February 25, 2021
Senate Committee on Finance
On Thursday, February 25, the Senate Committee on Finance held a hearing for Katherine Tai, President Biden’s nominee to be the United States Trade Representative (USTR). The most common topics were China and questions about trade disputes on local products. Other topics included United States–Mexico–Canada Agreement (USMCA) enforcement, rejoining the Trans-Pacific Partnership (TPP), World Trade Organization (WTO) reform, supporting supply chain resilience, and the Biden administration’s proposed worker-centric trade policy agenda.
- China – Multiple Senators raised concerns with China’s trade practices, from subsidizing corporations who then can unfairly compete, to IP theft and forced technology transfers, to tariffs, and asked Tai to elaborate on USTR’s role in countering these actions. Tai stated it is critically important to have a strategic and coherent plan for holding China accountable to its promises and to effectively compete with its model of state-directed economics. She stated that China is simultaneously a rival, a trade partner, and an outsized player whose cooperation will also be needed to address certain global challenges. She stated this work begins by having conversations with others on our shared interests and shared challenges presented by China, and repeatedly emphasized that USTR would only play a role in the much larger whole-of-government approach taken by President Biden. She highlighted that in some areas, like in the WTO and with the Phase 1 trade agreement, China has made commitments and promises, and the U.S. should use enforcement mechanisms to ensure China keeps those promises. In areas where there are not any rules, Tai stated the U.S. should set those rules and norms through multilateral engagement with stakeholders.
- Worker-Centric Trade Agenda – Multiple Senators asked Tai to elaborate on President Biden’s proposed worker-centric trade policy agenda, with Senator Tim Scott (R-SC) asking if these benefits would apply to non-union workers as well. Tai stated that too often in previous trade agendas there was a pattern of workers and livelihoods being traded for some other trade priority, or one sector of workers felt like their livelihoods were sacrificed to support another sector of workers. She stated this worker-centric trade agenda would end those patterns, ensuring workers’ livelihoods are not sacrificed. She stated that this agenda is broad in scope, applying to union and non-union workers alike across all industries. She stated the goal is to ensure USTR thinks about how trade policy will affect regular people and to expand the circle of winners in trade policy. Senator Elizabeth Warren (D-MA) stated her concern that trade advisory committees are too often made up of members of corporations, noting that in the TPP negotiations, 85% of the advisory committee was from corporations. She asked for a commitment that each trade advisory committee will have more representatives from labor, consumer, and environmental groups than from corporations. Tai noted there is a statute that dictates the composition of the advisory committees and stated she would look into how that statute is composed and work with the Senator on the issue.
- USMCA Enforcement – Multiple Senators raised concerns with actions taken by Canada and Mexico that either breach or do not live up to the USMCA and asked Tai to elaborate on how USTR can push back on these breaches, like Canada’s dairy practices and Mexico’s labor practices. Tai noted that compared to NAFTA, the USMCA has more robust and expansive enforcement mechanisms, and committed to using them when appropriate. Senator Sheldon Whitehouse (D-RI) raised concerns with plastics and other debris in America’s oceans, and Tai noted that there are USMCA environmental enforcement mechanisms that could be used to address maritime debris. She committed to digging into the work of her predecessor who opened consultations under the dispute settlement mechanism of the USMCA with Canada over U.S. producers’ curtailed access to the Canadian dairy market.
- Trans-Pacific Partnership – Senators Tom Carper (D-DE) and Steve Daines (R-MT) asked Tai to elaborate on whether the U.S. should seek to rejoin or reengage with the TPP. Tai stated that the basic formula behind TPP was for the U.S. to engage robustly with countries and economies with which it has a lot of shared interests, and to address shared challenges from China, adding the formula is still good. Tai stated that the world in 2021 is very different from the world in 2015-16 and committed to working with Congress and the administration on the issue in the future.
- Trade Disputes – Multiple Senators brought up local trade disputes. Ranking Member Mike Crapo (R-ID) raised concerns with Canadian softwood lumber dumping, Senators Maria Cantwell (D-WA) and Bob Menendez (D-NJ) raised concerns about the Airbus dispute with the EU, and Senator John Thune (R-SD) advocated for country-of-origin label requirements. Tai committed to working with Ranking Member Crapo and other interested Senators on this long-standing issue with Canada. To Senators Cantwell and Menendez, Tai committed to attempting to solve the problem if confirmed, noting it had been an ongoing dispute with the EU since 2005-6, and stating it shouldn’t be impacting U.S. agricultural exports. To Senator Thune, Tai noted that country of origin labels were blocked by the WTO but stated she would work with Senator Thune to see if there is a work-around. Senator Catherine Cortez Masto (D-NV) stated her concern with the Trump administration’s decision to place tariffs on solar equipment, and asked Tai to work with her to address the issue. Tai noted the tricky position USTR is in on this particular issue, as it was parties in the U.S. that had requested a review and won relief, and now there are additional parties in the U.S. who say the relief unfairly impacted them. She committed to working with the Senator and the Committee to address the issue.
- WTO Reform – Several Senators asked Tai to elaborate on how best to reform the WTO. Tai stated that the U.S. has been a leader at the WTO since its role as a founding member, and the U.S. cannot afford to be unengaged in Geneva. She stated that the U.S. needs to have hard conversations with WTO members about the value of the WTO, how it accomplishes the goals expected out of it, and how it rises to the challenges of today’s world. She emphasized that this could not be done unilaterally, but required multilateral engagement to succeed.
- UK Trade Relations – Senators Chuck Grassley (R-IA) and James Lankford (R-OK) stated that the UK has a special relationship with the U.S. and asked Tai if she would prioritize reaching a bilateral trade agreement now that the UK has left the EU. Tai stated the last update on U.S.-UK trade relations she had seen in her professional capacity was initial notifications sent by her predecessor to the House Ways and Means Committee in 2018. She stated she would have to review what progress has been made since that time since both the UK leaving the EU and its future relations with the EU could impact U.S. trade policies.
- Resilient Supply Chains – Multiple Senators raised concerns about the state of domestic supply chains, noting that the COVID-19 pandemic has highlighted areas of vulnerability, and asked Tai what role the USTR could play in strengthening domestic supply chains. Tai stated that securing and ensuring the resiliency of U.S. supply chains, especially for critical products like semiconductors, will be a whole-of-government response. She stated she would emphasize resiliency as much as efficiency in global trade policy negotiations.
During her confirmation hearing, Tai went to great lengths to assure Senators that trade would be an integral part of President Biden’s domestic policy agenda. Most Senators appeared impressed by her command of the issues and thoughtful approach to trade. She also touted a philosophical shift in how this administration would execute its trade agenda, stating that their approach would be “worker centric” and would ensure that workers’ livelihoods would not be sacrificed in pursuit of a trade priority. Multiple Senators raised extreme concerns with China’s trade practices and Tai reiterated her commitment to holding China accountable by utilizing every tool at USTR’s disposal, including tariffs. Tai also acknowledged the challenges facing the country’s supply chains have only been exacerbated by the ongoing pandemic. She stated that securing and ensuring the resiliency of U.S. supply chains, especially for critical products like semiconductors, will be a whole-of-government response. Tai also provided a glimpse into this administration’s “formula” for multilateral trade agreements by referencing the TPP. She stated that the U.S. should engage robustly with countries and economies with which it has a lot of shared interests. Tai also committed to expansive enforcement of USMCA and working diligently to resolve any lingering and ongoing trade disputes.
Tai is no stranger to Capitol Hill and her performance today further confirms her ability to navigate Congress and garner bipartisan accolades. She will likely win broad support from the Senate Finance Committee and her nomination appears to be on track to ultimately be confirmed. However, the timing of floor consideration for her nomination is to be determined and will largely depend on the Senate’s ability to begin consideration and vote on President Biden’s American Rescue Plan.