tv Impact of Tariffs CSPAN July 16, 2018 8:00am-10:37am EDT
has a detrimental effect on our overall economy? so if you're using as a rationale a weakened economy doesn't allow us to provide for the national security. putting aside whether or not canada represents a real "threat" in terms of its inabilities to supply us with steel and aluminum during some kind of conflict. given the defense arrangements that we have with canada and the fact that they have never, ever -- ever -- been in a position, or wanted to be in a position, where they would deny us an ability to mount a national defense. but just on the economy alone, are you relying simply on the words of wilbur ross here? because the wealth of data suggests that this will weaken our economy, not strengthen it. >> senator, these are interagency conversations. the recommendations of the united states trade representative, the commerce secretary, other officials all
went to the president, and this is the president that -- this is the decision that the president has made. >> i understand that's the decision, but i'm just saying what data does he rely on? just interagency memos? or actual economic figures and historical data that we've accumulated for prior actions of this sort? the wealth of data suggests that this weakens our economy, not strengthens it. you dispute that then. >> well, senator, there are exports at the department of commerce who ha haven't there for decades. they're not political appointees, they're career folks who have looked at this situation and this is the information that they have provided. we have the treasury department, commerce department, united states trade representatives, hundreds of economists who have looked at this, and these are the recommendations that they have provided based on the information and perhaps the same data that you've looked at. >> i would suggest that you really have to use tortured data to come to a conclusion that
this is going to strengthen our overall economy. just the data out there affirms in spades that this will lead to a weakened economy and we're seeing the knock-on effects now with the announcements of companies moving offshore now to escape these tariffs. so i just -- i can't believe that with a straight face the administration tries to claim and tries to simply ignore what we know about the economy and the effect of these kind of tariffs. thank you, mr. chairman. >> thank you. senator markey. >> thank you, mr. chairman, very much. the north koreans did not attend a meeting they were scheduled to have with the united states
today. and it just continues to raise the question as to whether or not the north koreans are playing games with the united states with regard to their promise to denuclearize, especially in light of the fact that reports indicate that even before the singapore summit, that china had already increased trade with north korea. and after singapore, china also said that they were going to increase trade with north korea. now that clearly undermines our ability to be able to extract the concessions from the north koreans which they had promised to the united states and to the rest of the world. so my question to you is,
looking at china right now, do you believe that china has increased trade with north korea over the last couple of months, and especially in the aftermath of the singapore summit? >> senator, thank you for that question. i don't have personal knowledge of chinese trade with north korea and if it's increased. >> so you don't know. >> i don't know, sir. >> yeah. again, i think that whenever we listen to the administration when it comes to any subject that relates to china, that there's an ambiguity that, unfortunately, is presented from the administration with regard to a lack of knowledge. but here, it's clear that we're not going to get the result which we want from north korea if china is playing games with
the trade sanctions, which they are a part of committing to enforce. have you ever had a discussion internally within the state department or in a joint agency panel with regard to toughening the crude oil sanctions against the north koreans in order to ensure that they understand that there is a commitment that has been made to guarantee that north korea in fact has to fulfill its promises before it receives economic relief? >> senator, i'm not sure i'm able to comment in an open forum on our sanctions deliberations. but i can tell you that secretary pompeo is personally committed to a process that leads to the complete,
irreversible and verifiable denuclearization of north korea. >> that's why i'm asking you the question. if the chinese are loosening the trade sanctions against north korea, then complete and irreversible denuclearization becomes less likely, not more likely. so what is the conversation that the state department of is having with the chinese about this increase in trade? >> we are talking to all nations about -- all nations with an interest in the denuclearization of north korea. we are having conversations with the chinese, with others in asia, all over the world. this is in global interest to have a denuclearized north korea. our secretary is ensuring this process works. >> there's no evidence that it is working. in fact, there is evidence that it is not working.
it's pursuant to the kim family playbook that goes back to his grandfather and his father where they pocket the benefits. here it would be suspension of military maneuvers on the korean peninsula. but it's in return for concessions made by the north koreans, but we don't see any evidence of that yet. they didn't show up at the meeting today, and it's all part of a long-standing pattern of conduct by the north koreans going back generations. and if china is now playing in to this, then ultimately, the likelihood of them actually making the concessions are very slim. and so i would ask for you to report back to this committee with regard to whatever plan the administration has to ensure
that china continues to honor its commitment to impose trade sanctions that are enforceable on the north korean government. i would make that request through you, mr. chair, that we receive that information from the state department. thank you. >> senator, i can tell you that we are committed to engaging china on this issue. we are committed to making sure that they work on this issue. as far as our posture on north korea, of course, as you know, the singapore summit was historic. a north korean leader has never met with a u.s. president, so we feel that we have made progress in at least having the conversation with north korea. >> i don't think the meeting in and of itself signifies progress. i think it is a first step, but it does nothing that follows on and china can use the ambiguity of the agreement to increase its trade on pressure on north korea to comply with whatever promises they made is reduced.
so if you could report back to us, i would appreciate it. >> yes, senator. >> senator gardner. >> thank you, secretary singh, for being here. appreciated the opportunity to talk to you about north korea, asia issues overall. chance to speak with you about my legislation, the asia reassurance initiative act that senator markey is a part of, senator coons, senator kaine, senator young a part of so thank you for that opportunity. i want to follow up a little bit of what senator markey is talking about. in january of this year in the asia realm, china suspended access to marriott's website with china for referring to e taiwan as a country. it was lifted only after marriott's chief executive issued a public apology. in april this year, according to the "chicago tribune," chinese civil aviation administration delivered 36 airline carriers, a letter demanding they immediately stop referring to taiwan as a part of china. last month the "wall street journal" reported that china rejected official u.s. requests
to discuss china's new antitaiwan labeling policy for u.s. airlines, including potential action against american airlines, delta air lines, and united airlines. these actions, there were articles yesterday about the iphone, that if you had taiwan flag in china, your location showed up in china, that your iphone would lock up if you used the taiwan flag. in fact, if you look at your iphone location settings, it doesn't say taipei, taiwan. it just says taipei. these are just the latest actions from an aggressive chinese government working to pressure american businesses. it calls into question how the u.s. intends to respond to such threats to commerce in this new landscape. what have we been doing and what more account united states be doing in the indo-pacific to counter this type of bullying campaign from china? >> thank you, senator, for that question. we have been looking at the situation that you've indicated about how taiwan should be labeled. you may recall that the administration -- >> this isn't just about taiwan being labeled. >> it is foreign policy, yes. >> inappropriate action.
>> it is inappropriate behavior, absolutely. you'll recall that the administration put out a very strong statement regarding china's directive that airlines change their websites not to reflect taiwan as a separate country. we've told our airlines that they should do what they think is right, that they are under no obligation to comply with china's directive. we made this clear to the chinese government, as well, that our businesses will conduct policy -- conduct their business as they see fit and that the airline websites, the way that they've listed taiwan is completely in accordance with the u.s. policy. we've made very strong statements. there is a july 25th deadline, as you may know, for the airlines to comply. we are not sure what sort of penalty will be imposed against any of our private sector for not complying, but we are prepared to respond appropriately if any damage is done to our u.s. enterprises. >> to follow up on the lines of
discussions on china, i recently was brought to my attention a business in colorado that has an employee that moved to china from taiwan, they had a plant in taiwan, this employee was hired in taiwan, allegedly took some interelectricity ul property with them to taiwan. they replicated the manufacturing process in china from taiwan. intellectual property. they replicated the manufacturing process, used the stolen information, allegedly. now a court in china has accused the u.s. firm of violating copyrights and patents. and so this is just a sign of things that we have to work on. i don't like the tariff approach. i want to be clear. there is a letter i'd read that talked about 25% cost being passed on to people in agriculture, buying sweeps and other equipment they'd use in cultivation practices because of the steel tariffs.
we have to do something about china but i hope that u.s. businesses don't succumb. bullying pressure china has pursued. >> thank you for that, senator. we in the u.s. government want to make sure our businesses are not bullied. as an aside, you've referred to your aria legislation. we welcome that legislation. it is completely in line with our indo-pacific strategy which is also designed to demonstrate our commitment to the region, and again counter china's influence there. >> thank you. senator udall. >> thank you, mr. chairman. let me say that a group of us from the committee -- four of us on this committee -- senator flake headed up a bipartisan group, three democrats, three republicans. we went over into the baltic region and met with leaders from four countries -- four countries. and leaders at all level from
presidents to prime ministers to parliamentarians. i'm sure chairman corker's already mentioned this, but they were very, very concerned with where president trump is going on trade and then very specifically a lot of talking about tariffs. and the discussion went along the lines -- i mean we've been your friends. now you're calling us under this 232 section enemies and the threat to national security. so they really are not happy about this. they don't understand it. they don't -- they think that we're headed for a trade war, that this -- you start and then you don't -- it starts spiraling down and nobody has control of it. so i don't see from anything i've heard today from you what the exit strategy is here, where the -- what's the end game?
clearly we have some things that we should be doing on trade, but i really don't see that the president's listening -- you have any evidence the president's listening to foreign leaders about what's going on? what they're recommending? because i think it is almost unanimous that foreign leaders are telling him, you know, you're headed in the wrong direction. is he listening to foreign leaders? that's just a yes or no. >> well, senator, thank you for the question. i do think that there is an end game -- >> i'm not asking about the end game. i'm asking is president trump listening to foreign leaders? the answer is easy. just tell me no. >> president trump has regular conversations with foreign leaders. [ laughter ] >> i's n >> he's not listening to them, ma'am. he's not listening to them. let me -- under this piece of law here, the trade expansion
act requires commerce to consult with the department of defense and other agencies making the determination under 232. right? well, i don't even think the president is listening to his own agencies. here is a report where the consultation is going on. secretary mattis writes to secretary ross and says, "current domestic capacity" -- they're talking about aluminum and steel, that this is some big national security issue -- "is actually sufficient to meet national defense requirements, and that dod and this is a direct quote from secretary mattis -- dod is concerned that the negative impact on our key allies regarding the recommended options within the commerce reports. so even within the government, the trump administration, you
have agencies speaking out and saying, there's no national security issues here. i mean this is very, very unusual, i think, what -- and unprecedented what this administration is doing. let me just say a quick word about nafta. i know the chairman wants to move on, so i'll stay within my time here. but free trade agreements that we've negotiated to the benefit of the world's largest corporations and their shareholders, i've consistently argued on these free trade agreements, that they should do much more -- guarantee labor protection, security commitments to environmental stewardship, and nafta is no exception. it entered into force 25 years ago and i support the effort and i've talked to secretary ross about making sure that we try to improve nafta. actually, secretary ross told me, he said, "it is going to be done in 90 days."
>> thank you, senator. if i may, when it comes to canada and mexico, as you have recognized, we are having the broader nafta conversation with them, but i just want to assure you that we are having conversations with our allies, as i indicated at the outset, the state department, in particular, it is our job, it is our mission to make sure that our allies understand the direction we're going in. >> senator. >> thank you for being here to talk to us today. a couple questions regarding to 232. i'm concerned just as everyone is of the impact of the steel and aloom anymore tariffs on businesses and consumers, but i am concerned that this will impact the trade policy, specifically with strengthening the national security. and i have been pushing the administration to launch a separate investigation into the uranium imports. what we have been seeing is that uranium producers owned by the goth and russia and uzbekistan
and afghanistan have flooded our market to cheap uranium to now the u.s. fulfills less than 5% of uranium. so our ability to create uranium is necessary for security. this is a national security issue in terms of the uranium in our nuclear power. so i think it is important that the administration actually quickly initiates the investigation into the industry's 232 petition and that we have been awaiting response for about six months. so to that end, i would ask, instead of requiring congress to weigh in on all section 232 actions, are there some things we can do to maybe improve the 232 process? because as senator portman talked about perhaps losing it completely, are there things we can do to improve the process that won't hamper the administration's ability to protect the national security with regard to trade and with regard to the issues of the energy and that i raise with
uranium. >> thank you, senator. i think we can take a look at that. i will take that back as far as improving the 232 process. >> and do you know anything in terms of the process and timing with how things are doing with regard to the concerns we expressed from the russians flooding the market and the national security implications of that? >> i can get back to you with information on that, senator. >> thank you, mr. chairman. >> thank you. senator rauch. >> thank you for what you do in representing the administration here. i hope you'll take back the message that some of the difficulty that has been expressed here is not universally shared by every united states senator. i hope that every member of this panel would go back and look at and study the five pillars that you suggested. people say they don't know where we are going here, we have a
very, very clear description using those five pillars of where we do want to go here and are following that. you know, there's a lot of criticism about the president arguing with our allies over trade. there is some examples out there that make him very angry and should make him angry. it's already been referred to here, we have a partner in the nafta agreement called canada. and canada is beating their breast over the tariffs that have been put on steel. canada is a member of the north american free trade association. they are our ally. they are our friend. they will continue to be. they put a 247% tariff on dairy products produced. we are the third largest dairy producer in america behind wisconsin and california.
and our dairy farm, it is hard to explain how they can be in a free trade zone and wind up with a 240% tariff on their product. software and lumberers are in the exact same position. and these people claim they are our friend and ale lie, and they are, but nafta needs some adjustment. and i amend the president for doing all that he can to make the adjustments. we have been very clear that he wants to get that done. and we should all support that effort to try to do things better than what they are. trade is complex. there's no question about it. using tariffs is complex. but i want to talk about in a few minutes that i have left here something that is going on with the chinese.
i think we're all in agreement that the chinese are something to be concerned about. and anyone who hasn't studied china's -- made in china 2005 plan needs to look at that and drill down to see what their objectives are. we have a company called micron teb technology in idaho. micron technology is the second largest employer in idaho. they are producing the memory products. they had chinese nationals steal from them patents they used to produce products. those people took those to china. they then patented the exact same thing in china. they then turned around and sued micron and the fujion province. and the judge in fujion province used the stolen patents to put
an i injunction against mirkcro. it is critical that micron sell their products there. if they don't, it's going to cause them serious problems. so you have -- and who sued micron? a state-owned enterprise in a court in fujion, which is a state-owned enterprise, and headed by a judge who is employed by the chinese government. why would you -- why would micron think they had a chance in those circumstances? those of us from idaho are taking a serious look at this. and we're going to do some things that are probably pretty stringent as far as the chinese government is concerned. and we have to. this company's very existence depends upon having a rule of law in countries where we are doing business.
and i applaud the president for his strong stance on what the chinese are doing, what they claim is legally. for instance, requiring chinese ownership in companies that do business there. and getting into their secrets and their patents. but they are also doing things under the table, like i just described, as having the micron technology. and this is going to have to stop. and if this doesn't stop, we'll be in very difficult straights going down the line to compete with their 2005 plan. i see my time is up. >> thank you fur your comments. i would like to associate myself with your remarks. >> this is on the president's radar screen, by the way. i know that personally, but it is something we're all going to have to pay attention to. and this is just the tip of the iceberg as far as what is coming. thank you. >> thank you. senator rubio.
>> thanks for holding this hearing, mr. chairman. the ranking member, thank you for being here. it is a complicated issue because it involves two different stories. the first is -- well, let me back up and say that we all, i say there's been a general consensus in american politics and american debate about the value of the global economic order, the rules based trading system, and i do think, well, this is a committee that focuses on foreign policy that difficult to ignore that while free and open global trade has incredible benefits, it does have down sides. there are losers to trade, even agreements that are great, and not enough attention has been placed over those in the last 30 to 40 years creating the domestic blowback against the trade. that said, by and large america is generally the winner, particularly when we are we are acting with countries who follow the rules. and that is where the dispute resolution mechanisms exist and you have a hope that they would work when the countries also
happen to be geopolitical issues like national security, wisdom would say that particularly when we talk about the 232 actions and whether it is our partners in the eu, mexico, canada and other places, these are ultimately allies. countries we do have issues that need to be addressed, but we can work with them. we believe we can. because ultimately none of these nations seek to displace the united states or under mind our position in the world. they want better deals, but there's a mechanism in place to address it. which is why i would strongly prefer the president and the administration to deal with the issues second after first focusing on china. because many of the countries we are allies with have deep concerns about china as well, which leads us to the 301 actions. and the threat from china is perhaps without precedent. senator richard mentioned made in 2025, that's a key plan to
replace the united states on virtually every field that will define the 21st century. and if they were going to displace us because they work harder, they are more innovati, they outhustle us, that's one thing. that calls on us to do better. but the way to displace us is the theft of intellectual property. just yesterday or a couple days ago, a former employee of an apple was arrested in california headed to china with a bunch of secrets and intellectual property on apple's autonomous vehicle technology. every single day plays stories. if you want to do business in china, here's your new partner. and by the way, teach them everything you do so when they can do it as well as you can, we can kick you out and be your get or the backed by the chinese government and put you out of business. unfair practices outright denying market access but demanding unfettered access to our own market. this needs to be addressed. so there's a consensus or belief in the business community, well, we should have told china what
we were upset about. we should have warned them that this is what you need to do if you don't listen, that's the story of the last 20 years. our relationship with china economically has been built on the hope that once they became richer, they would behave more like us. what they have done is taken all the benefits of the global order but assume none of the responsibilities leading us to this point. i guess my only question is, i wonder what role the state department played or others in advising the administration on a path that would have said, why don't we partner with our allies first so we can all collectively confront china because we are all facing the same challenges. and then secondarilsecondarily, the implications. i would be remiss if i didn't ask remisto that, what role did the state department play in that regarding zte? because while i would say to you that the penalties imposed on zte for violating sanctions are severe for purposes of sanctions violation, they extend -- our
issues with zte extend well beyond sanctions violences. allowing them to embed themselves in the commercial infrastructure of the united states poses a significant national security threat. and there is an irony that while we are out there imposing tariffs for national security on partner countries with whom we have national security arrangements with, we are allowing a foreign talk communication operator to stay in business with our parts knowing the threat they posed to our national security. so did the state department have any role in advising from the geopolitical perspective and focusing on china if irs? -- first? and what role did this place on the zte? >> thank you, senator. both of those are very important questions. the state department has played and continues to play a role in advising the president on working with our allies to counter china. i previously indicated that in
all of my travels, the senior leadership of the state department, whether the deputy secretary, secretary pompeo himself who, as you may know, is on a tour of several countries right now. we have explicitly provided input to the white house and said, we need to work with our allies specifically to counter china. we need their buy-in. because the only way to have success against china is to isolate them. china needs to be clear that it is a threat to the global economic community. and if our allies agree with us, then we can isolate china and force it to change its behavior. under the question regarding zte, the state department did play a role and we advocated the stiffest penalty possible against zte. >> it is hard to partner up with countries who take on china while we are in a trade war with the countries we seek to partner up with, so that's why i hope this is something we can get worked out. >> i couldn't agree more. we have done a great job in
we'll now turn to our second panel. and we have very distinguished witnesses with us here. the first witness is joshua bolton. mr. bolton is president and ceo of the business roundtable. and in association of ceos of leading u.s. companies and employ more than 16 million people and generate more than 7 trillion in annual revenues. mr. bolton has had an extensive career serving our nation at the highest levels. he was choof ief of staff and director of office to the omb to president george w. bush. and before that served as general counsel to the u.s. trade reps. so he has a lot of background in this area. our second witness is mr. michael fukes. from the center of american progress, mr. fukes is a senior fellow at focusing on the u.s. foreign policy and u.s. policy to the asia pacific region. mr. fuchs has previously served
as deputy assistant secretary of state for the east asian and pacific affairs. we thank you both very much for being here. your patience in waiting. and senator menendez, i don't know if you want to welcome them. go ahead and summarize your comments at about five minutes, any written materials you have will be entered into the record. with that, if you would begin, we would appreciate it. again, thanks for being here. >> thank you, chairman corker. >> mike. >> thank you, chairman corker. senator menendez, other members of the committee, thank you for holding this hearing and for inviting me to testify on behalf of business roundtable. business roundtable is an association of chief executive officers of leading u.s. companies. our ceos are today overwhelmingly bullish about the american economy. thanks in large part to tax reform and ongoing regulatory reform. our overriding concern now is
that those gains will be entirely reversed by major missteps in u.s. trade policy. the trump administration is rightly focused on addressing unfair foreign trade practices that hurt american businesses and workers. however, business roundtable strongly disagrees with many of the administration's reactions on trade. particularly invoking national security under section 232 to impose unilateral tariffs on imported steel and aluminum. we have four important reasons for opposing this action. first, the 232 tariffs increased costs on american consumers. this multibillion tax increase on imported steel and aluminum is already driving up the cost of many industrial and consumer products. second, by driving up the cost of inputs, these tariffs are also causing u.s.-made final products to be less competitive
in both domestic and export markets. third, the 232 tariffs are inviting a cascade of retaliatory tariffs against america's most competitive exports. overall, a recent study by the trade partnership worldwide found that the administration steel and aluminum tariffs along with the resulting retaliation will cause 16 american jobs to be lost for every american steel or aluminum job saved. the roundtable's fourth reason for opposing the 232 tariffs is the misuse of the 232 statute itself. as several members of the committee have already noted since its inception in 1962, section 232 has been invoked only twice before to ban oil imports from iran and libya. in both cases, the national security purpose was clear. the national security purpose of restricting steel and aluminum
imports from our coastest allies is not at all clear. the administration' improper use of 232 twisting national security beyond reason invites other countries to do the same against a wide range of u.s. exports. despite these evident harms, the congress department is now investigating whether to imemployee the same national security argument to restrict autos and auto parts. there's no national security purpose for this. and the damage would be exponentially greater. for these reasons, business roundtable strongly supports chairman corker's bipartisan bill to require congressional approval of section 232 tariffs. we would also enthusiastically support other legislative approaches that would similarly advance the goal of preventing the misuse of u.s. trade statutes inappropriately to restrict trade.
the administration's deployment and threatened deployment of section 232 tariffs demonstrates clearly that the statute is susceptible to misuse. it is time for congress to assert its constitutional prerogative to prevent serious harm to the u.s. economy. a final less direct but no substantial harm from the misuse of section 232 is that it risks alienating u.s. allies needed to address the real problem in international commerce. chinese policies and practices. most business roundtable companies have encountered one of the serious problems, intellectual property theft, forced technology transfer, unfair restrictions on access to and investment in chinese markets and competing with state subsidized chinese companies. business roundtable, therefore, welcomes the administration's focus on china's trade policies. however, the cycle of tariffs and counter tariffs recently
initiated by the administration is dangerously counter productive. imposing section 301 tariffs without first pursuing serious negotiations on necessarily jeopardizes u.s. farmers, workers and businesses. instead of starting negotiation by imposing punitive tariffs on tens or hundreds of billions of chinese imports, thereby triggering commencer retaliation against u.s. exports, the administration should first detail clearly to china how its practices must change. second, establish deadlines for china to adopt concrete reforms, and third, describe actions the u.s. will take in coordination with our allies if china fails to address our concerns. finally, the administration should exempt u.s. allies from 232 tariffs to encourage them to joe join in this effort. thank you for holding this hearing and encouraging a
constructive trade policy that will truly benefit america's workers and businessesle. we look forward to the committee's questions. >> thank you for your testimony. mr. fuchs. >> thank you, chairman corkermef the committee, it's an honor to be here today. my written testimony contains highlights on this subject. and i would to highlight a few points. first, the global tactic challenges we face from russia and china and beyond, and america needs long-term strategists to use tools of the american power. current administrations' approach to tariffs and trade is undermining national security. the decisions being made in the capitals of american allies radioit now, how to cooperate on counter terrorism, whether to fight in afghanistan or syria, how to deter russia and compete with china are being influenced by the tariffs. the leaders of the countries are asking themselves, can we trust
america anymore? the world does not standby when we act and our allies are looking elsewhere for trade partnerships. second, driven by a single-minded focus on tariffs and trade deficits, u.s. foreign policy is losing the moral compass right now. the current president b barraded -- trying to sanction russia, he's imposed harsh tariffs on the closest allies in europe, countries america relies on to deter russian aggression and uphold the values that america holds dear. third, to build an economy that empowers and provides opportunities for all americans, we need a comprehensive strategy to level the economic playing field with china. but the recent tariffs instead leave the u.s. economy more vulnerable by alienating friends and allies and creating opportunities for china to work with our own partners against us. these tariff decisions are the policy equivalent of coming to a
gunfight and shooting your partners at the same time you take aim at your adversary. we need a targeted strategy with our friends and allies, many whom are suffering from the same problems from china. fourth, the united states should see our trade relationships as one aspect of the larger efforts to achieve a strong economy at home and to achieve our national security objectives around the world. to do that, i believe the united states should take a number of steps including strengthening alliances to counter our biggest national security threats, supporting democracy abroad to push back against the rise of a liberalism and autocracy, develop a strategy in concert with our allies to deal why china's practices, and build an economy at home to invest in areas like infrastructure and education. congress should also play an important role in holding the administration accountable and in reassuring our allies. thank you again for inviting me here today. and i look forward to your questions. >> thank you. thank you both for that testimony. senator menendez.
>> thank you, both, for your testimony. mr. bolten, i've been contacted by dozens of companies in new jersey that have been negatively impacted by the administration's tariff and quota policies. one such company, for example, uses a korean specialty steel product to manufacture a life-saving medical device, but the section 232 quota on korean steel could put this third-generation family owned company out of business. new jersey could lose over 400 good paying manufacturing jobs and hospitals and surgery rooms could shut down for certain end scopic procedures. the supply chain could be disrunted. ultimately, hundreds of u.s. lives could be at risk. there's no u.s. source for this steel. and if it were, it could take up to three years to gain fda approval for its use in medical devices. so in cases where imports of
steel are subject to the 232 tariff, american companies can obtain relief through exclusion requests when there's little or no u.s. production. however, there's not a similar process for steel products from countries with quotas. so this is one dimension of the challenges that we're having, given your previous experience at usdr, how would you compare this to similar efforts of past administrations? >> well, senator, i think it compares poorly. the use of section 232 in this case was entirely inappropriate. in previous cases where administrations, including the one i served in, have sought to provide some protection to the steel industry, it's been done through a different process that has typically narrowed the scope of the products protected, has required that the international
trade commission make a finding of injury to that industry and has typically put the tariffs on for a very limited and internationally accepted regime that has not triggered retaliation. all those things have been absent from the way the administration has approached this, in significant part because they used the wrong statute for it, badly undermining the rule of law dhaurntthat currently exists around the world, like the meaning of national security. if we have used national security in this way to protect our steel and aluminum imports, not even mentioning autos at this point, but just even on steel and aluminum, that is an open invitation to other countries to do the same when they want to protect themselves from our exports. >> let me ask you, the companies that you represent in the world of international business, how important are predictability,
reliability and consistency when it comes to making deals? >> that is business. to be able to plan in advance most of the members of the business roundtable do their planning many years in advance, supply chains take five, ten years to develop, so the transparency and the ability to know what the rules are is critical to the success of business anywhere. you mentioned in your first question, senator, the use of quotas. and the administration has treated that as though it were a benign success because we're not imposing tariffs. we bullied our trading partners into quotas. i know from talking to several of our member companies that the quotas are even more damaging than the tariffs themselves, because in some cases, they would be willing to pay the tariff just to get the product that they need in their supply chain to make things work. with the quota in place, they
can't get it at all. so there are companies at the business roundtable that have products sitting on the dock that are desperately needed as inputs to a big project, they can't get them because of the quotas. >> is it a position of the roundtable that the tariffs are in the national interest? >> no. >> thank you. mr. fuchs, let me ask you one quick question. let me make it generic in nature. whether we are talking about the indopacific region and how we try to promote a rule-based order or whether it is with critical allies like canada are impacting europe, what damage does the administration's policy in this regard affect our ability to pursue all of those? and in a tit for tat who flen
ches first? >> thank you, senator. uh think that's an inkrecredibl widespread -- first and foremost, the challenges that we face in our national security, whether it is china in the endopacific, our allies are the first line of defense, they are our key partners in tackling these challenges. but right now, we're making enemies of the very allies that we need to be with us. and we are starting with our own best friends around the world. in capitals around the world, our allies and our friends, they are making decisions right now. they are planning just like
companies what kinds of policies and positions they are going to be taking in the coming months and years. and right now, they are asking themselves very clearly, can we trust the united states? i think it is very instructive. right after the g7 debacle, the german foreign minister gave a concern about the fate of europe. one is russia. second is china. the third is president trump's foreign policy. to me, that is incredibly concerning. >> do you have a view on the china question? in a tit for tat, how does that play out? >> i think we are seeing the
chinese communist party and how they operate. they are not a democracy, it is a dictatorship run by the communist chinese party. they have one interest in mind, and that is maintaining stability and staying in power. and they do not want to lose face because that helps them. they believe, lose legitimacy. i believe the chinese communist party is likely to try to weather any storm and go tit for tat with the united states going forward. >> thank you. mr. bolten, you represent the white house and the titans in the industry. has anyone articulated to you the strategy behind using 232 in such a broad way against our allies? >> they have not, mr. chairman. and that is why we are concerned. i mean, from the positions i've served in, i understand the
politics. i understand the need that leaders have of living up to commitments they make in campaign rhetoric. but what the administration has pursued here under 232 and in 301 with china has us deeply concerned because there does not appear to be any strategy behind it that is designed to produce an outcome other than just tariffs. and what we would -- what we are strongly encouraging the administration and are very glad to see many members of congress encouraging the administration is develop a strategy that can produce success. and success in this case means getting the international community aligned to put pressure on china to reform their trade policies and practices. >> you're right. senator young. >> it's a great segway, mr. chairman, because i'm going to continue to hit the same note i did in the first panel. and same note i have been
hitting for a couple months now with respect to our response to predatory international and economic practices. we need a strategy. and this is important to hoosiers. i really appreciate, mr. bolten, in your testimony, you referenced an indiana-based manufacturer, cummings incorporated, major company. you note that cummings, on account of what you characterize as an escalating trade war, must now pay a 25% import from china for use in u.s. production. you go on to note that the companies absorbing a 25% u.s. tariff on finished products that it manufacturers in china for sale off highway equipment manufacturers and if cummings were to pass this tear rough-related cost and increase to the highway customers who lose final sales to the world as
a national competitor. mr. bolten, earlier this year i introduced along with other senators on both sides of the aisle some legislation i mentioned in our first panel. the bipartisan national economic security strategy act of 2018. as 2757. it will create a statutory requirement for not just this administration but for a future administration to periodically submit to congress a national economics security strategy. a very sensitive topic, but there's an unclassified version with a classified enx. members of congress respectfully engage back and forth. they pick the strategy and we move forward together as a country. i just ask you, sir, are you aware of the legislation that i just emps ared -- referenced? and if so, what are your general
impressions of it? >> senator, we are aware of your legislation. we're taking a look at it, so i don't have an official roundtable for you. but it's a good idea. i served in the administrations where the exercise that the national security council goes through on a regular basis to produce that is beneficial, both to forming priorities within the administration, and then holding yourselves accountable for how are you doing against your priorities. and i'm included to agree with you that doing the same on the economic front would be enormously beneficial, not just for the trump administration, but any administration. >> mr. fuchs, you earlier indicated the strategy is an effective component of making sure that we respond optimally
to china, in particular. their predatory economic practices, my words, not yours, but i'm going to allow you to explain why you think your strategy is needed, sir. >> thank you, senator. i am aware of your legislation and closely reviewing it as well. but to your question, i absolutely believe that this country needs a coherent and comprehensive strategy that sees the trade aspects in the broader picture. of how best we can grow the economy here at home in a way that works for all americans and that protects our international interests and our national security at the same time. so i absolutely believe that a strategy in this regard is necessary. and i'm encouraged, frankly, by some of the efforts i've seen in congress for congress to push the administration to develop such a strategy, especially in this case. >> thank you much.
i would note there's a real distinction that needs to be made between objectives on one hand and a more rigorous, more thorough and comprehensive strategy developed across different departments of government, working with say the national economic council and national security council. some bullet points on powerpoint slides with five pillars, frankly, is not a strategy. and you know that. to the extent, there's a lot of energy behind that comment, but it is just conviction. so thank you for your remarks about the importance of the strategy. indiana's not only a major producer of ag products as it is generally perceived to be, but we are the most intensive company to major automobile producers. companies like toyota and subaru and nissan, they employ tens of millions of hoosiers. these companies operate by
making sure that there is a global supply chain interrupted. and mr. bolten, in the prepared testimony, you say the administration is now investigating whether to employ the same national security argument to restrict imports of automobiles and auto parts under section 232. sir, can you describe in more detail what you think would be the consequences of this approach for companies producing automobiles in indiana and beyond for american consumers? >> in a word, disastrous. the steel and aluminum will ripping throughout the economy. now take that and multiply by ten, because the automobile trade in this country is much
larger in a wee import. now the supply chain is interrupt interrupted for companies to get the products. and to put into their autos, it just makes the entire industry less competitive. putting aside, even the dramatic price increase attacks of the people who can least afford to do it. this is why we are testifying so strongly, mr. chairman, because not just of the use of 232 and aluminum tariffs, but the fact that the autos and auto parts would be devastating to this
economy. >> thank you, gentlemen. >> thank you both for your testimony. there is a common theme here about having a planned strategy. we have not -- we don't understand what it is in regards to the trade policy -- trade actions taken by this administration. but we could say the same thing in regards to some of the other areas under this committee's jurisdiction, including north korea. i have been asked the question as to north korea questions and can respond pretty easily by saying i don't know what the administration is doing because they have not briefed us. so we don't know their strategies. and that is presenting a problem because, quite frankly, many of us think they don't have one. and it would be comforting to see this with trade. we had meetings on finance and couldn't figure out a trade.
i want to respond to mr. bolten's statement at which he gave, which i thought simplisti to see a change in china's trade policies. you start off by saying you need to detail how the current policies need to change with the realistic timeframe for being able to achieve that. and the last point i'll get to in a minute working with our allies. so do we have a detailed understanding of where this administration would like to see us end up with china in a timeframe that is understandable to achieve that? has that been shared with either one of you? >> it has not been, senator c
carden. we have tried to have that dialogue with the administration. by and large, the administration has been very receptive when our business community comes to express concerns and have always given us a good hearing. we feel like we have had a good hearing on the trade issues but have not broken through on the risks that are being posed by the way the administration is going about it. now, on the china question, there's still time. and i believe that if ambassador lighthiser were here right now, he would say, yes, we have a strategy and we are working on the negotiating position. but the anxiety throughout the business community big and small is that the strategy is not one coherent and designed to prod e
produce. success in this case is not tit for tat. look at the reform of the chinese policy and practices. there's time for the administration to do that. i'm hopeful they are doing that. we're hear speaking out to see the evidence that they are. >> have you focused on this? the complaints against china are global. we're not the only country that has major concern by the way china behaves. the question i ask the secretary in the former panel is, she can name one country that agrees with the trump strategy to get china to change their practices. and she couldn't even name one country. do you know of any of our trading partners that believe america is moving in the right direction to get china to change these policies?
>> no, senator. there's not one that i can think of. in fact, i can only think of countries that believe that we are going in the wrong direction. and for a few reasons, some of which have already come up. first, the kinds of sanctions, tariffs, excuse me, that we are imposing with china in an all-out trade war are not going to solve the problems we have with china. second of all, we need our allies and partners to pressure china here, but as we have pointed out earlier here, we are actually making enemies of our partners and our allies instead of actually enlisting them to help us with china. the third issue here is that we also need to look a little beyond the trade space here and to see our broader national security interests as well. when we're going after china right now with over-the-top, across-the-board tariffs on everything counter productive, we are undermining our own
position, vis-a-vis north korea right now. we are not helping ourselves as we try to engage in diplomacy to get north korea change its behavior, for which we need china's help. right now we are taking away our own leverage when it comes to north korea. >> one more point, i'm not going to ask for a response. the secretary testified about a robust in our agency process in regards to the 232 process. and i challenged her on that as to how much time commerce spent and how much inner agency, and she couldn't give me a definitive judgment. i understand that there are members of the administration that are open for your meetings. but i question the input, meaningful input into this process by the decision maker before these tariffs were, in fact, imposed. thank you, mr. chairman. >> thank you. senator rubio?
>> thank you both for being here. mr. bolten, as i saw your written testimony, on the path that you outlined, it is by and large by consensus, but there's one point i want to disagree with and detail it. but your plan, as i understand it, and as many have argued, we need to detail the problems you have with china. you have accurately talked about them on investment, the ip theft, the transfer of technology subsidize and production and force them to have computing services and facilities located within china. the requirement on apple, for example, to place the cloud there and the like. the second part -- you have detailed those right. the second is giving them a deadline to change the things and telling them how to see the changes. and the third is, here's a list of things we want you to do if you don't meet it by the deadline. the fourth is working with our allies and, in particular, i would imagine canada, mexico and
the eu, three of the four large export markets by giving them exemption by the 232 tariffs. i would agree with all the points that you have described. as the problems, i would agree with the fact that we would be in a much stronger position if we were working with canada, mexico and the eu. we just heard the testimony from the state department that in every one of the meetings, we raised the china issue. but i'm confident it is very difficult to get the message across when the other things are ongoing. the problem that i have is with you giving them the deadline, and this is what we're going to do, and we'll have a serious negotiation. number one, the history of serious negotiation with china on matters such as this is not promising, by and large, they have shown a propensity to try to get us to accept symbolic measures and exchange nothing in exchange for walking away from whatever we are threatened to do. but here's the bigger problem, that is on two of these items,
which are the ones the president's memorandum in march focused on, ip theft and in some ways forced technology transfer, i think there's an argument, very strong argument to be made that what china is doing on that is a very clear and serious national security threat to the united states. these are acts, in my opinion, of direct economic aggression. not simply for purposes of economic prosperity, but to displace the united states. so plant us in the world as a dominant power in many of the fields. whi when you combine that with china 2025, interestingly, they are not talking about it as much anymore, but it is clearly a design they have in place. when you combine that with statements made by the president xi about how there are two suns in the world, when you combine that with the others, this is not just a conflict with a nation that wants a bigger
economy. they want to sub plant us in all the critical fields. i don't know if you see the technology being stolen and transferred, but some of it becomes a reversible. for example, any changes they make, if they are on the path to do this eventually, all of the tech notes and industries of the 21st century depended on 5g will be built to chinese standards, meaning we will now be out of place in regards to that. if they dominate biotechnology and the like, it seems like the biggest issue with the administration's approach on china is that we're not working with our allies under 232, which i agree we'll be stronger, but they took this act first as opposed to giving them a moment -- is that an accurate assessment? and your biggest complaint is, we couldn't do these things but first we should have given serious negotiations a chance to work. >> yeah, that's roughly it. but i agree with everything you just said.
and were i the negotiator, i would put at the top of the list the issues i mentioned on intellectual property theft, technology transfer and sub dids in critical industries. i would put those at the top of the list and would make clear what the consequences for the chinese would be if they don't change their policies or practices. but i would also put on paper, here's what we want you to do. here are the specific policies we want you to adopt. one thing that almost everybody in the business community that has interacteded with the chinese government and i imagine members of this committee have had a similar experience, finds when they talk to folks in the chinese government, the chinese government says, well, what do you want? tell us what you want. and waving our hands and saying, we want all of these problems fixed immediately. that is true and that would be great, but we need to give the chinese a coherent and practical
list of the stuff we want them to do. put it on paper. you don't have to show it to those of us in the private sector. it is probably confidential. it aught to be shared with you so you know what is on the priority list of the administration. it aught to be possible to write it down. and the administration aught to put that piece of paper on the tablen in front of the chinese before they just jump off and announce huge retaliation. >> my last question, as i'm out of time, assuming they refuse to do anything, would the list of things we would threaten to do include the things that are being done now under them ran dumb and the actions the president has taken? >> they could. i mean, you know, the 301 authority is an operation outside the inner rules of the wto. >> so is stealing intellectual property. >> so is stealing intellectual property and the wto does not
provide protections for intellectual property. and we aught to pursue our rights so we have them, but wto does not produce enough righted. so we are in the business roundtable are not ruling out the possibility of the administration using authorities, it's statutory authorities that are not sanctioned by the wto, but they aught to be a last resort, not a first. >> i want to thank you for that last interchange. i actually think that congress and the world, except for china, would be unify ied in our effor like senator rubio laid out. i don't think there could be dissension whatsoever in congress. it would be very difficult to find a witness to counter an effort solely focused on intellectual property, theft, subsidizing enterprises, that type of thing. and that is what's interesting about this is there is a problem that does need to be solved.
let me ask this question, you eluded to understanding politics in the white house. and you understand that people make statements during a campai campaign. we have been given signals that, hey, your 232 effort, is there any way you guys would wait until after the election? and then there's been other statements made by the administration about, well, we're going to wait and deal with nafta after the election. and i don't know what is driving this. again, it's so incoherent it would be difficult to even begin to understand what is driving the policy that is in place today, but let's say that this policy is 100% about politics. and this is really about the midterm elections. and the nafta issue will be dealt with after the elections,
the tariff issues currently that we're dealing with would be dealt with after the elections. the auto car, the auto industry tariffs will be dealt with after the election. so let's just say that this policy that we now have that cannot be articulated and lacks coherency were to stay in place between now and the first tuesday of november. what would be the effect, if you will, on the business community and just our relationships around the world? >> a lot of damage is being caused every day. bear in mind, we're only a few weeks into the first faces of the steel and aluminum tariffsle. we are only in the first few days of the retaliation that has been put in place against those tariffs. there's more to come, even on the steel and aluminum side, much less the auto side. so significant damage is being done every day. i have heard people in the administration say, you know, oh, okay, but don't worry, it's going to get resolved.
it will just take a little time. everybody needs to absorb a little pain in the short-run. the pain in the short-run is not small to begin with. it's getting larger by the day. and the additional measures is now threatening to exponentially increase that. and it is not a situation from the business standpoint where, okay, we suffer a little bit of damage today but everything is okay two weeks from now. when you disrupt supply chains, when you demonstrate that we are an unreliable trading partner, you lose those relationships permanently. when you stop selling to a customer, harley davidson is faced with a choice of either stopping selling in europe because they are the subject now of retaliation from europe or building their harleys for europe someplace else in order to send them into europe without a 25% tariff. that's a terrible choice for
harley davidson to make. but i think they are making the right one by going someplace else to sell into europe because once they stop selling harleys in europe, even for a few months, they could be knocked out of the market permanently. so the damage is incremental day by day, but no one should ensure that the incremental damage doesn't last longer than the trade dispute does. >> thank you, you want to say something? >> i fully agree with mr. bolten and would say for our relationships around the world and the alliances in national security, without no doubt, the longer this goes on, the worse it is. there are reports in recent weeks in anticipation of the china eu summit happening next week, china has been pitching european allies on forging the anti-u.s. trade alliance. and just stop and think about that for a second, right? for the moment, it sounds like the europeans are not game for it, but if this continues to go on for months and months and
longer, i wonder how long they will hold out? >> you know, i wonder what we would be discussing today if we continued on the path of negotiating tpp. continue along the path of negotiating ttp. we would be in a much better place to counter the real threat, which is what china is doing. senator kuntz. >> thank you for your clear and determined leadership on this issue. mr. bolten, if i might, it's terrific to have your clear and forceful testimony today. let me just take a few minutes, if i could, to make sure i have understood it correctly. you said that trump's tariffs are on hikes of american business and consumers. is that right? >> right. >> you talked about making our products less competitive, it leads to lost profits and fewer
jobs. >> correct. >> and you say it invites harmful retaliatory tariffs from many of our allies, in fact, you called it a cascade of retaliatory tariffs that could cost 16 jobs for every job that we might protect. and that is just with the earl lip round of tariffs for steel and aluminum. >> correct. >> and you expect a dramatic impact if the administration goes ahead with another $200 billion in tariffs, correct? >> correct. >> and last, you view this as a misuse of the president's statutory authority under section 232 and urge congressional action. >> yes. >> you are a republican, are you not, sir? >> i am. >> a former chief of staff to the last president. >> yes. >> and the head of the organization known to its leftist and radical views in the business roundtable? >> we are a bipartisan organization that advocates in support of a strong u.s. economy. i work with both parties to achieve that. >> all joking aside, mr. bolten,
i think it is striking that someone of your experience and pedigree and representing the organization that you do is so forceful in asking for congressional action. something i can't remember when a btr member came to urge this action against a president. how does this end? how does this end? you were here when we had the current secretary from the administration, and questioners, republican and democrat, asked for and demanded a strategy, more clarification. where is the off-ramp? when does this stop? as i said in questioning, assistant secretary sing knows that ship loads of steel from sweden may not be coming this year, that we may face a loss in revenue. and it documents farmers and soybean farmers, folks who are generally speaking pretty strong supporters of the trump agenda
are now concerned that they're facing the lowest prices for their commodity in a decade. and if i understand your testimony correctly, it's going to be very difficult to reverse this. it will have significant unintended consequences and will face americans for the air rita burden. in your view, how urgent is this and when does this end? >> we're concerned about exactly the things that you mentioned. it's not necessarily something for the business roundtable to come and speak against this administration that has been so effective for american business on issues like taxes and regulation and workforce
training and skilling. on all those issues, we have corporated tremendously well. and the results are showing up in a very strong business optimism. so it's a difficult thing for the head of this organization to come forward and speak out so strongly against the administration's trade policies, but we believe they are headed in a very dangerous direction. now, as i said in the response to questions about china, i think there is time to put it on a constructive path. the administration may be in the process of pulling together a serious negotiating agenda with the chinese that will produce, that could easily at this moment produce significant reforms in china. the question is, are they prepared to do so and remove the
impediments they have put in place of having all of our friends and allies support us. because the likelihood of success with china is dramatically improved if we get the rest of the world, which basically agrees with us, behind our negotiating strategy. so i don't know how it ends. this story can have a good ending, but there's relatively little time to point it in that direction. >> what i hear you saying is that it is urgent that the trump administration reverse course in terms of broadly imposing tariffs on our closest and most vital allies that will have very negative consequences in my home state of delaware to dock workers in wilmington and instead focus on building a team of allies to confront china's real aggressive actions that have undermined global trade. and that if we don't act soon, the consequences will be large, they will be lasting, they will undermine our alliances in our national security and harm american competitiveness and
jobs. that strikes me as a pretty urgent call to action. and i appreciate your testimony today. mr. chairman, i appreciate the chance to work with you on what is an important agenda for america. >> thank you. thank you so much. senator gardener. >> thank you, mr. i remember what. -- mr. chairman. i know you both probably had at least some time to watch the previous panel. and answer the questions asked. so thank you for that. i want to follow-up with the activities. as i mentioned in the question to her, in january of this year china suspended access to their website for referring to taiwan as a country. this blockage was lifted only after the executive of public
policy. and we know that china is going after u.s. allies for potential action because they referred to -- didn't refer to taiwan as part of china. i worry about what they are doing to u.s. companies. and i know senator rich mentioned micron. this is a u.s. company that had a facility in taiwan, taiwan employee that was hired by a company in china. and when i met with the foreign minister in taiwan, they said china is doing more and more of this. they are hiring people from taiwan trying to brain drain taiwan, take their intellectual property with them if they can get away with it to china, and in this case, this individual gave apparently a lot of information to china. they set up a facility and plant to replicate what micron had done. they got a court injunction. and now a u.s. idea is being stopped by china claiming its
their own completely stolen information. there's a company in my state of colorado that sold a product to china that sent the product to china a couple weeks later and got the schematics back from china,e engineered the company. the company had questions for the company in china that manufactured it. the company in china was the exact same name as the company in colorado. with the airline activity, with the marriott activity, should we -- what should we be doing to help make sure that american airlines, american hotels, american businesses overall aren't falling for the bullying of chinese sort of public diplomatic we a
diplomatic berrading? >> countering the american bullying of companies is one of the most difficult problems. the kinds of problems you described, for example, with micron, those are happening throughout the member companies, the 200-member companies of the business roundtable. they wisely don't talk about it publicly very much because the bullying will get worse if they raise their heads above the pen. but almost everyone who deals with technology and is trying to do business in or competing with chinese entities has faced some serious, similar and serious kinds of problems. that is what needs to be at the top of the serious negotiating agenda. and we aught to be able to write down what specifically it is that we are demanding that the chinese do and have that negotiation. not an easy negotiation. the chinese are not easy to deal
with. they will stretch us out as senator rubio suggested over long periods and give only partial concessions. that's been the history of negotiations with china, but that's the road that has to be traveled. that is the tough work of trade diplomacy. and we're here to call on the administration to do it. >> i just hope to these companies that are being bullied, but they won't fall for it. that the airlines won't fall for it, because if they fall for it, they will be soon subject to the same kind of antics that micron has found themselves subject to. they can remove -- they can follow what china wants to do when it comes to taiwan on their website, but pretty soon they may find other kinds of activities that they are also subject to in china because they have allowed that kind of corruption, that kind of bullying, that kind of lawlessness to occur when it comes to intellectual property rights, when it comes to standards of trade, when it comes to how they are acting in
response to -- how they are not acting in accordance with the standards that we hope all people are living up to. so thank you both for the opportunity to be here today and to have your testimony. thank you. >> thank you. we thank you both for being here and for your patience. for some reason, we have a protocol in this committee where we have administration witnesses come in. and then panelists like yourself. and unfortunately, by the time it gets to the real intellect, if you will, most people are gone. but we, again, thank you both for spending time here. there will be some questions after. we're going to ask for questions to come in before the close of business friday. and to the extent, you can get to those fairly quickly, we would appreciate it. but you have added a lot, both to the record, but also to people's thinking. we thank you both for what you do in respective roles to help shape policy. and we look forward to seeing you again. thank you so much. >> thank you, mr. chairman. >> the meeting is adjourned.