On February 27, 2019, Ambassador Robert Lighthizer, U.S. Trade Representative (USTR), testified before the House Ways & Means Committee on U.S.-China trade relations. In his brief opening statement, the ambassador stated that the United States “can compete with anyone in the world but we must have rules – enforced rules – that make sure market outcomes, not state-capitalism and technology theft, determine winners.” Due to the Section 301 tariffs implemented on certain imports from China, he said, the United States is “in a position to deal with this problem for the first time after decades of government inaction.” He closed his statement by emphasizing that ongoing negotiations with China are resulting in “real progress” that could help to “turn the corner in our economic relationship with China.”
Preceding Lighthizer in the hearing was House Ways & Means Committee Chairman Richard Neal, D-Mass., who acknowledged in this opening statement that “China has been good for some but also very bad for others.” He added that “[w]hile this Administration confronts the same challenges with China that previous administrations faced, it has chosen to use tactics and tools that previous administrations – of both parties – did not. The Trump Administration tariffs have been sweeping, disruptive, controversial, and painful. The Administration’s promise is that its high-risk approach will yield high rewards.” He closed his statement by claiming that “the future of America’s economic prosperity is at stake.” Ranking Minority Member Kevin Brady, R-Texas, stated in his opening statement that he was “hopeful that the substantive talks under way … will produce meaningful commitments from China that lower trade barriers, achieve structural reforms and establish a new era of fair trade.”
Under questioning by the committee members concerning ongoing U.S.-China trade negotiations, Lighthizer indicated that while progress was being made, much work still needed to be done before an agreement could be reached. He cautioned that even once a deal was reached, there would continue to be trade friction, stating “I’m not foolish enough to think there is going to be one negotiation with China that’s going to change all their practices.” Given concerns about China’s past lack of compliance with its WTO and other trade-related commitments, the ambassador acknowledged that any enforcement tools would have to be “very specific” and “have layers,” but that the United States would be able to “act proportionately but unilaterally to insist on enforcement” if a disagreement remains. Lighthizer insisted that any agreement reached with China will not be submitted to Congress for approval, despite President Trump’s claim that he wanted a “trade agreement” and not a series of memoranda of understanding (see Trump and Trade update of February 25, 2019). Instead, Lighthizer indicated that any agreement would be an “executive agreement” not requiring congressional approval.
Concerning current Section 301 tariffs on imports of Chinese products, Lighthizer testified that an exclusion request process would be instituted on the third tranche of Chinese products valued at $200 billion only if those existing tariffs of 10 percent were increased to 25 percent. Despite Congress’ instruction in the recent appropriations law funding the federal government through September that such an exclusion request process be implemented (see Trump and Trade update of February 19, 2019), he indicated the Office of the USTR would institute such a process if the tariffs are raised to 25 percent, but “[s]hort of that I sort of want to see where we are” and to see if U.S. companies seeking such exclusions are considering “ways to manufacture more in the U.S.”
At times, the questions by House members focused on topics other than trade with China, such as the proposed United States-Mexico-Canada Agreement (USMCA). In response to questions on this trade agreement, Lighthizer repeatedly called for its approval by Congress. Failure to do so, he argued, would leave the United States without a trade agenda “for the next several years” and indicate to other countries that “we don’t have a consensus.” “If the Congress doesn’t see fit to pass that, then everything else is kind of like a footnote,” he stated, adding that if the USMCA does not pass, “We can’t do trade deals.”
Several questions concerned the continuing Section 232 tariffs on imports of steel and aluminum. On this issue, the ambassador noted that the Trump administration wants “very much to work out a deal” and that they especially want a deal with Canada and Mexico. Numerous members of Congress from both parties have made clear their position that they will not approve the USMCA until the Trump administration removes these tariffs for Canada and Mexico.