The Senate Finance Committee held a hearing today on the Nominations of Maria Pagan to be a Deputy United States Trade Representative (Geneva Office) and Christopher Wilson to be USTR's Chief Innovation and Intellectual Property Negotiator (as well as Brent Neiman to be Deputy Under Secretary of the Treasury for International Finance and Development, and two others).

A number of issues related to China came up at the hearing.

First, four Senators raised the issue of the WTO negotiations on fisheries subsidies, with some directly mentioning Chinese subsidies and labor practices in this context and others raising the issues without mentioning China. On this point, Ms. Pagan said: "while we want an agreement, we want an agreement that is high standard and meaningful. Our challenge is to make sure that we achieve those rules but that we don't also have them riddled with loopholes."

Second, Senator Daines asked how to protect intellectual property in China, focusing on the phase one trade agreement. In response, Mr. Wilson said "Ambassador Tai spoke to this recently and she herself is engaging directly with the Chinese, [and] I would expect to do likewise if confirmed to make sure they're living up to that."

Third, Senator Brown asked how to reform the WTO to deal with China's trade practices. In response, Ms. Pagan mentioned transparency, dispute settlement reform, and a worker centric focus.

Fourth, Senator Barrasso asked Mr. Neiman about lending to China by multilateral development banks, and Mr. Neiman said he would commit to the outcome of putting an end to that lending.

Finally, Senator Crapo asked the USTR nominees to make sure that China and Russia did not benefit from a TRIPS Waiver. He took their responses as unwilling to make such a commitment.

Transcript of exchanges related to China

Senator Wyden: Ms. Pagan, let me start with you. I have been following the WTO fishing subsidies negotiations for quite some time. And I have to tell you from the perspective of Oregon fishing families, they are getting ripped off by Chinese fishing fleets. These families are competing regularly with slave labor, and they're subsidizing long distance Chinese fishing fleets. It is absolutely critical to the health of the oceans and the survival of the family owned businesses that we crack down on this behavior with strong enforceable rules. What would be your message this morning, Ms. Pagan, to those fishing families in Oregon that are hurting, that believe they're just getting exploited by unfair rules? What would be your message to them about your first action in Geneva to close out these negotiations in a way that would allow our fishing families to get a fair shake and have the full fruits of competition?

Ms. Pagan: Thank you for that question. My answer is we do want to have an agreement but we want an agreement that is effective in cracking down on harmful fish subsidies so we can save the fish and save the fishers that depend on having those resources. So while we want an agreement, we want an agreement that is high standard and meaningful. Our challenge is to make sure that we achieve those rules but that we don't also have them riddled with loopholes. The United States has been playing a leadership role in these negotiations for a long time, and if confirmed, I will continue to play that role and hopefully we can get to an agreement that changes the status quo and doesn't just, you know, continue the situation the way it is, and to confirm I look forward to working with you on this.

Senator Wyden: I appreciate that. I'm going to hold the record open to give you a chance to give a more complete answer. I'm not sure that you're aware that'd be my first question. This is something I feel very strongly about. And our trading opponents on these issues have been playing stall ball on fairness in fishing for too long, and I'm just committed to getting it changed and the Ambassador to her credit has been candid with me, so we'll hold the record open for, say, 72 hours for a more complete answer on that.

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Senator Crapo: You didn't even realize this because we haven't talked about it, Senator Wyden but ... you just raised in your first question to Ms. Pagan another important issue that I think we can work on together. And that is the Chinese fishing fleet. Idaho isn't a coastal state, but we are as concerned about this as is Oregon, and are the rest of Americans ... and Washington. But, you know, this goes beyond just the United States. The Chinese fishing fleets are aggressively damaging fisheries around the globe, and creating not only damage economically, but they're also creating damage to some of the great treasures in our oceans. And I think it's really important for us to focus on that.

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Senator Cantwell: Once I heard then Commerce Secretary Ron Brown said he was Secretary of all of commerce, but if he was getting a call from a member of Congress, he guaranteed it was about fish. That just shows you here how important fisheries are to all our states, to the United States, and now to the globe. Why? Because we see warmer climates affecting fisheries, we see the Arctic being opened and probably claims to fisheries, we have ... our history about fishing in international waters and illegal fishing ... in our waters and setting up those boundaries. So I hope that you will be very serious about keeping your foot on these negotiations ... and the world is looking, and in a growing world, looking for more protein sources, and people are looking at fisheries. So we have good fisheries management in the United States. I would hope that that would be something in the debate that sustainable fisheries should be part of the requirements in trying to create a more market ... and I believe we should be in the business of exporting what those sustainable fishery practices look like because we are, at least in parts of our country, very good at it and being very successful.

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Senator Whitehouse: There are two issues we've been working on that involve the World Trade Organization. One is pirate fishing. And in particular, the use of forced labor, in fact slavery in pirate fishing. This matters a lot to American fisheries because it's really hard to compete with foreign fishermen who use slavery to their advantage. ...

Maria Pagan: On forced labor and fisheries, as you probably know that the United States has made a proposal for the fish subsidies negotiations that we obviously continue to push and we hope will be part of the final outcome. So that is one way of trying to get at that issue, which is very important and it is definitely tied to the issue of illegal fishing that we're trying to, and harmful subsidies that we are trying to curb through this, through the agreement. So that is certainly a priority for us.

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Senator Daines: I want to talk about intellectual property for a moment. Somebody who spent much of my career in global operations, spent six years actually living in China, working for an American corporation that would be launching American brands to compete against Chinese brands there in China. I believe protecting US intellectual property has to be a top priority for the US trade rep. As you know, the United States and China signed the phase one trade deal, including major advancements in the protection of US IP. But despite this agreement, China has not lived up to their end of the deal, and its forced technology transfer and IP violations continued. I've sponsored this bipartisan bill, the Protecting IP Act, which recently passed the Senate as part of Senate bill 1260. It would help boost enforcement in that phase one China deal. In fact I was over in China meeting face to face Liu He back at the end of that whole negotiation process in Beijing. So I had a lot of hands on personal experience, and hence my passion on this issue. Mr. Wilson, if confirmed, what actions will you take to ensure that IP created in America is protected?

Christopher Wilson: Thank you, Senator Daines. It's great to hear about your personal experience on these issues. And as you point out, the issue particularly of China's living up to the commitments that it made bilaterally to us in that earlier agreement is critical. Ambassador Tai spoke to this recently and she herself is engaging directly with the Chinese, I would expect to do likewise if confirmed to make sure they're living up to that.

Senator Daines: Thank you. I appreciate that, truly. ... Furthermore, would you support taking more aggressive actions against international IP abusers?

Christopher Wilson: Senator, I think again, if I'm confirmed one of my first priorities would be to open up the toolbox that we have at USTR, evaluate the tools, consider where they can be used most effectively, and consult with the committee on how we do that.

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Senator Brown: I want to start by saying that China's entry into the WTO has been devastating for Ohio workers and Ohio companies. Chinese government cheats the global system using forced technology transfers, intellectual property theft, chronic state subsidized overcapacity in key industries, like steel and solar, to undermine US industry. The WTO can't be a tool by which China bullies its competitors. If China continues to make a mockery of the World Trade Organization, Americans and the rest of the rule following world are going to lose faith both in the WTO and their own leaders to appeal for it for relief. That's the lesson it's so important for us to understand. So Ms. Pagan, detail for me how you think we should reform the WTO so it actually works to address Chinese abuses, which harm American workers and businesses.

Maria Pagan: Thank you, Senator Brown. There's a number of ways. You know, one important area is transparency. One of the areas where ... China fails is lack of transparency in its measures, and we want to improve transparency in terms of making sure that members are meeting their current obligations and bringing more transparency also to the WTO so we can have more conversations. The dispute settlement system has to be reformed because it has contributed to some of the difficulties for us to to combat some of the unfair practices and that's going to be a priority, if I'm confirmed, in my work forward at the WTO. ... I know this is an important issue and it's an important angle to bring to everything that we do at the WTO, is to bring the worker centric focus to remind ourselves of what ... after all, we're there to do trade and to facilitate trade but that it also means that you have to treat the workers that trade comes from, so there any number of ways that we can address this issue and if confirmed, I look forward to working with you on this.

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Senator Barrasso: China's the world's largest economy. Has access to capital, sizeable reserves that meet its own domestic development needs. Yet China continues to borrow billions of dollars from multilateral development banks. In 2016, China met the criteria for graduation from the World Bank. Since then, China received $9 billion from the World Bank, $7.6 billion from the Asian Development Bank, and China obtains sizable loans, it's engaging in predatory lending, likely using that money to developing countries across the world. So China is now the world's largest official creditor, you know, it continues to get all of this money, a lot that the United States has been putting into these organizations. The United States, I think, has a duty to make sure the US taxpayer resources are going to countries that need it most, not China. A dollar lent to China is a dollar not available for a project to eliminate poverty in the developing world. The multilateral development banks need to focus on their development mission. So what's your strategy to end lending to China at multilateral development banks?

Brent Neiman: Thank you for the question, Senator. I do agree that our MDB efforts and development finance should be targeting the lowest income countries that need that assistance. And China has, as you said, by that standard, graduated ... years ago now. If confirmed, I would be committed to working with the executive directors and understand the best way forwards to achieve that outcome, which I agree with Senator.

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Senator Crapo: With regard to the TRIPS Waiver, Ambassador Tai committed at the trade agenda hearing to brief this committee on negotiations to waive the US rights under the WTO Agreement on Trade Related Intellectual Property Rights or TRIPS. This hasn't happened. The briefing has not happened. Members on both sides of the aisle are concerned about this issue, particularly about allowing China and Russia to use our intellectual property for vaccines with impunity. My question for both of you is the same. Would you commit to opposing a waiver or peace clause for the TRIPS agreement that extends to Russia and China?

Maria Pagan: Thank you. I know this is a very important issue. I would just say that ... the conversations in Geneva are ongoing, and they're sort of stuck. ... we are trying to be constructive over there. I will say that on the issue of China and Russia or other people that shouldn't be getting access to our innovation, we will be very clear eyed on whatever the outcome is to ensure that that doesn't happen. You know, the devil is always in the details and with respect to ... consulting with you and the committees I believe we will do that.

Christopher Wilson:  Thank you Senator Crapo. As my colleague has said, there are lots of ins and outs of this discussion in Geneva that still need to take place. It's very helpful for me to understand your particular concern about technology being shared with two WTO members in particular. I think it's incumbent on us as we continue to be involved in the discussions to ensure that we're managing the risks as effectively as we can.

Senator Crapo: Well, thank you, and neither of you were willing to commit to oppose a waiver of TRIPS for Russia and China. I understand that you're working with the administration. It's already said that it is considering doing that. So I would just say ... I would encourage you to take back advocacy of protecting Americans and American industry and technology rather than yielding that technology, the access to that technology, to Russia and China, where the case has not been made that there is an emergency that somehow justifies this.