Tai Says She's Open to Talks With China, but 'Will Not Hesitate to Act' if Talks Ineffective

Across dozens of pages of written answers to Senate Finance Committee members, U.S. trade representative nominee Katherine Tai often avoided directly answering questions, instead pledging to work with senators on their priorities. One of the most common questions posed to Tai was whether she would renew Section 301 exclusions that expired last year; as well, whether she would allow companies that were denied exclusions another chance at a request; and whether she would reopen the exclusion process.

Every time, she replied: “I will work with Congress to ensure that those tariffs are appropriately responsive to China’s practices; account for their impact on U.S. businesses, workers and consumers; and support the U.S. response to the COVID-19 pandemic.” She also said future exclusion decisions would be fair and transparent.

Sen. Rob Portman, R-Ohio, tried to get a hint of whether the review of Section 301 tariffs would draw a distinction between products linked to Made in China 2025 and the others. “Do you intend to keep tariffs on goods if the underlying feedstock for the good can only be produced in China? Do you intend to draw a distinction between imports used to manufacture products in the United States and finished goods manufactured in China when it comes to assessing the potential for tariff relief?” She gave the same generalities.

Sen. John Cornyn, R-Texas, told Tai that stakeholders remain concerned that USTR will impose “punitive tariffs” on Vietnamese products over the two Section 301 investigations, on timber and on currency manipulation. Tai did not say the agency would not recommend tariffs, but implied that negotiations are better than years of tariffs. “If confirmed, I will work with the Treasury Department, the Department of Commerce, Customs and Border Protection and other agencies to bring effective pressure to bear on countries that engage in such unfair practices. The goal of a Section 301 investigation is always to provide an incentive to encourage a negotiated solution that addresses the underlying unfair trade practices,” she wrote.

Cornyn also asked her if she anticipates having bilateral talks with China. “I am open to exploring a wide range of options to address our longstanding problems with China’s unfair trade practices, including bilateral talks. However, I will not hesitate to act if those talks prove ineffective,” she said.

Four senators, three Democrats and Sen. Richard Burr, R-N.C., complained that the safeguard tariffs on solar panels and cells are costing installation jobs, and the increase in rate from the planned step down in 2021 is making it hard for companies to plan. Burr asked, “If confirmed, will you commit to rescinding this Presidential Proclamation, and to working to undo harmful policies?”

She did not say she would, but suggested that the Biden administration might take a different approach. She wrote, “The Biden Administration has made the increased use of renewable energy, including solar, a core component of its policy to combat climate change. If confirmed, I will examine the safeguard action in light of those goals, the security of our renewable energy supply chain, and the impact on U.S. businesses and jobs.”

Several senators, including Ranking Member Tom Crapo, R-Idaho, asked her to endorse renewing the Miscellaneous Tariff Bill and the Generalized System of Preferences benefits program. She said she would work with Congress to get the bills passed. In the case of GSP, she said she would work with Congress as it seeks to update GSP.

Sen. Maria Cantwell, D-Wash., told Tai that Indian purchases of apples have fallen from $120 million to $4.9 million because of retaliatory tariffs India imposed after Section 232 tariffs on Indian steel. She asked if India could be restored to GSP, and if that could be connected with an agreement to return to the previous level of tariffs on American apples.

Tai avoided answering, just saying, “If Congress passes an extension of the GSP program, I will review our trading partners’ eligibility for the program based on their compliance with the program’s criteria. I commit to working with Congress on GSP eligibility reviews.”

In addition to pleas that USTR enforce USMCA provisions with Canada and Mexico, Tai got some very specific questions on the NAFTA rewrite.

Sen. Todd Young, R-Ind., whose state is home to major heavy truck engine manufacturer Cummins, said that since the switchover from NAFTA to USMCA, exporters of used trucks from Canada face a duty at the border. In order for Canadian motor carriers to afford new North American manufactured trucks, which mostly originate from the U.S., they need to sell their used trucks. “Often those trucks are exported used back to the U.S. where we have a much larger used truck market,” he wrote.

“I commit to looking into this issue and consulting closely with you, CBP, and affected stakeholders,” Tai replied.

Cornyn complained that foreign-trade zones are disadvantaged because of the return to NAFTA-era treatment of drawback, and that because was no mockup, the Senate was not able to put its views on the record as to whether they wanted the treatment changed. He asked her how FTZs fit into the conversation on critical supply chains, and whether the administration would study whether the drawback rules should be changed. “The Biden Administration is already undertaking a comprehensive review of supply chain risks, pursuant to the President’s Executive Order issued on February 24,” she said, and she pledged to review this issue as part of it.

Tai received several questions about the World Trade Organization. Cantwell asked Tai if she would restart negotiations in Geneva on the Environmental Goods Agreement. She did not answer directly, but said, “If confirmed, I will pursue a trade agenda that supports the Biden Administration’s comprehensive vision of reducing greenhouse gas emissions and achieving net-zero global emissions by 2050, or before, by fostering U.S. innovation and production of climate-related technology and promoting resilient renewable energy supply chains.”

Sen. Chuck Grassley, R-Iowa, asked her if China should be considered a developing country at the WTO. “If the WTO is going to succeed in promoting equitable economic development, it is critical that the institution rethink the ability of countries to self-select developing country status. The rules for special and differential treatment should be reserved for those countries whose development indicators and global competitiveness actually warrant such flexibilities; they should not be abused by countries that are already major trading powers,” she replied.

And Portman said he thinks allowing appointments to the Appellate Body without addressing the issues that led to the blocking of appointments would not be a good idea. “Yes, it is absolutely critical that any solution to the existing impasse be one that seeks to address the underlying problems, including longstanding concerns of overreach and jurisprudential drift,” Tai replied.

Email ITTNews@warren-news.com for a copy of the questions and written responses.