tv Commerce Secretary Ross Others Discuss Trade Policy CSPAN October 15, 2019 12:36pm-2:04pm EDT
analyst. i've seen a lot of what i would call conspiracy theory mongering, that there's a quote deep state coup against the president, so on and so forth. in 2016 when democrats basically say the fbi was the antichrist and jim comey was antichrist and when the six months they were hailing bob mueller former director of the fbi as the second coming and so on and so forth. when we get into this environment we have these very, very heated political dynamics going on it's difficult for people to maintain any kind of political -- >> thank you all for being here. a special welcome to the folks joining us on c-span. we're looking forward to a spirited debate in our panel following opening remarks from secretary wilbur ross. i am pleased and privileged to introduce the 39th secretary of commerce wilbur ross your as
secretary he is the principal voice of business in the top administration trying to ensure that u.s. businesses have the tools they need to create jobs and pursue economic opportunity. he served the secretary's of the beginning of administration that gore 2017. he's got limited time with us today for be brief in my introduction so we can get right to his talk. he will be laid at the conclusion of the talk and then the panel will ensue. secretary ross is no stranger to commerce with over half a a century of experience in investment banking and private equity come restructuring over $400 billion in assets across numerous industries and serving as chairman or director more than 100 companies in over 20 countries. he's also the only person elected to both the private equity hall of fame and the turnabout management hall of fame. we agree please welcome him here today and please join me welcoming commerce secretary wilbur ross.
[applause] >> thank thank you, dean, for tt kind introduction. and thank you for the opportunity to discuss the trump administration's trade policy and how it fits into our long-term goals for the country. federalist society has always advocated for informed debate, and the commitment to our constitutional government. the overall goal of our administration fits perfectly within the federalist charter. only by maintaining a strong and viable economy can americans live freely under the rule of law with guaranteed individual liberties and a separation of
powers. today, thanks to policies focus on rebuilding american industry, american jobs, american communities, and american prosperity we are turning the tide toward a far more prosperous and hopeful future. but you would never know it by listening to liberal politicians hell-bent on impeaching the most successful president since ronald reagan, nor to the left wing medias desperate efforts to frighten americans into a recession. in fact, the u.s. has the strongest economy of any major economy in the world. our unemployment rate of 3.5% is the lowest it's been since 1969.
since the election of president trump, the united states has added 6.4 million new jobs, including 500,000 in the manufacturing sector alone. and 136,000 new jobs in the month of september itself. income and wages are up, poverty is at the lowest level in almost two decades. the number of americans needing federal food assistance has fallen by more than 10 million, from 44.2 million in 2016 to 33.7 million this year. retail sales up by 4.6% over the past 12 months. and interestingly, the u.s. import price index fell by 2% over the past year, despite the
fears that people had had about the impact of tariffs. last friday, the president announced phase one agreement in principle with china. this would phase in 40-50 billion of agricultural purchases over a two-year period. more than twice our prior annual peak sales. would also address some of the issues regarding intellectual property. the remaining issues, the remaining structural issues and their enforcement remain to be negotiated. in return, the u.s. has agreed not to raise tariffs from 25% to 30% on october 15. and as a sign of good faith, the
chinese recently made substantial purchases of agriculture, especially soybeans and pork. i believe that china came to the negotiations mainly because we imposed substantial tariffs on them, but also because of the personal relationship between president trump and president xi. now, they naturally retaliated to the tariffs we put on, but because they sell us more than four times as many goods as we sell them, i given amount of tariff action means that they would run out the goods before we do. and also their economy is only 60% the size of ours. therefore, a given amount of
tariff product purchased them far more than it hurts us. -- hurts them -- it also cause the eu recently to buy more ag products from us and to begin negotiations of the topics. and it is the reason why japan agreed to buy more meat and why the koreans renegotiated chorus. the tariffs are now having a direct impact on chinese producers. and perhaps more importantly, our accelerating the taliban out of china's supply chain. china already was suffering some manufacturing immigration because of rising costs. companies have begun to move operations elsewhere, in southeast asia, africa, and to
north america. that will be hard to stop. china's problems with hong kong also hinders its economy, and may further accelerate and exodus of foreign producers. last week the commerce department added 28 chinese governmental and commercial organizations to the entity list. list. that list restricts the export of items used to target uighurs and other ethnic minorities. we also responded the china's belt and road initiative with our new indo-pacific strategy. last week i was in new delhi, bangalore, singapore, and sydney to discuss the prime minister's
and other ministers of the three countries our engagement with them and with others in the indo-pacific region. in november i will be in bangkok, jakarta, and possibly other cities in the region. through the belt and road initiative, china has invested in 117 nations, and those nations account for two-thirds of the world's population. their state-owned enterprises uses chinese materials in chinese nationals to build projects with very little local content. and as defaults occur, they foreclose on the assets rather than renegotiating the loans. for example, in sri lanka, china has already foreclosed the chinese built fort.
it is also taken control of natural resources such as cobalt mining in the congo and hydrocarbons in venezuela. belt and road is also effectively a jobs program for china that eases some of the impact of tariffs on their domestic employment. electing president trump in 2016, the american people instead demanded free, they are, and reciprocal trade. section 232 tariffs imposed by the department of commerce are part of that strategy. part of -- prior to the imposition of the 232 tariffs in
march of 2018, both the u.s. aluminum and steel industries were on the verge of collapsing. now utilization rates have improved noticeably, and $13 billion of vital expenditures have been committed to expanded and modernize capacity, including 1.3 billion from an indian steel company. now that our corporate tax system and regulatory environment are so business friendly, foreign companies are more eager than ever before to invest in our market. we have the largest foreign direct investment stock of any nation, totaling $4.3 trillion. two foster rapid growth in fdi,
i and other commerce executives constantly speak to business leaders around the world, and every june we host the select usa conference here in washington, a three-day summit promoting foreign direct investment. last year this event attracted 3100 participants. we've also created a recent initiative to encourage american companies to reselect the united states as their domestic and export manufacturing hub. and last but not least, the trump administration aggressively pursues bilateral trade deals. we had signed an initial trade agreement with japan that opens
that market to u.s. farmers and should generate $7 billion in sales. that's about 40% of the agricultural trade that we lost to chinese retaliation. the chinese -- the japanese trade pact also will facilitate $40 billion in bilateral trade between the u.s. and japan in digital services. this is close to 90% of what we would have achieved from the transpacific partnership, yet without the harmful tpp concessions that the u.s. would have made to other countries besides japan. and this is the third major trade deal announced by president trump in less than three years, a remarkable achievement since trade
agreements normally take many years, often more than a decade to execute. for the record, the other two agreements on the korea free trade agreement, and the u.s.-mexico-canada agreement, which is pending congressional approval. let me conclude by talking about the situation in turkey. yesterday, president trump announced two actions against turkey that involve the department of commerce. we are raising their steel tariffs back up to 50% from the current level of 25%. turkey is the eighth largest steel producer in the world, and steel was about its largest export to the united states before the tariffs. exports of steel to the u.s.
surge 303%, , from 10,000 metric tons per month to 42,000 per month when we dropped the tariffs originally back to the 25%. the president also directed the department to cease work on the plan we had been developing with the turkish government to expand our bilateral trade from the current 20 billion annual total, to 100 billion over the next few years. already, 1700 u.s. businesses operate in turkey, and in september i have traveled to istanbul and ankara, bedding the detailed plan with leading turkish businesses and government officials. the three major businesses associations there all endorsed
it, and one of them hosted a large celebratory dinner on 42nd street in new york city during the u.n. general assembly week in september. if achieved, the plan would increase turkish gdp by 4% and provide more than 150,000 direct jobs. the plan was always contingent on resolving the military differences between our two countries. these now include the excursion into syria. it would be an excellent time for turkey to break into global supply chains in a big way, as many companies are reassessing their earlier decisions to concentrate so much on china.
but there will be a cost to the turkish economy if present military practices continue. turkey will bear the costs of the war and forgo the potential trade benefit. in conclusion, the trump administration is focusing more intently on trade than any prior administration. there are some short-term costs associated with this shift, but they are much greater long-term potential and probable gains. millions of americans have demanded that we put their interests first. that is what we are doing, and that is what we will continue to do. thank you, and i appreciate that federalist society is discussions about these issues. they are critical to the health
ross for joining us today. we are going to begin our panel. we'll hear opening remarks from each panelist, in turn can write down the lane and i'll introduce them in the order they're going to speak. each will have about five to eight minutes strictly enforced for the opening remarks and then we'll have some discussion and ultimately questions from the audience, so do of those in mind for when we get to the portion of the program. ron cass is our first speaker, he's dean emeritus at boston university school of law. it's also a former vice-chairman and commission of the u.s. international trade commission. he is currently the chairman of the center for the rule of law and president of cass & associates. there he is an arbitrator or mediator for commercial international and intellectual property rights disputes. he also interestingly has been appointed six times, six presidential appointments spending president ronald reagan to barack obama which i sigrid think was a ploy for him to just like it into a bigger office
with wall space to make all those commissions. we were there next from donald cameron, partner in the morris, manning & martin law firm right here in town with an international trade practice. he's got over three decades of experience representing multinational businesses, foreign governments, foreign trade associations and u.s. importers. he's got particular experience defending clients in industry sectors that are politically sensitive so we welcome him today. and lastly will hear from jeffrey kessler, confirmed unanimously by the u.s. senate on april 3, 2019, so it's been with the secretary for quite a while turkey serves as assistant secretary of commerce for enforcement and compliance with the goal of promoting u.s. jobs and economic growth. prior to serving at commerce he was and international trade attorney in private practice litigating several precedent-setting wto cases, among other things.
with that, five to eight minutes for each of you. dean cass. >> i get very much, dean it i actually thought we were here today to talk about your best-selling book. dean is recently published a book. i'm envious. my books are what my wife calls academic books. she says once you put them down, you just can't pick them back up again. [laughing] i urge you to look at his book instead. i'm going to start first with a small story from the pre-gps age about the great americans loss for yogi berra. he was in his apartment in new york, and was cooking and started a grease fire in his kitchen. he called the fire department, told them that he had a grease fire in his kitchen any need them to come put it out.
the person taking the call at the fire station said, will be there since we can, mr. berra, can you tell us how to get there? his response was, what happened to those low rent trucks you used to have? there are times -- little red trucks -- certain things are quite obvious but not always obvious to everyone else. i am a proponent of open trade. trade is a source of competition, competition is generally good. obviously it's not good for everyone. it's not good for somebody who is competing with me, but, or not good for me to have extra competition. but competition generally promotes giving more things to more people at better prices and with better quality. having an opportunity to have trade and trade on terms that
open economies one to another is generally something to be supported. but competition takes place in other spheres as well. one sphere that i am particularly focus on is the national security sphere. we are competing with other place in the world, not just to get our products into their country and to get the products we want from their countries. we are also competing on various military and security dimensions. and in that regard i want to say that i regard everything that is being done by the administration as generally supporting trade, but with a special focus on china. and i think that focus is appropriate because china has special interests in the national security sphere that we
must be aware of. china has a lot of state run parts of its economy. it is opening the economy more. it is allowing more free enterprise, but it has also maintained a lot of state control through both investment and personnel. there are more than 150,000 state-owned enterprises in china and many other enterprises in china that have state investment and state control, both direct and indirect. ..
and lexmark and many other chinese brands. products that have been found to have back doors in their software or flaws in their construction that allow security threats to be maintained and to have chinese espionage and cyber espionage elements make use of those opportunities. those are things i believe the department should look at through the section 232 process which is a process that allows us considerations of national security into account into we when we are making ourdecisions on what
imports are appropriate into the united states . the great majority of products are products thatare outside the space . they are products that involve the sort of technologies that are relatively easily evaluated. a lot of complex products, a lot of us carry around cell phones that have computing power far greater in the first large scale computers had, then the computers had thatwe sent people to the moon with . those are very highly complex technologically and devices, hard for any of us know what's in there. the same is true of the computers we use which now most of us have notebooks or laptops or other computing devices that we do almost all our work on. again, hard to know what's in there. hard to make sure we are protected from a security standpoint . my wife and i were in a hotel
room recently having a conversation and a voice, not hers or mine guarded responding to us asking us things. we hadn't realized there was one of those, ithink it was an alexa device in the room that was turned on . we don't know what sort of information is going out in a lot of the communications we are doing as well as not knowing whatcomes in . that aside and again, i think that's something to be taken seriously and something on which china is different than other players in the world. that aside, i'm very supportive of initiatives to expand trade, to facilitate trade, facilitate trade on open competitive grounds and look forward to further discussions on both eátrade economic and security fronts. >> is this working? sorry.
thank you. the discussion you used to be free with fair trade which supplies the logic behind extensive use of the expansion of unfair tradelaws , primarily antidumping laws or that trade is indeed unfair as a separate discussion but what we have now is not fair trade. it's managed trade and as long as we're all understanding that, then that's fine. but it's managed trade to an extent that we haven't had since smoot hawley and is not beingmanaged particularly well . the other hallmark of the administration has been rules-based trade. the us is taking unilateral action led to retaliation . the wto was constructed to eliminate to the extent possible unilateral actions
which are the antithesis of rules-basedtrade . now, the decision as apparently been made at the rules-based systemconstructed largely by the united states out of the ashes of world war ii no longer works . it may no longer work for the united states and i question that conclusion. we had seven years ofrecovery coming into 2016 . longest economy in the world. we are now seeing a slowing of the economy but that's not particularly surprising since we are now at 10 years since the recovery. the abandonment of rules-based system though leads to unpredictability and unpredictability translates into many things including less foreign investment and if you talk to businessesout there , predictability is somethingthat they seek. this is the way that they base their business .
according to the wall street journal, the majority of economists currently believe the manufacturing sector is in a recession. one reason given, unfair trade practices. the agriculture sector have been severely hurt by these trade policies. levine exports have been decimated. and you know, the farmers that have been the first ones by the 232 retaliation. with respect to steel, there are approximately 900 thousand dollars per job created. this is like an 81 disparity between steelworker jobs steel consuming jobs. and the 80 is the steel consuming jobs. so let's just talk for one minute about 232. the 232 on imports is the first action by thesecretary determining that imports of steel threaten national security of the united states . as a result, president has imposed 25 percent tariffs on
most suppliers. the secretary of defense who had to be consulted under the law specifically informed the secretary of commerce imports were not a threat to the national defense, that had no impact on the decision. in 2001 and president bush investigated the same issue and concluded within one month of following 9/11 that imports of steel were not a threat to national security. you might want to ask why the administration chose this route rather than for instance a safeguard investigation under section 201 president bush also did in 2001 and in that case the itc made an affirmative determination in 16 out of 33 product categories leading to tariffs of varying degreesfor those products . there were no, there was no retaliation those actions. the administration and this is a guest because i don't know the answer to this, the administration i think not
want to chance the possibility of negative determinations in some or all product categories. but i would point out that primarily because of the impact of the antidumping duty orders which by the way was said to be not having any impact on imports of steel . well, between 2014 and 2016 apparent consumption of steel declined by 16.2 percent. during that same period, total steel imports declined by 25.5 percent from 44 million 33 million tons and as a result imports as a percentage of apparent consumption climbed from 41 to 27 percent. the justification for the 232 was chinese overcapacity . instead of, instead of targeting imports from china which would have had little impact on the steel industry since its imports had largely
beencut off , steel imports had been cut off by abcd decisions we imposed 232's on everybody elseincluding china . one result of section 232 was on face beginning with china retaliated against the united states agriculture . the irony of all this is that of all of the countries that were subject to 232 restrictions, china and police state. other countries such as the eu, canada and mexico retaliated. added, mexico are no longer there because of the impact of the us and ca agreements and as a result they lifted their retaliations. but the reason is that it's self-evident, why is it they would, why would people retaliate immediately? why not wait -mark they didn't retaliate in section 201 but the reason is self-evident because these
were actions, unilateral taken under the guise of national security and claimed to be that they were conforming to the national security exception in article 21 of the gap. if you look at article 21 you'll see that these don't meet those criteria at all. the us is still threatening to impose 232 restrictions on automobiles, so on behalf of the american iron and steel institute, i mean the americaninstitute for important steel , we are working together with professor alan morrison who is actually supposed to be giving the speech, by the way and we filed a constitutional challenge to the section 232. electing that they constitute an unlawful delegation of legislative actions to the
executive branch. there are no boundaries or definition of national security nor limits on what actions can be taken against imports and that appeal is pending before the federal circuit. subsequent to the 232, the united states also imposed tariffs on imports to china which has led to retaliation. there is apparently another cease-fire referenced by the secretary but we seem cease-fire than the past that have fallen through the were going to have to see exactly what happens. and we will talk some more in the question and answer, i think that's all i got . >> i'll respond to those comments let me first fill in some details about what the trumpet administration is doing in trade policy. what you menstruation is going to pursue free, fair and reciprocal trade.
i think one thing that come across in the comments we've heard that the administration is using new tools to greater extent than prior administrations. 232 would be one of them but there are others as well. and there's a reason the administrations increased willingness to turn tools that someconsider unconventional . when the administration took office in early 2017, the united states had been suffering from a series of trade policy challenges that were getting worse over time, not better. and the administration came into office with a mandate to address them and to be more proactive than prior administrations in addressing them. and that is what the administration has done. so for example, there is the china challenge and i agree with professor katz that's a huge talent for the united states. over many years, china had
systematically pursued discriminatory trade investment policies that puts us companies and workers at a disadvantage. the best of intellectual property, cyber intrusion, force technology transfer, industrial subsidies to state owned enterprises as well as of the specific problems professor katz mentioned . a study in 2016 by some mit economists and others showed that import competition from china and led to the loss of 2 million jobs from 1999 2011 . it also showed that it had contributed to theerosion of the american manufacturing base . so this is a significant challenge for the united states and one that the tools , the traditional tools of trade policy and failed to resolve area structure dialogues with china and a one off wto dispute did not
prevent the problem from intensifying in the years before thepresident took office . another problem that had been getting worse was that global crisis and access steel and aluminum capacity . for example, from 2000 to 2016, global capacity and in steel increased by 127percent . as of 2016 china had so much excess capacity to produce steel excess capacity worth the entire production of steel of the united states. and the situation was similar for aluminum. so these were serious problems the traditional tools failed to meet them in the administration decided to take a different course . the administration for example with respect to
china, the administration imposed tariffs under section 301 starting in 20 and those tariffs certainly have put pressure on china and as the deal announced last week shows, they're startingto work . they're starting to bear fruit in a way that the approach of previous administrations hadn't. and section 301, using section 301 in this way and been done in the 1990s. section 301 at its aj under president reagan but it is proving effective. another example is section 232 tariffs that don mentioned. in the section 3232 is a tool that had been used also since president reagan . but the administration decided to impose these tariffs to stem the global crisis in excess capacity and prevent excess capacity from
reachingamerican shores . it's true that it affected all countries, not just china and it's true i know was the main driver of excess capacity, but this was a global problem and meriteda global solution . another example is the section 201 tariffs resident, announced in january 2018 on solar cells and modules and washing machines, industry-specific but these tariffs also addressed a serious problem of imports erred in the sectors. in section february 1, 2001 and menus sincepresident george w. bush . just to be clear also, the administration is doing much more and tariffs and the secretary discussed that in his remarks. the administration also has negotiated a new us-mexico canada agreement which once congress ratifies it to generate $68 million annually
in economic activity and all hundred 75,000 jobs. the administration also negotiated a new deal with japan andrenegotiated the existing agreement with korea . and as expressed interest in a possible new agreement with the united kingdom. so the administration is pursuing a free trade agenda. i would also add you administration is working allies and partners and multilateral's to advance free, fair and reciprocal trade. there's been a series of trilateral dialogue between the us and european union about reforming the wto which i think there's a bipartisan consensus that the wto is very much in need of reform and many outside the united states acknowledged that as well. the administration has been a leader in the global forum on steel excess capacity to address that problem .
the administration has here headed e-commerce negotiations at the wto. you menstruation is working with partners to address these problems but we are not shying away from old action, even when some of ourpartners and allies are involved . so overall, the administration is making trade policy in a way that a reasonable response to the world as it stood in 2016 and the traditional tools and been working. something new was needed and the administration is unflinching in trying to policy approaches . let me address a few of the other comments that i heard. okay. >> first as to the charge that the united states is now
somehow a country that uses managed trade ratherthan free-trade . what i would say is in the heritage foundation's 2019 index of economic freedom the united states was 12. the united states was one of the highest, most highly ranked countries in the world. so i think we still have a pretty good system of free trade. we have tariffs on a lot of, on some imports but only represents a small proportion of total us imports . under400 million , $400 billion that are affected by tariffs in the context of more than $20 trillioneconomy . i also want to address the reference to smoot hawley which i think isa big exaggeration .
smoot hawley, the problem with smoot hawley is it reduce us exports from 1931 1933 by 60 percent as a result of retaliatory tariffs. by contrast experts went up from 2016 to 2017, 2017 20 and in 2019 year-to-date on track to be the same as 2018. so i don't see that as an act of historical comparison. often smoot hawley is invoked as a way of charging that any use of tariffs is bad area any use of tariffs is bad. the administration views tariffs more neutrally. tariffs are a policy instrument can be used e.g. different objectives, economic objectives, geopolitical objectives and so on and whether tariffs are appropriate in a particular case should be based, should be evaluated on thatbasis . one other thing that i want
to address is why, the question of why the united states use section 232 rather than another tool to impose tariffs on steel and aluminum and i would just say it's a neat with the statute . and i wrote down some of the statute. i'm not sure i can read my own writing but the statute says that the secretary and president shall further recognize the close relation of the economic welfare of the nation to our nation's security and shall take into consideration the impact of foreign competition on the economic welfare ofindividual domestic industries . and it goes on to talk about employment, loss of skills or investment so section 232 is just a fit for the situation
that the steel and aluminum industries found themselvesin . i'll stop there . >> i noticed but don was scribbling furiously while you were speaking and only took a few notes himself so i want to give folks a chance to respond . i can't get this microphone to work so ron and i will share a microphone i'll just take two or three minutes. >> you and appreciation to both analysts. first of all, i do think that by and large, it is positive to look at trade overall rather than with respect to one country . i try not to look at bilateral trade issues unless i really have to. i have a terrible bilateral trade problem at mygrocery store . i keep giving them money and all they give me our groceries . a lot of these issues are ones that are better look at in terms of how old countries
we deal with operate. i also think it is worthwhile looking at trade and tariffs in connection with how they work at trade opening area a lot of times putting tariffs on a product is a strategic decision in order to try to get more open trade rather than simply too close trade, although there are many industries like tariffs because it inhibits competition and i think you have to look at what any administration is doing, not just in the question of whether it has tariffs going up or down any particular moment but whether the use of tariffs is intended to and effective at adding more trade opening broadly with respect to other nations. i also think it's important and jeff emphasized this, when we are working with respect to what we're going
to do on the trade front to be working with other nations and jeff emphasized we are working with trade partners on different initiatives. a lot of people will criticize any administration if it doesn't sign a trade deal that a particular set of people like. not every trade deal is a good deal and not every trade deal opens trade. we have negotiated some trade deals that runs eight or 900 pages. it doesn't take eight or 900 pages say we want to have open trade which again is not to say that along trade deal can't be good but we should recognize that our trade negotiations are uniformly going in one direction under any sort of negotiations. one thing i wanted to pick up in don's remarks talks about the intersection of gap article 21 and the 232 process here.
and there is a serious interpretive question as to whether and to what degree a us domestic law should be interpreted by looking at a collateral trade agreements that deals with the same issues. the gap article 21 safeguards provision will determine the degree to which a us action is viewed as consistent or inconsistent with our international agreements. that's a separate question and the question that a court or an administration faces in interpreting the law, us law that is on the books and directs the administration in how to act and directs the courts in what is legitimate under us law. and that was a point that
scalia made to others who wanted him to look at international ingredients when he was interpreting us law. last point, i was talking earlier about the threat from china on the nationalsecurity front . i think many people can make decisions that protect themselves in their economic purchases. none of us is effective at making decisions that protect us from anational security standpoint . i can't tell whether something i'm doing is helping the national security or not and my own individual action is not going to be terribly determinative in terms of national security. that is something we do need the government to look at. the government to take actions based on. i have a paper on china, chinese way that exports and national security that will be published on the federalist society website. it is unlike dean's book on
hidden nazis. it is one of those reads that my wife would encourage people to really focus on when you are tired and having difficulty falling asleep. >> i should have mentioned in my introduction to john, he's also my literary agent. don, i want to give you a couple of minutes to respond and we will move on from there. >> first i'd like to address ãarticle 21. i agreed with ron on that. the reason i pointed to gap article 21 was not to say that was germane as to whether or not that there was something wrong with respect todomestic law . article 21 pointed to and the answer to that question is because measures that were taken by the united statesdid not conform to get article 21. they're not even close .
so i agree. the respect to whether or not the us law is or is not a good thing, that's the reason we have a constitutional challenge pending for the courts . this is not an action against the actions of the administration, it's an action against the law itself . the provisions itself say that in order to define it, the secretary should give consideration to domestic production needed for national defense requirements which of coursethe secretary of defense said everything was okay but the section , section d is so broad that it says at the end and then it says without excluding other factors. in other words, anything can be used to make a decision
here and the point that we have made in our constitutional challenge is that there are no standards and there are no limitations that is a unconstitutional delegation and that's the difference between that and for instance section 201. the itc there are limitations on what the president can do in order to restrict imports. just for one second with respect to managed trade, if you don't think there's managed trade, you are not a farmer and you are not a steel consumer because if you areone of those two things , you can understand there is managed trade. there arechoices being made. managed trade , i don't find that theparticularly offensive . there is managed trade all the time.
but in this room i think managed trade takes on a different context may be done in other forums but i would tell you that it is heavily managed and that is really as long as everybody is upfront about the fact that sure, we're picking winners and losers, you got an exclusion process at the commerce department for granting exclusions to the 232 tariffs. it's a difficult process to wind your way through. that's a fact. and the fact that steel consumers are having to do that, that's one outgrowth of managed trade. have an enormous number of people in charge of trying to administer this process . and work extremely hard but they're also not steel experts and nor can they be. so the system works about as well as you would think that it works and it doesn't work particularly well.
finally with respect to smoot hawley, it was kind of an example that jeff may be right that that's going too far but again, the economy these days is not as dependent upon manufacturing as it was in 1928 and i would say to you if you are farmer or in the agricultural sector these days , those differences between now and smoot hawley, i'm notsure how different they are .>> before you go to the mike,can you get the case name on the nondelegation challenge ?>> sure. >> jeff, i think you probably want to take acouple minutes and elaborate . >> i want comment on the pending litigation. i, with respect to the gat issue, all i have to say is the united states believes
all of its actions including the actions under232 are consistent with wto rules . and on 232 i disagree with your characterization of managed trade and of the way the exclusion process works. we are proud of the way the exclusion processworks, we processed many exclusions . the process is based on objective criteria and yes, i disagree. >> going to start taking questions from the audience there are for mike's, if you can go to one of the four microphones to ask the question , and while we are waiting to go to the floor might ifyou have a question . the program says were going to go until 230 but we agreed we will try to wrap up by 2:00 because it's important that the panel before the audience does. >> plus we didn't eat dessert yet. with that, we want three questions that end in?
rather than statements so please be clear and as crisp as possible before we turn to the audience, i want to ask a question of all three panelists . i'm no expert in this area . i'm just wondering to what extent it at all should the united states take into consideration in setting trade policy the form of government of a country with which is dealing and here i'm thinking about national security issues that ron reyes but also some of the economic issues if we're dealing with a country that has stayed on for state-supported enterprises, how do you do the math on those and how do you figure out what free-trade is and how also do you take into consideration the national. the implications. >> as a general rule, i think it is better to look at the economic flows and trying to open up economic flows rather
than looking at factors in any country that lead to the production of the goods. we do have certain rules both internationally and domestically that allow us to look at states subsidies and the degree to which the subsidies are intended to and do in fact distort trade flows and those are processes that go through a of commerce andinternational trade commission . those are subject to the laws on countervailing duties and also to some degree are embedded in theantigovernment regulations . i think it's a different matter when we talk about security. if you have a country that has an authoritarian government that has very consciously used its authority in domestically to regulate aspects of the economy have an impact on national security to facilitate espionage efforts
and fiber espionage efforts, when you have in full that affects the way products are produced and marketed in a particular country, that has an impact on what you should be doing from a national security standpoint and i would draw a distinction between that and the usual matter of dealing with economic flows. we do have provisions in both the international agreements and our domestic law that allowed us to use different sorts of computations and we are trying to figure things out in cases involving nothing from nonmarket economies. those however are a different question from looking at the structure of government itself which i think you are asking. >> let me give you a chance to speak.
>> i generally agree with what ron said although i must say that i don't agree that the enemy doesn't go to the structure of government. the nne rules which look, antidumping and the theory of antigovernment the extent that any of you are into the in injustices of trade policy and trade law , long ago, less the intellectual mooring of something what one would call real policy, antidumping is a way to assess attacks on your foreign competition and that's fair enough. that's what the rules are, that's what the international rules that we agreed to our and that's what the us does but that's what it is when you get down to the unfairnesselements, a pejorative term that is useful in politicaldiscussion
, it doesn't really get to the heart of the matter . with respect to nne methodology, that is so far afield from anything that one would call intellectually honest that it's really , that has nothing to do with anything aside from we can put more penalties onlet me give you one example . commerce department determined a few years ago that it would be a good idea and would be legitimate to bring countervailing duty cases against companies in china. why? because prior to that they decided well, it's all a government run enterprise anyway so everything is hundred percent owned and run by the government but we're just going to do nne methodology i which what we do is we create a surrogate value and surrogate benchmarks in which to compare the prices in the united states. this is why you get dumping
margins of 200 percent and higher, many times in these cases. the commerce department looked at this and said well, we've determined i believe it was 87 percent, i don't remember the precise number but 87 percent of the economics in china actually is not state run. it's not state-controlled and therefore it is legitimate for us to do countervailing duty cases against china. they're enough. you're going to now measure subsidies in china area that the course would mean you're not going to follow a nonmarket economy antidumping methodology because if you're going to do a subsidy case and then you're going to treat their dumping as a market economy, right?
no, we're not going to do that. the nonmarket comedy methodology and do the subsidies we can get those 200 percent dumping margins up to 300 percent. okay, i get it area it's a matter of how high do you want the tax but it has to do with the formalgovernment . >> did you get out that case name? >> it's a ias american institute for imported steel versus the united states pending at the court of appeals for the federal circuit. there's also a court of international trade case and i'll send you the court number. >> let me give you a chance to weigh in and we will go to the audience question. >> on the last point that mister cameron made, i think is concern is with congress and the way that congress set up the law.
congress changed the laws to permit commerce to impose countervailing duties and antidumping duties at the same time area congress applies the law rigorously as congress enacted. congress decided what's unfair trade and commerce applies that in various cases faithfully. we have a process of commerce that is subject to judicial review and that means if we ever depart from the statutes , there may well be a consequence in the form of a court case that appeals are determination so again, all our determinations are rigorous, they adhere to the statutes and we administer the law the way congress enacted it. on the other topic of your original question about whether the formal government is important, the answer is absolutely . the united states experience with china shows this. it is largely do to the nonmarket base practices of china and the nonmarket
structure of china's economy that the united states has encountered so many problems with china. the one that i mentioned that have been intensifying in recent years and is largely in recognition of the special challenges posed by nonmarket base economies that the united states, japan and european union are having this trilateral discussion about reforming the pto rules . the discussions are focused on topics like industrial subsidies the state owned enterprises, forced technology transfer and other nonmarket base practices. so the form of government of countries is absolutely critical. a model of progressive liberalization the united states pursued after world war ii of gradual reductions in tariffs, that's extremely important but when it comes to an economy like china's , it's insufficient to break down the trade investment
barriers that pose a threat to us companies and workers. >> was moved to the audience now and remember pose a question rather than a statement. you may have been first, go ahead . >> zooming and mbt tv, this question for mister kessler. i want your assessment of the china will make those interchanges that demand a sickly the communist party to change the way they run their economy, to change the way they run their country and basically change the way they rule and isn't that something that is just they fundamentally couldn't do? second question regarding hong kong, if hong kong intuitions largely stay the same with no tiananmen style massacre but with continued demonstration and more and more of those so-called suicides, with the us , with
the trumpet ministration support the revoke of the hong kong's special trade status? >> on the first question, i think that it is possible that china will make structural changes. it certainly has made structural changes to its economy in the past, dramatic ones and it's within its capacity to make further structural changes and pursue more reform and opening up. unfortunately china is not adhered to reform and opening up in recent years but i believe it's possible to return to that . i don't have a comment on the hong kong situation . >> the question was for jeff but let me give our other panelists a chance to respond if they'd like to . >> i would say that even
though a lot of the changes that would make trade more similar with china to trade with other market-based economies , the united states has not refused to trade with countries that have authoritarian governments, nor has it refuse to trade with countries that have non-market-based economies . that's a different question than the question how some of the rules operates and that was what don was talking about earlier. it's a different question from what source of trade agreements are mutually advantageous to the united states and othercountries . >> question on this side. >> my name is elaine middle and i make attorney with the auto industry and i wondered with the general motors strike and the pressure on the companies to keep plants open in the united states,
the uncertainty with autonomous vehicles, i wonder what you thought about how that's going to impact trade issues . >> go ahead. >> i mean, the gm strike is, it's obviously problematic. for instance you had a closing at lordstown. you are in the auto industry. i grew up in cleveland, iknow lordstown . lordstown as an issue for 20 years the other issue that lordstown face which was rather new to the party was that lordstown makes small cars and the cost increase by 25 percent because the tariffs didn't affect the price of imports. it affected the price of steel. but that is the reality so
they were also caught in the cross squeeze. the administration denied that steel tariffs had anything to do with the shutting of lordstown. i'd say that that's a tough thing to say. because there was no way they were going to be able to make a profit once those prices went up . but strikes are problematic. they are, but strikes happen regardless of the, of who's in power and what the trade policies are they are going to serve more pressure just as the pressure from the community, pressure from the agriculture community israel . why? any of those people are going bankrupt and they're going bankrupt because of the trade policies with this administration. >> jeff on this point? >> it's a reminder many experiences americans
continue to experience anxiety and it's a reminder for the administration that we have aresponsibility to do something about it . >> the sort of economic dislocations you're talking about affect how people feel about not only their own circumstances but the us economy and trade that has an impact on their own lives, their own sort ofproduction . a lot of people look at trade through the lens of what that does for competition with what i produce, even though they would then go to the store and try to find things from other markets that fit their purchasing needs. it has less to do with the sort of trade policy that we ought to be following and more to do with the way people will feel about. >> another question fromthe audience . >> class lucero. this question is for mister
kessler. you talk about action 232, mister ross talk about this turkey sanctions so my question is how will the administration justify raising the tariffs to 50 percent on steelimports from turkey under section 232 or will it be under a different authority ?>> i'm not going to comment on that. i think details of thatpolicy action or forthcoming . >> another question on the side. >> for the gentleman whose first name is don . i'm not an expert in this area. in the investment systems i know that a lot of apparent disagreements can be understood by contrasting the one looking at an issue from the short-term or from the long term. i don't know what constraints on the secretary of defense when he is asked to make a determination as to whether or not a certain situation is problematic.
from the standpoint of the fence, but i would guess that would be a relatively short term point of view that he's taking. as we look at the situation right now is there sufficient input to the defense industrial allies that are available to the united states, one could make a prudential call for the long-term looks more about in terms of what, how can one recover and in this industry that had close or ceased to exist because of trade differentials, thereby simply by looking at the extended time for you justifying a different potential view. does that make any difference to youranalysis ? >> it doesn't. the secretary of defense made this same analysis in recently that he did in 2001,
it was a different secretary. what they found was the needs of the current production of the steel industry to work the needs of the defense industry and he doesn't look at it in the short term because that's the whole point of national security analysis and i would say that the rumors of the demise of the steel industry are greatly exaggerated. the steel industry in this country is the most protected industry historically ever. it's even more protected than the textile industry was. we had protection from the united states industry since 1974. you had the vra's, then then you had to trigger price mechanism and the rnas again
and you had antidumping countervailing duties followed by escape clause followed by more out antidumping duties. it is not a coincidence that between 2014 and 2016 imports of steel fell . they fell specifically in response the fact that antidumping actually work and limited imports of steel. talk about the demise of the steel industry, at the same time they were starting to do 232, big river was investing in a greenfield plant of 3 million tons out in texas. there's an additional 6 million tons coming on stream from newborn and ci, not all flat steel. i would add your somebody in the investment field i guess what i would ask you is the steel program is going to make the rich richer, what about the people, what about companies that are on the margins, let's say integrated facilities. integrated facilities like us steel.
there's a real question that's exactly how they're going to compete in flat steel with 9 million newtons of flat rolled steel by the three most efficient producers in the country . it's a very good question and there's another question which is whether or not the 232 program is actually accelerated that dynamic by making the rich richer. because while they were getting richer, us steel was hanging on at us steel is still hanging on but it raises an interesting question. pardon me? [inaudible] >> textile protection isn't the way it was because there isn't much left but feel, i get it. in steel there's a lot of capacity . >>. >> i would reiterate a point secretary was made is that we're all starting to see positive results from the tariffs including in the form
of increased investment in steel production facilities, new facilities, modernization of existing facilities and in the form of order and direct investment. money into the billions of dollars . >> ron katz. >> the argument how you look up at the national security question is one that i've been engaged with since the reagan administration when people inside the administration took very different views on what we should be looking at. there were people like jean kirkpatrick who really ought that we should be protecting industries that we might need in the case of a war when we would have difficulty getting products from other nations. there were other people in the same administration said anything we do now that raises the cost of those products takes money out of what we could otherwise spend on other defense investments.
they take money out of what we can use for other parts of our economic support and that has long-term implications for national security as well. i don't think the two different sides have company closer over the last40 years , but i think you raise an issue that is one that will continue to be banned. >> time for a final question. >> this is for assistant secretary kessler. on auto 232, the president in may that he wanted to get six months for the parties to discuss ways to deal with the national security threat that the report outlined. there a month away now and europe and the us have not been able to agree on the scope of thoughts because of the issue of agriculture. is there a way for the government to offer yet another extension or are we going to see some kind of action in november -mark.
>> i believe with the executive order calls for is the us trade representatives to provide an update that the president six months after the issuance of that executive order so sometime in mid november. so that will be up to the us trade representatives and president. >> is there a requirement in the statute that the report be made public once it goes to the president -mark 's is there a requirement on the report? >> on auto report that it may be be made public? >> eventually it will be. >> got a few minutes left, let me give you 60 seconds to express the final thought and we will wrap up. ron. >> the trade issues have been issues of controversy since the beginning of the nation. the first substantive law passed by the first congress was the tariffs act. hotly debated, a matter of
regional disagreement. those things will remain matters of this agreement but i'm glad that the federal society gave us an opportunity to talk about it today and to secretary ross and assistant secretary kessler were willing to be here to both give and take the ammunition on both sides. >> you for all listening. i found it to be an interesting discussion. and i understand the controversy and the disagreements. and in the end, i do think that the unilateralism that has been exhibited, i agree that these are new tools, new policies. new doesn't necessarilymean good . and new policies are necessarily better than old policies.
if you want see what happens to the economy if they do 232 on auto, just wait the cause the largest facility to produce bmws's in south carolina and if you're going to start cutting off and raising the cost of auto parts and automobiles, it is going to have asevere impact on the economy . so let's see. i think that this latest deal with china, we will see how it works out but it appears there may be some efforts to at least draw things a little bit back in and try to move forward rather than strike out one more adversary. >> jeff, final thought. >> i would think that federalist society for convening thisdiscussion . i think we are in a new era in policy and we're in a new
era geopolitical as well . and it's important for the public, for intellectuals . i suppose at least the majority of federalist society members think through how trade policy should adapt to changing circumstances. this administration has taken a new approach, a bolder approach to trade policy problems. and it's in recognition of changing realities. strategic, geopolitical and economic. and i think it's important for everyone to understand what tools in the toolbox the united states government has read how we are deploying them and how we should continue to deploy them meet the challenges of the future . >> thank you to the
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