On April 16, the House Ways and Means Committee held a hearing on the “Biden Administration’s 2024 Trade Agenda with U.S. Trade Representative Katherine Tai.” The sole witness in the hearing was U.S. Trade Representative (USTR) Katherine Tai.
Below is a summary of the hearing prepared by Delta Strategy Group. It includes several high-level takeaways from the hearing, followed by summaries of opening statements and witness testimonies and a summary of the Q&A portion of the hearing.
Key Takeaways
The following is a summary of some of the topics explored in today’s hearing. Each is discussed in further detail in the Discussion section below.
- Today’s hearing discussed the U.S.-Mexico-Canada Agreement (USMCA), concerns about tariffs and trade enforcement mechanisms, environmental considerations in trade negotiations, and inquiries about USTR’s broader goals and performance in trade negotiations.
- Ambassador Tai emphasized the USTR’s commitment to implementing andenforcing the USMCA, including addressing trade barriers with Mexico. She highlighted ongoing efforts to expand market access for American products, engage in negotiations with key trading partners like Brazil and India, andaddress concerns about tariffs and trade enforcement, particularly regarding China.
- Representative Adrian Smith (R-NE) questioned Ambassador Tai about the implementation and enforcement mechanisms of the USMCA, including dispute with Mexico over bioengineered corn.
- Representative Darin LaHood (R-IL) expressed concern about market access for specific products such as Brazilian ethanol and agricultural goods.
SUMMARY
Opening Statements and Testimony
Chairman Jason Smith (R-MO)
- The Biden administration has been inactive in countering China’s influence andenforcing trade agreements. USTR has failed to enforce the Phase One agreement and pursue new cases at the World Trade Organization (WTO) or Section 301 investigations. Congress is committed to addressing issues such as China’s trade practices, the use of forced labor, and taxation by other nations. The Biden administration has chosen to focus on progressive agendas rather than delivering for American workers and businesses. Congress remains willing to collaborate with the USTR to realign trade priorities and achieve mutual goals.
Ranking Member Richard Neal (D-MA)
- USTR plays a pivotal role in crafting trade agreements that shape the economy. Led by Ambassador Tai, the USTR negotiates deals like the bipartisan USMCA which promote fair competition and protect American interests. Ambassador Tai’s focus extends to enforcing existing agreements and ensuring fairness for American workers. Looking ahead, I am confident that the USTR will effectively tackle emerging challenges like digital trade and climate change.
USTR Ambassador Katherine Tai
- USTR is using innovative tools with U.S. trading partners to address harmful practices, such as forced labor. Our work with Japan through the Task Force on the Promotion of Human Rights and International Labor Standards in Supply Chains is one example. The USMCA’s Rapid Response Labor Mechanism has been effective in empowering U.S. workers by reducing the incentive to unfairly ship jobs overseas. USTR is aware that GMO concerns with Mexico are important to U.S. farmers, especially our corn producers. Last August, USTR established a dispute settlement panel under the USMCA. USTR is committed to ensuring access to the Mexican market and using innovative tools to respond to climate and food security challenges.
- In 2023, USTR worked with Japan to implement a new biofuels policy that will allow the U.S. to capture up to 100 percent of Japan’s on-road ethanol market. Under this policy, exports of U.S. ethanol could increase by over 80 million gallons annually, representing an additional $150-200 million in exports each year. This is an important win for producers in Iowa, Missouri, and South Dakota.
- Additionally, efforts are underway to transform the WTO and collaborate with trading partners to reshape the global trading system. Supply chain resilience is a major priority, with a focus on reducing dependencies and vulnerabilities, strengthening manufacturing, and fighting against unfair economic practices, particularly in China. The administration emphasizes fair competition and giving everyone a fair shot in the economy, with a commitment to rebuilding American manufacturing and strengthening supply chains.
Discussion
USMCA
Neal (D-MA): Can you elaborate on the Rapid Response Labor Mechanism and other areas USTR has worked to improve? Tai: USTR takes USMCA’s implementation andenforcement seriously. USTR is in the middle of litigating a case with Mexico on biotech corn policies that are restricting the rightful access of our producers into Mexico.
Smith (R-NE): I am concerned that the Biden administration has not spoken on the current issue of Mexican corn. Tai: USTR is actively pursuing litigation with Mexico, using the tools of the USMCA to address what we consider to be an illegitimate andunscientifically based restriction on U.S. trade in biotech corn to Mexico.
Kelly (R-PA): What is USTR doing to address trade with Mexico regarding steel? Tai: USTR has a robust work stream with Mexico on the issue of steel. Beyond that, USTR is presenting to the Mexicans that it is within their control to do the right thing in collaboration with us to ensure that U.S.-Mexico trade is benefiting our industries andnot others.
Market Access
LaHood (R-IL): What is USTR doing about Brazilian ethanol imports? Tai: USTR’s Chief Agriculture Negotiator had a meeting with the Brazilian agriculture ministry just weeks ago, and USTR continues to engage with Brazil. We have received assurance from Brazil that they know how important this issue is to USTR. We are working to find ways to relieve the tension in the relationship.
Smith (R-MO): What is the Biden Administration doing to open new agricultural markets? Tai: USTR is committed to protecting American farmers and agricultural producers. USTR has removed $21 billion in non-tariff barriers, and in the last year lowered tariffs to create market access on a dozen products in bilateral negotiations with India, a significant market to diversify opportunities for American farmers.
Buchanan (R-FL): What is USTR doing to expand access to new markets in places like Africa and Asia? Tai: USTR is taking lessons learned from the renegotiation of the North American Free Trade Agreement (NAFTA) and the creation of the USMCA andapplying them forward. Currently, USTR has active negotiations going on with the thirteen countries in the Indo-Pacific countries. USTR is currently negotiating with countries with whom we do not have an existing Free Trade Agreement.
Thompson (D-CA): What is the USTR doing to address the De Minimus issue? Tai: USTR is committed to enforcing the integrity of our trade programs at the border. USTR will be examining the De Minimus issue very closely. In addition, USTR sees concerns around evasion and transshipment across the board, and that is something that I would encourage the Committee to consider closely.
Larson (D-CT): How has USTR leveled the playing field for the American workers? Tai: USTR is working to reauthorize the NAFTA and USMCA has been beneficial for American workers. USTR has concerns about excess capacity and surges of exports that may come as a result of China’s attempts to export its way out of its economic downturn.
Fischbach (R-MN): What has USTR done to create new market access for farmers?Tai: USTR has secured wins for specialty crop farmers, and we are committed to supporting the ag industry.
Panetta (D-CA): USTR should focus on free trade agreements going forward instead of economic frameworks.
Sanchez (D-CA): Can you explain how USTR ensures our trading partners avoid forced labor? Tai: USTR is growing the conversation around forced labor and we will continue to work on that in the WTO context.
Chu (D-CA): When will USTR complete negotiations with Taiwan regarding the USTR’s summaries of proposed texts on labor, environment, and agriculture in U.S.-Taiwan 21st Century Trade Initiative negotiations? Tai: USTR is still in contact with Taiwan, and I hope we can provide an update soon.
Feenstra (R-IA): Why is the USTR lagging other nations in the number of FTAs initiated? Tai: The traditional FTA is beneficial for agriculture, but it has not done well for the manufacturing industries.
Gomez (D-CA): What are USTR’s short-term and long-term goals? Tai: USTR is actively negotiating through bilateral agreements with Kenya, with Taiwan, both important strategic partners. In the long term, USTR needs to address supply chain resilience.
Section 301 Issues
Smith (R-MO): Do you agree that trade enforcement is less effective if Section 301 or other trade enforcement tariffs can be ignored through other U.S. trade laws, like the De Minimus exemption? Tai: UTSR has heard a lot of concerns from stakeholders, especially from the producers and sellers of consumer-facing products. I agree that this is a worthy issue for the Ways and Means Committee to take up.
Smith (R-MO): Can you commit to releasing USTR’s legally mandated 4-year review of the China tariffs by May 3? Tai: USTR is making progress, and I believe that we are very close to the conclusion of this review.
Blumenauer (D-OR): I am concerned that China benefits greatly from our De Minimus rule.
Davis (D-IL): I have concerns that without exclusions to the Section 301 tariffs, healthcare costs may increase. Can you explain the necessity of Section 301 tariffs? Tai: The tariffs help USTR address the imbalance between U.S. and China andencourage our producers to diversify their supply.
Wenstrup (R-OH): Can you speak to exclusion programs with Section 301 tariffs? Tai: USTR believes those are important.
Fitzpatrick (R-PA): When can Congress expect to see the review of Section 301 tariffs? Will the final report answer questions regarding exclusions? Tai: The report will be completed soon and will include information about exclusions.
Steube (R-FL): USTR should reinvestigate Section 301 tariffs to show other countries there are consequences for unfair trade practices.