The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“TRADE POLICY” mentioning the U.S. Dept of State was published in the House of Representatives section on pages H6246-H6252 on July 16, 2018.
The State Department is responsibly for international relations with a budget of more than $50 billion. Tenure at the State Dept. is increasingly tenuous and it's seen as an extension of the President's will, ambitions and flaws.
The publication is reproduced in full below:
TRADE POLICY
The SPEAKER pro tempore. Under the Speaker's announced policy of January 3, 2017, the gentleman from Arkansas (Mr. Hill) is recognized for 60 minutes as the designee of the majority leader.
Mr. HILL. Mr. Speaker, I appreciate the time tonight. It is my hope tonight that we will have a discussion in our country and in this historic Chamber on trade policy. I am delighted that two of my good colleagues have joined me to carry on this discussion.
A key tenet of international economic policy for the Trump administration has been to improve U.S. bilateral and multilateral trade arrangements with an eye toward enforcing reciprocity with our trading partners as it relates to tariff levels and the elimination of nontariff barriers. The goal: to simply achieve more market access for American goods and services.
Mr. Trump recognized this, campaigned on free and fair trade, and routinely emphasizes the importance of reciprocity between trading partners. He has stated that he prefers bilateral arrangements over multilateral arrangements by indicating that he did not want to pursue the Transpacific Partnership or the Transatlantic Trade and Investment Partnership, one with Asia partners and one with the EU.
While it is true that bilateral treaties are easier to negotiate and acquire, select multilateral arrangements can achieve broad geopolitical and geo-economic strategic objectives.
In the case of TPP, it could, potentially, significantly leverage the economic clout of China in Southeast Asia and obviously link longstanding free trade partners across the transatlantic region with the TTIP.
President Trump has also initiated the effort to improve the North American Free Trade Agreement, NAFTA, among the United States, Mexico, and Canada. He has called this agreement one of the worst ever, but has offered concrete ways to improve it and modernize it for current conditions in Mexico, Canada, and the United States. No doubt, these are, in fact, significantly different than back in 1992 when the NAFTA agreement was arranged.
This work continues in earnest, and I am pleased that the administration has made significant strides in improving NAFTA between Canada and Mexico over the past year, something that I think is very important in my home State of Arkansas, where Mexico and Canada are absolutely the largest trading partners that our companies and farmers have in my home State.
President Trump's objectives of changing the mercantilistic trade policies of China have proven more challenging. Tonight, we will talk about the President's strategy, because we want the United States to have an opportunity in China. We want a more open China trading process. We want more goods and services made in America sold in China.
But over the last 3 decades, China has developed into one of the world's largest and fastest growing economies, but also one of the world's largest protectionist economies, putting up barriers to American goods and services in both tariff matters and in nontariff ways.
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We are going to talk about that tonight, and I would like to start by talking about that with my friend from Ohio. What is interesting is that this strategy of getting at a more open China, ending a more mercantilistic trading policy with China has taken a couple courses of action: one, the President has imposed section 301 under the Trade Act of 1974, going after China's intellectual property theft in the U.S., their ability to compel U.S. companies or companies from the European Union to give up their intellectual property in order to do business in China, clearly a violation. And so the President has proposed a 301 investigation and tariffs related to that.
He has also imposed tariffs under the 1962 act for national security purposes across the board on steel and aluminum--all countries, all products. And that is very challenging, Mr. Speaker, because, if the real issue is getting at China, the world's largest subsidizer and dumper of steel and aluminum, this may not be the most successful strategy to accomplish. That could, in fact, be a distraction from our ultimate objective in opening China.
Mr. Speaker, I yield to the gentleman from Ohio (Mr. Davidson), my friend, so that we can have his perspective on tariffs and trade and how we can improve and be more successful in getting the outcomes that we want.
Mr. DAVIDSON. Mr. Speaker, prior to coming to Congress 2 years ago, I spent 15 years building manufacturing companies. I have been personally on the receiving end of bad trade policy and bad trade practices. So, in 2016, when President--then candidate, now President--Trump talked about making America great again by dealing with bad trade deals and bad trade practices, frankly, he energized me and many other people in my industry, in the manufacturing sector, and, indeed, all across the country because America has lived with bad consequences of bad trade deals.
In fact, America has built its history on trade. Truly, economic liberty is as much a part of America's history as religious liberty and other forms of liberty. We were the world's largest trading country. We are a great trading power in every way you can measure it. We do have trade deficits with some countries, but we have to pay attention to the right metrics.
So when we talk about bad trade practices and bad trade policies, we talk about, to use an analogy, watching basketball. Think how the sport would change if there were no fouls called and no one could shoot free throws. These are the kinds of things that happened with the WTO. Eventually, after, sometimes, years of filing a complaint, the WTO will adjudicate a subsidy practice by China on steel, for example, and then they will say: Hey, you have to stop.
Well, the moment a complaint is filed, the Chinese company just dumps faster because they know that it is going to be turned off. The trouble is there is no consequence for this bad conduct.
So what I had hoped we would be doing is we would be using our great relationships around the world to unite our allies, our best trading partners, frankly, people who are also the victims of these bad trade practices and bad trade policies, to take action against those bad practices so that we can define what is a foul and what is the effective free throw. What are the consequences?
I believe that the President's goals are being poorly served by some of his advisers and I hope that the President will change course, because what we are doing has resulted in failure in every type of war studied, from Sun Tzu through World War II, through more modern wars.
When you multiply your enemies, you are not winning, and we are doing that with the practices that some of the administration is implementing, things that implement uniform tariffs, things that distort the very definition of a national security issue to call German luxury autos a national security issue.
We have tools in the kit bag that could be very effective, tools like sanctions. When we engage in warfare, when we engage with enemies of our country that are strategic enemies, we have sanctions in place against Russia, sanctions in place against Iran, and sanctions in place against North Korea.
The beauty of sanctions is they can be targeted not just as a country or a sector; they can be targeted to companies and even individuals. We can use these things to restrict the flow, and we can define what is illicit finance.
We can use these tools that the world uses already against bad actors and, frankly, some of the worst actors in the world to unite our allies and to define a better way for trade going forward.
So we shouldn't confuse this with a critique of the objective. The objective is, indeed, noble and necessary. Past trade practices, past Presidential policies have left America on the short end. True, as Milton Friedman said:
If countries want to subsidize the cost of a good, let them. They are just lowering the cost for our consumers.
But we can't simply be a nation of consumers. We need people to put capital at risk in America to thrive, and for our great industries, whether it is agriculture or manufacturing or technology, for the intellectual property to flourish here. We have the best markets for goods, services, intellectual property, capital, and we need to make sure that we defend that.
I applaud President Trump for being passionate about putting America first in these practices, but I do believe that we need to look at the tactics that have been employed by many who have advised him and say,
``Is this multiplying our enemies?'' And, in fact, it is.
I hope we can move forward in a better way and we can serve this great country by restoring trade to its right and proper place as a vibrant part of our economy. Exports drive our economy, but imports can benefit our economy. Trade is exactly that.
Trade is something of value for both parties. Both profit when trade is there. A zero-sum understanding is not the right way to look at trade. We benefit and so do others; and it is okay that they benefit, because then they are able to buy more from us in trade.
The practices that are in place today give us a chance to assess the progress, and I think it is vital that we do that. It is vital that we keep this economy doing the great things that it has under President Trump's leadership, under congressional leadership.
We were told that the new normal was a 1.5 percent growth rate, that we couldn't grow at the high rate. With regulatory relief and tax reform, our economy is growing higher than 3 percent, and we certainly don't want to do anything that would derail that momentum.
I am encouraged by Mr. Hill's dialogue tonight, and I thank the gentleman for the opportunity to speak. I know we have other colleagues who would like to as well.
Mr. HILL. Mr. Speaker, I thank my friend from Ohio. He is a valued member of the House Financial Services Committee, and his decades of work in private business and in manufacturing is ideal for this discussion. He knows about intermediate goods manufacturing and how a lot of those parts are made domestically, but some parts, critical parts, might be made abroad. Nonetheless, they allow us to create a competitive manufactured good here in the United States, employ Americans, and then potentially sell that domestically or export it to, yet again, another country. I appreciate his manufacturing expertise.
We are also joined tonight by my friend from Illinois, a distinguished member of the House Ways and Means Committee, Darin LaHood, who comes from America's heartland of agriculture and can speak to the issue of how do we achieve this outcome that we want: more open markets, fairer and reciprocal trade, but how do we do that in a way that minimizes the impact on American consumers and our agricultural producers.
Mr. Speaker, I yield to the gentleman from Illinois (Mr. LaHood), my friend.
Mr. LaHOOD. Mr. Speaker, I want to thank my colleague, French Hill, for organizing tonight's Special Order on trade. I want to associate my thoughts tonight with the comments made by Congressman Davidson and also with Congressman French Hill.
Mr. Speaker, I would just start off and say that it is imperative that we, as Members of Congress, come together to stress to the President and his administration the importance of free trade.
When I look back over the last year and a half of his administration, I applaud the President and his leadership in working with us to roll back regulation, have reasonable regulation in place, and also once-in-
a-lifetime tax reform that he was able to get passed, along with this Congress, two accomplishments that have jump-started our stagnant economy, and we are seeing the results.
However, I think we do ourselves a real disservice to the work that we have already done on this economy by engaging in a trade war. I think we go backwards in terms of the economic progress that we are making to get in a long-term trade war.
Mr. Davidson referenced it a little, but it is frustrating and disappointing to see several staff members with the President who are unelected and unconfirmed who are trade protectionists. They have the ear of the President when it comes to implementing trade policy, and that is, again, frustrating. These protectionists are failing to take the time and recognize the long-term costs of the recent tariff actions and our current position as it comes to renegotiating NAFTA and other trade agreements on our economy.
I have said this many times before when I think back to the election. Our President wasn't elected by people on the East Coast or the West Coast. It was people in the Midwest, people from rural America, people from the South who helped elect him. And, unfortunately, these are the folks who are left the worst off by these trade policies that are being put in place currently by the administration.
As we move forward in this Congress, we need to carefully examine how much authority the legislative branch has ceded over time to the executive branch. I credit my colleague, Warren Davidson, for introducing a piece of legislation that I am a cosponsor of that would help take back a little of that authority under our Constitution, to have more input from Congress on that. We need to talk more about that, managing our trade policies to determine how best to restore our constitutional authority. Our other colleague, Congressman Gallagher of Wisconsin, has also introduced a piece of legislation that also does the same thing.
We have no choice or alternative with the current world that we live in. We live in a globalized world with supply chains set and marketplaces and customers continuing to grow, but we need to be engaged. Given that 95 percent of the world's customers live outside of the United States, we tend to forget that we represent about 4.5 percent of the world's population.
There is no doubt that we produce the best goods; we produce the best products; we have the best workers. But you have got to have markets. You have got to have customers around the world for those products to go to support free and fair trade.
I think about Illinois. Illinois is the sixth largest State in the country. Ag is the number one industry in the State of Illinois. It is the number one in my district. When I think about Illinois, for example, global trade supports over 1,700,000 jobs in Illinois. Ensuring that our manufacturers and farmers have access to markets around the world to sell their goods is vital to their ability to remain competitive and our economic success.
The district that I represent, Illinois' 18th Congressional District, spans central and west central Illinois. We are proud to be home to some of the world's most respected manufacturers, including companies like John Deere, Caterpillar, and CNH.
We are also home to some of the world's most fertile farmland. We have the eighth largest district in the country in terms of corn and soybean production in the country. About 40 percent of the corn and soybeans grown in my district go somewhere else around the world. They get put on barges on the Illinois and Mississippi River, go down that river through New Orleans, through the Gulf, through the new Panama Canal, and go anywhere around the world.
But when you put up tariffs and barriers, you restrict those farmers from getting their goods all across the world. Unfortunately, these days, manufacturing and agriculture communities like mine across the country face uncertainty and dark days ahead. That is because of our current trade policy.
While I applaud the President's intent to go after bad actors in the global marketplace, his approach and the resulting retaliation has put our American workers and products in jeopardy, with no end in sight. The administration's reckless and frequent use of tariffs, some premised on national security, which I think is a fallacy, threaten to spark an all-out trade war in this country and around the world.
We have already seen retaliation on American-made products from some of our closest allies like Canada, Mexico, and the EU. In addition, China, which consumes a third of the world's soybeans, has also followed suit.
In Illinois, total State exports threatened by new tariffs have reached over $3.8 million. Instead of tariffs, which are simply taxes passed on to consumers, our approach to address unfair trading practices should be targeted to minimize collateral damage and should include specific and clear end goals, which we have not seen.
Bottom line, we must pursue targeted trade enforcement policies that minimize harm to American farmers, our rural communities, and our manufacturers.
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We know that our agriculture industry is typically first and hardest hit by any trade retaliation. To make things worse, our farmers are already at a disadvantage compared to other foreign competitors given the lack of free trade agreements that the U.S. has compared to other countries, especially in the Asian markets. It was referenced earlier that TPP which, of course, is the Trans-Pacific Partnership, is going on without us.
I look back at this administration. There was a lot of talk when they came in about bilateral trade agreements. We are 19 months into this administration, and we don't have one--not one--bilateral trade agreement. There was a lot of talk about putting those in place.
Part of the reason we have not had that is they have run from us because of our position and what we have asked for in those bilateral trade agreements.
The loss of marketplace due to tariffs will be extremely hard to regain and may not be possible to regain at all.
The administration's go at it alone approach is clearly not as effective as with working with our allies to negotiate a solution to global oversupply and technology theft perpetrated by countries like China, and there is no doubt they have done that. The forced technology transfers and the stealing of our technology should be addressed. But there are better ways to do that in a strategic and a precise way, partnering with our allies to do that, but we can't do that going at it alone, and we can't do it premised on national security.
Lastly, let me just say that we have heard a lot about surpluses. We have heard a lot about trade deficits. It seems like the administration is fixated on trade deficits.
I will tell you, in agriculture we have a trade surplus with every country in the world. Think about the collateral damage that is going to be done to those farmers and those ag products by engaging in a trade war. We do need to address the trade deficit, but it is a complicated, nuanced issue that we ought to address.
There are lots of things we can do to change that instead of the path we are heading down right now.
At the end of the day, our farmers want trade, not aid. In a free market system, it shouldn't be based on subsidies or aid. So we need to, again, continue to work with this administration on our proper oversight, taking back some of our constitutional authority to make sure that we are getting the message across that we need to have free and open trade that is going to benefit our farmers, our manufacturers, and working people all across this country.
Mr. HILL. Mr. Speaker, I thank my friend, Mr. LaHood from Illinois, for his expertise in agriculture and these markets. I think it is very important to have his example.
I might react by saying the gentleman was talking about the power of working together. I was reflecting that if we were working together to leverage the challenges of China, we are about 15 percent of two-way trade with China. The European Union is about 15 percent or so of trade with China. Japan is another seven. Clearly working together on some of these issues that we have in common would give us more leverage.
Let me just outline four key objectives I think of U.S. trade policy with China that I believe would be shared by those two other groups that I mentioned, the European Union and Japan.
Ensure China fully complies with its obligations as a member of the WTO, including the beneficial agreements on government procurement, information technology, environmental goods agreement, and a trade and services agreement. These are things, Mr. Speaker, that we have worked on bilaterally and multilaterally since China entered the WTO in 2001, an admission I think now that many people question, was China really ready to join the World Trade Organization in 2001?
That is number one.
Number two, that we fully protect U.S. intellectual property rights and establish ways and means to cease government-directed cyber theft of U.S. trade secrets and intellectual property both for commercial and national security reasons.
I am reminded that Ambassador Winston Lord, the U.S. Ambassador to Beijing in 1989, when he was briefing President Bush 41 in preparation of his first foreign trip. President Bush's first foreign trip in February of 1989 was to China where he had served as our representative back in the 1970s. Ambassador Lord wrote that memo to the President and said:
You have got to talk about religious freedom, human rights. You have got to talk about Taiwan. You have got to talk about Tibet. And you have got to talk about theft of intellectual property.
This was in February, 1989, Mr. Speaker, and we are still debating that issue today, unresolved. I would say that the European Union shares that view.
Now, here is the amusing point. Ambassador Lord and the State Department team, when they sent that memo to President Bush 41, said that it was in its eighth printing, and they were sorry that the author wasn't getting any royalties for it. Meaning, we have been talking about this since we established diplomatic relations with China back in 1979, and we have been fighting this intellectual property theft.
Number three, seek changes in China's extensive industrial policies which protect domestic sectors and firms, particularly China's state-
owned industries. China's objective is for these state-owned enterprises to be global competitors compatible with other trading partners, but they are not. They are state-owned. They are state-
subsidized.
Finally, fourth, promote changes to industrial policies that provide open and reciprocal treatment for American exporters of goods and services by reducing nontariff barriers and making China's tariff level comparable with U.S. tariffs.
I think those four things, Mr. Speaker, is what all of us agree on tonight, and I think they would benefit the European Union as well. But I think my friends hav made a good case that if we were to partner with the E.U. and with Japan, we would have a lot more economic clout in delivering on that negotiating posture.
I would ask my friend from Ohio, does he share that view? What are his thoughts about what are alternative strategies maybe in the steel and aluminum area?
Mr. Speaker, I yield to the gentleman from Ohio (Mr. Davidson).
Mr. DAVIDSON. Mr. Speaker, I thank Mr. Hill.
I want to agree with the importance of bringing allies to the table to address those practices.
There are four, and there are several others that we would probably agree on. In a way, I think the thing that our President respects about China is they put China first. They have used all the resources of their nation really since 1989, since Deng Xiaoping transformed China's economy to a more market-oriented economy.
They are not a market-oriented economy. That was one of the things they committed to do as part of joining the World Trade Organization. They are a command-driven economy in many respects. They have made great progress since 1989 to being market oriented. Frankly, since 2008, they have gone the other way in some of their practices.
If you look at the revolutionary idea, though, the idea that lives can be changed by trade and capitalism, China under Deng Xiaoping, at the peak, they were using communism with Communist principles, and he introduced to them communism with Chinese principles, which was essentially capitalism as long as we can stay in charge.
It is a corrupt, subsidized form of capitalism, but at its peak, it was lifting 1 million Chinese people a month out of dollar-a-day poverty.
Trade was a key part of this, inflows of foreign direct investment to reach this massive market. Today General Motors sells more cars in China than they sell in the United States of America.
This is a better path than the one I expected. When I graduated from high school in 1988, Mr. Gorbachev had not torn down the Berlin Wall. By the end of 1989 when I was there, unfortunately bad things had happened in Tiananmen Square in China, but, thankfully, great things happened at the Berlin Wall. I was fortunate to be able to see people there. I met a man who was from East Germany in his first hours of freedom who said: Is it like this everywhere?
We were in the Ku'damm district--kind of like Times Square is in New York--in Berlin. I thought he meant how big the city was. But what he really meant was the stores were open at night, and there is fresh milk, as he said. He was astonished that regular people, even foreigners, could go in, and the shelves had stock.
This is the idea of economic liberty. This has produced abundance wherever it has been tried. Where the other ideas, the redistribution that Mao tried every version of Marxist Communist ideology that he could think of, and they all failed. They produced scarcity, poverty, and depravity. By engaging in the world, China transformed their economy. That is something to respect. I think the President admires the way that they put China first.
But the reality is in putting China first, they have engaged all the resources of the country to where in 2014 we saw that President Obama had to take action against hackers. In fact, they were indicted. But did President Obama cut off all relations and trade with China? He did not. He engaged in diplomacy with China.
I think it is great that we engage with Russia. Perhaps even Russia will see a market-oriented economy. They started out that way in the 1990s. But they also proved that deficits do matter. This is something that the whole West wrestles with, and it is another thing that we could unite in agreeing with.
I hope we can also get to ways we can unite here, because, as Mr. LaHood mentioned, the Global Trade Accountability Act is not an adversarial bill. It doesn't even go retroactive to the actions that have occurred in the past. It does get Congress engaged. It gets Congress engaged because the same benefits of cooperation, the same benefits of multiplying our allies instead of multiplying our enemies, could happen here in Congress where we multiply the people working on the problem.
We want to join our President in taking action against bad actors and in making our trade policy better than it has been even with the Canadians--they have bad trade practices that we can improve. Even with the Europeans; they have bad trade practices that we can improve upon.
Great friends work through problems and I feel like that is the reality that we have with our friends. Here in Congress, the President has great friends. I would consider the three of us some of his great friends, not adversaries, in the goal we are concerned, I think, about the means of getting to that, and the Global Trade Accountability Act would simply say that Congress works with the President who leads the negotiations similar to the REINS Act. Where Congress can come alongside and say we do it, what would that mean? Well, that would mean that the President is more engaged. But it's really the President's advisors. Men like Peter Navarro, instead of refusing to come talk to Ways and Means, would engage with our chairman, would engage with our committee dealing with trade, and would, in fact, develop a plan instead of criticize their own failure to plan after the fact.
How do we know this?
This is an example. We have a uniform tariff policy that probably never should have been implemented, that has got a chance for exclusions. We have over 20,000 companies that want exclusions right now. Commerce is doing them not sector by sector, but company by company; not commodity by commodity, but company by company.
There are only six people working on this massive task. Were there to be required engagement, I believe there would have been a better plan in that collaborative approach, and perhaps a different course of action.
I look forward to seeing other ways that you all might think that we could collaborate and make the great cause of making our trade agreements better and more productive.
Mr. HILL. Mr. Speaker, I thank my friend from Ohio.
It is quite clear that in Article I the Congress exclusively in an enumerated power has the power of regulating commerce between foreign nations and, of course, we know setting duties, levies, and taxes as an Article I power. I think you make an important component, just like Congress partnered with the executive branch on how to rightsize certain overregulation in our economy from the previous administration or how Congress collaborated with the Treasury Department in designing tax reforms to make America more competitive to have people bring business back to the U.S., not be double taxed on foreign earnings. In both of those examples, as you note, we collaborated, the executive branch and the legislative branch.
So I do think that also would strengthen the sequencing of our strategy to get at the heart of what I think our key challenges are which revolve around access into China.
I ask my friend, Mr. LaHood, does he have thoughts on this line of discussion?
Mr. LaHOOD. Mr. Speaker, I thank Mr. Hill.
The gentleman laid out four different objectives which I think are very pertinent. The gentleman mentioned state-owned enterprises. I think about that in China, and I think about how in many ways they have cheated the system and done things, but this is a problem that has been going on for a long time.
One of the requirements with any trade agreement is you have to have enforcement. I don't think we have had proper enforcement like we need when it comes to a number of these initiatives we have had over a series of 20, 25 years. But enforcement is important.
That means law enforcement. It means getting the Department of Justice involved holding bad actors accountable. But I think you have more ability to do that and more leverage if you partner with the E.U., you partner with Japan, you partner with our other allies to do that. We simply haven't done that.
I think, again, going at it alone is not the right approach to take.
Are there things we ought to be working on to change?
Of course. There are rules we should change. We should engage on a number of these issues. We should hold a number of the bad actors accountable. But disengaging, putting up tariffs, and putting up barriers are the frustrating parts to me because I have not seen what is the ultimate goal with this strategy.
What is the endgame?
How do we land this plane eventually?
That is what is frustrating to me. What I try to explain to my farmers and my manufacturers in the district is: How does this all end?
I have worked with the White House on a number of issues and been a strong ally with them, but there is clearly a division in the White House. You have the protectionist wing and you have the free-trader wing.
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There are many good people who have talked about the importance of free trade--Secretary Perdue, Ambassador Branstad to China, Secretary Mnuchin, Larry Kudlow--people who support the free enterprise system, support trade. Gary Cohn was in that group.
On the other side, you have the more protectionist wing. Again, from them, we have not seen how this all ends, giving us some confidence this is going to work out. That is the frustrating part, again, for our constituency and my farmers and manufacturers moving forward.
We have talked a lot about China and what they have engaged in and what they have done, whether, again, it is forced technology transfers. In a lot of ways, what they do with American companies that come over there or foreign companies is a form of extortion: Give us your technology, make us a part of it, and then we will let you come into the country.
Well, we ought to be stronger in going after them. There are mechanisms and ways, and there are success stories in doing that. But we pulled out of TPP, and that is something the President ran on.
But what has happened since we pulled out of TPP? All those other countries have gravitated towards China, Southeast Asia. They have gravitated towards them without us. So we are left out, being on our own. I don't think that is good, long term, when we need marketplaces and we need customers to engage with.
Being isolated is not the right approach to take on this. We need to, again, engage the White House and particularly try to understand the path we are on and the end game here moving forward.
Mr. HILL. Mr. Speaker, my friend from Illinois mentioned enforcement. I was looking in the archives this week when I was thinking about China, and I found an article that I wrote back in 1996 as a private citizen about the Clinton administration's China policy.
The paragraph on China and trade reads like this:
China, as a world power, for her part, must recognize that bilateral and multilateral treaties are to be enforced. Lack of compliance with international treaty obligations must produce a known and delivered set of sanctions by the world community. China must clearly understand the consequences of noncompliance.
I would argue so strongly about the gentleman's point that have we--
when I say ``we,'' I mean the United States, in the past two decades, the European Union as an entity and others--have we done a good job at enforcing those norms and those treaty provisions and those basic tenets of being a WTO member aggressively and collectively against China? I would argue we have a mixed record at best. But I think the gentleman makes a very good point about enforcement.
Mr. Speaker, I yield to the gentleman from Ohio (Mr. Davidson).
Mr. DAVIDSON. Mr. Speaker, I think we have made great progress towards that end in uniting on trying to take a difference course of action. Just recently, we passed updated export controls and CFIUS regulation to try to give more tools to the kit bag.
Who is going to execute this? The executive branch. But the legislative branch passed the law, the House, the Senate. We are working to get the final package to agree on language--not just against China, but anybody who would steal our intellectual property, anybody who would take targeted action to harm our economy or put their citizens in a position to do that harm--and also try to strike the balance.
Here is the thing. We can have perfect security for America's intellectual property by exporting zero of it, but we can't do that. What we have to do is find a balance that says: We want you to innovate in the United States of America; we want the ideas to continue to originate here; we want the capital to be invested here to create those great ideas; but we do want to have some concern.
You mentioned the Clinton administration. One of the first actions Bill Clinton took as President was to move release authority for sensitive information from the Department of Defense into the Department of Commerce.
And what happened?
Swiftly, Hughes worked with China to be able to help send them launch vehicles off of one rocket. One rocket went up into the air, multiple low-Earth orbit satellites went around, precisely positioned in orbit around the Earth. The down side is that is the exact same technology that can be used to send warheads to multiple cities after one launch vehicle penetrates U.S. airspace. This is dangerous technology in the wrong hands.
So we have to find a way to review those things and keep America safe, but we also have to find a way to have the ideas and the intellectual property initiate here.
We can't shut down all these in the name of national security. We certainly don't want to shut down the production of luxury automobiles. But we might want to restrict the trade there.
China is actually targeting our entrepreneurs. We have some of the best education in the world, and the world comes here to become well-
educated. Over 50 percent of our graduate and postgraduate students are not native-born Americans.
We allow, frankly, most of the world to come here to get educated. Unfortunately, we don't retain enough of that talent. So we send many of those people out of here with those skills that can be put to work in our marketplace.
But in the process, Chinese capital sometimes and, frankly, other foreign nationals are getting into venture capital. They are on our campuses. They are recruiting our talented people. They also are looking to buy our innovative ideas for dual use, but sometimes only to advance their own technology.
The challenge today is that China has had this mixed blend of aggressive behavior towards us. They have also seen the benefits of trade. They have seen the benefits of the flow of goods, services, capital, and, in some cases, people, and they have brought those to bear to benefit their own economy.
Today, nearly a third of initial public offerings are taking place in China. This is a challenge. And I would say we are better off finding a way to compete in the marketplace than as I thought I would as a soldier, which I never thought I would go to China without body armor and a rucksack full of ammo and night vision goggles and whatnot. I would rather trade with them.
I hope we can stay on friendly terms with them. I hope we can get on friendly terms with Russia, when it is possible. As much as it depends on us, we should live at peace with everyone.
But we do have to trade. We do have to enforce the rules. We do need law and order. We have made many of these commitments, including commitments in the WTO. We should insist that China live up to their obligation and become a market-oriented economy.
Mr. HILL. Mr. Speaker, I am concerned about the steel and aluminum tariffs across the board. I have raised that issue before I was joined by many Members of the Congress on that issue because I felt like it came out of the blue to Members of Congress engaged in trade policy, whether on the House Financial Services Committee or on the House Ways and Means Committee, and that it was sweeping in its nature. It has produced the challenge you talked about that 20,000 American businesses are trying to seek an exclusion from that.
I have several in my district, Mr. Speaker, who make the steel belts and steel-belted radial tires who are hurting. These are companies in Arkansas that use a steel rod that is not made in America, Mr. Speaker, and that is spun into the steel belt that is sold to the tire manufacturing industry. They are being hurt by this kind of across-the-
board steel and aluminum tariff.
If we are concerned about a good, healthy aluminum industry for national security purposes and a good, healthy steel industry for national security purposes, then we ought to go after, directly, the world's largest dumper of steel and aluminum, which is China and their state-owned enterprise sector with their subsidies, and not sweep up everyone engaged in that intermediate goods manufacturing in America, not penalize our partners in Europe who share that concern with us, who could help us go after that.
Ambassador Lighthizer made a comment. He said: Well, one of the key reasons for going across the board like that was the risk of transshipment risk, in other words, violating the rules of origin, passing Chinese subsidized or dumped steel through a third country into the U.S., like Mexico, for example, or Canada, for example, just to name two possibilities.
That got me thinking: Well, surely--back on my friend from Illinois' comment about enforcement--there is a more elegant way to tackle what is really a regulatory issue, a transshipment risk, rule of origin risk. Why don't we see what others are doing?
So I looked at Canada. Just in March of this year, Mr. Speaker, the Canadians put in place a whole new regulatory regime working with the Americans to block rules of origin changes or transshipments of Chinese steel or aluminum through Canada. And, likewise, we have worked with the EU; and the OECD has their own steel committee that works to, on a regular basis, block that kind of work.
So I just wonder, if we had consulted and worked together, perhaps we could have taken a more sophisticated route at stopping steel and aluminum dumping that is damaging our American industry. We do need a protective steel and aluminum industry in this country, no doubt.
We also have good friends like Canada, good allies who produce it, but that is not to say that we don't want to have a vibrant industry here.
Mr. Speaker, I yield to the gentleman from Illinois (Mr. LaHood).
Mr. LaHOOD. Mr. Speaker, on the national security issue and premising much of this on national security, I didn't serve in the military, but national security is not something that should be used lightly. So when I saw that being used by this administration, I went to the experts and talked to people in our military. I think we saw early on that General Mattis was interviewed. He didn't think very highly that this was a national security risk.
Talk to any of our top brass in the military and I don't think you will find anybody that supports this. I don't think you have seen anybody in the administration from the military that has come out to support this as a national security threat, because it is not, in my view. I think it is a faulty premise to go forth on this. I think, eventually, when it gets to the WTO, I don't think it is going to stand up.
I think that, again, gets back to our credibility in going about this. We have got to be very careful when we put our prestige of the United States out there and rely on national security when you can't even find our own defense apparatus and our security folks out there who think this is a proper basis to do this.
So that concerns me, moving forward, and I think, again, puts us in a tough position, again, being more isolated and not having other like-
minded allies to help us.
Mr. HILL. Mr. Speaker, I yield to the gentleman from Ohio (Mr. Davidson).
Mr. DAVIDSON. Mr. Speaker, prior to being here, I worked in the manufacturing sector. I worked in metal stamping.
One of the challenges, as Mr. Hill highlighted, is the tariffs are only on the commodity. Frankly, they are blunt force. They are all steel, all aluminum.
The reality is some grades of steel, some grades of aluminum are commodity. Beverage cans, for example, are a commodity. We make it in the U.S.; they make it in Canada. Everywhere they consume lots of beverages, there is a significant ability to produce this grade of aluminum.
So the idea that we would target that isn't necessarily changing our market, but where it is, there are things like the grades of rod that your tire manufacturers are or a similar rod for welding wire. Welding wire is highly automated.
So we have got domestic welding wire manufacturers who already weren't the lowest cost provider. China, India, South Korea all heavily subsidize their welding wire manufacturers. Having domestic welding wire manufacturers probably is a national security issue.
We want the base rod to be made in the U.S. Some of those grades aren't. But soon, if we don't get exclusions to our domestic welding wire manufacturers, we won't have the manufacturer of welding wire either.
Meanwhile, their cost for the steel has gone up by 25 percent or more because of the tariffs and they are losing market share. They don't have a year or 2 to wait for the exclusions review. They are losing business now. And the size they are could kill their companies.
Some of these companies are big enough to just shift production offshore, as we have seen other people do, but some of the smaller companies don't have that option. They will live or die on whether or not they can get a government-mandated exclusion to a government-
created problem that restricts their ability to buy the aluminum.
So we either have to put tariffs on the secondary goods--so you can see where this goes--and then they will put tariffs on the secondary goods, or we have to find a way where we say it is a national security issue for us to get this capability in the U.S. We want that capability, but we have to go about it the other way.
I believe passionately that it is the sanctions. As you alluded to your own articles in the sixties, you have to take sanctions action.
When you talk about how you deal with transshipments, we already deal with transshipments for national security purposes. And it is targeted.
The sanctions protocol offers a path forward. I hope we can engage on that. I hope we can pass the Global Trade Accountability Act to provide a check, and I hope that more of our colleagues will engage in this sort of discussion. I hope colleagues across the aisle can engage in it, not necessarily to be an attack on our President or our policies, but as a gateway to support economic liberty that has indeed made America the land of opportunity.
{time} 2015
Mr. HILL. Mr. Speaker, I appreciate the time of my colleagues tonight on the floor. We have worked hard tonight to talk about how do we have a more constructive partnership between the executive branch and the legislative branch like we do in designing economic policy, tax policy, regulatory reform policy, like this excellent description that Mr. Davidson gave of how we created a modernized CFIUS approach for reviewing investments into the United States.
We had full engagement with General Mattis at the Pentagon, Secretary Mnuchin at the Treasury Department, Secretary Ross at the Commerce Department, and the White House, with Senator Cornyn in the United States Senate, Andy Barr, Robert Pittenger here in the House working to create a collaborative approach regarding how to have a great national security policy for investment in the U.S.
I think we have all argued here tonight that, with our Article I engagement in the House Financial Services Committee, the House Ways and Means Committee, we want to be a constructive partner on accomplishing the President's objective, which is fair and reciprocal trade, first and foremost, with China, and to finally break this cycle we have talked about tonight of inadequacy, of holding them to account, making progress, enforcing their rules of the road under WTO, all with a heart toward helping our consumers, having more choice, more free trade, more opportunity to expand our economy, not contract, as we get into a downward spiral on a tariff-only strategy.
Mr. Speaker, we want to work successfully with this administration on a new and modern NAFTA and with a successful set of trading arrangements with our friends in Europe and in Asia.
Mr. Speaker, I yield back the balance of my time.
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