[Congressional Record Volume 165, Number 86 (Wednesday, May 22, 2019)]
[Senate]
[Pages S3039-S3041]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Trade
Mr. PORTMAN. Mr. President, I am here on the floor today to talk
about international trade. It is a very complex issue, but also a
really important issue to our country. Our goal with trade should be
pretty simple: It is to level the playing field for America's workers,
America's farmers, and America's businesses.
One, we have got to be sure they are not hurt by unfair imports
coming into our country, so that is really a fairness issue and a trade
enforcement issue.
Second, we should expand our exports. Opening up more foreign markets
to our products is great for America. That is the balance. As a trade
lawyer and as the U.S. Trade Representative in the George W. Bush
administration and as a member of the Finance Committee, which has
jurisdiction over these issues, I have worked on the trade matters
quite a bit. It is really important to my home State.
Ohio has products that are manufactured by workers and crops grown by
our farmers that are shipped all around the world. In fact, in Ohio, 1
of every 3 acres is now planted for export. So our farmers are
dependent on trade, and 25 percent of our factory workers--
manufacturing workers--have their jobs because of exports. Twenty-five
percent is a big part of our manufacturing economy.
These jobs aren't just good for Ohio's economy. They are great for
the people that have them. Trade jobs pay, on average, 16 percent more
than other jobs, and they have better benefits, so we want more of
these jobs.
With 95 percent of the world's population living outside of our
country, we want to sell more of our stuff to the rest of the world to
continue to grow and maximize the potential of our economy. So in my
State and a lot of others, manufacturing and ag jobs that are the
bedrock of our economy depend on balanced trade. That goes for our
trading partners around the world, but particularly for our two biggest
neighbors: Mexico and Canada. They are, by far, Ohio's biggest trading
partners.
Since 1994, we have linked our economy to Mexico and Canada in the
form of the North American Free Trade Agreement, or NAFTA. In 2018,
Ohio shipped 39 percent of our exports to Canada, more than twice the
national average. Along with our trade with Mexico, this accounted for
$20 billion in trade. In all, trade with Mexico and Canada now supports
450,000 jobs in Ohio. So it is important.
We all know that the existing agreement--again, called NAFTA--has to
be updated. It is 26 years old. It needs to be modernized. It needs to
be improved. We need to be sure that we are doing a better job of
leveling that playing field that we talked about and be sure that we
are reflecting the nature of the 21st century economy.
Think about it. Back when NAFTA was negotiated, there was no digital
economy. So we need to have new rules with regard to digital economy,
as we do in our more recent trade agreements.
Also, as an example, there were no biologics. So we have no
protections in the NAFTA agreement for biological pharmaceuticals. Of
course, we need to have that in the new agreement, but it is more than
that. Labor standards and environmental standards that have been in all
of the more recent trade agreements need to be incorporated into the
NAFTA agreement. There are lots of reasons for us to update the North
American Free Trade Agreement and to improve it. Although no trade
agreement is perfect, the new USMCA does those things.
By the way, according to a recent study by the Independent Trade
Commission, the new USMCA, which is used to replace NAFTA, is estimated
to raise wages and add 176,000 jobs to the U.S. economy. That is good.
I support this U.S.-Canada agreement, or USMCA.
Last week, President Trump and his administration took a major step
toward realizing the USMCA by announcing they would be lifting the so-
called section 232 steel tariffs on steel and aluminum coming from
Mexico and Canada. This is really good news. It is something I had
advocated for, as had others, in order for us to pass the USMCA here
but also to be sure that other countries--Canada and Mexico--could
ratify the USMCA.
It ends the retaliation by Mexico and Canada on Made in Ohio exports
to our northern and southern neighbors. This was really starting to
bite in my home State and around the country.
By the way, it also protects against import surges and
transshipments, particularly with regard to steel and aluminum. We
worry about transshipments coming from China into
[[Page S3040]]
countries like Mexico and Canada and then being shipped or sneaked into
the United States. You don't want that. That protection is in there as
well. I think this was a good agreement.
Tariffs, especially on our allies, ought to be something we try to
avoid--used tactically, sparingly, and targeted as to when we are going
to use them.
There has been a lot of talk recently about the use of these section
232 tariffs by the administration not just on steel and aluminum but
also with regard to automobiles and auto parts. Section 232, the law
that this will be done under, is really an exception to our trade laws.
Our trade laws say that if you unfairly trade with us--in other words,
if you subsidize your products overseas or if you dump them, meaning,
you sell them below their cost--then that is illegal, and we get to
retaliate by adding tariffs to your product.
We also have laws that say if there is an import surge that domestic
industries are substantially harmed by, that is a time for us to step
up. But our other trade laws require one of those two things: either a
finding of injury to a U.S. industry or some kind of unfair trade.
Under section 232, which is an exception to that, you don't have to
do that. You can block imports simply by saying it is a national
security issue.
It is a pretty powerful thing that the executive branch has, but it
has been used very infrequently, and that is how Congress intended it.
Congress intended it just to be used for true national security
purposes.
The agency in charge of investigating these 232 tariffs is the
Commerce Department. A recent Commerce Department investigation
concluded that imported automobiles under the 232 criteria would be a
national security threat. I think that is not accurate. I think
minivans from Canada, as an example, aren't a national security threat
to us. It may be that if they are unfairly traded, then we should
enforce our trade laws. It may be that if there is an import surge that
hurts our domestic industry, then go after them. But I think to use
this tool in that sort of way is not appropriate.
That is why, over the past 50 years since this has been in effect,
the section 232 tool has been used only a few times. In fact, it hasn't
been used in the last 33 years.
One President tried to use it--George W. Bush, for whom I worked--and
his Commerce Department said: You know, that is not a national security
issue. So he used another trade provision that, again, required that
you showed material injury to a domestic industry. That is the 232
issue.
I think it is important to have the tool. I think if it is a true
national security concern, it is good to have it in the toolbox, and we
ought to be able to use it. But we have to be judicious about it and
not misuse it.
One reason to be careful is if you were to impose tariffs on cars and
automobiles, as the Commerce Department has said you could do, it would
really cost U.S. consumers and businesses.
First, on average, U.S. cars would cost about $2,000 more, and I am
told that is a conservative estimate. We don't want that.
Second, if you put these 232 tariffs on cars and auto parts with no
fairness rationale, the retaliatory tariffs on our exports would be
swift and painful.
Finally, if you misuse this 232 tool, I think you risk losing it
altogether.
The World Trade Organization might not have too much influence these
days, but they do have the ability to say whether something is legal
under international trade rules. They have an exception for these
national security waivers, but not if they are misused. So I think we
have to be careful about how we use it.
President Trump and his administration made a decision over the last
several days that I applaud them for. They decided not to move forward
on these 232 tariffs against auto parts and automobiles. They decided
to put it off for 6 months. I commend them for that.
Again, I hope we would never go there, but I think it is really
important that we put that off for 6 months so that we can get not just
the U.S.-Canada-Mexico agreement accomplished but so that we can also
focus on other things, specifically, our issues with China.
I recently introduced a bipartisan bill on section 232. It is a
commonsense approach that says: Let's be sure we are going under the
original intent of section 232, that we are not misusing it. It is
really simple. It says that instead of having the Department of
Commerce make the decision, it should be the Department of Defense. The
Department of Defense has the expertise to determine whether something
is a national security issue.
With regard to the recent decisions on these 232 tariffs, the
Department of Defense did not agree with the Commerce Department and
thought that it was not a national security concern. They said that
explicitly with regard to steel and aluminum, as examples. I just think
the men and women who are hired to protect our country ought to be the
ones who decide whether that is a national security threat.
Second, our legislation increases Congress's oversight here and
allows for Congress to have an expanded role, to provide a legislative
path for Congress to disapprove one of these 232 tariffs decisions if
we think it is the wrong way to go. I think it is important to bring
some of the power back to Congress, where it resides in the
Constitution.
I hope my colleagues on both sides of the aisle will help us with
this commonsense legislation and avoid the misuse of section 232 on
issues like autos and auto parts.
Again, in the meantime, the administration has made the right choice
by delaying the imposition of these 232 tariffs on longtime allies with
regard to autos and auto parts.
As I said earlier, balanced trade is about enforcement, being sure
that it is fair in terms of what imports are coming into this country
for our workers, for our farmers, and for our service providers.
It is also about exports. Do you know what? Because of that goal of
balanced trade, I support what the Trump administration is doing vis-a-
vis China. Unfortunately, when you look at what has happened to our
relationship with China, we have more and more reasons to say that
China is not playing by the rules.
China needs to make structural changes in our trade relationship in
order for us to have that level playing field we talked about earlier.
Right now, this U.S.-China economic relationship lacks equity, balance,
and fairness. It also lacks durability.
The big trade deficits and the structural problems we have can't
last. To put it simply, China is not playing by the rules.
First, they unfairly subsidized their exports. We talked about this
earlier, but it is not fair for another country to say ``We are going
to use government money to subsidize what we send to the United
States,'' and then have our workers and our farmers have to compete
with that. Subsidies are unfair under international rules and under our
trade laws.
China does it in a number of ways. One, they have a bunch of State-
owned enterprises, and they have actually expanded their State-owned
enterprises at a time when it looked as though China was going the
other way, that they were going to have a more market-based economy,
where the government wouldn't be controlling industries. But they have
also committed massive subsidies to some of their favorite industries,
companies, and technologies.
Second, China doesn't grant reciprocal access to U.S. investors and
engages in coerced technology transfer in intellectual property theft
from U.S. companies. Often, that intellectual property or technology
then goes to a Chinese company.
To be clear, as a condition of doing business in the huge Chinese
market, U.S. companies regularly have to hand over their intellectual
property, their technology, and their innovations, like manufacturing
processes, let's say, or blueprints, designs, trade secrets, and other
things of value. Then, typically, a Chinese competitor uses these
advantages to compete against U.S. companies. Again, that is just not
acceptable.
I encourage you to check out the administration's section 301 report
on USTR.gov. Go on USTR.gov, and you will see the section 301 issues
that are laid out in that report. If you want to learn more about it,
it is pretty clear.
[[Page S3041]]
Let me give you an example of how this technology transfer works. If
a U.S. automaker wants to make cars in China--and a lot of them have
wanted to and have made them there--China requires joint ventures in
order to gain access to production technology that then helps foster
China's own domestic auto industry.
In a number of businesses, China requires a 51-percent Chinese
partner in a joint venture. Again, that is one way that technology
transfer happens.
At first, China's foreign investment catalogue encouraged--that was
the word--foreign auto investment. I was in China back in 1984, I
believe it was--maybe 1985--at a Jeep plant. And I watched the first
American vehicles go off the production line in China. I was there. I
saw it. It was very positive. People were thinking: This is
interesting. We are going to do business with China. Those Jeeps can
then be sold in China and sold in other parts of Asia. It wasn't going
to compete with the U.S. market. This was good for Jeep and good for
China. That was at a time when they were encouraging foreign auto
investment. But as China learned about auto manufacturing from these
investments--in other words, they got knowledge about how to
manufacture automobiles themselves--the foreign investment catalogue
changed its position on auto investment from ``encouraged'' to
``permitted'' and then, more recently, in 2015, to ``restricted.''
Again, this is an evolution, initially, bringing in a joint venture
partner and getting the technology. It goes from ``encouraged'' to
``permitted'' and then finally to ``restricted'' now that China has
that technology. That is kind of leapfrogging us, isn't it? Again, that
doesn't seem fair, and it certainly is not reciprocal because we don't
do the same thing here in this country.
This problem of fueling Chinese innovation with the hard work of U.S.
companies is even more pronounced in the electric vehicle sector.
There, China tries to incentivize the production of vehicles in China
rather than imports from overseas. We would love to sell American
electric cars in China, but they prevent this with a combination of
things: tariffs, which are relatively high; subsidies for domestically
produced electric cars; and a credit system that requires all
automakers selling in China to produce a portion of their electric
vehicles in China or face penalties. Again, we don't do that.
It is clear from this experience that China's unfair trade practices
are at odds with the current rules-based, multilateral trading system.
I will continue to support the administration's efforts to increase
pressure on China in order to reach a strong but fair and enforceable
agreement. I argue that this is in China's interest, as well as in our
interest. They are now a mature trading partner. They are now the
greatest exporter in the world. They have an economy that is growing--
again, more sophisticated, more technology. They should want to protect
their own intellectual property. They should want to be engaging with
us and other countries around the world on a more fair basis.
While I urge the United States to hang tough, the administration
should work quickly to try to bring these negotiations to a close
because a combination of the retaliatory tariffs on U.S. exports and
tariffs on Chinese consumer products here in America is causing pain
for our farmers, for our workers, and for our service providers. So it
would be good to bring these negotiations to a conclusion.
We were very close to doing that only a few weeks ago, and the
reports back were that China had changed its view on some of the
concessions they were willing to make. Let's get back to the table, and
let's make a fair and enforceable agreement.
As part of increasing pressure on China, as the new tariff increases
are designed to do, the United States must also better leverage our
allies. The European Union, Japan, Korea, Canada, Australia, not to
mention Vietnam and lots of other countries in Southeast Asia--all
share our concerns that the administration has raised with regard to
China. They are all experiencing the same thing. Leveraging our allies
helps put pressure on China by demonstrating the broad consensus that
exists among those who believe China often acts contrary to our rules-
based, multilateral trading system.
When I was U.S. Trade Representative, I laid the groundwork for a
number of successful World Trade Organization complaints against China
by working with our allies. Key to our victory in those cases was our
ability to rally and to kind of come up with a posse--the EU, Canada,
Mexico, Japan, and other countries--to show China that the world was
watching and cared. The administration's work with the EU and Japan on
WTO reform and subsidies, right now, is a good step in the right
direction. It shows how much is possible when we can rely on our
friends and, therefore, gain more leverage. It is why it is important
we don't adopt policies that actively undermine our ability to work
with allies also.
That is another reason I was glad to see the administration delay any
tariffs pursuant to this 232 we talked about on automobiles and auto
parts. A lot of those 232 tariffs would have been imposed on our
allies. Not only do autos and auto parts from our allies or anywhere
else in the world not threaten our national security, but it also
invites retaliation on U.S. exports and poisons the well of good will
we need with our historic allies as we pursue a resolution of our
differences with China.
Let me end where we started--about balanced trade. All America needs
is a level playing field. We can compete. We have the ability to
innovate. We have the ability to be flexible. We have a lot of
advantages in this country, but we do need a level playing field. All
we ask for is fair and reciprocal treatment from our trading partners.
The sweet spot for America is that balanced approach--again, opening up
new markets for U.S. products while insisting on trade enforcement so
that our workers can compete.
As we talked about today, right now, we have a lot of balls in the
air in relation to trade. This has caused some uncertainty among our
trading partners, with American businesses, workers, and farmers that
rely on trade. I get that.
Let's prioritize passing USMCA with Canada and Mexico. That will
provide some certainty. Let's support the administration in bringing
home a strong agreement with China. That will provide a lot of
certainty. And let's not impose new section 232 tariffs. That will also
provide some certainty and predictability.
With that predictability and certainty further leveling the playing
field, we can help American farmers, American workers, American
businesses, and our economy.
I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant legislative clerk proceeded to call the roll.
Mr. CRAMER. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________