April 1, 2022
WASHINGTON DC – During a Senate Finance Committee hearing, U.S. Sen. Rob Portman (R-OH) expressed concern over the non-implementation of the phase one agreement with China. Senator Portman noted that the United States should use the agreement’s existing dispute settlement tool to bring China into compliance and further restrict imports if China does not comply.
Additionally, Ambassador Katherine Tai praised Senator Portman Playground Leveling Act 2.0, which will help combat China’s unfair trade practices. Ambassador Tai said Portman’s legislative updates and improvements are exactly what is needed to address the challenges we face today.
A transcript of Senator Portman’s interrogation can be found below and a video can be found here.
Senator Portman: “Thank you, President. Ambassador, glad to have you back with us. As you know, I strongly believe that you must have the ability to negotiate open trade agreements — it would make your job more interesting and the jobs of your associates. It’s a broader topic than I think in the context of the COMPETES Act, also known as USICA, also known by five other names. I think we have an opportunity to do something, and you and I have talked about it; I’ve spoken to the Secretary of Commerce about this, so hopefully you’ll work with us on this if there’s going to be trade adjustment assistance. Typically that’s combined with the trade promotion authority and I think those agreements that are before us, including the UK agreement which is virtually unproblematic in terms of labor and the environment, are fruits within reach and it would be great to get America back in the game. With regard to China, and your discussion and testimony about the need to use existing tools, you refer to the phase one deal under the old playbook because China failed to meet its commitments and I understand that.
“It’s frustrating when China doesn’t deliver on its commitments, but I don’t think we can just go ahead and say, ‘So let’s start working on other ways to open up more opportunities.’ Instead I think we need to stick to this agreement and use what’s in it, which is dispute resolution, and I think if we just say we’re going to forget about that and do some of the old playbook, I think that sends a terrible message because I think when China makes a deal with us and they don’t fulfill their obligations, we have to exercise our legal rights under I think it will be much more difficult to make progress with China on subsidies, on state enterprises, on the removal of labor rights and other things if we do not insist that the agreement is honored. So I guess my question would be, are you ready to move forward with dispute resolution? Are you ready to commit to using the dispute resolution process that benefits United States under this phase one agreement, may t lead to restrictions on trade with China if necessary to enforce the agreement? »
Ambassador Katherine C. Tai, United States Trade Representative: “Senator Portman, it’s always a pleasure to see you. Regarding your question on China, I am glad to have the opportunity to clarify my position and what I said, because I saw that it was perhaps a little inaccurate. That is to say, it is time to turn the page on the old playbook which focused exclusively on pressuring China and asking to change its ways or pressure on China to conforms. We are not giving up on pressuring China to comply or change its ways. And yes, all the tools remain on the table when it comes to dispute resolution and enforcement. But my main point is that this is not the only thing we can do now and we need to broaden our strategy to include developing the tools we need to defend the interests of our economy. So basically what I’m saying is that we’re committed to doing more work and our strategy needs to expand.
Senator Portman: “Okay well thank you. I appreciate that and I think it’s important to use the existing tools that we have. Again, setting a precedent by not using the dispute resolution tools that we have, I think, would be problematic for China and others. Let me talk to you about the new tools because that’s the other point you raise. You and I have talked about it a lot. We just don’t have the tools to keep pace with China, in my view, as they try to undermine our national competitiveness They subsidize manufacturing in many countries through their Belt and Road Initiative and yet our forces of the commercial order are powerless to fight against these subsidies. Our bipartisan legislation with Senator Brown called Level the Playing Field Act 2.0 contains new tools to deal with this reality. This is what is happening there, as the transshipments, and especially the Belt and Road grants. This bill is something that I urge, as you know, to be included as it is in the House version, in the Innovation and Competition Act of the United States that we talked about earlier. Thank you for your support of this approach. Can you explain to the committee how this legislation would help combat China’s unfair trade practices? »
Ambassador Katherine C. Tai: “Well, Senator Portman, let me start by congratulating you and Senator Brown for working bipartisanly and bicamerally on this legislation and this initiative. In terms of how that would help us, I just want to point out that most of our business application tools date back to the 1970s and 1980s. And it’s critical that we keep those tools. But, as the global economy has evolved around us, our tools have not kept pace. And so the updates and improvements 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 customization of a set of tools and the expansion of a set of tools, which will be up to the challenges we face today.
Senator Portman: “And with China in particular, would you agree?
Ambassador Katherine C. Tai: “Yes.”
Senator Portman: “Thank you. Mr. President.