At Senate Finance Hearing, Portman Discusses Vision for Trade in the Indo-Pacific Region, Need to Pass New Legislation to Combat China’s Unfair Trade Practices
WASHINGTON, DC – During a Senate Finance Committee hearing earlier today, U.S. Senator Rob Portman (R-OH) discussed the need for the U.S. to open up foreign markets by expanding trade in the Indo-Pacific region, as it will lead to more, better-paying jobs here in the United States. Senator Portman also argued that the United States should enter into a trade agreement with Japan, the largest economy in the region, as an alternative to the Trans Pacific Partnership.
Senator Portman also proposed two pieces of bipartisan legislation to push back on China’s influence in the region. The first, the Trading System Preservation Act, introduced with Senator Coons (D-DE), gives Trade Promotion Authority to the U.S. Trade Representative to pursue sector-specific trade agreements with allies which do not have an MFN, or a Most Favored Nation, requirements. The second, Leveling the Playing Field 2.0, introduced with Senator Brown (D-OH), would give new tools to trade enforcement authorities to combat trade abuses by China. The bill has the support of 172 business trade associations, agricultural groups, and unions and support of lawmakers on both sides of the aisle. It passed House of Representatives, as part of the America COMPETES Act, earlier this year.
A transcript of Senator Portman’s questioning can be found below and video can be found here.
Senator Portman: “Thank you Mr. Chairman. First I want to thank you and Senator Crapo for holding this hearing. It’s really important and I want to start by just giving four quick thoughts about where we are in terms of Indo-Pacific trade. One is we have to recognize the importance of opening up foreign markets. That’s sort of an obvious advantage of trade—trade jobs pay about 16 percent more on average and 90 percent of consumers live outside of the United States. We need to make things in this country in order to take advantage of that, but that should be the objective.
“Second, I find it surprising that after passing USMCA with such an overwhelming bipartisan vote, the conclusion by a lot of people is that we should stop expanding trade at all. If you look at the campaign that President Biden ran, one thing they said was let’s stop FTAs. That has always been very confusing to me. The Indo-Pacific economic framework, as was said earlier, does not include any new market access for U.S. exporters. I don’t get that. Senator Carper just talked about that. It disappoints me because after decades and decades of debate, we finally developed what I thought was a pretty good paradigm that found consensus between industry, labor, ag, and others and it’s a template that we should be using to move forward and improve our competitiveness. Instead, we’re ceding market share to China. Mr. Wessel acknowledged this in his testimony. We need to be engaged in the region, not just writing it off and be engaged in terms of opening up new market access.
“Third, when we talk about expanding trade, there’s always a tendency to default to the Trans Pacific Partnership or TPP. So it’s either you are for trade promotion; you’re for the Trans Pacific Partnership or nothing. We have to remember, that wasn’t very popular on a bipartisan basis. It had some flaws, including its effect on the manufacturing sector here in this country. I think what we should be doing immediately is getting Japan into the fold. Japan is by far the largest economy in the TPP group that we do not already have a trade agreement with. We have trade agreements with most of them, but not Japan, so we ought to deepen the existing ties with Japan and get a trade agreement done – which requires TPA, which is another reason it’s important that we look beyond this notion that somehow trade is not a good thing, but rather it’s something that helps our American workers.
“Lastly, we need to be blunt about the elephant in the room, which is China. In 2002, America was the top trading partner of these Indo-Pacific nations. We were number one. Today, it’s China, by far. Ms. Shaw, I heard your comment on that—that they are the most dominant trading partner and that should be a wake-up call to us, to embrace a new path forward. One that allows us, again, to have better market access to our products. And, like USMCA, has enforceable labor and environmental rules to guard against offshoring. There are a couple of things that some of us have proposed—and I want to ask you about it quickly—that takes us down that track. One is to do something with regard to the WTO. Right now too often agreements get stalled because one country or another objects. Often it is China—and since the WTO works by consensus—that means it doesn’t work very well.
“Senator Coons and I have introduced legislation called the Trading System Preservation Act, which gives authority to USTR to pursue sector-specific trade agreements with allies which do not have an MFN, or a Most Favored Nation, requirement. In other words, we should find like-minded countries that want to come up with an agreement with us and move forward with those agreements. We should not, certainly, allow China to be able to free ride on the global trading system, or be empowered to act as a spoiler to prevent these agreements from going forward. The government procurement agreement at the WTO would be an example of that. Let me start with you Ms. Shaw, do you support sector-specific plurilateral agreements without MFN, that are an effective way to open markets with allies and to put pressure on China?”
Kelly Ann Shaw, former Deputy Assistant to the President for International Economic Affairs: “Thank you for the question. I do and I thank you for your leadership, along with Senator Coons on that piece of legislation. I think countries are going to continue to negotiate with or without the WTO so to make clear that the view from the U.S. Congress is that we should be pursuing plurilateral agreements is the right message to be sending to Geneva and our trading partners around the world. But what I would say about plurilateral and sector-specific agreements is that we shouldn’t be limiting ourselves to a single sector or a single topic to discuss. We should be negotiating across a broad range of plurilaterals, so that we have the opportunity to make important trades across difficult issue areas. That’s how we make progress. And I realize I’m talking to a former USTR about negotiations, so definitely defer to your experience, but I don’t see how we can make significant progress just taking one issue at a time. I think we need to take a coalition of the willing and go deep on a certain set of issues that really reflect the challenges we are facing today.”
Senator Portman: “Yeah, I think that is a good observation because there are tradeoffs between different sectors and our legislation wouldn’t be limited to one specific sector. But it would be this notion that we don’t have to have everybody on board, because that’s what blocked progress on all kinds of things—think about environmental goods. Why can’t we come to an agreement on that because one, or in that case, two countries object? Let’s get the rest of us together and maybe do some tradeoffs with some other areas and move forward to expand opportunities for trade and market openings.
“The other bill that we’ve been working on is Leveling the Playing Field 2.0 and a number of the members on this committee are co-sponsors of that legislation. Senator Brown and I are the original co-sponsors. Basically what it says is, the reality is with the Belt and Road Initiative in particular, and with trans-shipment, that China continues to game the international trading system and we need to be responsive to that. That’s the real world. That legislation has new tools to combat some of these trade abuses. We now have 172 businesses, trade associations and Ag groups and unions that have endorsed the bill. It has a lot of support here on both sides of the aisle, including with Republicans, and it also passed House as part of the COMPETES Act. Mr. Wessel, maybe you could comment on that legislation? Do you agree that Leveling the Playing Field Act 2.0 will help combat China’s unfair trade practices and improve our economic situations in the Indo-Pacific area?”
Michael Wessel, Staff Chair, the Labor Advisory Committee for Trade Negotiations and Trade Policy: “Couldn’t speak more highly of both the bill that you and Senator Brown put together and your work over time. But the importance of Leveling the Playing Field 2.0 is as a component of whatever legislation comes out of the conference on COMPETES and USICA. Giving workers the tools to defend their rights when they’re injured by unfair foreign trade is vital. There are too many areas right now where they have no tools and they are victims. Your legislation will help put an end to that.”