[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
HEARING ON THE BIDEN ADMINISTRATION'S 2024
TRADE POLICY AGENDA WITH UNITED STATES
TRADE REPRESENTATIVE KATHERINE TAI
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
APRIL 16, 2024
__________
Serial No. 118-FC25
__________
Printed for the use of the Committee on Ways and Means
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__________
U.S. GOVERNMENT PUBLISHING OFFICE
56-867 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 TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma JUDY CHU, California
CAROL MILLER, West Virginia GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota JIMMY GOMEZ, 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
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Jason Smith, Missouri, Chairman............................. 1
Hon. Richard Neal, Massachusetts, Ranking Member................. 2
Advisory of April 16, 2024 announcing the hearing................ V
WITNESSES
Katherine Tai, United States Trade Representative................ 4
MEMBER QUESTIONS FOR THE RECORD
Member Questions for the Record to and Responses from Katherine
Tai, United States Trade Representative........................ 114
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 156
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THE BIDEN ADMINISTRATION'S 2024 TRADE
POLICY AGENDA WITH UNITED STATES
TRADE REPRESENTATIVE KATHERINE TAI
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TUESDAY, APRIL 16, 2024
House of Representatives,
Committee on Ways and Means,
Washington, DC.
The Committee met, pursuant to call, at 8:45 a.m., in Room
1100 of the Longworth House Office Building, Hon. Jason Smith
[Chairman of the Committee] presiding.
Chairman SMITH. The meeting will come to order. Ambassador
Tai, thank you for joining us today to discuss the Biden
Administration's trade priorities. As always, it is a pleasure
to welcome you back to your home, the Ways and Means Committee.
The last time you came before this committee, I was very
optimistic about the work that we could accomplish together to
deliver some real results for American workers, farmers, and
manufacturers. Unfortunately today, I am less optimistic as the
administration has continued to pursue a trade agenda that
ignores Congress, to the detriment of the American worker and
American leadership on trade.
The Ways and Means Committee has held field hearings across
the United States where we have heard about how the
administration has failed to secure our critical supply chains,
level the playing field for American farmers and workers, and
reassert America's global leadership role.
The United States is rapidly losing ground to China. We
must act quickly to right the ship and put workers and American
job creators at the center of an effective trade agenda. This
starts with strict enforcement of all our existing trade
agreements, especially the USMCA agreement.
Unfortunately, the Biden Administration has failed for the
last 3 years to hold our trading partners accountable. It took
years of congressional engagement to finally get this
administration to bring a case against Mexico GMO corn ban. To
make matters worse, when I speak to farmers in my home State of
Missouri, they often refer to America as the world's
breadbasket. But lately, they feel more like the world's cash
cow.
You can understand my concern when the U.S. agriculture
trade deficit reached a staggering $21 billion, $21 billion in
2023. This is even more alarming when you compare it to the
years when President Trump was in office where the average
trade surplus for agriculture products was over $5.2 billion.
U.S. agriculture producers benefit when the administration
aggressively pursues a trade agenda that prioritizes their
interest, and when USTR goes to bat for them around the world.
USTR must be far more aggressive in protecting the interests of
American farmers.
Meanwhile, this administration has sat idly by while China
continues to spread its milling global influence. You have
asked for new tools in that fight, but you haven't even used
the tools that you already have. You have failed to enforce the
Phase 1 agreement, despite knowing that China is violating its
end of the agreement. This administration has pursued no new
cases at the WTO, no new Section 301 investigations. To top it
off, we are now nearly 6 years into a 4-year review of
President Trump's tariffs. Maybe it is time for the Biden
Administration to just admit that he did something right.
The Ways and Means Committee stands ready to hold China
accountable for its human rights abuses and predatory trade
practices that devastate American jobs and communities.
Tomorrow, this committee will advance legislation to make sure
that countries like China can no longer use trade tools like de
minimus to escape tariffs they rightfully owe. Additionally, we
will counter China's growing influence in the Democratic
Repulic of Congo and its use of forced labor to harvest
critical minerals. We will also propose reforms to the GSP
Program specifically aimed at convincing countries to sever
their own ties with China.
The administration has also unfortunately chosen to go it
alone trade policy that consists of endless dialogues and
unenforceable trade frameworks that fail to open new markets to
American products and circumvent congressional constitutional
authority over trade. A proactive, robust trade agenda that
will actually deliver results can only be achieved when USTR
and Congress work together, as the Constitution demands.
Your efforts to secure critical mineral deals in places
like Japan, the EU, UK, and Indonesia have incensed both
Republicans and Democrats on this committee, as well as in the
other chamber. Again, we are left with no option but to advance
legislation tomorrow to correct that. United States should not
sit idly by while our workers and companies are taken advantage
of, and I am not just talking about China. The European Union
and Canada seek to tax and regulate our companies out of
existence. This is completely unacceptable.
Unfortunately, it is clear the Biden Administration's focus
has been misplaced. Rather than work to deliver for American
workers, farmers, and small businesses, the administration
appeases progressive activists to make trade woke and
surrenders U.S. leadership on priorities like digital trade.
Let me be clear. We would prefer to work closely together
to achieve these goals, and it is not too late to start. We
remain willing to work with USTR to realign America's trade
priorities and look forward to hearing your answers to our
questions today.
Chairman SMITH. I am pleased to recognize the Ranking
Member Neal for his opening statement.
Mr. NEAL. Thank you, Mr. Chairman. Let us welcome back
Ambassador Tai, certainly one of the most talented and capable
negotiators I have met during my long stay here in the
Congress. Delightful is the word I think that we would use in
terms of her raw talent. Also to point out that the template
that she was the lead negotiator on, USMCA, was one of the most
important trade agreements, if not the most accomplished ones,
again, that has happened in decades. She worked with the
Republican president at the time and a reminder, every
Republican on this committee at the time voted for the
agreement that she led the negotiations on with Bob Lighthizer
on the Republican side.
We reached the agreement on rapid response, the right to
organized labor, and environmental concerns. People said it
couldn't be done, and all of our Republican colleagues at the
time on this committee, as well as 95 percent in the House,
voted for the legislation that she was the chief negotiator on
and whom I spoke with almost every day for months.
I saw a headline in the Wall Street Journal recently, that
generally doesn't lean in the Democratic direction, which said
U.S. economy ``is the envy of the world, and it expects to keep
powering higher.'' Much of that has to do, I think, with Joe
Biden's vision, and just as importantly, unemployment that has
remained under 4 percent for the last 3-plus years. Putting
workers and their families first, as Katherine Tai has done,
when building an economy from the bottom up and the middle out,
putting weight to the phrase made in America, she has embraced.
Through targeted investments, we have supercharged domestic
manufacturing, improved supply chain resiliency, all while
creating millions of new jobs, 15 million to be exact.
For years to come, these successes will continue to unfold,
but in the meantime, we also will return to our roots as a
maritime nation. Bolstering our commercial shipping industry
with comprehensive strategies to expand the sector, grow the
workforce, and make sure that this is the next frontier of
making it America, and I know we will work together on this
initiative.
Our investment in combatting climate change, which is the
largest in our Nation's history, is already ushering in
hundreds of thousands of new good-paying jobs and spreading
investments across our country. Success of late has shown how
interconnected workers rights, environmental protections, and a
growing economy are. Ensuring that our trade policies support
our values, not just spoken but practiced, is critical. I am
one who is grateful for Katherine Tai's leadership in these
fronts.
The future is in front of us, and we all should be very
proud of it. As our Nation's lead negotiator, you have fought
to ensure that again that our workers and businesses have the
tools they need to compete in today's global economy and
strengthen relationships with our allies across the world.
Most recently at the WTO MC 13, you secured an agreement on
ecommerce moratorium, and you are making continued progress on
fish subsidies as I noted a moment ago.
The other big dimension that this administration and the
trade representative have brought to these discussions is
enforcement of existing trade agreements. Robustly enforcing
our agreements is another way you put workers at the center of
our trade policy. Again, with USMCA standing as the beacon of
what is possible for labor environmental protections that were
bipartisan in agreement. We no longer have to be concerned that
the very foundation of these agreements can be fractured going
forward.
I credit much of this success to your vision. We are sure
that your efforts will continue on our behalf, and we want to
make sure that we will continue with a values-based trade
policy working together. United by doing what is right for our
people, we might be able to spread opportunity and prosperity
for all members of the American family.
Thank you, Ambassador, and I yield back the balance of my
time.
Chairman SMITH. Thank you, Ranking Member Neal.
Today's sole witness is United States Trade Representative
Katherine Tai. The committee has received her written testimony
and it will be made part of the formal hearing record.
Ambassador Tai, you may begin when you are ready.
STATEMENT OF KATHERINE TAI, UNITED STATES TRADE REPRESENTATIVE
Ambassador TAI. Well, thank you so much, Chairman Smith,
Ranking Member Neal, and members of this august committee. Good
morning, and I appreciate the opportunity to discuss the
President's trade policy agenda with each and every one of you.
The Biden-Harris Administration believes strongly that our
economic policies should work to strengthen our middle class.
In order to give all Americans a fair shot, we need to ensure
broad-based access to economic opportunity, and our trade
policy should be a tool that works together with our other
economic policy tools to reach that goal.
Trade policy hasn't always worked this way. To respond to
the many changes occurring in the modern economy, the world
economy, and the world in general, we must bring a more open
mind and be willing to innovate in the way that we approach
trade policy by questioning and testing old assumptions,
revisiting norms, and thinking creatively and strategically all
at the same time.
In this new era, we increasingly measure our success in
progress by the degree to which we are delivering real benefits
to more Americans across our society no matter where you live,
or whether you have a college degree. Our approach is one that
addresses and advances the interests of all parts of our
economy, and does not pit Americans against other Americans.
Let me give you some examples of what middle out, bottom up
trade policy looks like. First, we are using trade to empower
our workers because we know that they are the backbone of our
economy. Their success is our success. This is about building
our middle classes together with other countries, and not
pitting them against each other. This is why we have
prioritized strong labor commitments in all of our ongoing
trade initiatives, including in our negotiations with Kenya and
Taiwan.
This is also why we have been so focused on utilizing the
USMCA's Rapid Response Mechanism, a key worker-focused feature
of the modernized and reformed North American Free Trade
Agreement that garnered robust bipartisan support.
Since 2021, we have used the Rapid Response Mechanism 22
times at facilities that span various industries from
automotive and garments to mining and services. These cases
have directly benefitted 30,000 workers through new independent
unions, new collective bargaining agreements, higher wages,
back pay, and reinstatement for wrongful termination. The
reason why this matters is because advancing workers' rights
abroad strengthens and empowers workers here at home, because
only then can they compete fairly and thrive in this global
economy.
Our enforcement efforts are also motivated by the principle
of inclusivity; that is, ensuring that all Americans enjoy the
benefits of our trade policies.
With respect to the producers and workers in our steel
industry, last year we secured a victory at the WTO that
determined the illegality of the retaliatory tariffs that the
PRC and Turkiye imposed in response to the U.S. Section 232
National Security Actions on Steel and Aluminum.
Separately through the USMCA, we are actively championing
the interests of our farmers and agriculture producers. We have
pursued two cases now against Canada's dairy tariff rate quota
allocation measures, and we are currently in the midst of
challenging Mexico's restrictive measures on biotech corn
before a panel.
We are also opening markets for hardworking American
families and communities, especially our rural communities.
Through negotiations, our administration has secured over $21
billion in new agricultural market access in the last 3 years.
For example, after the U.S. and India terminated seven disputes
at the WTO last year, India also agreed to remove retaliatory
tariffs on several U.S. products. This means improved access
for chickpeas, lentils, almonds, walnuts, and apples,
benefitting farmers across the country, including Michigan,
Oregon, California, and Washington. This means more market
access for turkey, duck, blueberries and cranberries,
benefitting our farmers in North Carolina, Pennsylvania,
Virginia, Massachusetts, and Minnesota.
Trade should work for all Americans. Our goal is to stop
pitting Americans against each other in our trade policy. This
is why we are taking unprecedented steps to incorporate more
voices into policy making. Just as you stay connected with your
constituents in your districts, I have made a point of
traveling the United States to hear from workers, farmers, and
small businesses, and tribal leaders to better understand their
hopes and aspirations, and learn how trade policy can address
them.
I am also meeting with civil society and labor leaders, in
addition to the big corporations and trade associations that
have traditionally had access to USTR. My job is to represent
the entirety of the United States' economy, not only those that
can afford Washington lobbyists.
Our vision for a fairer future also applies to the
international arena, because it turns out, we all want to grow
our economies from the middle out and the bottom up. This is
what drives our work at the WTO and in our ongoing
negotiations, including with Taiwan, Kenya, and the Indo-
Pacific. We are focused on economic engagement and
collaboration efforts to drive durable economic growth, to
build our middle classes together again, instead of pitting
them against each other.
Over the course of the last several years, it has become
clear that domestically and internationally we need an economy
that is more resilient, as you say, Mr. Chairman. That means
supply chains that can adapt and rebound more quickly and
easily from shocks and crises. Developing the tools to reduce
dependencies and vulnerabilities and incentivize stronger
supply chains is a major priority for USTR this year. We are
gathering public input and will hold several public hearings on
this. This effort will allow us to draw upon a comprehensive
set of perspectives and experiences to help us identify and
develop more trade policy solutions.
Part of this exercise includes developing more effective
countermeasures to the PRC's unfair practices and their
negative effects on our economy and workers, and I want to end
on this note. For many years now, we have seen how the PRC's
non-market policies and practices left unchecked have
devastated many working communities and industries across our
country, including many in your districts. Steel, aluminum,
solar panels, batteries, electric vehicles, and critical
minerals, just to name a few.
As the President said during his State of the Union
address, this administration will continue to stand up to the
PRC, and we are prepared to use our trade tools in this effort,
including through new Section 301 action, and our 4-year review
of the China Section 301 tariffs, which assesses ways to deploy
tariff measures to more effectively and strategically address
the harms from China's forced technology transfer policies,
such as cyber theft and cyber hacking, and related imbalances
and inequities in the U.S.-China trade relationship. This is
also why I am closely reviewing the Section 301 petition I
received last month from five national labor unions to initiate
an enforcement proceeding to assess the harm to U.S. workers in
the shipbuilding industry as a result of the PRC's acts,
policies, and practices.
This administration is fighting every day to put working
families first, rebuild American manufacturing, and strengthen
our supply chains. We are using trade to give everyone a fair
shot while working with our allies and partners.
I want to thank my USTR team serving in Washington, D.C.,
and around the world for their unwavering devotion and
determination to serve all America.
Thank you.
[The statement of Ambassador Tai follows:]
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Chairman SMITH. Thank you, Ambassador Tai.
We will now proceed to the question-and-answer session. The
committee will convene again tomorrow morning to mark up
significant trade legislation, including a GSP reform and
renewal bill, and a de minimus reform bill. Our GSP bill is the
longest renewal in the history and includes updates to counter
China and ensure our farmers are treated fairly when they
export to GSP countries.
Given that USTR administers the GSP Program, including
enforcing the eligibility criteria, would you agree that having
the GSP Program back in place will be a useful tool as you
advocate for U.S. interests on trade?
Ambassador TAI. Thank you, Mr. Chairman, for that question.
I did see the notification on the markup tomorrow, and our
position as the administration is to support the
reauthorization of GSP, in particular with appropriate updates
to reflect the development goals and the values of the American
economy, including human rights, anti-corruption labor
standards, and environmental standards.
Chairman SMITH. I appreciate your perspective on this. I
have heard similar views from our colleagues on this committee,
including my Democrat friends, which is why this morning in an
effort to make the legislation bipartisan, as it traditionally
has been, we have added those provisions, the labor provisions,
consistent with USMCA into the GSP legislation.
Our de minimus bill makes several important reforms, with
the most significant being the exclusion of all products
subject to Section 301 trade enforcement tariffs from de
minimus eligibility. Do you agree that our trade enforcement is
less effective if Section 301 or other trade enforcement
tariffs can be ignored through other U.S. trade laws?
Ambassador TAI. Mr. Chairman, I have heard a lot of
concerns across our economy from stakeholders, especially in
the smaller categories, and people producing and selling
consumer facing products about the challenges that de minimus
presents to their competitiveness, and I agree that this is a
worthy issue for the Ways and Means Committee to take up.
Chairman SMITH. There still is no end in sight to your
legally mandated 4-year review of the China tariffs. For almost
2 years, China is eating our lunch on trade, and the Biden
Administration is still studying the issue. So, your review
will run into a third year unless you complete it by the first
week of May.
So, will you commit to releasing results by May 3?
Ambassador TAI. Mr. Chairman, I was carefully listening to
your description of the timelines. We started the 4-year review
in September of 2022, and this has been a whole of government
effort. It is a tremendously consequential exercise in
examining the use of tariff tools in addressing the inequities
in the U.S.-China trade relationship, which are significant.
So, let me just say that we are making progress, and it is
my belief that we are very close to the conclusion of this
review.
Chairman SMITH. Good. It is just alarming that this
administration cannot even complete a mandatory review of this
tariff action in a timely way. This raises serious concerns
about whether the Biden Administration truly recognizes the
urgency of the threat that China poses to American workers and
businesses and farmers.
The U.S. agriculture trade deficit reached a staggering $21
billion in 2023, after running an average trade surplus of over
$5.2 billion during the Trump Administration. Simply put, the
United States is no longer negotiating meaningful market access
for American farm exports. Instead of serious agreements, the
administration is pursuing so-called dialogues and trade
frameworks that lack legal authority and do not even try to
address tariffs, which are often the most significant trade
barrier our farmers face.
Given how important agriculture is to the American economic
vitality, what is the Biden Administration doing to open new
markets for our farmers and reverse this deficit?
Ambassador TAI. Well, Mr. Chairman, there is so much that
you have just said that I disagree with, but I am going to
start with the facts, which is in 2019 and 2020, the United
States ran agricultural trade deficits of $1.3 billion and $3.7
billion respectively. I also have to look back on----
Chairman SMITH. What was it in 2018?
Ambassador TAI. Well, you said----
Chairman SMITH. It was a trade surplus.
Ambassador TAI. But you said that there were no deficits.
Chairman SMITH. I said an average----
Ambassador TAI. There are deficits.
Chairman SMITH [continuing]. Of $5.2----
Ambassador TAI. Well, then let's acknowledge that deficits
are not a new phenomenon and they happen and they were larger
in recent history.
But the main point I want to make--and this is the most
important one--which is something that I think you and I agree
on, which is American farmers and agricultural producers
absolutely deserve the championship of our efforts, and that is
what we are doing every single day in trying to score wins for
American agriculture. We have removed $21 billion in non-tariff
barriers, which by the way, operate along with tariffs to
frustrate opportunities for our farmers every single day. We
have also just in the last year lowered tariffs. That is real
market access on a dozen products in our negotiations and our
work bilaterally with India, a significant market that is
really important to the work of diversifying opportunities for
American farmers.
So, I really have to push back on your characterization of
recent statistics, and also our efforts to align our values,
which is that American farmers absolutely are a priority for us
in our trade policies.
Chairman SMITH. Ambassador Tai, the fact that you will not
even admit to a $21 billion deficit last year under your watch
on agriculture trade, that is disappointing. Because we have a
serious problem when it comes to agriculture trade in this
country, and it is because USTR and this administration is out
to lunch and they have not been going against Thailand, who has
a 50 percent tariff on U.S. beef. They haven't been going after
Kenya, who has 27 percent tariff on our agriculture products. I
can give you a list of countries, Ambassador. I wish that you
all would lead on protecting the American farmer.
Mr. Neal is recognized.
Mr. NEAL. Madam Ambassador, for decades House Democrats
worked to elevate labor standards and to strengthen the
enforcement of labor commitments to U.S. trade agreements, and
I would suggest that the agricultural states in America have
done pretty well with trade agreements, many of which I have
supported. I thought that the trade discussions were always
pretty bipartisan on this committee, which led to the major
achievement of USMCA.
USMCA reflects the culmination of House democratic work to
transform the old NAFTA, which I opposed, into a deal that
respects the dignity of workers and it contains meaningful
labor enforcement provisions. Why don't you elaborate on Rapid
Response Mechanisms and other areas of improvement that you
have embraced, quite effectively, I might add.
Ambassador TAI. Well, thank you so much, Mr. Neal.
It is true that we take as one of our most important
priorities the serious implementation and enforcement of the
USMCA's terms, especially the updated terms of trade between
United States, Canada, and Mexico.
On the Rapid Response Mechanism which was responsible for
winning the credibility of so many members of Congress and for
the first time, so many of our labor unions, we have taken that
responsibility especially seriously. We have now invoked the
mechanism over 20 times. We have concluded the proceedings in
about 15 cases. The net result is 30,000 workers directly
benefitted by our efforts that have resulted in $5 million in
real benefits. That is back pay. That is increased benefits.
That is raised wages. And with every single one of these
measurable wins, we are evening the playing field for American
workers who have competed too long against brethren in Mexico
whose rights have been suppressed by a system that has
exploited them.
So, I think it is really actually an important consequence
of the renegotiation of the NAFTA, the work that this committee
did in renewing the agreement in the USMCA, that through a
trade agreement for the first time in history we are
demonstrating that trade does not need to be conducted in a way
that undermines the interests of workers. That trade can lift
standards, and trade can improve the prospects of working
people. And that is something we are working every day to
expand into the rest of our trade practice.
But we haven't stopped there, obviously. We have also used
the environmental tools in the USMCA to raise concerns and to
establish protocols for working with Mexico on, for example,
the Vaquita and the Totoaba.
We have also used the USMCA to enforce our expectations of
improved market access for U.S. dairy farmers into Canada. And
as well, we are in the middle of litigating a case with Mexico
on biotech corn policies that are restricting the rightful
access of our producers into Mexico. In all of these cases, we
are proud to be using the tools that were developed in the
renegotiation of this exercise, and for forging a new path in
trade policy that really does espouse and champion the
interests of as broad a base of our economy as possible.
Mr. NEAL. Thank you.
Just a reminder, if I could, Ambassador, because I think it
is important that the USMCA, the largest trade agreement in the
history of the world, was a bipartisan effort largely
promulgated by this committee, again, in a bipartisan manner,
endorsed by the AFL-CIO, the Teamsters Union, the United States
Chamber of Commerce, 195 Democrats voted for that trade
agreement, and 194 Republicans voted for that trade agreement.
Yes, we can build into these trade agreements as you have
envisioned, workers' rights, environmental concerns, and do it
by both political parties participating in the negotiation and
the outcome, as you have embraced and enforced, has been
beneficial to all members of the American family.
I yield back.
Chairman SMITH. Thank you.
Mr. Buchanan is recognized for questions.
Mr. BUCHANAN. Thank you, Ambassador, and I appreciate you
taking some time this past week, get a chance to visit. I thank
the Chairman for putting this on.
You know, USMCA, there is plenty of credit to go around
that was an effort. I was chairman at the time of the
subcommittee, so a lot of energy, a lot of effort that you did,
everybody did. But the thing that I struggle with, there are 7
billion people in the world. We are 350 million. Where do we go
from there? It has been 4 years ago. What is the trade agenda
to do more in terms of Asia, Europe, Africa should be an easy
one. There are a lot of things I just don't--I can't figure out
why we are not doing more in some of these other opportunities
like Kenya, for example, or Switzerland or Great Britain or--
the list goes on and on of things that we should be doing.
Let's take credit, but that was 4 years ago. Let's talk
about the trade agenda now and going into the future.
Ambassador TAI. Well, thank you so much, Mr. Buchanan. I
appreciate this question, which really gets at what are we
doing, and perhaps your specific question is on the negotiation
agenda.
We are taking lessons that we learned in the renegotiation
of the NAFTA and the creation of the USMCA, and absolutely
applying them forward. We have active negotiations going on
with the Indo-Pacific countries. That is 12, 13 countries in
the Indo-Pacific, with Kenya, with Taiwan. With Taiwan, the
first part of that negotiation has been in trying an agreement
that has passed through the Congress beginning with this
committee.
One important distinction in terms of the renegotiation of
the NAFTA and the negotiations we are undertaking now, the
USMCA was built on a renegotiation of an existing free trade
agreement. The negotiations we are undertaking now are new
agreements with countries with whom we do not have an existing
FTA. Therefore, we are taking a different approach, and our
approach is built on----
Mr. BUCHANAN. Let me ask you----
Ambassador TAI. Our approach is built on the basic
principle that we should not be pitting Americans against
Americans and American sectors against American sectors, and
that is why we are building our negotiations out using the
building blocks that you see.
Mr. BUCHANAN. Yeah. USMCA, it just seems like we were all
active and engaged both sides, a lot of meetings, a lot of
effort, and I just feel like there is not that intensity, the
focus that we should have in terms of the future. Because China
is very active all over. I just got back from South America.
I'll be in Africa later this year. They are active all over the
planet in the sense, and I think it is important we are engaged
just as well.
Let me go back to ag, talk a little bit about our tomato
growers. We have lost probably half our business in the last 10
or 15 years to Mexico primarily. We are in the same time zone
in terms of, you know--and it is something we have been talking
about for 4 or 5 years. And they are very upset, very--want to
find a way to get to us, a lot of this stuff. But they just
feel like they have been played in terms of pricing and the
competition, the way they do business.
I would like to have the opportunity, what your thoughts
are on, you know, where we are at, what we can do, and
literally, I think the number is $2-1/2 billion in imports from
Mexico, which was a pittance of that before. They are basically
taking all of our--a lot of our businesses.
You know, I am all about free trade, but it needs to be
fair. It seems like we have been played in a lot of our
vegetables and tomatoes in Florida.
Ambassador TAI. Mr. Buchanan, I think this is a great
example of within a sector where a trade agreement is operating
in different ways for different parts of that sector, and even
for the same set--the producers of the same set of goods, which
is on seasonal and perishable products. I know that the tomato
growers in Florida are getting pinched in a way that tomato
growers in other parts of the United States are not because of
the proximity to the growing season.
This is why Secretary Vilsack and I have been in the
process of setting up an advisory committee specifically for
these growers to give them more voice and influence in the
development of our trade policies that affect them. And so, I
am very, very attuned to their concerns, and we are working
very hard to enable them to have more pull in the development
of those trade policies.
Mr. BUCHANAN. And the advisory committee, I guess that is
something they have been waiting on about a year or so. But if
there is any way you can accelerate that.
So, I can ask one more question. I would love to have you
join me with the growers in Florida, where we can sit down and
just have a candid conversation. It would be positive, but try
to move from where we are to where we need to be. Is that
something you can do?
Ambassador TAI. Mr. Buchanan, I want to give you confidence
that we are very close on the final stages of the advisory
committee formation, and yes, I would be delighted to do that
with you.
Mr. BUCHANAN. Thank you.
Chairman SMITH. Thank you.
Mr. Doggett.
Mr. DOGGETT. Thank you, Mr. Chairman, and thank you,
Ambassador, for your outstanding leadership.
I think it is so important that for the first time we have
a trade ambassador who understands this is not just about how
many widgets are sold, but about the impact of trade on
families, on our health, on our environment, and that we cannot
leave our trade policy exclusively, solely to multi-national
corporations who may not think about those issues.
As you know on the GSP bill, we only got it yesterday and
it is good to hear from the Chairman just now another surprise
that he may add in a consideration concerning labor, but the
failure of their bill to include any environmental standards
seems to me to be a real setback from the progress that all of
us made under the USMCA.
I would ask you to focus on another aspect of this, and
that is the way the lack of environmental standards sometimes
harm our companies' competitiveness. As you know, we excel at
producing clean steel, clean aluminum. Our workers lead the
way, and thanks to the CHIPS Act and the climate law, we are
advancing even further. But it seems to me that our American
manufacturers and workers are competing on a bit of an unequal
playing field if countries like India and China can produce the
same products without regard to their carbon content.
Can you indicate what is being considered in your role to
ensure that our industries can maintain their competitiveness?
Ambassador TAI. Thank you so much, Mr. Doggett. I agree
with you that in the practice of American trade policy, it has
been long settled on a bipartisan basis that labor standards
and environmental standards are core to the way that we conduct
trade with the rest of the world.
To your point about the changing nature of our economics
and our consciousness around the need for sustainability in our
world economic order, I couldn't agree with you more. This is
the reason why we have spent the last 2--over 2 years now
negotiating what we are calling the global sustainable
arrangement on steel and aluminum trade, beginning with the
European Union with a view to then expanding it to other
likeminded countries from there.
The concept of this negotiation is to join the forces
between the U.S. and the EU markets, to create incentives
around our combined markets that will incentivize cleaner
production and cleaner trade, and also to address the non-
market excess capacity that is distorting the world market for
incentives for fair trade and fair production.
This would fundamentally flip a paradigm for trade where
trade would be about the race to the top, about cleaner over
time, more market-based and fairer over time, and that is why
we remain committed to our negotiations with the European
Union.
It is also really important to remember our partnership
with Europe begins at the beginning of the European experiment.
In 1948, the United States made clear our investment in
Europe--it is part of the Truman Doctrine, the Marshall Plan,
the Bretton Woods Project that the United States and the
European Union would come together to defend against non-market
autocracies. And that is just as relevant today as it was in
1948.
Mr. DOGGET. Well, thank you. That collaboration with our EU
allies, I think, is very, very important rather than a go it
alone approach.
Let me ask you also about the criticism that you have
received at times concerning drug pricing and the way big
pharma has handled it. Some of the same people on this dais who
are always defending big pharma, insisting on monopoly,
uncontrolled prices, the highest prices in the world for
Americans seem critical when you address fairer pricing rules
for drugs.
Can you comment on that?
Ambassador TAI. Yes. I think it is really important as we
are advancing trade policy to recall that we are actually a
critical part of the economic policy tool set, and that trade
policies have to work for the American people and be in their
interest, their economic interest, their public health
interest, exactly as you said.
Mr. DOGGET. Thank you very much. Thank you for your
leadership. I yield back.
Chairman SMITH. Mr. Smith, the chairman of the Trade
Subcommittee.
Mr. SMITH of Nebraska. Thank you, Mr. Chairman. Thank you,
Ambassador Tai, for engaging here today. I certainly appreciate
the conversation that we set up yesterday, and I think you want
to focus on solutions, too. I respect that. That is certainly
my goal.
A point of clarification. On the 4-year review of the 301
tariffs, when that 4 years--when did that clock start? Was it
2018 or 2022?
Ambassador TAI. So, this is a fair question and I feel like
we should come up with a different term for this review.
The 4 years refers to the 4-year mark when the tariffs are
in effect. So, the tariffs began in 2018. At the 4-year mark, a
review was triggered by stakeholders who reached out to USTR,
and this is under the 301 statute, to say we would like you to
review.
Mr. SMITH of Nebraska. Okay. So, you wouldn't characterize
this review as being at all late?
Ambassador TAI. Sorry, linked to----
Mr. SMITH of Nebraska. The completion of the review----
Ambassador TAI. Yes.
Mr. SMITH of Nebraska [continuing]. Would you acknowledge
that we are a little behind on having that review ready for the
public?
Ambassador TAI. So, the review began in 2022, in September
of 2022. For us, the approach to China is a deliberative,
strategic, and thoughtful one, and I have a lot of confidence
that we are nearing the end of that review.
Mr. SMITH of Nebraska. Okay. Well, I hope we can get this
going so that we can process it so the American people can
process it so that investors can process it. It is very
important.
No surprise, I would like to talk about corn and Mexico.
Has the President been briefed on what Mexico is doing with our
corn?
Ambassador TAI. Yes, Mr. Smith.
Mr. SMITH of Nebraska. Okay, thank you. I am glad to know
that. My research shows that the President has had exactly
nothing to say about what is taking place. That is
disappointing. It would lead most reasonable people to believe
that it is not a priority. It doesn't matter.
Now, it is one thing for me, the Representative of the
third district of Nebraska, big corn producing district, to
raise some concerns. I am concerned, certainly, about my own
constituents. I am also concerned about rules-based trade and
the perception that Mexico is getting a pass on this. The
filing for the dispute resolution was roughly 2 years after the
decree, the flagrant violation of USMCA was made. And perhaps
there were some efforts to try to work something out to try to
push back. I can't speak to those details. I have not been
privy to those details. And there are folks who would
characterize the decree went from bad to worse before it
perhaps got better, but certainly not resolved.
And I am concerned that our President has had exactly
nothing to say. Is there a downside to our President speaking
up and saying that what Mexico is doing with our corn is wrong?
Is there a downside to that?
Ambassador TAI. Well, Mr. Smith, I am the U.S. trade
representative in President Biden's Cabinet, and I am here to
talk about the President's trade policy agenda today, and I am
telling you that we are actively pursuing a litigation with
Mexico using the tools of the USMCA precisely to address what
we consider to be an illegitimate and unscientifically-based
restriction on our trade and biotech corn to Mexico.
Mr. SMITH of Nebraska. I understand that you are a member
of the Cabinet. I appreciate that. I think that is important
that trade has a seat at the table.
Looking at what President Biden has said publicly about
various issues and what he has chosen, apparently--or you are
telling me that he has chosen to remain silent on this issue. I
dont accept that as being concerned about the issue, and I
respect you and your efforts to--and your team here are very
capable of filing the dispute, even though it has been slow-
locked and Mexico answers that with slow-locking their
responses, in their interest. Okay, fine, but there seems to be
an acceptance by President Joe Biden of what is happening. That
is disappointing. It is frustrating. That is on top of the fact
that we basically announced to the world that we are not
interested in market access. We are not really interested--I
mean, take Kenya, for example. They are members of AGOA. AGOA
is a good thing. It means different things to different
countries in Africa. Kenya, for example, they have the
benefits--unilateral benefits of AGOA, but they would love a
trade agreement with us where we can negotiate market access,
reducing those tariffs that the Chairman spoke about, and we
would--any effort that was made previously, we have actually
walked backwards. We are losing ground. I am concerned.
I yield back.
Chairman SMITH. Mr. Thompson.
Mr. THOMPSON. Thank you, Mr. Chairman, and thank you for
holding this hearing.
Ambassador Tai, it is great to see you. Thank you, and
welcome back to the Ways and Means Committee.
I want to start by echoing Chairman Neal's remarks about
the great work you did in regard to USMCA. You know, I was
fortunate enough to be able to work with you on that
negotiating group appointed by Speaker Pelosi and Chairman
Neal, and I got to tell you, you were remarkable. It was an
honor to be there with you. It was like taking a graduate
course in trade negotiations, so thank you very much.
This is a very timely appearance in this committee because
we are going to be marking up the bills that Chairman Smith
talked about earlier, and I am glad that we have a de minimus
bill and a GSP bill. I know we didn't get the material long
ago, but in the review that we have been able to do, I know we
have some concerns on our side. So, I would hope, Chairman
Smith, that we can get an agreement to work together with you,
because these are two areas that are extremely important to all
of us.
I also want to mention that our economy has made great
strides in recovering from the pandemic by creating more than
15 million jobs under the Biden Administration, and through
strong domestic investments in our transportation structure,
green energy economy, and microchip manufacturing, we have seen
an extended period of unemployment under 4 percent, and that is
important. It has been pointed out by news agencies across the
board, we are the envy of the rest of the world in our recovery
from the pandemic, and that is in large part because of the
great work that the Biden Administration is doing. And we know
that a strong trade agenda both creates new jobs in America and
protects jobs at home from unfair foreign competition.
You have been doing good work. I don't have to look any
further. I have a big ag industry, and I don't have to look any
further in the great work you did to negotiate down the tariffs
in India on a couple of crops that are produced in my district,
almonds and walnuts, which is important. I think we still have
a lot to do in the wine space, and we need to be, I think,
aggressive in the rice area also. That is an area that is
always on the bubble.
I think we need to get a good commitment that we are going
to deal with the Forced Labor Prevention Act stuff. I know that
tomato farmers are very concerned that China is now in that
market, and they are producing a lot more than the market
suggests that they should be producing. So, I would hope that
you would take a good, close look at that.
In regard to the trade deficit in agriculture, I just want
to be clear that there are a lot of things that create problems
in the trade space. For instance, sunflowers are a big crop in
my district, and we lost 50 percent of our export because
Russia invaded Ukraine. They are not buying those seeds
anymore. Can you imagine? We got a lot of ag people on this
dais. If one of your major crops lost 50 percent, I would
suggest that we could--if we want to do something about that,
we could fund the legislation that is hopefully going to be on
the floor this week that will provide some protection to our
trade allies.
So, Madam Ambassador, I hope you could give us some
indication of what the next move is in reducing wine tariffs,
and on the de minimus issue, there are a lot of products coming
into the United States that are creating problems. I spoke with
you recently about the products in the bicycle area. There are
a lot of consumers that are put at risk because the de minimus
rule is allowing unsafe products to come in, especially in the
electric bicycle area and bicycle helmets. So, anything you
could tell us on that would be helpful, and again, thank you
for your great work.
Ambassador TAI. Thank you so much, Mr. Thompson.
Yes, with respect to concerns on enforcing the integrity of
our trade programs at the border, I think that that is a
significant issue, and there are a lot of challenges that we
face there together, as an administration and Congress, that
really will require Congress's leadership. So, I am encouraged
that de minimus is coming up in committee. We will be watching
this very closely.
I think that, you know, the only thing I would add is we do
see concerns around evasion and trans-shipment across the board
with respect to enforcing the integrity of our trade programs,
our trade enforcement actions. That is something that I would
encourage the committee to look very, very closely at.
Chairman SMITH. Mr. Kelly.
Mr. KELLY. Thank you, Mr. Chairman. Ms. Tai, it is really
good to see you. I know we all say it is good to see you, but I
truly mean it. It is good to see you, and I think you do one
heck of a job.
One of the questions I have had over the years--and you and
I have talked about it before, because it actually is a
combination of Department of Energy and Trade, and it comes
down to a product called grain oriented electric steel. The
sole producer, by the way--and it is in my district because it
is made in the town I live in--but it is also in the best
interest of America.
As you know, grain oriented electric steel is a steel that
is used inside the transformers of--that push the electric
current from one section to another and control it. But Mexico
has gone to the process now of importing steel from someplace
else in the world, grain oriented electric steel. They take the
coils, they split it in Mexico and they send it to the United
States. They say no, no. It is an American product because it
is actually assembled in the United States. We see so much of
that in the business I am in. If you look to the lower right
side of any sticker on a car, it tells you exactly where
everything comes from that is made in the production of that
vehicle. But in this case, this grain oriented electric steel--
and again, Department of Energy making a decision that somehow
we should abandon that and go to something called amorphous. We
have one producer of grain oriented electric steel in America.
We have one very small producer of amorphous steel in America,
and the rest would have to be coming from outside to come into
America. And I think that the concern is while we know this is
going on, why do we continue to let it go on?
There are great opportunities. There are great production
capabilities in America. Why would we ever be just kind of
turning a blind eye to our neighbor to the south to go ahead
and bring this steel in, slit it, and then send it to us is, to
me, is beyond anybody's wisdom. I think if we didn't learn
anything from the pandemic, it is the global supply chain.
What else can we do to alert the rest of--not only our
country, but let Mexico know we know what you are doing. You
need to stop doing this. They were able to get away from some
of the sanctions the Trump Administration was putting in
because they would say oh, no, we are not going to do that, but
they would circumvent that. They have done an incredible job of
getting around that issue.
Just from your perspective and what you have seen, what
else can we do and where is the enforcement if Mexico continues
to do what it does? It weakens our supply chain, makes it
almost non-usable anymore. Where can we go from there, and how
can we get Mexico to actually participate they way they were
supposed to participate, and what they asked us, please, let us
get to this point and we are going to be great partners, which
we really need in this hemisphere. So, if you can give me any
type of an idea what else can we do from this point on? I know
DOE changed its rule to go to amorphous steel here in a little
bit over a year and they changed it and gave a couple more
years for us to stay open, but what else can we do, because
this product coming in from other places in the world, it is
hurting us.
Ambassador TAI. Mr. Kelly, you know you and I are on the
same team with respect to ensuring that our steel producers
continue to survive, and also can thrive in our economy and in
the global economy. I really appreciate this question in terms
of what we can do.
First, let me assure you that we have coming out of USTR an
extremely intensive and robust work stream with Mexico on the
issue of steel, including this product, but more broadly as
well. Concerns around other parties using Mexico as a way to
evade and to circumvent our trade programs at the border, and
frankly to water down Mexico's own rights in its legitimate
trading relationship with us.
So, first of all, thank you so much for being such a leader
and a clear voice on this issue. That helps me. That helps to
convey the truth in terms of what my team and I have been
sharing with our counterparts in Mexico City, that the concerns
here are real. They are present, and they are urgent.
I think beyond that, we are really presenting to the
Mexicans that it is within their power and their control to do
the right thing in collaboration with us to ensure that U.S.-
Mexico trade is benefitting our industries and not others.
Mr. KELLY. Listen, I appreciate the help you have given us
so far, but I think we have to intensify it. When we have these
important discussions and we talk about what we can do, I would
actually start to see us actually doing something that shows
them that we are serious about this. We cannot afford--from a
national security standpoint, we cannot afford the loss of
grain oriented electric steel in our steel transformers. And
for those who don't know, watch the telephone poles as you are
driving. Any place you see a gray canister, that is the
transformer. That is what moves electricity from one point to
the next. It is absolutely critical for our infrastructure.
Ambassador, thank you so much. I look forward to working
with you on this.
Mrs. MILLER [presiding]. Mr. Larson, you are recognized for
5 minutes.
Mr. LARSON. Thank you, Madam Chairman, and Ambassador Tai,
welcome back to the committee. Let me join in the crescendo of
accolades directed at you, and rightfully so, for your credible
work that you did in the service of your country here on the
Ways and Means Committee, and in your current role as
ambassador.
Ambassador, in your remarks you talked about empowering
workers through trade, and I want to elaborate on that. In my
district, we are very proud to have a critical defense
manufacturing base--in fact, we power the F-35 with Pratt-
Whitney aircraft engines as well. And you have done a
remarkable job, and here is my question. Can you talk about
everything you have done to level the playing field for the
American worker, and what else we can do to ensure our workers
can compete fairly?
Ambassador TAI. Certainly. Thank you so much, Mr. Larson.
We believe that our workers are capable. They are strong.
They are productive. They are competitive. Just like our
farmers in the ag economy, they want that fair opportunity to
compete, and for too long, I think our trade policies have not
appropriately seen them or focused benefits on our workers in
the formulation and execution of our trade policies.
So, our home base with respect to what we call a worker-
centered trade policy is to always come back to the
renegotiation of the NAFTA. The establishment of the USMCA,
again, broad bipartisan support, leadership of this particular
committee, and this Rapid Response Mechanism demonstrating that
you can do trade in a way that supports the livelihoods and
prospects and opportunities for American workers.
I think I might also want to take this opportunity to note
that while I am very encouraged that this committee is taking
up legislation, in particular to look at the reauthorization of
lapsed programs. The GSP isn't the only lapsed trade-related
program that matters to our economy and to our leadership in
the world. That TAA is also an important piece of our trade
programs that goes to the level playing field for our workers,
that also should be taken up, and I would encourage the
committee to take them up together.
Beyond that in terms of advancing the interests of our
workers, all of our negotiations in the Indo-Pacific, with
Kenya, with Taiwan, whether they are developed, advanced
economies like Europe and the UK and Japan, or very developing
countries, we continue to put the worker piece at the center
because it is so critical to the way that we want to do trade
policy, which is to build economic opportunity for our workers,
while also doing trade in a way that allows our partners,
especially our developing country partners, to build their
middle classes alongside us.
So many of the challenges that we have experienced in trade
domestically and internationally have come because our trade
policies have pitted worker against worker, sector against
sector. We experienced that here in America. We experience that
around the world. We are definitely seeing those pressures with
respect to our concerns around excess capacity and surges of
exports that may come as a result of China's attempts to export
its way out of its economic downturn. And I think that this is
one of the most critical elements of the trade policy that we
are advancing. It is a different kind of trade policy. It is a
policy that is aimed at putting America at the center in
leading to articulate a way you can do trade that builds your
middle and working classes, not at the expense of others, but
together.
Mr. LARSON. Well, thank you again. As always, you are
precise and I particularly applaud your efforts in your
testimony about your work with Mexico especially again
demonstrates how we can empower workers and not pit them
against one another, and still have the United States excel in
an area that we lead the world in.
Thank you, Ambassador.
Mrs. MILLER. Thank you, Mr. Larson.
Mr. Schweikert, you have 5 minutes.
Mr. SCHWEIKERT. Thank you, Madam Chairman.
Ambassador, I want to move a little more globally, and sort
of three major topics. From what you do and your staff does,
how different does the world look right now?
We have been collecting a number of articles that show how
trade flows have actually changed remarkably quickly post
pandemic. How does that look for renewal change updates of
trade agreements, arbitration, all the things that go with
this? How much of those numbers I am looking at in those trade
flows are actually maybe a bit dodgy? In other words, trans-
shipment, the constant debate we are looking at and data we are
looking at coming out of Mexico. If Mexico is now our number
one trading partner, but how much of that is both, shall we
say, quite legitimate, they are moving a factory, and how much
of it is rebranding of a product that just touches ground?
Number two I am going to ask you about currency. As you
know, the U.S. dollar has been on a tear. How much do you--does
that create headwind for the work you do?
And the third thing, your opinion on investor protection
that we did in USMCA for an American company when Canada--a
Canadian business has substantially better because they can use
different trade agreements? We have recently had an issue of a
number of U.S. concerns functionally having takings from the
Mexican government and almost minimal redress as we designed
this in investor protections in USMCA.
So, first trade flows and trans-shipment.
Ambassador TAI. Thank you, Mr. Schweikert.
Your first question I think is a really profound one, which
is that you are absolutely right. The world today, the world
economy today is very, very different from the one 5 or 7 years
ago. There is so much change that is happening on several
different levels all at the same time. I think that in my
interactions with my counterparts around the world, there is a
recognition that this world is different.
Where I see challenges for trade representatives, trade
ministers like myself is what are you going to do about it? I
think that one of the hardest points of the trade policy
conversation today in America and around the world is how do
you adapt to the changes in the world? And from our
perspective, in order to lead as the United States, we have to
accept that change is happening and we need to get ahead of the
change.
Mr. SCHWEIKERT. But in some ways, that is sort of the point
I was hoping you would go to is often the language we design
our trade agreements under is quite static, and we also, you
know, multilateral has become a perverse word here, even though
you almost need that type of flexibility in your design. So,
how do you future proof?
Ambassador TAI. I think that the key is to really focus on
how do trade policy tools apply to making our supply chains
more strategic and more resilient.
A lot of the fragility that you see in supply chains
today--and you are right, we have an extra consciousness around
this over the course of the last few years, whether because of
the pandemic, Russia's invasion of Ukraine, or all of these
events that have broken our supply chains and demonstrated
their fragility. We are really conscious of doing that after-
action review to examine what is contributed to this fragility.
And I think that the key is in new trade arrangements and
new trade tools to build towards resilience. I think you are
right. I think that there are multilateral elements of this,
plural-lateral elements of this, but it is going to require a
pretty significant change in the way that we approach and talk
about trade.
Mr. SCHWEIKERT. Okay. The flash round, speed round.
U.S. currency, how much does that make your job more
difficult?
Ambassador TAI. So, I always have to start when questions
of currency come up to say that it is the Treasury Department
and monetary policy. Nevertheless, I will weigh in here to say
that it has been for a long time for those working on trade, we
know how incredibly powerful currency and currency practices
are to trade flows. It is a powerful driver and mover of trade
dynamics.
Mr. SCHWEIKERT. All right. In our last 15 seconds, investor
protections for U.S. companies.
Ambassador TAI. So, I know about the challenges that a lot
of our companies have faced in Mexico, and I am also aware that
some of them have availed themselves of some of these tools
that remain in the USMCA. We are tracking the progress very
closely.
Mr. SCHWEIKERT. Thank you, Madam Ambassador, Chairwoman.
Mrs. MILLER. Thank you, Mr. Schweikert.
Mr. Blumenauer, you are recognized for 5 minutes.
Mr. BLUMENAUER. Thank you very much, Madam Chair.
Madam Ambassador, thank you for being here with us. I
appreciate you started by attempting to set the record
straight, and in a couple of minutes, I will give you some time
to elaborate on that.
But I wanted to share some of my initial thoughts. I
appreciated the Chairman indicating some flexibility on GSP. As
you know, we passed something earlier. We have had on the table
proposals that are really not out of sync with what the
committee overall has approved, and I am sorry that it has
taken this long, but this may be a bright spot in terms of
moving forward. We know that we can work together on things
that are so critical to our country and our constituents.
I am advised that there are no simple trade issues. The
more we pull, the interrelationships are profound. Internally
in the United States, challenges in Congress, and of course,
internationally. And you have been working hard to recover from
some of the go it alone policies of the previous
administration. Designating Canada as a national security
threat? I imagine you spent a lot of time earlier trying to
explain that to our friends and allies.
I was pleased that we were able to work together with
Ambassador Lighthizer when you were a key staff director to be
able to bring these things forward with USMCA that when it was
introduced was dead on arrival. But we all worked together, and
I appreciate Chairman Thompson reflecting on that interesting
process that we were involved with for hours and hours. I think
it was worth it.
But I am concerned that there are certain items that could
be part of a more comprehensive approach. I appreciate your
referencing trade adjustment assistance, which would help put
us on a level playing field with many of our competitors. I am
concerned that we are going to have a proposal on de minimus
that basically is surrendering to China, that it does not have
strong provisions. It will go away if the tariff policies
change. It doesn't deal with fentanyl, and this committee got
copies of a letter from 13 Republican attorneys general and the
proposal that is going to be brought forward is silent on that.
It doesn't help at all.
I wonder if you could just take a moment to help establish
some perspective on these going forward.
Ambassador TAI. Well, thank you very much, Mr. Blumenauer.
I think on the issue of de minimus, we all know how much
time you have invested in examining the existing policy and
looking at policy solutions. And so, I do know from my own
experience working for this committee and also as the trade
representative that the details really matter, and whether or
not policies will be effective really comes down to their
architecture.
So, again, I am encouraged by the markup and the
legislative movement. I really take your point, though, that if
you're going to solve the problem, it is really important to
think through the dimensions of the policy that you put
together so that you aren't creating new problems as you
attempt to solve old ones.
Mr. BLUMENAUER. Thank you.
Madam Chair, I would just hope when we turn to this this
week, that we have that broader context and we don't settle for
something that looks cosmetic but doesn't solve the underlying
problem. We are all concerned about the influence that China
has, its unfair advantage. We all are aware that there are--I
forget the latest--billions of uninspected packages that are
leaking through this system, and the threats that it poses not
just to public safety, but to domestic businesses. I am hopeful
that we can have the spirit of cooperation, the chairman's
concern about being flexible. We can work that through because
we can do better than to give China a pass on de minimus with
the problems to American companies, public safety, and being
able to cut back on these billion packages a year and counting
that are slipping into the country without oversight,
inspection, and tariff.
Thank you, and I yield back.
Mrs. MILLER. Thank you, Mr. Blumenauer. Being from West
Virginia, you know I am very sensitive to the drug addition
problem that we have.
With that, Mr. LaHood, you are recognized for 5 minutes.
Mr. LaHOOD. Thank you, Madam Chair.
Ambassador Tai, good to see you again. Welcome back.
Ambassador Tai, I am the co-chair with Congresswoman
DelBene of the Digital Trade Caucus, and many of us on this
side of the aisle have been exceedingly frustrated with the
Administration's inability to promote a coherent trade agenda.
When we think about digital trade, obviously there is growing
concern with the Communist Chinese parties, global economic
influence, and their promotion of digital trade policies that
run counter to American ideals.
These Chinese policies promote censorship and surveillance.
They encourage human rights abuses, and they force unwanted
technology transfers through initiatives like the digital silk
road. Rather than providing a free market alternative to the
CCP's digital governance model, this administration sends mixed
messages on the global stage by walking back long-held
bipartisan digital trade proposals outlined at the World Trade
Organization without clearly articulating a policy path
forward.
Last November, Congresswoman DelBene and I led a bipartisan
letter along with 36 House colleagues to you underscoring how
your decision threatens American's leadership and ultimately
harms American businesses and workers. This decision, as we
mentioned, was made without any sufficient congressional input.
So, when I mentioned frustration, Ambassador Tai, we
continue to have concerns and frustration with this decision
and the successive abandonment of digital trade in iPATH, or to
understand what the policy position of the administration is
moving forward.
Can you tell us as it relates to the letter and the current
position of the administration, Ambassador Tai, and the
decision to abandon digital trade, what are the plans for being
briefed here in Congress on the plans moving forward?
Ambassador TAI. Mr. LaHood, thank you for raising the issue
of digital. I have been looking for an opportunity to address
the entire committee on this particular issue, because it has
generated a lot of heat.
Let me begin by saying that it is precisely because of
Congress that we are adjusting our approach and policies on
what we call digital trade. It is because we see what you are
doing up here with respect to addressing the risks and harms
that can come from PRC technology policies and how they impact
the rights and the interests of Americans and, for example,
their data.
We have paid attention to the fact that bills have advanced
through the House and have passed with respect to TikTok and
the concerns around onward transfers of Americans' data to
China and access to the PRC government, as well as more
recently the Data Brokers Bill that we saw pass on a 414 to 0
basis. These concerns around the security of Americans' data,
where it ends up in the global technological economic ecosystem
is what is animating our approaches to digital trade. The
digital trade provisions that you have references go to data
flows, data localization, and source code as well. They were
developed as part of a trade policy that is really rooted in
our recognition and our understanding 20 years ago that data is
just about facilitating traditional trade transactions.
What we have discovered today, and I think you probably
know better than many, being the head of the Digital Trade
Caucus, today data is not just something that facilitates
traditional trade, data is the commodity and the thing that has
value in and of itself. Data is what is fueling technological
advancements. Who has access to that data, who can accumulate
it, and then fundamentally here in the U.S. Congress, the
debates around what is the relationship between Americans and
their data? What kind of rights do they have? What kinds of
rights to security do they have? It is precisely because of
this evolution in understanding what is at stake that we have
indicated that these trade policies that treat data in a very
straightforward way and an outdated way have to be updated to
reflect the much, much more complex issues related to
American's privacy rights, their intellectual property rights,
and also their security and our collective national security.
Mr. LaHOOD. Well, I appreciate that, Ambassador Tai, and I
would appreciate more input from the administration in working
with the Digital Trade Caucus.
I want to pivot just for a second here. Article from
Bloomberg related to--this is the title from April 10, 2024,
``Brazil Rebuffs U.S. Pressure to Abandon Tariffs on Ethanol
Imports.'' Can you comment on the current negotiations with
Brazil? It is immensely frustrating for our ethanol producers
in this country the current situation with Brazil, and what
action is the administration going to take?
Ambassador TAI. Mr. LaHood, I know how much this matters to
you and your constituents. This is an issue where we are
entirely on the same page. We continue to engage with Brazil as
recently as a couple weeks ago. My chief ag negotiator had a
meeting with their agriculture ministry. We continue to work
this issue, and I have been given assurance by my counterparts
in Brasilia that they understand how important this issue is to
us. We are working to find ways to relieve the tensions in this
part of our relationship.
Mr. LaHOOD. Thank you.
Mrs. MILLER. Thank you, Mr. LaHood.
Mr. Pascrell, you are recognized for 5 minutes.
Mr. PASCRELL. Thank you, Ms. Chair.
Look, if we can move, Madam Ambassador, 450 tons of bridge
out of the Baltimore Harbor, we ought to be able to come
together with a trade policy that is looking forward, which we
all are talking about, reciprocal in every manner, shape, or
form, and labor-friendly. That is going to be a necessity from
here on in, and you know it. And that is how we move forward
primarily.
Because of the bad actors we got to deal with, the world we
live in today is more fraught and unstable than in quite some
time. That instability makes it absolutely critical, in my
eyes, for America to reinforce our trade capabilities. The
pandemic and its aftershocks were really a wakeup call, and are
going to be heard for years to come. That America must bring
our industrial capacity home and build trade relationships that
benefit our country and our allies. The decades of so-called
free trade have hollowed out communities and made America too
reliant on bad actors who take advantage of this Nation.
One of my proudest votes in office remains opposing China's
entry into the WTO. Since that moment, the Chinese Communist
Party has climbed America's back to economic prominence. China
and its junior partner, Russia, are directly hostile to the
values of the free world and to America specifically. We cannot
allow our own economy to bankroll tyrants who wish Americans
harm. There are actually some people who are running for
president that want to do that, who wish the economy crashes,
in their own words.
Trade is not just numbers on a sheet. It is interests and
it is values. I believe President Biden has prioritized
Americans' interests and values. It is essential that you
communicate both of these.
I have some questions for you.
The attacks on freedom and democracy led by China and
Russia represent perhaps the challenge of our time. Can you
broadly detail how the Biden Administration formulates American
trade to preserve democracy and combat autocracy? How does
illiberalism negatively impact trade?
Ambassador TAI. Mr. Pascrell, thank you for these questions
that go to the center of why trade is important, and why
American leadership in trade is important right now in a very
changing world, with significant consequences.
One of the leading ways in which we are advancing a trade
policy that is focused on defending against autocracies is to
work with our partners and allies who share a history with us,
and who share values with us, open societies, democratic
systems, open market-based economies.
The challenge is that the global economy is being
fundamentally distorted by systems that don't share our value,
but also systems that work on a different set of economic
logic. We talk a lot about markets and freedoms. The challenge
is that at this point in time, the global economy is actually
being significantly affected and distorted in ways that
freedoms are being impacted. The level of economic coercion and
bullying that we see happening with those countries that have
the leverage to choke where they have chokepoints in supply
chains in response to political decisions that they don't like
should be highly concerning.
And so, whether it is through our work to diversify and
derisk supply chains, or on our work to promote more
sustainable, more pro-worker, pro-democracy, pro-economic
opportunity trade paradigms and economic frameworks for
collaboration, the concerns you have raised animate everything
that we are doing to try to change the conversation on trade,
which I think for a long time has gotten very complacent.
We need to be fundamentally playing a different game, more
active defense. We have to be much more conscious about what is
at stake, and what are the values in our economy and in our
societies that we need to safeguard because they are under
threat. And I thank you very much for raising those concerns.
Mr. PASCRELL. And I have all the confidence that you can
change the dialogue.
Thank you for your service.
Ambassador TAI. Thank you so much, sir.
Mr. PASCRELL. Thank you, Madam Chair.
Mrs. MILLER. Thank you, Mr. Pascrell.
Mr. Arrington, you are recognized for 5 minutes.
Mr. ARRINGTON. I thank the Chairman; I thank the
ambassador.
When I hear you say we need to play more aggressive
defense, I think on the opposition, on our adversaries. But it
is like watching--I have to say it--my son play basketball at a
young age where sometimes they don't know who is offense and
who is defense, and their team will sometimes actually play
defense on their own team, which is what I believe, Ms.
Ambassador, we are doing with our L&G exports and our domestic
energy producers.
Why would we put a moratorium on trading L&G with our
allies? Why--we talked about enriching Vladimir Putin and
adversaries by not trading with Europe, who depends on us now
like we are their greatest exporter of L&G. They were 40
percent dependent on Russian natural gas in 2021. That has
changed. We have exported three times the L&G. And by the way,
this is just a stat--American produced L&G is 41 percent lower
life cycle emissions than compressed natural gas from Russia.
So, the environment is better off. Our economy is better off.
Domestic energy producers are better off. But we are enriching
Vladimir Putin and we are putting our allies in eastern Europe
in an untenable situation. I don't understand that. I will let
you respond, but I need to go to an issue that is admittedly
parochial in that it affects Texas. Not my district, but south
Texas, the Rio Grande Valley.
This may be a little out of your wheelhouse, but I think
you can help us. I am pleading with you to help us. This goes
back to the principle of these treaties and trade deals are
only as good as our willingness to enforce them. Whether it is
labor issues, environmental issues, we agreed to it, the
American people did by sending us here. We cut these deals, and
we get taken to the cleaners by our competitors and partners
when we don't enforce them. So, there is this water treaty
since 1944--I am sure you have heard of this--we depend on
Mexico based on this agreement to provide 350,000 cubic acre
feet a year to a couple of reservoirs so we can produce
irrigated crops in the Rio Grande Valley. It is $1 billion in
irrigated crop loss without these resources, and for 4 years,
Mexico has failed to deliver. Monica de la Cruz, God bless her,
she is a warrior from the great State of Texas, and is a
champion and strong voice for her people at a time when they
are in desperate need on the heels of a drought with Mexico not
complying, and they just shuttered the last--they grow various
crops, citrus, vegetables, but sugar is a big production ag
center in the Rio Grande Valley. They just closed the last
sugar mill to process the sugar. Five hundred jobs gone, and it
took her a year and a half to get a meeting with Secretary
Blinken. I recognize there are lots of things going on in the
world, but we got to be able to walk and chew gum. Somebody
over at the State Department--and maybe with your help--can
hold Mexico accountable so that we don't lose anymore jobs.
This is a self-inflicted wound. We are not talking about a
new deal. This shouldn't be that difficult to solve, and it is
devastating the Rio Grande Valley. I have got reports that I
would submit for the record, Madam Chair, from the Center for
North American Studies, that talks about the loss of almost
half a billion dollars in direct revenue and a much broader
economic impact.
So, bless Monica de la Cruz's heart. She is a new member,
and with the zeal of a new member, she has written letters. She
has gotten bipartisan support. She has worked up and down the
chain. She has engaged with Mexican officials, and after a year
and a half, she sat across from Secretary Blinken and it was
just so disappointing. It was like we will try. No real
commitment, no definitive action. Will you please help the Rio
Grande Valley to just get the water that they are owed
according to the treaty so we can help produce safe and
affordable supply food for this country and food security for
every American.
Ambassador TAI. Mr. Arrington, thank you for raising this
issue with me in this context. I would be delighted to follow
up with you and have our staffs connect and see how we can
assist.
Mr. ARRINGTON. I know that may have been the longest
question wind-up in----
Ambassador TAI. I appreciate it.
Mr. ARRINGTON [continuing]. History, but it is a very
important issue. Thank you for your sincere consideration.
Madam Chair.
Mrs. MILLER. Thank you, Mr. Arrington, and we do, without
objection, accept the article.
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Mrs. MILLER. Mr. Davis, you are recognized for 5 minutes.
Mr. DAVIS. Thank you, Madam Chairman. Ambassador Tai, thank
you for being here with us today.
I want to thank you for continually promoting President
Biden's efforts in strengthening the U.S. economy through
innovative trade initiatives and work-centered empowerment
agreements domestically and internationally. You have been
instrumental in securing U.S. supply chains and reducing
economic liabilities through affirming existing partnerships
and developing new ones around the world.
Additionally, as our trade representative, you have
embraced President Biden's vision by expanding agricultural
opportunities for farmers and producers with more market
access.
According to the Bureau of Labor Statistics on Wednesday,
April 10 of this year, it was reported that consumer prices
increased by 0.4 percent in March, and the cost of medical
services increased by 0.6 percent. At the end of May, a number
of exclusions from Section 301 tariffs for medical supplies are
set to expire. I am concerned that the lapse of these
exclusions, along with other economic factors, have the
potential to increase healthcare costs. Could you share with us
your thoughts and plans relative to how we handle these
expiring tariffs and the impact it may have?
Ambassador TAI. Thank you very much, Mr. Davis, for your
question, and for framing it around the issues that impact
Americans as consumers of healthcare services and products.
Let me just say broadly that with respect to our review of
the existing tariffs and a review of the exclusions, the
tariffs are meant to serve a purpose, and that is to help us
address the imbalances and inequities in the U.S.-China trade
relationship, to motivate China's compliance with respect to
the challenges and the harms that were identified in the
original Section 301 investigation, and also to encourage our
producers to diversify their supplies, and also our producers
to give them the space to make a transition to being able to
improve their own capacities.
So, without getting into specifics with respect to this set
of exclusions where I am limited to what I can say right now, I
just wanted to acknowledge that the questions that you are
raising are exactly the ones that we look at in administering
an exclusions process and in reviewing the Section 301 tariffs.
Mr. DAVIS. For your attention to that issue, I moan and
groan a great deal about what my district does not have, but
one of the things that we do have is a pretty solid supply of
medical equipment manufacturers, and they are indeed always
concerned. So, I thank you very much and appreciate your
serious attention.
Thank you very much, Madam Chairman. I yield back.
Mrs. MILLER. Thank you, Mr. Davis.
Dr. Ferguson, you are recognized for 5 minutes.
Mr. FERGUSON. Thank you, Madam Chairman, and Ambassador
Tai, welcome. Glad to see you again, and thank you for your
service to the Nation.
I know you have taken several questions along this point,
but I want to make it again. I am really frustrated with the
lack of movement on GSP. I look at a state like Georgia, and
having--you know, we have got about a million and a half acres
of privately owned timber, and about another million--excuse
me, $1.3 billion in manufacturing sales associated with that.
GSP could play a role in that, but it does in so many other
ways. It is really important for us to pull--to create
different supply chains than we have right now, and GSP is one
such tool that we can do that with.
Can we have your commitment that you will continue to--to
help us get that across the finish line, and can you speak to
the importance of a solid, potentially longer authorization
versus a shorter authorization, and what that does to stability
in the marketplace?
Ambassador TAI. Thank you so much, Dr. Ferguson. GSP is on
everybody's mind at the hearing today, because I know you all
have a markup tomorrow, which is encouraging because at this
point I think GSP has been lapsed for over 3 years.
I have a lot of counterparts who raised GSP with me, asking
about reauthorization. I always begin my response by tipping my
hat to the U.S. Congress, this committee, and the Senate
finance committee in particular in terms of it being a
statutory program that comes from you.
That said, the administration is supportive of
reauthorization of GSP, of course, with appropriate updates to
reflect GSP's purpose as well to be a trade and development
program that enhances the relationship between the United
States and many of our developing country trading partners. And
so, we also support updates to the GSP Program that go to those
development goals that address human rights and corruption,
rule of law, labor standards, environmental standards.
I would be remiss to not mention other lapsed programs,
including TAA, which goes to the competitiveness of our
workers. But whether it is with respect to technical assistance
or other kinds of assistance that we can provide, we at USTR
stand ready as always.
Mr. FERGUSON. Thank you. Thank you for that. I just feel
like it is really important that we get--that we work to get
this done.
Another area that I am concerned about is digital trade,
particularly as it relates to our filmmakers, our music
creators, the multi-billion-dollar industry that exists in my
home State of Georgia around TV and film production, but also
music industry in the metro Atlanta area.
I am concerned about things like what Canada is potentially
doing and how that can negatively impact, you know, trade, but
really, if that goes into effect, then that really could have a
chilling effect on the creator's incentives to, you know, to do
more. That could affect job creation in the State of Georgia
and capital investment there. Can you speak to how you would
deal with that issue, and how Canada could potentially be
discriminating against American producers there?
Ambassador TAI. Dr. Ferguson, the Canadians are very
active, so I just wanted to ask a point of clarification. Is
this with respect to the Canadian digital services taxes?
Mr. FERGUSON. The Online Streaming Act.
Ambassador TAI. Oh, the Online Streaming Act. I appreciate
that.
The issues that you raise with respect to impacts on
American content creators, our creative industry, jobs in that
industry which are heavily unionized, they--this provision is
something that we are looking at very, very closely, and I
think what I would say to you is we remain in close contact
with our Canadian counterparts with the MC as well in assessing
where they are in their implementation.
I believe this Online Streaming Act--became law in April
27, so almost a year ago. It does create an opportunity for
Canada to update its definition of Canadian content to better
reflect the complex ways in which film, video, and audio
content is produced, and we would like to see this updating
process lead to fair outcomes for U.S. stakeholder.
Mr. FERGUSON. Yeah. I just would like to have your
commitment that we are not going to do anything that
discriminates against U.S. producers and content creators.
Ambassador TAI. I think that you can rely on us to do that
in our conversations with our good friends up North.
Mr. FERGUSON. Thank you, Ambassador.
I yield back.
Mrs. MILLER. Thank you, Dr. Ferguson.
Ms. Sanchez, you are recognized for 5 minutes.
Ms. SANCHEZ. Thank you so much, and Madam Ambassador, thank
you for joining us. I know that you go to extraordinary lengths
to make yourself accessible and available. I want to thank you
for always being willing to answer questions.
I also want to point out the great work that you have done
traveling the country and talking to stakeholders to make sure
that our trade agreements are not pitting Americans against
Americans and are doing our utmost to boost each sector of our
economy.
I just want to, before I jump into questions, I just want
to mention, GSP has been mentioned a lot today, and I would
remind my colleagues on the other side of the aisle that
Democrats support GSP renewal, but trade agreements can create
disruptions. And so, Democrats are united in saying that we
want to see trade adjustment assistance included in the GSP
reauthorization because that helps to minimize some of those
impacts. Yet noticeably, the bill that we will be marking up
this week does not include trade adjustment assistance. I just
wanted to put that into the record.
I have to commend you, Ambassador Tai, and the
administration for your efforts to advance a new worker-
centered trade agenda, because our trade agreements in the past
weren't always focused on workers, and our trade policies in
the past had only paid lip service to labor rights. But I am
very heartened that our sort of new--our new template for trade
moving forward makes sure that workers living abroad are
getting decent wages and decent working conditions, and that we
are disincentivizing companies in the United States from
sending jobs overseas.
I know that we have seen the Biden Administration's work
over the last three years in defending workers' rights, both
domestically and abroad, and to help U.S. companies compete on
a more level playing field in trade. And as a labor lawyer, I
am particularly proud of USTR's success with the Rapid Response
Mechanism that we saw in the USMCA. You mentioned that there
have been over 22 cases in Mexico supporting nearly 30,000
Mexican workers, and I think that those ambitious and
enforceable labor protections like the RRM reflect the changes
that many of us here want to see in any new trade agreements
moving forward.
To that end, Ambassador Tai, can you speak to how you work
to ensure that our trading partners eliminate things like
forced labor and other worker abuses in their countries or in
their supply chains? And then, people will say well, why do we
care what happens to workers overseas? How does that benefit
U.S. workers?
Ambassador TAI. Thank you so much, Congresswoman Sanchez.
I will start with that last question and provide an
example. In the work that we have done over the years with
American auto workers, for instance, we have seen over the past
previous decades the amount of American manufacturing that has
relocated offshore, and especially when that production goes to
jurisdictions where workers do not have a fair shot, where
their rights to advocate for themselves are suppressed. What we
see is American workers suffer, and the autoworkers are
particularly articulate on this, which is that in their
negotiations that come up every couple of years, that they are
given deals and told you can either take this or leave this,
because if you don't take it, we are just going to move
production to a jurisdiction where workers can't get a fair
shake.
And so, by ensuring that our trade deals are actually
reinforcing and creating opportunities for workers in those
other jurisdictions to be able to have that fair shot to
advocate for themselves to improve their working conditions, we
are in a very direct way leveling the playing field for
America's workers.
So, that is one key component to what we are doing.
The other question that you asked is how do we work with
our trading partners to address forced labor and supply chains?
This is something that we have done a lot of work on with the
European Union. We do a trade and labor dialogue as part of the
Trade and Technology Council, entered into an MOU with the
Japanese government in the G7 context. We have advanced this in
a lot of our bilateral arrangements. We are working with our
trading partners to work with us collaboratively to create
measures where they don't have them, to work towards
eliminating forced labor from global supply chains.
Everyone knows that forced labor has no place in global
supply chains. The challenge is that right now, our global
supply chains are largely unfettered. They don't face a lot of
scrutiny, and making that change to create more scrutiny, to
create enforcement measures, is hard. You can ruffle feathers.
You need resources. But we are growing this conversation,
including at the WTO, where in May of 2021, we advanced a
proposal in the ongoing fishery subsidies negotiations to shine
a light on the problem, the scourge of forced labor in the
fishing industry, especially on distant water fishing vessels
where workers are very far away from land, from communication
devices, and are particularly vulnerable to forced labor.
We continue to work on that in the WTO context, and we
continue to see progress that we are making across the board.
Ms. SANCHEZ. Thank you, Ambassador Tai.
I just want to mention one thing before I yield back my
time.
Mrs. MILLER. Your time is expired.
Ms. SANCHEZ. The investor state disputes settlement, but we
can talk about that at another time.
But thank you for your time.
Mrs. MILLER. Thank you, Ms. Sanchez.
Mr. Estes, you are recognized for 5 minutes.
Mr. ESTES. Well, thank you, Madam Chair, and thank you,
Ambassador Tai, for joining us today. It is always good to talk
to you. Unfortunately, I think a lot of our conversation today
is centered around things that aren't going well on the trade
front. I mean, it seems like over the last 3 years for the
Biden Administration, we have been having a lot of the same
conversations, sharing the same frustrations with very little
or no action.
This committee, both Republicans and Democrats, are
passionate about free and fair trade, because we know when it
is done right it boosts our economy and lifts more people out
of poverty. Unfortunately, the Biden Administration has shown
little interest in pursuing meaningful fair-trade agreements
that benefit American workers and job creators.
Instead, the Administration has advanced some of the
disastrous proposals coming from the OECD and WTO that are
widely panned as detrimental to the United States and our
economy.
Over the past 3 years, USTR has failed to insist on
safeguards for digital trade, which has been brought up before,
which will result on the loss of U.S. tax revenue to other
countries. By acquiescing to forced tech transfers, localized
operations and data localization, the administration is
consenting to WTO proposals that will send U.S. jobs and IP to
foreign jurisdictions, decreasing our tax base.
In addition, the OECD's Pillar 2 project would accelerate
the loss of tax revenue because Treasury seceded the primary--
the primacy of U.S. international tax system.
I am especially concerned about the global minimum tax and
pillar 2. I want to step back to pillar 1. As you know, me and
several other members of the Committee have had concerns about
proliferation of the discriminatory digital services taxes
since 2017, which is why I encourage previous administration to
engage in the OECD BEPS 2.0 project. As you know, the goal of
this project was to eliminate digital service taxes and provide
tax certainty and simplicity for businesses in a growing
digital economy. Eliminating extra charitable taxes like DSTs
is not a Republican or Democrat issue. My Democrat colleague,
Congressman Dan Kildee, and I introduced a resolution in 2020
condemning DSTs. Yet, today we are seeing more countries like
Canada in at DSTs, and OECD issued a convoluted 800-page draft
deal that leaves more questions than answers.
And before of this, it is my belief that Pillar 1 deal now
represents a foot in the door to more extra territorial taxes
on successful U.S. businesses.
A recent Law 360 article summarizes sentiment from a tax
subcommittee earlier this year, saying both Republican and
Democrat members make clear that they oppose digital services
taxes, many of which would be eliminated under Pillar 1, but
stakeholders raised concerns about the extent to which
convention would protect companies from future measures.
The JCT report on Pillar 1 released earlier this year notes
that a parality of in-scope companies would be from the U.S.,
and 70 percent, or $135 billion of amount A would come from
American companies. Likewise, the U.S. Treasury would forego
between $100 million and $4.4 billion per year in tax receipts,
as we were giving away our taxing rights to other countries.
And USTR's negotiation with Canada on a DST that they deemed
susceptible is also troubling, be seen as an easy provision for
other countries to copy.
Ambassador, I have noticed this in previous hearings. The
House Ways and Means Committee, which has jurisdiction over
taxes and trade, should have been involved in the conversations
early on, and it simply unacceptable that Pillar 1 has
currently negotiated by the Biden Administration risks sending
U.S. dollars to foreign treasuries at the expense of American
job creators, innovators, and workers.
Kansans I represent sent me this body to put their best
interest first, not those of foreign countries seeking to
pilfer the U.S. Treasury.
In relation to the negotiations of Canada regarding their
DST, what would be the threshold for a tax to be determined
discriminatory towards the United States? Would it be that 25
percent of the ins-cope businesses were American, or over 50
percent or over 75 percent? Where is that threshold in the
discussions that you are having?
Ambassador TAI. Mr. Estes, you have compacted a lot of
information into your question, and so, I promise I will get to
it.
But first, I start with your characterization of what we
have done or not done in the context of the WTO. I have to
admit, I didn't fully understand which topics you were
concerned about, but I really do have to stand up for my
people, my agency at the WTO, which is a very challenging but
important institution. To allow for someone like me that leads
an agency to accept assertions like that does stand, so I am
just going to put on the record that I object to the
characterizations that we are not standing up for American
interests or that we are not leading at the WTO.
On your question on DSTs, I will have to say that for a lot
of it--let me just start with I am the U.S. trade
representative and not the U.S. tax representative, and a lot
of what you are characterizing as Biden Administration approach
really is led by the Treasury Department, which I know is
subject to Ways and Means jurisdiction. It is just that I am
not the person and we are not the main agency.
Your specific question, though, with respect to Canada and
discriminatory aspects of Canada's DST, that is where we come
into the DST conversation where DSTs that are proposed and come
into the world have discriminatory impacts. That is exactly the
question that we engage on, not with Canada, but with a number
of other jurisdictions. We have suspended Section 301 actions.
We stay in very close contact in understanding what the
dynamics are around Pillar 1 and Pillar 2, and we look at all
the tools that we have with respect to addressing those issues
in USTR's purview.
Mr. ESTES. Well, as you know, I only have 5 minutes to ask
questions, so covering a lot of material. It is unfortunate
that we can't get to some solutions.
So, thank you, and with that, I yield back.
Mrs. MILLER. Thank you, Mr. Estes.
Ms. DelBene, you are recognized for 5 minutes.
Ms. DelBENE. Thank you, Madam Chair. Ambassador Tai, it is
always great to have you here at the Ways and Means Committee.
Thanks for joining us.
As I often remind you, and pretty much all my colleagues,
trade is critical for Washington State's economy. More than 40
percent of our jobs are tied to trade in industries ranging
from agriculture to advanced manufacturing, and our port
workers serve as a gateway to the Indo-Pacific, where over half
of global economic growth is expected in the next 30 years.
You have notched some key wins for Washington's economy--
thank you--such as reopening India's $120 million market for
Washington apples. I do worry we are not doing enough to
negotiate trade roles that are commercially meaningful,
enforceable, supported by Congress, and reflective of the
modern-day challenges we face as a Nation.
One area where we need to be doing more is to combat
climate change through trade. The Inflation Reduction Act that
Democrats passed in 2022 is the most significant federal
investment in American history to tackle the climate crisis and
is expected to lower greenhouse gas emissions by 40 percent, in
part by investing billions of dollars to reduce emissions
across steel, aluminum, and other hard to decarbonize
industries. As a result, many businesses across our country are
investing in cleaner production processes, but their
competitors in certain foreign countries are taking advantage
of weaker environmental standards in their own countries to
undercut our industries, putting American jobs at risk.
And so, if we fail to harness America's clear and growing
carbon advantage, more jobs in important areas will be lost to
countries like China and India, where production is three to
four times as carbon intensive. And so, that is why I believe
Congress should pass legislation like the Clean Competition Act
that I introduced with Senator Whitehouse and a group of House
Democrats, including my colleague, Congressman Don Beyer, to
impose a border fee on energy intensive imports. The EU has
already passed their own carbon border adjustment mechanism,
and many other countries are moving forward with their own
proposals, including the UK, Canada, Australia, Taiwan, and
South Korea. This is not a partisan idea. Senators Bill Cassidy
and Lindsay Graham, both Republicans, have also introduced
carbon border legislation and earlier this year, one of Donald
Trump's top trade officials testified in this committee in
support of the concept. So, this is also very fiscally
responsible, as economic modeling in just the steel and
aluminum industries has found that a carbon import fee would
raise tens of billions of dollars.
So, Ambassador, I wondered how could a carbon border fee
level the playing field for American workers and reduce global
emissions, in your opinion?
Ambassador TAI. Thank you so much for your leadership on
this issue, Congresswoman DelBene. I agree with you. I think
that this was one of the most important changes among many
changes that are happening in the global economy, one where the
United States is positioned to lead. We have a lot to
contribute here.
I wanted to start by letting you know that just a couple
days ago, if not two weeks ago, we at USTR put forward at the
WTO communication on climate and trade at the WTO, primarily to
try to focus the work at the WTO--there are about a dozen
workstreams on environment and climate at the WTO. The WTO
knows that the solution to our climate challenges is a
collective one that involves trade.
Thanks to the work that you and your colleagues are doing
here, we are able to advance our voice in that conversation to
say the United States has a perspective here, and the measures
that countries and economies put together at their border to
incentivize pro-climate policies and to make trade work have to
be able to work with each other, and that we have to respect
that we all have different systems and that our measures might
look different. But if our goals are the same or similar, there
must be a way for us to join forces, and the approaches
shouldn't be to penalize each other.
So, this is one of these areas where we know that there is
work that we need to do, that is it a congressional and
executive partnership, and the leadership that you are showing
in introducing these bills as they advance as a bipartisan
conversation grows and develops here will further strengthen
our ability to engage and to influence the global conversation.
It truly is a partnership.
Ms. DelBENE. Thank you, Ambassador. I yield back.
Mrs. MILLER. Thank you, Ms. DelBene.
Dr. Ferguson, you are recognized for 5----
Mr. FERGUSON. Dr. Wenstrup.
Mrs. MILLER. Whoops, how did I do that? Dr. Wenstrup----
Mr. WENSTRUP. That is all right.
Mrs. MILLER [continuing]. You are recognized for 5 minutes.
Mr. WENSTRUP. Thank you. Ambassador, thank you for being
here today, and I may be redundant on something here, but I
just want to run it by you real quick when it comes to
reopening Section 301.
My concern is that when we have things that are not a
threat to our national security and do no harm to our
healthcare system, whatever, are we going to be open to let
businesses make their case to import some of those types of
products from China?
Ambassador TAI. So, thank you, Dr. Wenstrup. I think
probably specifically what you are referencing are exclusions
programs?
Mr. WENSTRUP. Correct.
Ambassador TAI. Yes. No, we recognize that exclusions
programs are particularly important in transitioning from a
situation where we have created and are living
invulnerabilities with respect to suppliers, to getting us to a
place where we are less vulnerable and have more diversified
opportunities.
So, I hear you in terms of the importance of exclusions,
and their role in the transition that we are making as an
economy.
Mr. WENSTRUP. Especially when we are talking about things
that do not engage with our national security, but in that--and
national health security, in particular, I want to talk to you
about that. Because I am concerned about the vulnerability of
our supply chain for products critical to our national health
security, such as, you know, PPE, generic drugs. You know, if I
had known when I served in Iraq as a surgeon that my protective
equipment and my medications relied on an adversary, I am
wondering how did our military get here, but how did we as a
country get here because it is a threat to all of us, not just
our military.
So, I know you understand that situation, so I will really
just get right to the question. What actions can you take as a
U.S. trade rep to help protect Americans and American patients
from predatory foreign medical supply manufacturers? I mean, I
look at things, you know, about 15 years ago we had 250
Americans die from tainted Heparin coming from China. You know,
we don't really have the oversight that we would like--that we
would have here.
And so--but it is not just what can you do as U.S. trade
representative, but what can you suggest that we do to help
secure our supply chain in that particular topic with
medications?
Ambassador TAI. So, Dr. Wenstrup, extremely important
issue, and you are right. Trade has an important role to play
here, USTR in particular. Obviously we are not the only ones to
the point about tainted Heparin. You know, the abilities of our
regulators and safety regulators especially come into play.
But I wanted to highlight for you and the members of this
committee that just about a month ago, USTR published a Federal
Register notice. It is a call for public participation. We are
looking for a robust engagement from your constituents from
across the American economy, from other economies as well, to
help us, to share their wisdom with us, and how they have
navigated all the changes in the global economy and all the
challenges with the supply chains to survive, and also to
create resilience. And of the almost one dozen sectors that we
have identified as being of special interest to us this year,
the medical supply chain, API, PPE, are right there at the
center.
What we are hoping will happen over the course of the
solicitation for public comment, a series of public hearings,
engagement of formal and informal is to find out from those who
are in the supply chain, who do produce, what drives their
decisions around production, around contracting for supply? If
they are trying to revive and rebuild manufacturing here, what
is going to be important incentives for that? How--if we
facilitate that, we can prevent offshoring back again. And then
how do we make use of the concepts of front shoring and
nearshoring?
My desire is to have results of this exercise be
informative not just for USTR, but for this committee as well,
to think about what we can do with it.
Mr. WENSTRUP. So, if I can, I am tracking with you, but you
know, we operate so much in siloes where, and would you be okay
if we held a round table and we had those key players all at
the table with you, with us, and we really talk through all
these things and not necessarily with, you know, 5-minute sound
bites, that we actually do that. I mean, this is a serious and
dangerous problem that we have to address, and we have to use
all of our assets to be able to do better.
I mean, Mark Cuban started his own generic company and for
some people, you can get your prescription filled for less than
your copay because he just marks it up 15 percent. Well, he has
the wherewithal to do that, but he's also concerned that he
doesn't have the APIs to actually make all these medications
free of adversaries. And so, I think those are things we need
to discuss more openly and bring in sort of a whole of
government and whole of private sector.
So, if you are up for it, I wouldn't mind organizing a
round table in that regard.
Ambassador TAI. Dr. Wenstrup, I would be delighted to do
that with you.
Mr. WENSTRUP. Thank you. I yield back.
Chairman SMITH. Ms. Chu.
Ms. CHU. Ambassador Tai, it is always great to have you
back at the Ways and Means Committee.
Since last year's trade agenda hearing, the U.S. and Taiwan
have signed, and Congress approved the Early Harvest Agreement
of the U.S.-Taiwan Initiative on 21st Century Trade. I commend
you and your negotiating team for the progress you have made on
this important agreement, and I continue to believe that it
should be a first step towards a comprehensive free trade
agreement between the U.S. and Taiwan, and I want to thank you
for the USTR's continued consultation and transparency with
Congress as negotiations on the initiative proceed.
I know that the USTR tabled proposed tax on the labor,
environment, and agricultural proposals earlier this month. Can
you elaborate on the status of the negotiations and talk about
how USTR will ensure that we have high standards in these
areas, and when do you hope to conclude negotiations on the
remaining areas of the original negotiating framework?
Ambassador Tai. Congresswoman Chu, I would be delighted to
do so. We remain in intensive talks with our counterparts in
Taipei. They are motivated partners in these negotiations. The
second agreement that we have taken up with Taiwan does include
the scope is labor, environment, and agriculture as you noted.
On agriculture, it is agricultural rules, science-based
approaches to regulating for things like food safety. I am
optimistic about the pace of the negotiations and I hope that
we will be able to provide you with additional updates very
soon.
Ms. CHU. And Ambassador Tai, as you know, I am the founder
and co-chair, along with Representative Drew Ferguson, of the
bipartisan Creative Rights Caucus in Congress, and that is
because the copyright industries are absolutely integral to the
local economy in my district. But it is not just Southern
California, which of course has Los Angeles and Hollywood.
Every district benefits from the creative workforce, and the
industry is one of our most important exporters, producing a
$10.7 billion trade surplus and supporting nearly 10 million
American jobs.
That is why it is imperative that the U.S. uphold
protections for intellectual property in our trade
relationships. This is a critical time for these American
industries as they face issues like piracy efforts by trading
partners to discriminate against U.S.-based content, and the
ingestion of copyrighted materials for development of
artificial intelligence tools.
So, Ambassador Tai, can you talk about the tools the USTR
can take outside of the special 301 report to promote the
robust copyright protections and enforcement needed to address
these threats?
Ambassador TAI. Well, Congresswoman Chu, this special 301
is an important tool that we have. It also enables us to take
up these issues in our bilateral engagements. In a number of
our bilateral frameworks, we have dedicated intellectual
property working groups. Those go to addressing specific
concerns that have come up to building capacity, to working
with our counterparts on issues of piracy of establishing a
strong regime, recognizing intellectual property rights. And
since you noted that intellectual property rights are currently
also implicated in the development of most advanced technology
models for artificial intelligence, I would also take a moment
to say that the approach we are taking to data and technology
and the intersection with trade is also geared to focusing on
the rights of our content creators who are struggling to be
recognized and compensated in this incredible race and hunger
and appetite for data. And that those types of issues, which
are primarily domestic, nevertheless are important to informing
the way that we approach our trade negotiations, so that in our
trade negotiations we do not accidentally take away space for
those questions to be taken up and resolved by legislators like
yourself.
Ms. CHU. Finally, let me just commend you. You are co-chair
of the White House Initiative on Asian American, Native
Hawaiians, and Pacific Islanders, and you created a special
trade commission study on workers in underserved communities as
a part of your chairmanship, and I thought that was just really
great.
I yield back.
Chairman SMITH. Mr. Smucker.
Mr. SMUCKER. Thank you, Mr. Chairman. Thank you, Ambassador
Tai, for being with us today.
Let me start by echoing several of my colleagues' comments
regarding our disappointment to see digital trade barriers not
included in the National Trade Estimate. However, there is one
area that has been brought up previously that I was pleased to
see in the NTA, which is the trade barriers that Canada is
enacting or has enacted for online music streaming.
Many people are surprised to learn that in my district, we
have companies that provide a lot of services to the live
entertainment industry, and particularly concerts in the music
industry. We have a big complex of multiple companies called
Rock Lititz. We also have a thriving live music scene in our
area as well.
I do, Mr. Chairman, I have three articles I would like to
submit to the record.
Chairman SMITH. Without objection.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. SMUCKER. Thank you. One is from My Politics, one is
from the Hill, and one is WSJ. They do a pretty good job of
explaining this issue and the impact on American musicians and
the holder of music rights, even talk about how, you know,
Canada can't afford it. It is going to increase costs in Canada
as well. So, I will submit those for the record.
So, again, serious concerns. It is going to apply quotas on
music streaming services that will clearly discriminate against
American content to harm American artists and rights holders.
What is deeply concerning is how the new law gives Canada's
regulators the power to condition market access for music
streaming services on making financial contributions into
certain government-linked funds that will be used to create--
support creation of Canadian content, again, ultimately
restricting cross border digital trade. We have heard from
stakeholders that the CRTTC, the Canadian Radio, Television,
and Telecommunications Commission, is planning to require these
mandatory financial contributions before even defining
specifically what Canadian content means for the purpose of the
fund.
So, it seems not only like an unfair trade practice, but
like a backwards process, and I think it is actually part of a
troubling pattern of governments and stakeholders around the
world seeing American economic success as sort of a piggy bank
from which they can extract value to plug holes in their
domestic budgets, similar to the DSTs, which by the way, Canada
is also pursuing.
So, Ambassador Tai, I strongly encourage USTR's continued
engagement with the Canadian government to ensure that we have
an outcome that gives equitable access for the U.S. music
industry and artists in the Canadian market, and I would like
to get your reaction and I would like to, you know, see if you
will commit to working with us to ensure an outcome that
protects fair market competition.
Ambassador TAI. So, thank you, Mr. Smucker, and thank you
for acknowledging as well that the National Trade Estimate--
which it sounds like you have actually looked at--does actually
include digital trade barriers, such as this one. So, we are
tracking this very closely and engaged. The Online Streaming
Act in Canada became law just short of a year ago. The law does
create an opportunity for Canada to update its definition of
Canadian content to better reflect complex ways in which film,
video, and audio content is produced. We have let the Canadians
know that we would like to see this updating process lead to
outcomes that are fair for U.S. stakeholders, and we are
engaged and we would be happy to stay connected with you and
your team as well.
Mr. SMUCKER. Yeah, like I said, this is really important
for the district I represent, and so, I would love to stay
engaged and if we can be helpful in any way, but I think this
is a really important issue.
Secondly, I am very concerned about the global
proliferation of digital service taxes, but I am equally
concerned with the fact that our own administration sees the
rise of DSTs around the globe as an opportunity to question if
digital innovation born and bred in the U.S. is actually
American. I believe comments like that send the wrong signal to
the international community that our administration welcomes
their efforts to cut into the share of taxes that companies are
paying.
So, I strongly urge you to pursue aggressive action to
ensure that our companies are not discriminated against, and I
hope new Section 301 investigations or other tools to respond
to DSTs are under consideration. We just--we need to show other
countries that there are consequences for unfair practices.
There are only a few seconds left. I don't know if you want
to respond to that.
Ambassador TAI. Mr. Smucker, let me just say I have taken
note of your endorsement of looking at all U.S. trade tools,
including Section 301, with respect to the discriminatory
impacts here. I appreciate it.
Mr. SMUCKER. Thank you.
Chairman SMITH. Mr. Hern.
Mr. HERN. Thank you, Mr. Chairman. Ambassador Tai, it is
always good to see you here. I am sure it feels nice and
refreshing to come home.
But you know, in an increasingly interconnected global
community, access to free digital trade is critical to U.S.
economic growth and innovation, and prevent digital trade
barriers has historically--it has always been bipartisan. It is
also a requirement of the 2015 bipartisan Congressional Trade
Priorities and Accountability Act, which directs USTR to
``ensure that governments refrain from implementing trade-
related measures that impede digital trade and good and
services, restrict cross border data flows, or require local
storage or processing of data.'' Yet, USTR has continuously
failed to protect digital trade. USTR pulled back on its
support for digital trade protections at the WTO, sidelined
digital trade negotiations in the Indo-Pacific economic
framework deal, and most recently, failed to include digital
trade barriers in the 2024 National Trade Estimate Report on
Foreign Trade Barriers.
The internet and digital technologies have revolutionized
commerce, enabling businesses of all sizes to have access to
global markets and consumers like never before. However, this
potential is being undermined by the rise of digital trade
barriers imposed by some of our trading partners. These
barriers come in various forms, from data localization
requirements to discriminatory regulations and censorship
measures. They not only stifle innovation and economic growth,
but also undermine the competitiveness of American businesses
in the digital age.
An increasing number of U.S. trading partners are adopting
digital restrictions modeled after Chinese laws that hurt
American workers and impede foreign market access of U.S.
exports, which is why I was greatly concerned to see USTR
failed to include the majority of these restrictions in this
year's NTE.
USTR stated that these exclusions only apply to any barrier
that is an effort to regulate in the public's interest, ceding
these protections to the interests of foreign governments who
would undermine the success of American companies, and as a
result, the people they employ, is simply unacceptable.
Ambassador Tai, will you commit to us today to revisit this
issue and to publish a supplement to the 2024 NTE report
relisting the barriers that were improperly deleted?
Ambassador TAI. Mr. Hern, let me explain to you our
approach to the National Trade Estimates report. First of all,
let me just say I appreciate the scrutiny of the report, which
I don't know that the NTE has ever gotten this much play in the
public discourse. Thanks to everyone that is talking about it.
I hope that you are also reading it, because we produce this
report as a statutory requirement every single year, and it is
a tremendous commitment of USTR and U.S. government resources,
and it ought to be read.
So, I am going to take this opportunity to explain the
development of the NTE over time. When you look at the
requirement for the NTE to be created, it is about listing and
articulating significant trade barriers that U.S. stakeholders
face in our major export markets. It is about looking for
opportunities to improve and overcome export restrictions to
our exporter opportunities.
Over time, the NTE has become a very, very large catalog of
complaints that haven't actually gotten much scrutiny. What we
did this year was begin a process of asking our teams to look
at the NTE entries and to first ask the barrier that is being
discussed, is it actually a barrier? Do we actually export the
product that is of concern? And then also with respect to
digital, whether the measure that is being complained about is
being erected as a barrier, or if it is a regulatory measure
that, frankly, we see a lot of bills in Congress trying to
address.
Mr. HERN. Madam Ambassador, if I may reclaim? I have one
more question I want to ask you regarding the digital commerce.
Thank you for your work on that, and obviously, we have
people of grave concern. We don't simply make up things up
here. I mean, maybe some do, but we are trying to make sure
that we are competitive in the future.
The WTO makes that digitally enabled services accounted for
54 percent of the global services exported in 2022, but as
digital trade and digitally enabled services increased, so did
the proposed regulations. India, Indonesia, and other U.S.
trade partners were proposed adoption of customs duties on
electronic transmissions and is an issue of grave concern for
me and many of my colleagues.
Do you agree that the countries should impose customs
duties on electronic transmissions, and if so, what is your
office doing to make the ecommerce moratorium at the WTO
permanent?
Ambassador TAI. So, the ecommerce moratorium was created in
1998. I talked a little bit earlier about how the U.S. trade
policy approach to data issues really began in 2000 when we
thought about data as simply a facilitator for traditional
trade transactions, and how that is no longer true, that data
has become actually where the action is itself.
On the ecommerce moratorium, there is a similar stuck in
time element. It was developed at a time when we could talk
about electronic transmissions, because the relevant
transmission was about fax transmissions. The ecommerce
transmission related to the technological world where we were
still faxing information to each other. And what developed was
a norm, a promise of WTO members to each other to say we
weren't going to try to impose duties on those transmissions,
even though to this day we are not really sure how you would
impose a duty on a transmission that you can't see or touch.
But as it is, it is now 2024, almost--I need to do my
math--26 years later, right? Just the reality that we are
living in is so far advanced. And so, I would just say we have
extended the ecommerce moratorium for another 2 years. At the
WTO, in terms of the project for WTO reform and modernization,
part of it relates to this conversation which is for those WTO
members who do not want to renew the moratorium, I think we
need to really challenge them to articulate what is it that
they are trying to accomplish, and how does it relate to the
moratorium? Because I am not sure that it does, but there is
actually an evolution in just policy debate, policy development
at the WTO that is stuck in time that is reflected in this
particular effort. I think that this is one of the areas of WTO
reform that we are very committed to.
This issue does implicate----
Chairman SMITH. Ambassador Tai, we are already over 2
minutes over, so I apologize.
Mr. HERN. Thank you for that answer. I really appreciate
it. That was really good.
Thank you, Mr. Chairman.
Chairman SMITH. Mr.--Ms. Sewell.
Ms. SEWELL. Thank you, Mr. Chairman. Welcome back,
Ambassador Tai.
You know my district well. International trade has helped
create thousands of jobs in my district, including in the
automotive manufacturing sector, as well as agriculture and the
forestry sectors. Thanks to the strong economy created by the
Biden Administration, exports from Alabama grew by six percent
last year, totaling over $27 billion in good and services.
Moreover, your worker-centered trade agenda has helped to
ensure that the benefits of trade are more equitably shared
with working class Americans.
As you know, I am a very strong advocate for our preference
programs, including CBTPA and the Haiti Hope Help Program, and
AGOA, of course. Last month, I had the privilege to join
Chairman Smith on a CODEL to several of the AGOA countries, and
I got to see firsthand how important the program is to so many
sub-Saharan African countries.
AGOA expires in September of 2025, and I think it is
critical to reassure AGOA countries and businesses that utilize
the program that Congress is committed to reauthorizing AGOA
before it expires. However, we also have an opportunity to make
important improvements to the program to encourage more
economic development, empower women-centered businesses, and
providing more certain future for larger economies.
Can you talk about why the AGOA program is so important to
the Biden Administration's trade agenda, and do you have any
recommendations on how we can improve the program?
Ambassador TAI. Thank you so much, Congresswoman Sewell. I
am very aware of your leadership on these trade and development
programs or preference programs, and I am really glad that the
chairman was able to lead a CODEL to so many different African
nations on the continent.
AGOA is really important to us. AGOA had its birth in this
committee 20-odd years ago in the early 2000s, if not 2000
itself. It is actually the foundational program for U.S.
economic partnership and trade partnership with sub-Saharan
Africa. It is the foundation on which we will be able to build
and further develop this incredibly important relationship.
We all know that by 2050, one in four human beings on the
planet will be African, and that the population will be
overwhelmingly young. So, to your point about the focus on
women and youth, unlocking economic opportunity, looking at how
trade programs can help with that, we are convinced that the
next generation of AGOA can lean into more tools for unlocking
that opportunity.
So, to your question around what are areas for enhancement,
the first is we know in looking at the data that utilization
rates have remained relatively low. They are uneven higher for
certain countries, but overall, quite low. So, first question
is how can we improve utilization rates?
Second question is there are actually quite a few sub-
Saharan African countries that are developing exactly as AGOA
hoped. As they increase in their GDP and income levels, the
question is presented what happens when they graduate out of
AGOA? I think----
Ms. SEWELL. Exactly. I think Kenya is a good point of that.
Ambassador TAI. We should--yes.
Ms. SEWELL. So, how can we go about helping to make a
smoother transition?
Ambassador TAI. The next version of AGOA should anticipate
that there should be a graduate program for AGOA member
economies. How do they continue to build on the partnership
with the United States as opposed to just dropping off and just
becoming another member of the world economy community? So,
graduation. How do you anticipate graduation? How do you
continue the partnership?
And then also since 2000, actually quite recently, the
AFCFTA has come into effect. That is the African Continental
Free Trade Area, and that reflects a desire amongst the
countries on the continent itself to better integrate with each
other. As we are looking at a renewal of AGOA, I think that we
need to be quite conscious about how a program like AGOA can
continue to enhance U.S. partnership while also reinforcing and
supporting the integration efforts of the countries on the
continent itself.
And so, I think that those are a couple initial thoughts
for areas that I think would really benefit for exploration and
elaboration in partnership with this committee.
Ms. SEWELL. I look forward to working with you on getting
this reauthorized.
Thanks so much, and I yield back the balance of my time.
Chairman SMITH. Ms. Miller.
Mrs. MILLER. Thank you, Chairman Smith and Ranking Member
Neal. Of course, Ambassador Tai, I always enjoy seeing you.
I am just a little bit grumpier today, so I will apologize
ahead of time, but I have been so disappointed with the
feckless trade agenda promoted by President Biden and his
administration. Even the meager IPEF agenda fell apart under
incredibly light pressure from liberal senators who were more
concerned about facing stiff competition in their reelection
bids than doing the right thing for their constituents.
In our hearing last year, I said that China is eating our
lunch when it comes to competing for trade and investment
around the world. Unfortunately, they have gone from eating our
lunch to eating our breakfast, eating our dinner, and probably
our dessert. The United States is losing ground in every step.
This administration is more focused on woke, DEI climate, and
other big labor agendas than more meaningful trade policy, and
you know I like trade policy. Nothing in this year's National
Trade Estimate report gives me confidence that this
administration is committed to even the basics of trade. There
have been no trade deals, no talks to expand free trade
agreements, no export control markets, and no increases in
market access under President Biden's leadership.
Compared to China's ambitious agenda, the United States is
falling behind in every region in the world. China is winning
in our back yard of South and Central America. They are
building on years of gains in Africa. China is establishing
footholds through central Asia, Middle East, and making inroads
with our own European allies. Finally, they are outcompeting us
completely in Asia through their regional economic partnership
agreement.
Ambassador Tai, China has an extremely aggressive trade
strategy in the Indo-Pacific. Basically, they are a dressed-up
trade version of the Belton Road. They recently concluded there
are separate negotiations with 15 countries. They are trying to
join CPTPP, and they are working to conclude a digital
negotiation with some of our closest allies in the region. This
has real consequences for our manufacturing companies, our
farmers, and our energy producers in my district. If a company
in Vietnam wants to import an information and communication
technology and service product from the U.S., it pays 35
percent tariff. If it imports the same thing from China, it is
zero. If a company in Cambodia wants to import a dairy product
from the U.S., it pays 35.7 percent tariff. If it imports the
same thing in China, it is zero. And if a company in Japan
wants to import petroleum from the U.S., it pays 18 percent. If
it imports it from China, it pays zero.
Unfortunately, through all of these countries, even though
they are in IPEF, it doesn't sound like these issues are on the
table. Ambassador Tai, do you think this situation is in our
best competitive interest, and if not, why isn't it part of
IPEF?
Ambassador TAI. Well, Congresswoman Miller, it is always
nice to see you, and I am sorry you are grumpy, and I am even
more sorry that you cannot see our trade policy and you have
described it as feckless. I think that is entirely unfair, but
you are obviously entitled to your opinion and your adjectives.
Let me pick up on some of the dynamics that you have
identified. It is true that China is a very fierce competitor
in the global economy. So, let's start there. We have common
cause as Americans working on behalf of other Americans. We
have stiff competition that we need to rise to the challenge to
address.
What I would like to do, though, is to have all of us take
more confidence in the strength of the American economy and the
focus that we are placing on our economic resilience. When you
look at our partners in the Indo-Pacific, a lot of what we are
trying to do, including in the Indo-Pacific economic framework,
is to lead on an agenda to help create more resilience--more
resilience for ourselves, but also in partnership with our
partners to create more resilience for them. Right now in that
region, the supply chains there are so dominated by and so
entangled with Chinese economy and the Chinese supply chains.
This is a result of the way we have pursued trade policies.
Policies like ARCEF, like big comprehensive free trade
agreements, they are really in favor of liberalization and a
program that has really advantaged the Chinese approach to
economic dominance.
What we are really laser focused on here at home and
whether it is through USTR, the Department of Commerce, the
Department of Treasury, the National Security Council, the
National Economic Council, is developing a set of tools and a
program for the United States to be able to develop more supply
chains, more supply chains that are independent, that run
through more different countries to revitalize our own
manufacturing base so that we have more options.
In a world that is as volatile and unpredictable as the one
that we are in now, we know that we and our allies are better
off if we have more options, we have more parallel supply
chains.
So, that is the animating force behind the types of
economic engagements, frameworks, agreements that we are
negotiating. I know they look different from what came before,
but that is really the feature, not the bug. Because we need
for our economic engagements to produce different outcomes. We
need to produce more supply chains that can rebound, more
supply chains that run through more places. And that is exactly
what we are doing.
I am going to be the first to admit that it is not easy.
Getting folks to do something different, to pursue a different
program even when they agree with the objective, is hard work.
But that is something where we are only going to succeed if we
can work together. I know that you and I share a lot of goals.
I hope that we will be able to work together on this set of
goals, too.
Mrs. MILLER. Well, I have already gone over a minute and a
half, but I do want to get together with you to talk about
central Asia.
Thank you. I yield back.
Chairman SMITH. Mr. Kustoff.
Mr. KUSTOFF. Thank you, Mr. Chairman. Thank you,
Ambassador, for coming today to testify.
I would like to ask you, back in January of this year you
issued a press release, the USTR releases 2023 review of
notorious markets for counterfeiting and privacy. If I can read
from it two sentences, your quote, ``The trade and counterfeit
and pirated goods harms workers, consumers, and small
businesses. It ultimately hurts the U.S. economy. This year's
notorious markets list is significant because it underscores
the potential dangers of counterfeit goods and why robust
enforcement and combat trade in these goods is important in
growing our economy from the middle out and the bottom up.''
So, first of all, I appreciate your remarks and I agree
with them. I am sure everybody here agrees with them. So, I
represent part of Memphis, and in Memphis, we have got a
company called Ampro Industries led by Jack Sammons. It is
headquartered in Memphis, and it manufactures hundreds of hair
care products in the U.S. They are shipped around the world.
The problem is their flagship line is being counterfeited by
the Chinese and sold in foreign markets.
If I could, I have got Jake holding this posterboard. They
make a product called Shine and Jam. That is on the right-hand
side. The Chinese make a product called Shino and Jam. Same
product, design, same lettering. If I could, this really
bothers me. We are proud in Memphis to have St. Jude's
Childrens Hospital, great research facility, great employer,
great for children and families all around the world. They are
a sponsor of this product. The fake Chinese product is St.
Jam's Children's Research Hospital. Same logo, by the way, as
St. Jude. So, as you can see, these products are nearly
identical in not necessarily the product, but the design, the
labeling, and it is a real problem.
So, my question to you is--my questions to you are--you see
this on a global scale with other products that are being
counterfeited. We know what the Chinese are supposed to do as
part of the Phase 1 agreement. So, Ambassador, what tools do
you have in the toolbox to crack down on stuff like this?
Ambassador TAI. So, Mr. Kustoff, this sounds like this is
also a small/medium enterprise, and----
Mr. KUSTOFF. It is.
Ambassador TAI. Yeah. I continue to have conversations and
meetings with these types of really hardworking, inventive
entrepreneurs in the American system, and they are exactly who
we want to champion and be able to allow them to compete more
fiercely.
To the bigger question in terms of the China Phase 1
agreement and that underlying Section 301 report and findings
around intellectual property rights abuses in China, I would
say that those are of a scale that obviously include these
types of challenges. The 4-year review that we are undertaking
right now, and again, it is a review that was triggered at the
4-year mark of the tariffs, is focused on the question of how
effective have the tariffs been in improving China's
performance with respect to IP rights abuses and forced tech
transfer. We see changes in their laws, but these types of
things are continuing to happen. So, that review will be one
piece of what we are working on.
Separately, though, I think that, you know, whether it is
at the U.S. International Trade Commission, through the
Department of Commerce, the Small Business Administration,
there are a lot of other tools that are geared towards helping
our smaller enterprises be able to address these types of
challenges. The notorious markets report itself is also one of
those tools.
So, let me say this. The challenge is significant; you are
absolutely correct. Every single one of our stakeholders
matters. Every single one of these types of instances matters.
It is a loss. It is an unfair trade practice. We would be happy
to connect with this particular stakeholder, if we are not
already connected, to see how we can connect them with more
tools.
Mr. KUSTOFF. So, actually I don't think you are. I could
make that connection to you with Ampro as it relates to this. I
can give them that guidance. Is that a yes?
Ambassador TAI. Yes. Absolutely, yes.
Mr. KUSTOFF. Thank you. Thank you, Ambassador, and thank
you, Mr. Chairman.
I yield back.
Chairman SMITH. Mr. Kildee.
Mr. KILDEE. Thank you, Mr. Chairman, and thank you,
Ambassador Tai, for being here. It is good to see you, of
course. Welcome back.
You and I have talked about this, so this isn't a surprise
to you. Where I come from in Michigan, the term free trade,
historically anyway, has been associated with bad trade deals
that failed American workers and American growers. NAFTA, for
example, our experience was to see our jobs, particularly auto
jobs, leave the state, leave the country, and often land in
Mexico being done by folks without any real labor protections
and really low wages. Simply put, deals like NAFTA failed the
communities that I represent, and that, of course, has been the
focus of the work I have done with you and others here.
But USMCA--and I think this is really important--has shown
us a new way of doing trade, and it oddly sort of put me in a
position of being a really strong advocate of this approach to
trade, because global trade is a reality. Here is a chance for
us to set the rules of the game in a way that requires strong,
enforceable labor standards like Rapid Response, which I know
you referred to in your testimony and answering questions.
With our use of this tool, workers in Mexico are being
empowered to stand up to protection unions and the multi-
national companies that have taken advantage of them. So, I
wonder if you might just, for the folks I represent, talk a bit
how we have flipped this race to the bottom to a race to the
top, and specifically what USTR is doing to assure that workers
across Mexico--which by extension means workers here in the
United States--continue to have protections that they need and
how those were really only made available through the work that
we have done through USMCA?
Ambassador TAI. Thank you so much, Mr. Kildee.
You are absolutely right. I think that the renegotiation of
the NAFTA was so extremely challenging precisely because so
much support had eroded over time, especially amongst our
workers who keep getting pitted against their Mexican brethren,
against workers in Mexico who may have rights on paper
reflected in the law, but who because of protection unions,
because of the tradition there of collusion between employers
and unions, never were able to get a fair shake. The
renegotiation of the NAFTA provided us with an opportunity to
come up with a new trade regime, a new approach to workers and
workers standards in a trade agreement that affects the
livelihoods of so many of our workers. It is a really
competitive world out there.
The Rapid Response Mechanism is actually only available in
a trade agreement, and yet, it is empowering workers in Mexico
that, in turn, empowers workers here.
I would say that for you and your hometown, of the first
dozen cases that we brought, about 90 percent of them were all
in the auto supply chain, and that is not an accident. It is
because that is one of the industries that suffered the most
offshoring and movement from the U.S. and Canada to Mexico. As
a result of the use of this mechanism, we have directly
benefitted 30,000 workers in Mexico. That has resulted in $5
million in back pay that has been retrieved, in improved
benefits, in increased wages. With every single one of these
successes, we are improving the lot of and the playing field
for America's workers.
Now, the key part of this is that trade policy can't solve
this problem alone. We have to be working in concert with our
investment policies, with our tax policies across the board. In
a lot of the areas that Ways and Means is paramount to ensure
that the creation of economic opportunity here in the United
States can happen along with the creation of economic
opportunity for workers in Mexico, and that by doing things in
this way, by strengthening our workers together, we actually
make a stronger North America. We make a stronger platform for
competing with the rest of the world.
The challenge with the direction we were heading before is
that if we aren't able to build the strong support bipartisan
with our working people for our trade policies, that is what
threatens American leadership in the world and in the world
economy. And so, I really--thank you for the opportunity to
engage with you on this question, because as consequential as
it is for your district, I think that that is an indication of
how consequential it is for the entire American economy and for
our future.
Mr. KILDEE. I really appreciate your work on this, and I
look forward to working with you in the remainder of my term
here.
Thank you so much. I yield back.
Chairman SMITH. Mr. Fitzpatrick.
Mr. FITZPATRICK. Thank you, Mr. Chairman. Thank you,
Ambassador Tai, for being here.
Ambassador Tai, U.S. digital trade policy has consistently
been a bipartisan issue in this chamber and in this Congress,
and Congress has remained committed to supporting the promotion
of digital trade and the removal of foreign barriers to digital
trade that directly harm our companies right here in the United
States. And moreover, digital trade bolsters American
leadership and encourages innovation, and levels the playing
field for U.S.-based companies and workers competing against
foreign businesses, while also promoting democracy abroad.
Ambassador Tai, last year your office made the unilateral
decision to withdraw support of the WTO's digital trade
principles. I believe this to be an unfortunate decision. I
believe it abandoned longstanding bipartisan digital trade
principles. It allows Communist China to have more of a say
over the global rules of the road for internet, for ecommerce,
and cross border data flow rules and information access. And I
believe this change in posture by the USTR will hurt U.S.
businesses. It will threaten our national security interests if
adversaries like China are able to impose national requirements
for data localization and get away with harming American
businesses at the WTO.
So, my first question, Ambassador Tai, is why did the
administration decide to abandon these principles, and can you
explain what steps your office is taking to protect our U.S.
companies from foreign government regulation?
Ambassador TAI. I am glad you raised this, Mr. Fitzpatrick,
and you are not the first one to have done it in today's
hearing. It is precisely because we are absolutely concerned
with U.S. national security, the security of Americans' privacy
rights, the security of their data, that we changed our
position on these digital trade provisions.
To be more specific, the provisions were talking about deal
with data flows, data localization, and source code. American
digital trade policy, first of all, is rooted in an outdated
perception that issues of data only relate to facilitating
traditional types of trade transactions. That is no longer
true. Traditional U.S. digital trade policy has also been
reliant on a proxy that what is good for an American digital
and technology company is also good for American innovation,
which we all care about American workers. We all care about the
strength of the American economy.
The challenge is that today it is primarily because of all
of the developments in Congress that we have been following,
bills that have passed out of Congress like the Data Brokers
Bill that came out 414 to 0 in this Congress in a time where
those numbers really speak volumes.
With respect to the TikTok legislation that also moved
through the House very, very swiftly and with a strong voice,
those are animated by concern around the rights of Americans
with respect to their data, their really sensitive data, and
where it is going to go, including whether or not it ends up in
places like China for surveillance purposes or other purposes
that are against their interests.
Not changing our approach is what was going to put at risk
all the work that you are doing here to assert the rights of
Americans to their data. At the moment, Americans have little
to no privacy rights with respect to their data. That is
something that I know that Congress is working to change.
Unless we change our approach to digital trade, unless we
expand the stakeholder set to go beyond just our biggest
companies, we close out the opportunity for those values to be
reflected in how we approach these issues.
Mr. FITZPATRICK. Thank you, Ambassador Tai.
I want to shift to tariffs here. The remaining tariff
exclusions for China, Section 301 specifically, tariffs are
scheduled to expire May 31 of 2024. If these exclusions are not
extended, the reimposition of tariffs will have an impact on
United States companies. Moreover, Section 301, this statute
requires the Biden Administration to conduct a 4-year review of
the tariffs, and nearly 2 years later, this review is still
incomplete. So, when can we expect the release of a 4-year
review, and will the review include a final determination
regarding tariff exclusions?
Ambassador TAI. I am confident and optimistic that you will
see a conclusion of this review soon, and with respect to the
exclusions, as they expire on May 31 the question of what we
will do with them will also be answered quite soon.
Mr. FITZPATRICK. I just want to end with a statement. The
U.S.-Taiwan economic relationship is obviously critical, that
we continue to deepen that bilateral trade relationship. So, I
hope that you continue to work with the committee on that.
I yield back, Mr. Chairman.
Chairman SMITH. Dr. Murphy.
Mr. MURPHY. Thank you, Mr. Chairman, and thank you,
Ambassador Tai, for coming today. I know you are probably worn
out from the constant questioning.
But anyway, I recently met--I have a very coastal district
and I recently met with some fishermen from the district who
have been highlighting to me the devastating impact illegal,
unreported, and unregulated fishing is having on the American
fishing industry. America's consumption of seafood has steadily
increased, mostly because I like it a lot, but that is a
different issue. Yet our fishermen continue to struggle,
continue to struggle, and it is one thing after another. They
are dealing already with burdensome domestic regulation, and
they just can't compete with other countries.
It is unconscionable to me that this administration is
literally regulating this industry to death. You know, now
fishermen have to install a million-and-a-half-dollar camera on
their boats to go out to make sure that they are not the bad
guys and catch the wrong fish. These guys, if enacted, will
literally be out of business. They can't do it. They can't fish
anymore. They can't do it with the costs. I don't understand
what sense that makes. We are destroying our domestic industry
for the sake of appeasing environmentalists. We go along with
the NOAA rule of a 10-mile an hour speed limit and they can't
even say if this is going to impact whales or not.
And so, yet we are allowing China and other countries to
destroy not only our environment, but to use forced labor to
provide 90-plus percent of the seafood for this country. What
have you done and what have you been able to do to combat the
IUU fishing and what progress has been made to stop this from
occurring?
Ambassador TAI. Well, Dr. Murphy, I think you are
absolutely right that not just the United States but the world
faces a crisis with respect to the sustainability of fishing,
our fish stocks, and the livelihoods of our fishermen.
This has been an ongoing subject at the WTO, and so, what
we have done in 2022, we worked very hard with the 163 other
members of the WTO to advance the first part of an agreement at
the WTO on fishery subsidies. The IUU fishing issues also
extend to unfinished business at the WTO. Our approach is--and
it has got to be a collective issue, because our oceans and our
waters connect all of us. The challenge is to level the playing
field by setting international rules that establish what fair
practice is and where practices need to be prohibited.
This past February in Abu Dhabi, the WTO convened its
thirteenth ministerial conference. My team and I were there for
the entirety of the negotiations. We came very, very close to
getting this agreement across the finish line. We weren't able
to do it for a variety of reasons. I would be happy to brief
you on it in private, but our work continues urgently and with
a lot of commitment.
On forced labor as well, you and I are on the same page. In
May of 2021, we proposed at the WTO as part of these
negotiations a provision that will shine a light on the
prevalence of the practice of forced labor, especially in
distant water fishing vessels. It is not only not moral; it is
an unfair practice and it is a subsidy. It is an immoral
subsidy. We will continue to push for this. We are growing the
coalition behind this forced labor provision in the fisheries
negotiations, and we remain committed to ensuring that level
playing field that, frankly, we all need.
Mr. MURPHY. Well, I appreciate that. I would love a
briefing on that. I really would like to know what is going on
behind the scenes and what is preventing that.
But you know, getting back to a further point, you know,
Wanchese's, where Wicked Tuna comes out, if anybody has watched
that show and why those people would go out when the water is 8
and 10 and 12 feet is beyond me. Those guys, they are having to
put a million-and-a-half-dollar camera on them. You can't go
any faster to get out to the fishing places out at the big rock
or anything like that, or it takes two hours to get out there.
Now if their speed limit is cut by literally a third, it means
no fishing. It could be a $200-plus billion industry for the
United States that is gone overnight, overnight. And so, I just
don't get why this administration is hell bent on--look, I love
the outdoors. I am from the beach. I absolutely love the
outdoors, but there is an imbalance between what is going on in
environmentalists and what is going on with our trade industry
and with our fishing industries, and we are being absolutely
clobbered by over-regulations from this administration.
I yield back.
Chairman SMITH. Mr. Beyer.
Mr. BEYER. Mr. Chairman, thank you very much, and
Ambassador Tai, thank you for sitting with us for many hours a
couple of times a year. You are heroic. Thank you, too, for
your eloquence on the data transfer, the digital law stuff. It
is fascinating to follow up with you later on the implications
of understanding that digital workforce is now a matter of
commodity rather than simply services, which I think has lots
of implications for not just trade, but taxation and everything
else.
Also on all the fishery stuff, it would be wonderful if you
could get your friends in the Senate to ratify the Law of the
Sea Treaty. It would take us a long way in the right direction
in terms of enforcement mechanisms and everything else.
I wanted to shift, though, to thank you and your team for
staying in touch with us about Ethiopia and pursuing a
reinstatement into AGOA. I understand that the lack of progress
on meeting the benchmarks related to ongoing internal
conflicts, accountability for human rights violations, removal
of barriers to humanitarian operations, access to human rights
monitors, that they are ineligible for readmission this year,
late last year. What are your current observations on their
progress towards these benchmarks?
Ambassador TAI. Mr. Beyer, thank you for continuing your
work on this issue.
We actually in the course of the last review had been
tracking a lot of progress, and then saw steps backwards again
so that we did not make the decision to bring Ethiopia back
into the program at the end of last year's cycle. We remain
very, very attuned to developments in Ethiopia, with an eye to
tracking where progress is being made, where we still need to
see more progress.
As you know, under the AGOA program, there is the
possibility of running an out-of-cycle review so that you don't
have to wait the full year. That is always something that is
available, if it is something that could be helpful. But I
think overall as well as we look at the renewal of AGOA, this
version of AGOA expires in about a year and a half. Looking at
the tools that we have is actually really hard once we suspend
benefits for a country to bring them back in. But the point is
to be able to bring them back in, and I think that Ethiopia is
a good example of one experience that we can learn from in
thinking about how we might be able to develop more tools under
AGOA to maintain and create that motivation to get countries
back into the program.
Mr. BEYER. Thank you very much.
You know, I with a number of my colleagues here visited the
WTO a couple of years ago in the midst of all the ongoing
multi-decade fights over the appellate body. You mentioned that
you made more progress in the last year than in the previous 20
years, and I was fascinated by noting it was a shift in
emphasis from leading negotiations based on their positions to
being asked to identify and share the interest that they want
served.
Could you explain what that means in English?
Ambassador TAI. Thank you so much, Mr. Beyer, for tracking
this very closely, because this is one of the areas that is so
important to us. Myself personally, having litigated at the
WTO, appreciate how many challenges we have with the dispute
settlement system, but also I remain very, very committed to a
vision for having a dispute settlement system that is
effective, that can be accessed by everyone at the WTO, not
just a small handful of the WTO members.
The interest-based approach to negotiations at the WTO, we
really endorse this idea from the beginning because we know we
have very, very deep, extensive concerns with how the appellate
body was operating before, and other aspects of the dispute
settlement system. And that if we were to approach these
negotiations on dispute settlement reform in the traditional
Geneva-based way where you have to think through what your
ideal outcome is, and kind of what you can live with, and then
from there because it is a paper-based exercise, you are
incentivized then to dial up every single one of your proposals
to 150 or 200 just to be able to survive a negotiation process
that involves almost 200 other participants. That, for us,
looked like it was going to be a very, very long, tortured, and
unsuccessful road to move forward, because we are genuinely in
good faith interested in a reform project.
What we really endorsed and got behind was an approach at
the WTO to identify not what your position is, you know, which
creates that dynamic of dialing up 150 this way, dialing back
150 this way, and then fighting your way to the middle, but to
encourage a conversation that was inclusive, that started not
with the question of what is your position, but starts with a
question of what is the interest that you want as a WTO member
served by a dispute settlement system? And as a result of that
approach to the negotiations, we were collectively able to make
more progress in one year than in the 20 years before of
dispute settlement understanding reform that was run along a
positional basis.
So, I think the most critical question in terms of dispute
settlement reform going forward is how do we continue this
work? My negotiators and my legal advisors in Geneva have told
me that this is the one negotiation area in an institution that
is showing a lot of age and brittleness that is dynamic, where
negotiators come and they are actually talking to each other
and listening to each other, rather than just reading points at
each other. So, it is tremendously consequential. We are very
invested in this process.
Thank you for the question.
Mr. BEYER. Thank you very much.
Mr. Chair, I yield back.
Chairman SMITH. Ms. Tenney.
Ms. TENNEY. Thank you, Mr. Chairman, and thank you,
Ambassador Tai, for being here and also for being here another
time before with us in our round table discussion. It was very
helpful.
So, as you know, and this is an unfortunate situation. Last
November, the U.S. market access rights for our dairy exporters
suffered a shocking setback when the USMCA dispute panel
actually ruled that Canada does not have to make changes to its
very unfair system regarding the dairy tariff quotas. And
despite persistently low fill rates for those quotas and the
negative impact it has been having on the--our being able to
make full use of USMCA, at the same time, we are seeing a
notable surge of dairy protein exports from Canada into this
market, despite the USMCA's export supply on the Canadian dairy
market.
My huge concern--I represent New York's 24th District, the
largest dairy district in the Northeast, not just New York, in
the Northeast, and ever growing, my district. What is the
administration doing? What can we do to ensure this fair access
to the Canadian markets for our U.S. dairy products at this
stage? Because I share the--almost my entire district is the
Canadian border with New York, and it is a critical, critical
issue for us, all the way from St. Lawrence Seaway down to
Niagara, and we really--this trading partnership is really
critical to the economy of my district, and also New York
State, and obviously the Northeast.
Ambassador TAI. Congresswoman, we also were tremendously
disappointed in the outcome of that second panel, because we
had won at the first panel and we also found that Canada's
attempts to bring itself into compliance, again, did not
translate into more access for our dairy farmers, which is very
much our expectation coming into the USMCA.
We remain in very, very close touch with our stakeholders
and the industry. We are pushing ourselves to think more
outside of the box. There are important conversations----
Ms. TENNEY. Let me ask you just a couple things, because I
got two other things I want to get to. One of them has to do
with steel scrap, and also wine. I also represent the Finger
Lakes Winery, which is a huge part.
Just back to the dairy, though. What can we do? Do we have
to renegotiate a trade deal? What other enforcement mechanisms
are there, because they are clearly violating USMCA. Is this
something we could take to another court or what can we do
legally on this?
Ambassador TAI. All tools are on the table, and there are
other partners facing similar challenges who we are talking to.
Ms. TENNEY. Great. I appreciate that.
The next big thing is our U.S. steel producers are among
the lowest emitting in the world, because they pioneered the
development of circular steelmaking that relies on recycled
steel scrap as its primary raw material input. Canadian,
European, and other steel industries are now following a
similar pathway.
However, as many steel producers seek to adopt low
emissions technologies that rely more heavily on scrap, several
countries are implementing rules that would restrict scrap
exports to hoard scrap in their domestic markets. The United
States is a significant net exporter of scrap, and our steel
industry relies on the free flow of scrap worldwide.
Do you agree that these steel scrap export restrictions are
detrimental on the U.S. steel industry, and to global steel
decarbonization efforts? Quickly, if I could just get a quick
answer on that, and what we can do about it.
Ambassador TAI. I think it is important for us to look at
that very closely and scrutinize, because the issues that you
raise are very important.
Ms. TENNEY. Do you think that these are detrimental, some
of these restrictions that we have imposed on scrap?
Ambassador TAI. That have been imposed on scrap coming to
us?
Ms. TENNEY. Right, from our side.
Ambassador TAI. If there are concerns from our producers,
then it is well worth our attention to that.
Ms. TENNEY. Yeah. We would love to talk to you more about
that, but thank you.
Another thing is how do we evaluate the impact of this
global scrap in terms of restrictions? Are we doing that? Is
that something in your agency work?
Ambassador TAI. I am certain that we are looking at it.
Ms. TENNEY. All right. Can we just get a follow-up on that?
I would love to have more, because it is obviously another
important industry along my massive district on the Canadian
border.
Another thing, the U.S. wine makers have struggled to make
inroads, as we have talked about in the past, in key markets
around the world. This is due to, again, trade barriers. We
have talked about this today and you have addressed a lot of
these issues.
Vietnam imposes a 50 percent tariff on wine for the United
States, but will soon eliminate tariffs from competitors in, I
believe it is EU, Chile, Australia, and New Zealand. India and
Australia have also entered into an agreement that will lower
the tariff to 75 percent, later 25 percent on premium wine from
Australia while U.S. wine makers are faced with 150 percent
tariff. How can we address this issue? What can we do and will
you please look into this as the USTA? The Finger Lakes wine
market is a more nascent market. We are coming up. We have got
three top wines--three wines in the top 100 wines. We are still
struggling to get our place, but we are doing a tremendous job.
Hundreds and hundreds of wineries in my district, and we really
want a chance to compete and get market access.
We would just love to have you either visit, advocate, or
see what we can do on this tariff situation, which is grossly
unfair to U.S. wine producers.
Ambassador TAI. Finger Lakes Riesling is one of my favorite
wines. I would gladly take you up on that, but more
importantly----
Ms. TENNEY. We will send you a bottle.
Ambassador TAI. We will be delighted to work with your
producers very, very closely on looking for opportunities.
Ms. TENNEY. Great. Thanks so much. We appreciate your
service. Thank you.
Chairman SMITH. Ms. Fischbach.
Mrs. FISCHBACH. Thank you, Mr. Chair. Ambassador Tai, thank
you for being here.
Last time you were with us, I guess it was over a year ago,
I shared with you the importance of export market development
and access to my district. My district is one of the most
agricultural-dependent districts in the country, and roughly
one-third of what producers in my district take home in sales
comes from exports.
Since we spoke, the agricultural trade deficit has not only
continued, but is now projected to be at the highest deficit
ever. Producers in my district are at a distinct disadvantage
as a result of this administration's lack of trade agenda,
compared to their counterparts across the world. And at this
point, Ambassador, I just want to ask: what you can give to my
producers in my district that could possibly be construed as a
new market access since we have last spoken? Not enforcement of
existing agreements, and not non-binding frameworks or
dialogues. I am talking about tangible, binding new market
access for the farmers in my district. And I do have a couple
of other questions, so----
Ambassador TAI. Certainly. Congresswoman, we really
prioritized our work for our farmers and our agricultural
producers, and we are very proud of the wins that we have been
able to secure. A lot of specialty crops, tree nuts, berries,
but maybe if you wouldn't mind my asking you in particular what
your producers are producing, and that will give me a better
sense for where the opportunities are that we are pursuing.
Mrs. FISCHBACH. Well, and maybe my next question will help
that, but you know, we have corn, we have soybeans, we have
sugar beets. But this one on the per capita pork consumption in
Taiwan I wanted to follow up with that.
So, that per capita pork consumption in Taiwan ranks near
the top globally at over 40 kilograms per person per year.
Taiwan has erected a number of technical barriers to trade,
including labeling and inspection, limiting U.S. imports to
just 16 percent of total Taiwanese pork imports. How will your
engagements with Taiwan address the unjustified restrictions on
U.S. pork?
Ambassador TAI. Well, we are currently negotiating the
second agreement with Taiwan, which goes to labor, environment,
and agriculture. On agriculture, the subject of the
negotiations are those rules that go to regulations and often
take the form of barriers. We are establishing high standard
rules for science-based, transparent regulatory processes. On
pork and beef in particular, these have been longstanding trade
irritants with Taiwan. We are leaning in on securing
improvements to these particular issues. They are squarely
being presented in the negotiations right now. I would be happy
to have my team read yours into the latest.
Mrs. FISCHBACH. And I would appreciate that. Are these
going to be binding and durable, or are you just----
Ambassador TAI. That is absolutely the intention.
Mrs. FISCHBACH. The intention is to----
Ambassador TAI. Yes.
Mrs. FISCHBACH. Thank you.
Then I do have one last question, not about ag, but about
another producer or manufacturer in our district. On May 31,
the remaining exclusions from the China Section 301 tariffs are
scheduled to expire. Many American companies rely on these
exclusions in order to remain competitive with competition from
other imports. These exclusions have been vetted multiple times
by both the Biden Administration and the Trump Administration,
and this vetting has found that there are no viable alternative
sources of supply. What are your plans for those exclusions
post May 31?
Ambassador TAI. Those decisions haven't been made yet, but
obviously they will need to be made before May 31. This
particular issue has been raised multiple times in the hearing
today. We know the level of interest at this committee, and we
will ensure that you all have a heads up.
Mrs. FISCHBACH. And so, I mean, is the intent to continue
providing these exclusions that support American manufacturers?
Ambassador TAI. Well, as I noted before, the exclusions are
meant to be temporary, but they are granted in recognition of a
need for a transition period. So, it will depend and that is
exactly what we are looking at.
Mrs. FISCHBACH. Thank you. I have just a few more seconds,
but I do have other questions and what I plan on doing is
submitting these in writing.
So, thank you very much, and I yield back, Mr. Chairman.
Chairman SMITH. Thank you, Ms. Fischbach. That has been
very rare today, so we appreciate you yielding that back.
Mrs. FISCHBACH. I will save it for another time.
Chairman SMITH. Thank you.
Mr. Evans.
Mr. EVANS. Thank you, Mr. Chairman.
Ambassador, I want to begin by just thanking you for your
hard work both here on the Ways and Means Committee, and now
with President Biden. I want to thank you for your time here
today.
On the topic of AGOA, I am very interested in seeing this
act reauthorized, and I know many colleagues here today are,
too. It is an essential tool in our toolbox to uplift
impoverished communities in Africa and create mutual beneficial
trade networks.
Ambassador, in your testimony, you briefly mentioned the
importance of exploring other fair-trade rules to complement
AGOA create expansion on what specifically--in other words,
follow up on these tools. Talk to us about what tools you are
referring to that could be assisting in terms of improving the
initiative.
Ambassador TAI. Mr. Evans, I missed the specific--is it--
which trade program are you talking about?
Mr. EVANS. Well, you mentioned that there could be other
tools to complement AGOA. Can you please explain on that
specifically which of the tools could be of assistance in
working together to enhance it?
Ambassador TAI. Certainly. Thank you very much for that
clarification.
Yes, one of the areas where we think is really ripe at this
point 20 years into AGOA for us to look at is anticipating what
happens when economies really reach that middle income level
and are ready to graduate from the basic AGOA program. This is
informing the engagements and the negotiations that we have
been conducting with Kenya, for instance, in the strategic
trade and investment partnership. Kenya is one of those leading
economies that is coming up on middle income level, and was
anticipating what happens when they graduate out of AGOA? They
would like to continue to grow their relationship with us. We
would as well with them. So, where do we take this?
Part of it is taking those AGOA criteria, which really do
reflect a set of U.S. values and U.S. outlook on democratic
pluralism anti-corruption rule of law, and bringing those into
a bilateral relationship. So, you see us negotiating those
types of content in the strategic trade and investment
partnership.
We are also building out parameters on labor, environment,
agricultural rules, but also in the Kenya negotiations, looking
at the topic of inclusivity. From the Kenyan side, from the
African continental side, there is this tremendous focus on how
to unlock the economic potential of Africa's women and youth,
Kenya's women and youth. And I think that this is an area where
we as the United States, working with this particular partner
of Kenya, are really prepared to innovate in a trade agreement
in terms of really thinking about women, youth, other types of
groups that our trade policies have traditionally not been
focused on, and how to bring them into the trading
relationship.
So, those are some of the tools that we are looking at. If
we can prove the concept with Kenya, then we think that we may
have a framework for engaging with other AGOA beneficiaries who
similarly are on the cusp of graduation. And I think that that
is a tremendous way of growing the AGOA program, and also
doubling down on deepening our relationship with the diverse
economies on the African continent.
Mr. EVANS. I yield back. Thank you, Mr. Chairman.
Chairman SMITH. Thank you.
Ms. Steel.
Mrs. STEEL. Thank you very much, Mr. Chairman. Mr. Steube
just came in so I gave him a little look there because I
thought I am missing my turn here.
Ambassador Tai, thank you for joining us today. You know
what, I am not talking about AGOA, but you know, I just want to
concern about the AGOA, they're graduating. It is like,
malicious, and their GDP is almost like $21,000. They are very
much concerned about that, that after graduating their economy
is going to go down. Instead of that, you know, they want to
stay. But I don't think that is really fair for staying, if
there is one tool maybe FTA that, you certain things that they
are actually--like they have textiles and apparel and we can
have certain FTA that, you know, between United States and--I
think it is going to be really helpful instead of not
graduating and trying to stay in AGOA. So, you know, that is
kind of like my idea and I got it, it was just a wonderful trip
to see how African countries are working.
But we must--and then, you know, I just want to ask you
just one more thing is about the California olive growers. We
just briefly talked about it last year, and--I mean last week,
and I know you are fighting on behalf of our growers. And you
know, whatever Congress stands ready to help as needed, and you
know, we can work together to make sure California olive
growers, you know, they don't have to compete to something
coming in from Europe.
Another pressing issue we learned about COVID was our
alarming reliance on the CCP for medical supplies, and the U.S.
imports half of its PPE from China, and two-thirds of its
surgical masks and respirators. Even more dangerous, China
dominates numerous aspects of the supply chain, you know, for
pharmaceuticals. We rely almost solely on China for imports on
ibuprofen and high amounts of insulin.
The reliance poses an unacceptable risk to our economic and
national security. Congress must adopt policies to start
diversifying our medical trade to our allies. I introduced the
Medical Supply Chain Resilience Act with my colleague, Brad
Schneider. This bipartisan legislation will help diversify our
medical supply chains by directing USTR to negotiate sectoral
agreements with trusted trade partners around the world and
lower barriers and align standards with our close allies in key
sectors.
So, Ambassador Tai, thank you very much for long time
staying here, and thank you for all those answers. I appreciate
that.
But do you share my concerns about our over-reliance on
China for medical supply chains? If so, will you commit to work
with me on a strategy that would start aligning our standards
and regulations with our close allies, as well as lowering
trade barriers?
Ambassador TAI. Congresswoman, I do agree with you that
that over-reliance is a challenge and a vulnerability, and I
would be delighted to work with you on this.
Mrs. STEEL. Thank you. You know what, we talked about this
and everyone always asking the same questions. I am strong
supporter of the United States and Taiwan economic
relationships, and we must do more to deepen bilateral trade
relations with Taiwan.
You know, you just said--one of the questions that you
said, you know, we built in the Pacific economic framework to
build the stronger resiliency, you know, between Taiwan, and
you talked to me regarding a little bit because Taiwan is not
really included in this Indo-Pacific economic framework, and
you said some of the countries are very much concerned it is
not United States. So, can you update the Committee on where
things stand in these talks, and what we are actually doing
further to include Taiwan?
Ambassador TAI. Sure. So, you have seen the scope of the
Indo-Pacific economic framework trade pillar discussions, and
you also see the scope of the first agreements and second
agreements that we are negotiating with Taiwan. You will see a
lot of overlap there, and it is largely because of the
consistency of our approach to negotiations, and it is also
with a view to ensuring that we have a consistent approach in
this particular region.
Taiwan has worked very, very closely with us. Of course,
this is a bilateral negotiation. We are moving very swiftly.
So, the first agreement, Congress has already spoken and acted
on. The second agreement involves labor, environment, and
agricultural provisions. We are making very good progress. I am
hopeful in the coming weeks that we will be able to come back
and report to you on further progress, and knowing your
interest, will make sure that our teams remain in good touch.
Mrs. STEEL. Thank you. I have a couple more questions but
my time is up. I yield back.
Chairman SMITH. Thank you.
Ms. Van Duyne.
Ms. VAN DUYNE. Thank you very much. Ambassador Tai, thank
you for coming today.
I continue to be concerned over what the trade agenda of
this administration looks like. I mean, from my seat, I think
most of this committee would say that there is not a trade
agenda. What I do see is a laundry list of toothless proposals
that do nothing, and that have not had the approval of
Congress.
Ambassador Tai, I am going to be very blunt. This
administration's trade agenda does not exist. The
administration is not holding China accountable. Trade
enforcement is weak, and we basically surrendered in areas such
as digital trade.
Earlier you said you objected with my colleagues, saying
you and your team are standing up to China, particularly at the
WTO, but time and time again actions speak louder than words,
and I don't think you can truly defend these policies and
honestly say that the USTR is actually pursuing an agenda that
wins for America and disadvantages our adversaries. You
defended IPEF and actions of the WTO as pushing back against
China, but IPEF is a framework. It is not a true free trade
deal. I mean, last you testified the buzz word was um and ah,
and this time it has been soon, which is equally as helpful and
informative.
So, the question I have got is does this administration
actually plan to enter into a free trade agreement, and I would
ask you to please be specific. Soon is not an answer.
Ambassador TAI. Congresswoman, I disagree with almost
everything that you have just said, and I think it is actually
a tremendous sign of disrespect that you don't see the trade
agenda that is so clearly before you.
Ms. VAN DUYNE. Well, I appreciate what you are saying,
Ambassador----
Ambassador TAI. We are not negotiating--I am sorry. You
asked me a question----
Ms. VAN DUYNE. As you know, we don't have--any of these
have real teeth.
Ambassador TAI. Free trade agreements----
Ms. VAN DUYNE. I mean----
Ambassador TAI [continuing]. As we have engaged with in the
past have pitted Americans----
Ms. VAN DUYNE. I appreciate your answer.
Ambassador TAI [continuing]. Against Americans----
Ms. VAN DUYNE. I think you can----
Ambassador TAI [continuing]. And we are not doing that
anymore.
Ms. VAN DUYNE. I retake my time.
Chairman SMITH. Yes, the lady's time.
Ms. VAN DUYNE. So, last year you had----
Ambassador TAI. She asked me questions.
Ms. VAN DUYNE [continuing]. It backwards.
Ambassador TAI. She asked me questions----
Ms. VAN DUYNE. Yes, we appreciate your answers.
Ambassador TAI [continuing]. That she really wanted me to
answer. If she doesn't want me to answer----
Ms. VAN DUYNE. You did a great job not answering questions.
Ambassador TAI [continuing]. I don't need to respond.
Chairman SMITH. It is Ms. Van Duyne's time.
Ms. VAN DUYNE. Last year, we had to do this backwards to
ensure that we actually supported our ally in Taiwan. Is the
UTR and this administration intentionally avoiding Congress,
and do you really care about the constitutional process? And a
yes or a no answer would just be great.
Okay, non-responsive. We will send it in a letter.
Last summer, you stated the Biden Administration's trade
policy is, I quote, ``turning the colonial mindset on its
head,'' and last November, you opened an APEC meeting by
acknowledging that it was being held on the ``unseated
ancestral homeland of a [inaudible].'' I mean, I thought it was
called San Francisco, but whatever. Then at a conference in
Brussels earlier this year, you called for ``breaking out of
some of these colonial and post-colonial structures.'' This
entire time the Biden Administration has not lifted a finger to
enforce China's violation of the Phase 1 agreement, but I guess
you considered it more important to travel the world talking
about unseated land in post-colonial structures than to hold
China accountable for its unfair trade practices.
I continue to hear from my constituents on concerns over
the inability of our trade tools to address massive subsidies
from China and other countries that dump products and unfairly
enter the U.S. market. In your nomination hearing, you
expressed the need for new tools to address these new threats
to American industries. Last week, I sent you a letter laying
out concerns on the aluminum extrusions. Given the serious
concerns raised in the aluminum extrusions case, why are new
trade tools not being utilized to initiate an investigation
into whether Mexican extruders received unwrought aluminum for
less than the market rate from governments of China and Russia?
Ambassador TAI. Ms. Van Duyne, I would be happy to respond
in writing. I find your approach to this question session to be
disrespectful and unserious.
Ms. VAN DUYNE. Excellent. I look forward to getting your--
because we haven't really gotten responses at all during this
hearing, which I find very frustrating as a member of Congress
when we ask questions, and the best that we can get is soon and
hopeful and optimistic answers.
In a recent interview, your former deputy USTR, Sarah
Bianchi, suggested that the reason that the Biden
Administration did not pursue a Section 301 case against
China's industrial subsidies was that the administration felt
that it was no longer necessary after passage of their
Inflation Reduction Act. Shocking to hear that. The Inflation
Reduction Act is absolutely nothing to stop China's trade
cheating. In fact, the IRA is helping China by maintaining our
dependence on infra-critical minerals.
So, given that, will you commit to launching an
investigation into China's unfair subsidy practices, and again,
please be specific. Soon is not an answer.
Ambassador TAI. Ms. Van Duyne, I am sure that there are
issues that we agree on. I don't know what you stand for, and I
don't know who your constituents are.
Ms. VAN DUYNE. So, I am asking you----
Ambassador TAI. If I can understand better----
Ms. VAN DUYNE. I appreciate--will you commit----
Ambassador TAI. If I can understand better who you are
championing----
Ms. VAN DUYNE [continuing]. To launching an investigation--
--
Ambassador TAI [continuing]. For, then I would be happy to
work with you.
Ms. VAN DUYNE [continuing]. Into China's unfair subsidy
practices? So, you can't answer whether or not you will
actually do the job of investigating China's unfair subsidy
practices?
Ambassador TAI. No, I choose to engage respectfully with
people who will treat me the same way. You are not.
Ms. VAN DUYNE. So, you can't give me an answer on it?
Ambassador TAI. No, I choose not to.
Ms. VAN DUYNE. All right. Thank you very much, and I yield
back.
Chairman SMITH. The gentlelady's time is expired.
Mr. Schneider, you are recognized.
Mr. SCHNEIDER. Thank you, Mr. Chairman, and Ambassador Tai,
thank you for joining us and for your patience in working with
this committee. On a personal level, I appreciate your work and
I am grateful for the successes you and the Biden
Administration have delivered.
The pandemic demonstrated how U.S. companies are at the
forefront of biopharmaceutical innovation, not just in
developing leading COVID-19 vaccines, but also research and
deploying cutting edge diagnostics and therapeutics. I was
pleased the recent WTO ministerial--that the recent ministerial
confirmed that the trips waiver would not be extended to
diagnostics and therapeutics, robustly defending U.S. IP
protections.
My district, my constituents include many of the innovators
and researchers who are leading the world in developing the
next generation technologies, and they rely on strong U.S.
intellectual property protections to ensure they are global
competitors, and China and elsewhere cannot appropriate U.S.-
developed technology as their own.
Keeping the U.S. at the scientific forefront requires
strong protections, and I want to again commend the Biden
Administration and you, Ambassador Tai, for your tireless work
in protecting U.S. innovation.
Let me now shift to another topic that you and I have
discussed many times, the importance of developing robust
supply chains, including planning for and building sufficient
resiliency, redundancy, and slack to absorb shocks within
supply chains while not breaking them. This applies to
virtually every industry and associated supply network, but
none more so than the medical-related supply chains.
We saw during the pandemic how our medical supply chains
are exposed and vulnerable to over-reliance on single-sourced
inputs, as well as the negative actions by entire countries in
the global crisis, as occurred with the People's Republic of
China throughout the COVID crisis.
During the pandemic and after, we have all talked a lot
about ideas like reshoring and front-shoring production of both
inputs and finished products, which would also create quality
jobs here in the United States. And these challenges,
protecting U.S. intellectual property and protecting our supply
chains against China, did not end with the pandemic.
This year, the biopharmaceutical industry has been rocked
by intelligence that a Chinese company, WuXi AppTec, had
transferred U.S. IP to the Chinese government without consent.
That is problem number one. Problem number two is that WuXi's
Chinese operations are a critical node in the development of as
many as one in four drugs used in the United States, and now
the industry is scrambling to address the consequences of the
expected removal of WuXi from supply chains, highlighting the
need to shift our focus on trading with friends rather than
turning to companies in China.
As she noted a few minutes ago, Ms. Steel, I joined with my
friend and fellow Ways and Means colleagues, Michelle Steel, to
introduce H.R. 4307, the bipartisan Medical Supply Chain
Resiliency Act. This legislation will empower the USTR to
negotiate trade agreements with respect to medical goods with
trusted trade partners who will commit to working with us
during public health emergencies, and not cut us out of supply
chains like China did during COVID.
The premise of our bill is that this globalized economy--
that in the globalized economy when United States can count on
our friends and vice versa, we are all better together. Working
with friends who share our interests and values ensures that
critical medical supplies get to patients in the United States
and around the world in proper time, and sufficient quantity,
irrespective of unforeseen circumstances.
So, in the minute or so left, can you please share your
thoughts regarding the ongoing geopolitical risks to our supply
chains posed by China, and potentially other nations, and
discuss how the administration is thinking strategically to
ensure robust and secure supply chains into the future?
Ambassador TAI. Thank you so much, Mr. Schneider, and I
would just note with respect to WuXi AppTec, I just saw a
report earlier this morning that not only has there been
unauthorized transfer of American IP to China, but unauthorized
access of Americans' genetic information and data----
Mr. SCHNEIDER. Personal data.
Ambassador TAI. Indeed, and so, there are multiple
dimensions of these concerns that affect our economy and our
individual citizens and their privacy rights as well.
The issue of supply chain concentration and over-reliance
is a significant one, and it is actually a reflection of the
version of globalization we have today. The incentive
structures for firms in their production decisions in the
relationships that they have formed in supply manufacture, we
are very much concerned about the role that USTR can play to
set you incentives, to create incentives for our producers, the
people who are so critical and the different links in our
supply chains, especially in this sector, to make decisions
that are not just based on maximizing efficiency. Efficiency is
still important and always will be, but also to incentivize
resilience so that to your point about redundancy and slack, so
that there is a plan B and a structure that is built into their
business models.
This is where it is all at. This is about applying the
lessons very, very painfully learned over these past 5 to 7
years and ensuring that the global economy, U.S. role in the
global economy going forward is one that is strong, that
doesn't suffer catastrophic breaks in the way we have
experienced, and that allows us the opportunity to have that
strength and resilience that is so critical to the experience
of our people.
Mr. SCHNEIDER. Thank you, and Mr. Chairman, thank you for
the extended time. I yield back.
Mr. STEUBE [presiding]. The gentleman's time has expired. I
recognize myself for 5 minutes.
Ambassador Tai, I am concerned about the total lack of
ambition from this administration on trade policy. It feels
like we are asleep at the wheel while China and other
competitors pursue an aggressive trade policy abroad that
divides up the world's consumers for their farmers,
manufacturers, and workers. Whether it be efforts to make trade
woke or surrendering U.S. leadership on digital trade, the
Biden Administration has put progressive activists at the
center of the President's trade agenda, all while creating a
void that is allowing China to pursue an aggressive global
trade that undermines our economic interests and national
security.
We need our tariff policy to make sense. I want to take a
quick moment to highlight two companies with domestic
manufacturing in my district. One is the Brunswick Corporation,
the largest recreational boating company in the world. The
other is ASO, the largest manufacturer of adhesive bandages in
the United States, producing over three billion bandages a
year. I will note with other colleagues, it was actually a
letter Mr. Schneider and I did together. We sent a bipartisan
letter to you on December 22, 2023, about Brunswick and the
issues they are facing in my district and others, and the
response from your office really didn't address the issues. We
need action taken now. I will submit both the letter we sent,
Mr. Schneider and I sent, as well as the letter that you
replied with for the record.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. STEUBE. Back to these two companies creating jobs in my
district. Both of these companies are major domestic job
creators, yet have difficulty acquiring materials and resources
in the United States, requiring them to acquire limited raw
supplies from China to bring to our country to manufacture with
U.S. jobs. For Brunswick, their competitors are all from Japan
and not subject to these tariffs, but are put at an unfair
advantage with foreign competition despite being the company
creating jobs right here at home.
For ASO, their competitors produce their bandages in China
or Brazil, and import products ready for distribution using the
same fabric ASO does and are not subject to the duties and
taxes placed on this U.S. company. U.S. policy focused on these
companies hampers domestic production, potentially at the
expense of American workers, while having little to no
meaningful impact on addressing unfair Chinese trade practices.
We must combat unfair Chinese trade practices, and I
believe that targeting the recreational motor industry and
medical supply industry within these efforts is an unintended
consequence of that effort.
I am also very concerned about the global proliferation of
digital services taxes. These taxes are clearly discriminatory
and unfairly target U.S. companies. That is why I supported the
Trump Administration's Section 301 investigations. Given the
discriminatory nature of these DSTs, I was very surprised to
see the Biden Administration unilaterally terminate these
investigations, eliminating U.S. leverage without concrete
assurances the discriminatory DSTs will be eliminated. I am now
seeing concerned reports out of the European Union about a
potential EU-wide DST and Canada is pursuing its own unilateral
DST. The Biden Administration has failed to pursue aggressive
action, and it is upsetting that you are just letting our U.S.
companies be discriminated against.
I believe you need to have new Section 301 investigations
and use the tools that Congress has given you to show other
countries there are consequences for unfair trade practices.
Like many of my colleagues, I believe we need to fully
enforce the USMCA to ensure that American workers receive the
full benefit of that agreement. One area where Mexico is
falling short is the pharmaceutical sector. Mexico has yet to
fully implement key commitments in the USMCA intellectual
property chapter, and continues to delay regulatory approval,
and therefore market access for innovative medicines. This not
only undermines American jobs and exports, but makes it more
difficult to strengthen medical supply chains in North America.
USTR needs to use all tools necessary to bring Mexico into
compliance with these commitments.
I yield back the remainder of my time, and I recognize Mr.
Moore for 5 minutes.
Mr. MOORE of Utah. Thank you, Chairman, Ranking Member for
holding this hearing. Ambassador Tai, again, for joining us
today.
Ambassador, something that concerns me greatly is the
Chinese government's interest in replacing the United States
and the permanent power in the Indo-Pacific region. One sign of
proof that China wants to replace the United States and achieve
economic hedge money in Asia is their recent application to
join the Comprehensive Agreement for Trans-Pacific
Partnerships, CPTPP. This trade agreement was previously
negotiated by the United States and 10 other allies, as you
know, and it was explicitly designed to exclude China and
develop strong standards on IP protection, labor, investment,
governance, and dispute settlements to ensure that the Asia-
Pacific economy would be shaped in a pro-U.S. image for the
foreseeable future. Of course, now the U.S. is out of the
picture and China wants to join. They are in the proverbial
waiting room.
My question to you, would China joining the CPTPP be a good
or bad thing for U.S. economic and national security interests?
Simple yes or no would be great.
Ambassador TAI. Mr. Moore, I don't want to disappoint you
but a simple yes or no is challenging here, especially given
the history of TPP, and the history of this committee with TPP.
TPP was a challenging, ambitious agreement on the framework
of our traditional FTA practice, and it generated a lot of
controversy during the negotiation, and of course, it was an
American president who took us out of it. So, I think the
question is a fair one, which is what do we do now? Whether
China joins the CPTPP is up to the existing CPTPP partners.
Our engagement in the Indo-Pacific is about forming
different kinds of supply chains. One of our concerns is that
our partners there not further entangle themselves in existing
supply chains, but look to build new supply chains with us.
So, I guess what I would say is in terms of what is
relevant to us, it is about advancing this diversification
program with our partners in Asia, in Latin America, and all
around the world to make for stronger and more autonomous
trading systems.
Mr. MOORE of Utah. I know yes or no questions aren't ever
necessarily being done. I get there is context, I mean, but
given the list of the reasons that it was established and China
is not a fair player in any of those categories, intellectual
property, things like that.
The point of the question is, is it good for U.S. national
interests, regardless of whether we are in it or not. Is it
good for U.S. national interests, and I would argue that it is
not.
As you may recall, I wrote you in August of last year to
highlight significant concerns about Health Canada's post-cost
recovery scheme for the sale of natural health products, which
include dietary supplements. I previously raised that there are
broad industry concerns that Canada's scheme will negatively
affect the overall dietary supplement industry and in favor the
manufacturing of dietary supplements in Canada to the detriment
of U.S. manufacturers. U.S. industries believe that the
proposed scheme may be in breach of the USMCA. What are you
doing to ensure Canada upholds its obligations under USMCA with
respect to the manufacture and sale of natural health products
so Utah companies in my district can achieve fair market access
within Canada?
Ambassador TAI. I am happy to look into this further, and
we have a strong relationship with Canada, and there are lots
of reasons for that. But the point to having a strong
relationship is so that you can work through issues and
concerns like this.
Mr. MOORE of Utah. We sent the letter in. What would be the
best way to interact on this further? As my colleague, Mr.
Buchanan, also said, this is important in my district. It is
extremely important. It is a strong industry. It is something
that strengthens not only our State, but our country. It is a
strong export. We do it better, you know, we do it more
responsibly than others. We get into the mode of writing
letters back here, and I get it. It is a thing and I am from
the Republican party and the White House is under Democratic
control. What can we do to understand what your opinion is,
what you and your team are going to do to help? I am game to do
anything.
Ambassador TAI. The title of the job is U.S. trade
representative, and it is to represent the interests of the
entire United States. Have your team reach out to mine. If
supplements falls under ag, that will be under my chief ag
negotiator's purview. If it is not, we will find the folks on
our team who can help your constituents.
Mr. MOORE of Utah. Thank you very much. I yield back,
Chairman.
Chairman SMITH. Thank you.
Mr. Panetta.
Mr. PANETTA. Thank you, Mr. Chairman, I appreciate this,
and of course, Ambassador Tai, thank you for being here this
morning and into the afternoon. I want to acknowledge your
staff as well, especially Doug Mckayla, who is there. I
appreciate them taking the time to be here and to listen, and I
am sure learn.
Also, I want to thank you, obviously, for your service, for
your work, for your efforts, especially within the confines of
the politics that we are seeing and the policies that are
coming out of the White House. I want to thank you for your
work at the 13th World Trade Organization Ministerial, the
Japan deal, and ongoing negotiations with Kenya and Taiwan.
Now, I think it is clear that as demonstrated in your and
our work as a committee and in a bipartisan manner on the USMCA
that we support trade deals that support the middle class,
increase economic security, raise labor and environmental
standards, and have enforcement mechanisms. Unfortunately,
though, we haven't seen those types of deals or agreements, at
least in this administration. Now, earlier in your testimony
you hearkened back to our Nation's trade leadership last
century, when U.S. transformed the global economy with freer
and a wider trade system.
President Biden actually campaigned on restoring multi-
lateralism; however, I don't believe the U.S. has leaned into
its role as a leader of the rules-based global trading system.
I do appreciate the frameworks that you have set up. I do
appreciate that we are practicing right now for these trade
deals, and I congratulate you on your efforts to innovate and
be creative. Some of the new ways are investment that we have
seen from legislation that we have passed, from CHIPS, IRA, and
the IAJ, including an announcement today, $6.4 billion to
Samsung for production properties in Texas. Technology
protections and even unilateral coercion is what we are using.
But that isn't getting rid of tariffs. It isn't ensuring
SPS are based on science, and that doesn't allow market access.
And I do believe that if we want to incentivize countries to
implement labor, environment, and enforcement mechanisms, it
takes more. It takes deals. It takes multi-lateralism. It takes
FTAs, and it does take working with Congress. I know it is a
tough environment. We have had COVID. We have a war in Ukraine,
Middle Eastern shipping issues, supply chain issues. But I also
think there are some inconvenient truths that are out there as
well that you really haven't hit on in your testimony today.
Many countries can't pass the litmus test of the USMCA.
Moreover, they won't do it on their own to keep up with the
rising tide. So, you are seeing a reduction of trade deals with
countries like India, Indonesia, Brazil, Angola, and also,
politics are just not with us on trade. We see that on both
sides of the aisle. No matter the agreement, the framework, no
matter how worker-centric they are, no matter the benefit to
the U.S. global economy and our security agenda, there is a
perception that trade is toxic. And what we don't want is for
us to be sitting on the sidelines just because of that
perception. We want to make sure that we are a part of the
economic integration that is going on right now, as we are
seeing in the Pacific especially as China tries to fill that
void with its being a part of the CPTPP and RCEP.
So, I do believe that if we want to use trade to further
our goals economically and security-wise, we need more. We need
the quid pro quo of a trade deal. We need tariffs to be
reduced. We need access to markets, and yes, we need Congress
to be involved.
I know you like sports analogies, and so, I believe that we
are good. There are practice players and there are game
players. I know you are both. I think it is time that we as a
country start to get into the game with our trade deals.
Now, when it came to the USMCA, we were players. There was
an agreement where market access contributed to the leverage in
negotiations. However, we are seeing our administration step
away from offering market access as a tool for leverage, and I
worry that it has undermined our ability to support both labor
and environmental standards. Is there--are there negotiations
going on right now in which this year in 2024 basically we have
been able to offer that, to have other nations raise their
labor and environmental standards?
Ambassador TAI. The short answer is yes, Mr. Panetta. I
guess what I just wanted to say is, you know, with respect to
your world view on trade, there are things we agree on and
there are things that we don't agree on. One aspect of it is we
need to remember who we are. We are the United States of
America. We are the largest and strongest economy in the world
right now. We should not have to apologize for requiring others
to meet our standards in order to access our market. We hold
the most valuable market of consumers in the world. If we
forget that, we shortchange our people. We shortchange the
economic opportunity that we and our people deserve. And I
think that is a fundamental shift in thinking about trade and
trade deals that is necessary for us to appreciate what our
role in the world economy is.
Mr. PANETTA. Madam Ambassador, I agree with you. I don't
think we need to apologize, but I do think we need to be
realistic about the quid pro quo that goes into the trade deals
that can actually have an impact, not just in this country, but
in other countries as well.
Thank you. I yield back.
Chairman SMITH. Mr. Feenstra.
Mr. FEENSTRA. Thank you, Mr. Chairman. Thank you,
Ambassador Tai, for being here.
I have the second largest ag district in the country, corn
and soybeans being the priority along with cattle, hogs, dairy,
eggs, you name it, turkeys. Here is--first of all, I just want
to say do everything you can on the Mexico issue on GMO corn. I
mean, 40 percent of our corn exports to Mexico. I can't tell
you how big an issue this is, and there is a lot of worry in
the markets right now where this is headed. The downward
pressure in the commodity market on corn is reflecting this
issue with corn, you know, we got below four just about a month
ago.
That also brings up the topic--and you have heard from
everybody about market access. I get that, and I heard all your
points, but it really affects ag, especially, you know, when
you talk about corn and soybeans and pork and dairy and cattle,
the downward pressure on the commodity markets. I heard what
you said about the trade deficit, that it has got ebbs and
flows.
But here is my issue, is that we are seeing individual
states doing individual trade deals with different countries,
and I struggle to square this up. If other countries can do
this with individual states, why can't our federal government
do some of this? I would like you to answer that. I mean, why
are we lagging behind--especially even our global partners? I
mean, our global partners, China has done 10 new agreements,
Japan has done seven new agreements, EU eight, Canada eight,
and we haven't done anything since the last USMCA. So, can you
expound on that?
Ambassador TAI. Thank you, Mr. Feenstra, and I appreciate
the significant footprint your district has in our Nation's
agricultural production.
I think this is a fair question. It is one that I come upon
quite often, so I am always willing to engage.
The first place is just to assert that you and I are on the
same team with respect to U.S. farmers and agriculture
producers, the big ones all the way to the small family
farmers. They feed us. They are able to feed the world.
The second piece is to look at the way that we have done
trade traditionally, and you have heard me say we need to do
trade in a way that stops pitting Americans against other
Americans. One of the things about the traditional free trade
agreement is that it has done very, very well for ag, American
ag, especially big ag. But is has actually not done well for
our heavy industries, our industrial workers, and that has
created this pitting of Americans against each other.
So, what we are trying to do is we are trying to continue
to score wins for American ag. We have done it with India. We
have done in the singles and our doubles, but at the same time,
what we need to do is stand up for our industries because the
FTAs that we have negotiated----
Mr. FEENSTRA. Thank you.
Ambassador TAI [continuing]. Have been much more strategic
for farmers than the industry.
Mr. FEENSTRA. Thank you, and I hear that, and it is a bit
rhetorical rhetoric there. I struggle with it. I struggle
because no one in the ag industry is seeing a lot--nothing is
getting done and that is where our commodity markets struggle.
It is serious.
I want to switch gears. I also share concern, along with my
colleagues, on USTR's decision related to digital trade rules.
Without the longstanding digital trade rules, local data
storage requirements will proliferate and countries will
essentially require U.S. companies to invest in building
facilities in those countries as a requirement for them to do
business there.
This creates a significant implication for our tax base,
our economy, our companies' taxable profits are shifted to
other countries. You know, you talk about America and American,
can you expound on this, Ambassador Tai? Did you consult with
the Treasury on economic and tax implications of your decision
on digital trade here?
Ambassador TAI. So, Mr. Feenstra, I have made this point a
couple of times so I definitely want to make sure that I make
it to you, which is it is actually the actions of the U.S.
Congress that were most powerful in indicating to us that our
digital trade provisions related to data flows, data
localization--your point of storage--and also with respect to
source code are outdated. They do not reflect the level of
debate that is happening up here in the Congress. Not about
national security, we are on the same page there. Not about
Americans' need to have rights to their data, rights to their
privacy, but with respect to these digital provisions, they
don't take into account the interests of Americans, American
citizens, and a regulatory structure that is lagging behind
where the technology is.
So, that is why we have pulled back on those proposals. We
will absolutely--we are absolutely interested in advancing new,
more modernized proposals that give Congress the space----
Mr. FEENSTRA. My time is up.
Ambassador TAI [continuing]. To actually legislate.
Mr. FEENSTRA. Thank you for your comments, but just a quick
note. I always want to remind everybody that businesses create
jobs. Businesses create the economy, all right, and that is
lost in this administration and it is lost in these rules. I am
very scared about that, and we all should be.
Thank you, and I yield back.
Chairman SMITH. Ms. Malliotakis.
Ms. MALLIOTAKIS. Well, thank you, and Ambassador Tai, I
appreciate you being here today.
You know, since I have come on this committee, I really
made it a priority to address the supply chain issue as it
relates to our pharmaceuticals. I think everybody on this
committee agrees that it is very dangerous for us to rely
overwhelmingly on Communist China for our pharmaceuticals.
As a matter of fact, one of our biggest issues right now is
that there are 252 drugs that are currently in shortage in the
United States with no pattern or predictability, and India and
China manufacturers, as you know, active pharmaceutical
ingredients that make up about 60 to 70 percent of the generic
drugs in the United States. Chinese API prices have more than
doubled since 2020. China is the leading source for U.S.
pharmaceutical imports, and China is the leading source of the
API that even India uses in its drug production. Over 80
percent of all APIs for essential medicines are used in the
U.S. have no domestic manufacturing source, and over the past
20 years, pharmaceuticals went from the ninth most imported
good to the second most imported good.
Now, obviously we see overseas tax entry on this committee.
I am introducing legislation soon that would try to onshore a
lot of our pharmaceutical production, but as it relates to
trade, you know, China also accounts for 95 percent of our
ibuprofen, 91 percent of hydrocortisone, 70 percent of some
other--I am sorry, 40 to 45 percent of penicillin. So, what can
we do from the trade aspect, and is this something that you are
actively speaking with within this administration?
Ambassador TAI. Yes, this is an incredibly important issue,
and I have noted the interest on this committee. I think that a
logical next step is to find an appropriate forum or convening
so that we can sit down and continue the work.
But Ms. Malliotakis, yes, we are working on this on an
inter-agency basis, but from a trade perspective as well. We
have supply chains exercise going this year that identifies 11
critical sectors and medicines API is one of them.
Ms. MALLIOTAKIS. Okay. What countries do you potentially
see opportunity? So, for example, we recently visited Poland. I
mean, that is a country that is likeminded. We are in agreement
on so many issues and values. They seem to be producing
pharmaceuticals. Ireland is another opportunity. Again,
obviously we want to try to onshore as much as we can using
various incentives to level the playing field, but from the
trade perspective where we can't onshore, we want to at least
friend-shore. Do you see any countries in particular that you
think would be capable of working with us?
Ambassador TAI. Let me just endorse your onshoring and
friend-shoring combination in terms of seeing that as the
solution. Our thinking is very much aligned.
In terms of good candidates, let me just put it this way.
My mind is very open. You have probably done more due diligence
and footwork in your visits. I would be delighted to take on
board what you found in your travels.
Ms. MALLIOTAKIS. Okay. Well, I really--in your role, I
think it is critical that you play a really instrumental part
in trying to identify those countries where we can have these
types of arrangements, and I really urge you to urge the
President to talk about this. I mean, it is shocking that the
President of the United States does not talk about the need to
bring pharmaceutical manufacturing home, or at least not rely
on Communist China. I mean, this is potentially very, very
dangerous, and not hearing the President talk about this in a
post-COVID world, right, where we know we need to have our
pharmaceutical supply chain shored up and all of that, it is
incredible to me that there has been no mention of this.
So, it is great that we are talking about it. We have
talked about it before when you visited the committee. I think
we really need to take action now, and as our leading, you
know, trade ambassador, I really appreciate your leadership on
this, and we on the committee will help and work with you
however we can to get it done.
Thank you.
Ambassador TAI. Thank you.
Mr. FEENSTRA [presiding]. So, we have four votes on the
floor right now, so we will recess and reconvene immediately
following the vote series. So, this committee stands in recess
until the votes are done.
[Recess]
Mr. CAREY [presiding]. I am not used to being up here. The
committee will now reconvene. The chair now recognizes Mr.
Gomez for 5 minutes.
Mr. GOMEZ. Thank you, Mr. Chair.
First, fast forward 20 years. This is where we would be in
2044, so this is the future. One of the things I think you are
hearing on the committee and the struggle is a lot of the
traditional positioning between the parties on trade has been
inverted. You know, free trade versus fair trade, all that has
kind of fallen--I don't want to say apart, but it has moved
away from where the public is at. So, I believe our challenge
regarding trade in the 21st century is developing a trade
strategy and agenda that takes into account the public's
opinion on trade, but at the same time uplifts American workers
while positioning the United States to compete against China
and continue to play a role in the global marketplace, which
traditional positions, policies are not necessarily sufficient
to achieve that goal.
I believe USMCA is part of that strategy, which I believe
is an example and maybe a path toward achieving that goal, but
the path is not a straight one. It is not a clear one, but it
is something that I believe gives us some insight into what is
possible.
Ambassador, thank you for being back here, and I know we
worked closely in negotiating the necessary enhancements to the
final USMCA deal. We have already seen the mechanism used 22
times across a variety of sectors, and we have seen real
results with over three-quarters of existing cases already
resolved, with tens of thousands of workers gaining union
representation, back pay, and freely exercising their right to
organize.
Ambassador, can you share your perspective on how the Rapid
Response Mechanism has contributed to raising labor standards
and workers' wages in Mexico? What lessons can we learn from
the first years of using this tool as we continue to push for
strong USMCA labor enforcement, and enforceable labor
commitments in future trade deals?
Ambassador TAI. Thank you, Mr. Gomez. This is one of the
most important aspects of our trade agenda, and one of the most
successful as well.
To your point about the bipartisan approach to trade, I
actually think that there are a lot opportunities that are
available to us in the current recombination. And to your point
about USMCA, it was negotiated on a bipartisan basis. It came
through Congress with strong bipartisan support, and this Rapid
Response Mechanism was a critical piece of that bipartisan
rallying around the USMCA and a promise that we could do trade
and trade agreements in a different way.
So, to your point, we have brought 22 cases, accepted--most
of them were petitions. A couple were self-initiated. As a
result of the 15 or 16 concluded cases where we have been
working very collaboratively with the Mexican government, the
economy ministry and the labor ministry, we have secured wins
with direct benefits for human beings, workers at individual
facilities in Mexico. Thirty thousand workers have now been
directly benefitted. They have received back pay. They have
gotten free and fair votes for unions that will actually
represent them. They have won better benefits. They have won
wage increases to the tune of $5 million in terms of back pay,
better benefits.
This is real change. This is demonstrating that we can do
trade in a different way. We can do trade in a way that lifts
workers and creates middle classes together. Empowering workers
in Mexico is empowering and leveling the playing field for
workers here in America, and I think that this is the beginning
of a paradigm shift that we are eager to expand to other
trading relationships and other trade arrangements.
Mr. GOMEZ. One of the things that I also recognize is that
paradigm shifts sometimes take time, but also, they do set the
foundation for what might be greater engagement of the United
States in trade agreements or trade policies that accomplish
the goals of uplifting American workers.
Where do you see the more opportunities where the United
States can engage on in the short-term, through the end of the
term, and in the next administration?
Ambassador TAI. Certainly. There are ongoing negotiations
that we have undertaken that we remain very committed to. One
is with the Indo-Pacific through the trade pillar, the Indo-
Pacific economic framework. Another one is with the European
Union on the global sustainable steel and aluminum arrangement.
These are two examples, but we are also actively negotiating
through this year as well bilateral agreements with Kenya, with
Taiwan, both important strategic partners, but very different
from each other. And I think that with respect to the issue of
supply chains, the nut that we have yet to crack, but something
that I think we can do in partnership between the
administration and this committee certainly is around supply
chain resilience. What are the trade tools that we can bring to
bear? Enforcement tools, negotiation tools to create resilient
and diverse supply chains.
Mr. GOMEZ. Thank you. I am out of time.
Mr. CAREY. Thank you, Ambassador, for being here today. It
is great to have you in front of us, and welcome back to your
home committee.
We are going to talk about de minimus as I have outlined,
so if you need some team help on that, I just wanted to let you
know.
Again, I want to thank you for talking all time, and as a
former staffer myself, you can appreciate when you get down to
the final two.
But anyway, as you know, in recent years we have seen an
influx of low-cost imports from China, many of which fall below
the de minimus value which the threshold right now I believe is
$800. I need to get my glasses to make sure I am right on
there. I am pleased that the committee will be considering a
bill tomorrow to reduce the abuse of this de minimus privilege,
but this is only one of the many vectors by which unsafe or
counterfeit goods can enter the United States. This
particularly affects products intended for children and
families.
One way we can address the influx of unsafe goods from
China is through a 4-year review of China tariffs. However, it
is my understanding that that has not taken place yet through
the administration, and it is still not complete and review
is--within the last 2 years.
I am asking you, would you be willing to commit to address
the importance of the unsafe and counterfeit goods as part of a
4-year review?
Ambassador TAI. I think the point you make is an excellent
one. I want to assure you that the 4-year review, which is
currently still ongoing, but I have confidence it is coming
into its final stages, does address the issue of counterfeit,
unsafe, and even larger issues regarding the fundamental
inequities reflected in the U.S.-China trade relationship. So,
short answer is yes, longer answer is yes, among many other
factors.
Mr. CAREY. Well, I thank you for your answer.
GSP expired more than 3 years ago, and renewing it remains
a top priority for this committee, as you know. We know the
expiration of this program has caused some tremendous
uncertainty for both American businesses and the beneficiary
countries that meet the program's requirements. The longer the
program remains expired, the more China benefits. The U.S.
loses credibility, as is common in trading partners--committing
trading partners to these countries.
So, I guess my question to you, what additional products
could be added to GSP eligibility to enhance the supply chain
diversification and resilience efforts? You have got 2 minutes.
I know it is a big question.
Ambassador TAI. It is a good question. It is a hard
question in part because the GSP program, the foundational
principle of the program is to operate as a trade program to
help stimulate development in developing trade partners that we
have. It is our oldest preference program, so when it was set
up and created, it wasn't done with a particular supply chain
strengthening goal in mind. If that is something that we want
to bring into the GSP, I think it would probably require a bit
of a rethink and some new architecture. As it is, though, I
want to say I really commend the committee for taking it up. It
has been lapsed for 3\1/2\ years. Again, you know, I hope that
the committee is able to engage with the issues robustly, to
listen to each other. We as an administration are supportive of
reauthorization, and of course, also supportive of seeing GSP
brought up to level with our other trade programs that reflect
labor and environmental provisions, and also to look at other
lapsed programs like TAA as well.
Mr. CAREY. Ambassador, I want to thank you for appearing
here. I know this was a long committee hearing, but I do want
to really--I appreciate your time. I appreciate you answering
all the questions that both sides of the aisle asked you.
I want to say, at this time please be advised that members
have 2 weeks to submit written questions to be answered later
in writing. Those questions and your answers will be made part
of the formal hearing record.
So, with that, the committee now stands adjourned.
[Whereupon, at 2:00 p.m., the committee was adjourned.]
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