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Senate Finance Committee Hearing on the Road Ahead for the World Trade Organization

Senate Finance Committee

“Approaching 25: The Road Ahead for the World Trade Organization”

Tuesday, March 12, 2019

Key Topics & Takeaways

  • WTO Reform: Lighthizer stated the WTO supports policies that address the concerns of IP theft penalties, self-designating for developing countries that need assistance, acting as a forum that supports new trade multi-lateral agreements, and has global consensus for the appeals process. Lighthizer noted the need to create reform for e-commerce, agriculture, fisheries, and other global trade patterns that incentive global growth, not protectionist polies.
  • EU and Japan Trilateral Agreement: Lighthizer stated the trilateral agreement is on-going, but he would have to discuss specifics privately. He noted that addressing subsidies and market share under an agreement is very important, and the conversations are leading to many successful moving parts, but there are areas of stalemate for non-tariffs barriers, including the EU’s protectionism policies. Lighthizer said he will continue to work with Congress in addressing major concerns that need to be resolved in negotiations.
  • China and Section 301 Tariffs: Lighthizier said there is not an exact timeline, but he believes the negotiations are making progress and hopes to conclude in the coming weeks. He said the negotiations involve many U.S. Departments, including Treasury, Trade, and Agriculture, as well as the Chinese government. He outlined a structure which would address IP, tech transfer, currency manipulations provisions, access on services for companies, agriculture trade provisions, non-tariffs measure, and enforcement of the agreement. Lighthizer said the WTO trade remedy has failed in dispute processes and is a serious problem that needs to reform, which is what is being determined for the U.S. to have a fair framework with China that can be used for other agreements.
  • USMCA and Section 232 Tariffs: Lighthizer said he is committed to working diligently to getting the USMCA through Congress, and there are provisions in place to move forward while the administration continues to negotiate with Canada and Mexico about steel and aluminum anti-dumping.

Witness

Opening Statements

Sen. Chuck Grassley (R-Iowa), Senate Finance Committee Chairman

In his opening statement, Grassley said he finds it critically important to continue monitoring the role of the World Trade Organization (WTO) and the role the U.S. plays in the overall body. He referenced the increase of trade over the last 25 years, with 98 percent coming from WTO members. Grassley said that while the initial intent was for the WTO to be a forum for negotiating trade, the organization has faced many challenges, causing disruptions to global trade. He stated his support and commitment for pushing efforts of plural-lateral e-commerce agreements, settling trade disputes, and application of WTO rules and agreements. However, Grassley stated his desire to update and reform the WTO in relation to “very serious” reforms needed to the appellate the body of the WTO

Sen. Ron Wyden (D-Ore.), Senate Finance Committee Ranking Member

In his opening statement, Wyden echoed many of the same views as Grassley, noting that WTO reform is “long overdue.” Wyden said that China joined as a “middle weight” economic country, but this is no longer the case, demanding reform to enforce China to hold true to its trade commitments. He referenced China hurting U.S. jobs and the economy through their use of state-owned enterprise, intellectual property (IP) theft, forced tech transfers, the “great internet firewall,” and their government “shake down” of foreign investment. Wyden said China identifies and seizes upon weaknesses to the WTO’s rules, and it is up to the U.S. and its allies to crack down on such violations, adding that he would like reform to see an end to global conflict, cheating, and fair and effective trade.

Testimony

The Honorable Robert Lighthizer, U.S Trade Representative, Executive Office of the President

In his testimony, Lighthizer stated the President’s record of trade surging since 2016, referencing 12.8 percent and 14.8 percent growth for exports and imports, respectively, as well as an increase of 2.5 trillion good and services, 264,00 manufacturing jobs, and a growing economy. Lighthizer said along with WTO reform, he and the administration are negotiating other trade deals such as the United States, Mexico, and Canada Agreement (USMCA), and a trilateral negotiation between the U.S., European Union (EU), and Japan. Lighthizer said the WTO is important but has significant inefficiencies, as over time the organization’s purpose has shifted. He stated five major areas for improvement: 1) repurposing the WTO’s focus from being a litigation forum back to a negotiation forum for new trade deals; 2) addressing high global tariffs; 3) country commitment to their obligations; 4) reforming the self-declaration of developing countries; and 5) the trade agreement dispute process. Lighthizer stated the administration is working diligently to reach new trade agreements to solve these problems and find sustainable solutions.

Question & Answer

WTO Reform

Sens. Chuck Grassley (R- Iowa), John Cornyn (R- Texas), Rob Portman (R-Ohio), James Lankford (R-Okla.), and Ben Cardin (D-Md.) asked questions pertaining to reforms the WTO should undertake and the relevancy of the organization. Lighthizer responded by stating the WTO supports policies that address the concerns of IP theft penalties, self-designating for developing countries that need assistance, acting as a forum that supports new trade multi-lateral agreements, and has global consensus for the appeals process. Lighthizer noted the need to create reform for e-commerce, agriculture, fisheries, and other global trade patterns that incentive global growth, not protectionist polies.

EU and Japan Trilateral Agreement

Sens. Ron Wyden (D-Ore.), Steve Daines (R-Mont.), John Thune (R-S.D.) and Grassley asked questions regarding the progress of negotiations with the EU and Japan. Lighthizer responded stating the trilateral agreement is on-going, but he would have to discuss specifics privately. He noted that addressing subsidies and market share under an agreement is very important, and the conversations are leading to many successful moving parts, but there are areas of stalemate for non-tariffs barriers, including the EU’s protectionism policies. Lighthizer said he will continue to work with Congress in addressing major concerns that need to be resolved in negotiations.

China and Section 301 Tariffs

Sens. Pat Roberts (R-Kan.), Bob Casey (D-Pa.), Johnny Isakson (R-Ga.), Catherine Cortez Masto (D- Nev.), Maria Cantwell (D-Wash.), Maggie Hasan (D-N.H), Sherrod Brown (D-Ohio), Debbie Stabenow (D-Mich.), Cardin, Portman, and Wyden asked questions about unfair and disruptive practices committed by China, enforcement, and a timeline for lifting of section 301 tariffs. Lighthizier said there is not an exact timeline, but he believes the negotiations are making progress and hopes to conclude in the coming weeks. He said the negotiations involve many U.S. Departments, including Treasury, Trade, and Agriculture, as well as the Chinese government. He outlined a structure which would address IP, tech transfer, currency manipulations provisions, access on services for companies, agriculture trade provisions, non-tariffs measure, and enforcement of the agreement. Lighthizer said the WTO trade remedy has failed in dispute processes and is a serious problem that needs to reform, which is what is being determined for the U.S. to have a fair framework with China that can be used for other agreements.

USMCA and Section 232 Tariffs

Sens. Bill Cassidy (R- La.), Stabenow, Thune, Cornyn, and Portman asked questions about ratification of the USMCA and the timeline of lifting section 232 tariffs. Lighthizer said he is committed to working diligently to getting the USMCA through Congress, and there are provisions in place to move forward while the administration continues to negotiate with Canada and Mexico about steel and aluminum anti-dumping.

For more information about this hearing, click here.