5 Aug 2019
USTR Lighthizer Offers Administration’s Views on Various Trade Issues
On 18 June, USTR Lighthizer appeared as the sole witness before the Senate Finance Committee. Given the limited time in the public hearing, senators were able to submit additional questions for the record to Lighthizer and his team. The questions and answers from committee members of both parties have now been made public, consisting of 66 pages encompassing all aspects of U.S. trade policy.
The questions covered a broad range of topics such as the U.S.-Mexico-Canada Agreement and U.S. trade relations with the European Union (including Brexit), Switzerland, India, Japan and other countries. Certain questions focused on industries of specific interest to particular senators, including local agricultural commodities (especially dairy, cotton and grain exports) as well as manufacturing (including autos, steel and medical devices) and digital exports.
While Hong Kong was not mentioned in the questions for the record, issues related to mainland China were raised at length by Chairman Chuck Grassley (Republican-Iowa), Ranking Member Ron Wyden (Democrat-Oregon) and most other committee members. Grassley’s first question on mainland China focused on whether the Section 301 tariffs would remain in effect even if an agreement is reached, signalling his preference for a suspension of all tariffs if a deal is struck. Lighthizer merely replied that “USTR will continue to follow all procedural requirements for tariff remedies with respect to consultations, hearings, and public comment as set forth in the Section 301 statute.”
Grassley and other senators noted that many businesses have expressed dissatisfaction with the Section 301 tariff exclusion process. The Iowa lawmaker observed that businesses “have to wait months to get a decision, and struggle to understand how USTR is applying the discretionary exclusion criteria.” Lighthizer repeatedly insisted that USTR’s efforts are more than adequate, stating that “approximately 35 USTR attorneys, paralegals, trade analysts, and contractors with experiences in law, industrial sectors, tariff classifications, and data analysis work on the exclusion process” and additional staff, including analysts from the departments of Treasury, Commerce and Agriculture, are assisting on the effort. The majority of these personnel work on the exclusion process on a full-time basis. Lighthizer added that his agency plans to use “a staffing contract that is in development to hire additional contract analysts to ensure that we can be timely and responsive to applications for exclusions” and also intends to monitor the List 3 product exclusion process to determine whether additional funding is necessary.
Wyden and other Democrats pressed Lighthizer to comment on the damage suffered by their constituents’ businesses both regarding imports from, and exports to, mainland China. Lighthizer stressed the administration’s desires to achieve a fairer and more reciprocal trade relationship with Beijing by “seeking to address a wide range of unfair trade practices, including those that support non-market forces in order to create conditions for fair competition, including through structural reforms.” He insisted that the use of Section 301 remedies “is providing the United States with an important source of leverage to bring China to the table to negotiate an enforceable agreement that will address China’s unfair trade practices”, adding that the administration “does not have a predetermined timetable for how long it will be necessary to leave these tariffs in place.”
Wyden was emphatic in his questioning of the administration’s policy towards Huawei, wondering whether the administration will give up U.S. national security for “literal peanuts” and casting doubt on the appropriateness of involving matters of national security in trade negotiations. Lighthizer was evasive in his response, simply noting that Huawei is currently on the Entity List and advising Wyden to direct any questions regarding Huawei to the DOC.
Lighthizer also described the tri-lateral process with the European Union and Japan aimed at identifying and addressing distortions caused by unfair market-distorting trade practices as having proven useful “to reconfirm our shared understanding that market-oriented conditions are fundamental to a fair, mutually advantageous global trading system.” A central theme of the discussions has been analysing the nature of the problems in mainland China “to identify effective means to address our shared concerns”, which may include “ individual, coordinated, or joint enforcement actions, developing shared norms on fair trade, and exploring possible new rules in those areas.”