Deputy USTR Bianchi Responds to Senate Questions on China

Simon Lester -

As a follow up to the June 24 Senate Finance Committee hearing on the nomination of Sarah Bianchi to be a Deputy U.S. Trade Representative (with oversight of Asia/China policy), Senators submitted questions for the record to be answered later in writing. The answers from Ms. Bianchi are now available. This piece highlights the questions and answers related to China, including with regard to the Phase One agreement, CPTPP, and Trade and Investment Framework Agreement (TIFA) talks with Taiwan.

  • Senator Crapo asked how the Biden administration would respond to Chinese censorship policies that affect U.S. market access; Bianchi noted that "President Biden has pledged to work with allies to address the adverse consequences of non-market authoritarian behavior."
  • Senator Menendez asked how best to strengthen trade ties with Taiwan, in response to which Bianchi talked about building off a recent round of TIFA negotiations with Taiwan and collaborating on shared interests such as resilient supply chains.
  • Senator Grassley brought up Chinese subsidies to its amino acid industry, and Bianchi committed "to making it a priority to combat China’s unfair trade practices, including those that harm U.S. amino acid producers."
  • Senator Thune asked about the CPTPP, including China's interest in it, and Bianchi responded that "I will work to ensure U.S. trade policy represents a viable, effective alternative to China’s industrial policies." Thune also asked about China's developing country status at the WTO, to which Bianchi responded that "I agree that claiming special and differential treatment allows major global economies to exempt themselves from WTO rules, which weakens the organization’s standards and effectiveness."
  • Senator Burr asked about China's agriculture purchase commitments under the Phase One deal, and Bianchi responded by saying "I will work with Ambassador Tai to ensure China lives up to its commitments under the Phase One Agreement."
  • Senator Young asked how the U.S. "should use the new TTC partnership as a strategic transatlantic response toward China’s efforts to gain supply chain and technology dominance," and Bianchi said she would "work to make sure these efforts are effective."
  • Senator Sasse asked about "creating a tech alliance among democracies with shared values," and also about a possible trade deal with Taiwan; Bianchi offered general comments supporting digital trade talks and trade cooperation with Taiwan.
  • Senator Barrasso asked about a possible trade deal with Taiwan, and Bianchi responded by saying she looks forward to building off of the recent TIFA negotiations.

The full text of the exchanges is below.

Senator Crapo:

Question 2 – China Market and Censorship

China’s market access restrictions and its censorship policies often run in parallel. For example, China imposes a quota of 34 foreign films a year, and often places pressure on our creative industries to censor the content of their works in order to secure a seat at this limited table. This hurts American employment—and undermines our values.

What measures do you believe the Administration should consider deploying in response to this problem?

Answer: The Chinese government’s censorship policies are an affront to democratic, open societies. They are deeply problematic for the Chinese people, and others around the world as the government extends its censorship extraterritorially. The denial of market access is an important commercial facet of this much larger concern. We have seen that, to date, China has a record of nominal compliance with many core trade obligations, and securing Chinese compliance with its trade commitments is an ongoing problem. President Biden has pledged to work with allies to address the adverse consequences of non-market authoritarian behavior.
Senator Menendez:

Question 1: A number of my colleagues and I have been urging the administration to accelerate our trade talks with Taiwan toward the objective of negotiating a full trade agreement. Taiwan is a vibrant democracy and the right type of partner with whom the US can develop the high-standard, progressive trade policy this administration is looking for. Any final agreement should also incorporate strong rules of origin and other safeguards to ensure that the PRC cannot use a US-Taiwan trade agreement as a backdoor into the US market.

How do you think we can best strengthen our trade ties with Taiwan?

Answer: Taiwan is an important economic and strategic partner for the United States. USTR recently concluded a round of TIFA negotiations with Taiwan, and, if confirmed as Deputy USTR, I look forward to building off of that progress to strengthen this critical relationship by collaborating on our shared interests, such as resilient supply chains.

Question 2: Will you commit to consulting with my office on any trade negotiations with Taiwan, if confirmed?

Answer: If confirmed, I commit to consulting closely with Congress on trade engagement with Taiwan.
Senator Grassley:

Question 1: Iowa is a leading hub for amino acid innovation and production for use in animal agriculture throughout the United States. I am concerned that unfair Chinese subsidies to its amino acid industry have resulted in unfair increases in imports of Chinese amino acids such as Lysine and Threonine. These unfair trade practices jeopardize the vitality of U.S. amino acid producers, the U.S. amino acid supply chain, and American corn growers.

If confirmed, will you include the issue of potential Chinese unfair practices in the amino acid space as part of the Biden Administration’s international trade agenda with China? Will you also commit to briefing my office and the relevant Capitol Hill committees on this issue on a biannual basis?

Answer: China’s nonmarket economy and industrial policies disadvantage U.S. companies and workers in numerous sectors. If confirmed as Deputy USTR, I commit to making it a priority to combat China’s unfair trade practices, including those that harm U.S. amino acid producers. I will consult closely with Congress on these efforts.
Senator Thune:

Question 4: At the hearing you suggested that the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) was outdated.

What specific areas of the CPTPP are outdated? Do you believe the U.S. should enter the CPTPP or some version of the agreement? What are your thoughts on China’s interest in joining the CPTPP?

Answer: If confirmed as Deputy USTR, I will work to advance a high-standard, worker-centered trade policy that reflects American values, supports U.S. manufacturing, and reduces vulnerabilities in our supply chains. Any trade agreement must be good for U.S. workers. It must have strong labor standards and effective labor enforcement mechanisms. China’s commitment to its nonmarket economic model and unwillingness to change its industrial policies are well known. I will work to ensure U.S. trade policy represents a viable, effective alternative to China’s industrial policies.

Question 5: I recently introduced a bipartisan resolution to call on the WTO to reform its special and differential treatment rules so that globally competitive countries such as China, with the world’s second largest economy, can no longer self-designate as a developing country to gain unfair trade advantages. China declaring as a developing country at the WTO misidentifies its economic standing, undermines countries that are truly developing, and corrodes trust in the WTO itself.

Do you agree that the WTO should reform its special and differential treatment rules so that major economies can no longer self-designate as a developing country? Would you expand on your thoughts on this issue?

Answer: I agree that claiming special and differential treatment allows major global economies to exempt themselves from WTO rules, which weakens the organization’s standards and effectiveness. If confirmed as Deputy USTR, I will work with Ambassador Tai and the USTR team in Geneva to reform the WTO in this and other areas.
Senator Burr:

Question 1: China’s violations of trade laws have disadvantaged many U.S. businesses and workers. As you know, however, North Carolina’s agricultural exports have been affected by China’s retaliatory tariffs, and because of this China’s ag purchase commitments in Phase One of the China deal are incredibly significant for farmers in my state.

If confirmed, what steps will you take to ensure these commitments are fulfilled?

Answer: If confirmed, I will work with Ambassador Tai to ensure China lives up to its commitments under the Phase One Agreement, and I will work with the entire USTR team to maximize market opportunities for U.S. agricultural producers, including in China.
Senator Young:

Question 2 Recently, the White House announced a new joint initiative with the EU, the Trade and Technology Council (TTC). Among its various goals, ensuring fair competition and establishing global trade standards for emerging technologies are among the issues the TTC will focus on. Yet, the EU has taken several unilateral actions that would significantly impact American companies’ ability to compete in Europe; one example is the proposed Digital Markets Act, which would prevent market dominance by forbidding “gatekeeper” companies from undertaking certain actions. If this proposal were to become law in Europe, it is highly anticipated that this would subject major U.S. digital companies to various restrictions.

How do you propose the U.S. should use the new TTC partnership as a strategic transatlantic response toward China’s efforts to gain supply chain and technology dominance?

Answer: President Biden has often emphasized that market democracies, not China, should write global rules governing trade and technology. Transatlantic cooperation on trade in emerging technology products through the Trade and Technology Council is of particular importance for sectors that both the U.S. and the EU have identified as critical for our respective efforts to strengthen our supply chain resilience in the face of Chinese industrial policies, such as clean energy and semiconductors. If confirmed, I would work to make sure these efforts are effective.
Senator Sasse:

Question 1 If confirmed, Asia will be a part of your portfolio as Deputy United States Trade Representative (DUSTR). Given the CCP’s growing influence in the region, we must continue to pursue creative economic solutions in order address this challenge. I have previously discussed with Ambassador Tai the possibility of creating a tech alliance among democracies with shared values.

• Can you describe the strategic challenges for the United States posed by continued economic and technological independence with the CCP?

• How do you plan to think creatively about crafting trade agreements in the tech and digital spaces with countries that share our values to jointly push back on China’s techno-authoritarianism?

• Will you commit to presenting this Committee with a strategy for establishing critical technology and digital trade agreements with our likeminded allies and partners?

Answer: I believe digital trade provides the United States with an opportunity to advance shared goals among the United States and other democracies with shared values, particular to fight techno-authoritarianism. Digital trade policies that reflect the entire digital ecosystem, from infrastructure, to workers, to market access, to consumers, will allow the United States to address the threat of digital authoritarianism more holistically. If confirmed, I would welcome the opportunity to present the Committee with a strategy to achieve these goals.

Question 4

I was pleased to hear Ambassador Tai and Taiwan Minister-Without-Portfolio John Deng’s joint commitment to reconvene the Trade and Investment Framework (TIFA) talks. Taiwan has proven to be a strong U.S. economic and strategic partner.

• Do you view a trade agreement with Taiwan to be an important national security approach in counteracting China?

• How will you approach an FTA with Taiwan now that Taiwan has granted greater access for U.S. pork and beef?

• Where does an FTA with Taiwan fall on your priority list and where do you see hurdles to an agreement?

Answer: I believe the United States and Taiwan have significant opportunities to cooperate on trade, including with respect to supply chain security and resilience. In addition to supply chains, Taiwan and the United States have agreed to cooperate on ensuring that trade promote shared prosperity, setting up a Labor Working Group, and will also cooperate on environmental issues, including climate change.
Senator Barrasso:

Question 2 We are in a critical moment in the U.S.-China relations. Given China’s rapid rise as an economic powerhouse and their aggressive behavior in the region and across the globe,

• Can you discuss the importance of the strengthening U.S. trade relations with Taiwan?
• If the U.S. re-engages on the Comprehensive Progressive Agreement for Trans-Pacific Partnership (CPTPP), which I believe is in our best interest, how likely is it that we can integrate Taiwan into this multilateral framework?
• If we can’t integrate Taiwan into a larger multilateral deal, should the U.S. pursue a bilateral deal instead?

Answer: Taiwan is an important economic and strategic partner for the United States. USTR recently concluded a round of TIFA negotiations with Taiwan that covered a variety of issues, and, if confirmed as Deputy USTR, I look forward to building off of that progress to strengthen this critical relationship by collaborating on our shared interests, such as resilient supply chains.