[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
U.S. CHINA TRADE
=======================================================================
HEARING
before the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 27, 2019
__________
Serial No. 116-6
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
36-236 WASHINGTON : 2020
COMMITTEE ON WAYS AND MEANS
RICHARD E. NEAL, Massachusetts, Chairman
JOHN LEWIS, Georgia KEVIN BRADY, Texas
LLOYD DOGGETT, Texas DEVIN NUNES, California
MIKE THOMPSON, California VERN BUCHANAN, Florida
JOHN B. LARSON, Connecticut ADRIAN SMITH, Nebraska
EARL BLUMENAUER, Oregon KENNY MARCHANT, Texas
RON KIND, Wisconsin TOM REED, New York
BILL PASCRELL, JR., New Jersey MIKE KELLY, Pennsylvania
JOSEPH CROWLEY, New York GEORGE HOLDING, North Carolina
DANNY K. DAVIS, Illinois JASON SMITH, Missouri
LINDA SANCHEZ, California TOM RICE, South Carolina
BRIAN HIGGINS, New York DAVID SCHWEIKERT, Arizona
TERRI A. SEWELL, Alabama JACKIE WALORSKI, Indiana
SUZAN DELBENE, Washington DARIN LAHOOD, Illinois
JUDY CHU, California BRAD R. WENSTRUP, Ohio
GWEN MOORE, Wisconsin JODEY ARRINGTON, Texas
DAN KILDEE, Michigan DREW FERGUSON, Georgia
BRENDAN BOYLE, Pennsylvania RON ESTES, Kansas
DON BEYER, Virginia
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
TOM SUOZZI, New York
JIMMY PANETTA, California
STEPHANIE MURPHY, Florida
JIMMY GOMEZ, California
STEVEN HORSFORD, Nevada
Brandon Casey, Staff Director
Gary J. Andres, Minority Chief Counsel
C O N T E N T S
__________
Page
Advisory of February 20, 2019, announcing the hearing............ 2
WITNESS
The Honorable Robert E. Lighthizer, U.S. Trade Representative,
The Office of the U.S. Trade Representative.................... 6
QUESTIONS FOR THE RECORD
From Chairman Richard E. Neal to Ambassador Robert E. Lighthizer. 87
From Trade Subcommittee Chairman Earl Blumenauer to Ambassador
Robert E. Lighthizer........................................... 91
From Representative Brad Wenstrup to Ambassador Robert E.
Lighthizer..................................................... 93
From Representative Kenny Marchant to Ambassador Robert E.
Lighthizer..................................................... 94
From Representative George Holding to Ambassador Robert E.
Lighthizer..................................................... 96
From Representative Linda Sanchez to Ambassador Robert E.
Lighthizer..................................................... 99
From Representative Jason Smith to Ambassador Robert E.
Lighthizer..................................................... 100
From Representative Suzan DelBene to Ambassador Robert E.
Lighthizer..................................................... 103
From Representative Darin LaHood to Ambassador Robert E.
Lighthizer..................................................... 105
From Representative Gwen Moore to Ambassador Robert E. Lighthizer 107
From Representative Stephanie Murphy to Ambassador Robert E.
Lighthizer..................................................... 109
From Representative Brian Higgins to Ambassador Robert E.
Lighthizer..................................................... 110
From Representative Jackie Walorski to Ambassador Robert E.
Lighthizer..................................................... 111
From Representative John Lewis to Ambassador Robert E. Lighthizer 113
From Representative John Larson to Ambassador Robert E.
Lighthizer..................................................... 114
From Representative Bill Pascrell, Jr. to Ambassador Robert E.
Lighthizer..................................................... 115
SUBMISSIONS FOR THE RECORD
The Hon. Kevin Brady and the Hon. Vern Buchanan, Letter.......... 119
The Hon. Darin LaHood, Article................................... 121
Agricultural Trade Associations.................................. 125
Air-Conditioning, Heating, and Refrigeration Institute (AHRI).... 127
American Apparel & Footwear Association (AAFA)................... 130
Center for Fiscal Equity......................................... 132
International Dairy Food Association (IDFA)...................... 137
McGuireWoods Consulting LLC...................................... 140
National Association of Foreign-Trade Zones...................... 141
Software & Information Industry Association (SIIA)............... 142
Solar Energy Industries Association (SEIA)....................... 151
Steel Manufacturers Association (SMA)............................ 153
U.S.-CHINA TRADE
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WEDNESDAY, FEBRUARY 27, 2019
U.S. House of Representatives,
Committee on Ways and Means,
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m., in
Room 1100, Longworth House Office Building, Hon. Richard E.
Neal [Chairman of the Committee] presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
CONTACT: (202) 225-3625
FOR IMMEDIATE RELEASE
Wednesday, February 20, 2019
FC-5
Chairman Neal Announces a Hearing on
U.S.-China Trade
House Ways and Means Committee Chairman Richard E. Neal today
announced that the Committee will hold a hearing on U.S.-China Trade.
The hearing will take place on Wednesday, February 27, 2019, in the
main Committee hearing room, 1100 Longworth House Office Building,
beginning at 10:00 a.m. The only invited witness is Ambassador Robert
E. Lighthizer, United States Trade Representative.
In view of the limited time available, oral testimony at this
hearing will be from the invited witness only. However, any individual
or organization not scheduled for an oral appearance may submit a
written statement for consideration by the Committee and for inclusion
in the printed record of the hearing.
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written comments for the hearing record can do so here:
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with the formatting requirements listed below, by the close of business
on Wednesday, March 13, 2019.
For questions, or if you encounter technical problems, please call
(202) 225-3625.
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Note: All Committee advisories are available at
http://www.waysandmeans.house.gov/
Chairman NEAL. And the Committee will come to order. Good
morning.
Today we welcome Ambassador Robert E. Lighthizer, the
United States Trade Representative, to discuss U.S.-China
trade.
One of the challenges for the Ambassador, Members of the
Committee, and the Administration, indeed, is the following,
that as trade issues play out, there is generally some truth to
what everybody says about trade.
At the direction of the Trump Administration, there are
currently U.S. tariffs on $250 billion of Chinese imports. In
retaliation, China has imposed tariffs on $110 billion of U.S.
exports. This hearing is our opportunity to make clear what
Congress stands for on U.S.-China trade, and what the American
people need to see in any trade agreement as the Administration
concludes its work and memorandums of understanding with China.
At the outset, I want to acknowledge that Ambassador
Lighthizer is leading negotiations with China, and that he may
want to exercise discretion about the level of detail he gets
into as we reach the delicate stage of finishing, hopefully,
the agreement. At the same time, I encourage the Ambassador to
be as forthcoming and vigorous, as we know he is capable of
doing, as possible.
I have often observed that there is truth, again, as I
noted earlier, to what everybody says about China: China has
been good for some, but it also has been bad for many others.
In 2000, when Congress voted on normalizing trade relations
with China, the promise was that China would reform and become
market-based, democratic, and would respect human rights. But
the China that we trade with and compete with today is very
different from the one we had hoped would emerge.
China's economy, which has taken on some market
characteristics, remains fundamentally state-directed. China's
companies, state-owned or not, are called upon to serve the
government's interests. China's trade and economic policies are
coordinated through 5-year and 10-year plans. Those plans are
backed by China's resources. They are aimed at fostering
national champions, advancing China's economic and
technological ambitions, and ensuring full employment in China.
They are implemented at the expense of other economies, through
the theft of others' intellectual property, and without regard
to the global trade rules or human rights of workers.
These are structural economic challenges that American
workers and companies face in trading and competing with China.
While this Administration confronts the same challenges
with China that previous Administrations have faced, it has
chosen to use tactics and tools that previous Administrations
of both parties did not. The Administration's tariffs have been
sweeping, disruptive, controversial, and indeed, for some
sectors, painful. The Administration's promise is that high-
risk approaches will yield high rewards.
My concern is that we are about to see the Administration
use the same, from time to time, ineffective playbook that has
been applied in the past.
Recall that in April 2017 President Trump met with
President Xi at Mar-a-Lago, as part of a 100-day plan for a big
China deal. The Commerce Secretary declared that the outcomes
from the exercise represented more than has been done in the
whole history of U.S.-China relations. Of course, when we
examined the results of those negotiations, we found that some
of the commitments were not quite as advertised. Other
commitments that were made promising changes in China were
already in the process of being made.
But in May of last year China's trade negotiation seemed
like it was about to lead to a package of large purchase
commitments for commodities like soybeans and natural gas,
along with aircraft. Those negotiations clearly were not
leading to the solution that we had hoped for, in terms of
significant trade challenges. They, indeed, were put on hold.
This time around, on December 1st, the President announced
the 90-day period to fix our complex trade problems with China.
And as we near the finish line, we are hearing once again about
very large purchase commitments for commodities like soybeans
and natural gas, along with aircraft.
There is a primary difference, however, with these
negotiations: That is that Ambassador Lighthizer is at the
helm. He has time and again, I think, developed a vision that
many of us on this Committee will support vigorously. And we
believe that the structural problems that face America as it
faces its trade relationship with China are well observed by
the Ambassador.
This Administration has chosen to take a path of high-risk
confrontation. It must hold out for the good deal, a structural
deal. The future of America's economic prosperity is in the
balance.
And with that I would like to recognize the Ranking Member,
Mr. Brady, for an opening statement.
Mr. BRADY. Thank you, Chairman Neal, for convening this
hearing on America's trade relationship with China.
And thank you, Ambassador Lighthizer, for your leadership
in the ongoing negotiations with China, and for consulting with
us today about where those negotiations stand and what comes
next.
We can all strongly agree that China has cheated on trade
for decades, severely harming American workers and businesses.
President Trump deserves significant credit for being the first
President to confront China's unfair and predatory trade
practices head-on, and insist on a new, fairer trading
relationship with the United States.
While we want China to buy more U.S. goods that support
farmers, manufacturers, and professionals here at home, it is
even more important for us to hold China accountable to meeting
high international standards on intellectual property rights,
on subsidization, on overcapacity, and on the other structural
ways in which China distorts the global economy.
A new era of fairer trade between China and the United
States is in everyone's interest. The solution must be
enforceable at every level of Chinese governance, measurable,
and subject to corrective action should it fall short of
commitments. And it should provide as much predictability as
possible for our American job creators seeking to serve China's
market.
With a more level playing field and now armed with a
competitive, 21st century tax code, I am confident that our
farmers, workers, and local businesses can compete and win
anywhere in the world. U.S. companies face a wide range of
trade barriers in China, and I look forward to a thoughtful
discussion of them today.
China's unfair treatment of U.S. investors is a huge part
of the problem that the U.S. Trade Representative's Section 301
report identifies in great detail. For example, China's equity
caps and joint venture requirements prevent U.S. companies from
controlling their own operations, as well as their own
intellectual property when they invest in China, giving Chinese
competitors an unfair advantage and costing American jobs.
A high-standard, fully enforceable bilateral investment
treaty with China can help us address many of these issues for
the long term. And I am hopeful the substantive talks underway,
including in Washington last week, will produce meaningful
commitments from China that lower trade barriers, achieve
structural reforms, and establish a new era of fair trade.
But no one country can take on China entirely alone. The
three-party initiative, Mr. Ambassador, that you are
undertaking with the European Union and Japan, holds great
promise that we must build on together. I am also encouraged
that the Trump Administration is showing leadership in
aggressively challenging China when it violates WTO rules,
including in its intellectual property licensing policies, as
well as its subsidies and tariff rate quotas for our key ag
commodities.
At the same time I am concerned about the very real impact
of tariffs on American manufacturers, consumers, and farmers. I
will continue to work closely with the President and his team
to ensure we minimize the impact to the United States and our
allies as we take on China. Fairly traded goods should be
excluded from our tariff actions, as should products that are
otherwise unavailable to U.S. companies. And I think having a
real and workable exclusion process in place for any tariffs is
essential, so that we can focus these impacts on the bad
behavior of China.
In sum, thank you for being here, Ambassador. I look
forward to today's discussion about the challenges we face in
China and our demand for China to negotiate in good faith to
achieve a durable and enforceable solution to the structural
issues we face.
Mr. Chairman, with that I yield back.
Chairman NEAL. Thank you, Mr. Brady. And without objection,
all Members' opening statements will be made part of the
record.
Today's sole witness is Ambassador Robert E. Lighthizer,
the United States Trade Representative.
The Committee has received your written statement. It will
be made part of the formal hearing record. You have 5 minutes
to deliver your oral remarks.
Ambassador Lighthizer, again, welcome. And you may begin
your testimony as you are ready.
STATEMENT OF ROBERT E. LIGHTHIZER,
UNITED STATES TRADE REPRESENTATIVE
Ambassador LIGHTHIZER. Mr. Chairman, Ranking Member Brady,
and distinguished Members of the Committee, it is a pleasure to
be here today and to discuss this very important issue. As you
said at the beginning, I can never hear anybody up there, so at
some point you will have to get----
Chairman NEAL. Mr. Ambassador, could you speak into the
microphone?
Ambassador LIGHTHIZER. Yeah. See, you can't hear me and I
can't hear you. It is like a perfect room.
[Laughter.]
I want those 10 seconds back. I have to say that every time
I come here.
All right. I think at the beginning it is appropriate to
take a minute and remind ourselves that, with all our pressing
problems, we have a very successful economy. Under President
Trump's leadership we are growing much faster than any other G7
nation. We have created millions of new jobs, significantly the
500,000 manufacturing jobs, and we have seen 2 million people
join the workforce. These are people who were not in it before.
These are real working people moving from despair to hope,
and their kids from insecurity to a future. A lot needs to be
done, and I salute all Members of the--of both parties--who are
working so diligently on issues of worker training, opiate
addiction, as well as trade and other issues.
But we are here to talk about China. I agree with those who
see our large and growing trade deficit and their unfair trade
practices, including technology transfer issues, failure to
protect intellectual property, large subsidies, cyber theft of
commercial secrets, and other problems as major threats to our
economy.
We can compete with anyone in the world, but we must have
rules, enforced rules, that make sure market outcomes, not
state capitalism and technology theft, determine winners.
President Trump has, for years, recognized this very
serious and, I would say, existential problem. And he is
determined to take action to defend our workers, farmers, and
ranchers, and our economic system. He directed me to conduct a
study under Section 301. After months of hard work the
President ordered that certain tariffs be put in place. Because
of his insight and grit, we are in a position to deal with this
problem for the first time after decades of governmental
inaction.
I would like to note that, as with many extremely important
issues facing our country, prescience has been bipartisan. The
Speaker was an early, forceful, and foresighted leader on this
issue. I have admired her perception and hard work over the
years, and have counseled with her regularly in my current
position.
I would just like to read something briefly. Faced with the
PNTR vote in April of 2000, the Speaker said, ``It is incumbent
upon all of us in the public and private sectors to work for
free and open trade with China that is real. The U.S.-China
bilateral WTO agreement, however, is seriously deficient in
substance, implementation, and enforcement. This issue is too
important for our economy to be based on a pattern of broken
promises, not proven performance. China can become a member of
the WTO without Congress having to surrender its right to U.S.-
China trade review annually. There is no reason why we should
permanently surrender that leverage at this time.'' I ask, if
her position had prevailed, how different would things be right
now?
There are many other examples of bipartisan leadership,
including a lot of people on this Committee, and I am going to
get into--I am going to answer the question, if it is relevant.
Let me close by saying that we have engaged in a very
intense, extremely serious, and very specific negotiation with
China on crucial structural issues for several months now. We
are making real progress. If we can complete this effort--and
again, I say if--and can reach a satisfactory solution to the
all-important outstanding issue of enforceability, as well as
some other concerns, we might be able to have an agreement that
helps us turn the corner in our economic relationship with
China.
Let me be clear: Much still needs to be done both before an
agreement is reached and, more importantly, after it is
reached, if one is reached.
I want to thank all Members for your bipartisan approach on
this seminal effort, and I look forward to continuing our work
together. I want to say that if this was not a bipartisan view,
we would not be having the success that we are having.
Thank you, Mr. Chairman. Thank you, Ranking Member. I look
forward to your questions.
[The prepared statement of Ambassador Lighthizer follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman NEAL. Thank you, Mr. Ambassador. We will now move
to questioning.
Without objection, Members will have 4 minutes to question
the witness today, in order to ensure that all Members have an
opportunity to inquire before the Ambassador's schedule
requires him to depart.
I will begin by recognizing myself. Members will be
acknowledged in the order of what we call the Gibbons Rule, and
that is when the Member took their seat.
Mr. Ambassador, in my opening I referenced some of the
earlier Administration efforts to negotiate trade with China.
Those efforts seemed to overlook the deep and complex
structural problems underlying our trade relationship.
My question is this: What would be different this time, and
what can we expect next?
Ambassador LIGHTHIZER. Thank you, Mr. Chairman, and that is
the fundamental question. What the President wants is an
agreement that, number one, is enforceable, but the changes--
the pattern of practice of forced technology transfer,
intellectual property protection, large industrial policy
subsidies, and then a whole variety of specific impediments to
trade and unfair practices in the area of agriculture, in the
area of services.
What we want is fair trade. That requires structural
change, and it has to be enforceable. We have had--and I can go
through them for the Members--many, many examples of the
Chinese agreeing to specific--not this specific, but agreeing
to take steps to forego certain unfair trade practices. And in
very few cases have they actually kept their obligations.
We have to, in this case, engage in--approach this with the
view that there are reformers in China who want to change these
practices, and we are working together with them. That has to
be our approach. And if that is the case, our hope is to have
specific language on specific issues that is enforceable
through a very clear process.
Chairman NEAL. So do you envision one negotiated package in
the next few weeks that is going to resolve all these
structural issues?
Ambassador LIGHTHIZER. So I am not foolish enough to think
that there is going to be one negotiation that is going to
change all of the practices of China or our relationship with
them. I don't believe that.
I think that we have to take on the major issues, the ones
that I just raised, and we have to specifically preclude anti-
market practices and practices that are unfair to our workers
and ranchers and farmers, and there are lots of them.
At the end of this negotiation, if we are successful, there
will be a signing and then there is going to be a long process
of me working with the Members of this Committee and the
Finance Committee in the Senate and other Members to ensure
that we actually live up to this. And I believe other problems
will arise, and they are going to have to be dealt with.
I view this as a process, but this is--well, I use the term
``turning the corner.'' This is the first time, I believe, that
it has been approached in this way. And the result--it is more
the result of the creation of an enormous amount of leverage by
the President.
Chairman NEAL. Mr. Ambassador, as you reach an accord, will
you envision putting the tariff threat in abeyance?
Ambassador LIGHTHIZER. So this may not be the first time or
the last time I say this in this hearing. But actually,
specific provisions may be--I want to kind of hold off on--as
the Chairman knows well, I am happy to talk to him about
whatever is on my mind. I love it when you said there would
have to be some discretion here. I wrote that down, because I
am thinking that is, like, not my strongest suit, discretion.
But I am trying. I am trying to do it.
I will talk to you about that, specifically. Certainly, it
is an objective of the Chinese that tariffs go away, and, I
should just add a footnote that, in my judgement, does not
mean--anti-dumping, kind of--that normal trade law--that is a
separate process. That is a separate enforcement process. I am
dealing with Section 301 in this agreement.
Chairman NEAL. Thank you. Let me recognize Mr. Brady.
Mr. BRADY. Thank you, Mr. Chairman. And I think you raise--
both you and Ambassador Lighthizer raised--an important point
here, which is this is the first serious, substantive attempt
to change China's misbehavior.
And it is not just one issue. You are taking a
comprehensive approach by challenging China at the World Trade
Organization in cases, aligning with Europe and Japan on the
WTO reforms that can address this, implementing investment
restrictions Congress put in place last year to address China.
And then the Section 301 case, the issue you are dealing with
right now, it will take--this is the first comprehensive
approach I have seen, and the one I think holds the most
likelihood for success.
I think, as people look at what is a successful win for
America, you ought to really focus, as you just mentioned, on
the Section 301 area, where you really pulled back the curtain
on China's trade practices and predatory trade practices, and
laid out that case.
I know at home, in Texas, we have one of our best corporate
citizens, Huntsman Corporation, with nearly 1,000 employees in
my district; they are an example of how American companies have
no recourse when their intellectual property rights are
violated in China, because provincial Chinese courts simply
don't uphold the rule of law.
Not only did the court throw out this patent intellectual
property case based on the expiration date of the dye, but they
also appointed a court panel to review the case that had an
employee of the company that stole the intellectual property.
It is that hard for businesses to compete.
So let's talk about 301 for a second. I think these are the
key issues here that will define our success. You mentioned
this earlier.
Will the agreement that you are negotiating with China have
measurable commitments in it?
Will they be enforceable at all levels of China's
governance? Because we know the play they have run before is
to, you know, pretend to protect intellectual property at the
central government level, but not at the provincial or local
court and communities level.
And finally, will there be an avenue for corrective action
if China doesn't live up to its commitments in what we hope
will be an agreement here in the near future?
So measurable, enforceable at all levels of governance, and
corrective action, make sure they live by those commitments.
Ambassador LIGHTHIZER. So, you know, thank you, Mr. Brady.
I appreciate that.
First of all, in terms of what is successful, you know, I
have been doing this a long time. But nonetheless, over the
course of the last few months, I went to every statement that
business groups have made, that agriculture groups have made,
that labor unions have made, and that Members have made. Most
of them, myself--in some cases having my immediate staff go
through and tell me--``Tell me what that guy or that woman said
is essential to a successful''--and that is my guide. I am
taking that, and I am distilling that down. And it is--I
could--I mean, for some of you it is one thing, for some of you
it is another. But it is all right in a band, right?
And so that is what I am measuring myself by, and that is
what I have as my objective. It is not just what I think, it is
what everybody--I have distilled down what the people who have
spent time thinking about this think.
So the Huntsman example is, like, unfortunately, one of
many, many thousands.
Mr. BRADY. Unfortunately.
Ambassador LIGHTHIZER. And I could go on and on about that.
I won't, because I only have 12 seconds or 10 seconds to go.
So number one, yes. Clearly, it has to be specific and
measurable.
It has to be enforceable at all levels of government. Some
things are not appropriate for that, but 99 percent, the core
stuff, is all--and in the agreement it will say central, sub-
central, local, and--so it has to be across the board like
that. And we have to have the ability to take proportional
action unilaterally, to make sure that we have a situation
where they are following----
Mr. BRADY. Thank you, Ambassador.
Chairman NEAL. Thank you, Mr. Brady. The Chair would now
recognize the gentleman from Georgia, Mr. Lewis, to inquire.
Mr. LEWIS. Thank you very much, Mr. Chairman and Ranking
Member, for holding this hearing. Thank you, Mr. Ambassador,
for being here.
I have said it before and I will say it again. There is no
way to compete in a race to the bottom. Like our friend and
colleague, Ms. Sewell, I grew up in Alabama. She grew up in the
big city, but I grew up in rural Alabama. And I watched
American jobs disappear throughout my life and career.
In my home State of Georgia, with many manufacturers,
workers continue to struggle to find good, livable-wage jobs.
Over the years, many of those businesses move overseas in
search of cheap labor and lower environmental protection. What
I witnessed in our community inspired me to oppose granting
China permanent normal trade relations almost 20 years ago.
At the same time, my congressional district is also home to
a large number of manufacturers, both large and small, who rely
on the aluminum. I do not need to tell you, Mr. Ambassador,
that China plays by its own rules, and focuses on the long
game. While we may differ on the tactics, everyone in this room
will agree that we need a level playing field. And we don't
have it. We can do better. We can do much better.
As you note, Mr. Ambassador, this is not an easy matter. We
must be thoughtful, we must be mindful, and we must get it
right.
Now, Mr. Ambassador, I want to thank you again for being
here, and thank you for your service. The current negotiation
focuses on a number of issues. I want to know about the labor
and environment protection part of the discussion.
Ambassador LIGHTHIZER. So I would say first of all the
principal reason why I am spending my time doing this now is
for the same reason that you just stated. That is to say we
have lost--not all just to China, but since China joined the
WTO, we have lost 5 million manufacturing jobs, and millions of
additional jobs. And it would distress me if that was the
result of economic forces. But it is not the result of economic
forces, it is the result of state capitalism. So I am motivated
by the same thing that you are, and I want to be judged by
that, right? I want to ultimately be judged by that.
On the aluminum question, you are completely right. We have
a problem, a global problem in aluminum, precisely because
China doesn't operate on an economic system. They have created,
through controlling their market access and subsidies and other
practices, an extraordinary amount of excess capacity that has
basically wiped out the aluminum industry across the world.
The issues that we are focusing on in this negotiation are
not--they are labor and environment to the extent those are
unfair trade practices. But it is not the same as we are, as
you know, well in USMCA, where those are specific objectives
that we are requiring change in. So to the extent they are
unfair trade practices--I would say also we are constrained by
the limits of 301, and by the statute that we have to work
with. But those are also, as you know well, high priorities for
me.
Chairman NEAL. I thank the gentleman. Mr. Nunes is----
Mr. NUNES. Thank you, Mr. Chairman.
Chairman NEAL [continuing]. Recognized.
Mr. NUNES. Thank you.
Ambassador, thanks for being here. And I want to
congratulate you for really being the first--being part of the
first Administration in 20 years of complaining about China to
actually do something.
I associate myself with a lot of the comments that Mr.
Lewis made, and I know it is tough, because I know the Chinese
are trying to be very targeted in how the tariffs are being
implemented on our side. But I can tell you, from the
intelligence angle that we have been studying here in the
Congress for several years, that, you know, the Chinese have
moved into taking over the communications systems around the
world. They have moved into building strategic military
locations around the globe, and those are spreading.
At the same time they have targeted major industries for
either takeover through acquisition of banks, energy sectors,
and others around the globe, in every continent, including here
in the United States.
So I would like to give you an opportunity, Ambassador, to
get into a little bit of how the Chinese use the regulatory
angle to encourage abuse and theft of intellectual property,
because it is not something that I think a lot of Americans
understand, but they are actively, on a daily basis, stealing
intellectual property from right here in the United States, and
transferring that to China to compete directly with our
companies and our allies' companies around the globe.
I will give you an opportunity to expand on that.
Ambassador LIGHTHIZER. Yes, thank you very much,
Congressman.
So, number one, I think that the United States has the best
technology in the world. It is probably our single biggest
competitive advantage, and why we will be number one for a long
time, if we protect our intellectual property, because it is
not just a question of high-tech industries, it is steel, it is
these combines. If you get into a modern combine, it is like
a--you know, like a spaceship was in the sixties, right?
These--you know, how they drive these things, they have all
these computer operations and satellite operations.
And so technology is our biggest advantage, and it runs
absolutely across every part of our economy. It is the key, and
that is why the President had me focus on it right here. And I
think China, as you suggest, knows full well that it is the
key. Technology is what is going to determine who rules the
future. Chinese practices are--you could break them down into
twofold: One is what they do there, and the other is what they
do here.
We are negotiating provisions that will, if enforced,
restate, make far more specific, and clarify commitments
against cyber theft, against physical theft, and against using
investment practices to get technology.
What happens now, I don't want to go through a lot of
specific examples, and I know you know far more of them than I
do, because this is part of your responsibility in the
Intelligence Committee. But what happens very often is China
comes in--for example, they invest in a company, the company
develops technology, that technology ends up in China. And it
could end up through investment, it could end up through cyber
theft, it could end up through employees working for that
company and then leaving and going to China.
I mean, there is a whole group of things. And what we are
trying to do is deal with them as much as we can in one
agreement. And then that is one side of the problem, it is the
one you are focused on.
The whole other side is how they get technology from us
through non-economic means in China, U.S. companies operating
there. And that is another thing that we are trying to deal
with in this.
Mr. NUNES. Thank you, Ambassador.
Thank you, Mr. Chairman.
Chairman NEAL. Thank you, Mr. Nunes. The gentleman from
Texas is recognized, Mr. Doggett.
Mr. DOGGETT. Thank you, Ambassador. I think our country is
fortunate that you are on the front lines of this very
important negotiation. I did note with interest the exchange
you had with the President last Friday that this ongoing
negotiation with China is a trade agreement--that is the goal--
and not a memorandum of understanding.
And I think you indicated that, since he is the boss, you
agree with him and that your goal is to negotiate and complete
a reasonable trade agreement. Is that right?
Ambassador LIGHTHIZER. I am going to elaborate on that when
it is my turn to talk.
Mr. DOGGETT. Well, I am just referring to your precise
words last Friday, that you would no longer use the term
``memorandum of understanding,'' and that this is a trade
agreement.
Pardon? I think if you turn your microphone up----
Chairman NEAL. We are having trouble hearing you, Mr.
Ambassador.
Ambassador LIGHTHIZER. Yes, and could you pause my time
here? Is that better now?
Chairman NEAL. Yes, thank you.
Ambassador LIGHTHIZER. I actually felt pretty good when you
couldn't hear me, either, for a minute.
[Laughter.]
Kind of like this is--it is finally a fair system here.
There will be--I am not quite sure I know, Congressman
Doggett, where you are going on this, but this will be a
binding agreement.
I should take a step back and say to the extent any
agreement between nations is binding--right? I always have to
make that clear. It is a great de Gaulle quote, which is that
agreements between nations--I will slightly change it to update
it to the current situation--agreements between nations, like
flowers and children, last while they last.
Mr. DOGGETT. Right. And so it is a binding trade agreement.
A contract, as the President referred to it.
And as a binding trade agreement, given the statutory
authority that you and the President have to negotiate that is
delegated by Congress, can you outline to us what you would
anticipate after the agreement would be the timetable for
submitting it to Congress for approval?
Ambassador LIGHTHIZER. Thank you. We have no intentions of
submitting it to Congress. It is----
Mr. DOGGETT. Well, if it is a trade agreement, under
Section 103, you are required to submit it to Congress, are you
not?
Ambassador LIGHTHIZER. It is an executive agreement. We are
not required to submit it to Congress. We have to submit at
some point----
Mr. DOGGETT. It is----
Ambassador LIGHTHIZER. The President has the--I am sorry,
Congressman.
Mr. DOGGETT. No, it is--yes, as you have agreed with the
President, it is a binding trade agreement that you are
seeking, you can seek it only through delegation of
congressional authority. And you are required to submit such
agreements back if you are lowering U.S. tariffs, which would
appear to be the case.
Ambassador LIGHTHIZER. Well, let me just say that we are in
no way--this is a settlement of a 301 action. The President is
using his power under Section 301, which has been delegated.
And it is an executive agreement which the Constitution gives
the President the right to enter into. We are not changing any
tariff lines, we are not using TPA. And if we did, by the way,
I wouldn't be here now anyway, because we wouldn't have gone
through the process.
So this is not a TPP process. This is a settlement of a 301
action, and it is the President's constitutional authority to
enter into executive agreement.
Mr. DOGGETT. Since we may not agree on that, let me ask you
if you do agree that unless you get meaningful structural
changes to address this stealing of our intellectual property
and the other issues that are out there structurally that you
outlined in your testimony, if all we get is the sale of a few
more soybeans and other products, then this is an agreement not
worth having, isn't it?
Ambassador LIGHTHIZER. I couldn't hear the last----
Mr. DOGGETT. I am just saying that the goal here is
meaningful structural changes. And if we don't get them, this
is an agreement not worth having.
Ambassador LIGHTHIZER. I agree completely with that
statement. And right now we are 500, you and me----
Mr. DOGGETT. And let me just add how----
Ambassador LIGHTHIZER. I want----
Mr. DOGGETT [continuing]. Important it is, given--and I
realize this is not in your direct jurisdiction, but I agree
with my Texas Senator, John Cornyn, and the others who express
concern about Huawei and its national security threat, that if
there is any bargaining away of our national security to get
this agreement, it would be with great harm to our country.
Thank you.
Ambassador LIGHTHIZER. So let me just say, one, I agree
with you on 50 percent of the things. And that is a--you get to
the Hall of Fame if you----
Mr. DOGGETT. That is progress.
Ambassador LIGHTHIZER. Yes, that is. Now, we are usually at
90 percent. But I do not think it should just be a purchase
agreement. I agree with that completely. The law enforcement
provisions are outside of my purview; I have nothing to do with
them.
Chairman NEAL. Thank you. The Chair would recognize Mr.
Buchanan to inquire.
Mr. BUCHANAN. Thank you, Mr. Chairman, for this important
hearing. I also want to thank the Ambassador for reaching out,
really, to both sides. I know you have had a lot of meetings,
you have a lot more meetings you are going to do. So I
appreciate you doing that on a bipartisan basis.
I also want to just echo what many of my colleagues have
said, in terms of enforcement. My experience--I happened to be
in Beijing 20 years ago as a part of the U.S. Chamber, in a
delegation there. Intellectual property was a big issue back 20
years ago, in terms of the theft. And I am not sure how far--
there hasn't been any or much progress on that. It is still, as
you know, a big challenge.
And the thought is whether the agreement is 150 pages or
1,000 pages, what I have learned in my business career, the
agreement is only as good as the 2 parties involved. So I just
want to go on record also concerned about the enforcement. I am
for free trade, but it has to be fair, and we have to level the
playing field.
I want to switch gears to--I touched base with you the
other day, but it is a big issue in Florida and, I think,
across the country: Fentanyl. Last year, there was a 77 percent
increase in deaths in Florida. China is one of the leading
sources for Fentanyl. I know the President has had some
discussions, and I think he said he had some commitments. Can
you maybe expound on where that is at, in terms of Fentanyl and
the Chinese ability to produce that, what we are trying to do
as a part of this document, ideally?
Ambassador LIGHTHIZER. Yes. Well, thank you, Congressman.
First of all, you are right. There is a long history of failure
by China to protect intellectual property.
The first kind of modern example of it was a 301 that was
brought in 1991 during the George Herbert Walker Bush
Administration, and then between 2010 to 2016 there were 10
different commitments where they agreed to do certain things,
which commitments I would suggest were not lived up to. And
therefore, enforcement really is the biggest thing.
The President completely agrees with you on the issue of
Fentanyl. He specifically raised it with President Xi when we
were in Buenos Aires out to dinner. President Xi--I don't want
to suggest that this is my area of expertise, because it
isn't--but President Xi agreed that he would treat it as
whatever the equivalent of a controlled substance is in China.
And this is something that the President views himself as
having a commitment on. It may very well be something that we
end up writing into this agreement. But it clearly is something
the President views himself as having a commitment on, and that
we are monitoring to see if there, in fact, are changes. It is
very important to the country for all the reasons you said. I
even made a veiled allusion to it in my opening statement: This
idea of fighting opioids is as important as job training.
Mr. BUCHANAN. Let me add one other thing. I just want to
put on your radar--I know you have a lot of things on your
radar, but the ag community in Florida, forestry, a couple of
years ago it did $8.4 billion. It is a big industry in our
State. And in terms of exports to China, that has dried up for
various reasons. We can talk about that at a later date. I just
want to make sure that is something you are considering or
looking at, as well, as part of the agreement.
Ambassador LIGHTHIZER. No, I am. I actually--I have a list
of specific issues that have been raised by Members that are
appropriate for the agreement, and it is something that we have
raised and will continue to raise.
Mr. BUCHANAN. Thank you, and I yield back.
Chairman NEAL. We recognize the gentleman from California,
Mr. Thompson, to inquire.
Mr. THOMPSON. Thank you, Mr. Chairman. Thank you for
holding the hearing.
Ambassador, thank you for being here. And thank you for
your willingness to work with us and meet with us. You have
been very open and very helpful during your time in this spot.
I have three issues. You have heard from me on a couple of
them before. I would just like to reiterate those and raise one
new one to you, and then let you respond accordingly.
As you know, my district produces the finest wine in the
world, and China is the largest and the fastest-growing wine
marketplace in the world. The 232 and 301 tariffs put a 39
percent tariff on our products. And we are having to compete
with other new wine areas, Australia and Chile, with zero
tariffs. So I just--I would like some assurance that you are
doing everything you can to ensure that high-value-added
specialty crop products have the enhanced entrance or enhanced
access to the market. I know you are working on all
agricultural issues and products.
And then the other ag issue is rice. You know, milled rice
in California has been waiting for the promised access to the
Chinese market ever since China joined the WTO. And they have
been very, very helpful, as you know, and very understanding.
And I guess I would like to have some idea as to how much
longer they are going to have to wait, or whether or not we are
close to the promised access.
And then the new issue that I want to raise today are the
tariffs on building and construction materials. The National
Homebuilders Association suggests that these tariffs equal
about $1 billion worth of tax on residential construction. And,
as you know, affordable housing, the lack of affordable
housing, is something that impacts all of our districts, every
district in the country. And this just makes it harder to be
able to build homes and get people into homes.
And in my district, in particular, we just went through a
horrific fire, where we lost about 7,000 homes. And home owners
are trying to rebuild, and they have seen the cost of building
materials, coupled with the shortage of supply and the shortage
of labor, just drive the cost of replacement to a point where
they can't rebuild the home that they lost in the fire.
We have had these 7,000 homes in my district, and then the
new fires up in the northern part of the State, in Congressman
LaMalfa's area, and down in the southern part of the State
there are thousands more. And this is really a setback for home
owners who have already been through a lot.
And so I am just wondering: Is that $1 billion tax really
the best way to hold China accountable? And I concur that, you
know, we need to hold them accountable, but is this the best
way to do it, at the expense of people who are trying to
rebuild and move into their homes?
Ambassador LIGHTHIZER. So thank you, Congressman. I would
say, first of all, on the wine issue and, as you call them,
high-value-added specialty crops, yes, they are very important.
This negotiation is, we have all said, about structural change,
structural change and enforcement.
But it is important that we have purchases, because the
purchases will be good for specific people, and it will also
get the deficit down, which I think is an important thing to
do, directionally, for sure. And in that context we very much
talk about high-value-added specialty crops. And wine, of
course, is a great example of one. I mean, there is--it is a
product where the United States makes the best products in the
world, so I would--I can attest to that, personally.
The second thing, rice, is complicated, all right? First of
all, we are talking about rice in the context of the purchases,
number one. Number two, as you know, we have WTO cases which we
have--is the second one public yet? No? Well, we have one that
we have won and one that is in the process. It will become
public at some point. So, trying to resolve those in the
context of this agreement is something that we are trying to
do. So that is something that we have raised. But, as you know,
rice is a funny issue in China. It is not--it has a different
political context than a lot of these other things we are
talking about. But nonetheless, we are trying to do that.
In terms of the billion dollars, I don't know the letter. I
should look at it. I presume they are talking about softwood
lumber, which I would say is a litigation matter, and I presume
also steel and aluminum. I presume those are the things they
are talking about. Yes, yes, I would assume that.
And each of them has their own context. I would say
softwood lumber is a litigation thing that we would have to
work our way through. Steel and aluminum, my objective, as many
Members know, is to try to work out something with Mexico and
Canada on those things. But I----
Mr. THOMPSON. We have run out of time, but thank you. And
any other information you have you can get back to me with.
Ambassador LIGHTHIZER. All right, I am sorry. I will----
Mr. THOMPSON. Thank you.
Chairman NEAL. Now that we have established that California
produces the best wine in the world, the Chair would recognize
the gentleman from Nebraska, Mr. Smith, to inquire.
Mr. SMITH OF NEBRASKA. Thank you.
Ambassador LIGHTHIZER. I want to say Oregon and there are
some other States that also have very good wine.
[Laughter.]
Maybe even--maybe Georgia, I don't know.
Mr. SMITH OF NEBRASKA. And the Nebraska wine industry is
coming right along, as well.
Thank you, Ambassador, for joining us this morning. I
appreciate that, certainly, you are dealing with a lot of
issues, and we appreciate that you took the time to be here
this morning.
President Trump has time and again expressed his concerns
for our farmers and ranchers. He has certainly made the
National Farm Bureau Federation annual conference and annual
event part of his schedule. He has been steadfast in his
insistence that agriculture be a part of any negotiations we
undertake with the European Union. For this and much more, the
rural community is appreciative.
There are many long-term issues to be considered in the
China negotiations, including intellectual property issues,
barriers to biotech products, and many other non-tariff trade
barriers. However, I do want to make sure that we don't lose
sight of the fact that commodity prices are down. And the bread
basket of the world, being America, has been negatively
impacted by the cumulative impacts of the tariffs and,
certainly, non-tariff trade barriers, as well. We should never
lose sight of this fact in our deliberations.
Because it is so crucial, and these talks come to a
successful conclusion, I am grateful for the President's
personal involvement. I, along with many Members of this
Committee, asked, last summer, that the President engage
directly with President Xi to move these talks forward. I urge
him to continue to do so, and to remember the sacrifices being
made by our producers, ag producers, in your daily discussions.
In addition to China we need to continue to move forward
with USMCA, we need to bring down the 232 tariffs on Canada and
Mexico, and eliminate the retaliation our producers continue to
endure in order to facilitate the agreement's approval.
I am grateful for the progress made in the Japan talks.
Every day our producers face tariff rates higher than their
competitors when doing business in Japan, which is a lost
opportunity to expand and defend their market share.
So once again, time is of the essence. With the President's
commitment to U.S. agriculture in mind, I would appreciate your
thoughts on the 232 tariffs on Canada and Mexico, and also your
outlook for the Japan negotiations.
Ambassador LIGHTHIZER. Yes, thank you very much,
Congressman.
First of all, in the context of China, it is not just about
purchases. We had many, many hours of discussion about a whole
variety of issues which I won't go through, because most
Members--well, most Members have at least some interest from
biotechnology to specific issues involving beef, poultry,
aquatics, or meats. I mean, it is just--I could go through it
all. There is a lot on rice. I mean, beyond the purchase, there
is a lot on just the SPS issues.
So we spend a lot of time on those. We actually had long
discussions on Ractopamine, for those of you who are from the
beef producing areas, with the Vice Premiere of China. So it
was a pretty detailed discussion.
So, having said that, to sort of jump ahead, I want to go
to Japan very soon. The date is probably going to be in the
next month. I want to have a trilateral meeting there on this
issue of China. I want to start our negotiations, which we have
now--remember, we have gone through the process of TPA with
everyone, with the Congress, and now we are beyond our 90 days,
so we can start the actual negotiating.
We feel a certain urgency, a real urgency, because of the
combination of market access from TPP and Europe and this sort
of thing you alluded to that is going to have a real effect on
our farmers. So it is something that we feel very strongly
about.
On Canada and Mexico, in the context of maintaining the
integrity of the steel and aluminum program, we want very much
to work out an agreement with Canada and Mexico, and we are in
the process of doing that. Whether we will succeed or not, I
don't know. But it certainly is my hope that we will do that.
Mr. SMITH OF NEBRASKA. Thank you. I yield back.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentleman from Connecticut, Mr. Larson, to
inquire.
Mr. LARSON. Thank you, Mr. Chairman. Thank you for holding
this hearing.
Mr. Ambassador, thank you so much for your candor over the
last several days. My question--and I hope to give you as much
time as we can to answer--is we all--I think you can sense up
here the bipartisan nature of our concern, as it relates to
China. And so my question would be pretty straightforward.
How will you define success in our meetings with China and
with a specific focus from the standpoint of a number of us
here on both labor standards and environmental standards?
And how will that play into whether or not you feel the
pending negotiations will be successful?
Ambassador LIGHTHIZER. Thank you, Congressman. I would say
what we are doing and what we have to remind ourselves is in
this context of settling a 301 case. So how I would define
success--and, once again, I will try to repeat what I said
before.
I really went through and tried to distill what everyone
else--Members, business groups, farm groups, but also experts,
people who actually study these things--and for me, success is,
number one, enforceable; number two, real rules on forced
technology transfer at every level of government, as Mr. Brady
said, which is absolutely essential. Intellectual--minimum,
intellectual property requirements.
And once again, this section is probably going to be--if we
have an agreement, the IP section alone will be about 27 or 28
pages. It is going to be--this is long, detailed. But every one
of you would say, ``Oh, yes, that is what I would expect normal
IP protection to be, right?'' In other words, I am not
inventing anything at all.
We have a series of items involving services. There are
specific provisions that China has that keep us out of banking,
out of electronic payment, out of a whole variety of things
like that. And we--on many of those we have made substantial
progress. And I would consider that to be--another chapter, I
would say, would be non-tariff barriers. And this is,
literally, how we negotiated this thing.
Non-tariff barriers, what is a big non-tariff barrier? That
is these subsidies, these industrial subsidies which have the
effect of making it possible for our people not only to
compete, in many cases, in China, but to compete around the
world. So that is another thing. There is a whole lot of things
that we expect to gather on agriculture, and I kind of went
through it on that. And we have made progress on a number of
those.
One thing that we haven't mentioned is we are negotiating
currency restraints. A lot of Members are very concerned about
currency manipulation and having access to the information that
allows you to make a decision. So that is another part of these
negotiations. And I am--to be honest, there actually are more,
and I could make it even more detailed. But to me, that is how
I am going to determine whether or not this is a trade
agreement.
Now, keep in mind it is not like an FTA in the sense that
we are going in there and going across the board. What we are
going in there with is focusing on what was raised by--for the
most part, what was raised by our 301. And if we do all of
those things--and the Speaker said this, and it is not
enforceable, and she said it in the context of USMCA, and it is
not enforceable, and it is not very valuable. So we have to
have it be enforceable. And that--I think it will be for the
first time. I think we will have an enforceable agreement.
Mr. LARSON. Thank you. I yield back.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentleman from Texas, Mr. Marchant, to inquire.
Mr. MARCHANT. Thank you, Mr. Chairman. Ambassador
Lighthizer, thanks for being here today.
I don't know if you are familiar with the district that I
represent, but when you land at the Dallas-Fort Worth Airport,
you are in the middle of my district. It is the headquarters,
the national headquarters for Toyota, Exxon Mobile, Fluor,
Kimberly-Clark, et cetera. The businesses and major employers
in my district are very vitally interested in what you are
doing, and deeply appreciate your hard work on behalf of the
country.
DFW Airport facilitates $35 billion worth of trade. The
Ranking Member, Mr. Brady, has an airport of similar stature in
his district. So to us, in Texas, our ports are not only
Houston, but our ports are the airports. And because of that,
trade is very vitally important in my district.
I have a letter here from our Governor, Greg Abbott, that
is a full-throated support of your negotiations. And I would
like to put that in the record, Mr. Chairman.
Chairman NEAL. Without objection.
[The submission of the Hon. Kenny Marchant follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. MARCHANT. It is in support of your work on the USMCA.
And he recognizes the importance of that. And we would like to
make sure that this goes in the record, and make sure that you
know he is in full support of the work that you are doing.
Because I have such an interest in my district, when I go
to town hall meetings, what am I going to be able to tell my
constituents is being accomplished in the China agreements and
the China discussions that will be very important in getting
things changed for my district?
Ambassador LIGHTHIZER. So thank you, Congressman. First of
all, I have spent a lot of time at DFW. And if that entire
airport is in your district, you have a very large district
because I think that airport is bigger than some districts that
Members have. It is the biggest thing I have ever seen. And I
appreciate very much the Governor's support, and hopefully your
support, for USMCA.
If USMCA doesn't pass--I have said this before--it would be
a catastrophe across the country. But it would particularly be
a catastrophe in Texas. It is just--I mean, it is just--it
would be very bad on every level, way beyond economics, right?
And you know what I am talking about, and I won't dwell on
that. But I am very appreciative of the--and the President is
very appreciative of the Governor's--so when I look at this--
and this is not just your district.
I don't know if you have--you must have a big district, if
it has that airport in it. But if you have any agricultural
products, there will be a substantial increase in those and a
substantial reduction in barriers.
But I would say, when I talk to Members generally, the most
important single thing that we are going to do is stop the non-
economic transfer of technology; that technology really is what
separates us from the rest of the world. And it is, for me--and
I think this is true for most of you--it is, for me, what is
going to ensure that our kids have the kind of jobs that we
had, and better jobs, jobs that we want them to have. If we end
up losing that technological edge, where we are number two in
technology, then the world is going to look very different for
our children. And that, literally, is what I think is--but I
could talk about the various specific provisions.
But if we make headway to stop this transfer of technology
and this unfair trade by this trading partner, it is going to
have a huge impact in terms of jobs, and high-end jobs, in
America.
Mr. MARCHANT. Thank you for the work you are doing,
Ambassador.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the Trade Subcommittee Chairman, Mr. Blumenauer, to
inquire.
Mr. BLUMENAUER. Thank you, Mr. Chairman. Mr. Ambassador, I
think you have one of the toughest jobs in the Administration,
and we appreciate your being here, we appreciate your openness
and candor and discussions you have had with me and so many
Members of the Committee on both sides of the aisle.
Frankly, I am a little concerned about the 301 tariffs. It
is kind of a blunt instrument, a tax on everyday Americans and
most businesses. And I am concerned that we have some sort of
agreement that results just in purchasing soybeans and
airplanes. That is not sustainable. I am hopeful that this
effort you have been involved with, and using the tariffs, that
the negotiations result in some structural changes in order to
be termed a success. And I am confident that is your goal, as
well.
Any meaningful deal, I feel, must effectively deal with
another long-term problem that has been vexing us for the last
couple decades: Currency manipulation. The President made a
campaign promise that he would have the Treasury Secretary
label China a currency manipulator on day one of his
presidency. Well, I am not so much concerned about that broken
promise as I am whether or not we are moving forward.
It doesn't appear as though China has been actually
manipulating in the last 25 months. I am concerned whether the
Administration is focusing on ensuring China commits to
transparency regarding its currency practices, addressing the
potential that China will resume aggressive currency
manipulation, damaging our economy.
In the past you have testified before this Committee
regarding the detrimental impact of Chinese currency
manipulation on our economy--and manufacturing, in particular.
You have even called on the United States to change our trade
remedy laws and bring a WTO case against it.
I have four questions. It has been claimed that there is
already a deal reached on currency. Is that true? If so, can
you tell us anything about the substance of that agreement?
In the past I have made a point in my support for trade
agreements that we need to have our trading partners commit to
stronger worker protections, environmental standards, currency
disciplines, and that the commitments need to be meaningful.
Are you seeking enforceable currency commitments from China?
And last, but not least, if you see indications that China
is manipulating, what will the United States do? Does
enforcement mean more across-the-board tariffs?
Ambassador LIGHTHIZER. Thank you, Mr. Chairman. So I would
say, as you say, currency problems are something I have spent a
fair amount of my time, not necessarily in my current job, but
in previous jobs, worrying about.
And I would also say that it is not just a problem with
China. It is a problem with a lot of other areas in Asia. And a
reasonable case can be made that it has, at times, been a
serious problem with Japan. And I know those of you who are in
the automobile industry realize that. It was a substantial
problem, and we lost a lot of jobs because of that, but also in
some other areas. I don't want to name any other countries, but
it has been a problem from time to time.
So it is something we have to focus on. There are costs in
being the reserve currency, but one of them can't be that we
lose--that, you know, the good people that go to work every day
and have a competitive job lose their jobs. So it is something
we have to focus on.
In here, is there agreement? There is no agreement on
anything until there is agreement on everything. You know that
from how these things work. But the reality is that we have
spent a lot of time on currency. And it will be enforceable.
But the agreement will be enforceable. And I think there will
be something on it. But I will talk to you offline.
Mr. BLUMENAUER. Yes, I would appreciate that.
Ambassador LIGHTHIZER. Yes.
Chairman NEAL. The Chair would recognize the gentlelady
from Indiana, Mrs. Walorski, to inquire.
Mrs. WALORSKI. Thank you, Mr. Chairman. Thank you,
Ambassador Lighthizer, for being here today.
Mr. Chairman, I ask permission to insert into the record a
letter signed by over 150 trade associations, asking for a
Federal Register notice that formally delays the increase of
the List 3 tariffs from 10 percent to 25 percent.
Chairman NEAL. Without objection.
[The submission of the Hon. Jackie Walorski follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. WALORSKI. Thank you.
Mr. Ambassador, it is great to see you again. We are always
glad to have you here. When can we expect that Federal Register
notice?
Ambassador LIGHTHIZER. Oh, that Federal Register notice is
being worked on right now. The President has made the decision,
and it is sort of in process. In the next day or so--the
President has made that decision, he has made the announcement,
and it will--we are following the legal process. We have a
process where we go through--we have a process, as you know----
Mrs. WALORSKI. Right.
Ambassador LIGHTHIZER [continuing]. With other agencies,
and there are certain steps we have to go through. But that is
something that will happen, and it will happen according to the
normal course.
Mrs. WALORSKI. And with that, when do you anticipate
releasing more decisions for exclusion requests from Lists 1 or
2 of the 301 tariffs?
Ambassador LIGHTHIZER. So we are in the process of doing
that right now. And those--in the first place, we have already
granted more than 1,000, or almost 1,000, as you know. And
things were sort of slowed down because of the government
closure, but we are in the process of doing that right now. We
expect another sort of tranche to come out fairly soon.
Mrs. WALORSKI. Mr. Chairman, I ask permission to insert
into the record a letter myself and my friend, Mr. Kind, led
that was signed by 167 of our colleagues, asking for an
exclusion process for List 3 of the 301 tariffs.
[No response.]
Mr. Chairman?
Mr. KIND [presiding]. Without objection.
[The second submission of the Hon. Jackie Walorski
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Laughter.]
Mrs. WALORSKI. Thank you.
Mr. Ambassador, there is obviously great support in
Congress for an exclusion process for List 3, and we have
chatted about it, and I appreciate that.
In fact, the most recent spending bill instructed USTR to
establish a process within 30 days. We are almost halfway to
that deadline. Do you expect to meet that 30-day deadline?
Mr. Chairman, I can't hear----
Mr. BRADY. Can you get that microphone, Mr. Ambassador?
Mrs. WALORSKI. Thank you.
Ambassador LIGHTHIZER. I would say, first of all, that was
a report from the Appropriations Committee. I understand there
are people in Congress who want us to have an exclusion
process. It is something that we are looking at.
Our view until now has been that we would have the
exclusion process for the $50 billion, which was at 25 percent.
The 10 percent, which is what you are referring to in this
case, there would not be any exclusion process for.
I would note since the date that we put that into place,
there has been a seven or an eight, depending on when you stop,
devaluation of the Chinese currency. So the effect has been
less significant than fully 10 percent on those people who are
affected. And our hope is that we can deal with this in the
context of our negotiations with the Chinese.
Mrs. WALORSKI. I----
Ambassador LIGHTHIZER. I--I am sorry?
Mrs. WALORSKI. Sorry to interrupt, I just--I also
appreciate--I know you and I chatted--the constraints on
resources that I understand you are facing with this exclusion
process.
I recognize that the process for Lists 1 and 2 is tough to
administer, and I know it is moving slowly, and that List 3 is
kind of looming out there, at 4 times the size. And I
understand that, as well. But can I just ask you this, as a
close, here?
Is there a way to simplify things a little to take a load
off of your agency? For instance, what about companies who are
hurt because their only competitors are foreign, and are able
to export finished products to the United States at little or
no tariffs?
Ambassador LIGHTHIZER. We have a process right now that we
are following that we think is fair, and it looks at the
competitive effect, whether products are available in other
areas, and whether or not it is a focus of China 2025. So we
are happy with our current process. But it is a--as you say, it
is a big, big process.
Mrs. WALORSKI. Mr. Chairman, thank you. I yield back.
Chairman NEAL [presiding]. I thank the gentlelady. Let me
recognize the gentleman from Wisconsin, Mr. Kind, to inquire.
Mr. KIND. Thank you, Mr. Chairman.
Mr. Ambassador, thank you for your testimony today and for
the outreach that you have been making so far this year. I am
going to ask you to respond to a couple of questions in a
moment, Mr. Ambassador, one of which is the level of
cooperation and coordination you have with other nations in
regard to what you are trying to accomplish, as it relates to
China.
And the second one is in regard to the concern I have, that
the longer this trade war with China lasts, the more market
share we start losing in China, China pivots to other
countries, and how difficult it is going to be to regain that
market share. Because back home in my district in Wisconsin, my
family farmers and manufacturers are getting hammered. We had
record bankruptcies for family farms last year alone, with well
over 800. That trend is continuing.
I am not saying this trade war is the sole cause, but it
certainly is piling on right now. So those are the two
questions.
But before I do that, I think it is safe to assume--and you
probably heard it from most Members--that there is bipartisan
consensus on the challenges that we face with China: The IP
theft, forced technology transfer, forced joint ventures, what
you are trying to accomplish in these negotiations. And there
is bipartisan agreement on where we need to go and how we need
to resolve this.
But there is a difference of opinion on the tactics being
used. There was another approach, through a multilateral
effort. I still believe that our summarily rejecting the Trans-
Pacific Partnership is going to go down as one of the great
strategic mistakes we made in the 21st century. This President,
this Administration summarily rejected it without due
consideration. Twelve nations in the largest and fastest-
growing economic region in the world, the Pacific Rim area,
came up with standards and rules that elevate up to where we
are, and China would have been on the outside looking in.
It would have isolated them and put great pressure on them,
whether it was prohibition on IP theft, on forced technology
transfer, on joint ventures. It has strong labor and
environmental chapters that are fully enforceable. An e-
commerce and digital trade chapter; everything that we are
trying to accomplish right now to elevate standards to where we
are. A prohibition against localization rules was contained in
the Trans-Pacific Partnership. Moving forward on that would
have put, I think, incredible leverage on China, isolating them
in the region.
And now we are on the outside, looking in. And China is
able to help establish those rules of trade. At some point we
hope to be able to find a way to get back in that agreement,
rather than disadvantaging us from that.
But having said that, let me go back to the original
questions I asked in regard to the level of cooperation and
coordination with other nations right now in regard to China.
There is strength in numbers. And I think, ultimately, China
will respond to the collective will of the international
community much better than the unilateral action that we are
taking against them today.
And then, finally, the lost market access issue.
Ambassador LIGHTHIZER. So thank you, Congressman. I would
say, first of all, getting out of TPP was the right decision.
It was a bad agreement. It was poorly negotiated, and a car
could have been manufactured 45 percent in Vietnam and 55
percent in China and sold in the United States duty free. It
didn't do much on currency, it had a whole lot of problems.
And in any event, to get to your geopolitical problem, had
China joined it, they wouldn't have lived up to the rules. We
would have a problem, number one.
Number two, as you know well, we have FTAs with six of the
eleven countries that are in it already. And of the other five,
95 percent of the GDP is in Japan, where, with your support and
help, we are negotiating. Now I have stated my view, but I--
this period of time prevents me from going into detail.
In terms of cooperation, we are trying to do it on two
tracks. We do want to cooperate with other countries. As I say,
we have the trilateral thing. We are trying your approach. I
would say, though, that your approach by itself is less likely
to be successful. And, indeed, was tried by prior
Administrations unsuccessfully. So what we want to do is
continue that approach, but also put in place unilateral action
that the President has taken. And I would note that unilateral
action is what has brought us to the point where we are now. We
are, hopefully, on the verge of beginning to turn the corner.
In terms of----
Chairman NEAL. The gentleman will finish.
Ambassador LIGHTHIZER. Well, in terms of trade with China,
we hope that we can get these barriers down, and we can do this
before we lose our supply chains and our customers.
Mr. KIND. Okay.
Chairman NEAL. Thank you.
Mr. KIND. Thank you, Mr. Chair.
Chairman NEAL. Let me recognize the gentleman from Ohio,
Dr. Wenstrup, to inquire.
Mr. WENSTRUP. Thank you, Mr. Chairman. Thank you,
Ambassador, for being here with us today. A question a little
off track from China, but it does relate to China.
My colleague, Terri Sewell, and I have introduced
legislation to extend the Caribbean Basin Trade Partnership Act
for another 10 years, from 2020 to 2030. It is an important
program to the U.S. textile industry because it required the
use of U.S.-made yarns. And for a country like Haiti, this Act
allows their garment industry a fighting chance to compete with
large Asian suppliers such as China and Vietnam.
And with the program set to expire and people trying to
make investment decisions and production plans, certainty is
important, important to U.S. companies. But especially when
doing business in a least-developed country like Haiti, do you
foresee support for re-authorization of this Act?
Ambassador LIGHTHIZER. Well, I am not prepared to say. I
haven't studied it, I don't have an idea. The fact that you and
Congresswoman Sewell are in favor of it certainly is a very
positive indicator, from my point of view.
But I want to look at it. And I would also say that,
generally, the requirements of U.S.-made yarn and textiles
going forward is something that I have supported, as a matter
of policy, in a variety of other areas. But I want to look at
that so I can give you an informed opinion.
Mr. WENSTRUP. So it hasn't come up in any talks with China,
and how it might affect them. So----
Ambassador LIGHTHIZER. Pardon me?
Mr. WENSTRUP. It hasn't come up in any conversations with
China as how it might affect them, that they have a concern
about it.
Ambassador LIGHTHIZER. No, that--it has not.
Mr. WENSTRUP. One other question when it comes to China's
retaliation, if you will, and some of the effects on
agriculture and their access to markets, you talk about some of
the non-tariff barriers. And one of the things that has come to
my attention is inspection requirements that aren't
scientifically-based.
Can you elaborate on some of the things that they are doing
in that arena, if you will?
Ambassador LIGHTHIZER. I would be happy to do that,
Congressman. This is something that we spent an awful lot of
time on. There are a whole lot of, as you know, technical
barriers to trade, or non-tariff barriers to trade, depending
on what term you want to use.
One of them that we spent probably the most time on, is
this whole issue of biotechnology and their approval processes.
In the United States, it can take 18 to 24 months to get an
approval. In China, there are ones that after 7 and 8 years
haven't had approval. It is a very complicated process, and it
is one that has a very, very negative effect on the United
States, because in many cases U.S. farmers will not introduce
the technology themselves in the United States until it is
approved in their major markets, one of which is China.
So we spent a lot of time on that. Hopefully, we made some
headway. The time was spent both to change things systemically,
and to put in time limits and the like. Whether we succeed on
that, we will see. I don't want to suggest that we will, but we
did raise it and talked about it a great deal, that there would
be science-based decisionmaking, because right now there is not
science-based decisionmaking in many, many cases. That there be
time, and that--and we have a long pipeline of things that have
been stacked up for years and years and years and years and
years.
So we understand how important this is. They are changing
their process and getting it, really, more in line with the
international norms, which is something we spend a lot of time
on, and have it be science-based. So we will see how that turns
out. I don't want to suggest that those talks are over. We
spent a lot of time on it, though, and we realize how important
it is.
Mr. WENSTRUP. Yes, thank you very much. I appreciate it.
Chairman NEAL. I thank the gentleman. Let me recognize the
gentleman from New Jersey to inquire, Mr. Pascrell.
Mr. PASCRELL. Thank you, Mr. Chairman, and thank you,
Ambassador, for fulfilling article 1 section 8. It is very
clear that the Congress has a major role, the major role, under
article 1 in trade negotiations. And I thank you for appearing
before us.
China needs to provide, we agree, greater access for U.S.
services firms and allow them the ability to invest and operate
independently from state-owned enterprises and competitively in
the financial services technology and audio-visual sectors.
Beyond the scope of the 301 report I want to ask you about
two things quickly. One, it has been reported that there will
be a memorandum of agreement on currency in this deal. I have
read your comments from the 2010 U.S.-China Security and
Economic Commission, in which you laid out your standards for
combating currency manipulation. You laid them out very
clearly.
You argued in that presentation that China's practice of
currency manipulation, it constitutes a countervailable subsidy
under our CVD law. I agree. I have a bill that would treat it
as such. You argued we should be ``imaginative'' in dealing
with this issue, including restricting imports, or even
requesting compensation for value of lost market access.
Do the terms you have reached with China on currency live
up to your own standards on currency? Mr. Ambassador, make it
as short as possible, thank you.
Ambassador LIGHTHIZER. I am not very good at that.
[Laughter.]
Mr. PASCRELL. None of us are.
Ambassador LIGHTHIZER. I would say, first of all, I would
think, without question, that the President has been
imaginative, right? The whole 301 approach we have used has
been something that people haven't used before, and it has had
a huge difference. So I feel very comfortable that I passed my
own standard of imaginative.
And I might say in the case of the President, gritty,
right? He had the grit to get this done.
In terms of currency, there is--it is certainly our
objective--and once again, these provisions are never agreed--
the only thing that is agreed to is that there be commitments
not to do competitive devaluations. As Congressman--I think it
was Thompson said, it is complicated, what has happened in the
last couple of years, where we are on that. And I could argue
that round or I could argue it square.
Those kind of decisions on currency manipulation are not
made by me, of course. They are made by the Secretary of
Treasury. But they are complicated issues. But without
question, in the past China has used currency manipulation. And
our desire is there be commitments like that, as well as
commitments to a certain amount of transparency.
Mr. PASCRELL. I hope for another meeting, Ambassador. We
will talk about the relationship between your job and the
Treasury's job, in terms of trade, and where exactly does the
Congress fit in.
Do you think labor or environmental issues are in the scope
of the 301 negotiations?
Ambassador LIGHTHIZER. I would say, to the extent that they
are involved in these unfair trade practices, they are. But
this is not like a free trade agreement, where we are going
across the board and looking at a whole variety of very
important issues. So my scope is narrow here, because it is
based on 301.
And by the way, I would love to work with you and other
Members who want to sit back and figure out a way that we can
create new statutory authority that allows me to use something
like 301 in these areas. I would love to sit down and talk to
you----
Mr. PASCRELL. Mr. Chairman, can I just add one sentence?
Chairman NEAL. Please.
Mr. PASCRELL. All right. If your answer to my question is
that, as I point out, the agricultural market access is not in
the scope of the 301 report, but you are negotiating these
anyway.
And so, you know, consistency, consistency. I am not
really--that is not my--the essence of my question, my point,
which--my time is up. But I wanted you to take a look at that,
because it has caused some confusion. And I would like some
clarity on it, if at all possible. Call me, write me, whatever
you can do.
Thank you, Mr. Chairman. I yield back.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentleman from Kansas, Mr. Estes, to inquire.
Mr. ESTES. Thank you, Mr. Chairman, and thank you,
Ambassador Lighthizer, for joining us today.
You know, as a Representative from the bread basket of
America, trade is a critical issue for my district and for the
State of Kansas. In fact, according to the U.S. Chamber of
Commerce, trade supports over 108,000 jobs for these exports,
and a value over $17 billion for the economy in our State.
Before I focus on trade relationships with China, I want to
first thank you for your work on upgrading NAFTA and replacing
it with a U.S.-Mexico-Canada free trade agreement. You know,
Canada and Mexico are Kansas' top export markets worth about
$3.5 billion. And since its adoption, NAFTA was really
beneficial for my district, particularly the farmers, ranchers,
and aerospace manufacturers.
But the 20-year-old agreement did need some upgrading, and
some reform efforts, and I am thankful that they have done
that. And hopefully, we can get through this process and get
that ratified quickly, so that we can move forward with some of
the other important issues that you are working on.
So let's go back today and focus, as we want to, on China.
You know, tariff retaliation from China has threatened Kansas
exports worth about $525 million to China, led by a lot of
grain products--soybeans, sorghum, cotton, and beef--as well as
aircraft manufacturing and other manufacturing.
As a big supporter of free and fair trade, I believe a
prolonged trade war with these tariffs is not the final outcome
that any of us want.
You know, as I talk to Kansas farmers and manufacturers in
the district, I have heard over and over again how they support
the President and believe we can get a better trade deal
negotiating through their strength.
One of the things I think our colleagues on both sides of
the aisle would agree with is that China has been harming
American businesses and workers for decades. In fact, we have
seen so much cheating over the years that it is having a
drastic impact.
You know, for example, in 2013 a Chinese national was
arrested in Kansas for attempting to steal some intellectual
property regarding research pertaining to rice seeds, and
trying to send that to scientists in China. So I am proud that
President Trump has been one of the first Presidents to stand
up to these unfair trade practices, and hope to bring China to
the table in a meaningful way to help make sure we have free
and fair trade agreements.
Since we have entered these negotiations with China, there
has been a lot of positive steps. And we want to make sure that
we continue moving forward with some of those positive
activities.
I don't want to stop there. You know, as I mentioned
earlier, China has threatened exports from Kansas worth $525
million. And one of the things we want to make sure that--you
know, as I talk with constituents, particularly with--both in
the farming community, as well as aerospace--hopefully, we can
work on making sure that the retaliatory and regulatory
practices are fixed.
And so I just want to talk a little bit about what you are
seeing in that regard, in your negotiation of correcting those
unfair practices.
Ambassador LIGHTHIZER. Well, you know, thank you very much,
Congressman. Thank you, specifically, for your support of
USMCA. As you know, that is our top priority. And if the
Congress doesn't see fit to pass that, then everything else we
are talking about is kind of like a footnote, because it will
mean we can't do trade deals, and we can't--we are not going to
be in the trade space. I mean it is just--it would be such an
admission of failure by all of us. So I am very grateful for
your support in that area.
I would also note that we talk about manufacturing jobs
being lost because of Chinese practices. The reality is that
farmers have been hurt as much as anyone by their practices.
That is a huge market. They are the second or third biggest
agricultural market, if you skip over 2018 and go back to 2017
and traditional years. But the reality is they should be buying
much, much more agricultural products. And my hope is that
these purchases, as part of this, while not central, will lead
to that, will lead to new markets that will go on for years and
years and years.
Mr. ESTES. All right. Thank you, Ambassador.
Mr. Chairman, I yield back.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentleman from Illinois, Mr. Davis, to inquire.
Mr. DAVIS. Thank you very much, Mr. Chairman.
And, Mr. Ambassador, thank you. I thank you for the work
you have done and the work you are doing, and for the candor in
responding to inquiries and questions.
I represent an area in Chicago known as Chinatown. And I am
trying to figure out what it is that I say to the Chinese-
American Chamber of Commerce there when I go and meet with
them. And so I would like to know as specifically as you could,
when it comes to disregard for intellectual property
protection, currency manipulation, and market access for U.S.
businesses that are trying to do business in China, given the
fact that it is an enormous market, what can I say and tell the
Chamber of Commerce in Chinatown that I am doing, or we are
doing, or you are doing?
Ambassador LIGHTHIZER. Well, you know, thank you very much,
Congressman.
I would say this, first of all. Chinese-Americans and
Chinese--many Chinese businessmen themselves, but Chinese-
American businessmen universally--have said to the President
and to me for the President, ``Hang tough. This is really,
really, really important. We have to do things that lead to
reform in China. We are not forcing reform in China. We are
working with reformers in China who want to reform China.'' And
nobody knows better how important that is than Chinese-American
business people, men and women. They absolutely know what the
problem is.
And they realize also what the potential is if China takes
a step forward and changes these practices, the potential for
them--and, really, the potential for us--but also I would say
the potential for China is enormous. And that is why, in fact,
China has reformers, and that is why it has people who want to
change some of these policies.
The reality is that all of our businesses--and their group
probably more than any--are afraid to do business. At some tier
they are afraid to do business with China because they will
lose not only what we think of as technology, but also know-
how, just how they do business, that they will not have their
intellectual property protected and respected, and there are
huge markets that they could open up if we get this kind of
thing reformed.
But I would be really interested the next time you go back
and do that and talk to them. If you call me and tell me, I
will come up and talk to you, because I would be very
interested to know what their reaction is to what we are doing.
I find these people follow this stuff really a lot closer than
most Americans do. And when I talk to them, they are like,
``Hang tough. Don't go for the soybean solution. Go for the
structural change. This is our one chance.'' I would be really
interested to get your feedback after you talk to these men and
women.
Mr. DAVIS. We will make sure we do that.
Thank you very much, Mr. Chairman, and I yield back.
Chairman NEAL. I thank the gentleman. Let me recognize Mr.
Schweikert to inquire.
Mr. SCHWEIKERT. Thank you, Mr. Chairman.
Mr. Ambassador, let's face it. Some of the best questions
have already been asked. So I actually have a one-off. How do
we future-proof? Let's say you have amazing success. You know,
the angels sing, whatever happens. What do we do to future-
proof a success?
Is it time that those of us here in Congress have a serious
discussion on streamlining the WTO? Should we discuss its level
of being almost ineffectual, you know, the number of filings
that, when we read through them we are a decade later and a
tweak has been made, and the bad acts are still happening?
What do we do so we are not back having this same
discussion a year, 2 years, 3 years from now?
Ambassador LIGHTHIZER. Okay, well, thank you, Congressman.
I want you to know that after the number of hearings that I
have done before the Committee, whenever I think of the future
I think of you. You are always going to ask me a question
about--that I should be thinking more about the future. So I--
--
Mr. SCHWEIKERT. That is either a good thing or an annoying
thing.
Ambassador LIGHTHIZER. Well, I--it is a good thing, in my
opinion. It is--we all have a tendency to think about the here
and now probably more than we should. So thinking about going
off into the future is something we should be doing.
I would say, number one, having a--realistically, having a
real enforcement process. That enforcement process is going
to--as you resolve issues, if you are doing it properly, you
are going to be resolving issues in ways that turn up new
problems and new trends. And I think you have to be able to
deal with it in that process.
And, as I have tried to say, I am not Pollyanna. I don't
believe that this is going to solve all the problems between
the United States and China. We have very different systems.
They are in a process of reform, or they are not. It depends on
who you talk to. If they are in a process of reform, we will
make headway. If they are not, we are going to go right back to
having problems.
But I think there is a role for the international bodies. I
absolutely do. And I think WTO reform is an important part of
it.
Mr. SCHWEIKERT. With that, if it is a process, the sins on
the bilateral organizations, is it the timeline, the ability to
stall, or is it just the actual adjudication process itself?
What can we help in reforming so we are not doing this all the
time?
Ambassador LIGHTHIZER. I would say, first of all, trying to
look to the future and to reduce problems is a healthy and
important process. But I believe we are going to have problems,
anyway. So I think we are going to be back here and we are
going to be working our way through problems, and trying to
work through those problems always with one eye to the future.
But this enforcement process, if we have an agreement--and
once again, we don't have an agreement--will be very specific.
It will have layers, it will have timeframes, and there will be
reaction. And working with Congress on WTO reform is something
that I am eager to engage in at--you know, when your schedule
permits it. I think there are problems at the WTO that we have
to address, and it hasn't risen to the occasion with respect to
at least non-market economies.
Mr. SCHWEIKERT. Mr. Chairman, look, to that point, one of
my great interests is, you know, I believe there are technology
disruptions, there are always economic disruptions, there is,
you know, financing technology that is going to create
international disruptions. And we will need some types of
dispute mechanisms that move efficiently.
How many times have we had constituents come into our
office saying, ``Well, we were part of this WTO complaint, but
by the time we dealt with the lawyer fees and everything else,
we are sitting here, you know, a decade later, we gave up.''
And I am--it would be a powerful thing, as we look at this all
over the world. Can we be helpful in fixing that process?
And with that I yield back, Mr. Chairman.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentlelady from California, Ms. Sanchez, to
inquire.
Ms. SANCHEZ. Thank you, Mr. Chairman, and thank you to
Ambassador Lighthizer for joining us today.
A number of my colleagues have mentioned enforcement
mechanisms. And I am wondering if you are able to share with
any specificity how you intend any agreement with China to be
enforced.
Ambassador LIGHTHIZER. Well, thank you very much,
Congresswoman. I would say I will do it with limited
specificity.
Ms. SANCHEZ. Okay.
Ambassador LIGHTHIZER. So there will be--if we have an
agreement there will be a process that has been agreed to
where, at the office-director level, there will be monthly
meetings, and then I will go through the process and then I
will take a step back. At the vice-ministerial level there will
be quarterly meetings. And then there will be semi-annual
meetings at the ministerial level. That would be me and the
Vice Premiere, who is my counterpart in this.
And the idea is two things: One, individual companies will
come to us with complaints about practices, and we will be able
to work those through the process. In many cases, those are
going to have to be anonymous, because companies are afraid to
come forward, because they know what will happen if they do.
They will have real-world effects. It will be negative.
And then, in addition to that, there will be systemic
problems, where we will see patterns developing, and a series
of things that we disagree with, and we will bring those
through the process. Hopefully, in most cases, they will be
resolved at the first or second level. If not, they will be
resolved at my level. And if there is disagreement on my level,
then the United States would expect to act proportionately, but
unilaterally, to insist on enforcement.
But without that kind of thing--and I should say this is a
fairly unique idea, right? I mean, this is not something that
has a lot of precedent. But without that sort of thing, to me,
we don't have real commitments.
Ms. SANCHEZ. Thank you. That is helpful because, of course,
many people complain that if there is no enforceability, then
our trade agreements are not really worth the paper that they
are written on.
And I know that there are a number of moving parts in the
ongoing negotiations. But one sector that I want to call to
your attention, because it is very important to the economic
viability of southern California, is the creative industry.
Ninety-five percent of people who are involved in the
creative industry in LA are union workers who have quality
negotiated benefits and retirement plans. And the audio-visual
sector at large is pretty much hamstrung by how to invest and
distribute in China.
Specifically, I want to call your attention to current MOU
negotiations. I want to call to your attention a commitment
that was made by the Chinese in 2012, in the 2012 film
agreement. They said that in 2017 they would provide
``additional meaningful compensation'' in terms of increasing
revenue shares to U.S. studios. And it seems clear that a
revenue share of at least 40 percent of gross box office would
be consistent with international norms.
Given that resolving this issue would be indicative of
China's compliance with the WTO obligations under a trade
dispute settlement, can you confirm that is a priority for the
negotiations in a trade deal with China?
Ambassador LIGHTHIZER. Yes, Congresswoman. Absolutely, it
is a priority. It is something we have spent a fair amount of
time talking about. They know precisely where we are. As you
know, it is a complicated issue. The key point--revenue
sharing--isn't that complicated, though.
They can try--I mean, Secretary Mnuchin has been very much
involved and he, of course, knows a great deal about that
industry, a lot more than I do. The distribution thing becomes
more complicated. There should be some changes there, too.
But what we haven't done is things that will challenge
control, right? It is not something that we want to bring into
this, the idea of challenging control in China. But this idea,
the revenue sharing, the--I don't want to get into the details,
but I think you probably know them exactly as well as I do.
That is something that has not been resolved, and something we
have spent time on, it is something we understand the
importance of.
Ms. SANCHEZ. Thank you. I appreciate that, and I yield
back.
Chairman NEAL. I thank the gentlelady. Let me recognize the
gentleman from Texas, Mr. Arrington, to inquire.
Mr. ARRINGTON. Thank you, Mr. Chairman. I was going to
refrain from bragging about west Texas, but I had so many of my
colleagues talk about their districts, so let me just say, Mr.
Lighthizer, west Texas is the food, fuel, and fiber capital of
the United States of America. We feed and clothe the American
people, we fuel the American economy--that is fossil and
renewable--and we provide energy independence and food
security. And I am proud to represent our hard-working farmers
and ranchers, and they are concerned. And these are desperate
times.
And I know you know this, Mr. Ambassador, but--and by the
way, good work, great work, hard work. And I know this is a
long-term proposition, it is a long-term game-changer, and
nobody knows about the inequities and the unfairness and the
way the Chinese--their bad actions and unfair trade practices
better than our farmers out in west Texas, especially our
cotton farmers. So keep up the great work.
But times are tough. And I just want to remind you that
over the last few years we have seen a decline of over 50
percent in farm income in the United States ag industry. That
is the steepest decline since the Great Depression. We have
seen a 40 percent, roughly, increase in bankruptcies. And I am
sad to report that farmers have the highest suicide rate in the
United States of any profession, five times the national
average. Times are desperate.
And our farmers, in spite of that, and our ranchers, they
stand with this President 100 percent. They will stand with him
right up until they have to sell the family farm. But they love
him, and they appreciate him, and they know that he is fighting
for them.
Let me talk about cotton, because when you fly into Lubbock
International Airport, you are going to land in the largest
cotton patch in the world. We produce about a third of the
world's cotton that we export out of the United States. But we
have lost 50 percent of our market share in China, and it is an
awfully big market.
We want reforms, Mr. Ambassador. We want the equitable,
reciprocal, and enforceable, structural reforms that you talk
about. We are Americans first. We want that for every American
job creator, manufacturer, and producer.
But you have mentioned this, the purchase commitment, and
we have heard a lot about soybeans, a little bit about pork.
Talk about cotton, because we have a 17-State Cotton Belt, a
$21 billion industry. We produce the most and the best cotton
in the world. But that Chinese market, as a result of that 50
percent loss, our guys are suffering. Can you talk about cotton
being mentioned in your purchase commitment discussions with
the Chinese, please?
Ambassador LIGHTHIZER. So, first of all, thank you for
that, and particularly for the comments about the support for
the President. As you know well, you can't talk to the
President about trade without having the farmers come up,
right? It is like the first thing he talks about, it is usually
the loudest thing he talks about, too.
He is--and Secretary Perdue, as you know, is--I don't know
all the secretaries of agriculture, but I can't imagine there
was ever a better one. He is just full-on everything for
agriculture. And we happen to be in the middle of a long-term
trend that has been very bad, so all of that is appreciated,
and the President keeps us very focused on it, as does the
Secretary.
In terms of the purchase commitment, absolutely, cotton is
a factor. It is something that China needs, has traditionally
bought, and it is easy to buy more of. So it is something we
understand--that these people have suffered--and it is
something that is on the list of things we expect them to have
substantial increases on, and it is something the President
keeps us very focused on.
And I have specifically gone through with the President the
various items, so I am talking to the President of the United
States about these numbers for these ag products--and, by the
way, it is these big commodity items--it is hazel nuts--I mean,
there are a lot of things that I have had Members talk to me
about, and I keep track of them, and I go through them
dutifully.
Mr. ARRINGTON. You are doing a great job. Thank you.
Thank you, Mr. Chairman, I yield back.
Chairman NEAL. I thank the gentleman. Now, based upon the
ratio present in the room, we will now move to two Democrats
and then recognize one Republican.
Ms. DelBene is recognized to inquire.
Ms. DELBENE. Thank you, Mr. Chairman, and thank you, Mr.
Ambassador, for being here with us today.
I was pleased last month. We saw 76 countries agree to
start negotiations to develop global rules on e-commerce.
However, I am concerned that the recent inclusion of China in
these talks could weaken those overall efforts and lead to a
watered-down agreement, since their current digital regime is
so radically different than ours.
In your bilateral talks with the Chinese, are you pushing
them to address critical issues like data localization, forced
disclosure of source code, restrictions on cloud service
providers, and banning customs duties on electronic
transmissions? This would not only help many American companies
operating in China, but would also help make China a more
constructive partner in important multilateral negotiations
like the e-commerce initiative.
And if we don't address these issues immediately, we risk
creating new digital borders, and those digital borders could
create massive disruptions in the digital supply chains that we
have. So I would love your thoughts on how you are addressing
these issues.
Ambassador LIGHTHIZER. Well, thank you very much,
Congresswoman, but you know this is something that I care
about. So I am putting this in the soft ball category.
Number one, I completely agree with you. Strategically,
what we should be doing is having a small group that writes
real rules on e-commerce, and then expand the group to other
people. The more people you bring into the negotiation, the
harder it is to get any rules that you and I would think of,
and many other Members would think of, as actually world-class
kinds of rules.
The kind of rules we need, by the way, I would just point
out, are in USMCA, right? That is, like, the gold standard for
all of this stuff. It is the absolute gold standard for all
this stuff. And it is probably a bridge too far, with respect
to some of these people. But I think bringing China in will not
help these negotiations. That is number one.
Number two, are we dealing with these issues with China?
Absolutely. We spend an enormous amount of time on data
localization, on data transfer, on source codes, and on
requirements in a whole variety of areas. And I mean down to
absolutely the most minute detail. And I am happy to sit down
with you at some point and kind of go through it, just so you
can get some actual appreciation. But, I mean, it is me sitting
down with the--you know, among the most senior officials there,
talking about precisely where there are circumstances, and
which is appropriate to require source codes.
And there are some, I mean, you know, emergency meetings. I
mean, there are some strange things. But we have had a very--we
haven't concluded, we are not done yet, but we have made
headway. It is--whatever it is, it is not going to be what you
and I think of as a model agreement, but we will make
substantial progress, I believe.
And these are really, really important issues that--and I
agree completely with you, this is one of those things where we
should lock in rules that stop barriers in the beginning of an
industry. Once you get protectionism set in all over the world
it is much harder to change practices than it is to have people
adopt best practices at the beginning. And so it is very
important.
It is also a big issue for--just colloquially, for us. We
are good at it, and we ought to have that----
Ms. DELBENE. So, as you know, U.S. technology companies,
and specifically cloud service providers, face significant
market restrictions and forced technology transfer requirements
in China. The 301 tariffs also impact them because other key
inputs to data centers are subject to these tariffs.
And so, particularly talk about that. I would like to know
what your commitments are to pursuing forced technology
transfers. But also, are you looking at things like eliminating
foreign equity caps and licensing requirements, so that U.S.
companies don't have to rely on Chinese companies to operate?
Ambassador LIGHTHIZER. Yes.
Ms. DELBENE. Thank you. I know we are out of time. We can
follow up more at a later date.
Thank you, Mr. Chairman.
Chairman NEAL. I thank the gentlelady. With that, let me
recognize the gentlelady from California, Ms. Chu, to inquire.
Ms. CHU. Yes, Ambassador Lighthizer. I represent Los
Angeles, the heart of the film, television, and music industry.
And also, I am Co-Chair of the congressional Creative Rights
Caucus. And I wanted to follow up on what you said earlier
about the unfair practices affecting the film industry.
Part of the unfair practices has to do with the revenue
share, of course. The average for the nation in terms of
revenue sharing with regard to films in China is 40 percent.
But for the United States, the revenue sharing is 25 percent.
And so that, I believe, is so important to address.
But on top of all of this, the U.S. film industry brought a
market access case against China to the World Trade
Organization. The World Trade Organization ruled in favor of
the film industry, and an MOU was entered into by both parties.
And in that MOU the Chinese committed to engaging in
consultations in 2017, and to providing additional meaningful
compensation, in terms of that revenue share.
So my question is have they engaged in those consultations,
which were supposed to be done in 2017? And if not, what is
your plan for enforceability in this regard?
Ambassador LIGHTHIZER. So we have had discussions, and we
have had discussions that predated the current 301 process. But
now, because we haven't made sufficient progress, we are
folding them into this 301 process. And it is one of the
services issues.
The revenue share, as you said, is crucial, but crucial
also is trying to make some improvement on the distribution
side of things, because the reality is that competition there
helps also.
You know, I don't know if I can predict success. I would
say they are very difficult negotiations, you know, as of the
last time they were here. But your industry is very well
represented by you and other Members, and by MPAA. We are
focused very much on it. And I think making it part of these
negotiations increases the likelihood of a successful outcome.
But it is a difficult issue. You find, just
philosophically, all these kinds of areas that you sort of dig
in, and you say why is there this or that protectionism, and it
is almost always the situation where there is an interest in
the other country because that country is getting richer as a
result of it. It is very seldom philosophy, although there are
cases where it is.
But in this case, there are people there who make money on,
basically, squeezing us, number one. Number two, they want to
develop their own industry.
Ms. CHU. Yes.
Ambassador LIGHTHIZER. So there are--I don't have to go
through it. You know the reasons why we have this problem. But
it is something that we are focused on. Hopefully, we will come
to a conclusion. We are not asking for the moon at all. What we
are asking for is what is normal.
Ms. CHU. Well, I thank you for continuing to press on that
issue in these trade negotiations.
Also I wanted to make a statement about a company in my
district, iRobot, which employs 675 American workers,
engineers, scientists, and which developed the famous Roomba,
the robotic vacuum. So it employs many people in my district,
but the Roomba is manufactured in China. And the iRobot is on
that third list of tariffs. Right now, iRobot is paying 10
percent in retaliatory duties, but it may go up to 25 percent
if the deal is not reached.
And so they are very, very anxious about having some way to
apply for exclusions for that third list, and I just hope that
you can make that process happen.
Ambassador LIGHTHIZER. Well, I have certainly taken the
position that if we go to 25 percent, we will--I have made that
commitment--have an exclusion process. Short of that, I want to
see where we are. And I hope that they are thinking about ways
to manufacture more in the United States.
Ms. CHU. Yes----
Chairman NEAL. I thank the gentlelady. With that, let me
recognize the gentleman from North Carolina, Mr. Holding, to
inquire.
Mr. HOLDING. Thank you, Mr. Chairman.
Mr. Ambassador, it is always a pleasure. I am very glad to
see that the Administration is willing to tackle China's unfair
trade practices, rather than just talking about it and
complaining about it. I think we have bipartisan support in the
room to agree that China is a strategic trading partner that
plays by the rules when it behooves them, but otherwise ignores
them.
And, Mr. Ambassador, as you know, I am from North Carolina,
which not only has the best barbeque in the country, but we are
also one of the leading pork-producing States in the country. I
am glad I didn't hear any objection to that.
Chairman NEAL. We won't subtract that from the gentleman's
time.
[Laughter.]
Mr. HOLDING. In 2017 the United States shipped over $1
billion in pork to China. But with punitive tariffs, over 50
percent, our pork exports to China have slowed down to a
trickle. Lost sales to China have caused producers in my State
to lose $8 per hog, and collectively, an annualized loss of $1
billion.
And I know you have made progress with agricultural
purchases, especially for soy and poultry, and I appreciate
your good work there on behalf of my farmers. But obviously,
there is a tremendous demand for pork in China. And with
Chinese pork production in steep decline because of African
swine fever, it seems like it is time for significant U.S. pork
shipments to China, which would, of course, put a big dent in
the trade imbalance.
So can you give us any indications as to where you are on
pork market access in the negotiations?
Ambassador LIGHTHIZER. So thank you, Congressman. Yes, that
is--you are absolutely right. Pork is one of the issues that is
very important to us. Before we talk about the purchasing, it
is also important in the SPS area, where we have specific
problems with, I would say, lack of a scientific basis for some
of their restrictions. So that is another area in which we have
issues.
Pork is something that we have talked about. We would
expect, if we have a deal, that there would be substantial pork
improvements, particularly, as you know well, given the fact
that China has issues with their own pork production right now
that are substantial. And this is something we have talked
about, it has been quite specifically addressed, and we have
gone back and forth with numbers. And I am happy to talk to you
about it offline.
But we are making headway. And if there is a deal, and if
there is a package, I am confident that there will be
substantial good news for our pork producers.
Mr. HOLDING. Thank you. Switching to 301 tariffs, you know,
we are working with you to find ways to work on the exclusion
process. One option in particular I would like to work with you
on is the criteria that excludes products that are regulated by
other U.S. Government agencies, where those regulations already
constrain the ability of importers to access those products.
For example, products regulated by the FDA, where the FDA's
regulatory framework means that consumers cannot quickly shift
to other suppliers. The existing regulations by our government
already constrained supply for the consumer. And I believe we
have an opportunity with the List 3 exclusion process to
address these products and minimize consumer impact. So that is
an area which I, you know, hope that we can work on together in
the future.
That doesn't really require an answer, and I am out of
time, and that works well. I yield back.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentlelady from Wisconsin to inquire.
Ms. Moore.
Ms. MOORE. Thank you so much, Mr. Chairman, and I do want
to thank the Ambassador for his patience and indulgence. A lot
of stuff has been covered already, so I won't regale you with
repetition.
I do want to say that while these tariffs have had
draconian impacts on all of our constituents and districts,
they are having an impact on China, as well. But many
economists seem to think that China is adapting, and that they
are recovering. One of the things they are doing is expanding
their export markets.
So a question that hasn't been asked is we don't have a
functioning Export-Import Bank now. Do you think that is having
an adverse impact on our trade position?
Ambassador LIGHTHIZER. Thank you for that question. Yes,
the answer is yes, it is having an impact, and it is way beyond
China, and it is costing us jobs, and there is no excuse for
it, in my opinion.
Ms. MOORE. Okay, thank you.
Ambassador LIGHTHIZER. So I don't know what else to say.
I----
Ms. MOORE. All right. I know what to say, but I won't carry
you there.
You have talked a lot about science-based decisionmaking.
One of the things that our companies have leaned into was a
provision of Dodd-Frank, where companies would report and
refrain from using conflict minerals in their products.
I was wondering. Is that a consideration--in terms of
unfair trade practices--for China to use conflict minerals,
thus undercutting the prices of their products?
Ambassador LIGHTHIZER. It is. I am, of course, sympathetic
to your objective--it is not something that we have talked
about. And if there is a specific unfair trade action that we
should be thinking about, I would be happy to work with you on
it.
Ms. MOORE. Okay.
Ambassador LIGHTHIZER. But it is not something we have
spent----
Ms. MOORE. Okay, I would love to work with you on that,
because that could severely undercut our products, our iPhones
with these minerals in them. We want to make sure that they are
not being produced or taken from countries where people are
being murdered and that have unfair labor practices.
Ambassador LIGHTHIZER. I am very sympathetic to your----
Ms. MOORE. I do want to follow up with--my colleague on the
Republican side talked about lists of things that are really
critical. And I know that my colleague from Wisconsin probably
waxed on about how this is hurting our folks in Wisconsin.
More specifically, I have an initiative to try to prevent
sudden infant death syndrome. And one of the products that we
have found to be very effective and cost-effective, especially
for poor women, is something that is marketed in the United
States as a Pack 'n Play. It is a crib that is only made in
China, and it has been subject to these 10 percent tariffs. And
if we were to continue these tariffs, it would be out of the
reach for many consumers.
And so I was wondering how to get these Pack 'n Plays on
that list of don't-touch items, because we can't get these Pack
'n Plays from anywhere else.
Ambassador LIGHTHIZER. Well, thank you, first of all. And I
can't help but say how important USMCA is for Wisconsin.
Now, having said that, my guess is we ought to be
manufacturing Pack 'n Plays in the United States. Why is it
that they can't be manufactured here?
Ms. MOORE. Well, can you manufacture them before my great-
granddaughter is born on March 23rd?
[Laughter.]
Ambassador LIGHTHIZER. Maybe we will just let you use my
granddaughter's. She doesn't need it anymore, she has outgrown
it, so--no, I don't want to be flip about it. You know, I am
sympathetic. The bottom line is we ought to be manufacturing
these things in the United States. That is what our objective
is. We ought to be paying people here to manufacture these
things.
And I would also say a 10 percent tariff on that product,
assuming it doesn't go up, a 10 percent tariff on that product
versus what it would have cost 6 months ago with the
devaluation of the Chinese currency, is probably a 2 or 3
percent increase in price. My guess is it is not going to price
too many people out.
And if the cost of that 2 or 3 percent on the price of that
is a bunch of people have jobs they wouldn't otherwise have,
personally, that is a trade I would make.
Chairman NEAL. I thank the gentlelady. Let me recognize the
gentleman from Michigan to inquire.
Mr. Kildee.
Mr. KILDEE. Thank you, Mr. Chairman, for holding this
hearing. And thank you, Ambassador Lighthizer, for being here.
And beyond that, thank you for your willingness to engage with
us on a regular basis. It makes a difference, and I very much
appreciate that. You have been quite accessible.
And I have a question, but before I get into that, I also
want to note how much I appreciate you bringing up the
polysilicon issue with the Chinese during these negotiations.
It is important that we address China's retaliatory tariffs in
response to legitimate American trade remedies. That is
important to me, it is important to my district, and I
appreciate your efforts in that regard.
Obviously, the Congress and the Administration need to work
together to deal with China, and hold China accountable for
unfair practices that are costing American jobs. And there, I
think, is general agreement on that score, bipartisan
agreement, and many of us wish that it was more of a
multilateral approach.
One area that I know was addressed, but I wasn't here to
hear your answer, has to do with currency manipulation.
President Trump promised to label China a currency manipulator
on his first day in office during his campaign. Obviously, that
didn't happen. And I know you agree with the President's
general sentiment that China engages in bad behavior and
manipulates currency. In fact, in 2010 you testified to this
Committee that China would be labeled--should be labeled--a
currency manipulator, and was in violation of its WTO
obligations.
You have thoughtfully outlined a list of actions that the
United States needs to take to address China's currency
manipulation, but I would like to get your perspective on
whether or not the understanding that the President recently
announced with China on currency issues meets the requirements
that you had laid out in your previous testimony.
Simply put, does this deal meet the standards that you laid
out in 2010?
Ambassador LIGHTHIZER. Well, thank you, I appreciate that.
I would say, first of all, whether or not China is
manipulating its currency right now, being competitive is an
issue that we can talk about. It probably is, but it is
probably not manipulating it to lower its currency, it is
probably manipulating it to raise its currency, because they
are at a different position than they were in 2010. So that is
one thing I would say. It is not a foregone conclusion that
China is manipulating its currency down right now.
And I would say that this is a decision that the Secretary
of Treasury makes in conjunction with the President, not me.
But I do not think you can make a case that, right now, China
is intervening in the market to have their currency be weaker,
right? That is not in their interest, and they are probably
doing the exact opposite of it.
Have they done it in the past, in my judgement? That is
absolutely true. And were they doing it when I made that
testimony? That is absolutely true.
Mr. KILDEE. And I don't think you could rule out the
possibility that at some moment in the future we could see that
happen again. And that is why the structural approach to these
issues is more important than looking at this moment in time,
or even in the context of a deal that we might see negotiated
founded on some temporary transactional benefits, as opposed to
structural benefits.
Ambassador LIGHTHIZER. I completely agree with your
statement, absolutely 100 percent. And what we are trying--what
we want to get is commitments to not have competitive
devaluations in the future, and a certain level of
transparency.
If you have those two things, and they are enforceable,
then you can guard against that problem in the future. The
other point I made before you were here is that this is an
issue beyond China. We think of it as China. But there are a
lot of places in Asia where this is a problem, and a lot of
places where it has been a problem in the past.
And there are a lot of people in the United States that
aren't working right now because of this issue, a lot of people
who were told, ``Well, you just didn't do a good job,'' and
they were doing a fine job, they were just cheated on currency.
Mr. KILDEE. My time has expired. I appreciate your
attention to these issues. Thank you.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentleman from Missouri, Mr. Smith, to inquire.
Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. Thank you,
Mr. Ambassador, for making time to be here today. Today we are
here to talk about China. China has been taking advantage of
U.S. workers for a long time. And I think that the President,
along with yourself, Ambassador, deserve a lot of credit for
sticking your necks out on this very difficult issue.
It is clear that progress is being made, and that there is
real potential for positive structural change after years of
deception and false promises from China. A lot has been
reported on the recent negotiations, and I appreciate the light
you are able to shed on this process.
The news we heard last week about new Chinese purchases of
U.S. soybeans is especially encouraging for someone who
represents a very large agricultural district in southeast
Missouri. I am hopeful that we can achieve more than just the
status quo with China, and go well beyond current market
access.
I would like to reiterate the comments that were made by
the gentleman from Texas, Mr. Arrington, in regard to cotton.
There is only one thing I would disagree with. Missouri cotton
is a little bit better than Texas cotton. But we definitely are
like-minded when it is about opening up the markets.
I do want to bring up rice, which is extremely important to
the Bootheel. Rice farmers have been fighting for over a decade
for access to Chinese markets. While the Administration has
made progress in gaining access, since 2017, China has been
displacing U.S. rice in our territories by undercutting the
price. So while U.S. rice struggles for access, China's access
to our domestic market below traded prices continues to grow.
Are you and the Administration investigating the situation?
And what are you doing to address it?
Ambassador LIGHTHIZER. So thank you, Congressman. Yes,
absolutely.
First of all, to your first point, structural issues are
fundamental to what we are talking about. And I have tried to
make that point. I read in the media all the time--I read today
in the New York Times--that we weren't making any headway on
structural issues, and it didn't even cite anybody. It made
some other comments, by the way, and then cited ``contacts of
Lighthizer.''
I thought, ``What is a contact?'' Is that like somebody I
bump into at the grocery store? Contacts? That is a source, not
a contact. But that is another issue. I won't get into it, in
any event, any further than I already have.
The fact is that we are making headway on structural
issues, contrary to what maybe you read here and there. And the
President believes they are central to having what anyone would
consider to be a great agreement. And that is what his
instructions to me--his instructions to me were you have to get
a great agreement or we have no agreement. We will just wait
until we can get a great agreement.
So now, on the specific issue of rice, yes. Rice, number
one, is the subject of purchasing that we have to have. Number
two, we have, as you know well, we have two WTO cases, one of
which has been announced. The other, which has been decided,
hasn't become public, so I won't tell you where we are on that.
But those are two cases. And resolving those cases in the
context of this agreement is something else that we are talking
about. So whether we succeed in that, we will see.
And on the issue of unfair Chinese access in the United
States, if there are issues where someone has a case that they
want to bring to my office and talk about, I am happy to talk
about it.
As you know very well, because we have talked a lot, I am
completely into enforcement. I think if we don't enforce these
laws, the whole basic consensus that favors the trading system
breaks down. And I think it has broken down. So I am happy to
act on that, you know, very quickly.
Mr. SMITH OF MISSOURI. Thank you, Ambassador. I have
several other questions I will just submit for the record,
hopefully, to get responses. But I appreciate your responses.
Chairman NEAL. I thank the gentleman. With that let me
recognize the gentleman from Virginia, Mr. Beyer.
Mr. BEYER. Mr. Chairman, thank you. And Ambassador, thank
you so much for being with us all this time.
You know, Ambassador, we have been discussing--and, of
course, you are particularly compelling on the point about how
China simply refuses to operate under what we consider to be a
lawful and rules-based trading system. And, of course, this
extends beyond just trading rules.
On Monday, Deputy Attorney General Rosenstein spoke at CSIS
about what he called China's transactional approach to the law,
citing China's willingness to detain foreign nationals on
specious charges to gain negotiating leverage or force an
outcome from a foreign government. This isn't how our justice
system works, or it is not supposed to work that way.
After the Huawei CFO's arrest, the President said, ``If I
think it is good for what will certainly be the largest trade
deal ever made, which is a very important thing, what is good
for national security, I would certainly intervene if I thought
it was necessary.''
And during your meeting in the Oval Office with the Chinese
Vice Premier the President again discussed the possibility of
``talking to the U.S. attorneys,'' and talking to the Attorney
General. He hinted further this would be a subject for trade
talks.
I know you are not responsible for law enforcement. I know
you are not responsible for the Huawei prosecution. But you are
certainly responsible for the trade deal. Are you familiar at
all with any further discussions within the Administration
regarding using this case as leverage for trade negotiations?
We have seen firsthand that you are willing to be
forthright with the President. Are you not concerned that
adopting a transactional approach to the criminal justice
system, close to what the Chinese would do, will undermine our
own legal system and incentivize reciprocal actions, as we have
already seen with the Chinese targeting of Canadian citizens?
Ambassador LIGHTHIZER. I am not aware of anything on this
subject. I don't get involved with it, and I am not aware of it
at all. I am too involved in what I am doing.
Mr. BEYER. All right, thank you. And most of our national
trade discourse, particularly the popular discourse, centers
around heavy manufacturing and agriculture, despite the fact
that 75 percent of Americans employed in the private sector
work in services of one form or another.
In my district we have tens of thousands that support their
families with good jobs across a wide range of services. I know
you really focus on the trade deficit and goods, and leave out
services all together. I just wanted to make sure that we know
we run a surplus on services.
But, nevertheless, both the national trade estimate and the
Chinese WTO compliance report note that American service
companies face significant trade barriers across a number of
sectors. And given our general competitive advantage in these
areas, it is safe to assume the service surplus could be a lot
larger.
China places significant restrictions on legal services,
ICT, cloud services, a whole range of things. Can you provide
us just some detail on how the concerns raised about services
are addressed in your current talks, and can we expect concrete
changes in Chinese competitive behavior in this sector, too?
Ambassador LIGHTHIZER. Yes, thank you very much. And I am
remiss in not making that point clearly.
Services are the crucial part of what we talked about, and
we spent a lot of time on them. I brought my--one of my many--
negotiation book, which I will be happy to show you at some
time. Somebody looked at it and saw all the notes, and they
said, ``God, that really is a terrible job you have,
Lighthizer,'' but here it is. We spent a lot of time on banking
services, cloud computing services, credit rating services,
electronic payment, and express delivery. I won't go through
all of them here, because someone will say--my God, insurance
services--I mean, we spent a lot of time in great detail, right
down to the sub-sub-sub-section on pages and pages and pages of
services.
And you are exactly right, services jobs are equally good
jobs. The United States has a surplus in services, which is
very important, and millions and millions of people work in
them. And we should be doing much better, because in many areas
we are, by far, the most competitive in the world. So this had
an enormous amount of time spent on it.
And it is sort of less thematic, and more specific, right--
if you can follow what I mean--in these negotiations. But there
was progress made on a number of these fronts.
Mr. BEYER. Thank you very much, Mr. Ambassador.
Chairman NEAL. I thank the gentleman. Let me recognize the
gentleman from Pennsylvania, Mr. Evans, to inquire.
Mr. EVANS. I too, Mr. Ambassador, would like to thank you
for coming before this Committee today.
There are 100 Chinese firms operating in Pennsylvania,
supporting over 3,000 jobs. Pennsylvania imports over $17
billion from China, and Pennsylvania exports $2.5 billion to
China. Mandarin is the third most spoken language in
Philadelphia. But the question that keeps coming up--and this
came from our Department of Economic Development--is the issue
around intellectual property, when it comes to investment.
The concern--and this question has probably been asked over
and over again to you, so forgive me for repeating it again--
the issue about intellectual property, or the ability to
protect our domestic companies long term, can you speak
specifically to that again?
Ambassador LIGHTHIZER. Well, absolutely, Congressman.
First of all, I will repeat what I said before, and that is
that I have found that Chinese-Americans are the ones who will
say, ``Hang tough. We need structural change. This is the only
way we are going to get structural change. Don't cave, don't
sell out for soybeans,'' all the kinds of things that you and I
have talked about and we both agree on.
And I think that Chinese-Americans will be people who
will--number one, they have a stake in a change in that system.
And, number two, they will be beneficiaries, from a business
point of view.
On the IP front, China has very little IP protection right
now. What we did in this negotiation--and I am going to talk to
you later, and I am going to stick all this in front of you--we
went through section by section by section what normal--what we
would consider to be sort of best practices for intellectual
property protection. And we negotiated those provisions.
We didn't get everything we wanted, but you need things
like a proper definition of what intellectual property is, a
proper definition of what trade secrets are. You have to make
sure you have criminal enforcement at some point in the
process. You have to make sure you have deterrent-level
penalties, because if you don't have that, you have a problem.
You have to make sure you have neutral people making decisions.
It is all the kinds of things that you would say, ``Yes, that
is more or less what we would expect in a system.''
Now, there is variation, and we didn't get all of it. But
the people with whom we dealt in China want to--they want to
reform this process. I think they legitimately want to reform
it. I think they legitimately view themselves as creators of
intellectual property, instead of just consumers of it. And
that is--when that changes, people have a different attitude.
So Chinese creators of intellectual property now want
protection, and have more power than they would have in the
past.
So we have an enormous amount of detail. I will just spend
10 seconds and show you my book when we are together, and you
can see. But this was a detailed discussion. It is extremely
important.
And I would say the final thing, when they put this in
place, to the extent it is agreed to because they think it is
in their interest, then there will be the enforcement issue,
right? And we will be going down, and it will be--it is a
change for China to do this, but it is something they seem to
want to do.
Mr. EVANS. Real quick, Mr. Ambassador, you raised the issue
about banking. Development projects and companies rely on
Chinese investment to infuse capital into their projects and
work. The restrictions on capital inflow is a concern for
future investment.
Ambassador LIGHTHIZER. Well, okay, the President wants
Chinese investment, just like he wants everybody else's
investment. That creates jobs, and it helps Americans. What we
don't want is investment in areas where they are going to end
up taking crucial technology from the United States. So there
is a balance there, and some people will come in, and what they
really want is technology and not investment. In other cases,
they want investment.
The President's position and the Secretary of Treasury's
position is quite clear: We want investment from China, just
like we do from everyone else. But we don't want investment
where it is going to go into crucial technologies and we end up
losing those technologies, which is going to hurt us in the
kind of things that Mr. Beyer talked about. He cares a lot
about it.
So there is a balance there, and it is very important that
we meet that, you know, balance properly.
Mr. EVANS. Thank you, Mr. Chairman.
Thank you, Mr. Ambassador.
Chairman NEAL. I thank the gentleman. With that we will
recognize the gentleman from Illinois, Mr. LaHood, to inquire.
Mr. LAHOOD. Thank you, Mr. Chairman. And, Ambassador
Lighthizer, welcome back, and thank you for your toughness on
China. And we are lucky to have you as our negotiator going up
against China.
I have the eighth largest ag district in the country, in
terms of corn and soybean production, a heavy manufacturing
base, and there is a lot of anxiety in both of those
industries, as we have heard today.
The Wall Street Journal just came out with an article in
the last couple months. The ag economy is down 13 percent over
last year, directly related to tariffs, directly related to the
trade war with China. And so there is a lot of stress and
concern there.
However, most of my constituents in my district support the
President in going after China. And you mention at the
beginning of your statement, ``Technology is going to rule the
future.'' And how we change the behavior with China is--seems
to be--the crux of what you are getting at with your
negotiations.
And, historically, looking over the last 25 years, no
President, from Clinton to Bush to Obama, has been able to do
anything on this front, whether it is cyber threats, forced
technology transfers, or stealing intellectual property, we
have not been able to change that behavior to put China on the
same playing field as every other industrialized country in the
world. And that really seems to be what we are trying to get
at.
Having said that, you have talked a little bit about our
leverage in this negotiating process. And as I look at what you
are trying to do here, I am wondering whether this is going to
be different in terms of--what is going to be different this
time in changing the behavior in China?
And I am going to submit for the record--this is an article
from Reuters within the last 2 months, and the title is,
``China says U.S. accusations of unfair trade practices
`groundless'.'' And in there, the spokesman from China says the
U.S. side made groundless accusations, and China finds that
totally unacceptable. That is from their spokesperson. And I
will submit that for the record, Mr. Chairman.
I guess, as we look at what you said earlier, how do we
have structural change, how do we get to a more laws-based
system? And I know that is what you are getting at. So two
questions, Mr. Ambassador.
First of all, on the ag side. As we begin planting season
for our farmers, what assurances can you give my corn and
soybean farmers and pork producers that the market share in
China will be there when we resolve this, eventually?
And then, second, as we look at this different approach
that you are taking, what gives you confidence that this
approach is going to be different? And what if it is not? What
are the consequences to China if we are not able to hold them
accountable, moving forward, and are not able to change that
bad behavior? Thank you.
Ambassador LIGHTHIZER. Yes, thank you very much,
Congressman, for that question. It covered a lot of territory.
And I have one minute now to respond, but I will do it as
quickly as I can.
First of all, in terms of the soy and corn, we are trying
to, number one, get more sales, more purchases, not only on the
question of corn, it is also on the question of ethanol.
Mr. LAHOOD. Yes.
Ambassador LIGHTHIZER. Which, of course, is a huge user of
corn. So I believe if we have a deal, there will be a
substantial--in the case of soy we have already seen a
substantial amount of additional purchase, and we see the
certain moving together of soy prices back to traditional
levels, in terms of the foreign competition. So we have seen
some impact, particularly with the most recent 10 million
metric ton purchases that the Chinese have gotten into the
market for.
So if we have a deal, I think we will see substantial new
sales there, and hopefully some other improvements, in terms of
SPS stuff.
How is this different? You know, we are--it has to be
enforceable, it has to be specific. And we are covering many
more areas than anyone has ever covered. But it requires the
grit and determination of the President, and it really requires
the cooperation of people who want reform in China. And there
are people who want that.
And the alternative is what has been going on. And that,
for sure, fails. So we know that approach doesn't fail, and
hopefully ours will succeed.
Mr. LAHOOD. Thank you, Mr. Ambassador.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentleman from Illinois, Mr. Schneider, to
inquire.
Mr. SCHNEIDER. Thank you, Mr. Chairman. And, Ambassador,
thank you again, not just for your time here today, but the
availability you have given us throughout this whole process.
Being from Illinois, I share the concerns of my colleague
for the farmers in our State. I represent the suburbs of
Chicago. And I just want to share a quick story of a
constituent's firsthand experience with some of China's bad
practices.
They were working on some product designs, trying to get
some samples. A company in China was delaying, and ultimately
the company in my district started seeing their product showing
up on shelves here in the United States, a clear theft of
intellectual property. And this is something that is happening
throughout the country, it is happening to businesses large and
small.
So I agree with you that China is a bad actor, and that we
cannot let their devious behavior go unchecked. We need to
level the playing field for American businesses. On a level
field our businesses can absolutely succeed. But I have real
concerns with the way the Administration has approached the
problem, creating and escalating a trade war that has caused
harm to many businesses, and many businesses throughout my
district.
Last summer I visited a number of companies to talk about
the impact tariffs were having on them. And everyone was very
concerned that it was hurting their ability to compete. But it
is not just businesses. A local school in my district had to
spend $2 million in contingency funding to cover the increased
cost in materials for a remodeling project. So I was pleased to
hear that you have made progress in the discussions, and the
March deadline was delayed.
In your testimony you mentioned that this Administration is
pressing for significant structural changes to allow for that
more level playing field. What specific structural reforms or
other policies are you pursuing in these negotiations to help
our businesses that are experiencing hardships in the Chinese
market? And can you ensure to me that these reforms will be not
just meaningful, but long-lasting, and that they are looking
toward the long term?
And can you please share with the Committee what outcomes
you have secured thus far to help businesses like my
constituent and those throughout the country that have been
harmed by these Chinese companies?
Ambassador LIGHTHIZER. Thank you, Congressman. I would say,
first of all, your example of intellectual property theft--and
you heard it from your constituents--I have gotten many, many
more. We could sit down and exchange stories at some point. And
that is a pattern that has to change, right? That is real
people losing money, losing market share, not only overseas and
in China, but actually in the United States, right? I mean,
they literally are competing against people that have sold the
stuff in the United States.
And so we are making headway. People say, ``Well, tariffs
are a blunt instrument.'' And my response always is, ``But we
don't have any other instrument, right?'' If Congress wants to
sit down and talk to me and worry about creating new tools, I
am happy to do that. I would love to do it. We are using the
tools we have.
We know that just sitting around blathering hasn't worked
for 25 or 30 years, so we have to try something new. And I
think we have gotten to a point where we might have success. We
will find out. Hopefully, we will have success.
How will it be long-lasting? We will see. The reality is
this is going to be a challenge, it goes on for a long, long
time. My guess is it goes on long after I have left, and
hopefully by the time you are sitting in this chair, you will
be sitting here making sure that the people who are in my job
are continuing to do that, because enforcement tends to be
about people. And if we are not going to enforce this
agreement, they will figure it out pretty quickly, and that
will be the end of it.
All we can do is try to set up a situation where we have
the potential that if people go in here and have the right
attitude, the tools will be there that they can be successful.
And that is what our objective is.
And we are using the tools that Congress has given us as
imaginatively--I told one of your colleagues--as imaginatively
as possible. I testified in 2010 I thought we had to have
imagination. I think that is what the President has shown here,
imagination. And then grit, right, because----
Mr. SCHNEIDER. If I can use my last couple of seconds to
emphasize something else that you said, as well--so thank you
for that.
You mentioned that technology is our biggest asset, and we
have to protect that intellectual property, that technology.
But it is more than that. It is the application of that
technology in this country. It is the continued innovation to
think about the next technology, and it is the alliances we
build around the world to apply those. So I appreciate that.
And with my time up, I yield back.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentleman from New York, Mr. Suozzi, to inquire.
Mr. SUOZZI. Thank you, Mr. Chairman.
Ambassador, thank you so much for your public service. We
really do appreciate the hard work that you do on behalf of the
country.
For decades, since President Nixon and Secretary Kissinger,
and certainly since the end of the Cold War, the United States
has operated under the assumption that, with increased economic
integration and exposure to our system of capitalism and
democracy, China would ultimately adopt some of our systems, at
least in part. That simply hasn't happened.
Not only has Communist China eschewed democracy and engaged
in awful human rights abuses, repression, and abuse of
religious minorities such as the Uyghurs and the Tibetan
Buddhists, not only have they polluted the air, the land, and
the water, and treated their workers poorly, but they have not
transitioned to capitalism or a market economy. The Chinese
State Communist Government not only cheats, by stealing
intellectual property and restricting access to their markets,
but the Chinese government subsidizes its industry.
The 2019 Fortune Global 500 includes 111 Chinese companies,
of which 78 of those companies are viewed to be 50 percent or
more owned by the state. Could you share with us your sense of
what the long-term policy of the United States is, and the
goals that you have as part of this negotiation to have long-
term structural change on this relationship?
Ambassador LIGHTHIZER. Thank you for that question. That is
a great opportunity and all of your colleagues are saying, ``I
hope Lighthizer is unusually short-winded.''
I would say this. You raise the fundamental question. There
was a myth that grew up. And if you look at my 2010 testimony,
which I think is really quite good testimony--it has been
referred to on several occasions here today and in the past--
the myth was that if you open up a market, if you have an
economy, you will become democratic--small D, democratic. That
is the myth. You will open up and that will lead to an open
economy, and to an open political system, and all of a sudden
we are all a bunch of, you know, people from Ohio, where I am
from, right? That is the myth.
And the reality--and that was, literally, professed by all
the smart people, all the clever people. And that, really, is
what led us to--really, to PNTR, and it is precisely what I
read--you weren't here, I read the Speaker's quote, which was
very prescient, saying this ain't so. She said it, and she was
right. And all those smart people were wrong. The reality is
that it doesn't--you can have a very good economy and not have
any freedom, or have very little freedom, right? Well, I didn't
make them, but assumptions were made that were incorrect. So I
completely agree.
And your--the tone of your remarks were, without saying
every specific part of it, why do we have a bipartisan view on
this, and why are we making success. It is because of people
like you that we have success. If this was a partisan thing, it
wouldn't be. The fact that it is bipartisan is why we are
making success on this.
Mr. SUOZZI. So what are the goals of this negotiation,
specifically, to try to have long-term structural impact?
And will we ever get to a place where we think that China
represents something closer to what our system of capitalism
is? I am not going to put democracy on your shoulders, too.
Ambassador LIGHTHIZER. So I would say on the second
question, you know, we will find out. You are younger than I
am, you are more likely to have a better view, right, because
you will get there and see it. I don't know.
What are our objectives? Our objectives are to foster
reform in China, which a group of people want to do, to lead to
structural reforms on the kinds of things that we can, within
the confines of the statute that you have given us, and the
report that we did. Here is our report--if you haven't seen
it--and here is our supplement. And it is----
Mr. SUOZZI. Well, we can't get to the whole report in the
last 3 seconds I have left, so I am going to take you up on
your offer to try to work with you to see if there are other
tools that Congress can give you and people like you to be more
effective in the future.
Ambassador LIGHTHIZER. Fantastic, thank you.
Mr. SUOZZI. Thank you, Mr. Chairman.
Chairman NEAL. I thank the gentleman. With that, let me
recognize the gentleman from Pennsylvania, Mr. Kelly, to
inquire.
Mr. KELLY. Thank you, Mr. Chairman.
And, Mr. Ambassador, thank you so much for being here. You
know, part of what we do, we get a chance to go around our
district and talk to people when we are back home during our
district work weeks. And last summer I stopped at a place in
New Castle, Pennsylvania, called Blair Steel. Blair Steel got
started in the late 1800s, when Pittsburgh was known as the
Iron City, before steel became the product of choice, and took
off.
So I asked Mr. Kinney. I said, ``Mr. Kinney, looking at
what is going on right now, what could we have done
differently?''
And he looked at me. He said, ``I will tell you what we
could have done differently. We should have elected this guy 39
years ago.''
[Laughter.]
Now, people say, ``Oh, no, no, no.'' No, no, that is
exactly what happened, because we have taken a back seat, and
somehow we think that if we are just nice, other people will
play by the rules.
I think Mr. Suozzi is right on top of this, and a lot of my
colleagues have said the same thing. We have to be damn fools
if we don't think we haven't been in a trade war for decades,
and we are afraid of a trade war today that has already taken
place, and has taken heavy casualties. We just never stood up
to it to say, ``Hey, you are taking advantage of us. But we are
so damn nice, we are not going to call you out on it.''
Other than what you are doing right now--I mean this
sincerely, because you said maybe Congress could help out. This
Administration and your tireless efforts to make sure that
everybody is playing for the--I am so damn tired of forfeiting
the game and then crying because we lost. This is absolutely
stupid. We have allowed ourselves to get into this position.
What could we do differently? And I want to tell you I
think most of it is stand 100 percent behind this
Administration, and don't let these people get away with what
they have been getting away with for so many years. An old
saying--and this is very crude--but there is an old saying out
there. If you are in a peeing contest with a skunk, the only
way to beat him is to out-pee him.
I have to tell you right now, I think we are in a trade war
that has taken a heavy toll across the United States, and we
sit back and we just don't want to offend anybody. I am so
offended by us not being offensive, that it is sickening, what
we allowed to happen to manufacturing and intellectual
properties, and you name it. We have been gamed so badly for so
long.
Is there anything else we can do to help you, Mr.
Ambassador?
Ambassador LIGHTHIZER. Well, let me say, first of all, it
really is important, and I have said this, this is my theme--
well, it has been my theme for 2 years, that these things have
to be bipartisan. They cannot be partisan. This is just
different than a lot of other stuff we deal with. And hearing
the last two questions shows why exactly it is bipartisan,
right? Why this is a fundamental both intellectual and gut
reaction to what is going on.
And I think supporting us, supporting the President when we
get this package together--if there is a package, and I am not
there yet, as I say all the time--that we have to look at it
and get behind it and say this is a great step forward. But you
have to--you know, you have to keep your eye on making sure
that we enforce it, and that I enforce it, and that my
successors enforce it, and that, you know, years down the road,
that new Presidents enforce it.
And the second thing I would suggest, which I have said
before, I would love to work with Members on new tools. I think
we need new tools.
Mr. KELLY. Yes.
Ambassador LIGHTHIZER. I won't go through it here, because
what has happened to 301 is troubling, right? So I don't want
to go through all----
Mr. KELLY. Yes, just because we talk about 232 and 301--I
have to tell you. When I go back home to western Pennsylvania,
people don't look at me and say, ``Tell me exactly what is in
232,'' or, ``Tell me what is happening with 301.'' That goes
back to 1974. And the reason we did it is because of unfair,
unreasonable discriminatory trade practices, right? So these
are things that Congress created for the President of the
United States, for the executive branch to handle.
I believe it is going to take eternal vigilance. I think
that what you said earlier--our trade agreements are like
children, they last as long as they last--holds true. We are in
grave danger, I think, in this country of thinking that somehow
people will play fair with us because we are nice, as opposed
to being vigilant.
Thank you so much for your time and your effort. I know you
don't sleep very often, because we have talked before. You are
doing one hell of a job. Thank you.
I yield back, Mr. Chairman.
Chairman NEAL. I thank the gentleman. With that let me
recognize the gentleman from California, Mr. Panetta, to
inquire.
Mr. PANETTA. Thank you, Mr. Chairman, Ranking Member Brady,
and, of course, Ambassador Lighthizer. Thank you very much for
being here. I think in the 116th, just on the Ways and Means
Committee alone, you have been here three times within the last
2 months, and I think that says a lot about you and your
commitment to working with us. And we look forward to
continuing to work with you, not just on this, but, of course,
on the USMCA, as well.
That, as well as trade with China, is very important to me
and my district in California. As you know well, California is
the number-one ag-producing State in the Nation. Although I
appreciate the questions from my other Members here on the
dais, California is what it is about when it comes to
agriculture. And the central coast of California being the
salad bowl of the world is what it is about, when it comes to
agriculture. And it contributes to that title that we are the
number-one ag-producing State.
But, obviously, these tariffs, these retaliatory tariffs,
have affected our farmers. I have over 800 food and
agricultural products that are being taxed. And, unfortunately,
a lot of those products can be obtained from other non-U.S.
trading partners. And so, what we are seeing is a closing of
certain markets.
Now, I appreciate the fact that there is an aid package of
$12 billion, and I actually spoke with some of my almond
growers yesterday who were benefiting from that. But I can tell
you--and what we have heard, and what you have heard, I am
sure--it is not about aid, it is about trade. And it is not
about short-term bailouts, it is about long-term business.
And so my question to you is, in regard to these markets
that are potentially being shut off, that are being closed,
what are we doing to recoup those markets in regard to your
negotiations with China?
Ambassador LIGHTHIZER. Well, thank you, Congressman.
First of all, the problem on retaliatory tariffs and market
opening goes beyond China. I should say that. And one of the
things we are doing is we are having negotiations in a variety
of areas; we're at a bit of a stalemate with Europe right now,
because they won't include agriculture, and we want to include
it.
We have our talks with Japan, which have a very big
agriculture component. We have USMCA and the 232, and I am
looking forward to working with you on passing USMCA, because
it is so important for California and Illinois and everywhere
else. So I am looking forward to that.
Now, in terms of China, which, unfortunately, is only part
of where we have had retaliatory tariffs, if we get an
agreement those tariffs will come off. And then the President's
hope is--although it is not the purpose of the negotiation--
that the purchases will have the effect of not only giving
short-term sales--and by the way, we are looking at numbers
that go out several years.
We are not--it is not like I should make this point, even
within the purchases, which, contrary to what is in the
newspaper, is not the function, the purpose of this. Those
purchases are going to have targets and amounts that go out for
several years. But our hope is that if you increase those
agriculture sales, and you do it for a period of years, you
will create new customers that will have results that go on
years and years and years and years into the future.
So this is a--it is a very real thing that the President is
worried about. Obviously, when you get into a situation where
you are trying to bring change about, it is going to have
costs. No one has been treated less fairly than the farmers,
right? I mean, they are in a position where they should have
enormous markets in China. China is a big market for us. As I
say, they are our second or third--depending on the year--
market, excluding, of course, 2018. But there is a much bigger
market there. I mean, there is a lot of people there. And with
any kind of fair trade, farmers would be beneficiaries too.
Mr. PANETTA. Thank you for bringing that understanding into
these negotiations.
I yield back. Thank you, Mr. Chairman.
Chairman NEAL. Thank you. We will now revert to one for one
on both sides. And with that, the Chair would recognize the
gentleman from New York, Mr. Reed.
Mr. REED. Well, thank you, Mr. Chairman. And, Ambassador,
it is always great to be with you. And I really do echo what my
colleagues have said about you. I think you are the right
person at the right time to take on this much-needed
negotiation with China.
One of the things I want to bring to your attention, and
maybe your thoughts on, as well as my colleagues, to focus on a
little bit as we deal with these tariffs and the future after
we negotiate this agreement--I do believe we are going to be
able to negotiate an agreement. And you have one chance, a very
limited runway to do this right, to make a fundamental shift in
our trade relations with China.
But, you know, one of the things I see--and I see the
Chinese position. You know, they are thinking long term. They
are always thinking long term. They are not looking
transactional. And so, as I see the negotiations proceed, and
the tariffs that are on the books, and the reaction in China, I
see their commitment, as a Co-Chair of the U.S. Manufacturing
Caucus, to build up excess capacity.
And I will add another issue to it: Excess inventory of
certain products. So when that new marketplace is created, what
are we going to do to protect American markets from that excess
capacity and inventory that would then be dumped or thrown into
the U.S. market in a very dangerous way, in my opinion?
Do you understand what I am getting at? Because as I see
manufacturers, as I see folks--especially in advanced
manufacturing--I see China reacting to this transaction of what
we are dealing with in these negotiations. But as these tariffs
come off, as we operate under this new agreement, how are we
going to minimize the adverse potential impact of what the
Chinese 2025 long-term vision of positioning themselves as a
world leader in manufacturing does in order to protect our
manufacturing bases here on domestic soil?
Ambassador LIGHTHIZER. Let me just thank you for that
question, Congressman. That is a fundamental question.
I want to make one point clearly, and that is I think the
United States has been guilty of short-term thinking and short-
term view, for sure. But I don't think that is true of
President Trump; that is why he is going after structural
change.
Mr. REED. Amen.
Ambassador LIGHTHIZER. He is looking down the road. He is
thinking. He wants to know what is going on way down the road,
and have the United States still have this advantage.
We have to be number one. We just have to stay number one.
And, by the way, most people in the world want us to be number
one, right? I mean----
Mr. REED. I totally agree with you. So what are you going
to do when that valve is potentially opened up? Are there going
to be strict enforcement mechanisms----
Ambassador LIGHTHIZER. So you have to have strict
enforcement----
Mr. REED [continuing]. To make sure that----
Ambassador LIGHTHIZER. Let's remember that no matter what
happens, we have to maintain strong laws against unfair trade.
We have to remain strong on anti-dumping laws, and have strong
countervailing duty laws.
Mr. REED. So if that inventory is dumped on the U.S.
market, what are we going to do to make sure that enforcement
is there, and easily executable by us to take on that Chinese
action?
Ambassador LIGHTHIZER. So, number one, we have in here
provisions, if it is agreed to, that will limit subsidies
specifically in cases of so-called competitive industries. That
is to say where there is this problem of excess capacity. What
you are talking about is what has happened in steel, what has
happened in aluminum, what has happened in solar panels, what
has happened in, Christ, washing machines----
Mr. REED. Advanced manufacturing----
Ambassador LIGHTHIZER. I could go on and on and on and on.
Mr. REED. Yes.
Ambassador LIGHTHIZER. There is an agreement to limit
subsidies in those kinds of cases. There are unfair trade laws,
and then there is the enforcement provisions in here. This is a
pattern.
And, by the way, it is not always even a plan. Sometimes it
is just they start this, and the provincial governments and the
local governments all kind of get into it. And they don't even
have a way to put their own brakes on, right?
Mr. REED. So do we at least agree that potential threat is
there that I am raising?
Ambassador LIGHTHIZER. Well, I absolutely think it is
there. I mean----
Mr. REED. And we want to----
Ambassador LIGHTHIZER. It is undeniable that it is there.
Mr. REED. And we want to put in enforcement mechanisms
readily available to us as partners in this agreement that we
can then deploy against China. And we may need to make it very
clear, I think, to China that we are ready to use those. Is
that fair to say?
Ambassador LIGHTHIZER. Yes, absolutely.
Mr. REED. Thank you.
Ambassador LIGHTHIZER. Absolutely.
Mr. REED. With that, I yield back.
Chairman NEAL. I thank the gentleman. Let me recognize the
gentlelady from Florida, Mrs. Murphy, to inquire.
Mrs. MURPHY. Thank you, Mr. Chairman. Mr. Ambassador,
presumably the goal of Section 301 tariffs is to cause China
enough economic pain to persuade China's leadership to
negotiate an enforceable agreement, curtailing its abuse of
trade practices. And in a previous answer you noted yourself
that tariffs are a blunt instrument. You know, not only are
they not precision-guided, they can have unintended
consequences, often for U.S. consumers and small businesses.
And I imagine that before you made the unilateral decision
to impose tariffs on China, you weighed the cost and benefits
and designed those tariffs to maximize the damage to China and
minimize the self-inflicted damage to companies and consumers
in the United States, and to the broader American economy.
Whatever your intentions were, I have to tell you the
evidence on the ground is really grim. I have had small
business owners in my community in central Florida break down
when they talk to me about the impact the tariffs are having on
the companies that they have spent a lifetime building, and on
the workers that they view more like family than they do
employees.
Take, for example, David. He is the owner of a 30-person
electronics firm in Orlando that imports components from China
and sells finished products to American retailers. His business
has been upended by this third tranche of 10 percent tariffs
that took effect on September 24th. When he went to work that
day he had to pay an up-front bill of $280,000 to release his
goods from China that had already landed at a U.S. port. No
notice from his government, no time to adjust. And since
September, David has paid over $800,000 in tariffs. It is a lot
of money for a small business.
So what he has had to do is raise the cost of his products.
Some of the big retailers have agreed to pay more, but they are
just passing those costs onto consumers. And some smaller
retailers just simply won't accept the price increase, and so
that means that David has lost business. These tariffs have
decimated his cash flow, jeopardized his financing, and made
him unprofitable, placing his workers' jobs--my constituents'
jobs--at risk.
And unlike his bigger competitors, David doesn't always
have ways to mitigate the harm. So if this 10 percent tariff
endures, the damage could be really severe. And if it increases
to 25 percent, the damage could be fatal. In 40 years as a
business owner, he tells me he has never seen government
actions interfere so directly with his businesses.
And I know you are not insensitive to this issue, but what
do I tell these small business owners, like David, whose
livelihoods are on the line? When is this going to end? What
will their sacrifices have allowed you to achieve? And do you
think you are going to be willing to accept a deal that falls
short of what you have indicated you want to achieve in order
to end this trade war?
Ambassador LIGHTHIZER. So first of all, we are sympathetic
to situations like David's, although I don't purport to know
the details of it. But there clearly are people who import
products who are negatively affected.
I would suggest that this is a 10 percent tariff, and that
with the depreciation of the Chinese currency, it is probably
having a 4 or 5 percent--maybe less, maybe 2 or 3 percent
effect on his business. So I would just make that statement.
In terms of notice, of course, you know that this--we go
through a notice and comment process. This process of putting
these tariffs in place was months going through, with hearings
and all the--I don't want to let anybody have the impression
that this is something that we just woke up and did. No, there
are laws, and we followed them. And there were months and
months and months and months and months of process going
through here.
I always start with a proposition of do you think we have a
problem with China. If you don't think we have one, then all of
this is crazy. If you think we have a problem with China, then
we have to weigh what is necessary to move forward.
And in terms of what we are willing to accept, no, I don't
think we should accept anything that doesn't have structural
change and is enforceable. Absolutely not.
Mrs. MURPHY. Thank you, and I yield back.
Chairman NEAL. I thank the gentlelady. With that, let me
recognize the gentleman from South Carolina, Mr. Rice, to
inquire.
Mr. RICE. Ambassador Lighthizer, thank you so much for
being here. I have told you repeatedly that one of the things
that gives me the greatest confidence in this Administration is
people like you and Secretary Ross that have taken on these
jobs to lift up American workers. I am heartened by your
observation about the loss of the 5 million jobs since China
entered the WTO, and your objective in taking this job and
doing something about that, and lifting up our middle class.
Because, you see, I believe that our middle class--that
American workers--can compete with anybody in the world on a
level playing field, and that we here in Washington have
allowed that playing field to be tilted against them for far
too long.
Beginning around 1990 we were competitive at that time in
the world, but we sat on our hands and allowed everybody else
to change their economic systems, including their tax system,
regulatory structure, trade policies, and so forth, to take
advantage of American workers. And 30 years ago we could accept
trade agreements that weren't necessarily in our favor, we were
so far ahead of the rest of the world. But we can't do that
anymore.
So I am really proud of what the President has done,
restructuring our tax code, restructuring our regulatory
system. I think the next most important thing we can do is to
balance our trade agreements. Your progress on NAFTA is so
important and so impressive. Your progress with China gives us
great hope, although I heard you say at least a dozen times
today that it is not done yet. But I just want to applaud you
on how far we have come, because I don't think there is
anything more important at this point, after tax reform, after
regulatory reform, that we can use to make our economy
competitive and allow our workers to compete on a level playing
field.
Once we get through this, we need to move on to
infrastructure.
I want to tell you that I had a town hall in Loris, South
Carolina, last week. And a group of farmers came to my little
town hall in Loris. And they are worried. They grow peanuts,
tobacco, cotton and soybeans, primarily. And they said to me,
you know, ``We are worried about this disruption with China. It
is certainly affecting our business. What can we expect? When
can we expect it?'' You know, ``How quickly is it going to be
resolved?''
And we talked about all that, and I promised them that I
would raise these issues to you here in this hearing. So they
are watching you right now.
Hello, everybody back home.
But that being said, when we were through, they also asked
me to tell you that they are behind you, and they are rooting
for this President, and they recognize that this has to be
done, and they recognize how important it is.
So, in my last minute I am going to turn it over to you,
and I am going to ask you to tell my farmers back home, as best
you can, what they can expect.
Ambassador LIGHTHIZER. Well, thank you very much,
Congressman. And thank you for your comments about me. I am
grateful for that.
I would just make the obvious statement, and that is that,
like other Members in my position, people in my position, we
are inspired by and empowered entirely by the President. If it
wasn't for the President, I would have no power and no
inspiration. So I am happy to have this opportunity to be able
to at least fight for the things that we all care about. And so
we will see how that turns out.
I would say to these farmers I think they have been
victims, as much as anybody in America, of what goes on in
China. And I think they are more vulnerable than a lot of other
people, for a whole variety of reasons that we all know about.
And that if we have an agreement, there is a likelihood that we
will begin the process of the payoff.
Once again, if we don't enforce and we don't keep on it, it
is not going to happen. Unfortunately, we are not in a world
where good things just happen automatically, right? So if we do
our job, and if we get an agreement, I think there is going to
be a good payoff for them.
And the President is very grateful for their support. He
understands exactly that these are real people putting it on
the line for him. So thank you.
Chairman NEAL. We thank the gentleman. And with that, let
me recognize the gentleman from Nevada to inquire.
Mr. Horsford.
Mr. HORSFORD. Thank you very much, Mr. Chairman, and to the
Ranking Member, for this opportunity and the hearing. I
appreciate, Mr. Ambassador, that though these negotiations have
been ongoing and fraught, our congressional Committee is
finally getting an opportunity to address concerns that we have
heard from our constituents about, and that directly impact
each of our districts.
So I wanted to first say, Mr. Ambassador, we want you to be
successful. On behalf of the American worker, the American
business owner, the American consumer, all of whom are
depending upon the successful outcome of your negotiations.
I wanted to share with you that in Nevada it is estimated
that $107 million worth of exports are threatened by new
tariffs. Nevada's exports to China total $28.7 million, and
these exports affect an estimated 367,000 jobs in Nevada.
As the price of steel rises, so does the construction cost
across our State. There is currently an estimated $25 billion
of planned, proposed, and currently under-construction major
projects in southern Nevada, projects like the Raiders Stadium,
the Las Vegas Convention Center expansion, and public projects
including expansion in our universities. All have become more
expensive.
Food is also a big component of exports threatened by the
U.S.-China trade deal, everything from bread, pastries,
condiments, and even milk. So companies that make everything
from metal castings to appliances to the dairy sector, and even
bakeries, are impacted. And since last March the Administration
embarked on a series of tariff actions that drew retaliation
from trading partners.
And I know, Mr. Ambassador, you have talked about the need
to focus on enforcement and structural change as part of this
process. But what hope and relief can we give to our
constituents about some of these pressing impacts that we see
right now, based on this ongoing trade war with China?
Ambassador LIGHTHIZER. Well, thank you, Congressman. I
would say, first of all, in these circumstances, one has to
begin the analysis, as I said a minute ago: Is there a problem,
right? And if you believe there is a problem where we are right
now, between the United States and China, and that problem
threatens our future and our kids' future and all of those
people who we are very concerned about, and who are adversely
affected, if you don't believe those people are potentially
very seriously affected unless we change policies there, then
there is no point in this.
But if you do think those people's futures are threatened,
then you have to go through this process. And our objective has
been to try to minimize the effect, as the Congresswoman said.
We have to minimize our effect on our own consumers, and
maximize the effect on others, and we try to go through that
process. But when we get to the other end we have to be in a
position where we have actually defended our workers and our
farmers and our ranchers, and we have the potential for
structural change in China.
And I think we have done a reasonably good job of
minimizing that effect on our own consumers. That isn't to say
the individuals aren't particularly affected substantially, and
we have an exclusion process to try to help them out. So we are
sympathetic, and focused on it.
In terms of the steel, I would just say generally I want to
get a steel agreement. The President wants me to get some kind
of a steel agreement, if I can, with Canada and Mexico. I think
that will alleviate some of that problem.
Mr. HORSFORD. Thank you very much, Mr. Ambassador.
Thank you, Mr. Chairman. I yield back.
Chairman NEAL. I thank the gentleman. And with that, let me
recognize the gentlelady from Alabama, Ms. Sewell, to inquire.
Ms. SEWELL. Last, but not least.
[Laughter.]
Thank you, Mr. Chairman.
I also want to thank you, Mr. Ambassador, for being here
today. This discussion is long overdue. In fact, since the last
time you publicly appeared before the Ways and Means Committee,
this Administration has imposed a 25 percent tariff on $50
billion of imports from China, and another 10 percent tariff on
$200 billion of Chinese imports. The Chinese, predictably,
retaliated with a tariff of $100 billion on U.S. exports.
We are all aware of China's unfair trade practices. And,
you are right, the fundamental question is not just do we
believe there is a problem with China and trading. We do. I
think, universally, all of us will agree with that. I think the
more fundamental question is: What do we do about it? I think
it is important that we do something about it, but I can also
tell you that the tariffs have had a really devastating effect
on the folks back home in Alabama.
In fact, I have three concerns about the 301 tariffs as
enforcement mechanisms.
First, it is a go-it-alone strategy I am concerned about
that this Administration is taking, when I really think we
could have put to use our alliances and created a multilateral
pressure on China, and probably been a little bit more
effective, quicker.
Second, while we in Alabama do believe trade works for us,
we really believe that retaliatory tariffs don't. And the
retaliation that has the most impact on my district has been
both with farmers, as well as with my manufacturers. According
to a Brookings study, Birmingham, Alabama, has the fifth
highest exposure to retaliatory tariffs in the country. Since
the trade war with China has begun, Alabama exports have faced
over $254 million in retaliatory tariffs. Moreover, my cotton
and soybean growers' supply chains have been dramatically
affected.
The longer the tariffs are in place, the more likely it is
that a lot of the shifts in the supply chain will become more
permanent, causing more concerns for lots of my constituents.
In fact, the forest industry in my district is suffering from a
25 percent tariff on southern pine logs, and a 10 percent
tariff on the softwood lumber.
So I guess my question, really, is one of a fundamental
belief that, while there is definitely a problem, a trade
problem, with China, is the enforceability of tariffs the way
we are doing them the best way to get at that problem?
So my question is, especially given the fact that we are
looking for Section 301 tariffs as a tool to enforce other
trade agreements, my question to you really is do you see
Section 301 tariffs as an enforcement tool of last resort when
all of our options have been exhausted? Or do you see it as a
weapon that can be deployed regularly to exert concessions from
other economic rivals and allies?
Ambassador LIGHTHIZER. Well, I would say, first of all, I
don't want to conflate tariffs with other tariffs, right?
Because, I mean, as you know well, there is the softwood
lumber, and that is a litigation matter by private people. The
steel and aluminum is something entirely different, in my
opinion.
I think 301 is an effective tool. I think we should be
working with Members to find more effective tools. And I can--
at some point I want to sit down and take you through the
history of 301. When you are just ready to go to sleep and you
can't get to sleep, I will take you through it because it is
kind of interesting----
Ms. SEWELL. Since I sit on the Intelligence Committee, too,
there are many sleepless nights for me.
[Laughter.]
Ambassador LIGHTHIZER. I guess that is right.
So there is a history there. I think we need better tools.
But in terms of whether or not we should have done what we did,
or done a multilateral approach, I honestly believe that good
people tried for 20 years the multilateral approach and the
talk approach, and the let's all go along and get along
approach. And I can tell you it is not--I will show you. I
brought along--I have a chart here that shows the trade
deficit, what every one of these go along and get along--there
it is, right there.
So here is the trade deficit, and here is every one of
these go along and get along joint things. They just
demonstrably failed. And when you are in a situation where
something really, really matters in our kids' lives, you know,
jobs depend on it, and you have tried something and it has
failed, failed, failed for 20 years, you would have to be
crazy, in my judgement, not to try something else.
Now, is this perfect? I am not going to say it is perfect.
But at least it is leading to results, where everything else
didn't.
Ms. SEWELL. Now I just want to say thank you for allowing
the Ambassador to complete his answer, and I just really want
to say, in closing, we are all really, really--your success is
our success. We do want to get a better balance when it comes
to trade with China. And I want to thank you for being open
enough to come and talk to us on a regular basis with respect
to these tariffs and the trade agreements.
Chairman NEAL. We thank the gentlelady, and we will
conclude with the gentleman from Georgia, Mr. Ferguson.
Mr. FERGUSON. Thank you, Mr. Chairman.
Ambassador, thank you so much for being here today. You
know, it has been fascinating, sitting here and listening to
both sides recognize a few common threads. Number one, China
has been participating in unfair practices for years, and it
has hurt American business, it has hurt American innovation.
And most importantly, it has hurt the American worker.
Consistently, I hear throughout my district the support for
these efforts to really put China into a new trading position
with the United States. Across the board, whether it is
Republican or Democrat, small business, large business, they
all understand the need to do this, and they also understand
the need that, because we have not done it in the past, there
is going to be a rough transition period while this fight takes
place. But it will be worth it in the end. So I want to commend
you and the Administration for fighting so hard on behalf of
the American worker.
You know, as I look at this, another thing that I have
heard a couple of comments on along these lines, is talking
about the context of the China deal, and with everything else
that is going on in trade. Could you speak--because we all
recognize the problem with China, and we all recognize that it
is a very large problem to deal with--can you speak to the
importance of getting the USMCA deal done on the heels of the
South Korean deal, and then bringing Japan into the fold, and
then moving to the Europeans? Can you speak to how important it
is that we all develop these trade deals so that we can
collectively work to change China's behavior?
Ambassador LIGHTHIZER. Thank you very much, Congressman,
and thank you for your comments about the President's program,
which I think is working, and I am certainly going to pass
along to him the various comments people have made about what
we are trying to do.
But you are right, and I said this at one point, and I will
say it again. There is no trade program in the United States if
we don't pass USMCA. There just isn't one. What it says is we
don't have a consensus, and that we don't want to stand up for
our workers and our farmers and our ranchers. I think there is
no less than that at stake.
We have an agreement. It is clearly better than its
predecessor, there is no question. It is $1.3 trillion worth of
business. Millions and millions of people are affected. And it
just has to pass. If it doesn't, you have no credibility at all
with China, and you will have no credibility on any deals with
your other trading partners.
I have Members come to me, as I talked--every day I talk to
two or three Members, just, literally, every day. And they are
all--it is always constructive. They have this idea, and that
idea, and they have thoughts, and all this. And I always in the
back of my head think if we don't pass USMCA, just don't
bother. Just sit down and say we will just wait a few years
before we say anything.
Mr. FERGUSON. I want to thank you for that, and addressing
that, but I want to switch gears for just a minute.
In my home town we have an automaker, Kia Motors
Manufacturing Georgia. We have seen the benefits of having a
good trade agreement with South Korea. We want to continue to
see that.
One concern that I have--and if you could address it very
quickly--the timelines both on the USMCA and potentially any
trade deal, 3 to 5 years for implementation, talk about how
that--that, to me, seems like a relatively tight timeline. Is
there opportunity, if companies are moving in the right
direction, to give some leeway as they try to bring jobs back
to America?
Ambassador LIGHTHIZER. USMCA requires a very short
transition. They can get the additional 2 years if they are
meeting certain requirements. We have worked with the
manufacturers. Is it a tight timeframe? Yes. Is it a doable
timeframe? Yes. We have to make changes as soon as we can. By
extending this out, I mean, we have consensus among
manufacturers, and by extending it out you are just postponing
Americans getting their new jobs, and I don't want to do that.
We want these people to be employed as soon as possible.
So this is a doable thing. And, by the way, we want them to
be manufacturing more engines and more transmissions in
Georgia, and I think they are going to. And they are going to
quit using the Korean engines and transmissions to a large
extent. So this is going to be a big win for you.
But I don't want to defend them. I already pushed it off as
far as I am going to push it off. Who knows where I am going to
be in 5 years?
Mr. FERGUSON. Thank you, Mr. Ambassador. And thank you, Mr.
Chairman.
Chairman NEAL. I thank the gentleman.
Mr. Ambassador, let me thank you for joining us today. As
always, your accessibility is appreciated by the Committee.
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.
And with that, the Committee stands adjourned.
[Whereupon, at 1:06 p.m., the Committee was adjourned.]
[Questions for the Record follow:]
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