U.S. Senate Hearing on Two Commerce Department Nominees Raises Various U.S.-China Trade Issues
The Senate Finance Committee held a hearing today on the nominations of two Commerce Department officials: Maria Louise Lago as Under Secretary of Commerce for International Trade, and Lisa Wang as Assistant Secretary of Commerce for Enforcement and Compliance. The questions from the Senators on the Committee touched on a wide range of issues, and there were several Senators who pressed the nominees on issues related to China, including the following:
- Senator Crapo pushed for details on whether the Biden administration would negotiate digital or other trade deals in Asia as a counter to China, but Ms. Lago responded only with a general statement about "develop[ing] an Indo Pacific economic framework."
- Senator Thune pressed Ms. Wang on China's developing country status at the WTO, but she did not address this point.
- Senator Whitehouse asked about carbon efficiency in manufacturing in the U.S. and China, as well as about illegal fishing (Senator Wyden weighed in on this latter issue as well); the nominees offered only general responses to these points.
- Senator Lankford raised the issue of forced labor in imports from China, and Ms. Lago responded that she would "welcome being part of the solution to the issue of forced labor in China."
The full text of the exchanges is below.
Crapo:
I believe that the United States should negotiate digital trade agreements to assure that the United States and not China sets the rules in this critical area. I just returned from a congressional trip to Indochina, where we went to the Philippines, to Taiwan and to India. And trade was critical in each of these discussions we had in those areas. Do you agree that the United States should pursue digital trade agreements with our allies?
Lago:
Thank you, Ranking Member Crapo, for, again, highlighting the importance of digital trade as being so central to our economy today and also the the economy of the future. I think it is extremely important, as you know, to align ourselves with countries that share our commitment to democracy, to rule of law, and to work with them in partnership, so that we end up with high standards, so that we do not cede this area to countries that engage in trade practices that are abhorrent to us. And so, if confirmed, I would so welcome being able to work with you, this committee and the interagency to see how we can best work with our allies and partners globally to achieve these multiple goals that we have in the digital trade arena.
Crapo:
Thank you. Just one more quick question for you ... a China led trade agreement, the Regional Comprehensive Economic Partnership, will enter into force on January 1. China has also applied to join the Trans Pacific Partnership. I'm deeply concerned that China is seeking to supplant the United States when it comes to setting the rules for trade in the Indo Pacific. Do you think the United States needs to re-examine TPP, including what improvements could be made?
Lago:
Thank you, Ranking Member Crapo, for that question. I do think it is extremely important that the US be present in the Asia Pacific, in the Indo Pacific region. I am pleased that as we are here in this hearing today, that Secretary Raimondo is in the region. I'm pleased that President Biden has announced an Asian economic dialogue and that the Secretary, as part of her trip to the region, has noted that we need to develop an Indo Pacific economic framework, one that is going to look to enhance the resilience, inclusion and sustainability of our trading relationships, the interests of the middle class in our countries. And so I would look forward, if confirmed, to bring the tools that ITA has to the table to make sure that we are engaged, committed partners with our allies in this effort, in a so important region.
Crapo:
Well, thank you and I hope that that engagement in that framework will involve focusing on bilateral and multilateral trade agreements with critical allies in the region.
Thune:
Do you believe that China declaring itself as a developing country at the WTO undercuts American businesses and corrodes trust in the rules based trading system?
Wang:
Senator, thank you for that question. In terms of trade, China is a threat. They take aggressive anti-competitive measures against U.S. businesses, and harm American workers, like flooding our markets with cheap steel and aluminum. If confirmed, I would use the full force of the AD/CVD laws to counter these distortive practices. Thank you.
Thune:
I've got a bipartisan resolution to address China's developing country status of the WTO and I would encourage the administration to take on this issue.
Whitehouse:
My first question is for Ms. Lago and it has to do with the carbon efficiency advantage that the U.S. enjoys over China. I'm looking at a table here based on data from the International Energy Agency which shows the carbon efficiency advantage index between the U.S. and China at 3:2 in our favor. And with a carbon advantage like that, Ms. Lago, what would you expect if we were able to deploy a border adjustment for carbon emissions with China? Presumably that would confer pretty significant advantage on American trade, exports and manufacturing, if in fact we are about a third as carbon intense as China.
Lago:
Thank you, Senator, for raising an issue that touches upon a number of different facets. One is highlighting the fact that among China's anti-competitive and trade distorting practices are the fact that many of its industries operate not in accordance with the environmental standards that our country prides itself on. Second, in highlighting our carbon advantage, it suggests that there are opportunities for US businesses to take advantage of the technological edge that we have here to create new markets and thus new jobs for Americans. With respect to the border adjustment tax, were I to have the honor of being confirmed, I would look forward to learning from you and your staff, and from the experts at the Commerce Department, more about this so that I could then have an informed discussion with you.
Whitehouse:
But as a basic proposition, if China is now getting away with essentially free pollution at a ratio of three to one compared to American competitors, that gives them an unfair advantage against their American competitors, does it not?
Lago:
Thank you, Senator, the importance of holding China to its international obligations can't be overstated. And again, if confirmed, I would look forward to learning more about this border adjustment.
Whitehouse:
So last question to Ms. Wang and also to Ms. Lago if there's time, pirate fishing, illegal fishing, IUU fishing it's often called, amounts to about a third of the fish taken out of the ocean. It's a pretty big deal. China is very involved in predatory fishing practices, outraging many neighboring countries with their practices in their sovereign waters. The result is intense damage to our oceans, a common resource for the world, and also intense damage to U.S. fishing interests which have to compete against these unfair cheating pirates. And yet, that doesn't seem to get much attention in our trade conversations. Can you express to me what your level of interest and engagement will be to suppress IUU fishing, if you're confirmed to your positions. First Ms. Wang.
Wang:
Thank you for the question. The issue of pirate fishing, including its use of forced labor in that, is an important issue, and one that I would note the Commerce's Enforcement and Compliance Office of Policy Negotiations has been working with the interagency, including U.S. Trade Representative, on the fishery negotiations. And if confirmed, I would look forward to learning more about this with the interagency and seeing what E & C's role can be in it.
...
Lago:
I would echo Miss Wang's comments and would also note that if confirmed, I would also look to Commerce's industry and analysis unit, ITA's industry and analysis unit, to see how their skills, their tools can be deployed to address this issue.
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Wyden:
I just want to say, if anything, Senator Whitehouse is being far too diplomatic. The stall ball that has been played for years and years on this fishing issue, as China pillages, pillages our fisheries and damages coastal communities is unconscionable. It's inexcusable. And I will be watching very closely the activities that are coming up in terms of the negotiations. And if progress is not made, we are going to pursue legislation to up the ante and ensure that we finally end the absurd practice of just sort of standing around and letting China pillage our fisheries.
Lankford:
One last piece on this and that is the issue about human rights abuses. I authored an amendment that came to this committee -- it was actually voted down by every Democrat in the committee -- on trying to exclude Uighur developed solar power or solar panels and such, that were coming in because the human rights abuses for Uighurs ... . Interestingly enough just a couple of weeks ago in the Build Back Better bill in the House, they actually took out the section that would prevent Uighur forced labor products from coming into the United States. And then John Kerry just last week made a statement that keeping out Uighur done solar panels and all that happens there is not in his lane. I'm trying to figure out whose lane it's in and what your role would be, Ms. Lago, on trying to prevent products that coming into the United States are done with forced labor.
Lago:
Senator, like you, I abhor the forced labor, the human rights abuses, that the Chinese government is inflicting, particularly on the Uighurs, and if confirmed, I would look forward to working with you, with this committee, and also with the interagency on this topic of forced labor. It is a topic that requires many different government agencies to pull together. But I want to start, be as clear as possible, that China's treatment of the Uighurs is unacceptable.
Lankford:
You would say that's in your lane to help prevent that coming in the United States?
Lago:
If confirmed I would welcome being part of the solution to the issue of forced labor in China.