tv U.S. Trade Representative Lighthizer on U.S.- China Trade Relations CSPAN March 1, 2019 10:02am-1:18pm EST
that that police officers directing traffic disappeared. it was the beginning of smog related automobile accidents. it was so bad mothers were dragging children into department stores. and a sort of hysteria built. >> and we'll go inside the jet propulsion laboratories at cal tech responsible for putting rovers on mars. >> the reason we are here is to do what has never bun been done before. and we are paving the way for human exploration elsewhere in the solar system. >> watch c-span's cities tour of pasadena, california, this saturday at 7:30 p.m. eastern on c-span book of it and sunday on 2:00 p.m. on c-span3. working with cable affiliates as we explore the american story. u.s. trade representative robert lighthizer testified before congress in week.
about ongoing u.s. china trade snoerkss and talked about the new trade agreement between the u.s., mexico and canada. would our guests please take their seats. and the committee will come to order. good morning. today we welcome ambassador robert e. lighthizer, the united states trade representative to discuss u.s. china trade. one of the challenges for the ambassador, members of the committee and the administrat n administration -- there is some truth to what everybody says about trade. at the direction of the trump administration there are currently u.s. tariffs of $250 billion on chinese imports. in retaliation, china has
imposed tariffs on $$110 billion of u.s. exports. this hearing is our opportunity to make clear what congress stands for on u.s. china trade and what the american people need to see in any trade agreement. as the administration concludes its work and memorandums of understanding with china. at the outset i want to ac knowledge that ambassador lighthizer is leading negotiations with china and that he may want to exercise discretion about the level of detail he gets into as we reach the delicate stage of finishing, hopefully, the agreement. at the same time, i encourage the ambassador to be as forthcoming and vigorous as we know he is capable of doing as possible. i have often observed that there is truth, again, as i noted earlier to what everybody says about china. china has been good for some but it also has been bad for many others. in 2000 when congress voted on
normalizing trade recommendation was mcthe promise was that mcwould reform and become market-based, democratic, and would respect human rights. but the china we trade with and compete with today is very different from the one that we had hoped would emerge. china's economy which has taken on some market characteristics remains fundamentally state directed. china's companies, state owned or not are called upon to serve the government's interests. china's trade and economic policies are coordinated through five-year and 10-year plans, plans backed by china's resources, aimed at foresting national champions, advancing mc's economic and technological ambitions and ensuring full employment in china. and they are implemented at the expense of other economies through the theft of others 'intellectual property and without regard to the global trade rules or human rights of workers. these are structural economic challenges that american workers
and companies face in trading and competing with china. while in administration confronts the same challenge was china that previous kmrgss have faced it has chose ton use tactics and tools that previous administrations of both parties did not. the administration's tariffs have been sweeping, disruptive controversial and for some sectors painful. the administration's promise is that hieskt approaches will yield rewards. my concern is we are about to see the see the administration use the same friemt infective playbook replied plooitd in the past positive recall in april 2017 that president trump met with president xi as marshaling as part of a plan for a big china deal. the commerce secretary that outcomes from the exercise represented morp than has been done in the whole history of u.s. china relations. of course when we examine the results of the negotiations, we found that some of the commitments were not quite as advertised. other commitments that were made promising changes in china were
already in the process of being made. and in may of last year china's trade negotiations seemed like it was about to lead to a package of large purchase commitments for commodities like soybeans, natural gas, along with aircraft. those negotiations clearly were not leading to the solution that we had hoped for in terms of significant trade challenges. they indiode were put on hold. this time around, december 1st, the president announced a the 90-day period to fix our complex trade problems with china. as we near the finish line we are hearing once again about very large purchase commitments for commodities like soybeans, natural gas and along with aircraft. there is a primarily difference, however with these negotiations. that is that ambassador lighthizer is at the helm. he has time and again i think developed a vision that many of us on this committee will support vigorously. and we believe that the structural problems that faces america as it businesses the trade relationship with china are well observed by the ambassador.
this administration has chosen to take a path of high risk confrontation. it must hold out for the good deal, a structural deal. the future of america's economic prosperity is in the balance. and with that, i would like to recognize the ranking member mr. brady for an opening statement. >> thank you, chairman neil for convening this hearing on america's trade relationship with china and thank you ambassador lighthizer for your leadership in the ongoing negotiations with china and for consulting with us today about where the negotiations stand and what comes next. we can all strongly agree that china cheated on trade for decades. sfrpg harming american borks and businesses. president trump deserved significant credit for being the first president to confront china as's unfair and spreader to trade practices head on and insist month a new new fair trading replace with the u.s. while we want china to by more u.s. goods that support farmers, manufacturers and professionals at home it's more important for us to hold china accountable to
meeting high international standards on intellectual property rights, on subbedization, overcapacity and the other structural ways in which china distorts the global economy. a new era of fair trade between china and the u.s. is in everyone's interests. the solution must be enforceable at every level of chinese governance, measurable and subject to corrective action should it fall short of commitments. and it should provide as much predict ability as possible for our american job the creators seeking to serve china's had market. with a more level playing field and now armed with a competitive 21st century tax code i'm confident that our farmers workers and local businesses can compete and win anywhere in the world. u.s. companies face a which had range of trade barriers from china and i look forward to a thoughtful discussion of them today. china's unfair treatment of u.s. investors is a huge part of the problem. the u.s. trade representative
section 301 report identifies in great detail. for example, china's equity caps and joint venture requirements prevent u.s. companies from controlling their own operations as well as their own intellectual property when they invest in china. giving chinese competitors an unfair advantage and costing american jobs. a high standard fully enforceable bilateral investment treaty with china can help us address many issues for the long-term. i'm hopeful the substantive talks under way including in washington last week will produce meaningful commitments from china. lower trade barriers, achieve structural reforms, and establish a new era of fair trade. but no one country can take on china entirely alone. the three-party initiative mr. ambassador, the that you are are undertaking with the european union and japan holds great promise that we must build on together. i'm also encouraged the trump
administration showing leadership and aggressively challenging china when if violates wto rules, including intellectual property licensing policies, as well as subsidies and tariff rate quota for ag medicateties "i" concerned about the real impact tariffs have op american consumerers and manufacturers and farmers. i'll work closely with the president and his team to ensure we minimize impact to the united states and our alloys as we take on china. fairly traded goods should be colluded from our tariff actions. as should products otherwise unavailable. u.s. companies. and i think having a real and workable exclusion process in place for any tariffs is essential so that we can focus these impacts on the bad behavior of china. in sum, thank you for being here, ambassador. i look forward to today's discussion about the challenges we face in china and our demand for china to negotiate in good faith to achieve a durable and
enforceable solution to the structural issues we face. mr. chairman, with with that i yoeld back. >> thank you, mr. brady. without objection all members opening statements will be made part of the record. today's sole witness is ambassador robert e. lighthizer the united states trade representative. the committee has received your written statement. it will be made part of the normal hearing record. you have five minutes to deliver your oral remarks. ambassador lighthizer, again, welcome and you may begin your testimony as you are ready. >> mr. chairman, ranking member brady and distinguished members of the committee, it is a pleasure to be here today and to discuss in very important issue. i should say at the beginning i can never hear anybody up there. at. >> mr. ambassador could you speak into ambassador. >> you can't hear me i can't hear you this is a perfect room i want those ten seconds back i
have to say that every time i come here. all right. i think at the beginning it's appropriate to take a minute and remind ourselves that with all our pressing problems we have a very successful economy. under president trump's leadership we are growing much faster than any g 7 nation. creating millions of new jobs, significantly to me 500,000 manufacturing jobs. and we have seen 2 million people join the workforce. these are people not in it before. these are real working people, moving from despair to hope and their kids from insecurity to a future. a lot needs to be done. and i salute all members both parties who are working so diligently on issues of worker trains opiate addiction and trade and other issues. but we are here to talk about china. i grow with those who see our large and growing trade deficit
and their unfair trade practices, including technology transfers issues, failure to protect intellectual property, large subsidies, cyber theft of commercial secrets and other problems as major threats to our economy. we can compete with anyone in the world, but we must have rules, enforced rules that make sure market outcomes, not state capitalism and technology theft determine winners. president trump has for years recognized this very serious and i would say existential problem. and he is determined to take action to defend our workers, farmers and ranchers, and our economic system. he directed me to conduct a study under section 301. after months of hard work the president ordered that certain tariffs be put in place because of his insight and cigarette
grit we are in a position to deal with in problem for the first time after decades of governmental inaction. i would like to note that as with many extremely important issues facing our country prescience has been bipartisan. the speaker was in early, forceful and foresighted leader on this issue. i have counselled with her regularly in in my current position. i would like to brief somethingpeople facewood a pmtr vote in april of 2000 the speaker said it's incouple botany upon all of us to work for free and open trade with china that is real, the u.s. china bilateral wto agreement is seriously deficient in substance, implementation and enforcement. it's too important for our economy to be based on a pattern
of broken promises, not proven performance. mccan become a member of the wto without congress having to surrender its right to u.s. china trade review annually. there is no reason why we should permanently surrender that leverage at this time. i ask if her position had prevailed how different would things be right now? there are many other examples of bipartisan leadership, including a lot of people on this committee. i'm getting into them and answer the questions if it's relevant. let me close by saying that we have engaged in a very intense, extremely serious and very specific negotiation with china on crucial structural issues for several months now. we are making real progress. if we can complete this effort -- and again i say if -- and can reach a satisfactory
solution to all -- to the all-important outstanding issue of enforce ability as well as some other concerns, we might be able to have an agreement that helps us turn the corner in our economic relationship with china. let me be clear. much still needs to be done. both before an agreement is reached and more importantly, after it is reached if one is reached. i want to thank all members for your bipartisan approach on this semenle effort and i look forward to continuing our work together. i want to say if this was not a bipartisan view we would not be having the success we are having. thank you, mr. chairman. thank you ranking member. i look forward to your questions. >> thank you, mr. ambassador. we will now move to questioning. without objection, members will have four minutes to question the witness today in order to ensure all members have an
opportunity to inquire before the schedule requires him to disparate. i will begin by recognizing myself. members will be ac nonld in the order of what we call the gibbens rule, that is when the member took their seat. mr. ambassador, in my opening i referenced some of the earlier administration efforts to negotiate trade with china. the efforts seemed to overlook the deep and complex structural problems underlying our trade replace. my question is this. what will be different this time? and what can we expect next? >> thank you, mr. chairman. and that's the fundamental question. what the president wants is an agreement that, number one is enforceable, but that changes the pattern of practice of forced technology transfer, intellectual property protection, large industrial policy subsidies, and then a whole variety of -- of specific
impediments to trade and unfair practices in the area of agricultural. services. what we want is fair trade that requires structural change. and it has to be enforceable. we have had -- i can go through for the members many, many examples of chinese agreeing to specific -- not this specific -- but agreeing to -- to take steps to forgo certain unfair trade practices. and in very few cases have they actually kept their obligations. we have to in this case engage -- approach this with the view that there are reformers in china who want to change practices. and where working together with them. that has to be our approach. if that's the case our hope is to have specific language on specific issues that is
enforceable through a very clear process. >> so do you envision one negotiate the package in next few weeks that's going to resolve all of these structural issues? >> so, i'm not foolish enough to think that there is going to be one negotiation that's going to change all of the practices of china or our replace with them. i don't believe that. i think that we have to take on the major issues, the ones that i just raised. and we have to specifically preclude anti-market practices, and practices unfair to our workers and ranchers and farmers. and there are lots of them. at the end of this -- this negotiation, if we're successful, there will be a signing, and then there is going to be a long process of me working with the members of this committee and the finance committee and the senate on and other members to ensure we live up to this.
and i believe other problems will arise and have to be dealt with. i view this as a process. but this is the -- well, i use the term turning the corner. this is the first time i believe that it's been approached in this way. and it's -- and the result -- it's really the result of the creation of an enormous amount of lefrverage by the president. >> mr. ambassador, as you reach an accord will you envision putting the tariff threat in abeyance? >> so this may not be the first time -- the last time i say this in the hearing. but actually specific proipgss may be -- i want to kind of hold off on -- as the chairman knows well i'm happy to talk to him about whatever is on my mind. i love it when you said there had to be some discretion here i wrote that down because i'm thinking like that's not my strongest suit, discretion. but i'm trying to do it.
i will talk to you about that specifically. certainly it's an objective the of the chinese that tariffs go away. and -- and i should just add a footnote, that in my judgment does not mean any dumping any coined of doubt of a trade law. that's a separate process, separate enforcement process. i'm dealing with section 301 in this agreement. >> thank you. let me recognize mr. brady. >> thank you, mr. chairman. and i think you raise -- both you and ambassador lighthizer raised an important part which is the the first serious substantive attempt to change china's misbehavior it's not just one issue you are taking a comprehensive approach by challenging china at the world trade organization in cases, aligning with europe and japan on the wto reforms that can address this, implementing the investment restrictions congress put in place last year to
address china. and then the 301 section case, the issue you are dealing with right now. it will take -- this is the first comprehensive approach i have seen in the ---en a the one i think holds the most likelihood for success. i think as people look at what is a successful win for america, you got to really focus as you just mention on the section 301 area. where you really pulled back the curtain on china's trade practices and predatory practices. at home in texas we have one of our corporate citizens huntsman corporation, nearly a thousand employees backup they're of an example of how american companies have no recourse when intellectual property rights are violated in china because prove inks chinese courts don't uphold the rule of law. not only did the court through out the patent intellectual property case based on the expirations date of die they
appoint add court panel to review the case that had an employee of the company that stole the intellectual property. it is that hard for businesses to compete. let's talk about 301 a second. i think these are the key issues here. that will define i think our success. you mention this earlier. will the agreement that you're negotiating with china have measurable commitments in them? will they be enforceable at all levels of china's governance? because we know the play they have run before is to, you know, pretend to protect intellectual property at the central government level but not the prove inks or local and court and community levels. and will there be an avenue for corrective action if chf doens live up to commitments in what we hope will be an agreement to -- here in the near future? so measurable, enforceable at
all levels of governance, and corrective action to make sure they live by those commitments? >> so thank you, mr. brady. i appreciate that. first of all in terms of what is successful, you know, i've been doing this a long time. but nonetheless over the course of the last few months i went to every statement that business groups have met. agricultural groups have labor members have made. most of them myself in some cases having my immediate staff go through and tell me, tell me what that guy or that woman said is essential to a successful conclusion. and that is my guide. i'm taking that and distilling that down. i could -- some of you it's one thing some of you it's another. but it's all right in a band, right. and so that's what i'm measuring myself by and that's what i have as my -- as my objective.
it's not just what i think. it's what everybody -- i've distilled what the people who have spent time thinking about this think. the huntsman example is like unfortunately one of many, many thousands. >> unfortunately. >> i could go on and on about that. i won't that because i only have 12 seconds to go. number one, yes clearly has to be specific, measurable. has to be enforceable at all levels of government. some things are not appropriate for that. but 99%, the core stuff is all. in the agreement it will say central, subcentral, local, and controlled -- it's got to be across the board like that. and we have to have the ability to take proportional action, uni laterally to make sure we have -- that we have a situation where they follow it. >> thank you, mr. brady. the chair would now recognize
the gentleman from georgia mr. lewis to choir. >> thank youing very much. mr. clirm and ranking member for holding the hearing. thank you, mr. ambassador for being here. i've said it before and i will say it again, there is no way to compete in a race to the bottom. like our friend and colleague miss suele. i grew up in alabama. she grew up in the big city but i grew up in rural alabama. and i watched american jobs disappear throughout my life and career. and my home state of georgia, many manufacturers workers, continue to struggle and find good, liveable wage jobs. over the years, many of those businesses move overseas in search of cheap labor and lower environmental protection. but i witness in our community
inspired to oppose granting china permanent normal trade relationship almost 20 years ago. at the same time, my congressional district is also home to a large number of manufacturers. both large and small, who rely on aluminum. i do not need to tell you, mr. ambassador, that china plays by its own rules and focuses on the long game. while we may differ on the tactics, everyone in this room will agree that we need a level playing field. and we don't have it. we can do better. we can do much better. as you know, mr. ambassador, this is not an easy matter. we must be thoughtful, mindful and we must get it right. now, mr. ambassador, i want to thank you again for being here. and thank you for your service. the current negotiation focuses on a number of issues.
i want to know whether labor and environment protection are part of the discussion. >> so i was -- i would say first of all the the principal reason why i'm spending my time doing this now is for the same reason you just stated, that is to say we have lost not all just to china but since china joined the wto we have lost 5 million manufacturing jobs. and millions of additional jobs. and it would distress me if that was the result of economic forces. but it's not the result of economic forces. it's the result of state capitalism. so i am motivated by the same thing that you are. and i want to be judged by that, right, i want to ultimately be judged by that. on the aluminum question, you are completely right.
we have a problem, a global problem in aluminum precisely because chf doesn't operate on an economic system. they have created through controlling their market access and subsidies and other practices an extraordinary amount of excess capacity that is basically wiped out the -- the aluminum industry across the world. the issues that we are focusing on in this negotiation are not -- they are labor and environment to the extent those are unfair trade practices. but it's not the same as we are -- as you no he well in u.s. mca where those are specific object he was that we are requiring change in. so to the extent there are unfair trade practices i would say also we are constrained by the limits of 301 and by the statute that we have to work
with. but those are also as you well know high priorities for me. >> i thank the gentleman. mr. nunez is recognized. >> thank you. ambassador, thanks for being here and i want to congratulate you for being the first part of the first administration in 20 years of complaining about mcto actually do something. i associate myself with a lot of comments that mr. lewis made. and i know it's -- i know it's tough because i know the chinese are trying to be very targeted in the -- in how the tariffs are being implemented on our side. but i can tell you that from the intelligence angle we have been studying in the congress for several years, you know, the chien chinese into taking over communications systems around the world. they have moved into building strategic military locations around the globe. and those are spreading.
at the same time, they have targeted major industries for either takeover through acquisition of banks, energy sectors, and others around the globe in every continent, including -- including here in the united states. so i'd like to give you an opportunity, ambassador, to get into a little bit of how the chinese use the regulatory angle to encourage abuse and theft of intellectual property. because it's not something that i think a lot of americans understand. but they are actively on a daily basis stealing intellectual property from right here in the united states and transferring that to china to compete directly with our companies and our allies companies around the globe. i'll give you an opportunity to expand on that. >> thank you very much, congressman. so number one, i think that the
u.s. has the best technology in the world. it's probably our single biggest competitive advantage. and why we will be number one for a long time if we protect our intellectual property. because it's not just a question of high-tech industries. it's steel. it's the combines. if you get into a modern combine it's like a -- like a space ship was in the 60s. you know how they drive these things. they have all this computer operations and satellite operations. so technology is our biggest advantage. and it runs absolutely across every part of our economy. it is the key and that's why the president had me focus on it right here. and i think china as you suggest knows full well it's the key. technology is what's going to determine who rules the future. chinese practices are -- you could break them down in twofold. one is what they do there and
the other is what they do here. we have -- we are negotiate being provisions that will if enforced restate, make far more specific and clarify commitments against cyber theft, against physical theft and against using investment practices to get technology. what happens now, i don't want to go through a lot of specific examples. i know you know far more of them than i do because this is part of your responsibility in the intelligence committee. but -- but what happened very often is china comes in, for example they invest in a -- in a company. the company develops technology. that technology ends up in china. and it could end up through investment. it could end up through cyber theft. it could end up through employees working for that company and leaving and going to
china. there is a whole group of things. what we are trying to do is deal with that as much as we can in one agreement. and then that's one side of the problem is the one you focus on. the other side is how they get technology from us through non-economic means in china. u.s. companies operating there. and that's another thing that we're trying to deal with in this. >> thank you, mr. chairman. >> thank you senator nuns. the gentleman from texas recognized mr. doggett. >> thank you ambassador, i think our country is fortunate you're on the front lines of this negotiation. i did notice with interest the exchange with the president last friday, that the ongoing negotiation with china is a trade agreement, that's the goal and not a memorandum of understanding. and i think you indicated that since he is the boss you agree with him and that your goal is to negotiate and complete a reasonable trade agreement. is that right? >> i'm going to elaborate on
that when it's my turn to talk. >> well i'm just referring to your precise words last friday, that upped no longer use the term memorandum of understanding and that this is a trade agreement. >> i think if you turn the micr micron phone up. >> we're having trouble zblou could you pause my time here. >> no. >> is that better now. >> yes. >> there thank you. >> thank you. >> i felt pretty good when you couldn't hear me either for a minute. i felt like this is -- finally a fair system here. there will be -- there will be -- i'm not quite sure i know, congressman, doggett where you're going on this. but this will be a binding agreement. i should take a step back and say to the extent any agreement
between nations is binding, right, i always have to make that clear, there is a great -- a great degalle quotes. and see i'll update it to the current. agreements between nations like flowers and children last while they last. >> right. >> and it's a binding trade agreement. a contract as the president referred to it. and as a binding trade agreement, given the statutory authority that you and the president have to negotiate that's delegated by congress, can you outline to us what you would anticipate after the agreement would be the time table for submitting it to congress for approval? >> thank you. we have no intentions of submitting it to congress. >> if it's a trade agreement under section 103 you are required to submit it to congress. >> it is -- it's an executive agreement. we're not required to submit it to congress. with we are the debate at some
point i'm sorry congressman. >> as you have agreed with the president i want a binding trade agreement that you're seeking. you can seek it only through delegation of congressional authority. and you're required to submit such agreements back if you are lowering u.s. tariffs which would appear to be the case. >> well, let me just say we are in no way --s in a settlement of 301 action opinion the president is using his power under section 301 which has been delegated and executive agreement which the constitution gives the president the right to interinto. we're not changing any tariff lines. we're not using tpa and if we did by the way i wouldn't be here anyway because we wouldn't have gone through the process. this is not a tpp process. this is a settlement of the 301 action and the president's constitutional authority to enter into executive agreements. >> since we may not agree on that, let me ask you if you do agree that unless you get meaningful structural changes to address the stealing of
intellectual property and the other issues that are out there structurally that you outlined in your testimony if we all get it the sale of soybeans and other products this is an agreement not worth having isn't it. >> yeah, i couldn't hear the last. >> i'm just saying the go he will is meaningful structural changes and if we don't get them this is an agreement not worth having. >> i agree completely with that statement. and right now we're 500 -- >> let me ask how important it is -- i realize this is not your direct jurisdiction but i grew he with my texas senator within cornyn and the others who expressed concern about huawei and national security threat. and if there is any bargaining away of our national security to get this agreement, it would be with great harm to our country. thank you. >> so let me just say one, i agree with you on 50% of the things. you get the hachl. >> that's progress. >> well no usually at 90%. >> i do not think it should be a
purchase agreement. i deplete are fwree with that completely and the law enforcement provisions i have nothing to do with them. >> the chair would recognize mr. buchanan to inquire. >> thank you, mr. chairman for the important hearing. i want to thank the ambassador for reaching out really to both sides. you have had a lot of meetings, a lot more meetings to do. i appreciate you do that on a bipartisan bases. i want to echo what many colleagues said in terms of enforcement. my experience -- i happened to be in beijing 20 years ago as part of a delegation there. intellectual property was a big issue 20 years ago in terms of the theft. and i'm not sure how far -- there hasn't been any or much progress on that. still as you know it's a big challenge. the thought is whether the agreements is 150 pages or 1,000 pages. what i've learned in my business career, the agreements only add as good the two parties involved. i want to go on record also
concerned about the enforcement. i'm for free trade. but it has to be fair. we have to level the playing field. i want to switch gears to touch base with you the other day -- but this is a big issue in florida i think across the country. fentanyl. last year 77% increase in deaths in florida. china is one of the leading sources for fentanyl. i know the -- the president has had some discussions and i think he said he had some commitments. can you maybe expound on where that's at in terms of fentanyl and the chinese ability to produce that, what we are trying to do as part of this document ideally. >> yeah, well thank you, congressman. first of all, you're right there is a long history of -- of failure by china to protect intellectual property. the first kind of modern example of it was a 301 brought in 1991
during the george herbert walk are bush administration and then in -- between 2010 to 2016 there were ten different commitments where they agreed to do certain things, which commitments i would suggest are not -- were not lived up to. and therefore enforcement is the biggest thing. the president completely agrees with you on the issue of fentanyl. he specifically raised it with president xi when we were in buenos aires after dinner. president xi -- i don't want to suggest this is my area of expertise because it isn't. but agreed that he would treat it as whatever the equivalent of a controlled substance is in china. and this is something that the president views himself as having a commitment on. it may well be something that we end up writing into the agreement. but it clearly is something the president views himself as having a commitment on and that we are monitoring to see if there are changes. very important to the country
for all the reasons that you said. i even made a veiled allusion to it in my opening statement, this idea of fighting opioids is as important as job training. >> let me add one other thing i want to put on the radar i know you have a lot on the radar. but thing a community in florida, forest tri, a couple of years ago did $8.34 billion in our stat that's dried up for china. we can talk about that. i want to make sure you are considering that or looking that as well as part of the agreement. >> no, "i" -- i actually -- i have -- i have a list of specific issues that have been raised by members that are appropriate for the agreement. and it's something that we have raised and will continue to raise. >> thank you. and i yield back. >> we recognize the gentleman from california, mr. thompson. >> thank you mr. chairman thank
you for holding the hearing. ambassador thank you for being here and thank you for willingness to work with us and meet with us. you've been very open and very helpful during your time in this spot. i have three issues. you have heard from me on a couple of them before. i would just like to reiterate those and raise one new one to you. and then let you respond accordingly. as you know, my district produces the finest wine in the world. and china is the largest and the fastest growing wine marketplace in the world. the 232 and 301 tariffs put a 39% tariff on our product. and we're having to compete with other new world wine areas, australia and chile with zero tariffs. so i would like some assurance that you are doing everything you can to ensure that high-value added specialty crop products have the enhanced
entrance -- enhanced access to the market. i know you are working on all agricultural issues and products. and then the other ag issue is rice. milled rice in california has been waiting for the promised access to the chinese market ever since china joined the wto. and they've been very, very helpful, as you know, and very understanding. i guess i'd like to have some idea as to how much longer they're going to have to wit, or whether or not we're close to the promised access. and then the new -- the new issue that i want to raise today is the -- the are the tariffs on building and construction materials. the national home builders suggests that these tariffs equal about $1.0 billion worth of tax on residential construction. and as you know, affordable
housing -- the lack of affordable house something something that impacts all of our districts. every district in the country. and this just makes it harder to be able to build homes and get people into homes. and in my district in particular, we just went through a -- just a terrific -- horrific fire where we lost about. 7,000 homes. and home owners are trying to rebuild. and and they have seen the cost of building materials coupled with the shortage of supply and the shortage of labor just drive the cost of replacement to a point where they can't rebuild the home that they lost in their fire. and then we have had -- there is 7,000 homes in my district. then the new fires up in the northern part of the state in another area and southern part of the state there is thousands more. and this is really a setback for home orions who have been
through a lot. i wonder, is that $1.0 billion tax really the best way to mold china accountable? and i concur that we need to hold them accountable. but is this the best way to do it at the expense of people trying to move rebuild and move into homes? >> so, thank you, congressman. i would say first of all on the wine issue and as you call them high-value added specialty crops. yes they are very important. in negotiation is -- as we have seen about structural change. structural change and enforcement. but it is important that we have purchases because the purchases will be good for specific people and it will also -- it will also get the deficit down which i think is important directionally for sure. and in that context we very much talk about -- about high-value added specialty crops. and wine of course is a high -- it's a great example of one.
i mean, it's a product where the united states makes the best in the world. i can attest to that personally. the second thing is rice is complicated. first of all, we have -- we are talking about rice in the context of the purchases, number one. number two as you know we have wto cases which we have -- is the second one public yet? we have one that we won. and one in the process and will become public at some point. so trying to resolve those in the context of the fwreemt is something we are trying to do. so that is something that we have raised. as you know rice is a funny issue in china. it's not -- if has a different -- a political context more than a lot of the other things we talk about. but nonetheless trying to do that. in terms of the $1.0 billion. i don't know the letter i should look at it i presume they are talking about soft wood lumber
which is an acbd matter and steel and lum newholm i presume near talking about that. i would assume that. and each has their own context. i would say soft wood lumber is a litigation thing we have to work through. steel and aluminum, my objective is to try to work out something with mexico and canada on those things. >> we have run out of time. but thank you. and any information you can get back to me. >> all right i'm sorry. >> appreciate that thank you thank you. >> we established that california producing the best wine in the world. the chair would recognize mr. smith. >> i want to to say oregon and other states have good wine. maybe even georgia. i don't know. >> and the nebraska wine industry is coming right along as well. thank you, ambassador. for joining us this morning. i appreciate certainly your dealing with a lot of issues. and we appreciate that you take the time to be here this
morning. president trump has time and against expressed concerns for our farmers and ranchers. he has made the national farm bureau federation annual conference and annual event on his schedule. he has been steadfast in his insistence that agricultural be a part of any negotiations we undertake with the european union for this and more the rural community is appreciative. there are many lopgt issues to be considered in the china negotiations including intellectual property issues barriers to biotech products and many other non-tariff trade bar years. however i want to make sure that we don't lose sight of the fact that medicatety prices are down and the bread basket of the world being america has been negatively impacted by the cumulative impacts of the tariffs and certainly non-tariff trade barriers as with bell. we should never lose sight of this in the deliberations because it's so crucial and the talks come to successful conclusion i'm grateful for the president's personal involvement pmt i with many members of the
committee asked raft summer that the president engage directly with president xi to move these talks forward. i urged him to continue to do so and that we remember the san franciscos made by our producers in your daily discussions. in addition to china we need to to move forward with usmca and bring down to the 2323 tariffs and canada and mexico and eliminate the retaliation our producers enduring ford to facility the approval. i'm grateful for progress made in the jpen talks. every day our producers face tariffs higher than competitors when doing business in japan is a lost opportunity to expand and defend market share. so once again, time is of the essence. with the president's commitment to u.s. agricultural in minded i would appreciate thoughts on the 232 tariffs on canada and mexico and also the outlook for the jpj japan negotiations. >> thank you very much, congressman. first of all in the context of china it's not just about
purchases. we have -- we had many, many hours of discussion about a whole variety of issues which i won't go through because most members -- well most members would have at least some interest from biotechnology to specific issues involving beef, poultry, aacquatics, meats. i could go through. a lot on rice. beyond the purchase, a lot on just the sps issues. we spent a lot of time on there. we actually had long discussions on raktopamine. with the vice premiere of china. it was detailed discussion. jumping ahead, i want to go to japan very soon. the date will be in the next month. i want to have a trilateral meeting there on this issue of china with the -- and i want to start negotiations which we have now -- remember we have gone through the tpa with everyone with the congress and now beyond
our 90 days we can start the actual negotiating. . well feel a real urgency because of the combination ofatic market access and tpp in europe and this sort of thing you alluded to. it has a real effect on the farmers. it's something we feel strongly about. on canada and mexico, in the context of maintaining the integrity of the steel and aluminum program we want very much towork out the the agreement with canada and mexico and in the process of that. whether we succeed or not i don't know but it's my home we will do that. >> thank you, i yield back. >> thank the squa gentleman. wlgt let me recognize the gentleman from connecticut mr. larson to inquire. >> thank you, mr. chairman. thank you for holding this hearing and mr. ambassador thank you so much for your candor over the last several days. my question and i hope
so my question would be pretty straightforward how will you define success. in our meeting from china and with a specific focus from the standpoint of a number of us here on both labor standards and environmental standards and how will that play into whether or not you feel pending negotiations will be successful? >> thank you, congressman. i would say what we are doing and what we have to remind ourselves in this context is settling a 301 case. how i would define success and once again i'll repeat what i said before, i really went through and tried to distill what everyone else, members, business groups, farm groups, also experts and people who study these things and for me, success is, number one,
enforceable. number two, real rules on forced technology transfer at every level of government as mr. brady said, which is absolutely essential, intellectual -- minimum intellectual property requirements and once again, this section is probably going to be, if we have an agreement the ip section alone will be about 27 or 28 pages that it's going to be. this is long detailed but every one of you would say yes, that's what i would expect normal ip protection to be. i'm not advancing anything at all. we have a series of items involving services. there are specific provisions that china has that keep us out of banking and electronic payment and a whole variety of things like that and we on many of those have made substantial progress and i would consider that to be another chapter i would say will be nontariff barriers. this is how we negotiated this
thing. nontariff barriers. that is the subsidies, these industrial subsidies, that have the effect which have the effect of making it possible for our people not only to compete in many cases in china but to compete around the world. that's another thing. there's a whole lot of things that we expect to gather on agriculture and i went through it on that and we have made progress on a number of those. one thing we haven't mentioned we are negotiating currency restraint. a lot of members, a lot of members are very concerned about currency manipulation and having access to the information that allows you to make a combination. that is another part of these negotiations. to be honest, there are actually more and i could make it even more detailed but to me, that's how i am going to determine whether or not this is a trade agreement. now keep in mind, it's not like
an fta in the sthaens we're going in there and going across the board. what we're going in there is focusing on what was raised by our 301. if we do all of those things and the speaker said this, and it's not enforceable and he said it in the context of usmca and it's not enforceable it's not very valuable so we have to have it be enforceable. that i think it will be for the first time. i think we will have an enforceable agreement. >> thank you. i yield back. >> i thank the gentleman. let me recognize the gentleman from texas, mr. marshawn, to inquire. >> thank you, mr. chairman. ambassador lighthizer, thanks for being here today. i don't know if you're familiar with the district that i represent, but when you land at the dallas/ft. worth airport, you're in the middle of my district. it's the headquarters -- the national headquarters for toyota, exxonmobil, flur,
kimberly clark, et cetera. i have a district that businesses and major employers in my district are vitally interested in what you're doing and deeply appreciate your hard work on behalf of the country. dfw airport facilitates 35 be there worth of trade. ranking member, mr. brady, has an airport of similar stature in his district, so to us in texas, our ports are not only houston, but our ports are the airports. because of that, trade is vitally important in my trikt. i have a letter here from our governor, greg abbott, that is a
full-throated support of your negotiations and lived to put that in the record, mr. chairman, and it is -- >> without objection. >> it is a support of your work on the usmca and he recognize the importance of that and we would like to make sure that this goes in the record and makes sure that he -- that you know that he is in full support of the work that you're doing. because i have such an interest in my district, when i go to town hall meetings, what am i going to be able to tell my constituents that is being accomplished in the china agreements, in the china discussions, that will be very important that gets changed for my district?
>> so thank you, congressman. first of all i've spent a lot of time at dfw and if that entire airport is in your district, you've got a very large district because i think that airport is bigger than some districts the members have. it's the biggest thing i've ever seen. i appreciate very much the governor's support and hopefully your support for usmca. if usmca doesn't pass, i've said this before, it would be a catastrophe across the country, but it would particularly be a catastrophe in texas. it would be very bad on every level way beyond economics. you know what i'm talking about and i won't dwell on nap i'm appreciative and the president is very appreciative of the governor. when i look at this and this is notes just your district, i don't know if you have -- you must have a big district if it's got that airport in it, but if
you have in the agriculture products there will be a substantial increase in those and a substantial reduction in barriers, but i would say when i talk to members generally, most important single thing that we're going to do is stop the noneconomic transfer of technology. technology really is what separates us from the rest of the world, and it is for me, and i think this is true for most, it is for me what's going to ensure that our kids have the kind of jobs that we had and better jobs, jobs that we want them to have. if we end up losing that tech be know logical edge where we're number two in technology, then the world is going to look very different for our children and that literally is what i think i had in mind. i can talk about the various provisions but if we make headway to stop this transfer of technology and unfair trade by this trading partner, it's going to have a huge impact in terms
of jobs and high-end jobs in america. >> thank you for the work you're doing, ambassador. >> i thank the gentleman. the trade subcommittee chairman to inquire. >> thank you, mr. chairman. mr. ambassador, i think you've got one of the toughest jobs in the administration and we appreciate your being here. we appreciate your openness and candor and discussions you've had with me and so many members of the committee on both sides of the aisle. frankly i'm a little concerned about the 301 tariffs. it's kind of a blunt instrument, a tax on everyday americans and most businesses. i am concerned that we have some sort of agreement that results just in purchasing soybeans and airplanes, that's not sustainable. i'm hopeful that this effort that you've been involved with and using the tariffs and the negotiations results in some structural changes in order to be termed a success.
i'm confident that is your goal as well. any meaningful deal i feel must effectively deal with another long-term problem that has been vexing us for the last couple decades, currency manipulation. the president made a campaign promise that he would have the treasury secretary label china a currency manipulator on day one of his presidency. well, i'm not so much concerned about that broken promise as i am whether or not we're moving forward. it doesn't appear as though china has been actually manipulating in the last 25 months, i'm concerned whether the administration is focusing on insure china xhitsz to transparency regarding its currency practices, addressing the potential that china will resume aggressive currency
manipulation, damaging our economy. in the past you testified before this committee regarding the detrimental impact of chinese currency manipulation on our economy and manufacturing in particular. you've even called for the united states to change our trade remedy laws and bring a wto case against it. i have four questions. it's been claimed that there is already a deal reached on currency. is that true? if so, can you tell us anything about the substance of that agreement? in the past i've made a point in my support for trade agreements that we need to have our trading partners commit to stronger worker protections, environmental standards, currency disciplines and the commitments to be meaningful. you seeking enforceable currency commitments from china. last but not least, if you see indications that china's manipulating, what will the
united states do? does enforcement mean more across the board tariffs? >> thank you, mr. chairman. so i would say, as you say, currency problems is something i've spent a fair amount of my time not necessarily in my current job but in previous jobs worrying about and i would also say it's not just a problem with china. it's a problem with a lot of other areas in asia and a reasonable case can be made that it has at times been a serious problem with japan and those of you in the automobile industry realize that, a staungsal problem and we lost a lot of jobs because of that but also some other areas. i don't want to name other countries, but it has been a problem from time to time. something we have to focus on. there are costs in beings the reserve currency, one of them can't be that we lose -- the good people who go to work every
day and have competitive jobs lose their jobs. it's something we have to focus on. in here, is there -- there's no agreement on anything until there's an agreement on everything. you know that from how these things work. we have spent time on currency and it will be enforceable, the agreement will be enforceable and there will be something about it. i will talk to you about it off line. >> the chair would recognize the gentle lady from indian a na to inquire. >> thank you, mr. chairman, thank you ambassador lighthizer. i ask permission to insert into the record a letter signed by over 150 trade soeshgsz asking for a federal register notice that formally delays the increase of the tariffs to 25%. >> without objection. >> mr. ambassador, great to see you again. always glad to have you here. when can we expect that federal register notice?
>> the federal -- that federal register notice is being worked on right now. the president has made the decision and it's sort of in process. in the next day or so the president has made that decision and made the announcement and it will -- we're following the legal process. we have a process we go through a tpsc process and other agencies and steps we have to go through. that is something that will happen and it will happen according to the normal course. >> with that when do you anticipate releasing more decisions for exclusion requests from lists one or two of the 301 tariffs? >> we're in the process of doing that right now. those were in the first place we've already granted more than 1,000 or almost a thousand as you know and things were slowed down because of the government closure. we're in the process of doing that right now and expect another to come out fairly soon.
>> mr. chairman, i ask permission to insert into the record a letter, myself and my friend, that was signed by 167 of our colleagues asking for an exclusion process for list three of the 301 tariffs. mr. chairman. >> without objection. >> thank you. mr. ambassador, there's obviously great support in congress for an exclusion process for lists three and we've chatted about it and i appreciate that. the most recent spending bill instructed ustr to establish a process within 30 days, we're almost halfway to the deadline. do you expect to meet that 30-day deadline? [ no audio ] >> i can't hear you. >> can you go get the microphone. >> thank you. >> i would say first of all that
that was a report from the appropriations committee. i understand there are people in congress who want us to have an exclusion process. it's something that we're looking at. our view until now has been that we'd have the exclusion process for the $50 billion which was at 25%, the 10% you're referring to in this case, there would not be an exclusion process. i would note since the date that we put that into place there's been a seven or eight depending on when you stop devaluation of the chinese currency so that the effect has been less significant than fully 10% on those people are affected and our hope is we can deal with this in the context of our negotiations with the chinese. i'm sorry. >> i'm sorry to interrupt. i also appreciate, i know you and i chatsds, the constraints
on resources and i understand that your' facing with the exclusion process. the process for lists one and two is tough to administer and moving slowly and list three is looming throughout at four times the size and i understand that as well. can i ask you this in the close here, is there a way to simply fi things to take the load off your agency? what about companies hurt because their only competitors are foreign and able to provide products with little or no tariffs. >> we have a process we think is fair and looks at the competitive effect whether products are available in other areas and whether or not it's the focus of china 2025. we're happy with our current process, but it's, as you say, a big process. >> mr. chairman, thank you. i yield back. >> i thank the gentle lady and recognize the gentleman from wisconsin mr. kind. >> thank you, mr. chairman. mr. ambassador, thank you for your testimony today for the
outreach that you've been making so far this year. i'm going to ask you to respond to a couple questions in a moment, mr. ambassador, one of which is the level of cooperation and coordination you have with other nations in regards to what you're trying to accomplish as it relates to china and the second in regards to the concern i have, that the longer this trade war with china lasts, the more market share we start losing in china, china pivots to other countries and how difficult it's going to be to regain that market share because back home in my district in wisconsin, my family farmers are getting hammered and manufacturers, we had record bankruptcies for family farms last year alone with close to well over 800. i'm not saying this trade war is the sole cost but is piling on right now. so those are the two questions i have. before i do that, i think it's safe to assume and you probably heard it from most members there's bipartisan consensus on the challenges we face with china. the ip theft, forced technology
transfers, forced joint ventures, what you're trying to akm ploish and there's bipartisan agreement on how we need to resolve this. there is a difference of opinion on the tactics being used. there was another approach through a multilateral effort. i still believe that our summarily rejecting the transpacific partnership trade agreement will go down as one of the great strategic mistakes we made in the 21st century. this president rejected it without due consideration. 12 nations and the largest and fastest growing economic region in the world the pacific rim area came up with standards and rules that elevate up to where we are. that china would have been on the outside looking in. would have isolated them and put great pressure on them, whether it was prohibition on ip theft, on forced technology transfers, on joint ventures, strong labor and environmental chapters, fully enforceable, e-commerce
and digital trade chapter, everything we're trying to accomplish to elevate standards where we are, prohibition against localization rules, for instance, was contained in the transpacific partnership. moving forward on that would have put, i think, incredible leverage on china, isolating them in the region and now we're on the outside looking in. china is being able to help establish those rules of trade. at some point we hope to be able to find a way to get back in that agreement, rather than disadvantaging us from that. having said that, let me go back to the original questions i asked in regard to the level of cooperation with other nations right now in regards to china. there's strength in numbers. i think ultimately china will respond to the collective will of the international community much better than the unilateral action that we're taking against them today and then finally the lost market access issue. >> so thank you, congressman. i would say first of all getting out of tpp was the right
decision and it was a bad agreement and poorly negotiated and a car could have been manufactured 45% in vietnam and 5% in china and sold in the united states duty free. didn't do much on currency. a whole lot of problems. to get to your geopolitical problem had china joined it they wouldn't have lived up to the rules and we would have had problems. as you know well, we have ftas with six of the 11 countries in it already and of the other five, 95% of the gdp is in japan where with your support and help we're negotiating. i've said my thing. in terms of cooperation, we are trying to do it on two tracks. we do want to cooperate with other countries. we have the tri lateral aproptr your approach. your approach is less likely to be successful. we want to continue that approach but put in place unilateral action the president has taken and i would note that
unilateral action is what has brought us to the point where we are now. we're on hopefully on the verge of beginning to turn the corner. in terms of -- >> the gentleman will finish. >> in terms of trade with china, we hope that we can get these barriers down and we can do this before we lose our supply chains and our customers. >> okay. thank you. >> let me recognize the gentleman from ohio, dr. wenstrup, to inquire. >> thank you, mr. chairman, thank you ambassador, for being here with us today. question a little off track from china, but does relate to china. my colleague terry and i have introduced legislation to extend the caribbean base and trade partnership act for another ten years from 2020 to 2030. it's important program to u.s. textile industry because it requires the use of u.s.-made yarns and for a country like haiti, this act allows their
garment industry a fighting chance to compete with large asian suppliers such as china and vietnam. with the program set to expire and people trying to make investment decisions and production plans, certainty is important. important to u.s. companies, puts especially when doing business with -- in a least developed country like haiti. do you foresee support for reauthorization of this act? >> i'm not prepared to say. i haven't said it yet. i don't have an idea. the fact that you and congresswoman suewell are in favor of it is a positive indicator from my point of view. i want to look at it and i would also say that generally the requirements of u.s. made yarn in textiles going forward is something that i have supported as a matter of policy and other -- variety of other areas. i want to look at that so i can give you an informed opinion.
>> so it hasn't come up in any talks with china in how it might effect them. >> pardon me. >> it hasn't come up in any conversations with china as how it might affect them, they have a concern about it? >> no. that specifically has not. >> one other question when it comes to china's retaliation, if you will, and some of the effects on agriculture and their access to markets, you talk about some of the nontariff barriers and one of the things that's come to the attention is inspection requirements and scientific based. can you elaborate on some of the things they're doing in that arena if you will? >> i would be happy to do that, congressman. this is something that we spent an awful lot of time on. there's a whole lot of, as you know, technical barriers to trade or nontariff barriers to trade depending on what term you want to use. one of them that we spent probably the most time on this whole issue of biotechnology and
their approval processes. in the u.s. it's 18 to 24 months to get an approval and in china there are ones that are seven and eight years and haven't had approval. it's a very complicated process and it is one where -- that has a very, very negative effect on the united states because in many cases u.s. farmers will not introduce the technology in the u.s. until approved in their major markets. we spent a lot of time on that and hopefully we made headway the time to change things systemically and to put in time limits whether we succeed on that we'll see. i don't want to suck we will, but we did raise it and talk a great deal there be science-based decision making. right now there's not science-based decision making in many, many cases. there be time and that -- and we have a long pipeline of things that have been stacked up for years and years.
we understand how important this is. they're changing their process and getting it really more in line with the international norms as something we spent time about and have it be science based. we'll see where that turns out. i don't want to suggest those talks are over. we spent a lot of time on it and realize how important it is. >> thank you very much. i appreciate that. >> i thank the gentleman. let me recognize the gentleman from new jersey to inquire. >> thank you, mr. chairman, thank you ambassador for fulfilling article 1, section 8, congress has the major rule under article 1 in trade negotiations and i thank you for appearing before us. china needs to provide greater access for u.s. services firms and allowing the ability to invest and operate independently from state-owned enterprises and
competitively in the financial services, technology, audio/visual sectors. beyond the scope of the 301 report i want to ask you about two things quickly. one, it's been reported there will be a memorandum of agreement on currency in this deal. i've read your comments from the 2010 u.s./china security and economic commission in which you laid out your standards for combatting currency manipulation and laid them out clearly. you argued in that presentation that china's practice of currency manipulation, constitutes a counter available -- counter valuable subsidy under our cbd law. i agree. i have a bill that would treat it as such. you argued we should be quote/unquote imaginative in dealing with this issue, including restricting imports or
even requesting compensation for value of lost market access. the terms you have reached with china, on currency, live up to your own standards on currency? mr. ambassador, make it as short as possible. thank you. >> i'm not very good at that. >> none of us are. >> i would say first of all, i think without question, the president has been imaginative, right. the whole 301 approach we've used has been something that people haven't used before and it's had a huge difference. i feel very comfortable that i pass my own standard of imaginative and i might say, in the case of the president gritty, right. he had the grit to get this done. in terms of currency, it is certainly our objective and once again these provisions are never agreed to, nothing is greagreed
not to do competitive devaluations. congressman, i think it was thompson said, it's complicated what's happened in the last couple of years where we are on that and i could argue that round or argue it square. those kind of decisions on currency manipulation are not made by me but the secretary of treasury. they're complicated issues. without question in the past china has used currency manipulation and our desires commitments like that as well as commitments to certain amount of transparency. >> i hope for another meeting, ambassador. we will talk about the relationship between your job and the treasurer's job in terms of trade and where exactly does the congress fit in. do you think labor or environmental issues are in the scope of the 301 negotiations? >> i would say to the extent that they are involved in these
unfair trade practices they are, but this is not like a free trade agreement where we're going across the board and looking at a whole variety of very important issues. my scope is narrow here because it's based on 301 and by the way, i would love to work with you and other members who want to sit back and figure out a way that we can create new statutory authority that allows me to use something like 301 in these areas. i would love to sit down and talk. >> can i add one sentence. >> please. >> if your answer, if not, my question, i point out the agricultural market access is not in the scope of the 301 report, but you're negotiating these anyway. so, you know, consistency, consistency, i'm not really -- that's not my -- the essence of my question. my point, my time is up, but i wanted you to take a look at that because it's caused some confusion and i would like some
clarity on it if at all possible call me, write me, whatever you can. i yield. >> i thank the gentleman. let me recognize the gentleman from kansas, mr. estes, to inquire. >> thank you, mr. chairman. thank you ambassador lighthizer for joining us today. you know, as the representative from the capital of the world and the bread basket of america trade is a critical issue for my district and the state of kansas. in fact, according to u.s. chamber of congress trade supports over 108,000 jobs for these exports and the value over $17 billion for the economy in our state. before i focus on trade relationships with china, i want to first thank you for your work on upgrading nafta and replacing it with the u.s., mexico and canada free trade agreements. worth about $3.5 billion. since its adoption naftas has
been beneficial for my district the farmers, ranchers and aerospace manufacturers, but the 20-year-old agreement did need upgrading and some reform efforts and i'm thankful and we can get through this process and get that ratified so we can move forward with the other important issues you're doing. let's go back and focus on china. tariff retaliation from china has threatened kansas exports worth about $525 million led by grain products soybeans, beef, as well as aircraft manufacturing and other manufacturing. as a supporter, a prolonged trade war with these tariffs is not the final outcome any of us want. as i've talked to kansas farmers and manufacturers in the district, i've heard over and
over again how they support the president and believe we can get a better trade deal negotiating through the strength. one of the things i think colleagues from both sides of the aisle china has been harming american businesses and workers for decades. in fact, we've seen so much cheating over the years that it's having a drastic impact. for example, in 2013, chinese national was arrested in kansas for attempting to steal intellectual property regarding research pertain to rice seeds and to send that to scientists in china. i'm proud president trump has been one of the first presidents to stand up to these unfair trade practices and hope to bring china to the table in a meaningful way to have free and fair trade agreements. since we've entered negotiations with china there's been positive steps and we want to make sure we continue moving forward with some of those positive activities. i don't want to stop there. as i mentioned earlier, china's
threatened exports from kansas worth $525 million. one of the things we want to make sure, you know, as i talk with constituents that particularly with both in the farming community as well as aerospace, and hopefully we can work on making sure that the retaliatory and regulatory practices are nextfixed and tal about what you're seeing in that regards in your negotiations of correcting those unfair practices? >> thank you very much, congressman. thank you specifically for your support on usmca. as you know that's our top priority. if congress doesn't see fit to pass that everything else we're talking about is like a footnote because it will mean we can't do trade deals and not going to be in the trade space. it would be such an admission of failure by all of us. i'm very grateful for your support in that area. i would note that we talk about
manufacturing jobs being lost because of chinese practices. the reality is, that farmers have been hurt as much as anyone by their practices. that's a huge market. they're the second or third biggest agricultural market if you skip over '18 and go back to '17 and years. they should be buying much more agricultural products and my hope is these purchase as part of this while not central, will lead to that, will lead to new markets that will go on for years and years. >> thank you, ambassador. mr. chairman, i yield back. >> i thank the gentleman. let me recognize the gentleman from illinois to inquire. >> thank you very much, mr. chairman, and mr. ambassador, thank you. i thank you for the work you have done and are doing and for the candor in responding to inquir inquiries and questions. i represent an area in chicago known as chinatown and i'm trying to figure out what it is
that i say to the chinese-american chamber of commerce there when i go and meet with them and so i would like to know, as specifically as i could, when it comes to disregard for intellectual properties protection, currency manipulation, and market access for u.s. businesses trying to do business in china, given the fact that it is an enormous market, what can i say and tell the chamber of commerce in chinatown that i'm doing or we're doing, you're doing? >> well, thank you very much, congressman. i would say this, first of all,
chinese-americans and chinese businessmen themselves, but chinese-american businessmen, universally have said to the president and to me for the president, hang tough, this is really, really important. we have to do things that lead to reform in china. we're not forcing reform in china. we are working with reformers in china who want to reform china. nobody knows better how important that is than chinese-american business people, men and women. they absolutely know what the problem is. they realize also what the potential is, if china takes a step forward and changes these practices, the potential for them and really the potential for us. also i would say the potential for china is enormous. that's why, in fact, china has
reformers and it is why it has people who want to change some of these policies. the reality is, that all of our businesses and their group probably more than any, are afraid to do business at some tier. they're afraid to do business with china because they will lose not only what we think of as technology, but also know-how. how they do business, that they will not have the intellectual property protected and respected and that there are huge markets that they can open up if we get this kind of thing reformed. i would be really interested the next time you go back and talk to them and call me and tell me. i would be interested to know what their reaction is to what we're doing. i find these people follow this stuff really a lot closer than most americans do, and when i talk to them, they're like hang tough, don't go for this -- as many congressmen said, don't go for the soy booen solution but
the structural solution. this is our one chance. i would be interested to get your feedback after you talk to these men and women. >> we'll make sure we do that. thank you very much, mr. chairman. i yield back. >> let me recognize mr. switsker to inquire. >> thank you, mr. chairman. mr. ambassador, let's face it some of the best questions have already been asked. i actually have a one off. how do we future proof? let's say you have amazing success, you know, the angels sing whatever happens, what do we do to future proof a success? is it time that those of us here in congress have a serious discussion on streamlining the wto, its level of being almost ineffectual, you know, the number of filings that, you know, when we -- we read through
them we're a decade later and a tweak has been made and the bad acts are still happening? what do we do so we're not back having this same discussion a year, two years, three years from now? >> thank you, congressman. i want you to know after the number of hearings i've done before the committee, whenever i think of the future, i think of you. you're always going to ask me a question about it that i should be thinking more about the future. >> it's either a good thing or annoying thing. >> it's a good thing in my opinion. we all have a tendency to think about the here and now probably more than we should. thinking about going off into the future is something that is important. i would say number one, having a realistic, having a real enforcement process, that enforcement process is going to -- as you resolve issues if you're doing it properly, you're going to be resolving issues in ways that turn up new problems and new trends and i think you have to be able to deal with it
in that process. as i have tried to say, i'm not pollyanna. i don't believe that this is going to solve all the problems between the united states and china. we have very different systems. they're in a process of reform or they're not. it depends on who you talk to. if they're in a process of reform we'll make headway and if not we'll go back to having problems. i think there is a role for the international bodies. i absolutely do. i think wto reform is an important part of that. >> with that, if it's a process, the sinz on the bilateral organizations is it the timeline? the ability to stall? is it just the actual adjudication process itself? what can we help in reforming so we're not doing this all the time? >> i would say first of all, trying to look to the future and try to reduce problems is a
healthy an important process, but i believe we're going to have problems in any way. i think we're going to be back here working through problems and try to work through those problems always with one eye to the future. this enforcement process, if we have an agreement, will be very specific. it will have layers. it will have time frames. there will be reaction. working with congress on wto reform is something that i'm eager to engage in when your schedule, you know, permits it. i think there are problems with the wto we have to address and it hasn't risen to the occasion with respect to at least nonmarket economies. >> mr. chairman, look, to that point one of my great interests is, i believe there's technology disruptions, there's always economic disruptions, there's, you know, financing technology
that's going to create international disruptions, and we will need some types of dispute mechanisms that move efficiently. how many times have we had constituents come to our office saying well, we were part of this wto complaint, but by the time the lawyer fees and everything we're sitting here a decade later we gave up. it would be a powerful thing as we look at this all over the world, can we be helpful in fixing that process. with that i yield back. >> i thank the gentleman. let me recognize the gentle lady from california to inquire. >> thank you, mr. chairman. thank you to ambassador lighthizer for joining us today. a number of my colleagues have talked about prior they have mentioned enforcement mechanisms and i'm wondering if you are able to share with any specificity how you intend any agreements with china to be
enforced? >> well, thank you very much, congresswoman. i would say i'll do it with limited specificity. >> okay. >> there will be, if we have an agreement, there will be a process that has been agreed to where at the office director level, there will be monthly meetings and then i'll two through the pro se and take a step back at the vice ministerial level there will be quarterly meetings and then there will be semiannual meetings at the ministerial level me and the vice premier who is my counterpart in this and the idea is two things. one, individual companies will come to us with complaints about practices and we'll be able to work those through the process. in many cases those are going to have to be anonymous because companies are afraid to come forward because they know what will happen if they do. they will have real world effects that will be negative and in addition to that there
will be systemic problems where we will see patterns developing and a series of things that we disagree with and we will bring those through the process. hopefully in most cases they will be resolved at the first or second level. if not, they will be resolved at my level and if there's disagreement at my level then the united states would expect to act unilaterally to insist on enforcement. without that kind of thing, and i should say this is a fairly unique idea, right. this is not something that has a lot of precedent. but without that sort of thing to me the -- we don't have real commitments. >> thank you. that's helpful to -- because, of course, many people complain that if there's no enfor enforceability the trade agreements are not worth the paper they're written on. there are moving parts in the ongoing negotiations but one sector i want to call to your attention because it's very important to the economic viability of southern california is the creative industry.
95% of people who are involved in the creative industry in l.a. are union workers who have quality negotiated benefits and retirement plans and the audio visual sector at large is pretty much hamstrung by how to invest and distribute in china. i want to call your attention for current mou negotiations, a commitment that was made by the chinese in 2012 in the 2012 agreement they said in 2017 they would provide, quote, additional meaningful compensation, end quote, in terms of increasing revenue shares to u.s. studios. it seems clear that a revenue share of at least 40% of gross box office would be consistent with international norms. given that resolving this issue would be indicative of china's compliance with the wto obligations under a trade dispute settlement, can you confirm that is a priority for
the negotiations in a trade deal with china? >> yes, congressman. it's a priority and something we spend a fair amount of time talking about. they know precisely where we are. as you know it's a complicated issue. the key point revenue sharing isn't that complicated though. they can try to -- secretary mnuchin is very much involved and knows about that industry a lot more than i do. the distribution thing becomes more complicated be. should be some changes there too. what we haven't done are things that will challenge control. it's not something that we want to bring into this, the idea of challenging control, in china. but this idea, the revenue sharing, i don't want to get into the details but you probably know them, that is something that has not been resolved and something we spent time on and understand the importance of. >> thank you. i appreciate that and i yield back. >> i thank the gentle lady. the gentleman from texas to
inquire. >> thank you, mr. chairman. i was going to refrain from bragging about west texas but i had so many of my colleagues talk about their districts so let me say, mr. lighthizer, west texas is the food, fuel and fiber capital of the united states of america. we feed and clothes the american people. we fuel the american economy. that's fossil and renewable. and we provide energy independence and food security. i'm proud to represent our hard-working farmers and ranchers and they're concerned and these are desperate times and i know you know this, mr. ambassador, but -- and by the way, good work, great work, hard work, and i know this is a long-term proposition, it's a long-term game changer, and nobody knows about the inequities and unfair mness and the way the chinese their bad actions and unfair trade practices better than our farmers out in west texas, especially our cotton farmers. keep up the great work. times are tough.
i just want to remind you over the last few years, we've seen a decline of over 50% in farm income in the united states. ag industry. that's the steepest decline since the great depression. 40% roughly increase in bankruptcies and i'm sad to report that farmers have the highest suicide rate in the united states of any profession. five times the national average. times are desperate. and our farmers in spite of that and our ranchers, they stand with this president 100%. they'll stand with him right up until they have to sell the family farm. they love him and they appreciate him and they know that he's fighting for them. let me talk about cotton because when you fly into lubbock international airport, your' going to land in the largest cotton patch in the world. we produce about a third of the world's -- of the cotton that we export out of the united states.
we've lost 50% of our market share in china and it is an awfully big market. we want reforms, mr. ambassador, we want the equitable reciprocal structural reforms you talk about. we're americans first and want that for every american job creator, manufacturer, producer. but you've mentioned this, the purchase commitment and we've heard a lot about soybeans, a little bit about pork, talk about cotton. we have 17 state cotton belt, $21 billion industry. we produce the most and the best cotton in the world, but that chinese market as a result of that, 50% loss, our guys are suffering. can you talk about cotton being mentioned in your purchase commitment discussions with the chinese, please? >> first of all, thank you for
that, particularly for the comments about the support for the president. as you know well, you can't talk to the president about trade without having the farmers come up. it's like the first thing he talks about. usually the last thing he talks about too. and secretary purdue, as you know, is -- i don't know all the secretaries of agriculture but i can't imagine there's be a better one. he's full-on, everything for agriculture and we happen to be in the middle of a long-term trend that has been very bad. all of that is appreciated and the president keeps us very focused on it as does the secretary. in terms of the purchase commitment, absolutely cotton is a factor. it's something that china needs, has traditionally bought, and it's easy to buy more of. it is something we understand that these people have suffered and it's something in the list of things that we expect them to have substantial increases on and something the president keeps us very focused on. i have specifically gone through
with the president the various items. i'm talking to the president of the united states about these numbers. by the way, it's these big commodities, hazelnut, a lot of things members talk to me about and i keep track of it and i go through it dutifully. >> you're doing a great job. thank you, mr. chairman. i yield back. >> i thank the gentleman. based on the ratio in the room we will move to two democrats and recognize one republican. recognized to inquire. >> thank you, mr. chairman, thank you, mr. ambassador, for being with us today. i was pleased last month we saw 76 countries agree to start negotiations to develop global rules on e-commerce. however, i'm concerned that the recent inclusion of china in these talks could weaken those overall efforts and lead to a watered down agreement since their current digital regime is so radically different than others. in your bilateral talks with the
chinese, are you pushing them to address critical issues like data localization, forced disclosure of source code, restrictions on cloud service providers and banning customs duties on electronic transmissions? this would in the only help many american companies operate in china, but would also help make china more constructive partner in important multilateral negotiations like the e-commerce initiative. if we don't address these issues immediately, we risk creating new digital borders and those digital borders could create massive disruptions in the digital supply chains that we have. i would love your thoughts on how you're addressing these issues? >> you know, thank you very much, congresswoman. you know this is something that i care about so i'm putting this in the softball category. number one, i completely agree with you, strategically what we should be doing is having a small group that write real rules on e-commerce and then
expand the group to other people. the more people you bring into the negotiation, the harder it is to get any rules you and i would think of and many other members would think of as world-class kind of rules, the kind of rules we need by the way i would just point out are in usmca, right. that's like the gold standard for all of this stuff. it's the absolute gold standard for all of this stuff. it's probably a bridge too far with respect to some of these people. i think bringing china in will not help these negotiations. that's number one. number two, are we dealing with these issues with china? absolutely. we spend an enormous amount of time in total on data localization, on data transfer, on source codes, requirements, a whole variety of areas, and i mean, down to absolutely the most minute detail and i'm happy to sit down with you at some point and kind of go through it so you can get some actual appreciation. i mean it's me sitting down
among the most senior officials there talking about precisely where there are circumstances where it's appropriate to require source codes and there are some. i mean, emergency rooms, there are strange things, but we have had a very -- we haven't concluded, we're not done yet, but we have made headway. it's whatever it is, it's not going to be what you and i think of as a model agreement but we will make substantial progress, i believe, and these are really, really important issues and i agree completely with you, this is one of those things we should lock in rules that stop barriers in the beginning of an industry. once you get protectionism set in all over the world it's much harder to change practices than it is to have people adopt best practices at the beginning. it's very important. it's also a big issue just for us. we're good at it and ought to
have that. >> as you know, u.s. technology companies and specifically cloud service providers, face significant market restrictions and forced technology transfer requirements in china. the 301 tariffs also impact them because another key input to data centers are subjects to these tariffs. so particularly when you talk about that, i would like to know what your commitments are to pursuing forced technology transfers but looking at things like eliminating foreign equity caps and licensing requirements so that u.s. companies don't have to rely on chinese companies to operate? >> yes. >> thank you. now we're out of time and can follow up more. thank you, mr. chairman. >> let me recognize the gentle lady from california to inquire. >> yes. ambassador lighthizer, i represent los angeles, the heart of the film, television and music industry and also i'm co-chair of the congressional
creative rights caucus and i wanted to follow up on what you said earlier about the unfair practices affecting the film industry. part of the unfair practices has to do with the revenue share, of course, the average for the nation in terms of revenue sharing with regard to films in china is 40%, but for the u.s., the revenue sharing is 25%. and so that i believe is so important to address, but on top of all of this, the u.s. film industry brought a mark access case against china to the world trade into by both trade organization ruled in favor of the film industry and in an mou n't -- entered into by both parties and the chinese for consultations in 2017 and provide additional meaningful compensation in terms of that revenue share.
so, my question is, have they engaged in those consultations which were supposed to be done in 2017? if not, what is your plan for enforceability in this regard? >> so, we have had discussions and we have had discussions that predated the current 301 process. but now, because we haven't made sufficient progress and it is one of the services issues. the revenue share as you said is crucial, but also, trying to make some improvement on the distribution side of things because the reality is that competition there helps, also. you know, i don't know if i can predict success. i would say they're very difficult negotiations. you know? as of the last time they were here. but your industry is very well represented by you and other members and by mpaa and so, you
know, we're focused very much on it. and i think making it part of these negotiations increases the likelihood of a successful outcome. but it's a difficult issue. you find just philosophically all of these areas you sort of dig in and you say why is this or tha' protectionism and almost always a situation where there's an interest in the other country that has an actual, you know, is getting richer as a result of it. it's very seldom philosophy althoughma there are cases ther is but in this case there's people making money on basically squeezing us, number one. you know the reasons why we have this problem. but it's something that we are focused on. hopefully we'll come to a conclusion. we are not asking for the moon at all. what we're asking for is what is normal. >> iwell, i thank you for continuing to press on that issue in these trade negotiations. also, i wanted to make a
statement about a company in my district. i robot which employs 675 workers. which develop the famous roomba, the robotic vacuum. so, it employs so many people in my district, but the roomba is manufactured in china and the i robot is on that third list of tariffs right now i robot paying 10% in retaliatory duties and may go up to 25% if the deal is not reached and so they are -- they are very, very anxious about having some way to apply for exclusions for that third list and i just hope that you can make that process happen. >> well, i have certainly taken the position if we go to 25% we will. i've made that commitment.
having a solution in process. short of that i want to see where they are. and i hope they're thinking of ways to manufacture more in the u.s. >> yes. >> thank theec gentle lady. let me recognize the gentleman froma north carolina, mr. holding, to inquire. >> thank you. mr. ambassador, always a pleasure. i'm very glad to see that the administration's willing to tackle inchina's unfair trade practices rather than just talking about it and complaining about it. i think we have bipartisan support in the room to agree that china's a strategic trading partner that plays by the rules when it behooves them but otherwise ignores them. i'm from north carolina as you know which not onlye has the bet barbecue in the country but we're alsoo one of the leading pork producing states in the country. i'm glad i didn't hear any objection to that. so -- >> won't subtract that from the
gentleman's time. >> in 2017 the u.s. shipped over $1 billion in pork to china but with punitive tariffs over 50% of the pork owexports to china have slowed down to a trickle. the lost sales to china caused high producers in my state to lose $8 perer hog and collectivy an analyzed loss of a billion dollars. and i know you've made progress with agricultural purchases, especially for soy and poultry and i appreciate your good work there on f behalf of my farmers but obviously there's a tremendous demand for pork in china and with the chinese pork production in steep decline it seems like it is time for significant u.s. pork shipments to china which would, of course, put a big dent in the trade imbalance. so can you give us any indications as where you are in
pork market negotiations? >> you're absolutely right. pork is one of the issues that't very important to us. before we talk about the purchasing, it's also important onsp the sps area where we have specific problems with lack -- i say lack of scientific basis for some of their restrictions. so that's another area in which it comes in. pork is something that we have talked about. we would expect if we have a deal that there would be a substantial pork improvements particularly as you know well given the fact that china is in -- has issues with their own pork production right now that are substantial. and this is something we have talked about. it has been quite specifically addressed and we have gone back an forth with numbers. so, i'm happy to talk to you about it offline.m we are making headway and if there's a deal and a package i'm
confident there will be substantial good news for our pork producers. >> thank you. switching to 301 tariffs, you know, we are working with you to find ways to work on the exclusion process. one option in particular i'd like to work with you on is the criteria that excludes products regulated by other u.s. government agencies where those regulations already constrain the ability ofte importers to access those products. for example, products regulated by the fda where the regulatory framework means that consumers cannot quickly shift to other supply eres. the existing regulations by our government already constrain supply for the consumer and i believe we have a opportunity with the list 3 exclusion process to address the products and minimize consumer impact. so, that's an area which i hope that we can work on together in
the future. that doesn't really lirequire a answer and i'm out of time and thatla works well. i yield back. >> let me recognize the gentle lady of wisconsin to inquire, ms. moore. >> thank you so much, mr. en chairman. i want to thank the ambassador for his patience and indulgence. many -- a lot of stuff has been covered already so i won't regale you with repetition. i do want to say that while these tariffs have had draconian impacts on all of our constituents and districts, they're having an impact on china, as well. but many economists seem to thinkto that china is adapting d that they're recovering. one of the things you're doing is by expanding their export markets. so, a question that hasn't been asked is, we don't have a functioning export/import bank
now. do you think that's having an adverse impact on our trade position? >> oh, thank you for that question. yes. the answer is yes, it's having an impact an it's way beyond china an it's costing us jobs and there's no excuse for it in my opinion. >> okay. thank you. >> i don't know what else to say. >> all right. i know what to say but i won't carry you there. you have talked a lot about science based decision making. i was also -- one of the things that our companies have leaned into and it was a provision of dodd/frank where companies report and restraint from conflict minerals in the products. i was wondering is that a consideration for -- in terms of unfair trade practices for china to use conflict minerals, thus undercutting the prices of their
products? >> it's -- i'm quite emphathetic to your objection. it is not something we have talked about and if there's an unfair trade action to be thinking about i'd be happy to talk with you. >> that couldbe severely undercut our products. iphones with these minerals in it. we want toan make sure they're t being produced or taken from countries where people are murdered, unfair labor practices. >> i'm very sympathetic to your -- >> i want to follow up, a colleague m talked about lists things that are really critical and i know my colleague from wisconsin, probably waxed on about howin this is hurting our folks in wisconsin. more specifically, i have an initiative to try to prevent sudden infant death syndrome and one of the product that is we have found to be very effective
and cost effective, especially for poor women, is something that's marketed in the united states as a pack and play. it's a crib that's only made in china. and it's been subject to these 10%re tariffs and if we were to continue these tariffs it would be out of the reach of many consumers and so i was wondering how to get these pack and plays on that list of don't touch items. because we can't get these pack and plays from anywhere else. >> s well, thank you first of a. i can't help but say how important u.s.m.c.a. is for wisconsin. now having said that, you know, i'm -- my guess is to be manufacturing pack and plays in the united states. why can't they be manufactured here?ht >> manufacture them before my great granddaughter is born
march 23rd? >> maybe we'll just let you use my granddaughter's version and she doesn't need it anymore. he's outgrown it. i don't want to be flip about it. you know? i'm sympathetic. the bottom line is we ought to be manufacturing these things in the united states. that's what our objective is. we ought to pay people here to manufacture these things and i would also say a 10% tariff on that product, assuming it doesn't go up, a 10% tariff on that product versus what it would have cost six months ago with the devaluation of the chinese currency is probably 2% or 3% increase in price. my guess is it doesn't price too many people out and if the cost of that 2% or 3% on the price of that is a bunch of people have jobs that wouldn't oetherwise have that's aic trade i'd make. >> let me recognize the
gentleman from michigan to inquire, mr. kildee. >> thank you, mr. chairman, for holding this hearing. thank you, ambassador lighthizer, for being here. beyond that, thank you for your willingness to engage with us on a regular basis. it makes a difference and i appreciate that. you've been quite accessible. i have a question but before i get into that i'd also want to note how much i appreciate you bringing up theta poly silicone issueth with the chinese in the negotiations. it is important to address the retaliatory tariffs. that's important to me. it's important to my district i appreciate your efforts in that regard. obviously, the congress and the administration w need to work together to deal with china and to hold china for unfair practices costing american jobs. and i think there's general
agreement on that score, bipartisan agreement. many of us wish it was a multilateralha approach but one area i know was addressed but i wasn't here to answer your answer is currency manipulation. president trump promised to label china a currency manipulator. obviously that didn't happen. i know you agree with the president's general sentiment that china m engages in bad behavior and manipulates currency. in fact, 2010 you testified to this committee that china would be labeled -- should be labeled a currency manipulator and was in violation of its wto obligations. you have thoughtfully outlined a list of actions gnat u.s. needs to take to address china's currency manipulation but i would like to get your perspective on whether or not the understanding that the president recently announced with china on currency issues meet it is requirements that you
had laid out in your previous testimony. simply rdput, does this deal me0 the standards that you laid out in 2010? >> well, thank you. i appreciate that. i would say, first of all, whether or not china is manipulating its currency right now competitive is an issue that we can talk about.ta it probably is. but it's probably not manipulating it to lower its currency. probably manipulating it to currency because they're in a different position thanan they were in 2010 so thas one thing i would say. it's not a foregone conclusion manipulating the currency down andyo a decision the secretary the treasury makes in conjunction with the president, not me. had they done it in the past in myue judgment?
absolutely true. >> i don't think you can rule out a moment in the future they'll do it again and that's why the structural issue is more important than looking at this moment in time than founding on temporary transactional benefits. >> i completely agree with your statement. absolutely 100%. what we're trying -- what we want to get is commitments to not have competitive devaluations in the future and a certain level of transparency. if you have those two things and enforceable then you can -- you cani guard against that problem in the future. and the other point i made before you weren't here is that this is an issue beyond china. we think of it as china. there's a lot of places in asia where this is a problem and a lot of places it's been a problem in the past and there's a lot of people, the united states, that aren't working right now because of this issue.
a lot of people who were told, well, you just didn't do a good job and they were doing a fine job. they got cheated on currency. >> i appreciate your attention to these issues. thank you. >> thank the gentleman. with that,ge let me recognize t gentleman from missouri, mr. smith, to inquire. >> thank you, mr. chairman. thank you, mr. ambassador, for making time to be here today. today we're here to talk about china. china has been taking advantage of u.s.k workers for a long ti and i think the president with yourself, ambassador, deserves a lot of creditif for sticking yo neckck out on this very difficu issue. it's clear that progress is being made and that there's reat potential for positive structure changes after years of deception and false promises from china. a lot has been reported on the recent negotiations and i appreciate the light you're able to shed on this process. the news we heard last week about new chinese processes of u.s. soybeans is especially encouraging from someone who
represents a very large agricultural district in southeast missouri. i'm hopeful that we can achieve more than just the statusas quo with china but go well beyond current china access. i would like to reiterate the commentsle made from the gentlen from texas in regards to cotton. the only thing i disagree with is missouri cotton is a little bit better than texas cotton, but we definitely are like minded when it's about opening up the markets. i do want to bring up rice which isce extremely important to the boot hill. rice farmers have been fighting for over a decade for access to chinese markets. while the administration has made progress in gaining access, since 2017 china has been displacing u.s. rice in our territories. by undercutting the price, so while u.s. rice struggles for access, china's access to our
domestic market below traded prices continues to grow. are you and the administration investigating this situation? and what arees you doing to address it? >> so, thank you, congressman. yes. absolutely. first of all, too your first point, structural issues are fundamental to what we're talking about and i've tried to make that point. i read in the media all the time, i read today in "the new york times" that we weren't making any headway on structural and it didn't even cite anybody. it made other comments, byze th way, and cited a contact of lighthizers. that's a source, a contact. but that's another issue. i won't gete into it. any w further than i already ha. the fact is that we are making headway on structural issues. contrary to whatt may be read here and there and the president believes they're central to
having what anyone would consider to be a great agreement. his instructions are a great agreement or we have no agreement. we'll wait until we get a great agreement. on the specific issue of rice, yes, it's a subject of purchasing we have to have.o number two, we have as you know well, we have two wto cases, one of which we have won and been announced, the other which has been decided but is not public so i won't tell you where we are on that but those are two cases and resolving those cases in the context of this agreement is something else that we're talking about. so whether we succeed in that we'll see. but on the issue of unfair chinese access in the united states, if there are issues where m someone has a case that they want to bring, my office talk about, i'm happy to talk about it. as you know very well because we
have talked a lot, i'm completely into enforcement. if we don't enforce the laws the whole basic consensus in favor of the trading system breaks down and i think it has broken down so i'm happy to act on that. you know, very quickly. >> thank you, ambassador. i have several other questions i'll just submit for the record hopefully to get the response. >> let me recognize the gentleman from virginia, mr. buyier. >> thank you. thank you so much for being with us all this time. we have been discussing, of course you're particularly compelling on the point of china refuses to operate under a what consider a lawful and rules based trading system and this extends beyond just trading rules. on monday deputy attorney general rosenstein spoke about what he called china's transactional approach to the law citing china's willingness to detain foreign nationals on charges to gain leverage or force anow outcome of a foreign government.
this isn't how our justice system works or not supposed to work that way. after the huawei's ceo was arrested, when's good for national security, i was certainly intervened if i thought it was necessary. end quote. during your meeting in the oval office with the chinese vice premier the president again discussed the possibility of, quote, talking to the u.s. attorneys and the attorney general. he hintedks further this would a subject for trade talks. i know you're not responsible for law enforcement, i know you're not responsible for the huawei prosecution but you're responsible for the trade deal.h are you familiar at all with any further discussions within the administration regarding using this case as a leverage for trade negotiations? i assume you're forthright with the president r. you not concernedal that the approach o there criminal justice undermin our legal system as we have seen with the chinese targeting of
canadian citizens? >> i'm not aware of anything on this subject. i don't get involved with it. y i'm not aware of it at all. involved in what i'm doing. >> all right. thank you. most international trade discourse, the popular discourse, centers heavy manufacturing agriculture and 75% of americans employed in the private sector work in services of one form or another. in my district, tens of thousan thousands support the families withoo a wide range of services. you focus on the trade deficit and goods and left out services altogether. i want to make sure we run a surplus in services. a nonetheless, the compliance report note that american service companiescr face trade barriers across a number of sectors and given the competitive advantage, it [ cou be larger. china places a significant restriction on legal services, ict, cloud services, a whole
range. can you provide the sum detail on how the concerns raised about services are addressed in your current talks and can we expect concrete changes in chinese competitive behavior in this sector, too? >> yeah. thank you very much. i'm remiss in not making that point clearly. services is a crucial part of what we talked about and we spent a lot of time on it. i brought one of my many negotiation books which i'll be happy to show you sometime. somebody saw the notes and said, god, this's a terrible job you have, lighthizer. but here it is. banking services we spent time on. cloud come computing services. electronic payment. express delivery. i won't go through all of them e here because someone will say my god -- insurance services. we spent a lot of time in great detail right down to the sub, sub, subsection on pages and pagesgh and pages of services.
and you're exactly right. services jobs are equally good jobs. the united states has a surplus in services which is very important and millions and millions of peopleer work on th and we should be doing much better because in many areas we are by far the most competitive in the worldf so this had an enormous amount of time spent on it and i'm -- it's sort of less thematic if you can follow but there was progress made on a number of these fronts. >> thank you very much, mr. ambassador. >> thank the gentleman. let me recognize the gentleman from pennsylvania, mr. evans, to inquire. >> thank you, mr. chairman. i too, mr. ambassador, like to thank you for coming before this committee today. there are 100 chinese firms operating in pennsylvania. supporting over 3,000 jobs. pennsylvania imports over 17 billion from china. and
pennsylvania exports 2.5 billion to china. mandarin is the third most spoken language in philadelphia. but the question that keeps coming up, and this came from our department of economic development, is the issue around intellectual property coming to investment. the concern and this question is probably asked over and over again to you so forgive me for repeating it again. the issue about intellectual propertyrm of domestic companie to protect long term, can you specifically to that again? >> absolutely, congressman. first of all, i will repeat what i said before and that is that we have found -- i have found that chinese americans are the -- just almost to a person ones who will say hang tough. we need structural change. this is the only way we'll get structural change. don't cave. don't sell out for soybeans.
all the kindth of things we hav talked about and we both agree on and i think chinese americans, number one, they have a stake in the change of the system andab they'll be beneficiaries from that business point of view. on the ip front, china has very little ip protection right now. what we did in this negotiation and i'm going to talk to you later and i'm going to stick all this in front of you, we went through section by section by section of what normal, what we would consider to be sort of best practices, intellectual propertyng protection are. you need a proper definition of whatf an intellectual property is, proper definition of what trade secrets are. you have to have criminal enforcement. you have to make sure you have --s you have deterrent lel penalties because if you don't
have thate you have a problem. you have to make sure you have neutral people making decisions. it's all the kinds of things you would say, yeah, that's more or less what we would expect in a system. t now, there's variation and as i say we didn't get all of it but the people with whom we worked in china they want to reform this process. i think they legitimately want to i reform it. they legitimately view themselves as creator of intellectual property and that's the -- when that changes, people have a different attitude. so chinese creators now want protection and have more power than they would have in the past. so we have an enormous amount of detail. i'll just spend ten seconds and show you my book when we're together and you can sort of see but this is a detailed discussion. it's extremely important and i would say the final thing, when they put this in place to the extent it's agreed to because they think it's in their interest to then there's the
enforcement issue. it is a change for china to do this but it's something they seem to want to did. >> you raised the issue about banking. development projects and companies relying on chinese infuse capital into the projects and work, the restrictions on capital inflows is a concern for future investment. >> stwell, look at.re the president wants chinese investment just like he wants everybody else's investment. what wewh don't want is investmt inta areas to take crucial technology from the united states. soas there's a balance there. and some people will come in and what they want is technology and not investment. in other cases they want investment. the president's position and the secretary of treasury's position is quite clear. we want investment from china but not where it goes into crucial technologies and end up losingse technologies and hurt in the kind of things that mr. t beyer talked about and cares a lot about. there's a balance there and very
important we meet that balance properly. >> thank you, mr. chairman. thank you,om mr. ambassador. >> thank the gentleman. we'll recognize the gentleman from illinois, mr. la hood, to inquire. >> thank you. welcome back. thank you for your toughness on china and you are -- we are lucky toeg have you as our negotiator going up against china. i have the eighth largest ag district in the country of corn and soybean production. heavy manufacturing base and an anxiety of those industries. thena ag industry is down. and so, a lot of stress and concern there. however, most of my constituents in my district support the president in going after china and you mentioned at the beginning of your statement, quote, technology is going to rule the future. and how we change the behavior
with china is -- seems to be the crux of what you are getting ate with your negotiations and historically looking over the last 25 years, no president from clinton to bush to obama's been able to do anything on this front whether it's cyber threats, force technology transfer, stealing intellectual property. we have not been abler to chan that behavior to put china on the same playing field as every other industrialized country in the world and this really seems to be what we're trying to get at. and having said that, you've talked a lot about our leverage in this negotiating process. as i look at what you are trying to do here, i'm wondering whether this is going to be different in terms of what's going to be different this time in changing the behavior in china. i'm going to submit for the record an article of reuters and the title is "china says u.s. accusations of unfair trade practices are groundless." the spokes from china goes on to
say that -- says the u.s. side made groundless t accusations a china finds that totally unacceptable. that's from their spokesperson. i'll submit that for the record, mr. chairman. and i guess, as we look at what you said earlier, how do we have structural change?e how do we get to a more laws based system and i know that's what you are getting at so two questions, mr. ambassador. first of all, on the ag side, as we begin planting season for our farmers, what assurances can yo give my corn and soybean farmers and pork producers that the mark share in china will be there when we resolve this eventually andd then secondly as we look a this different approach that you're taking, what gives you confidence that this approach is going to be different and what if it's not?e what are the consequences to china if we're not able to hold them accountable moving forward andr? changing that bad behavio? thank you. >> thank you very much,
congressman, for that question. it'l covered a lot of territory and i have one minute now to respond. but i'll do as quickly as i can. in terms of the soy and corn, we are trying to, number one, get more sales, more purchases not in the question of corn but on the question ofug ethanol. >> yep. >> which, of course, is a huge user of corn products. of corn. so i believe if we have a deal there will be a substantial -- in the case of soy we have seen a substantial amount of additional purchases recently and a certain moving together of soy prices back to traditionale levels init terms of the foreig competition so we have m seen se impact, particularly with the most recent 10 million metric ton purchases the chinese got in the market for. if we have a a deal i think we will see substantial new sales there and hopefully some other improvements in terms of sps
stuff.o how is this different? you know, it has to be enforceable, nyit's not gob specific and we are covering many more areas than anyone's ever covered. but it requires the grit and determination of the president and it really requires the cooperation of people who want to reform in china and there are people in that and the alternative is what's been going on and that for sure fails. hopefully ours will succeed. >> thank you, mr. ambassador. >> thank the gentleman. let me recognize the gentleman from illinois, mr. schneider, to inquire. >> thank you, mr. chairman. ambassador, thank you again for your time here i today and the availability you have given us throughout this whole process. being from illinois i share the concerns of our colleague of the farmers in the state. i represent the sub usuals of chicago. want to share a quick story. firsthand experience with et china's bad practices. they were working on some product designs, trying to get some samples.
company in china was delaying and ultimately the company in my district started seeing the product showing up on shelves here in the united states.ec a clear theft of intellectual property ands happening throughout the country. it iss happening for businesses large and small so iet agree wi you that china's a bad actor and can't let the behavior go unchecked.n we need to level the playing field for american businesses and a level field the businesses can succeed. i have concerns of creating a trade warut that's caused harm manyr, businesses and many businesses throughout my district. last summers i visited a numbe ofnc companies to discuss the impact of tariffs on them and they were very concerned it was hurting the ability to compete butt it's not just businesses. local schoolal district in the districtem had to spend $2 milln for costs of materials for a remodeling project and pleased toed hear you made progress in e
discussions andes the march deadline delayed. you mentioned that this administration is pressing for significant structural changes tock allow for that more level playingpu field. what specific structural reforms or other policies are you pursuing in the negotiations to help our businesss that are experiencing hardships in the chinese market and can you ensure me that these reforms will be not just meaningful but long lasting and that they're looking towards the long term and share with the committee what outcomes you secured to let businesses like my constituents harmed by the chinese companies? >> thank you, congressman. i would say first of all, your example of intellectual property theft and to hear it from your constituents, i have many, many more. we could sit down and exchange stories at some point. that's at pattern that has to change, right? that is real people losing me money, losing market share. not only overseas and in chinese ut actually in the united states. right? literally competing against
people that sold the stuff to states.ed and so, we are making headway. people say, well, tariffs are a blunt instrument. my response always is but we don't have anothero instrument. if congress wants to worry about creating new tools, i'd love to do it. we're using the tools we have. just sitting around blabbering hasn'twi worked and we might ha success.ng we'll find out. hopefully we will have success. how will it be long lasting? we'll see.e. the reality is this is a challenge. goes on forle a long, long time. my guess is it goes on long after i have lefthe and hopeful by the time you're sitting in this chairir you will making su that the people in my job are doing -- continuing to do that becausey' enforcement tends to about people and ifan we're not going to enforce this agreement they'll figure it out pretty quickly and that will be theia d of a it. all we can do ise set up a
situation of people potentially with the right attitude that tools are there to be successful. that's what our objective is. >> get. >> we are using the tools that congress has given us as imaginatively as i told one of yourug colleagues as imaginativy as possible. is testified in 2010 we have t have imagination. i thinkt that's what the president has shown here. imagination andle then grit. >> right.th if i can use my last couple of seconds to emphasize something else you said. thank you for that. you mentioned that technology's orat biggest asset and have to protect it, that technology. but it's more than that. it's the application of that technology in this country. it's the continued innovation of the nextt technology and the alliances we build around the world to apply those. so i appreciate that.gn my time up, i yield back. >> thank the gentleman. with that, let me recognize the gentleman from new york, mr. sawazi, to inquire. >> thank you, mr. chairman. mr.at ambassador, thank you for your public service. we appreciate the hard work you do on behalf of the country..
for decades since president nixon and secretary kissinger and the end of the cold war the u.s. operated under the assumption with increased economicac integration and exposure to the system of capitalism and democracy chinai would adopt some of our systems, at least in part. that simply hasn't happened. not only has communist china e skewedse democracy and engaged human rights abuses, repression of religious minorities, air, land and water ando treated the workers poorly they have not transitioned to capitalism or a market economy. the chinese state economy not only cheats by stealing intellectual property, restricting access to their markets buts the chinese government subsidizes its industry. the 2019 fortune global 500 includes 111 chinese companies, of which o 78 of those companie
are viewed to be 50% or more owned by the state. could you share with us your senseu of what the long-term policy of the united states is and the goals that you have as part of the negotiation to have long-term structural change on this relationship? >> actually, thank you for that question. that's a great opportunity and all of your colleagues were saying i hope lighthizer is unusually short winded. i would say this. you raised the fundamental question. there was a myth0 that grew up and if you look at my 2010 testimony which i think is really quite goodas testimony.th it's been referred to on several occasions here today and in the past. the myth was that if you open up a market, if you have an economy you will become democratic. small "d" democratic. that is the myth. you'll open upm -- that that wil lead toe' an open economy and a open political system and all of a sudden we'rere all a bunch of
you know, people are from ohio where i'm from. that's the myth. and the reality -- that was literallyy professed by the smat people, the clever people and that really is what led us to really to pntr and what i read. i read the speaker's quote which was very press cent. this ain't so. and she was right. it doesn't. you can have a very good economy and not have any freedom or have very little freedom. we made this up. i didn't. assumptions were made that were incorrectly. the tone of your remarks without saying every specific of it are whywe we have a bipartisan viewn this and why we're making success. it's because of people like you that we have success. if this was a partisan thing it wouldn't be. t the fact it's bipartisan is why we're making success on this.
>> so what's the goals of this negotiation specifically to try and have long-term structural impact? and will we ever get to a place where we think that china represents something closer to what our system of capitalism is? i'm not going to put democracy on your. shoulders, too. >> so i would t say on the seco one, we'll find out. you're younger than i am. you're more likely to have a younger view. you will get there and see it. i don't know.h what our objectives are? our objectives are to foster reform in china. which there's a group of people want to do. reforms on structural the kinds of things where we can condition the w confines of the statute that you have given us and the h report that we did. here's our report. here's our -- if you haven't seenin it. here's our supplement. >> we can't get to the whole report in the last three second we have. i'll see if there's more tools
the congress can give you. >> fantastic. >> thank the gentleman. let me recognize the gentleman of pennsylvania, mr. kelly, to inquire. >> thank you. mr. ambassador, thank you so much for being t here. we get a chance to go around our district and talk to people when we're back home doing our district work weeks and last summer i stopped in a place in new edcastle, pennsylvania, cald blair steel, started in the late 1800s when pittsburgh was known as the iron city before steel became the product of choice and how it took off. i asked mr. kenny, i said, mr. kenny, looking at what's going on h right now, what could we he done differently? and hefe looked at me and said should havee elected this guy 3 years ago. now, people say, oh no, no, no. no, no. that's what happens because we haveve taken a backseat and somehow we think that if we're just nice other people will play by the rules. a lot of my colleagues have said the same thing.
we have to be damn fools if we don't think we haven't been in a trade war for decades and afraid of a trade war today taking place and taken heavy casualties. we have never said you're taking advantage of us. we're so damn nice. we won't call it you out on it. other than what you're doing right now, i mean this sincerely. this administration and your tireless efforts to make sure that everybody's playing for the -- i'm so damn tired of forfeiting the game and crying because we lost. this is absolutely stupid. we have allowed ourselves to get into this position. what could we do differently? i think most of it is stand 100l behind this administration and don't let these people get away with what they have beens gettg away with for years. c an old saying. this is crude but an old saying, if you are in a peeing contest with a skunk the other way to beat him is to out-pee him. i think this is a trade war that's taken a heavy toll across
the united states and we sit back and we just don't want to offendot anybody. i'm so offended by us not being offensive that it's sickening what happened to'v manufacturin and intellectual properties. you name it. we have been gamed so badly for so long. anything else to help you, mr. ambassador? >> well, let me - t say, first all, it really is important. i have said this, this is my theme for two years that these f things have to be bipartisan. they h cannot be partisan. this is different than other stuff we deal with. and hearing the last two questions shows why exactly it is bipartisan. right? why this is aon fundamental bot intellectual and gut reaction to what is going on. and i think supporting us, when weng the president get this package together if there is a package, i'm not there yet as i say all the time, that we have to look at it and get behind it and say this is a great step forward. but you have to stay -- you have
to keep your eye on making sure that we enforce it and that i enforcesu it and that my successors enforce it and years down the road that new presidents enforce it. so and then the second thing i would suggest, which i have sad before, i'd love to work with members on new tools. i think we need new tools. won't go through it here but what's's happened to 301 is troubling. right? >> just because we talk about 232 and 301, when i go back home in western pennsylvania people don't say tell meha when's in 2 or happening with 301. that goes back to 1974 and the reason is because of unfair indisdrim that tory trade policies. this is what the congress created for thena executive branch. i believe it's going to take t, vigilance. i believe what youou said of tre agreements like children. they last as long as they last.
we're in grave danger of thinking that people play fair we're nice use opposed to being vigilant.l thank you so much for your time and effort. i know you don't sleep often. you're doing one hell off a job. thank you. i yield back. >> thank the gentleman. let me recognize the gentleman from california, mr. panetta, to inquire. >> thank you. of course, ambassador lighthizer, thank you very much for being a here. i think in the 116th just on the ways and means committee you have been here three times in the last twowo months and says lot about you and your commitment to working with us and we look forward to continuing to work with you not just on this but of course the u.s.m.c.a. as well. that as well as trade with china with important to me and my district. they're in at california as you know well california is the number one m ag producing staten the nation although i appreciate the questions from the other members here on the diaz. california is what it's about with agriculture in the central
coast of california being the salad bowl of the world is what it's about being agriculture and contributes to that title that we are the, number one ag producing state but obviously thesee tariffs, these retaliatoy tariffs affected our farmers. i have over 800 food and agriculture products that are being taxed. and unfortunately, a lot of those products can be obtained from other nonu.s. trading partners. and so what we are seeing is a closing of certain markets. now, i appreciate the fact that there is an aid package and the $12 billion and actually spoke with some of my almond growers yesterday who were benefitting from that but i can tell you and what we have heard and what you have heard, i'm sure, it's not about aid. it is about trade and long-term business. anden so, my question to you isn regards to these markets, that
are potentially being shut off, that are being closed, what are we doing to recoup those markets in regards to your negotiation with china? >> you know, well, thank you, congressman. first of all, the problem on retaliatory tariffs and market open goes beyond china and one of the things we are doing is havingle negotiations in a variy of areas. europe won't include agriculture. they won'twe include. we have talks with japan with a very big t agriculture componen. u.s.m.c.a. is so important for california and illinois and everyone else. so, i'm looking -- now, in terms of china, which is, unfortunately, only part of where we haveme had retaliatory tariffs, if we get an agreement,
those tariffs will come off and then the president's hope is although it's not the purpose of the negotiation that the purchases will have the affect of not onlyl giving short termk sales, by the way, we are looking at number that is go out several years. we are not -- it is not like i should make thiss point. even within the purchases, which contrary to what's in the newspaper is not the function, the purpose of those. those purchases are going to have tar gets in amount that is go out for several years but our hope is that if you increase those agriculture sales and you do it for a number of years you will create new customers that will have results that go on years andnd years and years and years into the future. it is a a very real thing that e president is worried about.n obviously when you're trying to bring change about, it will have costs. nole one has been more -- treat less fairly than the farmers.
right? i mean, they are in a position where they should have enormous markets. in china. china's a big market for us. as i say, second or third depending on the year market excludeing 2018. but there's a much bigger market there. i mean, there is a lot of people there and with any kind of fair trade, farmers would be beneficiaries, too. bringing the or understanding to these negotiations. i yield back. >> we'll revert to one for one on both sides and the chair would recognize the gentleman from new york, mr. reid. >> thank hyou, mr. chairman. and, ambassador, it's always great to be with you and i really do echo what my colleagues have said about you. i think you are the right person at the right time to take on this much needed negotiation with china. one of the things i want to bringh to your attention and maybe our thoughts on as far as my b colleagues to deal with th tariffsgr and the future after
negotiate this agreement.al you have one chance very limited runway to do this right, to make a fundamental shift in our trade relationship with china but, you know, one of the things i see -- and i see the chinese position. you know? they're thinking long term. they're always thinking long term.d they're not looking transactional. as i see rn the negotiations en proceed, and the tariffs that are on the books and reaction in china, i see their commitment as a co-chair of the u.s. manufacturing caucus to build u excess capacity. i'llis add another issue to it. excess inventory of certain products so when the new marketplace is created what ww we do to protect american markets fromnt that excess capacity and d inventory that would then be dumped or thrown into the u.s. market in a very dangerous way in my opinion? do you understand what i'm getting? as i seein manufacturers, as i e
folks especially at advanced manufacturing, i seene china reacting to this transaction of what we are dealing with with these negotiations and as the tariffs come off, as these -- a we orient under this new agreement, how are we going to minimize the adverse potential impact of p what the chinese 20 long-term vision of positioning us -- positioning them as a world leader in manufacturing to protect our manning bases here on domestic soil? >> let me ask just -- thank you for that t question, congressma. i want to make one point clearly. and that is, i think the united states has been guilty of short termen thinking and short term view, for sure. i don't think that's through president trump. president trump -- that's why he's going after structural changes. >> amen. >> he is looking down the road. wants to know what's going on way downnu the road and the unid states to have the advantage. we have to be number wone. we have to stay number one. by the way, most people in the world want us to be number one.
>> totally agree with you. what will you do with that valve is potentially opened up? are there strict enforcement mechanisms to make sure -- >> no matter what happens, we have to maintain strong laws against unfair trade. strong on anti-dumping laws. >> if that inventory is dumped on the u.s. market, what are we going to do to make sure that that enforcement is there and easily executable by us to take on that chinese action? t >> so, number one, we have in here provisions if it's agreed to that will limit subsidies specifically in cases of so-calledpa competitive 's industries, that is to say, where there's a problem of excess a capacity. what happened in steel, aluminum, solar panels, washing machines. on and onn and on and on. there's an agreement to limit subsidies in those kinds of cases. trade laws and then the enforcement provisions in here.
that is pattern. it is not always even a plan. sometimes it's just they start this andnd the provincial governments and local governments get into it and they don't have a way to put their own brakes on. >> do wey agree that that potential threat is there? that i'm raising. >> i absolutely think it's there. undeniable it's there. >> we want enforcement mechanics readily available to us as partners in the agreement to deploy against china.ea we need to make it very clear i think to china that we are ready to useab those. is that fair to say? >> absolutely. >> thank you. >> absolutely. >> with that i yield back. >> thank the gentleman. let me recognize the gentle lady of florida, ms. murphy, to inquire. >> thank you, mr. chairman.se mr. ambassador, presumably the goal of 301 tariffs is to cause china enough economic pain to persuade china's leadership to s
noesh negotiate an enforceable agreement. you noted that tariffs are a blunt instrument. not only not precision guided they can have unintended consequences often for u.s. consumers and small businesses. and i imagine that before you made the unilateral decision to impose tariffs on china you weighed the cost and benefits and designed those tariffs to maximize the damage to china and minimize the self inflicted s damage to companies and consumers in the u.s. and the broader american economy. whatever your intentions were, i have to tell you the evidence on the ground is really grim. i've had small business owners in my community in central florida break down when they talk to me about the impact that tariffs are having on the companies that they have spent a lifetime building and on the workers that theyfo view more lh family than they do employees. for example, david, he is the owner of a 30-person electronics firm in orlando that imports
skom poe innocents of china and sells finished products to american retailers. his business has been up ended by this third tranche of 10% tariffs that took effect on september 24th. going to work that day, he had to pay an up front bill of $280,000 to release his goods from china from -- that had already landedality a u.s. port. no notice from his government. no time to adjust. and since september david has paid over $800,000 in tariffs. it's a lot of money for a small business. so what he's had to do is raise the cost of his products. some of the big retailers have agreed tors pay more but passin the costs on to consumers. and some smaller retailers just simply won't accept the price increase so that means that david has lost business. these tariffs have december matdedm his cash flow. jeopardized his financing and made him unprofitable. placing his workers' jobs, my constituents' jobs, at risk.
unlike his bigger come pet tors, he doesn't always have ways to mitigate the harm. if it endures, the damage could be severe and increasing to 25% the damage could be fatal. in 40 years as a business owner he tells me's never seen government actions interfere so directly with hises businesses d i know you're not insensitive to this issue. but what do i tell these small business owners like david? when does thisnk end? what will the sacrifices have allowed you to achieve an do you think you're willing to accept a deal that falls short of what you have indicated you want to achieve to end this trade war? >> so, first of all, we are sympathetic to situations like david's although i don't purport to know the details of it. but there clearly people who import products who are negatively affected.
i would suggest that this is a 10% tariff and with the depreciation of the chinese currency it's probably a 4%, 5%, 2%ce or 3% affect on his busine an i would make that statement. in terms of notice, of course, go through a commentnt process and the process of putting thehe tariffs in place s months going through with hearings and all of the -- so i have want to let anybody the impression that this is something that just we woke up and did this. there are laws and followed them and there were months and months and months and months of process going through here. i always start with the proposition w that do you thinke have a problem with china?e if we don't think we have one then all of this is crazy. if youin think we have a proble with china then we have to weigh what is necessary to move forward. no, i don't think we should accept anything that has structural changes and is enforceable, absolutely not.
>> thank you. >> with that, let me recognize the gentleman from south carolina, mr. rice, to inquire. >> ambassadore lighthizer, tha you so much for being here.st i have told you repeatedly that one of the things that gives me the things that gives me the greatest confidence in this administration is people like you a and secretary ross who ha taken on these jobs to lift up american workered. i'm heartened by the loss. and doing something about that, and lifting up our middle class. because you see, i believe that our middle class -- the american workers can compete with anyby in the world on a level playing field and we here in washington have allowed that playing field to be tilted against them for far too long. beginning around 1990, we were competitive at that time in the world but we sat on our hands and allowed everybody to change their economic systems and their tax systems, regulatory
instructors, to take advantage of american workers. and we could accept trade agreements that weren't necessarily in our favor, we were so far ahead of the rest of the world but we can't do that anymore. so i'm really proud of what the president has done restructuring our tax code, i think the next most important thing we can do is to balance our trade agreements. your progress on nafta is so important and so impressive. your progress with china gives a us great hope.ot although i've heard you say it's not done yet. but i just want to applaud you on how far we've come because i don't think there's anything more important at this point after tax reform, after regulatory reform that we can use to make our economy competitive and allow our workers to compete on a level we get field once through this, we need to move onto infrastructure. i want to tell you that i had a
town hall in south carolina last week and a group of farmers came to my town hall and they're worried. they grow peanuts and tobacco and cotton and soybeans, primarily, and they said to me, you know, we're worried about this disruption with china it's affecting our business, what can we expect, how quickly is it going to beha resolved? and we talked about all of thath and i promised them that i would raise these issues to you hear in this hearing. they're watching me right now. hello, everybody, back home. but that being said. when we got through, they also asked me to tell you that they're ehind you and rooting for this president and they recognize that this has to be done and they recognize how important itt is. so in my last minute i'm going to turn it over to you and i'm ask you tell my farmers
back home as best you can what they can expect. >>nt well, thank you very much, congressman. and thank you for your comments about me. i'm grateful for that. i would make the obvious statement and that is like other members in my position, we are inspired by the president. if it wasn't for the president, i'd have no power. i'm happen to have this opportunity to fight for the things that we all care about. we'll see how that turns out. i would say to these farmers, i think that they have been victims as much as anybody in america what goes on in china. and i think they have -- they are more vulnerable than a lot of other people for a whole variety of reasons that we all know about. if we have an agreement, there's a likelihood that we will begin the process of the payoff. once again if we don't enforce,
it's not going to happen. fortunately we're not in a world where good things happen automatically. i think there's going to be a payoff for them. and the president is grateful for their support. he realizes these are real people putting it on the line for them. so thank you. >> with that let me recognize the gentleman from nevada to inquire. >> thank you very much to the chairman and the ranking member for this opportunity in the hearing. i appreciate that though these negotiations have been ongoing and fraught, that our congressional committee is finally getting an opportunity to address concerns that we've heard from our constituents about and directly impact each of our districts. so i wanted to first say, mr. ambassador, we want you to be successful on behalf of the american worker, the american business owner, the american
consumer, all of whom are depending upon the successful outcome of your negotiations. i wanted to share you with that in nevada it's estimated that $107 million worth of exports are threatened by new tariffs. nevada's exports to china total 28.7 million. and these exports affect an estimated 367,000 jobs in nevada. as the price of steel rices, so does the construction costs across our state. there's currently an estimated $25 billion of planned proposed and currently under construction major projects in southern nevada, projects like the raider's stadium, the los angeles convention center expansion and others including expansion at our universities all have become more expensive.
food is also a big component of exports threatened by the u.s./china trade deal. everything from food, baed, pastries, and even milk. so companies that make everything from metal kasings to appliances, and even bakeries are impacted. and since last march, the administration embarked on a series of tariff actions that drew retaliation from trading partners and i know that you have talked about the need to focus on enforcement and structural changes as part of this process but what hope and relief can we give to our constituents about some of these pressing impacts that we see right now based on this ongoing trade war with china? >> thank you, congressman. i would say first of all in these circumstances one has to
begin the analysis, as i said a minute ago, why is there a problem? if you believe there is a problem, where we are right now between the united states and china and that that problem threatens our future and our kids' future and all of those people who we are very concerned about, if you don't believe those people are potentially very seriously affected unless we change policies there, then there's no point in this. but if you do think those people's futures are threatened, then you have to go through this process. and our objective has been to try to minimize the effect as the congress lady said, we have to minimize our effect on our own consumers and maximum the effect on others and we try to go through that process. but when we get out the other end we have to be in a position where we have defended our workers and farmers and ranchers and we have the potential for structural change in china.
and i think we've done a reasonably good job of minimizing that effect on our own consumers. we have an exclusion process to try to help that out. we're sympathetic. in terms of the steel, i would say i want to get a steel agreement. the president wants me to get some kind of a steel agreement if i can with canada and mexico. i think that will alleviate some of that problem. >> thank you very much, mr. ambassador. >> with that let me recognize the gentle lady from alabama to inquire. >> last but not least. thank you, mr. chairman. i also want to thank you for being here today. this discussion is long overdue. in fact since the last time you publicly appeared before the ways and means committee, this administration has imposed a 25% tariff on china and another 10%
tariff on 200 billion of chinese imports. the chinese retaliated with a tariff of 100 billion on u.s. exports. we're all aware of china's unfair trade practices and you're right, the fundamental question is, not just do we believe there's a problem with china and trading, we do, i think universally all of us will agree with that. i think the more fundamental question is, what do we dabout it? but i can tell you that the tariffs have had a really devastating affect on the folks back home in alabama. in fact i have three concerns about the 301 tariffs as enforcement mechanisms. first it is a go it alone strategy that i'm concerned about that this administration is taking. i really think that we could have put to use our alliances and created a multilateral pressure on china and been a little bit more effective
quicker. secondly, when -- while we in alabama do believe that trade works for us, we really believe that real tear tariffs don't. and the real area that has the most impact on my district has been with farmers and manufacturers. according to a study, alabama has the fifth highest exposure to retaliatory tariffs in the country. since the trade war has become, alabama exports have faced $254 million in tariffs. and cotton and soybean growers have been dramatically affected. the longer the tariffs are in place, the more likely it is that a lot of the shifts in the supply chain will become more permanent causing more concerns by lots of my constituents. in fact, the forest industry in my district is suffering from a 25% tariff on southern pine logs
and a 10% tariff on south -- the south wood lumbar. i guess my question really is one of fundamental belief that while there is definitely a problem with china, is the enforceability of tariffs the way we're doing them the best way to get at that problem? so my question is, especially given the fact that we're looking for section 301 tariffs as a tool to enforce other trade agreements, my question to you really is, do you see section 301 tariffs as an enforcement tool of last resort when all of our options have been exhausted or do you see it as a weapon that can be deployed regularly to exert concessions from other economic rivals and allies? >> i would say first of all i don't want to conflate tariffs with other tariffs. as you know well, there's the -- that's a litigation matter brought by private people.
steel and aluminum is something different. i think 301 is an effective tool. i think we should be working with members to find more effective tools. >> i sit on the intel committee too, many sleepless nights for me. >> there's a history there. i think we need better tools. in terms of whether or not we should have done what we did or did a multilateral approach. i believe good people tried for 20 years the multilateral approach and the talk approach and let's all go along, get along approach, and i can tell you it's -- i brought along -- i have a chart here that shows the trade deficit. there it is right there. so here's the trade deficit and here's every one of these go along joint things. they just failed. and when you're in a situation where something really, really
matters and our kids' lives, jobs defend on it, and you've tried something, and it's failed, you'd have to be crazy not to try something else. i'm not going to say it's perfect. but at lease it's leading to results where everything else didn't. >> i want to say thank you for allowing the ambassador to complete his answer and i just really want to say in closing, we're all really, really -- your success is our success. we do want to get a better balance when it comes to trade with china and i want to thank you for being open enough to come and talk to us on a regular basis with respect to the these tariffs and the trade agreements. >> we thank the gentle lady and we'll conclude with the gentleman from georgia. >> thank you so much for being here today. it's been fascinating sitting here and listening to both sides recognize a few common threads here, number one, china has been
participating in unfair practices for years and it has hurt american business. it has hurt american innovation and it's hurt the american worker. consistently i hear throughout my district the support for these efforts to really put china into a new trading position with the u.s. across the board, whether it's republican or democrat, small business, large business, they all understand the need to do this and they also understand the need that because we have not done it in the past, that there's going to be a rough transition period while this fight takes place, but it will be worth it in the end. i want to commend you and the administration for fighting so hard on behalf of the american workers. as i look at this, another thing that we recognize -- i've heard a couple of comments along these lines talking about the context of the china deal with everything else that's going on in trade.
could you speak -- because we all recognize the problem with china and we all recognize that it's a very large problem to deal with. can you speak to the importance of getting the usmca deal done on the heels of the south korean deal and bringing japan into the fold and then moving to the europeans. can you speak to how important it is that we all develop these trade deals so that we can collectively work to change the chinese behavior? >> thank you very much, congressman. thank you for your comments about the president's program which i think is working and i'm certainly going to pass along to him the various comments people have made about what we're trying to do. but you are right and i said this at one point and i'll say it again, there is no trade program in the united states if we don't pass usmca. there just isn't one.
one it says is we don't have a consensus and we don't want to stand up for our workers and farmers and ranchers. i think there's no less than that at stake. we have an agreement. it's clearly better than its predecessor, there's no question. it's $1.3 trillion worth of business, millions and millions of people are affected and it just have to pass. if it doesn't, you have no credibility at all with china and you will have no credibility on any deals with your other trading partners. i have members come to me -- i tell you every day i talk to two or three members and they're all -- it's always constructive and they have ideas and thoughts and i always think, if we don't pass usmca, don't bother. just sit down and say we'll wait a few years before we say anything. >> i want to thank you for that and addressing that. i want to switch gears for just a minute. in my hometown we have an automaker there, kia motors manufacturing georgia.
we have seen the benefits of having a good trade agreement with south korea. we want to continue to see that. one concern that i have and if you could address it very quickly, the time lines both on the usmca and potentially any trade deal, three to five years for implementation, talk about how that -- that to me seems like a relatively tight timeline. is there opportunity if companies are moving in the right direction, to give some leeway as they try to bring jobs back to america? >> could you hit -- >> usmca requires a very short transition. they can get the additional two years if they are meeting certain requirements, we've worked with the manufacturers. is it a tight time frame? yes. is it a doable time frame?
yes. we have to make changes as soon as we can. by extending this out, we have consensus among manufacturers, by extending it out, you're postponing americans getting their new jobs. i don't want to do that. this is a doable thing and by the way, we want them and -- to be manufacturing more engines and more transmissions in georgia and i think they're going to and they're going to quit using the korean engines in transition to a large extent. this is going to be a big win for you. but i don't want to defend them. i already pushed it off as far as ioff as i can. >> your accessibility is appreciated by the committee. please be advised that members have two weeks to submit written questions. they will be made part of the formal hearing record. and with that, the committee stands adjourned.
>> where is the relationship i guess right now with treasury? what does that mean for a tax policy. are you going to be working with them -- >> he's going to testify before the ways and means committee first. that what the treasury secretary always does. >> there's a lot of talk about enforceability. i think that's where the greatest suspicion rests with the american people that when you have the agreement, there is always been a suspicion that e
geopolitics might interfere. and i think there was a healthy suspicion shared by both times that for a long period of time it was impediment to the idea of enforcement with china because of constant effort to rein in north korea. that's one example. there are other consideration as well. >> were you convinced here by the ambassador's explanation of how they would enforce this deal with china? >> he has taken a pretty vigorous position on china throughout the course of his career. and i think his background reinforces what he's just said. i think there's consensus here on the committee that a tougher line with china is good for america economics. >> what do you think about his repeated comments that if congress can't pass usmca, there's no other trade agenda? >> it's a little broader i think in terms of what he was trying to describe. he's saying that you can vote
for a new what he would describe as an improved nafta. >> yes. >> you could go back to the status quo which everybody agrees has to be revised or you could also acknowledge the threat the president has offered if you don't do the new and improved one, you wednesday upcoming out with nafta. i think what he is saying is that there are three options. two of which don't seem to be very plausible. >> chairman, one of the things the ambassador brought up, there's a lot of work that still needs to be done. do you think it's premature for the president to be talking about a summit with the chinese president? >> i think me telling the president what's premature in terms of commentary is going to have much impact. >> do you see a deal happens though? >> you have to consider that the
chinese have the bigger stake in this that we do. their economy is slowing. sometimes the threat of tariffs are as important as the use of tariffs. if you recall during my opening questions, if the tariffs be held in advance after an agreement was reached and he asked for some discretion on that which entirely plausible. >> last question. you talked about usmca and how important that is and yet the administration still has the 232 tariffs on canada and mexico which would preclude them from ratifying it. he was asked about that today. are they -- >> he was less than specific. >> what's your take on that? >> i think we're going to have to wait and see. i think that's the -- again, it is -- the old part of bargaining is when something is concludinged, everything has to be redone. if you keep revisiting it in
segments, it doesn't strike me as reaching a final deal. and the other thing i encouraged the committee members to embrace is the idea that once something is agreed to, you can't keep saying you're going to go back and revisit and that i think is the really important part of this hearing. >> do you think that's also true for usmca? >> yeah. i do. once it's agreed to -- you can obviously if something happens you did not anticipate, i think that's fair game. if you say this agreement and keep going back and back and back, then it's not the agreement. the other thing that's come out of this, i think once we proceed down the roadway here and brandon and i and the staff have been talking about it, it's probably time to have a wto hearing so that's the news piece you just got. >> on usmca, people are talking
about reopening what's been signed. is that an option for people who are dissatisfied with the provisions of the negotiation? >> there's going to be amble opportunity here. i think that's the better way to handle it. >> thanks, everyone. >> thank you all. >> how much dialogue -- >> what's your take on this enforcement mechanism that clearly means more talking before any unilateral interactions -- >> i think the whole idea is -- >> washington state governor jay inslee released a video announcing he is running for president. he plans to focus his campaign on climate change. ♪ >> hi, governor, what do you have to say about climate change? >> a lot. we have got to is to be global warming. >> climate is changing.
>> reduce carbon pollution. >> we should be dealing with climate change. >> climate change. we need to defeat climate change. >> that's what i believe. >> we're the first generation to feel the sting of climate change and we're the last that can do something about it. we want to the moon and created technologies that have changed the world. our country's next mission must be to rise up to the most urgent challenge of our time, defeating climate change. this crisis isn't just a chart or graph anymore. the impacts are being felt everywhere. we have an opportunity to transform our economy, run on 100% clean energy, that will bring millions of good-paying jobs to every community across america, create a more just future for everyone. i'm jay inslee and i'm running for president because i'm the only candidate who will make defeating climate change our nation's number one priority. we can do th