tv U.S. Trade Representative on 2019 Budget CSPAN July 27, 2018 5:58am-8:49am EDT
>> good morning, everyone. order.ring will come to we are here to explore significant issues of our countries facing an hour constituents care a lot about. i welcome you all here this morning. our witness today is ambassador robert lighthizer, the u.s. representative. welcome, thank you for the moment we had a few minutes ago, to have a conversation. i thank you for coming here to testify before our subcommittee today. the office of the u.s. trade representative is responsible for coordinating u.s. international trade, commodity and overseeing trade negotiations with other countries. week, representatives
from mexico and the eu are in washington for various trade discussions. that tammy is appropriate. -- the timing is appropriate. trust a great opportunities for higher standards of living for es anders, business farmers. u.s. tr tor the succeed, congress nice to make sure the necessary resources are available to carry out their important mission. the administration has requested $53 million for ustr in its fy 19 budget request. we consider the funding needs, we must also be mindful of the administration's trade strategy.
ambassador let heiser, and or your leadership, we have witnessed a significant increase in the u.s. trade activity in what i consider to be a major policy.n for example, you issued a letter on may 18, 2017, shortly after your confirmation, addressed to congressional leaders about the ustr's intention to renegotiate nafta. you stated that nafta was "out dated and does not reflect modern standards." wasthat i the ustr committed to renegotiating with timely results. more than a year later, the process is still underway. we look forward to an update on these efforts of ongoing negotiations. i do not think it would be a surprise to you that many were concerned or are concerned about efforts to renegotiate nafta, especially considering the administration's seemingly nonchalant attitude toward potential termination of that agreement. understandably, many are even the concerned about
administration's direction today, because in addition to nafta, the ustr is at the heart of a trade this youth with china, following u.s. findings by an investigation in section 301. i applaud the administration's effort to crack down on china's unfair trade actresses and i hope you can update us on how negotiations are going with china. that tactics we now see, where the united states proposes tariffs, china response, and so forth, appears to have gotten china's ascension, but more tariffs can best china's attention, but more tariffs can not be the answer. to u.s.l cause harm farmers, manufacturers, u.s. families, workers and businesses. those very people that the ustr is designed to help. the effects of the currrent tariffs are real, and many farmers in my home state of
kansas and throughout the united states are feeling the pressure. a former in kansas, fifth-generation family of farmers where they gross way beans, corn, wheat and also raise cattle -- they and many of their neighbors will begin fall harvest in a couple of months. the increased prices was. have already reduced from income, which has fallen by 50% in 2013. it is driving kansas farmers like them to the edge. all told. estimated $361n million of kansan exports being threatened by these terrorists. bottom line, trade and exports are hardly earn a living in kansas, and farmers, ranchers and our nations manufacturers cannot afford a prolonged trade war. thank you for joining us this morning, i look forward to your testimony.
i would now like to recognize the ranking member of this committee, senator shaheen, for her opening remarks. sen. shaheen: thank you for being here this morning, i appreciate it the opportunity to speak with you early this week. the senate commerce bill for provides $57.69 million for the united states trade representative, as well as an additional $50 million for the trade enforcement trust fund. in total, the bill provides nearly $73 million for ustr. level with the $10 million more 2014 omnibus bill, and the $10 million more than requested in the fiscal year 2019 budget proposal. as you know, ustr can play an role innstrumental creating a level playing field for american businesses and workers, and at this time, expanding markets for u.s. companies and removing foreign trade barriers. unfortunately, like senator moran, i'm concerned that these
tools are being used in a way that is hurting american businesses and antagonizing allies and letting other countries set the rules of the road for global trade. as we discussed, i appreciate the need to get tough with countries that cheat or abuse the rules but we can't cause an unnecessary trade war with our allies and puts american companies at a disadvantage. chairman moran outlined the impacts that the trade war with china has had on farmers in kansas. we are seeing some similar negative effects in new hampshire. i have heard from a number of small businesses in my home state who have had deals canceled and market access shrink. last week, i visited a small business in new hampshire called moon light eatery. meatery. they had a deal killed by the
retaliatory effects on american wine. this would have doubled their output, and for a small business, that meant a lot. what is happened, is that they have had to lay off employees and they have been hit by the increased cost of aluminum because of the tariffs on steel and aluminum. another new hampshire small business little bay lobster company, that sold 50,000 pounds of lobster to china each week -- that is quite a lot of lobster -- can no longer find a buyer after ustr imposed the section 301 terrorist. china retaliated with a 25% tariff that drove up the price of u.s. lobster. meanwhile, canadian lobster companies can sell their products to china at a much lower price and little bay is worried they'll lose their market permanently. when it is not just the agriculture sector. -- section 301 tariffs. i'm hearing from high-tech, value added manufacturing companies about the negative effects of the administration's trade policies. these are well paying jobs and growing sectors in new hampshire like the aerospace and defense
industry. industries in which we have a competitive edge in the global market that are now being disadvantaged by retaliatory tariffs and higher costs of raw materials. so, for example. manufacturing solutions corporation is a manufacturer of circuit boards. this company was close to winning a $5 million contract to build circuit boards here in the united states. but as a result of the tariffs imposed by the administration, the contract will likely go to a chinese competitor, creating chinese jobs. that ifately, i worry we continue in this direction, this will just be the tip of the iceberg, and that if left unchecked, the trade war will have dire ramifications for the american economy. so, ambassador, we clearly have a lot to discuss the riyadh i
look forward to your testimony and to having you here today. thank you. >> senator shaheen, thank you. ambassador lighthizer again , welcome to our subcommittee. i expect a robust conversation. we'll begin with your comments and testimony this morning. robert mr ambassador, you need o turn on your microphone, please. robert: members of the subcommittee, it has been 14 months since i was confirmed as the united states trade representative. it's been a very busy year for our agency. i'd like to take you through a few of the highlights. we have been renegotiating the north american free trade agreement at an unprecedented speed. this would be the first comprehensive renegotiation of the u.s. trade agreement. as part of this process, we have consulted with congress as required by the tpa.
hopefully, we are in the finishing stages of achieving an agreement in principle, that will benefit american farmers, workers, ranchers and businesses. we are also finalizing revisions to the u.s./korea free trade agreement. we have arrived at an agreement with the koreans to strengthen the domestic truck manufacturing here in the u.s., allowing more trucks to enter their market without regulations and fix a whole host of related issues related to agriculture, pharmaceutical products and other products. we are actively engaging in efforts to commence new trade agreements including the newly announced eu initiative from yesterday. after the confirmation of my deputies in mid march of this year, i instructed ambassadors mahoney and garris to work with congress and work with their foreign counterparts to find future partners for future
agreements. we are speaking with a number of countries in southeast asia and sub saharan africa. i will be happy to talk about that further. if you're interested. we have taken two action on two investigations, one for solar products, and the other for washing machines. these are the first investigations since 20001. 1. both cases involved a tremendous amount of work, each resulted in an affirmative itc recommendation with the president largely accepting the recommendations of the international trade commission. we have seen success in domestic manufacturing as a result of those actions. at the direction of the president, ustr has been leading the section 201 efforts to combat unfair chinese intellectual property practices. in march of this year, we published our report and identified several major problems, including forst
technology transfer, none practices,censing state-funded strategic acquisitions of u.s. technology, and cyber theft. in response to the chinese actions, the president directed implementation of several measures including a wto case which we brought. targeted tariffs, strengthen export controls and rigorously addressing direct investment in critical technologies. we are also pursuing and defending numerous actions at the world trade organization. we are actively litigating ten offensive disputes. defending 21 disputes and participating as third party in another 20 cases. in addition to these major initiatives, ustr runs a host of other programs and deals with many trade issues on a day to day basis. we operate the generalized system of preference program,
the african growth and opportunity act program, we monitor the many trade agreements we have in place, we prepare and publish numerous reports on trade, we lead the interagency process for developing trade policy, and we work on a daily basis with our foreign country hearts, to reduce barriers to u.s. trade around the world. finally i would like to touch on the budget of ustr. in fy 2017, we were appropriated $62 million. with an option of deriving funds from a trust fund that was set up in 2015. our appropriation for 2017 was 57 point $6 million, plus $50 million in the trade enforcement thrust fund. we are grateful for the added appropriation and we are focused on making the best use possible of it. $1557.6 million, plus
million in the trade enforcement thrust fund. we are grateful for the added appropriation and we are focused on making the best use possible of it. for fiscal year 2019 the president's budget request $63 million to support this staffing increasing and focus on priority areas. i thank the committee members for your time and i look forward to answering your questions and discussing the president's trade agenda. >> ambassador, thank you. we will not begin a series of questions by members of the subcommittee. particularly with a focus on japan and asia. we have written testimony submitted to the committee on finance this year, and it stated that ustr would aggressively pursue other free trade agreements. that's something i fully support. japan is one of the united states' largest markets for eat and other products. japan is currently negotiating and enacting new trade agreements with eu and canada and other trading nations. how is ustr ensuring a level playing field specifically with
regard to japan, when they are completing free trade agreements with other nations, to the exclusion of the united states? perhaps you can speak more broadly as to the ongoing efforts to establish new free trade agreements. robert: on the issue of new ftas, i did state as you said in the beginning, that it is the president holocene. when he decided he did not want to stay in the tpp that he would negotiate ftas with other countries in that region, as well as in other areas, that process was delayed somewhat by the fact that our deputies were not confirmed until about three months ago. since then, we have one deputy who is worrying about talking to
congress and talking to potential trading partners in east asia and another in sub-saharan africa. we have divided it up. he spent a fairmont of time with respect to both. it is not -- we spent a fair amount of time with respect to both. it's not appropriate for given tpa to announce what we'll do because we're still in the process and we have to consult with the congress, then we have to make an announcement, and wait 90 days before we can negotiate. but, i will say that we are close to beginning negotiations in each area. there are a number countries if , if you deal first with east asia, who are interested. some have different advantages over the others. one that we particularly liked , is the philippines. i think it would be a good first agreement. it is in a good location and there are a lot of advantages to it. of sub-saharan africa, we have talked to a number of countries and a number have asked rest interest.
we are trying to make the decision of which want to start with. our view is that you want to have a model agreement. we want one where there are clear advantages to u.s. manufacturing agricultural sales and what is in the model is something we can use with other people. so it's something we are actively doing, as i tried to date in my opening statement. we are very busy, and we are not a huge agency. having said that, this is a very high priority. in terms of japan, our relationship with japan is a very good relationship. the president met with the prime -- a couplea of months ago in mar-a-lago. they have had several meetings. in that meeting, he was quite clear about the nature of some of our trade problems. we have had a chronic trade deficit with japan. had, in that case,
what we consider to be unfair barriers to u.s. exports in a number of areas. one that would come to mind in your case, of course, would be beef, because that's a principle one when you think of the tpp , but also primarily japan. we set up a structure where we take, we are involved in the negotiations on that. we'll have a meeting probably in the next, certainly in the next 30 days. it is being set up right now. we have a fairly aggressive agenda. right now, it is the japanese position that they don't want to enter a new fta agreement with the united states. but, they are willing to work through a variety of issues and that's something we would expect to do. our sense is that we ought to be negotiating the fta with japan. me getambassador, let another question in, before my time is fully expired. i applauded the administration
for successfully concluding negotiations in a china in 2017 to allow u.s. beef act exports resumption into china after they were blocked in 2003. however, the 25% retaliatory whichs on u.s. beef, stems from that investigation threatens to halt those exports , and certainly any expansion. so on one hand, we had the opportunity to high 5 and brag about beef going to china. that opportunity seems to have disappeared, and most concerning is what the growth potential that exists in china, what it does to our opportunities to sales.ing u.s. beef can -- let me i speak for a second about beef with china. i think it's a good example of what we are facing with china. so, the president's strategy, was the strategy of prior
administrations, was to initially engage in a dialogue with china. we clearly have a chronic problem with china, we have a trade deficit with china. at my than $175 billion, a lot of which is not the result of real economics, but really, a result of state capitalism. so ten years ago as a result of negotiations because of their unfair practices, china agreed to allow u.s. beef in, 10 years ago. over the course of the next ten years, they didn't let that the in, because they've made that promise, but they did not keep the promise. the president during the 100 day period, when he decided, i will try a dialogue first, had a dialogue. as a result of that they agreed to let beef. let's be clear though. the amount of u.s. beef that was eligible to come in was less than 3% of u.s. production, so it wasn't meant to be a panacea, although a lot of people thought it would.
the result the last time i saw the numbers this was something like $60 million worth of beef sold in all of china. i guess to me, the china beef situation is one example of what we are facing with china, mesh it is more an example of what we're facing with china than it is actually a solution. we really thought -- we really thought that we would be able to sell beef with hormones and the normal u.s. production of beef into china for a long period of time. we don't think they have a wtr right to keep us out. so while we made some headway in there, you are right, they did take it away. the question not with beef, but with all of the members and all of the retaliation, this may not be the appropriate time to raise eight, i will do it on somebody else's time, if you would like, but, we have to discuss why we're doing any of this. because there clearly is pain associated with what we're doing
and the president is very sympathetic to not only cattle ranchers, but to everyone else. a lot of ag and a lot of over people who are being, who are we believe, unfairly treated as a result of our attempt to level the playing field. >> ambassador, i am sure this issue will come up among my colleagues. senator from new hampshire. you, mr. chairman. that was a good segue into my question. as i mentioned in my opening comments, i had opportunity last week to visit one of the small businesses that as you point out is being hurt by the policies of the administration. moonlightmpany called meatery. they make a beverage classified as a wine, from honey. i talked to the owner about the fact that we're having this hearing and you're coming before ,he committee, and i asked him what he would like me to ask you about the administration's policy. and as you can see, i have posted it, he said -- i'd like
to ask them what the plan is. i'd like to ask them why are they asking small businesses to bear the brunt of this policy. it doesn't seem fair. so, how do you respond my small business owner? robert: first of all, we talked to the same small businesses and farmers and ranchers a lot. the president is very sympathetic and i'm personally , i'm very sympathetic. it is certainly not our plan to small businesses, or agriculture or anyone else in america, feel the brunt of a change in trade policy which is designed to make the u.s. stronger and richer and help our exports and help small businesses, and farmers and ranchers. that is our objective. sen. shaheen: sorry to interrupt. but do you have a time frame for when you think this objective is going to be achieved? robert: let's talk about that. first of all, you have to start with the proposition that you
think there's a problem. you think that an increasing deficit is a problem. that's the first thing we believe there is. and something different has to be done. you have to kind of divide it up. if you look at nafta, i believe we are very close. if somebody asks about that, i can take some time to talk about that. sen. shaheen: please do. robert: then there are a whole lot of other actions that we're taking. but on the specific question of china, the reality is, it is going to take time, i believe. sen. shaheen: can you talk about what's, what is our trade deficit, because as i have looked at the numbers, if you add in services it isn't a deficit, it is actually a surplus. robert: with respect to, i'm sorry -- sen. shaheen: the total robert: the numbers are approximately $800 billion. good deficits we have about a 250 services surplus. so we have a substantial deficit any way you cut it.
now, there are some countries where the argument that you are making comes up. somebody might have raised it in that concept, countries rather is this data point, and we make that point. but overall, it is clearly a very negative trade situation. but if you do not accept that, then everything we are doing doesn't make sense. but we think it is clear, that in the case of china, they are acting inappropriately. taking advantage of an open u.s. using state capital, taking u.s. jobs and u.s. wealth area and we think it's clear and -- u.s. wealth. we think it's clear and something has to be done to defend u.s. workers and this company. sen. shaheen: so you have the administration has, the administration has proposed $12 billion in aid to farmers who are being hurt by this policy. are you also talking about aid the small businesses like those in new hampshire, being hurt by this policy, and how do you
distinguish between the two? robert: well, i think there are a lot of people across the economy that are being negatively affected. we believe, unfairly, by predatory practices. particularly by china, but also other people. we don't think anybody was otherwise to take up a kind of action -- i would take a step back and say, a lot of these same companies and agricultural producers are also negatively affected by all the auditory practices that have led to the $800 billion goods traded deficit. i don't want anybody to think that would have some kind of level playing field. these are the same people who are suffering as a result of our bad trade deals and bad trade policy over a long pair word of time. i don't know this person's business of course, by not a lot about agriculture and other businesses. there are a lot of other people facing unfair trade, and their
own businesses are suffering. but it is kind of like the status quo, they haven't really focused on it. it is the view of the administration that agriculture has been particularly targeted by retaliation as a result of the kinds of actions we are doing to try to level the , and therefore, the president, the secretary of a culture in place this program. sen. shaheen: so, you are not contemplating that type of assistance for other small businesses that are being hurt or this trade war? robert: not at this time, no. sen. shaheen: thank you. i'm out of time, many chairman. mr. chairman. >> senator alexander? sen. alexander: welcome. mr. ambassador, until yesterday, the tariff taxes that the administration had placed began to look like i have got a problem so i'll shoot myself in one foot. i have a problem, so i will shoot myself in the other foot. for those who think that it is not hurting, the wall street journal this morning says,
rising commodity prices from early steel, shaved about $300 million from their second-quarter results. most of it, they blamed on the metals tariffs. both companies by almost all there's deal from you as juicers their steel from u.s. producers. steel accounts for 53% of the material in typical automobile , and aluminum, 11%. in tennessee, that is bad news, because it had 929 auto parts suppliers. they almost all use steel and aluminum. three big car companies, that's 100 36,000 workers, a third of our manufacturing force. -- 136 thousand workers, a third of our manufacturing force. that's not good for us. it's not good for a lot of other people in tennessee and electrolux canceled an expansion because of steel prices going up, even though they buy all their steel in the u.s. our big tire companies have to buy cord for the tires from overseas, because it is not made
in the united states. so they pay an extra price to riyad. bush brothers cans their beans in the united states and the steel plated cans they have to buy, we have a company in dixon, tennessee, that chose between china and the u.s. moved to tennessee. then suddenly, on their gas grills, steel prices are up 40% because of us and retaliatory tariffs raise it even more. so they're making a loss on every gas grill they export to europe and canada. they wish they had moved to china instead of the united states. now, that's the bad news. the good news is, that what the president that at the g7, what he said about a week ago, and what he said yesterday, is that we are headed to what is zero tariff, zero subsidy policy. that is what it should be, he said.
i agree with that, no elected ask you a couple of things about how we get there. obviously, we are familiar with such a thing. the north american free trade agreement is essentially a zero tariff agreement with a few exceptions. it took us a couple of years to get to that point, but we got there. japan and europe are negotiating the same kind of deal. so, as we take a step toward a zero tariff agreement which we in tennessee, and i imagine in this country, would a reasonable step one be to make the tariffs the same between the united states and europe on cars and trucks, which should be , the tariff on trucks, led trucks, and 2.5%, the tariff on cars? and as we begin to do this, my second question, and i will let you take the rest of the time, how quickly than, when we get rid of the steel and aluminum tariffs? because if we're moving toward a zero tariff policy obviously we
, obviously, we don't want to raise the price of steel 40% in the u.s., which would have this year according to the steel in this is, because you cannot make a truck in tennessee with steel up 40%, and sell it competitively in the united states or export it to europe. so how, would that first step seem reasonable to you, the one i just described? and steel and aluminum tariffs number two, how quickly can we get rid of the steel and aluminum tariffs so we can be competitive in the zero tariff environment? robert: thank you, senator, for that question. first of all, the basic philosophy that we have, is that we want free trade without their ears. that is what the president wants. it.on't see we see ourselves as being treated unfairly. so then the next question is, what do you do about that? one idea is to talk and see if over a period of time you can make change. our sense is that's been tried
and tried and tried and tried, and the deficit goes up and up and up and up. so, the president check or idea idea- the president's is we have to do something more dramatic. >> in the short time we've got what about the idea of the same tariff for cars and trucks in the united states and light trucks in the european union? robert: i would say first of all, the idea of zero subsidies, but also we need zero standards. you can't have nontariff barriers to trade. we could have the same tariff and not be able to sell anything to somebody because they have a trade tariff there we my opinion, you cannot cherry pick specific -- you have to be careful cherry picking specific , becausers or trucks some countries have an advantage over others, and some don't. but you picked steel and aluminum, you did that and you drove the price of it up 40% since genera generally. robert: i will talk separately
about the steel and aluminum but , but philosophically, you have to have agriculture as part of it. you can't just do trucks and cars, which i believe, would greatly favor the european union as opposed to the united states are a lot of other manufacturing products that would greatly benefit the united states, and agriculture for sure. agriculture is one of the areas where we make class x. and a lot of other product that we make. so i think the idea, i agree with you that it is completely right, the idea is to pick a number of things, we have a balanced package, and moved to an environment where you don't have tariffs, when you don't have subsidies. because that is an important part. you cannot compete with someone who subsidizes. you can't compete with someone who is subsidized. then you have to worry about nontariff barriers to trade. it is a little complicated, but you cannot have zero tariffs, you can't ship there.
the final thing i would add is, you have to do something on services to make a balanced package, because that is another area that the united states has a huge advantage. the idea of doing trucks or cars by themselves would favor europe and lead to the increase in the trade market. and it would hurt the u.s. automobile manufacturers. 232 ourssue of the objective is, the president's objective is as we do these deals that we, we have done this in the case of korea and other countries, we set up a mechanism whereby they don't pay the tariffs as long as they don't take all the benefit that's supposed to go to the steel and aluminum producers. they can ship duty free in the united states up to the historic level so they don't get the benefit of it. but on the section 232,
generally, the first question you have is, you have to conclude that there is a problem. they, aluminum and that were in jeopardy, the presses were unfairly low. the action doesn't make sense. the president believes that was a necessary step. therefore after that, the objective is to try to accomplish what we believe to be a good -- and in the next round, i would be have a to talk more about this. i think the basic -- you and i have talked about these things. the basic idea, i ink, is exactly what the president was to do. he wants to get to a position where the u.s. is competing with countries,'s specifically on phases,l -- bilateral and on a no barrier bids, and then let the united states, let pure economics make the decision. if that's the case he's convinced, i'm convinced and i
know that you are convinced, that we're going to win. we'll do just great in an environment like that. chairman: senator manchin. sen. manchin: thank you, mr. ambassador. i appreciate you being here. a lot of questions to be asked. i come from the state of west virginia, got destroyed with nafta. so we might look at it differently and people might be surprised at my take on all this. i don't disagree with the president taking the tough stand, and the very unorthodox way that he is going about it. i want to make sure that's fairness to the trade deal. i want free to be fair. with all that said, do you believe that these deals that we make around the country or around the world if you will, should be more bilateral than multilateral? some countries are taking advantage by tacking on a country that we might be trying to help. the other part of the question would be, do you believe that there should be a sunset review on these, because nafta has been what, 27 years? afterd think that
about five years, you should have a review. did it meet the intent of what we did the deal for? there is a reason to these trade deals. we don't want to do any harm to anyone in the united states. we want to make sure we're helping ourself too. that would be my first question. i'll go on to my second one after that. if you could answer on that one, there? robert: thank you, senator. first of all, i would say that the president believes, and i believe, and both of us for a long favored of time, believe that the united states is better off in bilateral deals. we have more leverage. if we were in a position where we were a small country, we'd be far better off getting with other people. sen. manchin: everyone says there was a mistake for not staying in the tpp. i wasn't a fan of tpp, because of that. robert: we gave up a lot of our leverage. and they're much harder to enforce. you're in a position with 5 countries. you are in an agreement with five countries and if you have a problem with them, what do you
do? you don't get out of the agreement, right? because it messes up the agreement. if you have an agreement with one country, and you're the united states of america, you can enforce your rights under that agreement. so, to me, it is pretty clear. on the issue of sunsetting? sen. alexander: i'm not saying sunsetting. i said the sunset review. we review we met the intent, the findings of why we did the deal. robert: yes, i think we should have a sunset review, absolutely. i think the basic idea of a free trade agreement is this. : we are not talking about mfn trade, we're not talking about a level playing field. what we're saying to the country is, we will give you better access and we are giving the rest of the world, and you give us approximately an equal amount of that are access. it's not mfn. mfn is at the wto. what we're saying in the nta notionally is, we will give you
an advantage in our market. you give us an approximately equal advantage in our market. it is reasonable to say that after a period of time and after economies change and evolve, to say, did we give them approximately or equal to what got? it will be good for some people, for sure, right? but over all for the country, because of the nature of an fta you should sit down and review whether or not it was the deal you wanted. sen. manchin: i know some of my colleagues in different states are getting hurt in different ways and they'll express that today, as you already heard. i don't think it in what he intends about to the. but can we have a correctness to this unfairness? and what type of a time period do you think it would take? the president has taken an unorthodox approach to it. he hit some hard things, it to make some adjustments, i am looking for results. do any harm want to to american manufacturers, producers, growers, whoever it may be in the categories. the thing about china that i knew about, they're telling me that we basically only imported about 2% of chinese steel. so china produces 50% of the world's steel.
they were basically using every gimmick they could to get to our markets through other venues. camouflaging that. was that parte had with china and the $500 350-500,000,000,000 dollars trade deficit that exasperated it? robert: the answer to that is yes. let's talk about steel with china, because it's not just a steel problem with china, but an example of the chinese industrial policy. for noneconomic reasons they created a beyond enormous steel industry. not for economic reasons. they basically did the 3 state capitalism. to give you a relative idea, in the united states, we make something just south of 100 million tons of steel. they make 1.1 billion tons. i mean, and they have created all of this in the last few years. sen. manchin: what do you they consume? what does china consume of what they produce?
robert: i am going to guess that their conception, they probably have $300 billion worth of excess capacity. one million tons, 400 million tons. sen. manchin: so they're intentionally overproducing? robert: basically what they did is, they created it largely to get rid of imports and then they kind of, as if things do, it got out of control. then they ended up so big that they swamped the entire market. the entire world. then everywhere you look, ever wrote you look in every country -- every country you look, chinese excess capacity has heard the steel industry. it is across the board, everywhere in the world. in first, there is a group, the steel forum. that is all they do, they meet and talk and complain about this. i say it's more an example of the problem. you have the same thing with aluminum and with solar. the same thing with any number of high-tech products. in a review, you cannot be in a position where we are the residual of chinese state capitalism.
we have to stand up for ourselves and make sure that market forces determine who survives and who doesn't survive. the steel industry is a classic example of that. the world steel problem is entirely a chinese problem. sen. manchin: i know my time is up, but you see a timetable on basically the correction of this unfairness of trade? because we don't want to trade war. i think we definitely need a correction, and there is some pain ongoing with this correction. can you give us an idea of some time? robert: tamika might have to kind of take it, problem by problem. renegotiating nafta -- i think we are close to a point that we'll have that finished. we had problems of a much smaller scale with korea and we have resolved that issue. i have a whole list of smaller ag but no one is going to give me the time to
read, but notionally, know that it is there. senator, you already heard the list so i'll let you tell your colleagues. but there's a lot going on. that's all by way of saying that china is a longer term problem. that isn't to say we'll be in a trade war with china in my , in my judgment. but i think we have to change the dynamic. the direction we're going in right now, these are numbers, $375 billion in goods and deficits. and every piece, not as a result of economic forces. those are numbers that are not sustainable, never even heard of in the history of the world. they are just such cataclysmic numbers, that something has to be changed. what the president focused on, because it's the most important our study that alluded to, which is the basis for all of these terrorists -- it is a study started in august, -- i apologize for running over -- it was a study for eight it to yourommend staff, to read it. many of you already have. this is the basis, the reason we're putting tariffs on in this area.
because i had worked on the hill, in the back i put in nine charts so that members could go through the charts and not have to read the thing. so that they understand the basis. we are taking this action, because technology is the future of the american economy. this is our ultimate competitive advantage is technology. , is technology. and, if we don't change the direction, our kids are not going to have the kind of economy we want. this is a study that i really commend, because it's the basis , and it is really a well done study. a lot of people who don't agree with us on trade have read this study and said, you are right. sen. manchin: thank you. i'll take your assurance that my colleagues were delighted what say, and therefore, will not take any additional questions. senator collins? sen. collins: thank you, mr. chairman. welcome, ambassador. let me say thank you for sending maine last month to
meet with our lobstermen, dealers and processors. since that visit, regrettably, the situation for the lobster industry has worsened. china is admittedly a very bad actor when it comes to trade. but we have to be sure that the actions we take don't end up hurting our own domestic producers. china, since that meeting, has slapped a retaliatory tariffs on maine's lobster, our state's largest export. it generates about $1.5 billion in economic activity in my state. exports of maine lobsters to china had nearly tripled during the past 3 years. compounding the problem facing the industry, is the new trade agreement between canada and the european union.
it is known as ceda. it has eliminated and phased out tariffs on frozen, live and processed canadianaian lobsters, canadian lobsters that go into the european union. so american lobster exporters are at a serious disadvantage, because they're now facing tariffs of between 8% and 30% to sell into the european union, which used to be a very profitable market, accounting for approximately 15% to 20% of the annual american lobster exports. so when you combine what's happening with canada with the , with the retaliation by the chinese, my lobster industry is saying to me, how are we going to survive while the administration works out its long term plan? that's my question to you.
robert: well, thank you, as you. i am of course, know, very familiar with the problem, and the issue. ambassador mahoney who was behind me, was my deputy who wants to maine, and you are of .ourse -- who went to maine you are of course completely right, lobste lobster men from maine are both targets of the chinese, but also have this unfortunate circumstance that the relationship between the between the eu and canada has also taken away one of their markets. the good news is, this is something we can now focus on in our talks with the. it's very much something that's -- focus on in our talks with europe. it's very much something that's on our mind and something that hopefully we can rectify in the context of those talks. the european part of it, the china part of it is the same
problem we have in all the things that they targeted. by the way, i want to make it too, there is no wto. that's no international trade law justification for them taking the actions. they did it completely as rogue nations. we brought a wto action against them for that. in the case of china and the specific retaliation, we are always willing to talk to china. we think managing that is not be, not just for the lobster industry, but for others , managing the relationship will nequire a lot of effort and a attempt to try to minimize the effects as we move forward on all the industries that are targeted by them. but i do thin'n the european side in the not too distant future that we can rectify that problem. that's before other things that started. there were certainly because of
you and some of your colleagues, it was something that was very much on our radar screen. sen. collins: thank you. the second question, i will have to ask you to respond for the record, since my time will be up at the time i have finished the question. it has to do with the section 232 national security tariffs on steel and the impact on american small american manufacturers. i'd like to give you a specific example from the maine. it is a 183-year-old family owned business called hussy seating" in northborough work, maine, and it manufactures seating for distribution across the globe. this is what is happened. prices for domestically sourced steel have risen significantly to match the tariff price of imported steel. so, over all, steel costs for
the company have increased approximately 45% over the same. last year. the problem is, this small manufacturer has locked in contracts well before beginning project, but it did not anticipate a 45% increase in the cost of steel. there are other companies that my state stone well , kitchens, in york, maine, our maple syrup industry, blue are processors, they worried about the retaliation from canada in risk runs to the 's section 232 decision. my question for you is, aren't we risking doing tremendous damage to our own domestic industries by using the national security justification against
some of our closest allies? and i know my time has expired,, but if i could have an answer for the record, i would really appreciate that. thank you. chairman: thank you, senator collins. senator reid? sen. reed: that thank you, mr. chairman. i think i'm going to follow-up up on senator collins' threat is there a threat to justify section 232? robert: so -- sen. reed: is that a yes or a no? robert: well, that was the beginning of the answer. you have to start with the proposition that you think you need to help the steel industry , for example. if you're going to do it, you have to do it globally. you can't help the industry by just putting on tariffs against one country. because -- first of all, we have terrorists on china, and the
problem comes in from other resources. so, if your decision is, we will have the u.s. pay higher prices steel, to save an industry, you make that decision, where the price increases are worth the pain -- people have different ideas of where that pain is, but this is logically how you would do it -- you cannot be in a position where all the benefits of that, for example, come into or go to the canadian steel manufacturers. you have to be in the position where the benefit, if we are paying the price, the benefit goes to the united states steel producers. so you have to do something to stop -- it's another long had a great comment, which was, if you have one hole in the net, all the official swim through if you give it enough time -- you have to be in a position not to have a hole in the net. not to suggest that we think
army tanks are going to come in from canada. but, if you made a decision that it is in the national interest to say the steel industry, then you have to put in place a program that works, that requires not having holes in the net. now we are down to a yes or a no? is canada a national security threat to the united states justifying section 232? robert: because of the steel, yes. otherwise you have a problem. reed: you have identified a country, the basis for the action against canada is a threat to the national security of the u.s.. you have walked around that question for the last several minutes in the income the whole program has to go into effect. let me put it another way, ok? this is a country that has sent forces to afghanistan, those of themsome unfortunately, have given their
lives in a joint effort to the states. it is a country since the 1950's has been maintaining our early warning for attack from the soviet union, and now, russia. this is a country who uses our equipment, this is a country who has been with us every step of the way, and i guess, again, are they a national security threat to the united states justifying legally the imposition of this 2 32? robert: and, my answer is, if you are of the of any and that the 232 is justified, because of the need to preserve, then you have to put in place a provision , a program that actually works. and that means, every country has to have, you cannot let, you cannot let all the steel come in from another country, otherwise the program doesn't make any sense. that is the context. nobody is declaring war on canada, or say that they are on unfriendly neighbor.
they are obviously not. they're a great ally. certainly one of america's closest friends and closest trading partners. but if you decide that you need to protect an industry, you can't be in a position where the protection is of no value. sen. reed: but your decision is based -- you decided that you for theo do something industry, or not do something for the industry, then you have climbed onto section 232, because it's the only available legal status of the president. that ms is the national security of the united states area i don't know what kind of data or information you have that would show that canadian of steel or any other products, would impair the functioning of our steel industry. i don't think it has a good legal basis, what you are doing. robert: i mean, that's the fundamental question. the fundamental question, do you think, it's not, in my judgment,
-- it is not about canada or mexico, or europe, it is about -- the think having a steel industry is a national security issue? if you conclude it is, then you have to put it, if you conclude to -- then you don't need sen. reed: no, that is not true. listen, ambassador. mr. ambassador, ok. what else can we invoke 232 for? robert: i'm sorry? sen. reed: can we use it 232 to protect hollywood or the entertainment industry? robert: i'm sorry? sen. reed: can we use 232 to protect the entertainment industry? because we want to maintain the entertainment industry in the united states? china is a threat to us. france is a threat to us. those new wave films are just cutting the heck out of us -- you are using national security as kind of a generalized premise -- and i don't think a afterpremise, -- to go
individual countries that are frankly, ironically, contributing more to our national security than, well, they're contributing a lot. let me stop the want to talk about secret tariffs. it has clearly rattled my state. our seafood-- industry is the number one in salmonte and with our exports, our salmon went to china over the last five years. about a third of our salmon has
been exported to china. of our card went the china. us. is very significant to we are trying to figure out what this means not only to our fishermen, but our processors and the just six industry. the 10% retaliatory tariffs puts even more pressure on our seafood processes because many of our fish and shellfish that are harvested are then process -- processed in china before reimported back to the united states for domestic distribution. in many ways, we are looking at this and it is imposing a 10%
tax on our own seafood which is tough to reconcile. pretty well inng china, making significant steps towards reducing the tariffs imbalance we had seen. headed is a drop to about 6% and everything , again, a month or so ago. we have been doing we have been doing everything we can to further the trade relationship with china to really help balance things out and it seems that the plan we were on has been set back and said back in a debilitating way. keep in mind this follows on
the heels of russia's retaliation to us sanctions in 2014 when there was an embargo on american seafood imports. we felt the impact of that. it has been a $40 million loss to the state, the previous administration didn't take steps to address that so we have that that we are dealing with now. we are looking at additional foreign markets at risk. i listen to senator collins and her description of the lobster industry and the impact she has got going on with canada. it is a can to what we are seeing, different countries involved here. the same question senator shaheen has. my processors in the logistics industry. everything is, what is the plan? we don't see it, we thought we
had a good plan, working towards it and everything has been held back. how can you give that assurance to this seafood industry that is not just critical to alaska but so many states? >> thank you, senator. you are right, it is way beyond the number of states that have a problem and all the retaliation in seafood has been from china. they leave us at an effective political tool. and much in the same way agriculture was targeted and joining. >> if i may ask the question, because they have been impacted similar to farmers.
is it my understanding any of this $12 million in aid that is directed to agricultural commodities. i look at that and i don't see there would be any allowance for our fishermen. we call them farmers of the sea but that doesn't fit with your definition. alaskans are not necessarily looking for or supporting this what they consider to be this bailout. but they are interested in knowing does this encompass them as well because of the impact they have? >> i am not an expert on the usda program. i'm not at all an expert. that is something the department of agriculture does and generally -- >> this is a significant industry. >> we need to know whether or not whether we are impacted.
and someone looked critically to determine who is eligible for the $12 million. >> in the first place i am not an expert. it is my understanding they are using existing programs so they are reusing existing the authority under existing law and existing funds and i don't know, i'm not in every culture expert. >> some of those existing funds in the agriculture, the purchase and distribution program have been used in the past to help alaskan markets purchase surplus donated so we gain benefits in that so if you are taking from this program to allow benefits that would go exclusively to the traditional agriculture sectors, then you
are putting us that further disadvantage. i'm trying to get some clarity. i don't mean to be rude in interrupting. >> i understand completely why it is such an important problem. it is a serious problem. with respect to the specifics of what products are covered i'm happy to get back to you to give you an answer to a legitimate question. >> is there a plan for seafood? >> i will do that. the other thing i would say is it is no comfort to the people in that position, but what the chinese are doing, if you agree with us, is intolerable, or if you take it to another step and say it involves a national security issue, we have to figure out a way that specific
people are not targeted but we can't be in a position where china has the on off switch whether we do things in our national interest by attacking various constituents. that is the number of the problem. but on the specific problem about the program and seafood i will go to the department and the department of agriculture and get back to you on the answer. i agree you are raising significant and important questions. >> my time is expired. >> thank you for being here. i want to follow up on senator reid's justification under 232 by steel tariffs and follow-up because you are considering automobile tariffs and imports are weakening the internal economy. you are looking at 232, to assert not that we need to
secure our own supply and capacity for industrial shipbuilding but rather the basic argument, hurts our economy and national security and hang onto hundred 32. >> i don't think it is fair to say anything that hurts our economy is national security. >> hold on. it is a question of scale, not category. when people think 232 is invoked for the purpose, there is a nexus you may in further doesn't exist. i thought initially what you were saying is we need to build our own stuff in case we need to build up for war. you didn't make that assertion. you said anything that hurts our economy sufficiently is a national security issue which is why you're moving to automobiles. even if there is no the real direct nexus.
and you are now in a position that we will use 232 with near impunity. >> i am not arguing 232 on everything in the economy. i want to change that impression. it is not my position at all. tariffs should be justified under the national security process and layer one more question which is does this go through the nfc? the reporting, i would love you to correct the reporting if necessary, this originated from the white house and ustr, and
papered over it with the statute but professionals think this is legitimately done. >> 232 has nothing to do with ustr, because this is a department of commerce program, to do the study, i was involved in politics, the discussion. all the appropriate national security department under that statute. the studies done by the department of commerce in consultation with the department of defense so the defense secretary -- >> i don't have a lot of time. i want to get one more
question. senator murkowski and senator shaheen, we are playing chicken with china. the fundamental disadvantage we have are numerous, among them we take 50 or 100 year view. we are trying to scare these folks down. to soften the blow of our own policies because we throw our own prices down by 20%. if i am china i am looking at the united states, bipartisan upset, farmers and ranchers and fisheries and manufacturers in a panic.
i would wait us out. why would you stare down a non-democracy, they can incur more pain over more time than we can. and the edge of shutting down, losing contracts forever. it is 14 bucks, we lost our contract. how do we have leverage in a situation -- >> that is a long question. they are clever because they have a 50 year view, that doesn't make sense to me. >> we are a democracy -- >> does that mean democracy
loses to authoritarian government? >> it means you don't pick stupid fights. >> if it is stupefied than you are right, we should capitulate. >> if they don't think it is a stupid fight, china does not come in, that the future of american industry. >> i'm not suggesting we have any disagreement about our end goal but that is like telling me, in the middle of the fairway, everyone wants to hit it in the middle of the fairway, we are doing it badly.
>> thank you for being here. i want to congratulate you, the team that worked on the european situation and now that we have a framework in a timely fashion, actually get that nailed down which is very important. i would like to talk to you a little bit about some specific things going on that really are dislocating, short-term and long-term. just this week the constituent contacted me about the hardwood lumber manufacturing industry. virtually all the us hardware lumber which is primarily manufactured in the south and appalachia is exported to the chinese market. since us tariffs have gone into effect their purchases are for us hardwood lumber, have not decreased but essentially have ceased.
prices are in freefall, mills will be closing unless the issue is resolved fairly soon. it has been said the short-term pain long-term gain, i don't disagree with what you are saying just now. we have to get these problems done but in these real arkansas towns, not only arkansas but rural towns in the south, it is not the mills just shutting down, the community shuts down. if you are aware of that particular issue, the way we can all a that is other markets take the place of the chinese market. what are we doing in regard to that until we get this sorted out? >> thank you.
first of all, i'd -- a significant decision, significant initiative and come to fruition in his brief appear go of time. the solution to a lot of these problems, not just because of china but other trade problems, opening up new markets. and a bilateral basis. the effort, it took, i won't get into the process but took a long time to be confirmed. in my own case it took a number of months and in the case of my deputies it took longer but ultimately they are in place.
in east asia and other areas, the european initiative's approach, we have negotiations in japan and opening up markets in specific areas is something we have that we should do. this is generally to members, to member staffs, business people come in and have specific problems, everyone should bring them to us, part of what we do is solve these issues as they come up, we put in these specific companies into the metric that we moved to negotiate with other people. there are situations where we are trying to decide who we should negotiate with in east asia initially.
we look at the situation where there are real sales by us companies that can benefit from it. a classic example of the problem is not one that affects your situation but a classic example of the problem is you look and the philippines import cars from japan because they have an agreement they could come in duty-free, our cars can't come in duty-free so we could do an agreement with the philippines where we can ship our cars there and it won't cost anything at the margin because we will get the benefit to take market share away. >> lots of situations where there aren't other product being made in the country. jb was appear testifying yesterday about the containers. there are no domestic manufacturers of that product. we have another company that makes drillbits, the only company in the united states
that makes drillbits. they are stuck with a 25% tariff on the stuff that they use to make the drillbits. it comes from the uk. their competitors are able to bring that in with the drillbits being made in the uk. there is a tremendous disadvantage. what happens with these companies that there is no other supply in the united states? >> now we are talking about the steel program specifically. >> this is not steel, this is just another component that has been caught up in this. >> if it is a product coming in, there is a process. in the case -- >> is it an exclusive process done in a timely fashion? >> that exclusion process, sorry for being long about this but i have to be clear.
that exclusion process is done at the department of commerce and i'm not involved. >> but it needs to be done. >> the chinese tariffs, we have, the president -- this is slightly complicated and i apologize. he announced $50 billion in tariff that we would take because of the theft of intellectual property. a calculation made by congress, not by us. it wasn't a number to pull out of a hat but a calculation that this was one part of the chinese bid that was calculable so he announced a series of measures. one was put in place, $50 billion, we have an algorithm that came up, here are the things least likely to affect chinese policy, least likely to affect us manufacturers and us consumers and maximum effect on china. that is the algorithm that was
created and then we have a hearing and people in this situation come forward and say this peculiar circumstance honest as you would suggest and as a result, three days of hearings. as a result we took $16 billion and said we don't want to do this because people came in and made the kind of argument you are making and say this is -- help us, it will hurt us. we will take 50 and reduce it by 16 and put 34 in place and that is what we did. to make up that we go to the rest of the chinese imports using the same algorithm. that worked its way through, people making comments on that. with respect to 34 that is in place people can come in and make an exclusion process that we have at usg are the have peculiar circumstances. that is one answer to your question. other people will come in and
say, this downstream product is at the same circumstance. and we try to do that? all this is complicated and justified if you think it is -- if it is not worth the battle, and as fair as we can make it. >> thank you for giving me the opportunity. >> it is important to hear what you have to say is complicated. >> thank you, mister ambassador. thank you for the analysis to
steal us advanced technology. they do this over a long period of time with chinese companies that have stolen us technology, a giant telecommunications company, and cte, another telecommunications company, here is what tech crunch said a couple months ago, quote, to get a sense of just how egregious the te's behavior truly is we need only to consult the national index of federal court cases, a search revealed in the us alone cte has been sued for patent infringement and astonishing 126 times just in the last five years and they go on to give other examples house et in collaboration with the government of china engaged in
wholesale theft of us technology which is why there was bipartisan support in april when secretary ross and the government of commerce imposed a denial order on the te. i was astonished when we let them off the hook. i want to know why we left them off the hook. here's what donald trump tweet out, too many jobs to china lost, commerce department instructed to get it done and then he ordered the the parts of commerce to reverse the denial order on zte. one example where we had them where it hurts as opposed to them hitting us like agriculture and fisheries. congress on a bipartisan basis, the defense authorization bill, we passed legislation to reimpose the original order. the administration lobbied furiously against it.
zte hired a lobbying firm in washington that spends once $.3 million in a few months and ended up getting their way. zte thought it was money well spent and it was well spent for them because as a result of the administration's actions they took that provision out of the bill which is coming to the floor of the senate now. you were asking senator shots what he would do differently. i want to know why we let zte off the hook when they have an astonishing record of engaging the same kind of wrongdoing you are talking about while every national intelligence defense person has been up here, said they pose an espionage threat and why after they were caught violating sanctions against north korea and iran flagrantly and repeatedly, finally did the right thing and for god knows what reason the president changes his mind, exactly the kind of situation you are talking about where we have an opportunity to really send a strong message.
why did we reverse that decision? >> i agree with you that zte is a bad actor. they were determined to be so by the obama administration and took action against them and they were determined to be. by the trump administration. you can make an argument as to where the line is. they were punished in the view of a lot of other people, that it was sufficient punishment, the largest fine in history. it was requiring them to change management and putting in place for the first time ever a monitoring system inside the company. >> i am aware of what they did. it was a large fine. this with a company that spent $1.3 million in a couple months to lobby.
a slap in the wrist given where we had them. we had them caught red-handed not only in sanctions but it was an opportunity to address the issue you have been talking about very passionately. they have been exhibit a of flagrant violators. if we are serious about this, how can we let them off the hook? did you support the decision to let them off the hook? >> what i'm arguing is they are not let off the hook. >> what did we get in terms of your efforts? i don't think we should trade away national security. when we let them off the hook because the the permit of commerce had imposed the denial order it was going to be in effect for eight years. now it is not. now they get to go back to doing business, there is more oversight but i want to know what we got. what did we get for it, mister ambassador? >> i don't know what you mean. >> these are negotiations.
we are talking about they are retaliating against us on a range of issues with regard to the steel tariffs. this is something president teasing ping --xi was worried about, the expert denial order. i want to know why we backed up since we backed up what we got for it in this negotiation. >> i would say the question is what is the nature of the remedy? it is enforcement action. was there a trade-off in the connection of what i do? the answer is no, there was no trade-off in anything. >> here is what i am worried about. were you surprised when china retaliated, imposed retaliatory tariffs on agriculture, fisheries, did that surprise
you? you did file something at the wto that they were violating the wto rules. >> i believe they are. >> you were not surprised they did that. >> lived up to their obligations in many respects. >> you are talking about negotiations like we have them in little boxes, you are doing this, the secretary of commerce doing this. i don't know why we would let them off the hook when it was the one thing we had them squeezed and you are telling me that was in somebody's box and we got nothing out of it. the other thing donald trump tweeted out. when you are in a position like the united states where you are losing on trade trade wars are good and easy to win. that was a few months ago. after hearing the testimony about the retaliatory tariffs that have been imposed by china
and your inability to say when this is going to end and i agree with you. it is really hard. do you disagree that this is going to be, quote, easy to win? >> i think with the president -- >> is it easy to win and what is winning? >> to me winning is opening up their market and to change -- i don't want to say change corporate capitalism because i don't think we will do that but changes negative affects us, that is what we have to do and we have to manage that over appear go of time. what the president was saying is when things have been going so badly for so long. this is not, we have to remind ourselves, this is not a situation we created. i can bring the charts and show them to you.
we have had a pattern of how we reacted china in this case. >> i'm not contesting that. i'm not disputing that for a long time we have been put at a disadvantage. what i'm arguing is it is not easy to win. i think you said that. we have to figure out a strategy but it is not easy to win when you let them off the hook on a company like zte, the most flagrant violator in terms of stealing us technology, is an espionage threat and violate our sanctions laws repeatedly and flagrantly. if we are going to be in this let's be in this and not play ping-pong on issues when the costs are so potentially high in the united states. >> thank you very much. >> thank you for being here and thank you for the service to our country and the work you are doing. the state of west virginia,
senator manchin said trade agreements have not been traditionally very helpful to our small state and that is why i join you in advocating for fair trade and protecting american jobs. i want to talk about auto tariff, 1600 employees, we have peripheral businesses associated with that but if you track what happened in that supply chain the over aluminum comes from canada. it goes to a toyota plant in tennessee that makes the engine blocks which come to west virginia where we make the 6 cylinder very well, we make a 6 cylinder engine in addition to the transmission and half of those engines go from west virginia back to canada where they are dropped into the lexus and brought into the country for sale. we have a lot of crisscrossing
the borders, a supply chain that is wrapped up with us and our allies and the friendly nation of canada. i'm going to go back to the essence of a lot of questions, what is the end game and if people are looking at additional investments which we through our tax reform bill, a large part of our tax reform bill was to bring about more investment in this country, we are seeing that happening. we are finding a chilling effect because people are not seeing a end game. my question is you addressed it slightly by saying there is a end game as it comes to canada and mexico. not looking for a certainty but i'm looking for more certainty in your statements to help lay these issues to rest. >> thank you. i would say i think we have a
whole variety, a whole variety of problems and when you address the nafta issue, it is our hope, i am meeting this afternoon with the mexican side of the nafta deal in a discussion including representatives of the newly elected government in mexico. my hope is before very long we will have a conclusion with respect to mexico and as a result canada will come in and compromise. so in terms of timing the -- if you assume you are going to have an agreement, a new agreement with the united states, the current president of mexico, there has to be 90
days moments before that can say. it takes you around the end of august. if we are going to have him size it with the consent of the newly elected president. and the president of the united states, you have some kind of a collusion. my sense is that is not an unreasonable timeframe and everybody wants to get it done and that is what our hope is. >> that is much more definitive. the president talked about eu markets opening up, something i'm interested in. on that aspect in terms of the eu wanting to diverse a 5 their energy mix, they have been
reliant on russia for a lot of their natural gas. is that a geopolitical decision by the eu to something we can provide a good bargaining chip for us? >> i could stay in my own lane and death geopolitical objectives, something that is not good at. having said that there is always discussion about their reliance on energy coming from the east and they are spending a lot of money to create infrastructure to deal with lng. it is not my area to guess that but it is logical to think they will do that and there's a lot of discussion about their infrastructure. they committed to spend that money to bring it out and get
it through the distribution system. that is the objective. i don't want to comment on their relationship. >> my time is up, thank you. >> ambassador lighthizer, thank you for coming before the subcommittee to discuss priorities of ustr. i will mention two things of interest and concern of meat and moved to the home state concern and tariffs and trade policy. on intellectual property in section 301 actions, i spent eight years as a global manufacturer. we had all sorts of problems with iep theft from china, to prioritize being aggressive in pushing against the maligned trade activities that have gone on too long and i appreciate there being made a priority. i do have real concerns about the consequences of tariffs being misapplied in a way that doesn't marshal our allies in a directed efforts confront
china's activities but has negative secondary consequences. as a result of brexit we can negotiate with the uk. we created a trade caucus and met with liam cox with international trade, with whom you met to talk about bilateral trade relations. i want to ask up front do you support a post brexit us uk free trade deal and do you plan to notify and engage congress formally of your intention to begin negotiations as required? >> the answer is yes and yes. at the appropriate time. >> march of next year. >> this is a potential opportunity to show what a modern fta look like between countries that are having a clear i'd talk about ip, data, capital flows and a lot of things. i look forward to working with you. >> i look forward to working with you in the caucus.
>> agricultural sector is heavily focused on poultry and soybeans and corn are the main feedstocks so soybean farmers, facing a disaster declaration. and section 232 based on steel, harming relations and harming export opportunities. senator isaacson of georgia exports more chicken than any state, sussex county, delaware, exports more than any other county. we started under -- many years ago, in the south african market. the largest market shipping now a significant quantity of us poultry into the market after years of effort, a difficult
meeting with their trade minister. they do exporting small amount of steel into the united states market, applied for a waiver, they don't see themselves as a national security threat much like other countries. i also recently met with foreign ministers, canada, sweden who are wondering why these long-term trusted allies, to be justified. and closed the door for market and poultry. i started by saying i agree with you that we should be fighting mercantile list actions. and republican and democrat say where is the strategy. and the tariff strategy. a central planned economy like
china for democracy were all of us face constituencies in our home states that are increasingly upset about the impact of tariffs. i'm struck that the administration is proposing to dip into $12 billion in an fdr era program to provide support to farmers, and they would rather have long-term contracts and short-term payments. is there a plan to figure out, in the cepheid sector, championed by senators in maine and alaska, small and medium manufacturers made things out of steel filing cabinets, manufactured steel products. will there also be payments available for those businesses harmed by the tariffs in all sorts of sectors and how do you make those decisions? >> i would say ustr has spent a
lot of time working on poultry. i would also say among the actions of china that are unfair to the united states is actions that they take to limit exports of poultry, corn, wheat and other issues, we tend to focus on where the tariffs are coming from but the reality is while there are good agricultural markets, they should be much better because they take a number of steps and cases against them. >> i agree with you. and to support farmers harmed by countervailing duties and providers to other sectors and how do you define that? folks in my state, steel costs
rising from other tariff issues and will we sustain them for months, years, what prospects do we have of china caving encore trade issues with them before it collapses vital alliances for canada, sweden whose foreign ministers recently expressed directly to me there sense of grievance or hurt. at national security-based tariff. >> i apologize for the long answers but they are questions that require law offices, sorry about that. in terms of how long it would take with respect to steel and aluminum to take that issue. and nafta negotiations with
canada and we expect an agreement on steel and aluminum with respect to canada. we don't have a similar process with sweden. but we have a process beginning yesterday with respect to the european union and the view would be that if we are successful coming to a conclusion on that, solid steel and him and him problem with respect to the european union. to answer those questions that is where we are on that part of the issue. on the question of how long it will take to resolve the issue with china my guess is it will take longer. they take a longer view and to the extent we can, we realize a political system makes it difficult but nonetheless
reality is an awful lot of politicians. it is not fair to say every politician is dictated by the next election. a lot of risks do the right thing. i don't know the answer to the question on china. i just know that i believe we have a strategy that has worked. i don't think the president created the problem with china. by benign neglect, i think it is a situation where you have to make a change or the consequences are grave for the country. >> i have another colleague waiting to question. let me summarize your answer and areas where we agree and disagree. we should be taking aggressive action to defend america's inventions and immigration and ip and make sure we have fair market access for the chickens
of delaware and many other states. by slapping tariffs all over the world on countries that are not directly engaged, we reduce the number of allies working with his against china's actions and grow the number -- the example of south africa closing off soon, access to their market, something that is not even on your menu, strikes me as a dozen unintended consequences of a misguided policy that instead of marshaling our allies to focus on challenging china has instead stirred up a hornets nest of problems in other parts of the world with trusted allies and my concern is i agree with you. china is taking the long view and so should we. if our strategy is to pay more and more directly from the federal government, to farmers and maybe fishermen and manufacturers we are gradually
moving from a market economy to one where we are borrowing tens of billions of dollars in china to pay those sectors of the united states that suffer as we try to see who will blink first. i'm concerned that is not a sustainable tragedy. >> thank you for your service, you inherited a mess on trade worldwide and there are a lot of issues happening that need to be cleaned up so the grand challenge is how to get this done. what i would like to hear from you is what has been done to date? what are the whens you have had on trade issues and what are the priorities specifically for us and for me in particular? what are we trying to get to? looks like we are trying to increase tariffs everywhere. is the goal to increase tariffs or to get tariffs down everywhere? the wins and the goal.
>> first of all the biggest single thing, close to having a deal with mexico and canada. we have negotiated a successful real negotiation and one of the things i alluded to before that we don't give credit to is a whole variety of things that we have done and i will mention briefly we have opened up guatemala to poultry, we have gone in and negotiated rice in nicaragua, we have changed, gotten the eu to change the way they treat us citrus in a beneficial way. distilled, dried, distilled grain is important to a lot of people and we have opened up the market in several places and even china got rid of the
rise exports to columbia, we open that market, corn to columbia, pork, argentina lifted their man they had in place for years and they are accepting us pork, distilled dried green exports in vietnam. they closed our market in 2016. there's a whole bunch of these things, lamb in japan. these are things no one reads about or knows about. they are things we do to help agriculture. many of them are coming at the request of members of congress because of their constituents and we are spending a lot of time on them and you have a number of successes. in terms of your second question. >> more tariffs or less tariffs, on offense trying to find more markets or fix broken markets? >> what the president wants to do, the president's fundamental belief is if we have an
environment on economics, not based on artificial barriers to trade, not based on tariffs, not based on subsidies because the united states is not a subsidized are, economics will determine the effects of who ends up in the economy and that is the way it should be. the question is when you don't have that circumstance what do you do? what is your reaction? until now i believe the problem has been basically the solution has been one of nibbling around the edges. i followed this for a long time, talked about it for years and years. not that one was selling us down the road but dealing with problems at the edges, this president's view is we have gotten to the point we have a trade deficit that is so extreme at $800 billion that we can't nibble around the edges,
we have to change worth $375 billion. that is the gdp of most countries, enormous. what his objective is and i think he stated it yesterday and has stated a number of other occasions, he wants to be in an environment and will do what we have to do to do it where we don't have, the us producers, companies and farmers and ranchers are not treated unfairly. they can compete based on economics. that is his objective. his way of trying to do it. >> folks in my state are looking for more markets to get into. tariffs and dishes they are facing, they are looking for the new places and as we talked about, steel tariffs are helping steel companies in the united states but not helping actual construction, building
products, whether you are building small offices because the cost is going up and the cost of construction, it exceeds the value, that you can sell into that area. all of those things have a real effect and we talked about issues, paper products from canada and so many other issues out there. the target goal is how to get these resolved, fighting for the new places. >> the president agrees with you on >> thank you, mister chairman. i am not here to criticize you.
i'm trying to understand you. here is what is going on thanks to my observations. you are a smart guy, the only way to win the trade war is not to fight. trying to negotiate better trade deals, that causes anxiety because it impacts markets and impact investment decisions and it causes anxiety because it is risky and we could lose. that is why they call it risk-taking. they call it sure thing taking. is that basically what your strategy is? >> i think you are right.
it creates anxiety. >> how long, you can't give me month and day. is it going to take years? in my opinion. you see it patiently. is a going to take years? issues will be dealt with in a short time. there will be a problem for china that will go on for years, not to say this will be in place or all that. >> you can't predict the future so you think it will take years with china. year or years? >> can't predict the future but the way i analyze it, they have a system and their system is challenging our sister in my opinion. >> i'm not going to defend china.
we let them into the wto december 11, 2001, they started cheating december 12th. and to -- this is great, china is going to embrace democracy, didn't work out. i am not going to defend china. let's suppose senator more and was elected president of the united states and his first policy was i am really upset about the current account. exports way below imports, i am going to declare the moral
equivalent of war on imports. we are going to flip that balance. >> i don't believe that, the way to get the trade deficit down, to demand fairness. and increase exports, in a fair market also come down. >> let me ask you this, not to be rude or cut you off, but trying to get to the meat of the net here. if i buy something from japan, i give them dollars. what happens to those dollars? >> a lot of things can happen to the dollars. they can keep the dollars. >> would they put it under
their mattress? >> sometimes in some cases they put it under the mattress and sometimes build up their reserves. a lot of times they get it from petroleum and other imports and spend it on other things to build up their own economic strength. in some cases they come in and they by productive assets. >> 5 are interrupting again. what i'm getting at as you probably know is the relationship between the current account in the financial account. it has a balance. >> the answer is yes. >> we are running a negative in our current account, our financial account is positive.
which means those dollars are coming back. >> the dollars circulate back to the united states. that raises another issue. there is a great article, if you google warren buffett, a short article he wrote. >> back to the relationship on the current and financial account. it got more imports and exports, you run in the negative current account, that means you got to be, at least the way you economists describe it, got to be running a positive in your financial account, otherwise your balance of trade, that many comic the back and being invested. if toyota -- strike toyota, a bunch of stuff from japan, more
than we saw, those dollars come back, right? sometimes foreign direct investment from japan. >> sometimes buying our debt. >> good thing they do. >> sometimes our assets and sometimes creating new jobs but it could be all of the above. >> do you believe generally speaking that exports are better than imports and current account surfaces are better than current account deficits? >> yes, i do believe that. if you look at the countries that had the best economic growth over years and years and years, i am not an economist. i am a lawyer. if you look at countries who run it, germany when the current account surplus 7.7% of
gdp. >> how come president more and's equivalent of more on imports wouldn't make us richer? >> because i think you get more efficiency out of having more exports but i do think you will have -- >> i'm sorry to interrupt you but i'm trying to get an answer. how come if exports are better than imports, president moreand's policy of war on imports, we are going to stop buying stuff from countries to give them dollars to buy weapons to try to kill us, make it here in america. how come that policy hypothetically here is not going to make us richer? >> as a general matter we are better off in america. the most efficient allocation of resources around the world is to have trade in a situation -- >> i don't mean to interrupt
you but you are a good witness, you can stretch it out. if i can -- >> what you want me to admit? >> i'm trying to understand, not trying to get you to admit anything. >> whatever it is i agree with you. >> what if we can buy it, twice as inexpensively from england, then we can stop and make it, shouldn't we buy it? >> i have heard of ricardo, i have. >> that is yes. the problem where it breaks down is where you have multiple countries and you have trade barriers. if you are saying do we want market efficiency of course we do. do we want to make mostly the things that we best here? of course, that makes everybody richer.
what do you do in a circumstance with a country with a $12 million, $12 trillion gdp that doesn't agree with that? what do we do with them? how do we stop them subsidizing? your view would be within 100 years their model is not to say whatever the number is. .. or 200 years, whatever the number is. my view is i'm not going to be around in 200 years -- >> i don't think you know what my view is, with all due respect. -- why don'tu this we just go to europe and say let's just cut all tariffs? >> but we have said that. when we make that our objective with all the countries with which we negotiate? >> of course, that is our objective, but it cannot just be tariffs, all right? because there are other non-tariff barriers. >>" is. -- and quotas.
>> all tariff barriers, and also cities. >> of course, and that is what the president's objective is. that is precisely what our objective should be, and in that environment, if you can get to it -- i personally don't think you will get to it very soon, but the direction we ought to be working in. in that environment, everybody gets richer. that is the theory, and my guess is that is reality. >> what if congress passed a law that said you can do business -- this is america. we believe in freedom. you can do business with china all day long, but it's illegal, just like it is illegal to give a chinese official of pride to it isiness with you, illegal to let them have your technology.
>> than the first place, if you are referring to our study, in our study, there is theft of technology which u.s. companies are not participating in. >> yeah, but sometimes we give it to them. side effect, but it's also setting up business and technology, having them go in and steal technology. >> what i'm getting to is we go to them and say we want to -- i'm about done. >> you said that earlier. >> when we go to them and we say -- our business people say, look, we want to do business here, and they say give us your technology, and they say swell. technology element you are a firm to, and one of the ways we are addressing that is through export control and to try to stop that. industry key, it is hard, as you
know, but there are ways to do it. sorry, i have gone on way too far. thank you, mr. chairman. >> ambassador, thank you. thank you, senator kennedy. i'm going to do a second round of what i hope is rapid questions, what i think is generous both to you and our colleagues to make sure that this important topic is explored, and then we need to conclude. i expect there will be a vote call shortly. ambassador, what tools other than tariffs does the united states have to combat china's of our technology, their cyber attacks against our infrastructure, and there pursuit of our business secrets? other than tariffs, what tools do we have? both have export controls, in terms of product but also in terms of technology. we have limitations on investment because capitalism is buying these kinds of assets,
congress is in the process of passing an act we think will help us fight this battle. in addition, this criminal statutes and the like that do not involve us, but in my opinion in the technology area, ,xports, controls, tariffs investment restrictions, and then it's going to the wto, and by the way, all of those things we have done in here except for the criminal part of it. >> in addition to tariffs, what non-tariff trade barriers would you expect china to use and pursue in regard to the united states? beam sorry, that just cannot a short answer because they are doing a whole lot of things. we get from the embassy every day a variety of things. they slow up inspections. they require people to do things -- companies bringing in
products that are designed to do nothing but slow things of or on technical or even incorrect reading. >> maybe the summary of what i think your reasoning is is there is a set of other tools china can utilize in addition to tariffs. expect more to come beyond tariffs, i would guess you would tell me. >> i would say with respect to many and probably almost all of variousings, and contexts, they were already doing an extent to which it was beneficial to them. >> the conversations the white house announced yesterday in regard to the eu, those are encouraging. it seems to me it is a framework by which we agree we will at the battle -- that's not the right word, the trade were at the moment. we would take a cause and see if we cannot negotiate an end to that. that is a good ring in my view, the possible that
trade agreements with the e.u., that the eu wants to extend u.s. agriculture from any agreement. your reaction to that? >> my reaction was in the discussion, in the first place, agriculture is an issue everywhere in the world and is equally difficult in the european union given the fact that they have plenty of countries and all the problems. our view is we are negotiating .bout agriculture >> would we negotiate an agreement that leaves agriculture out of the discussions are other discussions out of the results? >> i certainly would not recommend that. >> you talked about the $12 billion aid package and announced by the administration earlier this week for farmers. ustr, youat role played in those discussions, the announcement, was there coordination that occurred? >> i was aware of it, but it's
not a program that i have expertise in or was any kind of a knowledgeable participant. >> am coming to a conclusion. i want to ask you to reiterate something i think you said earlier to the response to a question i think of senator capital about the staff -- status of nafta renegotiations. would you tell me again, tell the committee again what you expect this timeline to be and what you said about august cap then the first place, agreement depends on everybody being reasonable, but it depends on the timeframe. if you assume it will be signed by the current president of exit on december is out days, you move back 90 because we cannot sign until we
have agreement in principle 90 days before. then you would have to more or less have agreement in principle which is the way these things work, sometimes in august. >> i think finally, is it possible that you and ustr would address section 232 tariffs, again, the department of commerce's but others part of the negotiations?re >> yes. >> technically they are not part of nafta but the expectation is that there would be a resolution of those in the context of nafta. >> section 232 are negotiablees items that occur in the overall discussion of a nafta agreement. >> that's correct. >> senator shaheen. >> thank you, mr. chairman. ambassador lighthizer, i was pleased when we spoke by phone to hear talk y about the willingness of ustr to take enforcement action. you said bring me in the cases
that you knew of and we will explore those and tried to take action. well, one question i have is how you brought any cases to address labor violations by our trading partners? as i understand there beenn a number of labor violations to ourhe agreements. >> wto -- you mean nafta? >> any trade agreements we have that would involve labor standards, has ustr brought any cases to address any violations of those labor standards? >> in the ftas audibly during, or have been that many brought brought any, but we are very, we are very heavily on labor standards and commitment in nafta and working closely with the unions and other interested parties converted to set up a system where labor
rights were being substantially improved. >> ill appreciate that. >> i don't know we brought -- >> it's my understanding you have not brought any enforcement actions to address labor violations and i would hope you might be able to explore whether that's in fact, i to and share that with the committee. >> i believe it is, in fact, true. if there are labor violation cases to be brought we will certainly bring to. people bring them to us. in the context of nafta there's an effort to try to set up a system that is more, a little easier to monitor. >> i appreciate that. that's very important because as a look at how our american workers are impacted by some of those agreements as you heard from the panel, that continues to be an issue. i was pleased as i'm sure all of us were to see the presidents
press conference yesterday and the effort to cool tensions with europe. i'm not sure, understand why we started tensions with europe in the first place. wete were engaged in negotiatios around ttip the would significantly reduced tariffs as i understand the europeans under those negotiations were offering to reduce 87% of all tariffs to zero. i would like to know if you can share with us whether they were in the concrete decisions that yesterday as part of those discussions and that an announcement? what specifically happens next? >> so we are just one day into this agreement. what the president and president junker agreed to was that we would set up a variety of groups of basically one group to do with the process of getting to
zero on tariffs and zero on subsidies and the group to do with of the complicated issues of getting standards to the point where hopefully there somp equivalence it will remove standards as a trade barrier. i met individually with commission who's responsible for trade,wi and, when you say thiss a one day, this is one day old news, but we are in the process to set up a structure in ustr to allocate resources and expected in moving forward. and as you suggest there is some basis which to add these discussions because we have history of ttip and we can talk at another time about what happenedd with ttip or at least what my perception is what happened with ttip. >> but i guess the question asking is there wasn't anything as i understood the announcement and analysis i heard from the wasn't anything specific that was agreed to yesterday except'
an agreement to talk further and to set upt these kinds of workig groups. >> i would say in terms of the trade partner was thatt but thee was also agreement on energy park which is one of the paragraphs in the agreement, the elegy part and what they're going to do on that. there was a separate one on increases in soybean purchases but there were not like contracts signed. >> and, in fact, the eu has to rely on the>> countries within e eu to agree to things like increases and soybean purchases. am is correct? >> yes. presumably by the companies. >> you couldn't agree to that in those discussions? >> what? >> the eu couldn't agree to increase soybean purchases in those discussions because they don't have -- >> they couldn't sign contracts but the reality is that a
mandate from the member states, right, that's how to operate so i presume there's a basis for what they agreed to. >> my time is up but it just wanted to make a point that i think has come out from several people have asked questions. you said several times with respect to things like zte and some of the other issues that were brought up that were not directly under the ustr that you state in only and you don't deal with those issues. it seems to me one challenge that we've got now is that we haven't recognized that what's good for national security is often good for the economy, with good for the economy is often good for national security and that we haven't looked at the tools of diplomacy and international activity in the
context of a coordinated strategy. i guess that's the concern i have about these tariffs come, t appreciate the argument you are raising but it doesn't seem to be it's part of a coherent coordinated strategy that look at the role of the united states and the world big it seems to me that present realal challenges r us going forward. >> i would suggest that what we tried to do is opposite of that. we try to coordinate it and the presidents national security strategy whichch was published n maybe february goes through this and talk economic security as part of national security. it's a good document and i would recommend it to anyone. really, it's idly the person anyone anyways ever try to integrate national security and economic security is an essential part of. if we don't have a strong
economy you are not prepared for national security. that's kind of the essence of, that document. i think we are in agreement with you. >> maybe i'm faulting the implementation rather than the strategy then. >> mr. ambassador, to follow up on her comments, let me put in your mind and you don't need respond. i'm happy to see afterwards if you tend what you think but there is a belief that europe is naturally going to be buying more soybeans as a result of our loss of markets in china. those are being replaced by argentina and brazil, and as those soybeans in argentina and brazil are moved to china, where you're pastorally been buying from argentina and brazil, we will become a natural market. we want to make certain wherever the market is, it's at a price and in volume that offsets or grows the current opportunity we have to export soybeans around the globe, particularly to china. senator alexander.
>> thank you, mr. chairman for ther. opportunity. mr. ambassador, you've been there a long time so thank you for coming today. i want to talk about aluminum. which is a a part of the natiol security justification for that tariff. what's the goal of putting a tariff tax on aluminum? is it to create an event in which the united states produces more aluminum? >> i think the objective is to have a viable aluminum industry in the united states, and i think there was -- >> well now, there are different parts -- i know little about this because i grew up near alcoa tennessee and a father work for an aluminum smelting plant. you make aluminum by running a lot of electricity through bauxite and then you make it in ink it. from that make pots and pans.
they roll out and then they make pots and pans and aluminum foil and all that kind of thing. i assume are not putting a tariff on them in order to create more aluminum foil plans for more pot and pan plants. i assume the national security worry would be that we are not producing enough of the basic aluminum and get and if we don't produce any of it that's a national security problem. would that be right? >> in my view, and once again this wasn't a report i wrote speedy but you said this is all correlated and you are the trade representative. >> what is it is i'm involved in a process. >> you just said it was coordinated. i heard that part. what's the goal of the? you want to produce more aluminum ingets? >> our view is there certain kinds of aluminum you need and national defense and that if you don't have it, if you don't have
some kind of an aluminum industry -- >> i do want to run over my time. all you need to produce that aluminum is an aluminum ingets. you could have an american plant that can produce whatever you want, right? >> i'm sorry. i'm not following. >> onpl saying is we have a prey robust aluminum industry in the united states. we could make about anything. aluminum foil, special aluminum pots and pans. it would seem to me the worry is that we don't, do you know how many aluminum smelter is we have the united states today? >> we have very few. >> we have seven. do you know how many people work of those aluminum smelters? >> i don't know the answer. >> 4000. we have 7.2 million people working in the automotive industry whose jobs arer. affecd can we just read in the morning paper, 11. 4% of every car as aluminum. ford and gm are singular not make as much money because the
tariff on aluminum and it looks like we're doing that to protect or thousand jobs in aluminum smelting business andin will not get those back because the reason we don't have aluminum smelter is because of the cost of electricity. alcoa produces half of the aluminum produced in the united states. 46%. they have three smelters and one that is curtailed, which means it could open up if it wanted to. a 10% tariff tariff is not enough to offset the increased price of electricity. what going to do, go to 20, 30, 40? so that we have enough aluminum ingets made and the united states and at the same time continue to add to the price increases for automotive? >> the answer, there's no plan to go to 20, 30, 40%. >> what's the justification for any tariff on aluminum if it's not enough to create an
incentive for aluminum companies to create more aluminum? >> i don't know about alcoa was situation specifically, but the calculation was made at the department of commerce that 10% tariff on aluminum at the margin would make a difference so that you end up with a sustainable aluminum industry in the united states. that was the calculation. >> i'd like for us to talk to them because that is in any sense at all because we only got seven smelters. we got one curtailed smelter. anybody knows smelters bled all over the world because of the price of electricity. unless were going to increase the price of basic aluminum ingots in the united states by 20, 30, 40%, not going to able to make ingots. we could get ingots. we get 40% of our aluminum from candidate. did i understand you that if you're able to resolve the nafta
agreement, that that could be coordinated with the aluminum tariffs, and as a result there might not be an aluminum tariffs on canadian aluminum ingots come into the united states? >> yes, senator.n resolving the nafta issue, we would expect or hope that we resolve the steel and aluminum issues with both mexico and canada. >> well, that might not resolve the aluminum price issue in the united states because as we know whenever you raiseth the price f any imported steel or aluminum, it raises priceou of everything else but at least if we do with the supply. i'd like you to look at is what makes any sense to put any tariff on aluminum when the reason we don't have aluminum, ingots in the united states, is because of the price of electricity. canada has lot of water so they can make electricity allied easier and so can't of the
countries in the world. the last question i would have, if i may, i would assume that what we're going through right now is a substantial review of nafta. why doo we need a sunset clause? i mean, you are reviewing nafta today. there are substantial number of republicans including me who are not likely to vote for any new nafta agreement that includes a sunset clause because we don't think it's worthth anything. i'm overyt my time but i would like, hope you take the back to the negotiations and i hope to present a real obstacle to having a sunset clause in any final nafta agreement. >> senator kennedy. just a suggestion. you will gain credibility if you leave the moran presidents out of your questioning and it would also make me feel more comfortable. [inaudible] >> you're not recognized for that purpose.
[laughing] ambassador lighthizer, thank you, senator kennedy. senator shaheen. >> i i just have one more question, ambassador. as we had the whole conversation about increasing exports and that's one of the things would like to do in order to address the trade imbalance, one of the things that he consistently from newmp hampshire companies who he international markets who are very anxious to continue to do trade deals, is how much they are affected by the inability of the ex-im bank at this point to do big trade deals because of not having the appointees they need to to get a quorum. can you tell me if the administration is working to address that and what you're doing? and you have any ideas for when that might be up and running again to do those bigger trade
deals? >> i would say, first of all, i completely agree with your constituents is a the ex-im bank is apartment and were losing deals as a result of it. the acting president is not here. the president appointed and so we would have someone who is actually an acting president. and in my view that they we do have an effective ex-im bank is entitled within the united states said. i don't think it is in the do with the administration at all. it's the fact the senate will not come from the people. >> i certainly fault the same as well. i thought my question was, what is the administration doing to try and address back? are you talking to the senators who were holding that, and we can name them here. i won't do that but the people who were preventing that are not on my side of the aisle. they are on the presidents side of the aisle. it is an effort to persuade them
of the error of their way? >> i do want to characterize as the error of their ways but there certainly is a view, and i personally have spoken with senators and t and other people are doing their own thing because the increment to move forward. to move forward. i agree to -- with thepeople who on the other side of us on this issue that thereare improvements we need tomake. we need reform and all that sort of thing. >> absolutely, but we should get it operating. >> i am a complete believer in what you're doing. if you're saying, is this something that i care about, am i active on? the answer is yes. >> thank you, chairman. >> thank you, senator shaheen, for your cooperation. we are pleased, ambassador, you are with us. thank you for taking the timeto do so. this hearing in part was intended to discuss with you your resource needs. you mentioned them at least in passing in your opening statement, but we'd be happy
and you're very articulate and very intelligent, and i thank you for the attention that you provided to responding to my colleagues and my questions. if there are no for the questions, and there are none, senders may submit additional questions for the subcommittee official hearing record. we would request ustr to respond to those within 30 days. the subcommittee now stand in recess subject to the call of the chair. thank you. >> thank you, senator. [inaudible conversations] [inaudible conversations]
[inaudible conversations] >> which it was not the ambassadors jurisdiction. i think that's my response. >> the funding that the committee has approved or ustr almost 58 -- this is additional? >> i think the total is -- [inaudible] >> on soybeans and sorghum, we're we spoken of sorghum a couple ago.s >> talk to will. >> how is it going with sorghum in china briefly if you don't mind?
and the soybeans at the eu, what's the upshot from h what yu gathered from the searing? >> while i mean what i i heardn the searing was that the trade, the efforts that changing china's behavior and weha should not expect any short-term consequence with these efforts. therefore, the difficulties we have in soybeans and in grain sorghum would not be expected at least with regard to china's purchases to be resolved anytime soon. there was discussion whether that meant a year or years. >> what about the eu? >> the news yesterday or the announcement yesterday ofay an interest in pursuing or european interest in buying soybeans, i'm pleased to hear that. the idea that the eu and the united statess at least put a pause on escalation of our trade
differences and create an opportunity for soybean to be purchased in the european union is good news. we would expect there to be increase purchases because the eu in their demand for soybeans one now need to find a new market, additional market. let me say it differently, you define additional markets because argentina and brazil that event supplying the eu will now come on now supplying more and more of their beans to china. i can come we to sell everywhere but there's not, that is expectation with opportunity for the eu as long in a trade battle withwi them. >> is the eu markets more than the china market? >> it is. do you know the numbers? [inaudible] >> there really wasn't any development on the soybeans
yesterday. the european government doesn't by soybeans like egypt. the european government by soybeans and there's no european tax or tariff on soybeans that could be lowered. >> these questions were pursued by my colleagues here and i think thell answer was that a framework was in place for additional discussions about additional purchases but there was a sale of soybeans to the european union or two european countries yesterday. and there is no impediment towards your buying our soybeans now. >> just to be clear, it's private importers in the european union that makes decision about where they will buy. the government doesn't lean on them to d buy -- >> unlike china it's a different market in which we are selling the individual businesses that make decisions about where to
buy. we need to make sure neither the european countries governments or the united states puts any impediments in the ability for that choice is made to buy united states soybeans that that actually occurs. an issue that' i think is somewhat related to this because markets and change, you can be buying from one supplier and the changes to another supplier based upon price, availability, transportation costs. have witha that we will provide aid to farmers is that that is a short-term issue. but our markets are based generally upon long-term relationships. while they could change overnight, we spend money and time and effort in developing relationships with those people who by soybeans. who actually buy a great sort of. -- a grain sorghum. when these trade issues are behind us, i am fearful we will becauset our purchasers
there are now purchasing from somebody else rather than entities within the united states. that you can solely compensate agriculture producers by payment, that helps tide of those farmers and and make the next loan payment, the next payment on their note. but what we have been pursuing for a long time with individually and commodity groups, the united states, our trade efforts, through programs as long-term relationships with purchasers that will be damaged if we do not get out of the trade war quickly. >> american's voice he been association. you said they have been building clients in china for years and years. did it bother you at all -- was it concerning when mr. lighthizer said this trade war with china could go on for years?
it thisan: let me say way. my view and i have expressed this to the administration including in meetings with the white house with the president, that we ought to quickly resolve our differences with the european union and with mexico and canada. perhaps the -- if positive -- it is not an announcement and it is not definitive -- but the idea that it is potentially possible to have nafta or an agreement with forco resolved in time prior to the change of the administration of mexico, that is a positive development -- development that i heard today. it relates and china which we need to be aligned with canada, mexico, the european union, other countries in the world through are all interested in changing the behavior, the ill behavior of china in regard to their stealing of trade secrets. their cyber security attacks. patent infringements.
that is an issue the united states and our partners ought to be aligned in in pursuing changing behavior of china. that would be why it would be good for us to get those other trade issues resolved. then let's work in a specific way to change the bad behavior of china in a more unified way. it is not surprising to me to hear that the expectation is --t china trade agreements that the efforts to change china's behavior is a long-term issue, not a short-term issue. but the problem is that in the meantime, there is a lot of pain by not justtered farmers, but manufacturers and consumers. do you support putting nafta into two separate deals? sen. moran: i have not given a lot of thought to that.
that is an unlikely scenario of events. i could see we could reach an agreement with mexico, a creates greater impetus on the part of canada to more quickly resolve those differences. >> bilateral deals that have had the chance of that. sen. moran: i think there is additional pressure that occurs on canada if mexico and the united states have resolved -- has said that we've resolved our differences. >> [indiscernible] suppose that is the issues that are different -- the issues we have with mexico are different than the issues we have with canada. and perhaps the and perhaps the issues they have come have, some visitor from the issues that with the trend. the magnitude or difficult of each of those issues desire to reach an agreement. i'm not smart enough to know about the politics of other countries. >> senator alexander suggested that if the new nafta has a
sunset clause that many republicans including him will not supported. are you concerned that the concluded nafta couldn't difficultly getting through congress? >> i was not human nafta was approved. i was not in congress would nafta was approved. i've been to tpp numerous times in my time in congress. these issues are very difficult. they are difficult politically even for individual members of congress who are supportive of trade. the politics of trade agreements are hard to overcome, and the idea that we would renegotiate a trade agreement that would be hard to get approved in the first place, every few years is onet that is difficult politically but perhaps more importantly it creates even greater uncertainty because i get our trading relationships much better and stronger if they are long-term. uncertainty is nothing, something that no business, no
farmer who plants seed in the ground and borrows money to do so or nobody or no one who is purchasing that in china or mexico, with a limited to nafta guess, canada or mexico, no one, the supplier or the purchaser wants the uncertainty of not knowing whether that relationship is long-term versus short u term. it is not a good idea to have a sunset provision in a nafta agreement. and' secondly, i thought about this topic about who would vote or not voteld if it was in, aga, i was interested what sender alexander had to say and it cost me to think about the issue but at this point i would say i just would advise the ambassador the sunset provision is not a good solution or should i be included in the final negotiated agreement.
>> are you or your call expressing for more information about when the u.s. and eu might finally agreed to drop these tariffs? >> i think today's hearing indicates what was a lot of focus on fish, on seafood, on agriculture, on soybeans and grain sorghum, there's also equal or as much interest in aluminum and steel. as as a kansan often get asked question agriculture because of the stereotype and rightfully so but our airplane manufacturers, our automobile manufacturers, steel and aluminum are hugely important to the more important to me. it's important to the people theytim employ. we are all anxious to have answers as to when t this might come to an end. those are not answers that are easily receivable.
received. not easily attained. >> the ustr budget didn't come up much. would you comment on that? >> again, the ustr has been funded, is found in fy 19 to extent that as aed amount of moy they requested -- [inaudible] andse: so while the ambassador mentioned in passing about resources, i was expecting that it would be a request for additional dollars or at least the recognition we may be back to ask. for more money because it's apparent that thent task of ustr at a time when negotiating nafta deal with european union, encouraging as you are at least for me and some of my colleagues the desire we want bilateral agreements negotiated now, not
later, plus all the china issues, the workload at ustr has to be significant and the resources, in my view of surprised that there was not a request-- at least or a forewarning that additional dollars may be necessary. >> after meeting with the president and today, the hearing and meetings with secretary perdue is a jurist and at the china fight is going on for years as ambassador lighthizer said today, that the tariffs will stay on for years? we heard yesterday secretary perdue said this is a temporary assistance for farmers. >> i heard both stories. i heard what was reported that secretary perdue said, that this is -- [inaudible] >> i was not at the white house i was not in that meeting. what i know about the $12 billion is almost exclusively what i read, i guess are you all print journalists?
so what i've h read in regard to what was the program is. i think this is true of my colleagues, we have virtually no information other than what has been reported in the media. i would expect secretary perdue to come to congress and explain. in fact, i am suggesting to my call it, i serve on the agriculture appropriations subcommittee so we find usda. it is my request secretary perdue have some account of hearing as at the date on trade. but specific on the topic of the $12 billion and what the program will be. and again, today we saw the need for lobster and out of the whether the sphinx included an agricultural program, and i'm sure my colleagues to represent alaska and maine and new hampshire are anxious to knowar more about what that would be.
but to your earlier point, everything that i've read suggests this is $12 billion now, soon, any program that is not expected to bee ongoing. we heard today that the expectation is that negotiating, they had an agreement with china that reduces tariffs, and at least in the ever escalating dialogue and consequences of tariffs is a long-term thing, longer than a you that presumably the $12 billion available. [inaudible] >> isn't that breaking the process that you as the appropriators don't know what the administration is doing with the money to help farmers that you represent? isn't this speed is truly i would say i think men are supposed by some at suggestions that are going to farmers maybe this is a white you could do it best.
i have faith in secretary perdue. i appreciate his leadership at usda but it do think it's important for any leader to have input i of those whose constituencies are so directly impacted by this program, to have input ofog rest have an understanding. part of what i did as a member of the united states sin is try to provide information to my constituents. my constituents are asking what does this mean to me, what does this mean to my farm operation, which assist me to my belly to pay my banker? at this point in time i unable to answer their question. i am very interested opportunity for secretary perdue in this kind of setting or any meeting in my office to better explain to me so i can offer advice but i also can tell my constituents forthcoming. >> thank you very much. >> thanks. >> before i get caught with preston press, could replace it and
tougher. isn't that just sort of the secret? aliso was back then. we were constantly being underestimated, and so sometimes being underestimated is a good thing. you can always had elbit of surprised. our move a lot of my debates with the people who i was debating didn't take me seriously until i got out there and that it was too late. i think the things happen when you are negotiating. >> in the weeks it will hear from pat schroeder, helen bentley, nancy johnson and lynn woolsey. watch oral history sunday at 10 a.m. eastern on american history tv on c-span3. >> c-span, , where history unfos daily. in 1979 c-span was created as a public service by america's cable-television companies and
today we continue to bring you unfiltered coverage of congress, the white house, the supreme court, and public policy events in washington, d.c. and around the country. c-span's brought to you either cable or satellite provider. >> health and human services secretary alex césar talked about the role of the free market in providing health care at the heritage foundation in washington, d.c. he also criticizes the affordable care act and medicaid expansion in this 40 minute event. >> good morning, everybody. it's a beautiful morning in washington, d.c. after the monsoons seems to have relieved us some of the rains, a beautiful day. i'm the executive vice president of the heritage foundation and the like to welcome all of you here and for all of you who are watching online, i would