USTR Defends Ag 'Singles and Doubles'

WASHINGTON (DTN) -- U.S. Trade Representative Katherine Tai heard from members of the Senate Finance Committee on Wednesday about the lack of negotiations to open new markets for U.S. agricultural products and the lack of enforcement actions against China.

Responding to bipartisan concerns, the Biden administration launched an investigation Wednesday to explore increasing tariffs on imports of steel and aluminum from China -- the first major action against Chinese trading practices in three years. The White House called on the USTR to triple the tariff rate from 7.5% to 25%. That would be on top of a 25% tariff on steel and a 10% tariff on aluminum brought by the Trump administration. The action is known as a "301 investigation" based on Section 301 of the Trade Act of 1974, which addresses unfair foreign practices that affect U.S. businesses.

The White House stated American workers continue to face unfair competition from Chinese imports of steel and aluminum products and U.S. products are undercut by artificially low-priced Chinese alternatives produced with higher emissions.

Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee, noted China has a "rap sheet" of unfair trade practices and he called on the Biden administration "to play offense" when it comes to dealing with competition. He also called on the USTR's office to "shed more light on trade policy" rather than sending out generic statements about "bilateral agreement" to keep talking about the same issues.

"There is a lot more USTR could be doing in my view with the tools that it has," Wyden said.

Sen. Mike Crapo, R-Idaho, said he agreed "wholeheartedly" with Wyden. He said there is a lack of enforcement at USTR and almost no actions against Chinese policies until Wednesday's actions.

Tai took repeated questions from senators over the lack of any larger free-trade agreements (FTAs) under Biden's three-plus years in office, as well as the decline in U.S. agricultural exports over the past year.

Tai noted in her testimony that U.S. agricultural exports totaled $174.9 billion in 2023, and the Bien administration has won over $21 billion worth of new agricultural market access in the last three years.

Sen. Debbie Stabenow, D-Mich., chairwoman of the Senate Agriculture Committee, also representing a major automotive manufacturing state, complained about the "heavy, heavy subsidies" to Chinese automakers that threaten the fledgling electric vehicle (EVs) market in the U.S. "Allowing low-priced Chinese EVs to flood the market would cost thousands of jobs," Stabenow said, also adding it is a risk to national security if Chinese EVs had technology that could track the Americans who drive them.

China has a pattern of diving heavily into production in certain industries -- steel and aluminum, solar panels or semi-conductor chips -- and uses "exactly these same anticompetitive practices" that lead to enormous amounts of Chinese government support to overproduce then flood the world market with cheap products, Stabenow said.

"We know we are facing this again on autos and EVs," Stabenow said. "We have to take action or we are going to lose the capacity to produce and compete." She added, "We are looking for a level playing field."

AGRICULTURAL TRADE

Farm groups earlier in the week wrote to lawmakers to complain about the lack of trade negotiations from the administration.

Tai repeatedly told senators when it comes to agricultural trade the Biden administration is "scoring singles and doubles" with trading partners.

"We are scoring wins for them without having to do the long negotiations of a free-trade agreement," Stabenow said.

Under questioning from Sen. John Cornyn, R-Texas, the trade ambassador also explained her philosophy and the administration's view that full-blown free-trade agreements are not effective for expanding markets.

"The traditional FTAs we negotiate continue to pit Americans against Americans and sectors against sectors in a way that is entirely unsustainable," Tai said.

Cornyn and other senators countered that without trade agreements there is no enforcement mechanism when a country doesn't adhere to a deal struck to buy more products or lower trade barriers.

Tai said the Biden administration's negotiations have gotten quicker access, such as lowering tariffs for some products in countries such as India. Other agreements also have helped boost beef and ethanol exports to Japan as well.

FTAs ARE NOT AN EASY FIX FOR AGRICULTURE

Sen. John Thune, R-S.D., talked about agricultural trade. He noted the "strong dollar" is one of the reasons raised by the administration that U.S. agricultural exports have slipped while imports have grown.

"The way you create demand is open markets and I can't tell the administration is doing anything on it," Thune said, pointing to possible low-hanging fruit that could come from trade deals with the United Kingdom or European Union, for example.

Responding to Thune, Tai said, "There are no easy FTAs" or low-hanging fruit. Tai pointed out talks between Canada and the United Kingdom broke off because "the UK won't talk ag market access." In trying open talks with the European Union under the Trump administration, the EU also did not want to put market access for agriculture on the table.

"I think our farmers are the savviest businesspeople that I talk to and work with in the trade. They know their businesses and they know the trade," Tai said.

Pointing to the growing agricultural trade deficit, Tai said, "We're concerned about the deficit, absolutely. I just wish our ag champions were as concerned about the industrial trade deficit as they are with ag trade."

Thune said South Dakota farm groups don't think the administration is effectively opening markets. "I think that ag always ends up at the end of the line," Thune said.

Sen. Chuck Grassley, R-Iowa, asked about lowering tariffs on U.S. exports to Brazil, which increased its duties on ethanol from 16% to 18%, but Brazil is exporting ethanol to the U.S. tariff-free. Grassley raised concerns about more Brazilian ethanol coming in to meet California's low-carbon fuel standard or aviation fuel.

Tai said, "This is a high priority for the administration. We're also seriously concerned about market access restrictions."

AG RELIES TOO HEAVILY ON CHINA

Sen. Marcia Blackburn, R-Tenn., said China is not living up to its agreements under the Phase 1 trade deal signed under former President Trump. She said purchase commitments were not met. "We have cotton and soybean producers saying 'Hey, wait a minute, who is going to stand up for us?'"

Tai said one enforcement tool is that the Biden administration has not lowered the 301 tariffs on China put in place under the Trump administration despite repeated calls to lower those tariffs.

"Over the past three years we have faced a lot of calls to release the tariffs on China, and the point we have made over and over again is we do not see actions from China that would merit us going easier on them," Tai said.

While Tai also repeatedly said bringing World Trade Organization cases against China has not resulted in any changes of behavior, Sen. Jim Lankford, R-Okla., told Tai there is a "messaging portion" of taking actions against China.

Tai also said she and Agriculture Secretary Tom Vilsack agree there is an "overreliance" in China when it comes to agricultural exports. Vilsack told reporters earlier this week that U.S. agricultural exports were down about $6 billion in the first quarter of the fiscal year. The loss in value basically matches the decline in purchases by China.

Also tied to trade, Sen. Ben Cardin, D-Md., talked about the Baltimore harbor accident and shutdown on March 26, closing a key port for exports. Cardin said the port could be opened to 75% of capacity by the end of the month and 100% capacity by the end of May. He said the bridge collapse after being hit by a cargo ship has impacted 20,000 jobs.

Also see, "Ag Secretary Criticizes House GOP Study Group Plan to Slash Farm Programs," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com.

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