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Senator Rob Portman on U.S. Trade Policy

Senator Rob Portman on U.S. Trade Policy

Hudson Institute

Remarks as prepared for delivery by Rob Portman, United States Senator for Ohio, at Hudson Institute on November 28, 2018

Thank you, Dr. Ken Weinstein (President and CEO, Hudson Institute) for those kind words.

I’m honored to be with so many trade experts to discuss an issue that is important to all of us here today—and to the United States and every county across the world.

Thanks to the Hudson Institute for hosting us at this great venue as well as the American Institute for Contemporary German Studies for co-hosting this event.

Our U.S. trade policy has gotten a lot of attention recently as the administration has sought to reshape trade on four main fronts: updating NAFTA, using a national security exemption to our trade laws to impose global tariffs, rebalancing trade with China, and negotiating new trade opening agreements.

We have a lot of balls in the air as far as our trade policy is concerned—so many that it’s caused uncertainty with our trade partners and with the American businesses and workers that rely on trade.

That’s why I was pleased when one of those issues was resolved recently when the administration announced an agreement to update NAFTA.

I believe the U.S.-Mexico-Canada agreement updates and improves upon NAFTA, and I think passing the necessary implementation as soon as possible is important to allow us to focus on our other ongoing trade issues.

One important thing of note in the USMCA is the commitment to provide a safe harbor for a certain amount of auto and auto part imports if there is a Section 232 tariff on car imports from Canada and Mexico. Left unresolved is the steel and aluminum 232 tariffs—though Mexico reportedly won’t sign by the end of this week unless there is a resolution of 232 on steel and aluminum.

Section 232 is what I want to talk with you all about today—the use of national security tools to impose tariffs on our trading partners across the globe.

My views on trade are simple. I believe we need to open new markets to our exports while simultaneously vigorously enforcing our trade remedy laws.

With only about five percent of the world’s population, we want access to the 95 percent of consumers who live outside of the United States.

We have a trade surplus with countries with whom we have trade agreements, and I’ve supported more bilateral agreements to open markets to U.S. exports. As co-founder and co-chair of the Senate UK Trade Caucus, for example, I’ve urged the administration to pursue a trade agreement with the UK, and I recently led a letter with 18 of my Senate colleagues reinforcing that.

As I mentioned earlier—new trade opening agreements are on the agenda, and I’m pleased that last month the administration signaled its intention to seek separate trade deals with the UK, the EU, and Japan—and I know that is of interest to you all here today.

As we open new markets, we also need to ensure our trading partners respect our laws and play by the rules, instead of subsidizing favored companies to give them a non-market leg up on their American competition. And we need to be tough but targeted on countries that cheat.

If we have a level playing field, I believe American workers and businesses can compete—and win.

I have crafted bipartisan solutions to help provide that balanced approach on trade that I’m talking about. In 2015, I co-authored the Leveling the Playing Field Act, which helps on the front-end by making it easier for workers and businesses to win cases before the International Trade Commission when foreign companies send us products that are dumped.

I also co-authored the ENFORCE Act in 2016, which helps on the back-end by ensuring that once workers win trade enforcement cases, the new duties on foreign imports are actually enforced.

That’s how I believe trade enforcement should work—by using the targeted tools at our disposal to hold accountable countries that dump or subsidize their goods or otherwise create an unfair trade advantage.

What worries me are broad worldwide tariffs placed on trading partners under a unilateral claim of national security. We are seeing that currently as the administration has used Section 232 to impose a new 25 percent tariff on steel and 10 percent tariff on aluminum imports worldwide.

For certain countries and certain products, I believe there is a targeted national security issue with steel—electrical steel, which is critical to the grid may be the best example. Only one U.S. manufacturer remains—and they say they will go out of business without some relief. But broadly imposing tariffs under Section 232 has two negative consequences. First, other countries retaliate by putting tariffs on our products, which we’ve already seen with Canada, the EU, and more.

Second, we risk losing the tool for legitimate national security situations, like a time of war. By misusing the tool, we risk the World Trade Organization, or WTO, stepping in and changing the WTO rules to take away what I believe is an important national security tool.

Just last week, the WTO agreed to investigate the U.S.’s use of 232 steel and aluminum tariffs after the EU, China, Canada, Mexico, Russia, and Norway issued formal challenges.

The WTO’s eventual decision could result in more countries placing tariffs on American products for national security concerns, the loss of the national security tool, or even the possibility that the U.S. withdraws from the WTO.

None are outcomes we want, and that’s why I introduced the bipartisan Trade Security Act.

This legislation would reform the Section 232 tariff process to ensure it is used for legitimate national security purposes and expand congressional oversight to prevent its misuse.

There’s a reason Section 232 tariffs have only been used six times since the tool was enacted in 1962—and expanding its use to autos and auto parts as the administration has suggested doing is the wrong decision.

Finally, with regard to the Section 301 case against China, the administration has an opportunity to right the ship and rebalance our relationship for future trade. I support involving allies on our side of this dispute and making this a multi-lateral case.

Republican and Democrat administrations alike have tried to get China’s attention on the trade issue and failed. China has been violating and circumventing our trade laws for decades. I think the Trump administration now has China’s attention, and I think that’s primarily because the president has taken a firm stand.

I do have concerns about some of the collateral damage these tariffs can do to folks trying to make products in America, but I think this assertiveness on China is needed.

As Vice President Pence said at an APEC CEO Summit earlier this month, “The United States will not change course until China changes its ways.”

Temporarily reducing the trade deficit by increasing Chinese purchases of American soybeans and natural gas, while a good thing, will not resolve this trade dispute.

Instead, the United States should push for structural changes to the Chinese economy to reduce the ways Beijing distorts the economy in its favor and tilts the playing field away from American workers.

So that’s an example of where I think it is in our country’s interests—and our national security interests—to crack down on unfair trade, but we have to be careful about going too far.

The title of today’s convention is “Trade and National Security: Can We Have Too Much of a Good Thing?”

Trade and national security are both obviously good things—and I think we need more of them.

We only have trade agreements with 10 percent of the world, and yet we send nearly 50 percent of our exports to our free trade partners. Many of the countries we don’t yet have trade agreements with are developing countries—and they are often who could benefit most. We want to expand our export markets and develop trading relationships with more countries.

So, yes, trade is very important, and national security is clearly important—but we shouldn’t look for ways to artificially conflate the two, especially when that could result in damage to the very national security and trading relationships such action is designed to protect.

No one understood this general principle better than the drafters of the precursor to Section 232 did. During the debates over what would become Section 232, the Chairman of the Ways and Means Committee at the time gave instructions to future generations of trade policymakers.

He said national security-based trade actions, quote, “must consider the impact of that decision on our total foreign policy, and on the economies of the nations of the free world that are allied with us…keeping in mind that any modification of a duty on imports or a quota would inevitably result in the curtailment of exports by the United States. Such actions would not only be a burden on domestic industry to its economic disadvantage but would be to the disadvantage of our national security.”

I think it would be wise to heed his words.

Ultimately, good trade policy is about finding a balance: opening up new markets for American hard work and ingenuity to be shared with the rest of the world—and ensuring that our workers, farmers, and service providers can compete on a level playing field.

Trade enforcement, too, should be balanced—and our national security shouldn’t be used as a political chip to tilt trade in our favor and risk losing important tools for legitimate national security concerns. I hope moving forward we can find that balance.

Thank you, I’m happy to take any questions you have.

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