On April 17, the Senate Committee on Finance held a hearing on “The President’s 2024 Trade Policy Agenda.” The sole witness of the hearing was U.S. Trade Representative (USTR) Katherine Tai.
Below is a summary of the hearing prepared by Delta Strategy Group. It contains several high-level takeaways from the hearing, followed by opening statements and witness testimony, and a summary of the Q&A portion.
Key Takeaways
The following summarizes 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 Section 301 tariffs, and inquiries about USTR’s broader goals and performance in trade negotiations.
- Senator Chuck Grassley (R-IA) questioned what USTR is doing to press Brazil to lower its tariffs on ethanol. Ambassador Tai said this is a high priority for the administration as well, and the objective is to ensure that U.S. ethanol can once again compete on a level playing field. She also said her Brazilian counterparts understand how important this issue is to USTR.
SUMMARY
Opening Statements and Testimony
Chairman Ron Wyden (D-OR)
- USTR needs to take action to protect American workers and businesses. Specifically, USTR should confront foreign unfair practices through dispute settlement and Section 301 investigations. It is important to remove trade barriers to facilitate American exports, especially in agriculture and manufacturing. USTR should be more transparent in trade negotiations, and I urge the administration to communicate clearly with Congress and the public about their priorities and efforts in trade policy.
Ranking Member Mike Crapo (R-ID)
- The USTR has yet to initiate a single enforcement action against China. Whether at the WTO, under Section 301, or the Phase One Deal, USTR has failed to act to address Chinese nonmarket practices. The administration’s trade agenda provides no plan for real negotiations to improve market access. Instead, the administration lauds the Inflation Reduction Act, asserting that our workers need to be shielded, subsidized, and micromanaged through industrial policy, even if it entails massively expanding our national debt. Thus far, USTR has failed to support our workers in any of the so-called framework negotiations and the trade agenda indicates this will continue.
- If the administration will not negotiate tariffs, it should at least help workers in these industries by negotiating critical rules on technical barriers to trade, intellectual property, and key digital provisions such as nondiscrimination and free data flows. USTR needs to work with Congress to meaningfully expand market access opportunities.
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. 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.
- 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
Brazil
Grassley (R-IA): What is USTR doing to press Brazil to lower its tariffs on ethanol, and what concrete measures is the administration considering in the negotiations? Tai: This is a high priority for the administration. USTR is in coordination with USDA and actively engaging with our counterparts in Brazil on market access barriers to U.S. ethanol. Our objective is to ensure that U.S. ethanol can once again compete on a level playing field. The Brazilians indicated to us that they understood at all levels, how important this issue is to USTR.
USMCA
Wyden (D-OR): How does USTR use USMCA? Tai: USTR remains plugged into the progress that Mexico is making in the implementation of the Rapid Response Labor Mechanism.
Bennet (D-CO): Can you explain USTR’s general trade strategy in our hemisphere? Tai: USTR is looking to have more of a regional economic activity. USMCA is our gold standard, and we are looking to upgrade our other trade relations to this standard.
Barrasso (R-WY): What is USTR doing to resolve issues with Mexican energy policies to protect American interests? Tai: USTR is engaging with American companies about this issue.
China
Wyden (D-OR): How can USTR more effectively use Section 301 to address unfair trade practices with China? Tai: Section 301 is an important tool that USTR values.
Crapo (R-ID): Tai: When will Section 301 investigations that have now been going on for two years, regarding U.S. tariffs on steel and aluminum for China be completed? Tai: I hope we will have answers soon.
Blackburn (R-TN): What is USTR doing to hold China to account for agriculture purchase commitments, like cotton and soybeans? Tai: USTR is committed to improving agricultural markets for our producers.
Lankford (R-OK): President Biden has said he has plans to increase Chinese steel tariffs to 25 percent. Is this something that USTR is thinking about? Tai: USTR is going to release a proposal soon concerning Section 301 tariffs.
Brown (D-OH): How is USTR standing up to China? Tai: USTR is focused on reestablishing American leadership against the Chinese, and we are looking at all tools fit for the challenge China poses.
Market Access
Stabenow (D-MI): USTR must have a robust trade agenda for agricultural markets.
Cornyn (R-TX): How does USTR plan to address the declining market share of agricultural products? Tai: The U.S. has set high-record exports for the last three years, and I am happy to get those numbers to you.
Thune (R-SD): What specific actions does USTR plan to take to expand market access for agriculture in 2024? Tai: The U.S. has experienced $21 billion in market access over the last three years. We have renewed an agreement with Japan that has allowed for the export of high-quality U.S. beef. In addition, USTR has negotiated 12 tariff categories with India, given their growing markets.
Thune (R-SD): Why has the U.S. not entered into free trade agreements with the UK or EU? Tai: The UK has been difficult to work with in terms of agriculture market access, but USTR is committed to supporting farmers.
Lankford (R-OK): What is USTR doing to create more certainty for agriculture producers through free trade agreements? Tai: USTR is not doing free trade agreements, but USTR has made economic agreements.
Lankford (R-OK): What new agricultural markets is USTR opening? Tai: We have greater ethanol amounts going to Japan, and Bangladesh has dropped a cotton fumigation barrier, which will allow us to ship more cotton.
Cassidy (R-LA): USTR should handle WTO negotiations regarding Indian subsidies of rice.
Menendez (R-NJ): What is the USTR doing to expand market access in the Indo-Pacific? Tai: USTR is thinking about how to develop ways to diversify our supply chains.
Daines (R-MT): Agricultural exports declined $17 billion in the past year. How is the administration planning to reverse the ag trade deficit? Tai: Deficits happen from time to time, and USTR is committed to U.S. agricultural producers.