Senate Trade Subcommittee Talks About China's Barriers to Trade

Sen. Chuck Grassley, R-Iowa, represents a state that exports lots of soybeans to China but remains critical of the U.S.'s largest trading partner in goods. He said he recently visited five cities in China with Agriculture Secretary Sonny Perdue and other senators. What he saw there convinced him that Chinese officials "will do anything legal or illegal, moral or immoral, ethical or unethical ... to get ahead and stay ahead." He added, "They are very strategic and we're very short-sighted." Grassley, speaking at a Senate Finance trade subcommittee hearing April 11 on access to China's market, said he's one of the only Congress members still in office who voted to allow China full membership in the World Trade Organization. "It hasn't turned out the way I anticipated," he said. "I kind of feel like I should feel sorry for my vote."

While witnesses from the tech industry, manufacturing and the service industry and a former AFL-CIO leader all agreed China's counterfeiting, cybertheft, state subsidies and forced technology transfer are a problem, they disagreed on how to improve the U.S.'s standing in the trade relationship. Information Technology Industry Council CEO Dean Garfield said tech companies want less emphasis on tariffs and more on building a coalition of allies to negotiate changes with China. China would have to agree to a particular timeline for policy changes, though, because he noted that Chinese officials have a practice "of making commitments that they don't ultimately keep." Garfield said it's time to sit down with Chinese officials, and "take advantage of this moment," and said he's been stunned by the lack of urgency in the administration to start talks.

Thea Lee, president of the left-leaning Economic Policy Institute, said that over the decades she worked at the AFL-CIO, she found the U.S. enforcement policy to counter China's flouting of trade rules piecemeal and ineffective, and "often a decade too late." Lee said the composition of the trade flow between China and the U.S. demonstrates that there are market distortions. Normally, you would expect a poorer country to supply agricultural products and material inputs, and a more developed country to send the poorer country consumer tech products and advanced manufactured goods. One of the top U.S. exports to China is airplanes, but otherwise, the areas where the U.S. has a surplus are commodities and agricultural products. It's chemicals and food that are most of the target list for retaliatory tariffs from China.

Sen. Pat Roberts, R-Kansas, said in an interview outside the hearing that he does not want the administration to try to reimburse farmers who are hurt by tariffs. "I told [USTR] Bob [Lighthizer], we don't need another subsidy, for goodness sakes!" Roberts said Lighthizer asked him, "Well, what's the answer?" For Roberts, concluding NAFTA would be better than trying to pay farmers for lost sales. He said Mexico has been shifting away from buying U.S. grain and corn and buying instead from Brazil and Argentina. "That would take a lot of pressure off," he said. Senators from agricultural states have been telling President Donald Trump repeatedly that they don't want a trade war, because farmers get the brunt of retaliation. Roberts said during the hearing that he had a sorghum farmer in his office this week in tears because of how China's actions are affecting prices.

But Sen. John Cornyn, R-Texas, the subcommittee chairman, agreed with Lee, who echoed Trump in saying we've been in a trade war with China for years, and we've been losing. "I'm not sure we've been fighting back," Cornyn said. While he said the Section 232 tariffs and Section 301 tariffs were not well-designed, and the message has been muddy on tariffs, "we definitely do have the attention of the Chinese government."