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Senate Finance Committee Confirmation Hearing for Katherine Tai to be United States Trade Representative

Senate Finance Committee

Katherine C. Tai to be United States Trade Representative, with the rank of Ambassador Extraordinary and Plenipotentiary
Thursday, February 25, 2021

Nominee

  • Katherine C. Tai, of the District of Columbia, to be United States Trade Representative, with the rank of Ambassador Extraordinary and Plenipotentiary

Opening Statements
Chairman Ron Wyden (D-Ore.)
In his opening statement, Wyden emphasized that American trade policy needs to be smarter and stronger, which requires a “savvy” leader at the United States Trade Representative (USTR) who understands what working Americans are going through and knows how to develop a path for them to get ahead. Wyden emphasized the importance of developing a tougher, new approach with China, saying the country has become more closed off to American goods and services in the past four years. Wyden further said the U.S. needs a full blockade against other countries’ discriminatory policies aimed at “knifing” American industries, such as digital goods and services. He said that the USTR needs to focus on implementing the new North American Free Trade Agreement (NAFTA), which raised the bar for labor standards, environmental rules, and digital trade, but noted that the agreement can only deliver for American workers and businesses if it is implemented and enforced the right way. Wyden concluded “trade done right” is about strong enforcement that protects American workers and businesses, creates new opportunities to raise wages and increase exports, and raises the bar for environmental standards and digital rules around the world so that the global economy competes on American terms.

Ranking Member Mike Crapo (R-Idaho)
In his opening statement, Crapo said that successful trade policy means more high-paying jobs, adding that free trade empowers all Americans including those running and working in smaller businesses. Crapo said too many foreign markets remain closed to Americans. He argued that China stealing American businesses’ trade secrets is the theft of American innovation and has cost the United States half a trillion dollars each year. He called for China’s Regional Comprehensive Economic Partnership (RCEP) to have stronger rules on protecting intellectual property, foreign investment, labor rights, and environmental protection. He said the USTR needs to tear down trade barriers and confront abusive trade practices. Crapo urged Tai to make it clear to the Biden administration that trade is a domestic priority for hundreds of millions of Americans and while “buy American” goals are important, businesses and workers are ready to “sell American” to all foreign customers.

Testimony
Katherine Tai to be United State Trade Representative
In her testimony, Tai noted the significant challenges ahead, the most pressing of which is helping Americans emerge from the pandemic and economic crisis. She said that the focus should be on broad equitable growth, American innovation and competitive edge. She said she will prioritize implementing and enforcing renewed terms of the trade relationship with Canada and Mexico. Tai noted she will focus on rebuilding international alliances and partnerships and re-engaging with international institutions, thereby securing the necessary reforms that allow the world to come together and address common threats like climate change, the pandemic, and a global economic downturn. She said it is vital to develop a strategic and coherent plan that will hold China to its promises and effectively compete with their model of state-directed economics. She said that the United States must commit to working relentlessly with others to promote and defend shared values of freedom, democracy, truth, and opportunity in a just society. Tai emphasized the need for resilience and making investments in American people and infrastructure to harness American potential, boost competitiveness, and build a more inclusive prosperity. She concluded that the United States must impart the values and rules that guide global commerce and enforce those terms vigorously.


Question & Answer
Trans-Pacific Partnership (TPP)
Sens. Tom Carper (D-Del.), John Cornyn (R-Texas), and Steve Daines (R-Mont.) all asked if Tai supports re-engaging in the TPP and pursuing multilateral trade agreements with allies in AIPAC. Cornyn added that he would like to see India as a potential addition to the TPP agreement. Tai said the formula for the TPP is sound and set up to engage with countries who share our interests, however, the world is different today than it was in 2015 or 2016 in terms of awareness of pitfalls of trade policy. She said she would like to work with the administration and discuss working on a multilateral basis in Asia-Pacific with China in mind.

World Trade Organization (WTO)
Sens. Rob Portman (R-Ohio), John Thune (R-S.D.), and Ben Cardin (D-Md.) raised questions about possible reforms to the WTO and what can be done to restore the structure to support negotiations rather than litigations. Tai said the U.S. was a founding member of the WTO and we cannot afford to stop being a leader. She agreed that reforms need to take place and we should think about the value the WTO creates for its members and ask if it is accomplishing the goals we expect. Thune asked specifically if we can expect country-of-origin labeling to survive the WTO challenge. She expressed confidence that it will, and she committed to working with members of Congress to make positive reforms.

United States-Mexico-Canada Agreement (USMCA)
Wyden, Crapo, and Thune asked what the top priorities would be in using new tools to enforce the USMCA, reach dispute resolutions, and ensure partners are compliant with terms of agreements. Sens. Debbie Stabenow (D-Mich.) and Chuck Grassley (R-Iowa) asked if Tai would commit to creating similar kinds of consultations and forums that the former USTR had in place. Tai said it is a priority to make sure our partners deliver on the promises that have been made, noting re-negotiation of NAFTA was hard work, and the agreement we have now is an overall improvement containing new enforcement mechanisms. She said the key to making the USMCA successful will be exercising all tools within the agreement to address ongoing frictions. She also said she plans to continue important stakeholder consultations and forums.

Sens. Sherrod Brown (D-Ohio) and Cardin asked if small businesses and the enforcement of stronger labor standards, specifically with respect to Mexico, can be expected in these negotiations. Tai said she would like to see policy that prioritizes small businesses and worker rights and will ensure there is inter-agency coordination to make these programs work.

U.S.-U.K.
Grassley asked if Tai would continue negotiations with the U.K. even though they have left the EU. Tai said the initial notifications for negotiations with the U.K. date back to October 2018 and she would like to review the progress in conversations so far and our objectives in light of all the changes that have taken place in the past few years.

U.S.-China
Many members asked questions relating to China and how the USTR plans to reestablish our competitiveness, ensure China is compliant with Phase 1, combat China’s theft of intellectual property, combat their threats to human rights, and many other ongoing frictions. Tai said it all begins with engaging. She said if we can capitalize on our shared interests, we can make more effective policies together. To maintain our domestic competitiveness, Tai agreed with Sen. Bob Menendez (D-N.J.) that domestic investments are crucial. In response to Wyden’s concern on intellectual property theft, Tai said these conversations have been well worn and the U.S. needs to explore all options to get China to deliver on the promises they made. She said she supports a holistic, top to bottom review of our strategy with China. In response to questions from Sens. Bob Casey (D-Pa.) and Michael Bennet (D-Colo.) on addressing market distortion, Tai said we have been very trusting of the free market and “invisible hand” to take care of our economy, but recent years have taught us to revisit our trade policies. She said the goal is to remain true to ourselves but be more strategic, knowing who we are up against. In response to questions from Sens. Bill Cassidy (R-La.) and Brown about China’s lack of labor and environmental standards, Tai said she is committed to holding China accountable to these regulations and wants to strategize more beneficial trade policies.

Menendez asked if Tai would use the special investigations unit responsible for trade agreement violations as a tool to have U.S. companies come forward in sharing the problems they face with China. Tai said she would deploy this group.

Sen. Catherine Cortez Masto (D-Nev.) asked if using the U.S. International Development Finance Corporation would improve the U.S. ability to compete with China, Tai said she is considering a whole of government approach to addressing this issue.

Digital Data and Intellectual Property (IP)
Sens. Todd Young (R-Ind.), James Lankford (R-Okla.), Warner, Crapo and Menendez asked how Tai hopes to advance and defend strong IP rules, innovators, and IP intensive industries in our trade agreements, and if we can expect international IP law reforms. She said it is extremely important to reflect these ideals in trade policies and supports a comprehensive IP review. Crapo asked for the Special 301 Report to be used to call out countries and practices that injure American interests. Tai said this report should be considered one of the tools for IP enforcement but believes there are other options in the toolbox as well. Lankford asked what is being done on the 301-exclusion process, to which Tai said it is high on her radar and she wants to emphasize good governance, transparency, predictability and due process.

Wyden asked specifically about plans for digital tax services. Tai acknowledged the large presence and importance of digital tax services around the world and is committed, along with the administration, to have cooperative, multilateral efforts at the OECD and G20.

Tariffs
Sens. Maria Cantwell (D-Wash.), John Barrasso (R-Wy.), Wyden, Menendez, Grassley, Bennet, Daines and Cortez Masto asked about steps that can be taken to increase exports and asked for tariff-free trade across a wide range of industries. Wyden noted that many of our partners have imposed retaliatory tariffs and asked what role tariffs play in this worker-centric trade policy. Tai said tariffs are a legitimate tool and an important part of our fair-trade remedies. She acknowledged the disruption and pain tariffs have imposed on many U.S. industries, and even other countries, but said they are part of long-standing disputes. She said at the core of this, we need to come together with trade partners to figure out a joint solution. She said she would like to coordinate trade policies and break out of the pattern of ignoring one sector of the economy to prioritize another.

Supply Chain
Sens. Maggie Hassan (D-N.H.), Tim Scott (R-S.C.), Stabenow, Cornyn, Portman and Young, expressed their concerns about supply chain vulnerabilities, particularly as they relate to the manufacturing and automotive industries. Members asked about Tai’s role in securing and strengthening our supply chain, and how she hopes to support the relevant jobs and exports. She said she wants to coordinate an inter-agency process to craft policies that will put the U.S. in its strongest footing and focus on fostering resilience. She also said she would like to support affected workers by increasing their productivity and access to export markets.

Climate Change
Carper mentioned his strong support for environmental standards and asked how Tai would approach reviewing climate change related aspects of trade policy. Tai said trade policy has a lot to contribute to the climate change effort and will require a collective solution. She said as other countries regulate more in this area, we need to be competitive and take steps to show we want to lead this effort.

Sen. Sheldon Whitehouse (D-R.I.) raised concerns that the U.S. is being labeled as the “spoiler” when it comes to climate change issues, particularly marine pollution. He said big businesses will not be the ones to press the USTR to clean up oceans and asked Tai if she is ready to commit to climate change steps voluntarily. Tai said the USMCA environmental chapter has language that addresses marine debris and ocean plastics issues, and that she is committed to playing a positive role in future climate change negotiations.

Generalized System of Preferences (GSP)
Cortez Masto and Casey said there is a need to update GSP and ensure stronger standards in equity and representation with respect to gender and race. Tai agreed and said she supports the incorporation of women’s empowerment into trade laws.

Process Improvement
Sens. Elizabeth Warren (D-Mass.) and Pat Toomey (R-Pa.) expressed their concerns with the overall processes surrounding our trade deals and former agreements being made while leaving Congress in the dark. Tai said she wants to foster transparency and engage in good processes to support a positive relationship with Congress. Supporting bipartisan multilateral decisions, she agreed with Toomey that the U.S. should not withdraw from a congressionally passed trade agreement, like NAFTA, without consent from Congress. Warren said there has been unfair representation in the trade advisory committees and asked Tai to ensure more even future representation on the committees to include groups other than just large corporations. Tai said she will commit to reviewing how these committees are composed.

Toomey asked if the goal of a future trade agreement would be to end up with mutual, reciprocal agreements with zero tariffs, zero quotas, and zero obstacles to trade with respect to goods and services. Tai said our policies need to be nuanced and consider all the lessons we have learned in the past four years of trade policy. She acknowledged this may be a disappointing answer, but she cannot be certain without knowing specific facts and who the trade partner would be.

For more information on this hearing, please click here.