. Smith. I will start with your
last part.
China's ambitions, whether it is medical devices, or
pharmaceuticals, or biologics, or other life sciences, this is
an area where they want to take over the global economy. They
want to corner the market on this, not just in the manufacture,
but also in the innovation of these products. And intellectual
property is key to this.
When I hear about a waiver of intellectual property
protections, to me that sounds like the reverse of enforcement.
Obviously, we are very sympathetic to the COVID-19 pandemic.
And for that reason, the TRIPS agreement actually has an
article built into it to allow for compulsory licensing in the
event of such a pandemic, and something that should and could
be used in these kinds of situations.
So I think that we want to be worried about enforcing rules
using existing flexibilities, rather than trying to get rid of
enforcement or weaken rules that in the end could actually
benefit China.
Chairman SMITH of Nebraska. Thank you.
Mr. Duesterberg, you have extensively researched China's
ambitions on the continent of Africa and its efforts to
dominate global critical mineral production. Can you discuss
how trade tools, including trade preference programs like AGOA
and GSP, can support our efforts to counter China's influence
in the region and across key supply chains?
Mr. DUESTERBERG. Thank you for that question, Mr. Chairman.
I think the AGOA bill could be potentially used somewhat
for, you know, lowering tariffs on imported products. But
really, the fundamental problem with China and Africa is that
they have rather skillfully come to control basic mineral
production, from mining through processing, through creation of
final products.
Chairman SMITH of Nebraska. What would be your
recommendation moving forward, then, on that?
Mr. DUESTERBERG. Well, my recommendation moving forward
would be to use USAID, in conjunction with partners in like-
minded countries to encourage and help finance U.S. and allied
investments in basic production in Africa.
Now, the G7 last year adopted something. It is called the,
I think, the Build Back Better World Program, which was
designed to coordinate efforts of the G7 in areas like this. To
my knowledge, there hasn't been much follow-through. The
Japanese have the chairmanship of the G7 this year, and I think
they are meeting next month. That might be a opportunity to
reinforce the need for this.
But the fundamental need is really for our companies to get
some assistance to be on the playing field, so to speak, in
producing the raw minerals themselves.
Chairman SMITH of Nebraska. Okay, and thank you.
I now recognize Ranking Member Mr. Blumenauer for your
questions.
Mr. BLUMENAUER. Thank you very much, Mr. Chairman, and I
appreciate the testimony.
Mr. McHargue, your notion that we are looking at a complex
set of inter-relationships, I think, is well taken. And the
distinction between commodities and processed food, in terms of
the value added for Americans, I think, is very important.
Mr. Greer, at some point I would look forward to being able
to entertain your ideas for more aggressive enforcement. You
indicated you had a number of them. I assume your extensive
work with our friend, Mr. Lighthizer, gives you a sense of
going forward on that. And it just, I must say, just continues
to drive me crazy.
I was one of those people that took the Chinese
representations at face value, voted to get them into the WTO.
Watching now, 20 years later, they are doing this dual track,
playing the developing country when it suits their purposes. It
is maddening. And I am hopeful that our committee can focus on
things that will make a difference to be able to hold them
accountable and avoid this dual standard.
One of the things that I am interested in are some specific
things we can do to undercut Chinese exploiting opportunities
to take advantage of us. I have referenced and have put forward
legislation on the de minimis loophole, where they are now
importing directly over two million packages a day that escape
any meaningful detection. No sense of defective products.
I am wondering, Mr. Houseman. Do you want to just elaborate
for a moment from your perspective about the extent to which it
would be important to close the de minimis loophole for the
Chinese?
Mr. HOUSEMAN. Yes, Ranking Member Blumenauer. You know,
this idea of an $800 de minimis, it allows for a significant
amount of direct consumer shipments of goods from, you know,
everything--you know, the most common that everyone knows is
Shein, this clothing company, right? And this idea that, you
know, China, for example, has a $10 de minimis--we aren't even
able to compete on the same level from here in America on a de
minimis level between the two countries.
And then you add into the fact that, you know, a lot of the
clothing items that Shein is producing has the potential of
cotton from the Xinjiang region, where forced labor practices
and, as has been highlighted by the State Department, is the
potential for genocide. I think that we need to really re-
address the--this issue of an $800 de minimis with China,
particularly.
Mr. BLUMENAUER. To say nothing about exploding bicycle
batteries. There are some creative invoicing by these Chinese
sources that will get the sum of money below $800.
Mr. HOUSEMAN. Yes.
Mr. BLUMENAUER. And this is an area, Mr. Chairman, I hope
we can pursue.
But Mr. Houseman, taking advantage of the fact that you are
representing employees who workers who are in the steel and
aluminum industry. I wondered if you could just talk for a
moment about the global arrangement for steel and aluminum, and
a path forward to be able to deal more meaningfully with this
wildly disparate over-production capacity that the Chinese have
generated, and remedies that you would support.
Mr. HOUSEMAN. Yes, thank you, Chairman. And this is--you
know, look. Global steel-making capacity has increased for the
fourth year in a row, while utilization has shrunk globally,
okay, which means that our plant--our plants aren't operating
as efficiently as they can. And in large part, this is because
of China's fueling of the global steel industry.
As I mentioned in my testimony, 100 million tons of new
capacity is coming online in the Southeast Asian region, and it
is primarily of a technology that is going to increase the
carbon intensity by three times than its current levels in that
region for steel-making.
Now, when you add in this idea between the EU and the U.S.,
who are the two largest import share markets coming in--you
know, for steel commodities coming into the market, the U.S.
has dealt with, like, a 20 to 30 percent import penetration for
quite a while, over a decade. This idea that we could actually
set up a club to allow us to push back on non-market and
carbon-intensive steel-making products will allow our workers,
who have--and our companies, which have modernized, are playing
by the rules, and recognizing that we need to reduce carbon
emissions, but also push out state-powered and fueled steel
production.
Mr. BLUMENAUER. Thank you very much.
Thank you very much, Mr. Chairman. I appreciate this.
Chairman SMITH of Nebraska. Thank you.
Mr. Buchanan, you are recognized for five minutes.
Mr. BUCHANAN. Thank you, Mr. Chairman, and I want to thank
all our witnesses.
And Mr. Greer, I got to tell you I really miss Ambassador
Lighthizer. We are active, we are engaged on this committee,
and there hasn't been much active or very engaged. If there is,
nobody knows about it, from my standpoint.
Of course, we passed USMCA, so we know we are capable. I
thought we would be lucky to get the 218 votes, and I think we
got 380, a very bipartisan measure. But we had a lot of
momentum. I know I did a trip with Chairman Paul Ryan at the
time of this committee to Asia with other members, and there
was--most of the countries that we met there wanted us to be
active and engaged, to be a counterpunch to China. But
obviously, we haven't done much in terms of that, either.
I guess--what is your thoughts as you sit back and you take
a look at where we were, where we are today?
What is the difference in the Administration, just from
your expertise, from where you were sitting?
I know leadership matters and that is big, but beside that.
Mr. GREER. Sure. Well, I will say we are in a position
where I think the Administration has embraced certain aspects
of the Trump Administration's trade policy. The Section 301
tariffs are in place. There seems to be a rhetorical, at least,
agreement on the challenge with China. There has been, you
know, good movement, I think, on export controls and other
things.
Now, at the same time, we know that in order for--in order
to have a pragmatic and robust trade policy, we have to balance
a variety of stakeholders, right? We have our agricultural
folks that we have heard are very dependent on export markets,
not just China, all kinds of them. And then we have folks like
the steelworkers who have been really severely harmed by trade
agreements in the past. And so we have to balance these----
Mr. BUCHANAN. Mr. Greer, let me--I got one other question I
wanted to ask you real quick.
According to the FBI estimates, China steals between 300
and 600 billion in intellectual properties, IP, from the U.S.
every year. That is a staggering sum of money, and China steals
it from us each and every year. Just last month New York Times
published a very lengthy article which reported how skillfully
and savvy the Communist Chinese Party is--has become in its
effort to steal our IP.
I was there 20 years ago in Beijing with a business group,
and it was one of the biggest issues 20 years ago, and we
haven't made a hell of a lot of progress, it seems to me, in
the last 20 years. What can we do to minimize that? Because
that creates our--it takes a lot of money away from our
companies, and we lose a lot of jobs as a result of it. And it
is a very, very continuous big issue. What is your thoughts?
Mr. GREER. There are a couple of things we can do. First,
we have a Phase One agreement in place where the Chinese have
not only agreed not to do these things, which they have agreed
many times before, but they have said we can enforce with that,
and that doesn't necessarily have to be tariffs. Section 301
also allows fees on services, other restrictions on services.
There are a variety of things you can do.
The second thing is I think U.S. companies sometimes are
hesitant to share this kind of information. There needs to be
some kind of either requirement or ability for confidential
reporting, where they--they have to come forward to the U.S.
Government, but on a confidential basis so we can get a better
sense of the problem and how to deal with it directly.
Mr. BUCHANAN. Mr. Goodman, let me ask you. Like a lot of
us, a competitor--I hate to see--I am all for free trade, but I
want it to be fair. And to me, we get played by the Chinese in
a very big way. I think we export--the number I have got is 200
billion. They import 563 billion, a $400 billion deficit
difference. What is it--what more--what--how do we get this--
level the playing field a little bit more, in your opinion?
Because I think it is disastrous and outrageous.
You know, at the end of the day it needs to be somewhat in
the ballpark, and this is clearly, for a lot of years, 20
years, hasn't been in the ballpark. If they are not buying one
thing, they need to be working with our farmers and ranchers
and everybody else. So there should be some sense of fairness,
and I don't see that, and I haven't seen it for 20 years. What
is your idea?
Mr. GOODMAN. Yes, thank you, Mr. Congressman. We certainly
have a lot of work to do to make the Chinese market more open,
more rules-based. And I think we should--need to continue to do
that work to push them towards the direction that they were in
20 years ago when we bought this--bet on bringing them into the
WTO of reform and opening. And we need to hold them to that
approach.
I also think, you know, embedded in your question is our
large dependence and other partners of China, trading
partners--a huge dependence on China for just a wide range of--
pretty much everything we are looking at has a China nexus. And
I think part of what we are all talking about and looking at
now is a way to reduce that excessive dependence while
continuing to have, you know, fair and balanced trade with
China.
Mr. BUCHANAN. Thank you, and I yield back.
Chairman SMITH of Nebraska. Thank you.
And pursuant to committee practice, we will proceed with
two-to-one questioning, so we will begin that with Mr. LaHood
and proceed to the other side after that.
Mr. LaHOOD. Thank you, Mr. Chairman.
I want to thank all of our witnesses today for your
valuable testimony here today.
A robust trade policy is incredibly important to me and my
constituents. As I think about my district, it is heavy
agriculture and manufacturing, whose jobs and economic success
rely on opportunities to send our great American products all
over the world. However, when countries don't play by the same
rules and standards as everyone else, this causes problems.
Non-market countries like China, who engage in malign and
predatory trade and economic practices, must be held
accountable. China plays the long game through coercive trade
and economic agreements, pressuring countries around the world
to cede to their terms for investment.
I also serve on the Intelligence Committee and the new
Select Committee on China. And I learn every day about the
growing threats from China. And I believe the Biden
Administration is missing key opportunities to push back
against and hold China accountable for their trade practices.
The United States should be investing in substantive trade
policy with partners and allies in the Indo-Pacific Region to
strengthen global trade policy and make it harder for China to
manipulate the system.
Mr. Duesterberg, I think we can all agree that China has
outsized economic ambitions, but they manipulate the global
economic system and multilateral institutions to get their way.
It has been over 20 years since we allowed China into the WTO.
In retrospect, was that a mistake? Why or why not?
Mr. DUESTERBERG. Well, I was one of the few on my side of
the aisle to argue against letting them in in the first place.
So I think it was a mistake.
So what do we do now? I can agree with Mr. Jamieson about
possibly considering going to an annual renewal of MFN status,
but I think it also is incumbent on us to think about
alternative structures that exclude China.
China is a mercantilist nation. We have lots of friends. I
wish we had more friends, more staunch friends for instance in
Europe, who agree with us on things. But I do think that we
should try to erect other trade agreements, and I have argued
for regional agreements. We could expand NAFTA. I do still
think that we should join the CPTPP. Mr. Jamieson mentioned
sectoral agreements.
We need to have alternative structures that exclude China,
because China is not a faithful enforcer of its own agreements.
Mr. LaHOOD. Thank you.
Mr. Goodman, I and many of my colleagues have expressed our
concerns about IPEF--and you mentioned that--as an insufficient
tool to counter China's influence in the Indo-Pacific Region,
particularly because it has no enforcement mechanisms, in my
view, non-market access.
How would you assess the regional--from a regional
perspective, IPEF as a counter or an alternative to CPTPP?
Mr. GOODMAN. Thank you, Mr. Congressman. And I agree with
you.
I think one of the problems with IPEF is that it does not
have--it is not a formal trade agreement that is going to have
an enforcement mechanism. And I have seen many of these
executive agreements over the years that can do useful things,
but they tend to get put in a drawer and then not followed up
on. And so there is no substitute for having an agreement that
is approved by Congress and then has built in enforcement
mechanisms. So I think that is one of the reasons that we ought
to be looking at things like CPTPP or some other arrangement
that is more like a traditional formal trade agreement.
Can I just--in the answer on the other question I should
have added IP and subsidies, huge issues in China, and we ought
to be taking those on, including working with allies, as
Representative--Ambassador Lighthizer was doing with this
trilateral with Japan and Europe. That kind of effort is really
important in getting China to address some of these practices
that we are all troubled by.
Mr. LaHOOD. Thank you.
Mr. Greer, the question that I asked Mr. Duesterberg about
whether it was a mistake 20 years ago to allow China into the
WTO, do you have an answer on that, yes or no, and any other
comments?
Mr. GREER. The answer is yes. And I think we have seen--we
have data now, right? We have data. We can--at the time, like
Mr. Duesterberg said, a lot of people said it was not a great
idea, but went forward anyway. But now we have 20, 23 years of
data, and we can see the jobs that were lost. We can see the
factories that were lost.
And this isn't just fluff, right? There are economic
studies from a variety of esteemed economists who have made
this connection very clearly. So there is no question that it
was a mistake, and it would be a mistake going forward to
continue to think that we can somehow get them to change,
absent some kind of strong enforcement.
Mr. LaHOOD. Thank you.
I yield back.
Chairman SMITH of Nebraska. Thank you.
Mr. Higgins from New York.
Mr. HIGGINS. Thank you, Mr. Chairman.
You know, I think most agree that what oil was to the 20th
century electrification will be to the 21st century in terms of
global dominance relative to the world economy.
China is 20 percent of the world's population. It is a $17
trillion economy. It is 19 percent of the world's economy. The
United States is five percent of the world's population. It is
a $25 trillion economy, which is 24 percent of the world's
economy.
In this new era of global economic superiority, you are
either the country that controls the supply chain or you are
the country that is controlled by the country that controls the
supply chain.
And the title of this hearing is ``Countering China's Trade
and Investment Agenda: Opportunities for American Leadership.''
You know, China cheats on their currency. They steal our
intellectual property. They treat their people poorly, and they
treat their environment poorly. We do have to be tougher on
China, but the United States has to be tougher on ourselves
about China.
What do I mean by that? China was investing $1 trillion in
infrastructure in Africa 15 years ago not to help the people of
Africa, but to exploit Africa, to position itself to become a
superior economic force.
China mines or refines 68 percent of the world's nickel.
China mines or refined 73 percent of the world's cobalt. China
mines or refines 40 percent of the world's copper, and China
mines and refines 59 percent of the lithium, which is also
called white gold in the 21st century because of the emphasis
on electrification. There are 200 mega-battery manufacturing
plants that are either online or will be completed by 2030 for
electric vehicles: 11 are in North America; 21 are in Europe;
and 148 are in China. China has 80 percent of the global
lithium-ion manufacturing capacity.
Not only are we being outpaced, we are getting clobbered.
And unless and until Democrats and Republicans within the
American Government make a decision to gain access to these raw
materials, we can never catch up. And we will always, in the
21st century, be controlled by the country that controls the
world supply chains.
So, Mr. Duesterberg, you had made reference to this
relative to rare earth materials and minerals. Your thoughts on
this?
Mr. DUESTERBERG. Well, it is not as if we don't have
natural resources in the United States and in our countries
that are very friendly to us, Canada and Australia especially.
The mistake we have made--I mean, China has been very
aggressive about capturing these various resources.
Mr. HIGGINS. Yes.
Mr. DUESTERBERG. They put a huge amount of capital
investment into this, not only in Africa but in Latin America,
and they are actually buying lithium mines in Canada these
days. We have been somewhat asleep at the switch, and allowed
the subsidized Chinese industry to take over these industries.
We can and should start to exploit the resources that we
and our allies in friendly countries have. We have started this
in rare earths. We have a new mine, the old Mountain Pass Mine
is up and running. We are working with Australia.
Mr. HIGGINS. Yes.
Mr. DUESTERBERG. We could do this on uranium, if we are
ever going to reinvigorate the nuclear----
Mr. HIGGINS. Yes, my time is almost up. I am sorry to
interrupt but let me just say this to you. There are 17 mines
in Africa that mined rare earth minerals and metals. Fifteen of
the seventeen in South Africa, Congo, Mozambique are either
owned or controlled by China, seventeen of fifteen.
Now, there are mines throughout the world. I understand
that. But at least we have to acknowledge that we are
considerably behind. You can't just flip a switch and be ready
to compete with what another country has done with its
resources, regardless of how they have accumulated those
resources 15 years ago. Because what Africa is rich with is
precious metals and minerals. And they are way ahead of us. And
I am just simply underscoring the need for America to be more
aggressive in their competition.
Thank you, sir.
Chairman SMITH of Nebraska. Thank you.
Mr. Arrington from Texas.
Mr. ARRINGTON. Thank you, Mr. Chairman, witnesses. I want
to follow on some of the comments and thought process from Mr.
Higgins, my friend, with respect to China, and this very
interesting--I have a hard time describing, quite frankly, the
relationship we have with them. I come from one of the world's
largest agricultural production centers, oil and gas--energy in
general. I know how big and seductive their market is, but I
have just got a few questions to sort this out in my head. I
just seem to always be perplexed by this conundrum.
Mr. Goodman, is China one of the worst human rights
violators in the world community?
Mr. GOODMAN. China's human rights are atrocious.
Mr. ARRINGTON. Atrocious. Do--does China steal our
intellectual property, as has been reported, force some of
these transfer agreements, et cetera? Do they steal our
intellectual property?
Mr. GOODMAN. Yes, that has been a central part of their
development strategy.
Mr. ARRINGTON. Do they spy on Americans?
Mr. GOODMAN. Yes.
Mr. ARRINGTON. Do they align with other malign actors,
other countries that don't share our values and would probably
be considered adversaries of the United States and our allies
around the world?
Mr. GOODMAN. Yes.
Mr. ARRINGTON. Do you think China is our greatest
adversarial threat?
Mr. GOODMAN. I think there is no question it is our biggest
competitor and challenger, and in some cases an adversary that
we could become enmeshed in serious problems with. And so it is
our--yes, it is the--a generational challenge.
Mr. ARRINGTON. Are they a partner?
Mr. GOODMAN. Not right now, but we do depend on them. The
reality is we depend on their market.
We depend on their inputs for--as I mentioned, everything
we are looking at has some China nexus, and we do need to talk
to them in part to avoid any miscalculation, misunderstanding,
but also to talk about issues that affect everybody: pandemics,
environmental challenges, terrorism, proliferation. There are
many issues that we need to talk to them about.
Mr. ARRINGTON. It seems to be quite a precarious situation
to answer the first set of questions in the way I would have
answered them as well, and I suspect most of the panel would
have answered. And then, when asked about their partnership,
the response was, well, we need them.
I would say maybe the greatest challenge for--one of the
greatest challenges for our country, not just this committee,
is to need China less until China changes its behavior, if that
is possible. We thought it would be possible when we welcomed
them to the World Trade Organization table.
Mr. Greer, I was very impressed with Mr. Lighthizer and you
and your team. I believe my Democrat colleagues are every bit
as interested in continuing the good work we did with USMCA and
having this free trade framework that we can then take
throughout the world. We need to enforce it, and we need to
replicate it, especially in the Indo-Pacific area, as has been
discussed.
But it seems like the missing piece is having a president
that is very assertive and has made this issue of trade a
priority. When it comes to negotiating with China, I think we
were all pretty stunned that we were able to get to these
purchase agreements and these structural reforms like Phase
One. What is the psychology of negotiating with China?
Just for the benefit of this committee, if the President
were listening, how do we approach China to best undo some of
the things we need to undo in terms of supply chain dependence,
and then forge forward with enforcing some of the agreements we
have, and then beyond?
And then I yield back after your response.
Mr. GREER. We have a saying in the United States where good
fences make good neighbors. And I don't know if we will ever be
good neighbors with China, but we found that they really
respected strong action and not as much hot rhetoric, right? I
mean, I think sometimes we get those reversed. I think
sometimes we pound our fist and decry things that deserve to be
decried, but then we don't take action.
I think, actually, the reverse works a lot better with the
Chinese is to be polite, be respectful, talk to them, consult
with them, and take really strong action. They did not think
that we were going to impose tariffs on them. And then we did.
And then they didn't think we were going to do it again. And
then we did. And then they came to the table.
Chairman SMITH of Nebraska. Thank you.
Mr. Estes.
Mr. ESTES. Well, thank you, Mr. Chairman, for hosting this
hearing. And thank you to our witnesses for joining us today.
You know, when it comes to China there is a lot of
bipartisan support for holding the Chinese Communist Party
accountable and tackling their sinister advancement into other
nations around the globe. So as this committee discusses ways
in which we can compete with the CCP, being competitive in our
own tax code is one way to ensure the United States is
positioned as a global leader and pushes back on our
adversaries. This is especially true when it comes to research
and development.
According to the R&D coalition, the U.S. share of global
R&D investments in 2019 was 30 percent, down from 33 percent in
2009 and 40 percent in 1999. Unlike the United States, China's
global share of R&D investment has gone up. It was 24 percent
in 2019, a big jump from 5 percent in 2000, and 15 percent in
2009. That means Chinese--China's R&D investments have
increased by 400 percent in just 2 decades.
And what did this--and what did they do to incentivize R&D?
China has implemented a deduction of up to 200 percent on
eligible R&D investments. And without actions to undo the U.S.
research and development amortization tax provision that kicked
in last year, China will go from having two-and-a-half times
more favorable tax benefits for research and development to as
high as 20 times more favorable than the United States.
Research and development is critical for our competitive--
yet without the right incentives, the United States is ceding
research and development and, in turn, jobs to the Chinese
Communist Party. But today, on Tax Day, my colleagues and I are
introducing much-needed legislation to fix the R&D tax code
that, when passed, will provide greater economic opportunities
and reduce our dependence on foreign adversaries.
The American Innovation and R&D Competitiveness Act allows
for immediate expensing of eligible R&D costs, bringing us back
to where we were just two years ago, and securing our dominance
in research and development. The legislation is a bipartisan
solution that I have introduced with my Ways and Means
colleague, Congressman John Larson of Connecticut, as well as
several Republicans and Democrat colleagues on the Trade
Subcommittee today.
Mr. Duesterberg, do you agree that having China continue
advanced research and development while the United States slows
R&D harms our economy and American workers?
And is there a correlation between where R&D occurs and
where jobs and manufacturing follows?
Mr. DUESTERBERG. Well, Congressman, I do agree with the
sentiment, and I agree with the need for your bill. I agree
that R&D does produce results in terms of manufacturing and
jobs, especially.
But I would just caution people to not over-estimate the
efficiency of Chinese research and development and their
scientific research. I think we are much better at that than
they are.
I would also note that it would be useful, I think, to
continue the trend towards more support for basic research and
development. Most Chinese research is in the area of
development. We are still world leaders, and the benefits that
we received in the--for instance, in the 1950s and the 1960s,
when we were by and--far and away the world leader in basic
research, you know, paid rich dividends in terms of
manufacturing things like semiconductors, aerospace technology
for many years to come. So I would also emphasize, in addition
to the R&D tax credit, the need to continue robust support for
basic research in the United States.
Mr. ESTES. And yes, there is always that trade-off between
basic research and applied research and application.
So, you know, in addition to talking about research and
development, we know China has been stealing American
innovation and technology. And now the Biden Administration is
working to give away our vaccine innovation through the WTO
TRIPS waivers.
Mr. Greer, you mentioned earlier, talking about our
intellectual property--what are some more concerns, or do you
have anything else to add to--and particularly your assessment
of the Biden Administration's stance on waivers and support for
U.S. intellectual property?
Mr. GREER. Certainly, Congressman. With respect to
intellectual property, generally, you will recall that
intellectual property was actually at the heart of the Section
301 investigation that gave rise to the current tariff regime
on China. So that was something where everyone agreed that this
was a problem, and we should deal with it.
With respect to now, with the proposed waiver, which I
mentioned before, we have existing tools to deal with, you
know, pandemic-style needs. And moreover, you know, I think
rich countries--the quickest--if we have an issue with
vaccination, the quickest way is for rich countries to donate
and get the vaccine to the countries, right? Thinking that we
can parachute IP for free into a less developed country, and a
vaccine facility is going to spring up there, I mean, that just
doesn't make a lot of economic sense. So I think we need to
think of other tools to help these countries.
Mr. ESTES. Thank you.
And I yield back, Mr. Chairman.
Chairman SMITH of Nebraska. Thank you. Next I will
recognize Mr. Panetta for five minutes.
Mr. PANETTA. Thank you, Mr. Chairman, Ranking Member.
Mr. Goodman, let me talk to you real quick. Your
organization has provided a number of examples how China seeks
to use economic coercion to control its trading partners. That
can impact small countries and our allies, as well. It has
boycotted Korean automakers over missile defense agreements
with the United States; blockaded Norwegian goods over Nobel
Peace Prize awardees; and cut off infrastructure investments in
Mongolia, based on a visit by the Dalai Lama.
In some cases, especially for smaller countries, a coercion
works. However, you also note that these moves can backfire,
causing more distrust of China.
A couple of questions here.
In what ways can economic coercion have unintended
consequences for China?
What can we do to capitalize off of these blunders?
And what are some of the ways in which we can increase the
resilience of those countries that are so vulnerable to China's
economic coercion?
Mr. GOODMAN. Thank you, Mr. Congressman. And yes, we looked
at all this in this report that we put out a few weeks ago, and
concluded that a lot of times China is trying to do something
in the short term tactically to get somebody to take a sign off
a door, or not have a particular person visit their capital,
and they don't even succeed at that level often.
But certainly, this longer-term strategic effect that you
are referencing tends to drive partners away. And I would say,
you know, the Korean Government has leaned into us. You could
draw a straight line from the coercion of Australia, the
blocking of their coal, their wine, their lobster to the AUKUS
agreement, the Australia-UK-US agreement. I think that was the
result of this. It was largely, at least, pushed hard by this
coercion.
So I think it is--there is no question that China is its
own worst enemy when it comes to this coercion, and we should
find a way to take advantage of that. And the answer that we
came up with was, to your other point, building resilience,
helping our partners be less vulnerable, and less subject to
that kind of coercion from China, and to show them that we are
a more trusted partner, both economically and strategically.
Mr. PANETTA. Great, thank you.
Mr. Greer, you suggested that Congress consider ending PNTR
with China, given their history of unfair trade practices and
non-market behaviors.
Obviously, we have got a lot of issues with China, but I am
concerned kind of that we have seen how this can play out. And
what I mean is I know their support for the Phase One agreement
with China. But I would note that, despite some agricultural
reforms, China has not taken meaningful action on agricultural
biotechnology and required risk assessments for beef and pork.
Now, you note that revoking PNTR will give us time to
review China's status and put the onus on China to decide if it
will change its ways or not. But given the history of our 301
tariffs, don't you think that this strategy will be successful?
Do you think it will be successful?
And why do we still have 301 tariffs, and why haven't those
tariffs changed China's behavior enough to be rescinded?
Mr. GREER. Yes, Mr. Congressman, I think everything we have
heard today has really sharpened that we have a very unhealthy
dependence on China.
When you look at the section 301 tariffs, our imports from
China with respect to those items on which the tariffs are
subject have decreased substantially. So we are now less
dependent on China for those items. That is the kind of
direction that we want to go in.
You are exactly right, that we want to worry about
retaliation and things like that. It is not an easy answer, and
I don't want to suggest that it is. But I think we need to make
sure our exporters and agricultural folks are taken care of,
and that we are able to maintain that balance that is needed.
Mr. PANETTA. All right, Mr. Goodman, what are your thoughts
on revoking PNTR, and what impacts do you think it would have
on the U.S. economy?
Mr. GOODMAN. I mean, I think this is a very complex issue
because we are so dependent on China on the export and import
side.
And I think a--if what you are suggesting ultimately is a
kind of a broader decoupling, I think that would be very costly
for us. I think what we need to be doing is focusing on
targeted areas where we have real risks and threats. That is
why I think that the October 7th measures on semiconductor,
advanced semiconductor and equipment were appropriate, because
we were trying to really effectively decouple and degrade
China's capability.
I think that is the approach we should be taking, is trying
to find areas where we have specific risks and threats, and
finding ways to mitigate those.
Mr. PANETTA. Thanks.
Mr. McHargue, just real quickly. Sorry I am giving you a
little bit of time. What SBS challenges are you facing
specifically in Nebraska with China and other countries that we
could diversify our export markets?
Mr. McHARGUE. Well, ractopamine is one of the products that
we think that is completely safe, that is usable that we are
not using right now. I think that is one example.
Mr. PANETTA. Great. Thank you. Thanks to all of you. I
yield back.
Chairman SMITH of Nebraska. Thank you. Next I will
recognize Mrs. Miller from West Virginia.
Mrs. MILLER. Thank you, Chairman Smith, and thank you all
for being here today.
Last month a bipartisan group of my colleagues visited
Mexico, Ecuador, and Guyana to learn more about the trade
challenges and other issues that are facing our bilateral
relationships in Latin America. The one issue that came up in
each of these countries is the rise of Communist--China's
Communist Party's influence throughout the region.
When Ambassador Tai testified in front of our committee, I
told her that the CCP is out-maneuvering us when it comes to
trade deals in the Indo-Pacific, as well as our neighbors in
our own hemisphere. Unfortunately, the Biden Administration is
failing to react strategically and successfully challenge the
growing Chinese influence across the globe. That is why I have
been diligently working in Congress with my Ways and Means
colleagues to develop policy solutions that will press the
Administration into action.
We are working on redeveloping the U.S. trade leadership in
the Indo-Pacific Act (sic) to put America back in the driver's
seat in regional trade deals in the--in Asia. I am a lead
sponsor of the Made in America Act, which will reshore
pharmaceutical supply chains from China to opportunity zones in
the United States. With these policies and many more, it is
clear that the Republican majority is ready to act. Now we need
President Biden to step up and deliver for the American people.
Mr. Goodman, I am concerned major trade deals in the Indo-
Pacific, like the Regional Comprehensive Economic Partnership
and the CPTPP are putting U.S. exports, businesses, and workers
at a major disadvantage. Both of these agreements are phasing
in tariff cuts throughout the region, proving that every year
the U.S. does not negotiate a real trade agreement, that we are
falling farther and farther behind.
Do you think IPEF goes far enough to help the United States
compete economically with countries like China in the Indo-
Pacific? And if not, what would you recommend we do better to
compete?
Mr. GOODMAN. Thank you, Madam Congressman--woman, and I
agree with your analysis that I think we are losing ground, and
an agreement like the Regional Comprehensive Economic
Partnership is diverting trade away from us and towards China,
other countries in the region. And so we need to be back in
this game.
I think the Indo-Pacific Economic Framework has some
promise. It is good. Thirteen countries have joined us. The
agenda is not bad. And if these discussions can lead to kind of
be the tributary for us to get back into the major river of
major formal trade agreements--in other words, they can develop
the standards and the best practices that could then feed into
an updated regional trade agreement--then I think it could be
useful.
But in and of itself, as an executive agreement that is not
going to have enforcement mechanisms, it is not going to have
the incentives for our partners to want to aspire to these
higher standards that we are seeking, I am concerned it is not
going to be enough. So we need to think about it as a way to
feed into a formal trade agreement.
Mrs. MILLER. That is a nice way to put it, but it is still
just a polite suggestion.
Mr. Greer, on our trip to Latin America we learned the
region is ripe for American leadership. Central America, in
particular, can play a key role in countering China's trade and
investment agenda. While I support CAFTA, I am disappointed
with the lack of growth under the agreement. The apparel trade
has steadily declined over the life of CAFTA, while apparel
imports from China have doubled, proving that CAFTA has left
some sectors uncompetitive.
What can we do to make apparel supply chains in the Western
Hemisphere more competitive and resilient?
And how can we support more growth and job creation in the
region?
Mr. GREER. Congresswoman, as you mentioned, we already have
a series of strong FTAs in the region. You could have a
situation where you upgrade some of these agreements, like with
CAFTA. Perhaps you can modernize it and add on new chapters.
You know, I know I sound like a broken record, but with
Section 301 we put tariffs on China, actually giving
preferential tariff treatment to all other kinds of partners
relative to China, who is their major competitor. So they
should be poised to take advantage of that. They should be
poised to take advantage of this preferential tariff treatment
relative to China, take advantage of CAFTA, and look at
modernizing it, as you might suggest.
Mrs. MILLER. On a different topic, this week a video from a
country (sic) called JA Solar leaked where the chief financial
officer openly bragged to potential American investors that the
company was essentially port shopping to evade the
groundbreaking human rights law that was signed into law in
2021, the Uyghur Forced Labor Prevention Act. That bill was
designed to ensure strict enforcement of our existing ban on
imports made with forced labor, including the systematic use of
ethnic minorities for slave labor.
In my home state of West Virginia we have a Customs and
Border Patrol Advanced Training Center, and I would hope that
preparing to enforce our forced labor law would be a priority
at the facility. Do you have any sense of whether the CBP or
other U.S. law enforcement agencies have the training and
resources to ensure compliance with this law?
Mr. GREER. Well, I could say that they certainly are moving
forward on it. I am in the private sector, and I hear from
companies very frequently that they are trying to come into
compliance.
I think CBP could use additional resources for enforcement.
I think it would also benefit the trade to have a better sense
of what CBP expects with respect to proving up that you are in
compliance, and having some kind of a safe harbor where you can
actually actively go in and say, ``Here is where I am, here is
everything I am doing, I am trying to do the right thing under
the law. Can you please work with me?'' I think that would be
helpful to CBP.
Mrs. MILLER. Thank you.
I yield back.
Chairman SMITH of Nebraska. Thank you.
Mr. Smucker.
Mr. SMUCKER. Thank you, Mr. Chairman, and I would like to
thank each of the witnesses for being here for what I think has
been a really great discussion with a lot of consensus on where
we stand with China, the potential threats of China, certainly
their goals, and what they want to see us accomplish.
I do want to go back to some of the discussions that--the
questions that Mr. Panetta had asked in regards to PNTS (sic).
And Mr. Greer, I think he asked you this question. You have
advocated for revoking PNTR completely. I guess I would like to
understand that a little more.
Certainly, we want to counter China in every way we can,
but, you know, the fact of the matter is they are still also
one of our largest trading partners. Someone else, I think, had
mentioned, you know, how complicated the issue is because we
have American businesses who rely on China for market for their
products, and we certainly still receive a lot of goods, as
well. So can you explain to me what you mean by revoking PNTR?
Are you looking for a complete decoupling of trade with
China at some point, or what is the practicality of revoking
PNTR?
Mr. GREER. So it is hard to imagine a world where we are
completely decoupled from China, absent some significant
geopolitical event.
But before China had PNTR, they were subject to an annual
certification under the Jackson-Vanik amendment, where you,
Congress, and the president together, if I recall correctly,
had to decide whether or not--it was Congress who had to decide
whether or not China was going to continue to receive most
favored nation treatment. And so, going back to that situation
where China no longer benefits from complete certainty all the
time, that brings an element of discipline.
Before 2000, before PNTR was granted, we didn't have
manufacturers going over to China as much and putting their
factories there, and exporting back here because they didn't
know that they would always have certainty of access to this
market. Going back to that situation would discipline the
Chinese. It wouldn't raise the tariffs right away. It would put
the hands--it would put in your hands to decide on a yearly
basis whether you, Congress, think that we should continue to
have normal trade relations with China.
Mr. SMUCKER. Have you looked--and again, I am not
disagreeing with what you are saying, just trying to evaluate
whether that makes sense--have you looked at the domestic
economic impact? For instance, you know, what impact would it
have on the business community and on U.S. jobs?
Mr. GREER. So if you went back to a Jackson-Vanik-style
yearly amendment, nothing would happen unless you decided,
okay? So if you say we are going to go back to a yearly
certification, nothing immediately happens to those tariffs.
You are still in a situation where you are under control. What
happens is you get leverage.
The problem we have always had with--whether it is China or
other trading partners, is you, Congress, you have given away a
lot of the tariffs over years for a lot of different reasons,
good or bad, and you have lost some of that leverage.
If you go back to this situation where China, on a yearly
basis, has to yearly get an approval to continue to have the
same tariff regime they are enjoying--301 aside--that gives you
leverage with China to try to get the kind of market access
behavior that we would want, without immediately raising all
these tariffs, and you can have that in your pocket if you need
to.
Mr. SMUCKER. Thank you. I have also a slightly different
question, but somewhat related, of course.
But I have heard the comment ``rules-based system,'' and I
think part of the problem with China is that they choose not to
follow the rules that are generally followed internationally.
And we have trade tools that are available to us that can be
used to counter that. But in many cases, the Biden
Administration's decision to abandon those tools has left us
with very little. And, you know, instead, in some ways the
Administration has chosen to mimic China's aggressive economic
subsidies to promote domestic production.
And maybe, Mr. Duesterberg, I will ask you the question.
Does that work? What message does that approach send to our
allies? Do you think that these actions may encourage our
trading partners to abandon a rules-based system of trade?
Mr. DUESTERBERG. Well, it is--the adoption of what, in
effect, is a targeted industrial policy in the United States
has had a couple of impacts. One of them is that our many--our
friends--and I keep saying ``our friends,'' hoping that the
Europeans remain our friends with regard to actions on China,
but it has stimulated a sort of a competitive industrial
policy--they are going to adopt subsidies for their green
industries and other industries.
Japan has adopted a subsidy regime to try to get their own
companies into the game. So another impact of that is that our
credibility in trying to gain WTO reform on the subsidy code is
really shot to pieces because we are doing what we are trying
to get China and have been trying to get China to do, or----
Mr. SMUCKER. Not to do, yes.
Mr. DUESTERBERG [continuing]. To renounce for two decades.
So all in all, it is a problem.
You know, China is not going to change its behavior. And so
that is why I have advocated trying to create alternative
rules-based agreements that basically exclude China.
Mr. SMUCKER. Thank you.
Chairman SMITH of Nebraska. Thank you.
Mr. Beyer----
Mr. BEYER. Mr. Chairman----
Chairman SMITH of Nebraska [continuing]. You are
recognized.
Mr. BEYER. Thank you very much. And Mr. Chairman and
Ranking Member, thank you for putting this on. And I have
really enjoyed the testimony and learned a great deal from it.
Mr. Goodman, I truly appreciated your testimony. We
discussed the importance of U.S. economic engagement and trade
with our partners and allies in the Indo-Pacific. Your
explanation of the motivations behind TPP, that it was intended
to strengthen the existing alliances in a key region, help
build new relationships echoes my own belief that withdrawing
from the TPP was one of the enormous strategic mistakes of the
last 20 years, and a mistake that we will pay for, for years to
come, particularly in the context of the Chinese efforts to
economically dominate the region.
You mentioned that the successor to TPP, CPTPP, is
continuing to evolve. China has applied to it. Assuming that
our trade ambitions don't grow beyond the IPEF (sic) and China
enters the CPTPP, what should we expect the consequences to be?
And please describe how China could take advantage of
writing the rules of the road, something that should be our
responsibility?
Mr. GOODMAN. Well, again, I couldn't agree more with your
analysis, Mr. Congressman. I think it was a catastrophic
mistake to pull out of TPP, and I think it would be an even
greater catastrophe if China were in CPTPP and we weren't in
anything over there.
So I think, you know, our allies, Japan, Australia and
others who are in CPTPP are going to hold off China's
application as long as possible. But at some point I think they
are going to have to entertain that, especially now the UK
seems likely to join. And so I think it is not unrealistic to
think that two or three years from now China could be on the
road to acceding to CPTPP, which would be just devastating to
our interests, because they would be in there trying to shape
and probably undermine some of the good rules that are in TPP.
And so we need to have something, and that is why I am--I
just feel it is so important for us to use IPEF as a way to get
back into something--a higher standard.
And I just throw out here--which is probably risky for me
to do, but since you all, in a very bipartisan support--with
bipartisan support, passed the USMCA not three years ago, it
seems to me that could be--I know it has got unique elements to
it, but that is the sort of tested model of a trade agreement
that maybe could be updated, built on, expanded in the region
if that is our more comfortable approach than going back to
this TPP.
Mr. BEYER. And thank you for bringing up USMCA, because I'm
never tired of pointing out that USMCA, which was bipartisan,
celebrated, one of the major achievements of the last number of
years during the Trump Administration, 80 percent of it has
showed up in what was directly taken, word for word, from TPP.
Mr. Houseman, in your testimony you mentioned how U.S. and
Canadian production of minerals critical for the manufacture of
EVs isn't nearly sufficient if we are going to compete with
China in the future. Now, we know the Administration is
pursuing a number of side agreements, and I appreciate the
intent of the agreements. We don't like that Congress is left
out. But are you concerned about the relative weakness in terms
of environmental and labor protections?
Mr. HOUSEMAN. Thank you for the question. Yes. I mean, I--
for USW, the importance here for critical minerals is that--how
we mine and process those materials.
Right now, in Indonesia, where China has invested $16
billion in nickel processing, the environmental degradation
there is extreme. Annually, 1,400 workers are injured there and
5 are being killed, according to Indonesian unions there. Is
that really the type of trade agreement or trade arrangement
that we want to set up with our trading partners, where we are
exploiting workers and allowing them to be killed?
Like, this is the kind of system that we need to set up,
and this is why I am so concerned about when we talk about the
rules of origin. In the TPP, for example, up to 65 percent of a
vehicle could have been made with Chinese content and shipped
into the U.S. market because we only had a 35 percent rule of
origin standard in the TPP. That was one of the reasons why the
United Steelworkers opposed the agreement.
The idea of how our trade rules are set up, to ensure that
we have standards and the ability of enforcing those standards
and ensuring that the rules of origin are set as a way to our
American goods are going to be prioritized in the manufacture
and distribution so that our members, union members and also
workers across all of--non-union or non-union (sic)--can
benefit.
And I think those are the reasons why, you know, we look
at--when we have, for example, in cobalt, where USW has miners
up in Canada, and have worked with a facility here in North
Dakota, there is--nearly 80 percent of the world's cobalt is
processed in China. And, you know, they are able to effectively
swamp the market. They actually stopped a cobalt mine here in
Idaho in part by just dumping into the market and depressing
the price so much that this Idaho project couldn't move
forward.
So there are opportunities here, but we are going to have
to invest, which I think you are kind of hearing here a bit, is
this idea that we need to actually provide a bit of fiscal
support and the protections necessary to allow firms that--
private firms to develop their mines.
Mr. BEYER. Great, great, thank you.
Mr. Chairman, I yield back.
Chairman SMITH of Nebraska. Thank you. Mr. Murphy is
recognized.
Dr. MURPHY. Thank you, Mr. Chairman, and thank you all for
coming today. It is obviously a huge issue for us in this
country.
It is obviously clear that China is trying to dominate the
world: Belt and Road Initiative, economic coercion, predatory
trade practices, espionage balloons, police stations. We can go
on and on and on. All wars are not kinetic. And it is obviously
that this is a war of attrition, if you were, as far as trade
goes.
America is suffering because of it. The farmers,
manufacturers are being cheated. In 2018 the Commerce
Department found there were two separate cases that Chinese
exporters had significantly undersold and subsidized cast-iron
soil pipe and cast-iron fittings in the United States, one.
At the same time, AD/CVD duties were being imposed to
counteract China's unfair trade practices, but U.S. businesses
had to devote extensive time, money, resources toward remedies
under U.S. trade laws that are still supposed to--are supposed
to be designed to hide those--to hold those accountable.
And even when relief is granted, China and other trade
partners commonly engage in evasive tactics to avoid penalties.
They just move around. It is whack-a-mole, and we are losing
the global contest at the expense of U.S. taxpayers.
So let me just shift to the China solar issue just for a
minute. In spite of all that we have discussed--and I am sure
that the Biden Administration is cognizant of what is going
on--the President issued an emergency declaration to allow
imports of unfairly traded solar products from China into the
U.S. with no additional tariffs for two years. That hadn't been
done since 1946, when President Truman brought in wood so he
could build houses after World War II.
Mr. Greer, I am an original cosponsor of the bipartisan
resolution of disapproval, which would reverse the
Administration's emergency declaration that suspends tariffs,
suspends these tariffs on Chinese solar products that are
circumventing U.S. trade laws through four other countries.
Given that we have all said today, can you help me understand
why we would embolden China to destroy American jobs and cheat
American manufacturers?
Mr. GREER. I can't help you understand that, because it
doesn't make sense to me either. And I think that we need to
make sure that our domestic producers in any kind of sector
need to have the certainty that when they get trade relief
through trade remedies, they can count on it.
Dr. MURPHY. It is just unconscionable. We are literally
selling ourselves out while we know we are selling ourselves
out.
Let me ask you one other question. China--Chinese domestic
consumption is really weak compared--for a modern economy, and
its internal market consumes a surprisingly small share of the
goods that it produces. It has relied on the U.S. consumers for
growth in its export-oriented growth strategy. In other words,
we are the ones paying, and their own people are not buying.
The U.S. is, by far, China's biggest export market. No other
country has expressed a willingness or ability to absorb
China's subsidized forced labor overproduction. Are we funding
China's economic and military growth?
Mr. GREER. There is no question about that, sir. Again, it
is something that, to me, seems unbelievable that we are doing.
I think we will always have some kind of trade with China, but
we have to manage it. It has to be in the appropriate sectors.
It has to be balanced. We have these gross persistent trade
deficits. We are funding our strategic adversary.
Dr. MURPHY. Absolutely. And I don't say--I don't care,
Republican, Democrat, we are asleep at the wheel, and it is
staring us right in the face.
So if we repealed most favored nation status and
increasingly denied China our market, our market to fund their
growth, specifically military growth, wouldn't China's growth
slow and stagnate?
Mr. GREER. It could. We have a global market, and they may
find other ways to dump all of their stuff. But we are, as
you--you know, I like to call us--we are the consumer of last
resort. That is what we are. And so I think that we could help
control that relationship if we change our approach.
Dr. MURPHY. President Reagan's strategy to win the Cold War
was not military. It was economic. And this is exactly what we
did to Russia as we starved them economically. And I would
submit to my Republican colleagues and my Democratic colleagues
that we wake up, and we begin the same thing. Because if not,
we are going to wake up very, very soon and either be speaking
Mandarin or have every economy of ours devoted to China.
Thank you, Mr. Chairman. I will yield back.
Chairman SMITH of Nebraska. Thank you, Mr. Murphy. Next,
Mr. Steube.
Mr. STEUBE. Thank you, Mr. Chairman.
We need a worker-focused trade policy, not a corporate-
price-centered one. And we need to take every step necessary to
achieve balanced trade and eliminate the trade deficits that
are bleeding our economy to death. We should use tariffs
strategically to stop unfair trade in our market and to ensure
the elimination of trade deficits.
We have been running deficits of hundreds of billions of
dollars year in and year out for decades. These trillions of
dollars come back in the form of foreigners owing--owning
American assets permanently. The United States net
international investment is an astonishing negative 16
trillion. Foreigners own 16 trillion more here than we do
around the world. Foreigners, including China, own these assets
and the future income from these assets.
China has engaged in economic aggression against the United
States for years. It has a mercantilist policy designed to
build its economy at the expense of others, including ours,
using a largely closed market and massive subsidies. It has
stolen our technology, manipulated its currency, infiltrated
our infrastructure, hacked our businesses and personal
databases, engaged in cyber attacks on our private and
governmental systems, undertaken espionage against our
businesses and our government. China accounts for 80 percent of
all counterfeits coming into America, and their IP theft alone
has been estimated to cost us $300 billion annually.
In short, it has conducted--China has conducted economic
warfare on us and the West, and has done it for decades. And we
are losing because of Biden's trade policies.
As a result of our own foolish trade policies of the past,
we have lost millions of jobs and much of our technology
leadership, and have transferred trillions of dollars to China.
These huge annual trade deficits have built their military and
developed their industry and technology at our expense. Their
economy has grown from about $1.2 trillion in 2000, when ours
was $10 trillion, to about $16 trillion now, when ours is about
$22 trillion. In this period our cumulative trade deficits in
goods with them has amounted to more than $6 trillion. The
United States has not faced a foe with economic power this
close to our own in over 130 years.
Our trade and economic integration must be balanced and on
terms that help America and our workers, not China. We should
not link our technology sectors with China, and we should have
no trade or industrial cooperation in the security or joint use
technology sectors, period. We need to limit Chinese investment
in the U.S. economy, and to regulate outward investment to
China. We should put tariffs on all products imported from
China until we achieve balanced trade, and we must insist that
they buy our products if they want access to our markets.
In the remaining time I have, Mr. Greer, if there is
anything that I stated that you would like to expand upon, I
will yield my remainder of time to you.
Mr. GREER. Certainly, I am happy to do that, and I think
that your policy prescriptions are things that we need to
strongly consider.
And I--you know, coupled with Dr. Murphy's comments, policy
prescriptions for dealing with China depend on what you think
about the threat. So if our premise is China is a threat, they
are generational challenge, we think that they are preparing
for military conflict with their neighbors or, heaven forbid,
even us, if that is the case, then we need to be thinking about
our trade relationship in a way that strengthens our
manufacturing and defense industrial base, maybe at almost any
cost.
If you think that that threat is overblown, or you think
that people are being alarmist, then your ideas on what the
policy prescriptions are going to be will be different. So I
think we need to have a conversation about that.
I fall in the first camp, that I am concerned that we are
on a knife edge right now, and that we need to make sure our
trade policy reflects that. But I think we need to talk to
China. I think we need to be clear with them. I think we need
to set ground rules. I think we need to do enforcement so that
we can avoid that kind of situation, that we can have a strong
base.
The strongest thing we can do for our allies is have a
strong industrial base here in the United States, and be the
arsenal of democracy. We can't do that if we are sending our
manufacturing overseas.
Mr. STEUBE. I agree with you 100 percent, and I think COVID
taught us that when we were struggling to get products in from
all over the world to solve some of those industrial problems.
And it is time--we are in an economic war with China, and we
are losing, and we have been losing. And it is time for us to
change the trade policy to an America-first agenda to focus on
American products and ensure that we are focusing on the safety
and security of the American people first and China last.
Thank you for your time. I yield back.
Chairman SMITH of Nebraska. Thank you. I next recognize Ms.
Sanchez, five minutes.
Ms. SANCHEZ. Thank you, Mr. Chairman and to our Ranking
Member Blumenauer.
I just want to remind my colleagues that many of us worked
hard to pass strong trade legislation in COMPETES last year
that would have confronted China's unfair trade practices.
House Democrats led on COMPETES, the CHIPS Act, and the Uyghur
Forced Labor Prevention Act. Unfortunately, Republicans chose
not to join us across the board on those pieces of legislation.
The conversation, it seems to me, needs to be about
competition. We are trying to slow China down, but instead we
need to focus on speeding ourselves up and continuing to look
ahead to ways in which we can stay competitive in various
industries.
Mr. Houseman, in your testimony you briefly discuss the
importance of ensuring air, water, and labor standards are
considered and measured in anti-dumping and countervailing duty
investigations. And I agree that American workers and their
employers should not have to compete against countries like
China that enable environmental degradation and forced labor.
Could you elaborate on why it is crucial to level the playing
field for American workers and industries regarding other
countries' labor and environmental practices?
And do you have an example of how considering these factors
would play out in anti-dumping or countervailing duties
investigations?
Mr. HOUSEMAN. Sure. Thank you for the question, Ms.
Sanchez, Representative Sanchez.
You know, 75 percent of Vietnam's industrial wastewater
isn't treated. The idea that we passed the Clean Water Act so
that I can go fishing in Montana, where I used to work at a
paper mill, and not see the discharge out from the mill and
know that it is clean, versus in Vietnam right now people's
water--you know, or Indonesia, where there--we are talking
about nickel mining, and, literally, the waterways and the
fishing in the local communities there has been completely
degraded and eroded, like, this idea that that nickel is then
being processed and then sent to the United States for further
processing is--you know, comes at the expense of U.S. furnaces
in Pennsylvania.
This idea that we shouldn't be able to, like, countervail
against this sort of, you know, built-in process, these are not
like products. If you have a steel beam, one made with high
carbon, no concern to environmental standards, and killing
workers versus U.S. standards, we should be able to account for
that economic cost. Those aren't like products. And so, you
know, that is one of the reasons why the USW has been really
out there and pushing on this idea to--and we can account for
it.
I mean, literally, we send inspectors to look at tomatoes
in Mexico to make sure that they are abiding by health FDA
standards.
Ms. SANCHEZ. I appreciate the answer.
Mr. Goodman, Mr. Greer has recommended that the U.S. should
revoke permanent normal trade relations with China. And this is
building on the questions that Mr. Panetta and Mr. Smucker
asked earlier. Experts maintain that the tools we have to
address these issues are limited when dealing with a country.
Let's be honest, that lacks transparency or doesn't adhere to a
rules-based trading system.
But other people talk about the disruption that PNTR would
have on the global economy if we were to repeal it. Can you
share your perspectives on revoking PNTR, and the alternatives
that we might have to address the challenges posed by China,
while still protecting good-paying American jobs?
Mr. GOODMAN. Well, as you captured in your question, Madam
Congresswoman, this is a very complicated issue because it is
easy to understand why there would be an argument for not
having a kind of normal trade relationship with a country with
these practices.
But on the other hand, the reality is we do have this
complex and large relationship, and it would be very--the fact
is it would be very disruptive if we move sharply away from
that.
But there are things we can do, I think, both to deal with
specific risks, as I say, where we can use targeted efforts
like these semiconductor controls, which I think were
appropriate, or working with allies. As I mentioned, Ambassador
Lighthizer, when he was U.S. trade representative, organized
this trilateral grouping on industrial policies--on China's
industrial policies and IP and other issues. And I think we
should revive that and be working with allies to try to push
China on those issues.
But finally, I think at the end of the day it comes back to
China is going to be China. We have to do the stuff that we
have to do. You know, invest in ourselves. We have to have a
trade policy that makes us competitive and advances our
economic and strategic interests. So I think that is where I
would put most of our focus. But there are things we need to do
that are targeted to deal with the China risks.
Ms. SANCHEZ. I appreciate your answers.
And I yield back.
Chairman SMITH of Nebraska. Thank you. Next Mrs. Fischbach
is recognized.
Mrs. FISCHBACH. Thank you, Mr. Chair, and thank you to all
of the witnesses for being here today.
I would like to focus on a little bit--Mr. McHargue, I
appreciate your comments in your testimony regarding the
nuanced relationship between Nebraska agriculture, the Chinese
market, and the broader geopolitical dynamics.
Agriculture in my state currently has a very similar
relationship. I am from Minnesota, heavily ag district,
exporting roughly $1.5 billion of ag product every year, and
representing a market for nearly a quarter of our ag exports.
This competitor-customer dynamic is important to consider,
given national security concerns and other larger factors
beyond agricultural exports.
With that in mind, can you share your perspective on--of
the appropriate balance between expanding the Chinese market
access and diversifying ag export opportunities through
additional trade agreements?
Mr. McHARGUE. Yes, I certainly appreciate that question,
because it really gets at the heart of a lot of this discussion
we are actually having this afternoon.
And again, as I mentioned earlier, I think one of the ways
that we can help that conversation is by continuing to
establish other markets. And so then it is not quite as much
about China, and it is more about how do we, as America, an
agricultural powerhouse in the world, continue to sell our
products that we do so well. And one of the things that we do
really well is producing, I would say, probably one of the
lowest-carbon-footprint ag products in the world. And we need
to develop those other countries.
But I think, with China, as I have those conversations and
I think about the people that I do business with even in my
hometown, it is still important that we do business with people
that need our product. It is very clear that China is growing
in their need for grains. Just this last year they came--became
one of the largest grain importers in the world. So that
indicates to me that they are going to continue to need our
products.
And so I think that gives us the leverage, quite frankly,
to have some of these conversations that we are having here
this afternoon. If they don't need our products and we don't
have the ability to trade with them, I think we lose a lot of
that leverage to actually deal with some of the things that we
have talked about today.
Mrs. FISCHBACH. And Mr. McHargue, maybe as just as kind of
a follow-up, but in terms of opportunity cost, what does the
Biden Administration's lack of negotiations mean to you, your
members at the farm level?
Mr. McHARGUE. Yes. Again, we do such a good job producing
our products. And if we don't have the world out there--I think
we do actually have the world out there that needs it. But
every single day that goes by, I think we are at a
disadvantage. And so to keep the U.S. in the position that we
are in, I would say every day that this Administration is not
working on trade is a day that we are losing.
Mrs. FISCHBACH. Thank you very much. And maybe I will just
throw this out with my additional--or with my last minute-and-
a-half for Mr. Duesterberg or for Mr. Greer.
How do we appropriately balance these factors with the
broader national security concerns of an increasingly
aggressive Chinese economic agenda?
Whoever wants to, go first.
Mr. DUESTERBERG. Well, it is awfully clear that China has
benefited from acquisition of U.S. technology in much of what
they have done in terms of developing--and advanced military
capabilities has been at the expense of U.S. producers.
But also it is a result, in some part, of Chinese ability
to access American technology and know-how through access to
the American academic system. They send 300,000 or 400,000
students over here. They--some of them work in industry, they
return to China, they bring secrets of one sort or another with
them.
So I don't know what the solution to that is. We need to
reflect on that. But certainly, America has been crucial in
China's development of an advanced military system, and we have
to find ways to--selectively, at least--stop investments, stop
their ability to be in programs that are directly related to
military technology.
And I would also suggest to anything associated with
Chinese exports of their authoritarian state surveillance
technology and the like.
Mrs. FISCHBACH. Well, thank you very much.
And my time is expired. I yield back.
Chairman SMITH of Nebraska. Thank you. Mr. Kustoff is
recognized for five minutes.
Mr. KUSTOFF. Thank you, Mr. Chairman. Thank you for
convening today's hearing. And thank you to the witnesses for
appearing today.
Mr. Greer, thank you also for appearing, and for your
former public service. If I can, to you, I would like to talk
about intellectual property theft. And I know that other
people, including Congressman Buchanan, have talked about that,
and talked about the study that showed that Chinese IP theft
has cost our country anywhere from $225 billion to $600 billion
a year. And I know that is a big span, and those numbers are a
little expansive. But the fact of the matter is it is
substantial.
If I can, Tennessee is home to one of the largest
manufacturers of charcoal barbecue grills in the U.S., the Meco
Corporation, M-E-C-O. Now, about 20 years ago Meco employed
about 900 Tennesseans. That number is down to about 200 at the
same factory today, and that is because China has used IP theft
to unfairly capture most of the domestic charcoal grill market,
importing grills that are virtually identical to the grill that
the Meco had patented.
[Slide]
Mr. KUSTOFF. If I can, I want to show you this poster. The
top, if you can see up there, is Meco's grill. And that grill
hit the market in 1999 under patent. The below grill is a
Chinese knockoff, and that showed up in the market in 2018,
when the Meco grill was still under patent. The model, the
coloring, the design, they are all the same. In fact, the two
grills are really indistinguishable from one another.
There is also evidence of Meco's grills being used for
presentation in China's showrooms, and the Meco's grill
photography was used by a competitor to sell knockoff grills on
Alibaba, and the Meco grill photography being used in Chinese
factory catalogs. We all know that this situation with Meco is
not unique.
So my question: in your written testimony you talk about
this 2018 report that USTR did, and I assume you were there in
2018 as chief of staff. If you were still there today, based on
the report, and assuming that what I have represented to you is
correct, which it is, what tools in the arsenals at USTR would
you propose that we take advantage of to either punish or push
back the Chinese?
Mr. GREER. There are two things I would do off the top of
my head, and I could probably think of more if you give me a
few minutes.
But the first thing I would do is I would tell Meco, ``You
should look into Section 337 of the Trade Act,'' because this
is something that gives you a right to ban the import of items
that take away--that are a theft of your trade secrets, or your
trade dress, or anything like that, or your trademarks. There
is all kinds of protections, and that is a private right of
action, where you can get an exclusion order. So that is the
first thing I would tell them.
The second thing I would say at USTR is this is the kind of
thing where, under the Phase One dispute settlement
arrangement, there are supposed to be monthly, quarterly,
semiannual meetings where you can take this to the Chinese. And
the whole purpose of these meetings are to identify these
issues and resolve them before they blow up into bigger issues
and end up in tariffs escalating, and that kind of thing.
And those are the kinds of processes that I would expect to
see.
Mr. KUSTOFF. Thank you for that. Of course, you are not
there any longer.
Based on the current makeup, if Meco did what you
suggested, would there be any retribution? Would there be any
relief?
Mr. GREER. So it depends. So first of all, with the Section
337, if you--if your case is successful, you can get an
exclusion order, where those things are not allowed to come
into the United States. So that is a strong relief.
With respect to the Phase One agreement enforcement, the
whole purpose is to go to the Chinese, say, ``Here is the
problem. Go to your people and have them fix it.'' And because
they are authoritarian, it is a little easier for them to do
that than it might be for us.
So there are ways to secure relief. It is not always easy,
but there are processes you can go through to pursue it.
Mr. KUSTOFF. Thank you, Mr. Greer. And of course, that
would--not only Meco, that would apply to any other similarly
situated company with the same circumstances.
Mr. GREER. That is correct, sir.
Mr. KUSTOFF. Thank you. Thank you very much.
Thank you, Mr. Chairman. I yield back.
Chairman SMITH of Nebraska. Thank you. Next, Ms. Sewell
from Alabama.
Ms. SEWELL. Thank you, Mr. Chairman and Ranking Member.
I first would like to thank our witnesses for their
testimony today. In order for us to truly address the People's
Republic of China's harmful tax, I mean trade policies, we need
more than rhetoric. We need action. I think all of you on this
panel would agree on that.
I am proud that the Biden Administration has taken decisive
action. First, we in the Congress, under President Biden, took
a major step to combat China's growing influence by passing the
historic Infrastructure Investment and Jobs Act. By modernizing
our infrastructure for the 21st century and investing in
working families, America will be better positioned to compete
with China for decades to come.
Also, congressional Democrats and President Biden passed
the America COMPETES Act, which is the boldest legislation in
our country's history to directly confront China's anti-free
trade policies and practices, and to promote American workers.
As we have continued to advance a worker-centered trade
agenda, Congress must be more active in combating China's anti-
free market practices and ensure that our steelworkers can
compete on a level playing field. That is why I will soon be
reintroducing the Leveling the Playing Field Act 2.0. This
bipartisan legislation will modernize our anti-dumping and
countervailing duty enforcement laws to push back against
China's Belt and Road Initiative, combat China's circumvention
of U.S. laws, and target repeat offenders. These are common-
sense bipartisan solutions to protect American workers and get
tough on China's anti-market free market practices.
Moreover, today I am joining my colleague, Representative
Bost, to introduce the bipartisan Fighting Trade Cheaters Act,
which will increase civil penalties for fraudulent and grossly
negligent violations of the U.S. trade laws.
These two bills are concrete examples of legislation that
will directly combat the People's Republic of China's illegal
trade practices, and I hope that my colleagues on both sides of
the aisle will sign onto the bills and, more importantly, get
them passed.
Mr. Houseman, can you explain or expand on how the
steelworkers have been impacted by some of the current
loopholes in the anti-dumping and countervailing duties laws?
And do you think that the passage of the Leveling the
Playing Field 2.0 would be helpful to steelworkers and other
workers in my district and across the United States?
Mr. HOUSEMAN. Thank you for the question, Representative.
Yes, the United Steelworkers were strong supporters of
Leveling the Playing Field Act 2.0 in the 117th Congress. And
when the bill is introduced, I am pretty sure we will endorse
again.
And one of the reasons is, for example, tire workers. You
know, we have--we represent--we are the largest union in tire
manufacturing. We represent over half of domestic passenger
vehicle light truck duty tires. And we have been--we have had
to do five anti-dumping and countervailing duty cases,
including two on PVLT.
The first one was against China. Successful. We, hands
down, proved that 50 million tires were coming into the market,
you know, and just dumped at below costs just to kind of
capture market share and negatively impact--we lost 5,000
workers in that industry during that period of time. We were
successful there.
But then, three years later, the union had--a few years
later the union had to put out another AD/CVD case. And it
was--we saw imports rise very quickly from companies that also,
quite frankly, have parent companies that are based in China.
And so they just basically shifted production to third-party
countries, and just started shifting--putting those tires back
into the market. We filed that case, and we are successful in
that anti-dumping and countervailing duty case, as well.
But it would have been easier with your Leveling the
Playing Field Act 2.0. These successive cases, and particularly
third-country subsidies from China, are key items to address.
And then, you know, the union is familiar with your--the
Fighting Trade Cheats bill, which was introduced by Senators
Brown and Tillis over on the Senate side. And, you know, look,
we think the idea of enhanced penalties for bad actors is a
right idea.
I mean, the idea that these importers continuously evade
and break the law--like, for example, in--you know, there has
been three requests, investigations that have found evidence of
a Chinese-owned company operating in the Dominican Republic,
where they brought in aluminum extrusions and trans-shipped
through the Dominican Republic to avoid duties, multiple cases
now. We should be able to attack and address those sorts of
repeat offenders and repeat importers, and provide meaningful
penalties to--and potentially knock them off the list from
being able to import.
Sorry. I know I went over.
Ms. SEWELL. Thank you.
Thank you, Mr. Chairman, and thank you so much for allowing
him to go a little bit over.
And I would encourage my colleagues on both sides of the
aisle to look into both of those bills. Thanks.
Chairman SMITH of Nebraska. Thank you very much.
Again, thank you to our witnesses for participating here
today. I think a timely discussion, one that focuses on
solutions, as well. So thank you for sharing your expertise,
your insight, your ideas, and solutions.
Please be advised that members have two weeks to submit
written questions to be answered later in writing. Those
questions and your answers will be made a part of the formal
hearing record.
With that, the subcommittee stands adjourned.
[Whereupon, at 4:25 p.m., the subcommittee was adjourned.]
PUBLIC SUBMISSIONS FOR THE RECORD
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