USTR Katherine Tai Tells Senate Committee: Free Trade a “Beautiful Dream”

By Matthew McMullan
Apr 17 2024 |
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Ambassador Katherine Tai spent a second day outlining the Biden administration’s trade agenda on Capitol Hill.

Early in a Senate Finance Committee hearing Wednesday morning in Washington, D.C., U.S. Trade Representative Katherine Tai took a question from Sen. Debbie Stabenow (D-Mich.) about the economic and national security risks that would come with an import surge of electric vehicles (EVs) made by the burgeoning and heavily subsidized Chinese auto industry.

How does President Biden’s 2024 trade agenda, the senator asked, address such a looming threat?

This was Tai’s second day of presenting that agenda to Congress. Much like in her earlier hearing before the House Ways & Means Committee, she fielded Members’ questions about the trade of products and items varying from shrimp and potatoes to titanium sponge.

She again supported a reauthorization of the expired General System of Preferences (GSP) trade program, and again encouraged Congress to also reauthorize the also-expired Trade Adjustment Assistance (TAA) program. Tai also repeated that a conclusion of the four-year review of the Section 301 Chinese import tariffs was close. There was some movement on that Wednesday, too, as President Biden announced at United Steelworkers headquarters in Pittsburgh that he was asking Tai to triple a tariff rate on specific imports of Chinese steel and aluminum.

But all of Tai’s comments through both hearings followed a common idea: The administration sees trade not simply as a means of market access, but as a program to make the American economy fairer.

And the ambassador’s answer to Stabenow regarding Chinese auto imports got right at how it sees trade. Here it is, in part:

“We know that we’re facing this again on autos and EVs. We have to take action. Leaving these types of policies unchecked, we already know what’s going to happen. We’ll lose capacity to produce and compete, and when we lose it, it is so hard to rebuild. We need to take early, decisive action and we have to be clear about why we’re taking the action.

“We are looking for a level playing field because the current playing field is not level. For all the talk about free trade being the ideal, it’s a beautiful concept, but it’s also a beautiful dream because the world economy is not characterized by free trade, particularly when you look at the practices leading to the dynamics we’re seen on (Chinese) autos and EVs.

“This is a significant animating principle for us as we look at our tools at USTR, how we support American manufacturing industries and manufacturing workers. And it’s also a principle in how we can partner with other economies who share our structures and values, both politically and economically.”

Ambassador Tai’s testimony came only a few hours after her office announced it would open a Section 301 investigation into the anticompetitive practices of the Chinese shipbuilding industry, in response to a detailed petition filed by the United Steelworkers and four other U.S. unions last month. You can read more about that announcement here.