Following her February 25, 2021, Senate hearing confirmation hearing nominee for United States Trade Representative Katherine Tai responded to written questions from the senators.
It appears that the Biden Administration agrees that the investigation under the previous Administration has established China's bad behavior and has justified the Section 301 tariff action. Therefore, I believe there will be no short term change in the tariffs. Ms. Tai also states the Biden Administration's commitment that "tariffs are appropriately responsive to China’s practices; account for their impact on U.S. businesses, workers and consumers," which appears to leave open the question of possible re-opening of the exclusion process or even removal of certain articles from the action. I will monitor and update readers of this blog and provide specific advice to Agathon Associates clients.
SENATOR MIKE CRAPO (Rep., Idaho)
QUESTION: A number of exclusions from Section 301 tariffs expire soon, including on personal protective equipment. The need for such equipment is not going away anytime soon. Moreover, the pandemic has made it more difficult for many companies to relocate supply chains.
Considering that one of the criteria for granting an exclusion was severe economic harm, are you willing to support:
- extending exclusions currently in force until the end of the year;
- restoring exclusions that have expired, with retroactive relief for import duties the recipients have had to pay since the exclusion expired; and
- reopen the process for companies to apply again for exclusions based on unanticipated challenges they are facing as a result of the pandemic?
ANSWER: China’s track record on using unfair practices to acquire U.S. technology, to the detriment of U.S. innovators and workers, is well-established. During the last administration, USTR conducted an investigation against unfair trade practices in China under Section 301 of the Trade Act of 1974, and found that China engages in unfair trade acts policies and practices related to intellectual property, innovation and technology transfer. To address those findings, the United States imposed tariffs on products from China. If confirmed, I will work with Congress to ensure that those tariffs are appropriately responsive to China’s practices; account for their impact on U.S. businesses, workers and consumers; and support the U.S. response to the COVID-19 pandemic.
SENATOR CHUCK GRASSLEY (Rep., Iowa)
QUESTION: While I understand the rationale for China Section 301 tariffs, some of those tariffs are hurting U.S. renewable energy producers and job creation, and impeding the introduction of clean energy technologies in the United States, I believe we should be prepared to grant tariff exclusions where appropriate. With virtually all of the initial China 301 tariff exclusions now having expired, would you be prepared to stand up a new Section 301 tariff exclusion process for parts used in renewable energy products made in the U.S.?
ANSWER: China’s track record of using unfair practices to acquire U.S. technology – to the detriment of U.S. innovators and workers – is well-established. During the last administration, USTR conducted an investigation into China’s unfair trade practices under Section 301 of the Trade Act of 1974, and it found that China engages in unfair trade act policies and practices related to intellectual property, innovation and technology transfer. The United States imposed tariffs on products from China to address those findings. If confirmed, I will work with Congress to ensure that those tariffs are appropriately responsive to China’s practices and consider the impact on U.S. businesses, workers and consumers.
SENATOR JOHN CORNYN (Rep., Texas)
QUESTION: The USTR implemented a tariff exclusion process for each list of products on the Section 301 tariffs for products exported to China. For the products that were excluded from the tariffs the exclusion relief expired on Dec. 31, 2020. The absence of the previously approved exclusions increases uncertainty for U.S. businesses during the pandemic. The Biden Administration has suggested that they will review all trade policy in place.
While the Section 301 tariffs are under review, will you consider reinstating the process for product exclusions and those that had previously received such exclusions?
ANSWER: Answer: China’s track record of using unfair practices to acquire U.S. technology, to the detriment of U.S. innovators and workers, is well-established. In the last administration, USTR conducted an investigation against unfair trade practices in China under Section 301 of the Trade Act of 1974 and found that China engages in unfair trade acts policies and practices related to intellectual property, innovation and technology transfer. To address those findings, the United States imposed tariffs on products from China. If confirmed, I will work with Congress to ensure that those tariffs are appropriately responsive to China’s practices and consider the impact on U.S. businesses, workers and consumers.
SENATOR ROB PORTMAN (Rep., Ohio)
QUESTION: Many businesses who received exclusions to the Section 301 tariffs on imports from China expressed concern when their exclusions lapsed at the end of 2020.
Do you intend to renew any of these expired exclusions?
ANSWER: If confirmed, I will work with Congress to ensure the Section 301 tariffs on imports from China are appropriately responsive to China’s unfair trade practices and consider the impact on U.S. businesses, workers and consumers.
QUESTION: I understand you intend to review the Section 301 tariffs on China.
When considering the purpose and effectiveness of the Section 301 tariffs, do you draw a distinction between List 1 and 2 for their general focus on imports related to the Made in China 2025 plan, and List 3, which does not have the same focus? Or is there no distinction between the different rounds of tariffs as it relates to the broader approach to challenging China’s acts, policies, and practices that degrade intellectual property rights?
Do you intend to keep tariffs on goods if the underlying feedstock for the good can only be produced in China?
Do you intend to draw a distinction between imports used to manufacture products in the United States and finished goods manufactured in China when it comes to assessing the potential for tariff relief?
ANSWER: China’s track record on using unfair practices to acquire U.S. technology, to the detriment of U.S. innovators and workers, is well-established. Under the last administration, USTR conducted an investigation against unfair trade practices in China under Section 301 of the Trade Act of 1974 and found that China engages in unfair trade acts policies and practices related to intellectual property, innovation and technology transfer. To address those findings, the United States imposed tariffs on products from China. If confirmed, I will work with Congress to ensure that those tariffs are appropriately responsive to China’s practices and evaluate the impact on U.S. businesses, workers and consumers
SENATOR PAT TOOMEY (Rep., Pennsylvania)
QUESION: The previous Administration did temporarily extend the Section 301 exclusions on COVID-related medical products. However, this short-term extension is slated to expire at the end of March. I introduced legislation last Congress to extend tariff-free treatment on these products through 2022, in order to make sure that Americans have access to the supplies they need to fight COVID.
As USTR, will you extend Section 301 exclusions on medical supplies needed for the COVID-19 response until the end of the pandemic?
Will you consider granting exclusions for medical supplies that are COVID-related but never received an exclusion?
ANSWER: The United States imposed tariffs on products from China as a result of an investigation conducted under Section 301 of the Trade Act of 1974 that found China engages in unfair trade acts policies and practices related to intellectual property, innovation and technology transfer. If confirmed, I will review the existing exclusions with respect to COVID-19 related medical products to ensure that the application of the 301 tariffs supports the U.S. response to the pandemic.
SENATOR MICHAEL BENNET (Dem., Colorado)
QUESTION: The trade war with China created immense uncertainty throughout Colorado’s economy. Not only were the tariffs devastating, but the process through which the Trump Administration conducted the trade war exacerbated the unknown and made it hard for Colorado constituents to make important business decisions.
If the USTR decides to seek future tariff actions, how will you conduct the tariff exclusion process with more transparency and clarity?
Will you work with Congress on the tariff exclusion process and provide updates that we can share with our constituents?
Will you consider temporarily extending all previously approved exclusions?
You and Secretary Yellen have indicated the tariffs will undergo a review process. What is the timeline for this review process?
ANSWER: China’s track record on using unfair practices to acquire U.S. technology, to the detriment of U.S. innovators and workers, is well-established. Under the last administration, USTR conducted an investigation against unfair trade practices in China under Section 301 of the Trade Act of 1974 and found that China engages in unfair trade acts policies and practices related to intellectual property, innovation and technology transfer. To address those findings, the United States imposed tariffs on products from China. If confirmed, I will work with Congress to ensure that those tariffs are appropriately responsive to China’s practices and assess the impact on U.S. businesses, workers and consumers. Further, I will ensure that any tariff exclusion process is transparent, fair and objective.
SENATOR MARK WARNER (Dem., Virginia)
QUESTION: As you know, I have been an outspoken critic of China and the national security threat posed by its industrial espionage and the links between Chinese industries and their military. That being said, I believe the haphazard and unilateral approach of the Trump Administration, including the use of Sec. 301 tariffs on goods imported into the U.S., has not been effective in addressing these issues. These actions have raised costs for U.S. consumers, and in too many cases undercut the ability of U.S. companies to compete with Chinese and other non-U.S. competitors. Many US-headquartered companies have been taking steps to shift their manufacturing and supply chains out of China, but have been hampered by the global pandemic and resultant travel restrictions all across the globe, delaying the timelines for their transitions well into 2021. While USTR did grant many exclusions and extensions to these companies, all of the exclusions expired at the end of 2020 without USTR providing an opportunity to petition for extensions.
Are you considering reinstating the tariff exclusions that had been granted in the past, or establishing a process that allows companies to reapply for exclusions for some period of time while the Administration works on a more comprehensive policy to address trade with China?
ANSWER: If confirmed, I commit to assessing the Section 301 tariffs and exclusion process as part of President Biden’s comprehensive approach to confronting the China challenge.
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