President Biden’s nominee to become the U.S. Trade Representative, Katherine Tai, has received broad support from business, labor, agriculture and NGOs since her nomination. For example, the U.S. Chamber of Commerce submitted a letter of support to the Senate Finance Committee on February 23, 2021. The letter from the U.S. Chamber and several other endorsements are embedded below.
Today at the U.S. Senate Finance Committee Katherine Tai’s nomination is considered. While it is widely expected that Ms. Tai will be easily confirmed by the full Senate if/when she is reported out by the Finance Committee, the hearing today identified not only Ms. Tai’s views of the Administration’s priorities but also the issues of greatest interest to one of the Congressional Committees with jurisdiction over trade. For example, Chairman Wyden (D-Oregon) and Ranking Member Crapo (R-Idaho), Ms. Tai’s opening statement in their opening statements focused on very different issues viewed as important to them. Forced labor and concerns over efforts by trading partners to tax digital trade in a manner harmful to U.S. companies were issues raised by Chairman Wyden while the need to pursue more trade agreements (such as with the United Kingdom) was of great importance to Ranking Member Crapo. Ms. Tai was introduced by Chairman Neal and Ranking Member Brady of the U.S. House of Representatives Committee on Ways and Means in a sign of bipartisanship for a former Chief Trade Counsel for the Committee.Democrats.
Ms. Tai’s opening statement repeated themes she had articulated when she was nominated by then President-elect Biden focusing on helping the country recover from the pandemic, enforcement of the USMCA, dealing with China, and engaging with multilateral fora. Her opening statement is copied below and can be found at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/february/opening-statement-ambassador-designate-katherine-tai-senate-finance-committee.
“Mr. Chairman, Ranking Member Crapo, and members of the Committee — thank you for the opportunity to appear before you today.
“The chance to serve the American people, fight on their behalf, and represent them on the world stage once again will be the greatest honor of my life. It’s a privilege I’ve experienced before at the Office of the United States Trade Representative — and a responsibility that, if confirmed, I look forward to embracing once again. I thank President Biden for providing me with this opportunity.
“Serving as the top U.S. trade representative around the globe holds special resonance for me as the daughter of immigrants.
“My parents were born in mainland China, and grew up in Taiwan. The immigration reforms set in motion by President Kennedy opened a path for them to come here as graduate students in the sciences. And they made the most of their American opportunity.
“My dad became a researcher at the Walter Reed Army Institute of Research. He helped the Army develop treatments for illnesses that had debilitated GIs during the Vietnam War – the war in which my father-in-law fought bravely as a young man.
“My mom still works at the National Institutes of Health. She heads a clinical trials network, developing treatments for opioid addiction that will help to stem an epidemic causing so much suffering in our communities.
“I am proud of their service to the nation that welcomed them. And I am proud to live in a country where, in just one generation, their daughter could grow up to represent the United States and our interests around the globe.
“That sense of pride and patriotism will ground me every day if I have the honor to be confirmed as United States Trade Representative.
“I know that the challenges ahead are significant.
“Our first priority will be to help American communities emerge from the pandemic and economic crisis. USTR has an important role to play in that effort. Working with Congress, the entire Biden-Harris administration, and other countries and trusted partners, USTR will help to build out strong supply chains that will get our economy back on track.
“In the longer term, we must pursue trade policies that advance the interests of all Americans — policies that recognize that people are workers and wage earners, not just consumers; policies that promote broad, equitable growth here at home; policies that support American innovation and enhance our competitive edge.
“That’s why I will make it a priority to implement and enforce the renewed terms of our trade relationship with Canada and Mexico. Too often in the past, Congress and the administration came together to finalize and pass a trade agreement. But then other urgent matters arose and we all moved on. The United States-Mexico-Canada Agreement (USMCA) is a uniquely bipartisan accomplishment that must break that trend. It represents an important step in reforming our approach to trade. We must all continue to prioritize its implementation and success. We must continue to pursue trade policies that are ambitious in achieving robust, bipartisan support.
“I will also prioritize rebuilding our international alliances and partnerships, and re-engaging with international institutions. We must do the hard work, and secure the necessary reforms that allow the world to come together and address common threats like climate change, the COVID pandemic, and a global economic downturn.
“That duty of leadership extends, of course, to addressing the challenges posed by China.
“I previously served as America’s chief enforcer against China’s unfair trade practices. I know firsthand how critically important it is that we have a strategic and coherent plan for holding China accountable to its promises and effectively competing with its model of state-directed economics. I know the opportunities and limitations in our existing toolbox. And I know how important it is to build what the President has termed ‘a united front of U.S. allies.’
“We must recommit to working relentlessly with others to promote and defend our shared values of freedom, democracy, truth, and opportunity in a just society.
“China is simultaneously a rival, a trade partner, and an outsized player whose cooperation we’ll also need to address certain global challenges. We must remember how to walk, chew gum and play chess at the same time. That means here at home, we must prioritize resilience and make the investments in our people and our infrastructure to harness our potential, boost our competitiveness, and build a more inclusive prosperity. We must also impart the values and rules that guide global commerce — and we must enforce those terms vigorously.
“This is work I am eager to take on once more.
“Having spent my career fighting for American workers, I am honored by the opportunity to work alongside the bright and dedicated public servants at USTR, with our partners and allies, and with each of you. Having served nearly seven years in the House of Representatives, I know that U.S. trade policy is most successful when it is conducted through a healthy partnership between the administration and the Congress.
“I look forward to bringing our trade relationships to bear helping American communities emerge out of crisis and into greater prosperity.
“And I look forward to answering your questions.
Topics covered during the question and answer period were broad ranging and included questions on: USMCA enforcement looking both at Mexico (agriculture and energy) and Canada (dairy); 232 tariffs on steel and aluminum; protecting U.S. lumber interest from long running disputes with Canada on softwood lumber; taxes being imposed by trading partners on digital services; importance of intellectual property and the Special 301 report; shortage of semiconductors needed for the auto industry (supply chain vulnerability) and working with Taiwan (sole source for many semiconductors); renewing and expanding trade adjustment assistance; creating a consultation forum for the auto sector with Canada and Mexico; US-UK FTA negotiations (Ms. Tai would want to review progress and developments since 2018 USTR notice to Congress on negotiations); ethanol tariffs of 20% in Brazil and whether negotiations will continue to reduce; the U.S.-China Phase I deal (purchases and changes to laws); possibility of rejoining TPP and possibility of including India; utilization of tools for environmental part of USMCA; trade and environment/ climate issues (including adding to GSP climate change); need to open up new markets (India re apples vs. elimination of GSP for India; China, Vietnam re wheat); resolution of European Airbus dispute; need for inspector general for USTR (including costs to importers of food and beverage products U.S. has retaliated against); update review of China for the Committee; addressing industrial subsidies in China, particularly to state-owned enterprises and predatory mercantilist practices; WTO broken system is broken, activism by Appellate Body, WTO reform (focus should be on what is value of WTO to its Members; is it accomplishing the goals Members expected; how does it address current issues); country of origin labeling, important to cattle producers, need path forward in a WTO-compliant manner; expand ag market access in Southeast Asia and in Africa; compliance by China on US-China Phase I ; purchases (e.g., failure to open up polysilicon); anticorruption in trade agreements; what priorities will small businesses see in US trade negotiations (voices of small business need to be heard); UK 25% tariffs on rice from 232 retaliation; shrimp redirected from countries where rejected for phytosanitary measures; interest on new tools to supplement existing tools to address trade problems; counterfeit goods, what can be done to address rising tide of such goods; how failure of China to honor its labor obligations hurts U.S. and U.S. trading partners; dignity of work agenda; need to increase crackdown on banning imports from forced labor, particularly China treatment of Uighars; 301 exclusion process, need to be run efficiently (transparency, predictability, due process, speed of decision); China’s actions on critical minerals (e.g., rare earth)(trade plays a role but supply chain resilience is key); access to India’s pulse crops (peas) market where there are high tariffs; women’s empowerment; reshoring; tariffs on solar equipment; soda ash trade barriers in trading partners; growing energy exports; problems for seasonal agricultural producers since trade remedies don’t presently address seasonality; critical infrastructure and reliability of vendors (e.g., Huawei); process under Trade Promotion Authority – lack of consultation and lack of mock mark-up in past.
As is always the case in confirmation hearings, Senators raise issues important to their constituents or their broader interests. Some of the topics raised involve agencies other than USTR (or for which USTR has some role). Because trade is an issue where Congress has a constitutional role, an important issue where USTR nominees are being considered is the ability/willingness of the nominee to work with the Congressional Committees of jurisdiction on trade issues. Ms. Tai, having served as staff for the House Ways and Means Committee Democrats, is expected to work closely with the Congressional Committees including the Senate Finance Committee.
What is clear from the Finance Committee hearing today is that the Committee (1) is deeply concerned with the U.S. relationship with China and how to address the range of distortions and obtain compliance with agreements in place, (2) has a strong interest in ensuring enforcement of existing agreements, with a focus being the U.S.-Mexico-Canada Agreement; (3) wants expanded market access abroad (particularly around agricultural products) including through new free trade agreements and tackling retaliatory tariffs or high tariffs used by trading partners; (4) views the WTO as needing meaningful reform including the long-standing U.S. concerns with the Appellate Body; (5) supports strong intellectual property protections in trade agreements, (6) supports resolution of the US-EU disputes on large civilian aircraft; (7) wants the Biden Administration in building strong supply chains on critical products (critial minerals, semiconductors). The Committee asked questions on a broad range of issues including tariffs imposed under section 232of the Trade Expansion Act of 1962, as amended (national security determinations on steel and aluminum), section 301 of the Trade Act of 1974, as amended (various practices by China which resulted in tariffs), and Section 201 of the Trade Act of 1974, as amended ( safeguard tariffs on solar products). Members also asked about U.S. laws dealing with preferences for developing countries (the Generalized System of Preferences expired in 2020) and adjustment assistance which expires in 2021. Many Finance Committee members are from states with large agricultural sectors, and so there were many questions that went to particular agricultural products and market access challenges faced. There were questions about the climate crisis and the role trade can play in addressing the concerns including addressing plastics in the oceans.
There were also questions asked by Senator Warren of Massachusetts about the trade negotiation process. Questions went to composition of advisory committees (85% are corporate representatives) and lack of transparency in drafts of agreements. Sen. Warren asked for release of drafts 60 days before agreement goes to Congress and wants all advisory committees to have more representatives from labor, consumer and environmental groups are larger than corporate representatives. Senator Warren believes these process changes are needed to make U.S. trade policy more worker friendly and more representative of U.S. interests.
The hearing ended after three hours and fiifteen minutes at 1:15 p.m. Chairman Wyden emphasized the need to expand the “winner’s circle” as the U.S. trade policy. Transparency is important to open the process up for the public. Sen. Wyden asks for Ms. Tai to supply views within 30 days of confirmation on what needs to be done to expand transparency.
Written questions are due by 5:00 p.m. on February 26. Once answers are provided, the Chairman will arrange for a Committee vote. If affirmative, Ms. Tai’s nomination will go to the full Senate. Based on today’s hearing, it is likely that the Committee will vote her nomination out either unanimously or nearly unanimously and that she will receive confirmation by the full Senate in the coming weeks.
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