At Finance Hearing, Portman Secures Commitment from USTR Nominee to Conduct Top-to-Bottom Review of U.S.-China Trade Relationship, Pursue Reform at World Trade Organization

February 25, 2021 | Press Releases

WASHINGTON, DC – Today at a Senate Finance Committee hearing, the nominee to be the U.S. Trade Representative, Katherine Tai, committed to U.S. Senator Rob Portman (R-OH) that if she were to be confirmed for the position, she would work to conduct a “Top to Bottom Review” of the U.S.-China relationship. She also committed to pursuing reform opportunities at the World Trade Organization (WTO) and aggressively challenge China’s non-market techno-nationalism. Senator Portman, as former U.S. Trade Representative during President George W. Bush’s administration,conducted the first  “Top to Bottom Review” on China 16 years ago, which warned of many of the present challenges in the U.S.-China relationship. Updating the review will ensure that U.S. trade policy accounts for the latest developments in Sino-American economic relations.

Portman believes reform of the WTO is necessary in order to put America on the same level playing field as the rest of the world.  Last year, Senators Portman and Ben Cardin (D-MD) introduced a bipartisan resolution expressing support for U.S. leadership at the WTO while also calling for reform to parts of the institution. The resolution describes the long history of productive American leadership at the WTO, as well as the ways in which the WTO has failed to address new trade barriers and market distortions by countries like China. The resolution also offers specific reform proposals of the WTO.

Excerpts from the hearing can be found below and a video can be found here.

 

 Portman“Ms. Tai as you know from our meeting last month, I’m delighted you’ve been nominated. And I’d like to start by thanking Dr. Tai, behind you, for her work on finding alternate ways to treat opioid addiction. Incredibly important issue.

“On trade, as you know from your time at USTR, it’s a very special place. It’s full of career experts on trade. Almost all of whom could make a lot more money in the private sector. They’re committed, they’re passionate. And I know you’re going to thrive there.

“Largely because of commitments I made when I was before the Senate Finance Committee 16 years ago, I conducted what was called the ‘Top to Bottom Review of China.’ We issued an extensive report. We also established a prosecutor. I said we need a prosecutor just for China who became sort of the Chief Counsel for China enforcement. You later had that job. Let me ask you if you would make a commitment today to update that top to bottom review. Everybody in this panel has talked about China. I mean, I think it’s clearly the most important single trade issue we face. Would you commit today to updating that and providing it to the committee?” 

Katherine Tai, Nominee to be U.S. Trade Representative: “Senator Portman, you know I think that the Biden Administration itself is committed to a holistic review on China and a U.S-China strategy. If confirmed at USTR, I think that’s an excellent idea and yes absolutely, I want to make sure that review happens at USTR as well.” 

Portman: “Well I’m sorry to surprise you with that but I was just thinking about it as we heard all the questions and I think it’s timely. A lot has changed in 16 years, mostly changed in the way that China has become even more competitive and used even more subsidies. And under the current regime has decided that state-owned enterprises and heavy subsidies are going to be the norm rather than the exception and this goes to semiconductors.


There’s been a lot of discussion today on semiconductors. I appreciate what the Chairman said, and Ranking Member, Senator Stabenow, Senator Cornyn and others. I mean this is an urgent issue. We’re looking at serious impacts on our economy because of the supply-chain issues. Here’s what China is doing on semiconductors: they’re heavily subsidizing it. One study found that major Chinese semiconductor firms have received subsidies equal to 20 to 40 percent of their revenues. Subsidies up to 40 percent of their revenues. We can’t compete with that. Phase One with China was a good start and Bob Lighthizer hasn’t gotten enough love in the room today. He did a lot of hard work on that and I appreciate that.

“But we need to take it to next level because it’s really more than just non-market practices. I think it’s a techno-nationalist approach to trade that we have to stand up to. How would you propose we do a better job of addressing those unfair industrial subsidies and their proliferation, particularly by state-owned enterprises?” 

Ms. Tai: “Senator Portman, I think this is part and parcel of some of the most important questions that are facing us today. Not just on trade but across the board which is how we compete more effectively with China. China has done an incredible job of articulating its ambitions in its five-year plans and accomplishing a lot of the goals it has set for itself. You mentioned semiconductors and I want to acknowledge that that is an area where there is a lot of focus right now, which is really great, about how we more strategically shape our supply chains. I would just say that the Chinese are not shy about articulating their ambitions and semiconductors are just a part of what we have to compete with. We can’t compete by doing the things China does so we have to figure out how we compete marshaling all of the tools and resources that we have in the U.S. government.” 

Portman: “That’s the idea, as you know, of the CHIPS Act. We talked about that earlier, I was at the White House yesterday – a good meeting on that.

“Let’s switch to WTO for a second. The World Trade Organization was established to have rules that were beneficial to countries like ours, that are willing to play by the rules, a level-playing-field. And it’s important that we have those rules for our exporters. But the current system seems broken to me. The WTO negotiation role has faded. Instead we have activism by the appellate body that has constrained our ability, frankly, to respond to China’s non-market activities as well as other countries. This is a critique that’s long standing. It’s bipartisan.

“Senator Cardin, who was here earlier and I think is coming back, and I introduced legislation on WTO reforms. I know you’ve seen that. Again, USTR Lighthizer made some progress on this but we’ve got to continue this work. My question for you, I guess, would be you have said you want a positive agenda for WTO reform, specifically, what do you propose we do to restore the WTO to focus more on negotiation rather than a litigation?” 

Ms. Tai: “Senator Portman, it’s a special honor to be speaking to you as a senator on this committee but also a former USTR, and as such I know you have special insights into the U.S. relationship and the U.S. role at the WTO. I just want to say that the United States was a founding member of the WTO and the GATT before that. It has always been a leader in Geneva. We can’t afford not to engaged and a leader in Geneva at the WTO. The WTO does need reform and I believe that the focus should be the WTO now, in its 26th year of existence, we need to be having hard conversations in Geneva in a constructive way to be asking ‘What is the value of the WTO to its members? Is it accomplishing the goals that its founders and members expect of it? And also, in today’s world of 2021 how does the WTO rise to the challenges in today’s world – whether it’s the challenges that are facing all of us or the challenges that exist between the WTO’s countries?’” 

Portman: “Thank you.”

 

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