(As prepared for delivery)
This hearing comes at a critical and fascinating time in the U.S.-China trade relationship. Later next week will mark the 20th anniversary of China officially joining the World Trade Organization.
To put it mildly, the results of China’s two decades at the WTO have left much to be desired.
Instead of joining other market-based world economies, China has doubled down on its state-driven economic model. Economists now describe this phenomenon as the “China shock,” which has had devastating and sustained impacts on U.S. workers and businesses across our country.
Twenty years later, China’s approach has not changed. If anything, it has expanded. While the global economy is still dealing with steel and aluminum overcapacity caused by Chinese subsidies, China is doubling down on this approach with its “Made in China 2025” which has expanded its industrial model to focus on key sectors of the future.
More broadly, China continues to demonstrate that it refuses to play by the rules. China will exploit loopholes wherever they exist. We’ve given too much of a free pass to China over the years – it’s now time to take these issues seriously and take a more aggressive approach.
The testimony of our witnesses today highlights some of these problems. Ms. Glas has noted the example of Shein. This Chinese company has developed a business model to exploit the de minimis provision in U.S. law to avoid paying any costs or go through oversight at the U.S. border, all of which undercuts U.S. companies playing by the rules.
Shein is also part of a Chinese textile industry that benefits from the deplorable treatment and forced labor of Uyghurs and other minorities in the Xinjiang region of China. Lack of oversight at U.S. borders makes it even more difficult for CBP to intercept these shipments.
These issues with de minimis and forced labor are key areas of importance for me and ones that I intend to legislate on in the coming months.
Dr. Mallory highlights another area where China continues to break the rules: fisheries practices and subsidies. It’s a similar story to other industries: China will take public steps to claim adherence to international rules and commitments, but through obfuscation and an overall lack of transparency, avoids actually taking meaningful action.
Twenty years on, it’s clear to me that China is committed to its state-driven economic model and that the United States must change its approach to effectively grapple with this reality.
The Trump Administration highlighted many legitimate concerns with China’s trade practices, but its approach was too haphazard and chaotic to be effective. They refused to address labor and environmental issues in China and were entirely unsuccessful in addressing China’s industrial policies.
Equally troubling, the Trump administration went it alone labeling our allies as national security threats and leaving them in the dark.
The Biden Administration has provided a breath of fresh air. Ambassador Tai has completed a thorough review of the China policy she was handed and is creating a rational and coordinated strategy.
Importantly, the Biden Administration is working with our allies to identify areas of convergence and to increase pressure on China with a coalition of concerned partners.
There’s much more that the Administration must do on China, and I stand ready to work with them to do so. As always, the key to effective and lasting U.S. trade policy is close and consistent coordination with Congress.
Congress also has action that it can take to respond to the challenges posed by China. The Senate has been working on the United States Innovation and Competitiveness Act, or USICA, but the trade provisions in that bill are inadequate and fail to rise to the current moment.
For one, USICA does not include meaningful provisions on forced labor in Xinjiang. This is a critical defect. The House of Representatives has developed strong legislation has substantial support among Democrats and Republicans.
In addition, USICA’s trade title includes GSP and MTB legislation without making key reforms. I have introduced legislation that makes critical and reasonable reforms to both programs that must be included in any reauthorization.
I stand ready to work with Members on China-related legislation, but it must address the issues I’ve identified above and take steps to address key issues, like subsidies, that the current bill fails to address.
I look forward to hearing from our witnesses on these issues as we consider ways to more effectively address unfair Chinese trading practices.
With that, I’ll conclude my opening remarks.
Let me now yield to my friend, Ranking Member Buchanan. Vern, you are recognized for five minutes for your opening statement.
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