By Charles Benoit, CPA Trade Counsel
The American people don’t want to be dependent on China for things we need.
But some senior Republicans in Congress continue to choose multinational corporations over Americans. By extension, they’re also choosing multinationals’ fealties to the Chinese Communist Party (CCP).
The current GOP troubles started last summer, when Senator Mitch McConnell, the top Republican in the Senate, and Senator Mike Crapo (R-ID), the top Republican on the Senate Finance Committee, pushed to get their “Trade Act of 2021” into a larger Senate spending bill.
CPA raised the alarm about the disastrous provisions in the amendment.
Regrettably, only four Senators voted against the Trade Act of 2021 when it was added as an amendment to the U.S. Competition and Innovation Act (USCIA). Those four who saw the amendment for what it was were Senators Cotton (R-AR), Hawley (R-MO), Rubio (R-FL) and Sanders (I-VT). Senator Hawley (R-MO) called it out for what it was:
“I can’t support a bill that harms American workers and cuts tariffs on products made in China in the name of ‘increased competition.’ For decades, US policy makers have watched as millions of American jobs were shipped overseas, corporate America sold out to the Chinese Communist Party, and our industrial economy was replaced by slave labor in Xinjiang. We must correct the failed Washington consensus that has allowed Beijing to thrive at the expense of working Americans.”
Senator Crapo is carrying water for the U.S. Chamber and Business Roundtable in attacking our China Tariffs
Senator Crapo took particular aim at President Trump and President Biden’s maintenance of Section 301 tariffs against Chinese imports.
Our Section 301 tariffs are actually quite modest; they apply to less than half of what China sends us annually. Considering the damage and ongoing threat posed from the CCP, our Section 301 tariffs should be a ‘first step’ in any sane world.
Nonetheless, despite being modest, they also happen to be the strongest action against unfair trade imports America has ever undertaken, bringing in over $110 billion in extra government revenue since their implementation. This is a testament to how we’ve historically let others run over us while they break all the trade rules.
The $110 billion figure is why multinationals and their representatives like the Business Roundtable and U.S. Chamber are incensed that the tariffs have survived President Trump into the Biden Administration, and why they’ve turned to their allies in Congress like Senator Crapo to dismantle them and ensure they can never be used again.
Crapo says his Trade Act of 2021 will provide “oversight over U.S. trade policy by providing an inspector general to the USTR, and by ensuring the application of section 301 tariffs related to China are calibrated”. He goes on to assure multinationals that his bill “restarts and reforms the Section 301 product-exclusion process.” Here, Crapo is referring to Title III of his trade bill, and it’s by far the worst – which is really saying something! To get into specifics:
- Section 73001 dismantles our existing China tariffs, and puts an extraordinary burden on USTR to deny importers’ exclusion requests going forward. The Section also requires USTR to consider the benefits of cheap imports for consumers, even if rules were broken.
- Section 73002 would give Congressional leadership more levers to pull against a future President who decided to use Section 301.
- Section 73003 establishes an Inspector General in the Office of USTR, making it much more unlikely that a USTR would want to risk exposing herself by imposing tariffs.
- Section 73004 would create “national account managers” at Customs and Border Protection, whose job it would be to specifically serve the biggest multinationals.
- Section 73005 gives added secrecy to importers’ filings.
- And finally, Section 73006 passes on the “sense of Congress” what we should remain in the World Trade Organization forever, whatever may come.
Alarmed by the assault on our trade defenses, President Trump’s own USTR, Bob Lighthizer, penned an op-ed in the New York Times titled “America Shouldn’t Compete Against China With One Arm Tied Behind Its Back” to warn voters against it.
Senator Crapo’s trade bill did far more damage beyond destroying Section 301 and our China tariffs.
Senator Crapo’s bill makes it harder to stop slavers’ exports
Senator Crapo said his bill “bolsters efforts to prohibit goods made with forced labor from reaching the United States by strengthening our Customs and Border Protection (CBP) enforcement efforts”.
The truth? The bill does the opposite. Specifically, Sec. 71001 sets up new, onerous hurdles before CBP can begin an enforcement action. What is now properly a CBP law enforcement action would become subject to diplomatic restraints and State Department consultations.
Senator Crapo’s bill diverts USTR resources to lobbying for Big Tech with foreign governments
Senator Crapo boasts that the bill “appoints a USTR official to oversee information communication technology”. He’s referring to Subtitle B of the bill, “Addressing Censorship and Barriers to Digital Trade”. What this section actually does is put a Big Tech representative inside the offices of USTR. This is worse than it sounds, once you understand USTR’s resource limitations. If our manufacturers have a problem in Europe, for example, that problem would have to compete within USTR against Big Tech’s problems in Europe.
The Trade Act of 2021 disarms American trade defenses in other ways: see our warning from summer 2021 for a deeper dive.
There’s reason to be hopeful Trade Act of 2021 won’t make it in the House
Unlike GOP Leadership in the Senate, House Minority Leader Kevin McCarthy, a Republican from California, has been willing to distance himself and the party from the U.S. Chamber.
And House Ways & Means Democrats – who are in charge – wasted no time in expressing their displeasure with the Trade Act of 2021. They did this while introducing their own reforms to two of the trade programs affected by the Trade Act of 2021. The Democrats’ proposals would leave our China trade measures alone, and even make other programs better.
As we head into the 2022 primaries, GOP leadership must quit serving as a loyal opposition on behalf of multinationals
As we begin this critical mid-term year, GOP primary voters need to make their voices heard on trade. Don’t settle for the usual platitudes. Ask your representative why it’s alright that the United States is committed to the lowest bound tariff average of all WTO countries, at just 3.4%. Ask them what their plan is to demand fairness and reciprocity at the WTO. Ask them if it makes sense to depend on China for things we need. If they say it doesn’t, then ask them why they voted for the Trade Act of 2021. It’s not too late to keep this thing dead. Now is the time to speak up.