April 1, 2022
WASHINGTON, DC – During a Senate Finance Committee hearing, U.S. Senator Rob Portman (R-OH) expressed his concern about non-enforcement of the phase one agreement with China. Senator Portman noted the United States should use the agreement’s existing dispute resolution tool to bring China into compliance and further restrict imports if China does not fall in line.
In addition, Ambassador Katherine Tai praised Senator Portman’s Leveling the Playing Field Act 2.0, which will help combat China’s unfair trade practices. Ambassador Tai said the updates and the enhancements in Portman’s legislation are exactly what is needed to meet the challenges that we are facing today.
A transcript of Senator Portman’s questioning can be found below and video can be found here.
Senator Portman: “Thank you, Chairman. Ambassador, good to have you back before us. As you know, I feel strongly that you need to have the ability to negotiate trade opening agreements — that would make your job more interesting as well as the jobs of your associates. That’s a broader topic that I think in the context of the COMPETES Act, also known as USICA, also known by five other names. I think there is an opportunity for us to do something, and you and I have talked about it; I have talked to Secretary of Commerce about it, so I hope you will be working with us on that if there is going to be trade adjustment assistance. Typically, that’s combined with trade promotion authority and my view is that these agreements that are right before us, including the UK agreement which has virtually no issues as it relates to labor and the environment, are low hanging fruit and it would be great to get America back in the game. With regard to China, and your discussion and your testimony about the need to use existing tools, you refer to the phase one agreement as part of the old playbook because China has not lived up to its commitments and I get that.”
“It is frustrating when China doesn’t live up to its commitments, but I don’t think we could just move along and say, ‘So let’s start to work on other ways in which we can open more opportunities.’ Instead, I think we have to stick with that agreement and use what’s in the agreement, which is dispute resolution. I think if we just say that we are going to forget that and make that a part of the old playbook, I think that sends a terrible message because I think when China makes an agreement with us and they don’t fulfill their obligations, we have to exercise our legal rights under that. I think it is going to be much more difficult to make progress with China on the subsidies, on state-owned enterprises, on suppression of labor rights, and other things if we do not insist that the agreement be adhered to. So, I guess my question to you would be are you willing to move forward with dispute resolution? Are you willing to commit to utilizing the dispute resolution process that the United States enjoys as part of that phase one agreement, possibly culminating in restrictions on trade with China as necessary to enforce the agreement?”
Ambassador Katherine C. Tai, United States Trade Representative: “Senator Portman it is always a pleasure to see you. On your question on China, I appreciate the opportunity to clarify my position and what I have said because I have seen it reported perhaps a bit inaccurately. Which is to say it is the time to turn the page on the old playbook which focused exclusively on pressuring China and seeking China to change its ways or pressing China for compliance. We are not giving up on pressing China on compliance or on changing its ways. And yes, all tools remain on the table with respect to dispute settlement and enforcement. But my main point is that that is not the only thing we can do now and we have to expand our strategy to include developing the tools we need to defend the interests of our economy. So, in fact what I am saying is we are committing to doing more work and our strategy needs to expand.”
Senator Portman: “Okay well thank you. I appreciate that and I think using the existing tools we have are important. Again, setting a precedent of not using the dispute resolution tools that we have, I think, would be problematic for China and others. Let me talk to you about new tools because that’s the other point that you make. You and I talked about this a lot. We just do not have the tools to keep up with China, in my view, as they try to undermine our national competitiveness. Their subsidizing manufacturing in many countries through their Belt and Road Initiative and yet our trade enforcers are powerless to combat those subsidies. Our bipartisan legislation with Senator Brown called Level the Playing Field Act 2.0 contains new tools to deal with that reality. It’s what’s happening out there, such as the transshipments, and particularly the Belt and Road subsidies. That bill is something I am pushing very hard, as you know, to have included as it is in the House version, in the U.S. Innovation and Competition Act we talked about earlier. Thank you for your support of this approach. Can you explain to the committee how this legislation would help to combat China’s unfair trade practices?”
Ambassador Katherine C. Tai: “Well Senator Portman let me begin by commending you and Senator Brown for working in a bipartisan way and bicameraly on this legislation and this initiative. In terms of how it would help us, I just want to emphasize that most of our trade enforcement tools date back to the 1970s and 1980s. And it is critical that we retain those tools. But, overtime as the global economy has evolved around us, our tools have not kept up. And so the updates and the enhancements that are in the Leveling the Playing Field Act 2.0 are exactly in the spirit of what we need right now, which is the tailoring of a tool set, and expansion of a tool set, that is going to be up to the task of meeting the challenges that we are facing today.”
Senator Portman: “And with China in particular, would you agree?”
Ambassador Katherine C. Tai: “Yes.”
Senator Portman: “Thank you. Mr. Chairman.”