Trade Policy

Floor Speech

BREAK IN TRANSCRIPT

Mr. HILL. Mr. Speaker, I appreciate the time tonight. It is my hope tonight that we will have a discussion in our country and in this historic Chamber on trade policy. I am delighted that two of my good colleagues have joined me to carry on this discussion.

A key tenet of international economic policy for the Trump administration has been to improve U.S. bilateral and multilateral trade arrangements with an eye toward enforcing reciprocity with our trading partners as it relates to tariff levels and the elimination of nontariff barriers. The goal: to simply achieve more market access for American goods and services.

Mr. Trump recognized this, campaigned on free and fair trade, and routinely emphasizes the importance of reciprocity between trading partners. He has stated that he prefers bilateral arrangements over multilateral arrangements by indicating that he did not want to pursue the Transpacific Partnership or the Transatlantic Trade and Investment Partnership, one with Asia partners and one with the EU.

While it is true that bilateral treaties are easier to negotiate and acquire, select multilateral arrangements can achieve broad geopolitical and geo-economic strategic objectives.

In the case of TPP, it could, potentially, significantly leverage the economic clout of China in Southeast Asia and obviously link longstanding free trade partners across the transatlantic region with the TTIP.

President Trump has also initiated the effort to improve the North American Free Trade Agreement, NAFTA, among the United States, Mexico, and Canada. He has called this agreement one of the worst ever, but has offered concrete ways to improve it and modernize it for current conditions in Mexico, Canada, and the United States. No doubt, these are, in fact, significantly different than back in 1992 when the NAFTA agreement was arranged.

This work continues in earnest, and I am pleased that the administration has made significant strides in improving NAFTA between Canada and Mexico over the past year, something that I think is very important in my home State of Arkansas, where Mexico and Canada are absolutely the largest trading partners that our companies and farmers have in my home State.

President Trump's objectives of changing the mercantilistic trade policies of China have proven more challenging. Tonight, we will talk about the President's strategy, because we want the United States to have an opportunity in China. We want a more open China trading process. We want more goods and services made in America sold in China.

But over the last 3 decades, China has developed into one of the world's largest and fastest growing economies, but also one of the world's largest protectionist economies, putting up barriers to American goods and services in both tariff matters and in nontariff ways.

We are going to talk about that tonight, and I would like to start by talking about that with my friend from Ohio. What is interesting is that this strategy of getting at a more open China, ending a more mercantilistic trading policy with China has taken a couple courses of action: one, the President has imposed section 301 under the Trade Act of 1974, going after China's intellectual property theft in the U.S., their ability to compel U.S. companies or companies from the European Union to give up their intellectual property in order to do business in China, clearly a violation. And so the President has proposed a 301 investigation and tariffs related to that.

He has also imposed tariffs under the 1962 act for national security purposes across the board on steel and aluminum--all countries, all products. And that is very challenging, Mr. Speaker, because, if the real issue is getting at China, the world's largest subsidizer and dumper of steel and aluminum, this may not be the most successful strategy to accomplish. That could, in fact, be a distraction from our ultimate objective in opening China.

BREAK IN TRANSCRIPT

Mr. HILL. Mr. Speaker, I thank my friend from Ohio. He is a valued member of the House Financial Services Committee, and his decades of work in private business and in manufacturing is ideal for this discussion. He knows about intermediate goods manufacturing and how a lot of those parts are made domestically, but some parts, critical parts, might be made abroad. Nonetheless, they allow us to create a competitive manufactured good here in the United States, employ Americans, and then potentially sell that domestically or export it to, yet again, another country. I appreciate his manufacturing expertise.

We are also joined tonight by my friend from Illinois, a distinguished member of the House Ways and Means Committee, Darin LaHood, who comes from America's heartland of agriculture and can speak to the issue of how do we achieve this outcome that we want: more open markets, fairer and reciprocal trade, but how do we do that in a way that minimizes the impact on American consumers and our agricultural producers.

BREAK IN TRANSCRIPT

Mr. HILL. Mr. Speaker, I thank my friend, Mr. LaHood from Illinois, for his expertise in agriculture and these markets. I think it is very important to have his example.

I might react by saying the gentleman was talking about the power of working together. I was reflecting that if we were working together to leverage the challenges of China, we are about 15 percent of two-way trade with China. The European Union is about 15 percent or so of trade with China. Japan is another seven. Clearly working together on some of these issues that we have in common would give us more leverage.

Let me just outline four key objectives I think of U.S. trade policy with China that I believe would be shared by those two other groups that I mentioned, the European Union and Japan.

Ensure China fully complies with its obligations as a member of the WTO, including the beneficial agreements on government procurement, information technology, environmental goods agreement, and a trade and services agreement. These are things, Mr. Speaker, that we have worked on bilaterally and multilaterally since China entered the WTO in 2001, an admission I think now that many people question, was China really ready to join the World Trade Organization in 2001?

That is number one.

Number two, that we fully protect U.S. intellectual property rights and establish ways and means to cease government-directed cyber theft of U.S. trade secrets and intellectual property both for commercial and national security reasons.

I am reminded that Ambassador Winston Lord, the U.S. Ambassador to Beijing in 1989, when he was briefing President Bush 41 in preparation of his first foreign trip. President Bush's first foreign trip in February of 1989 was to China where he had served as our representative back in the 1970s. Ambassador Lord wrote that memo to the President and said:

You have got to talk about religious freedom, human rights. You have got to talk about Taiwan. You have got to talk about Tibet. And you have got to talk about theft of intellectual property.

This was in February, 1989, Mr. Speaker, and we are still debating that issue today, unresolved. I would say that the European Union shares that view.

Now, here is the amusing point. Ambassador Lord and the State Department team, when they sent that memo to President Bush 41, said that it was in its eighth printing, and they were sorry that the author wasn't getting any royalties for it. Meaning, we have been talking about this since we established diplomatic relations with China back in 1979, and we have been fighting this intellectual property theft.

Number three, seek changes in China's extensive industrial policies which protect domestic sectors and firms, particularly China's state- owned industries. China's objective is for these state-owned enterprises to be global competitors compatible with other trading partners, but they are not. They are state-owned. They are state- subsidized.

Finally, fourth, promote changes to industrial policies that provide open and reciprocal treatment for American exporters of goods and services by reducing nontariff barriers and making China's tariff level comparable with U.S. tariffs.

I think those four things, Mr. Speaker, is what all of us agree on tonight, and I think they would benefit the European Union as well. But I think my friends hav made a good case that if we were to partner with the E.U. and with Japan, we would have a lot more economic clout in delivering on that negotiating posture.

I would ask my friend from Ohio, does he share that view? What are his thoughts about what are alternative strategies maybe in the steel and aluminum area?

BREAK IN TRANSCRIPT

Mr. HILL. Mr. Speaker, I thank my friend from Ohio.

It is quite clear that in Article I the Congress exclusively in an enumerated power has the power of regulating commerce between foreign nations and, of course, we know setting duties, levies, and taxes as an Article I power. I think you make an important component, just like Congress partnered with the executive branch on how to rightsize certain overregulation in our economy from the previous administration or how Congress collaborated with the Treasury Department in designing tax reforms to make America more competitive to have people bring business back to the U.S., not be double taxed on foreign earnings. In both of those examples, as you note, we collaborated, the executive branch and the legislative branch.

So I do think that also would strengthen the sequencing of our strategy to get at the heart of what I think our key challenges are which revolve around access into China.

I ask my friend, Mr. LaHood, does he have thoughts on this line of discussion?

BREAK IN TRANSCRIPT

Mr. HILL. Mr. Speaker, my friend from Illinois mentioned enforcement. I was looking in the archives this week when I was thinking about China, and I found an article that I wrote back in 1996 as a private citizen about the Clinton administration's China policy.

The paragraph on China and trade reads like this:

China, as a world power, for her part, must recognize that bilateral and multilateral treaties are to be enforced. Lack of compliance with international treaty obligations must produce a known and delivered set of sanctions by the world community. China must clearly understand the consequences of noncompliance.

I would argue so strongly about the gentleman's point that have we-- when I say ``we,'' I mean the United States, in the past two decades, the European Union as an entity and others--have we done a good job at enforcing those norms and those treaty provisions and those basic tenets of being a WTO member aggressively and collectively against China? I would argue we have a mixed record at best. But I think the gentleman makes a very good point about enforcement.

BREAK IN TRANSCRIPT

Mr. HILL. Mr. Speaker, I am concerned about the steel and aluminum tariffs across the board. I have raised that issue before I was joined by many Members of the Congress on that issue because I felt like it came out of the blue to Members of Congress engaged in trade policy, whether on the House Financial Services Committee or on the House Ways and Means Committee, and that it was sweeping in its nature. It has produced the challenge you talked about that 20,000 American businesses are trying to seek an exclusion from that.

I have several in my district, Mr. Speaker, who make the steel belts and steel-belted radial tires who are hurting. These are companies in Arkansas that use a steel rod that is not made in America, Mr. Speaker, and that is spun into the steel belt that is sold to the tire manufacturing industry. They are being hurt by this kind of across-the- board steel and aluminum tariff.

If we are concerned about a good, healthy aluminum industry for national security purposes and a good, healthy steel industry for national security purposes, then we ought to go after, directly, the world's largest dumper of steel and aluminum, which is China and their state-owned enterprise sector with their subsidies, and not sweep up everyone engaged in that intermediate goods manufacturing in America, not penalize our partners in Europe who share that concern with us, who could help us go after that.

Ambassador Lighthizer made a comment. He said: Well, one of the key reasons for going across the board like that was the risk of transshipment risk, in other words, violating the rules of origin, passing Chinese subsidized or dumped steel through a third country into the U.S., like Mexico, for example, or Canada, for example, just to name two possibilities.

That got me thinking: Well, surely--back on my friend from Illinois' comment about enforcement--there is a more elegant way to tackle what is really a regulatory issue, a transshipment risk, rule of origin risk. Why don't we see what others are doing?

So I looked at Canada. Just in March of this year, Mr. Speaker, the Canadians put in place a whole new regulatory regime working with the Americans to block rules of origin changes or transshipments of Chinese steel or aluminum through Canada. And, likewise, we have worked with the EU; and the OECD has their own steel committee that works to, on a regular basis, block that kind of work.

So I just wonder, if we had consulted and worked together, perhaps we could have taken a more sophisticated route at stopping steel and aluminum dumping that is damaging our American industry. We do need a protective steel and aluminum industry in this country, no doubt.

We also have good friends like Canada, good allies who produce it, but that is not to say that we don't want to have a vibrant industry here.
BREAK IN TRANSCRIPT

Mr. HILL. Mr. Speaker, I appreciate the time of my colleagues tonight on the floor. We have worked hard tonight to talk about how do we have a more constructive partnership between the executive branch and the legislative branch like we do in designing economic policy, tax policy, regulatory reform policy, like this excellent description that Mr. Davidson gave of how we created a modernized CFIUS approach for reviewing investments into the United States.

We had full engagement with General Mattis at the Pentagon, Secretary Mnuchin at the Treasury Department, Secretary Ross at the Commerce Department, and the White House, with Senator Cornyn in the United States Senate, Andy Barr, Robert Pittenger here in the House working to create a collaborative approach regarding how to have a great national security policy for investment in the U.S.

I think we have all argued here tonight that, with our Article I engagement in the House Financial Services Committee, the House Ways and Means Committee, we want to be a constructive partner on accomplishing the President's objective, which is fair and reciprocal trade, first and foremost, with China, and to finally break this cycle we have talked about tonight of inadequacy, of holding them to account, making progress, enforcing their rules of the road under WTO, all with a heart toward helping our consumers, having more choice, more free trade, more opportunity to expand our economy, not contract, as we get into a downward spiral on a tariff-only strategy.

Mr. Speaker, we want to work successfully with this administration on a new and modern NAFTA and with a successful set of trading arrangements with our friends in Europe and in Asia.

BREAK IN TRANSCRIPT

Source