Transcripts For CSPAN2 Forum Considers Future Of U.S. Trade Policy 20170808

[inaudible] it afternoon. Welcome, glad to see everyone here. If nothing else you are staying out of the washington heat in the airconditioning and enjoying the launch. My name is john. Im a professor of economics, business, Public Policy at georgetown universitys Mcdonough School of business. Im also the executive director of our Host Institution today, the Georgetown Center for business and Public Policy. We are delighted to have a discussion on something very important, near interior to the Georgetown Center, that is the subject of trade policy. In particular, we will examine the issue of trade remedies, think tariffs, quotas, and the like, remedy unfair trade practices. Or, are they themselves simply protection policies. Todays panel will be moderated by my colleague bob, he senior industry fellow at the center, he has taken a lead in promoting and advancing the georgetown hill and has gotten so popular over the years. Again we are glad to have you here. I wont steal bobs thunder but in terms of introducing the panelist jose its an extraordinary Blue Ribbon Group of people we will be talking with today. When we looked at the list of registrants for today, we saw a number of experts in the audience. We wanted to make sure to have ample time for questions and answers. In that regard, we would love to hear from you. Before mean your questions as you can the panelist speak, but when it is time for q a, please do the following. These razor hand and wait for microphone to be brought to you. This event is being recorded and being broadcast live. It is a nice idea to identify yourself and identify your organization. With that, i will turn it over to bob who will introduce the panelists. Thank you. Thank you john. Thanks everyone for being here. We are writing a dramatic wave of change in u. S. Trade policy. Some think this bodes well, others think it will rip the fabric of our business relationships with countries deemed to be taken advantage of the u. S. , such as treaties like nafta. From this point of view i call your attention to an editorial in todays wall street journal. At the core of the controversy is the role of trade remedies. These are provisions in u. S. Law that allowed the u. S. To remedy Foreign Trade practices or something that may threaten the nations security. These are enacted by congress over decades, while they are an accepted pillar of u. S. Trade policy, many believe at the end of the day they dont benefit the u. S. Economy. So, they have continued and contained provisions that allow the executive, the president , to provide a restraint by tempering their reach and the impacts the remedies in the national interest. Now, we are in a position where the president seems not to be interested in restraint. I quoted Business Group on monday. For decades, washington has allowed other nations to wipe out millions of american jobs to unfair trade practices. Wait until you see whats up for you. Today, we have a panel representing different viewpoints. A begin by introducing briefly members of the panel starting in my rights. The first is chad, who is at the Peterson Institute for International Economics of the senior fellow. By the way, the bios are more complete in your hand out. He served previously as senior economist at the white house and on the council of economic advisers and most recently as a lead economist at the world bank. Steve is a partner and former trade council to the house ways and means committee, subcommittee and trade. Im glad to say that i have been able to work with him over a number of years. He is now assisting International Trade law and policy clients. Next, is tom who is president of the u. S. Trade the, he asked me not to try to pronounce that. And organization of manufacturers, workers and others dedicated to enhancing u. S. Trade laws. Hes been engaged in u. S. Steel policy for many years. Next is bill, a distinguished fellow he works principally with the trade policy initiative, he served for a long time as president of the national Foreign Trade council and was an assistant secretary of commerce. Im glad to say that i have known him for a long time. Weve both work for distinguished senators. Finally, we have nelson cottingham, im confused by the paper, his cofounder of a Prominent International Strategic Advisory firm, prior to that he served in the white house a special advisor to president clinton on western Hemisphere Affairs and as general counsel. He is a very wide and wellestablished reputation in this field. Very glad to have him and the others with us today. Will have opening remarks from each. When that is complete will turn to the audience for questions. For being here. Thank you. By the way, can i remind you to punch a button, the green light will then come on. Thats essential. As john said this is being televised. Thank you for the opportunity to be here and to share the stage with the panel. My name is chad, senior fellow with the Peterson Institute. My life and researches on this topic of trade remedy. The first question is what are trade remedies . We think of them as being antidumping, and a Global Safeguard. Antidumping is the policy and import restricted policy that governments use to do without fair trade, lowpriced imports and duties are unfair traits that are subsidized imports subsidized by global governments. Then a Global Safeguard is nothing unfair but its a surgeon imports. These are policies the United States is used for decades. The policies that governments around the world use. Their special rules that allow governments to use these under trade agreements. In particular the wto and the gatt, but this is nothing new. What i have done for the last 15 or so years study these things. I belted public database that people can look into these things. What i thought i would do in my time is describe what we are seeing in the data on what we think it might mean for the United States, the Global Economy and in light of changes happening now under the Trump Administration. Even before the Trump Administration came into effect, countries used antidumping duties in the United States is no different. The worlds most wicked use of these type of policies. Over the past few years the United States has started to use these to restrict more imports than normal but nothing out of the ordinary. We have not used them all that much. With one exception. That is to deal with imports from china. The main target of the United States use of antidumping and countervailing duties since the wto in 2001 has basically been china. For the United States these trade remedy policies have been an anti china policy to do with imports coming in from china. Even though the export growth has been tremendous, and by estimates as the end of 2016, about 9 of u. S. Imports from china are being dealt with through these types of policies. These claims by the Trump Administration that no Previous Administration has done anything about imports from china is untrue. Getting back to the Bush Administration, these policies have been used to slow down imports from china. Now, there are current problems in the Global Economy that we can attribute some to china. We can talk about the overcapacity problem in steel, and alumina. But theyre just symptoms of deeper problems which are china is a different type of economy than the United States, western europe, market oriented communities. When they came in at 2001 there is an expectation that china might become more like us. But it has not happen automatically. So, we are at a critical juncture today, 15 or 16 years after the entry into the deputy of about what to do about the fact that it has not become a market economy. Are the rules adequate to deal with that . Those problems wouldve been there regardless of who won the 2016 election and whether or not we had these issues of steel or aluminum overcapacity. Other administrations have used these duties. When the Trump Administration came into office chose to do things differently. They are using antidumping duties but in their use of these policies they have escalated public rhetoric. Many probably havent heard of trade remedies because they fly under the radar. Not something that generate political attention. The Trump Administration has changed the indifferent instances. But recently it was about cases against canada and mexico on topics like lumber and sugar. The political escalation to the level of secretary commerce let alone the president is unprecedented. It raises the issue of foreign leaders having to get involved in these issues and becoming less technocratic. The second is they had pushed beyond using the more traditional trade roo remedies t are well known and understood and used by countries around the world, pushing into use of laws that we have not utilized. What i have in mind here is section 232 investigations. The national security, the threat that steel or aluminum imports are threat to the United States as national security. The investigation is ongoing under section 232 law. The last time was an investigation was in 2001. Spend a rarely used law. It provides tremendous discretion for the president to invoke sweeping sets of trade barriers if you were to choose. We can come back to the discussion about whether we think theres a security argument for stopping imports of steel were aluminum, im not of the view there is. The main reason i would argue for that is most of the steel and aluminum we import is not from our military adversaries. Because of policies like antidumping duties we have halted much of the steel and aluminum we might import from china from coming in. Most of the steel and aluminum we import comes from canada. Steel comes from mexico, germany, japan. These are not military adversaries, historically they have been allies of the United States and not a threat. Other initiatives of the Trump Administration in the realm of trade remedies in the section 232 cases is that the government self initiated the cases. Typically thats not time. Its rare. Typically these companies are labor unions that come forward and file the cases. But by trump bringing afforded themselves they have changed the playing field. They said to business, we are open for protection and trade barriers if you wanted to. In my mind, thats led to the next outcome, weve seen use or initiation of cases under the third trade law, the Global Safeguard law. Here we have two new cases, one on solar panel someone on washing machines. The last case we saw in 2001 on steel, much like today back then we had overcapacity problem in the Steel Industry. The george w. Bush and menstruation utilized section two oh one law to deal with that, the import search that was committed globally. But it was managed and done through normal channels. It didnt escalate out of control. Its different from what were seen today. The last one i want to make about trade remedies to set the table to highlight how important they are in the contemporary discussion, is what happened this week when the u. S. Trade representative released their negotiating objectives for nafta. The new nafta the trus trump negotiation is going to negotiate with canada and mexico. On page 14 of that, theres a subsection called trade remedy. The two main proposals, want to eliminate chapter 19 which is a special dispute settlement in which any of the nafta countries can challenge or investigate antidumping and restrictions that can impose on their exporters. This has served as a balance to make sure the abuse of those remedies doesnt happen. The second was to end the current provision which is to say when countries impose a Global Safeguard they generally end up exempting other nafta countries. Think back to the Bush Administration of 2000 wanted to, the steel safeguard import restriction it was a 30 tariff imposed on countries run the world with the exception of our Free Trade Agreement partners. The Trump Administration would like to remove these elements which in my mind are negative signal and it suggests one of their main interest are making it easier to reimpose trade barriers against canada and mexico. In particular and hurt trade in the north american region with that i will stop and hopefully that sets the stage for some of what were seeing. Thank you. Thats very good. Thank you. Im pleased to be here under the offices of my two favorite institutions, georgetown and the house of representatives. Very good years in both places. Im going to make three pedestrian points, think it will help us keep everything in context for the later conversation. The first point is that everybody is for rules based trade but we reserve the right to pick the rules i would like a note like. In the case of the remedy rules, there is a dividing line and its defined by how you answer the following question. Do trade remedies distort free trade are protected enable free trade . Better but has created sharp opinions. If you believe trade remedies distort free trade then the other side consists of lazy, incompetent throwback, unable to cut it in the Global Economy, unwilling to try and driving up costs for everybody else. If you believe remedies enable free trade than the other side consists of a naive ideologue that would vote to repeal the anti smuggling laws, take receiving stolen property out of the criminal code. Very few people have been known to cross that line. The 232s, if nothing else have certainly calm down the anti abcd e language. For the first time in 15 or 16 years ive heard something favorable set about the steel to zero one. A number of organizations that have weighed in against the 232 have spoken favorably of the loss. Just quoting one, this is from the group not known to be advocates, these laws have established requirements for assessing the appropriate scope and level of remedies. Thats progress in my opinion. The only people have changed their mind on the subject across that divide fall into three categories. One, people who change professional jobs. We had someone at the American Steel institute who went to the American Institute for international steel. The putting body offices higher the cabinet but we had no trouble refuting his arguments because we used his old papers against him. Industrial people who have had their products brought into play that goes downstream and upstream. There are a lot of steel users who form it into their products have always been opposed to steel dumping because it raises the price of their inputs. Now, theyre filing their own cases because china has lowered some of his targets into the downstream market. Similarly, we had a steel exec who had just joined a isi and who called up in anger because the alloy industry had filed the trade case and this was going to raise the price of inputs. We find that where you stand in the chain of the movement of that product from raw material into the consumers hands has a lot to do with how you see the trade us. Finally, there are elected politicians have been known to change their mind on the trade thus, usually and responsibly go forces in the constituency. If anyone today changes their mind from the other side to my side, i will buy you a real launch. The second point i want to make is the strict enforcement of trade has the disproportionate impact for trade liberalization. It is true the specifics of certain cases fly beneath the radar screen, but dont think that people dont have a sense of whether there being cheated out of their jobs and whether the government is doing anything about it. There has been talk since the election that the job losses due to downsizing of the economy are productivity gains or people dont realize how much they benefit from liberalized trade. All of that is true. It would be a mistake to underestimate the impact of the knowledge that there is unfair trade in the market and it has not been adequately addressed. A group called the alliance for American Manufacturing which ive been involved in, they conduct polling Public Attitudes will be fracturing. They been doing a long day for the last election. Every year, theres a super majority of americans entering that survey and saying yes they believe some trade is unfair, yes they believe the government ought to be doing something about it, yes, they will vote for a politician who feels that way about it and yes they will but against a politician who doesnt feel that way about it. So these polls have been shared with political campaigns every year. Especially in president ial years. This past year both major candidates finally read them and embrace them. There was a bidding war on trade enforcement that weve been trying to instigate for decades. The fact is, one of the candidates read and exploited it better than the other. Here we are. The third point is that besides popular support, there is pronounced political support. Here we are into an academic institution. Were arguing whether revenue laws are protectionist or not. So most an academic exercise and will be for the next two or three years. The fact is, the Congress Even lobby for the selection congress has repeatedly made clear that it is an intent that these must be stay strongly in force. Five years ago the federal judge said the Commerce Department had never been authorized by congress to bring instant tie subsidy cases against china. He said if the congressman to do that they should pass a law. Two months later, at the beginning of 2012 which was the Election Year for president obamas reelection, totally partisan environment, that law passed. Unanimous consent in the senate code returned to the acquired ratio, it makes sense that members of congress would feel that way about the tradeoffs. They didnt want the trade laws undermining, they pass legislation that beefs of the energy test. Just the other day, the House Appropriations committee embraced secretary ross request for more money for enforcement of coupon notes. Also they made the following language in the report. The committee instructs the ita to make the enforcement of antidumping duty the highest priority and recommends they focus on expeditiously reducing caselaw and backlogs that investigating into which trade the evasion harms to mystic industry. So, substantively, from a political point of view, we are in an era where you can expect aggressive prosecution, either self initiated or not. I think we should find a way to see how that supports popular support. Thank you. Its an honor to be back here in hell. Its been a while. I will deal with the question of whether the remedies correct unfair practice that alters the behavior we dont like. Im going to try to talk about economic effects and political effects and behavioral effects. They kind of overlap on the economic side using the term correction might be asking too much. Chad noted and im talking primarily about here they are authorized by rules of the justification for the has been that the purpose has been to offset the impact of the unfair act so the duties are opposed to the extent of the subsidization is found and also if injuries found. You have to approve harm and crime but the consequence and the tariff is not a penalty as much a citizen offset. Theres an academic argument that the amount of the duty should only be that to offset the injury rather than to offset the dumping. But the rules permit offsetting the full amount of the dumping or substitut subsidization. Today work . First, that depends on what you mean by work. As an offset to the have limitations, they are intended to offset the crime. They are not intended to save the industry, restored to his former glory. That might happen but it would be a happy side effect. Not the purpose of these provisions despite what some people will say about their intention. The more important thing to say about whether they work, they dont work if theyre circumvented. That makes enforcement a large part of the issue. Theres a large ways to circumvent orders. Some are illegal under most countries domestic laws because they involve fraud. Like mislabeling or line about the contents of a container. Other things like shipping ghost with their country and relabeling them is a popular activity, particularly in steel as well as making changes of a product in a second country to reclassified as something thats not covered. And then shipping to the United States. Theres many ways to get around them. If you have good enforcement of the law several administrations are determined to put resources into more enforcement. You can probably have a greater likelihood of them achieving their objective. When they work, and the next question is, what does work mean i think occasionally people talk about working in terms of affecting imports and market share which is relevant to me the more important indications do they produce a price effect. The purpose of adding the tariff is to raise the price. To get it out of the dump range and to put it on the level that it can compete. Back in the dark ages when i started doing this in the 80s the biggest argument against these acts were these orders is that they would increase the price of products. Your cars, toasters, ovens and refrigerators all become more expensive. I can tell you a joke but in the interest of time ill skip it. We know request much about inflation now. Its still an issue but the point is different. Ideally you want to see a price effect. That might or might not happen in the real world, the domestic seller may choose to eat the tariff because by reducing the price making less money to stay competitive. Consumer preferences might be based on other things than price so it might mean to remain attractive even though its more expensive. One thing it means is remedies tend to work best in the case of fundable products where theres not a lot of product different differentiation. That makes steel a good case for this kind of thing. Complex products that are sold rectally to consumers might respond the same way. The added tariff also matters in the real world. For example, if avocados are dollar each, a 10 dumping margin would make them a dollar ten each. Chad might know something about the elasticity of avocados, but i dont. My suspicion is raising the price from 1 dollar to 1. 10 is not going to make a huge difference. Particularly to domestic users maybe they raise their prices as well to a dollar five or a dollar eight. Realworld effect is harder to predict in passing, the abcd e laws are not the only import relief measures for unfair trade practices. There is Section Three oh one which you may be hearing more about as time unfolds. There is an article this morning and said he was trade that got into this in some detail. That gives the President Authority to take action against unfair trade practices by other countries. Its a less mechanical law affect that the president has latitude to persuade the other country. Whats different in that is not designed to offset the practice. Its designed to impose a penalty that will persuade the other country to change its practice. This was a widely used statute in the 80s them since then and its day, it was useful on this is something that might appeal to the current president , initiated investigation was an enormous piece of leverage. You announce that its not fair practice and you to take some action. That usually starts the negotiation. The process has its limitations that the get into now. You might be see more about it. As also mentioned you 232 that will go back to the minute. Also 201 which are designed to deal with search and time to adjust and surge. All of these things have mixed records. In terms of political effects these are politically viewed there something that legislators can point to to deflect pressure from their constituent. That way your congressman doesnt have a response or bill or explain why he wont. He can go to his constituents and point to the administering to process. File a dumping and you tell them that they should use that first. That allows legislators to make legislation as a last resort and gets this thing off the table and congress which is what a lot of legislators want to do. Finally, behavioral effects, its hard to make the case of trade remedies by themselves alter another countries behavior, even if it imposes a significant economic cost. The defending action was taken for domestic reasons at home. The government is willing to pay a price for that. It doesnt mean theres no hope. Many cases filed against china has reduced chinese imports to the u. S. It also push them into other countries which pass on to us via circumvention or the processing. So the remedy solved a problem but there should be another one. It didnt address the central issue which is often the case in these things, which is overcapacity. Thats why were talking about a 232. In the interest of time i went to to the question of viability of 232. I would just say that the right answer here putting aside all practicality, the right answer is probably a multilateral agreement on overcapacity. I think the hamburg g20 meeting got it right. It gives relevance to the global forum on that subject. Lets give them deadlines and see if they can bruise the solutions. For the present this is a process because of multilateral. In the end its the right answer and the easiest answer. With multilateral, everybody can say theyre not the target, everybodys a target. Its not the chinese and part of the american plot to destroy them, its part of a multilateral prop problem. They can say to their constituency, everybodys taking a hit. I think its also more feasible remedy. Steve, its your turn. Thank you very much. Its also good to be back on the hill after only been gone for five months. If i my way around quite well. Also to clarify, im speaking a male behalf, not the behalf of any clients. The thing about coming after a number of speakers have already gone into depth on the issue is what you talk about. So i want to hit a few things rather quickly. First, to answer bobs question at the beginning that our trade remedy laws a remedy, are they protection . In a true lawyer fashionable say it depends. Any law can be applied in an unfair and improper way. In environmental law, tax loss, so whether one makes a judgment on how the trade remedy laws are being applied, does that mean the law in and of itself are bad thing . Are they in and of itself protectionist . I would say no. In and of itself they are there to remedy trade and types of trade that for a long time not only the United States but many other countries have viewed to be detrimental and unfair. These laws go back way back to right before world war i. Our friends the canadians were the first to have antidumping law. The u. S. Law is based on the trade act of 1930. This is not anything new. Weve had antidumping laws for long time. It has russian guys that economic circumstances can occur you need to have a remedy and selling the product at the u. S. At a low price because the country is overcapacity because of the things, there is a need to respond to that and to remedy a. On the account of other laws your remedying subsidies. Is it fair for you completed compete against a Foreign Government is providing either free electricity, free capital another support to his foreign competitor. Again, the purpose of the remedy is to offset these. Their policy reasons for having the loss. As bill touched on, thursday political reasons for having these lost. As tom pointed out, theres white support in congress for the unfair trade laws. Why is it there . I think most members see the policy value of it. Theres a political value of it too. The unfair trade laws have allowed other pro trade type of legislation to go through. Most recently when trade promotion was authorized theres also another set of laws that amended the entire dumping laws that created the space for some members also support tpa. Those who put themselves in the freetrade credit thats ridiculous. You shouldnt have to pay a people to support free trade. My own view, i think you have to flip it onto the free trade, if you did a better job in promoting free trade, you would have to do it. If you start off every argument by quoting a scottish guy who died 200 years ago youve already lost 95 of your audience in 2017. Its amazing how much that is still done. So, theres an important political aspect to it. Some of the more recent aspects of how the laws applied particularly as chad brought it up and thinking about, are these inherently anti china . Yes, there has been an increasing cases against china. Theres also been a decrease in cases against japan, south korea, and other countries. Whats happened . Well, production and export to the u. S. Has shifted from those countries to china. So, as the experts in china and have increased the potentiality of trade friction and of these type of problems coming up also increase. Its a natural aspect of the fact that increased trade with china would be accompanying with increased number of these cases against chinese inputs. Another thing to keep in mind, how much of that the number of these cases really a reflection of any administration trade policy or its own initiatives . I would say not very much. Almost 99 of these cases in the u. S. Are brought by companies, not by the government. Not by the administration. Its not the administration who decided to bring a case against lumber which started under the Previous Administration. He was not their choice to bring a case against sugar and mexico. In fact, there examples of this. The canadian lumber case has some no, this is the fifth time we have had cases against the lumber. Theres an intrinsic policy problem between the u. S. And canada on softwood lumber that goes back beyond the 1980s in the first case was brought in some only goes back to the 1880s where there is a brief border war. These are not real issues. The same thing with the sugar from issues. There was an agreement, the sugar industry was already having problems with how it was being enforced on the mexico side. That was long before President Trump was elected. Again, does this really reflected Trump Administration initiative . Not really. The main thing to keep in mind i think its you look at what is going on is to separate the rhetoric from the reality. This administration talks about trade in a different way and uses different words, but the reality is theres really not much difference. When this administration said we dont follow wto decisions, every administration has said that back to the clinton administration. Because the United States and any other wto member does not have to follow every wto decision. His been decisions we have not been following for years and yet the world still turns. Theres others decisions that we have not followed for years and yet the trade system still exists. Its important not to get hyperbolic about it. To really see whats going on versus how its being talked about. There. Thank you. Its very helpful and very interesting. Thank you. Another stephen i do not plan this, his ending meshes perfectly with my beginning. Im going to pull the lines back and try to give you my idea of what is going on with this administrations trade policy to put a context around the question of the specific issue of protectionism and of trade remedies. Steve, i see it differently than you. I think this administration is a deadly serious about changing the way that we deal with trade. How about changing the way we deal with our trading partners, and the evidence i would argue out there is manifest in their words and is beginning to be manifest in their actions. I want to start with a document that i think all of you should take a look at. It is an oped that hr mcmaster and gary cohen dead in the wall street journal on may 31, right after the president returned from his first trip to europe. If you going to think its a little early to talk about a trump doctrine, read this oped. I think it lays out the trump doctrine in a way that is very specifically relevant to trade. Its entitled, America First is that mean america alone. It says, while meeting with european leaders, the president reiterated his concern that our trade deficit with many european nations. Simply put, america will treat others as they treat us. They lay out the president s organizing vision. They said, the president had a quote clear outlook that the world is not a global community, but an arena for nations, and nongovernmental actors compete for advantage. So he does not even approach discussions with allies as community discussions, but rather as an arena where we are competing. Then they go on. We, the United States bring to this form on matched military political, economic, and moral strength, rather than deny this international affairs, we embrace it. For the world is an arena, where the biggest guy in the arena and we are going to use every bit of our force for our advantage. That is a very different view of the United States and its role in the world that we have seen since world war ii. Now, how does this apply to trade . The president has said clearly, over and over again that he wishes to undo the unfair trade deficit that he believes exist against the United States for decades. He has said this during the campaign. He said it repeatedly during his presidency, he is tweeted about it. Germany is very bad for having an 80 billiondollar trade deficit with us. He talks about trade deficits with mexico, china, and others. The response i hear from some is well look at the actions, not the words. Sometimes that this president he changes his mind, he says Different Things at different times and can embrace different arguments. I would argue in trade. Ive looked at his thinking on these issues for many years. On trade and related issue he has been remarkably consistent. Trade and immigration of the two steel rods that go through his thinking for decades. Immigration is ruining our country and ruining our countrys character. And trade is hollowing this out. Where the victims of unfair trade practices by our trading partners. We have heard that from him over and over again. How does he measure this . He measures it very simply and bilateral trade deficit. There are economists at this table and economist in this room. Everyone that i talked to says thats not what you measure. Bilateral trade deficits reflect certain factors. They often reflect differences in savings patterns between the countries. But you should not look at bilateral trade practices as being unfair actions or problems in a relationship. Nevertheless, the president keeps on coming back to this. Now, okay. He talks about it. Is he acting on this . I would argue the evidence is becoming clear. We are in the dog days of august, time went to washington usually not much gets done. The fact that this was full on friday with hill staffers and others indicates the dog days of july are a busy time. Just this week and perhaps next week we are seen for things that i would argue going to help us understand where the president really stands on trade issues. To have occurred and to mike martin coming days. The first that occurred, is the meeting with the chinese counterparts with the vice premier china and the china sed. Everybody who follows this has told me its a disaster. Even as the meeting started each state canceled the normal press conference they delivered at the end where they talk about the progress thats been made. Theres been little set about the meetings, but the hallway chatter is that the bilateral discussions that were meant to discuss trade, remember trump and she mad at maralago, they sent a 100 day agenda and it ended in failure. Number two, the 232 steel decision which is we are all waiting for eminently, any day now this will, and many of us suspect it will impose penalties on many of our trading partners, even those that many would argue our allies are not possible opponents in any sort of military conflict. The third is a deficit report which was commissioned. It was meant to look at the bilateral trade deficits the u. S. Has between trading partners run the world. Again, we been waiting for this for weeks. We dont know when it will come out. The suspicion is it will come out, maybe today, maybe next week. This would be the target was the president will use to decide what countries to go after with trade deficit numbers he feels his administration can support and go behind. The fourth thing and i want to turn to this and spend time on our the nafta objectives. They were mentioned which came on a monday. It starts a 30 day clock. This is the administrations objectives for the coming negotiations. Congress now has 30 days to comment. Actually the now have 26 days to comment. The clock is ticking. In this report which will start a historic renegotiation of an agreement that most will argue has worked quite well, the president said two things that are worth quoting. The very first objective in the 17 page report, number one is to improve the u. S. Trade balance and reduce the trade deficit with the nafta countries. There is a very small trade deficit with canada. If you include services and surplus, its kind of a wash. With mexico theres a 60 billiondollar trade deficit, that is true. Number one objective to reduce the trade deficit with the nafta countries in the introduction which explains the theory of where they are going it says, the new nafta will be modernized to reflect 21st century standards and will reflect a fair deal adjusting americas persistent trade imbalances in north america. So, we see the president has told his team these are your marching orders to reduce such a deficit. How are you going to lose a 60 billiondollar trade deficit with mexico . This is a spark of the people and they might have a better answer than i have. I see three ways you can adjust a bilateral trade deficit. One is tariffs, oneness quotas, one is managed trade. Of those on the table i dont see how our trading partners are going to continue. I look at the impending nafta negotiations and i see some very rough sledding coming up. Its going to be difficult to align the president s objectives with shifting 60 billion. You take that out of the mexican economy, that is hugely significant. Let me bring this now to a conclusion. Before i do that, let me note, those of you that were for members here on the hill, you have 26 more days for your members to give their views on nafta objectives. I know the committees of jurisdiction are looking at this. They may have something but all of you out there may have comments to make. This is the time to make it. If you want to shape the discussions this is the very time to do it. During the dog days of july. I think we are getting to see very clear pattern in this administration of how they will treat trade. President trump believes he was elected to up end the trade and up end immigration. I think is deadly serious about both and his team is deadly serious about both of those. When we look at mcmaster and cohen, if the nafta negotiations are in arena, and we will bring that forum, our unmatched military Political Economic cultural and moral strength. To canada and mexico, i guess you but to better bring yours. Thank you. Do you disagree with him . I am not here to say i agree with everything in that, it was a very i am glad he brought it up. It was an important statement from the administration on its view of the world. But again, as i said the administration they are talking about trade in a different way. But the themes, the problems or the perceived problems unfair trade, on fair trade. They went after nafta and 2008. I can very easily get a lot of floor statements from a lot of members of congress on both sides focusing on the trade deficit for better or worse. You cannot have a very good argument on what are the causes of trade deficits you know, an excellent exposc a few weeks ago about the surplus of the rest of the world and why does it have it and it is not really the cause of currency or unfair trade. They save more, save us. We consume more and save less. A love that is part of it. These are not new, these are not new themes. I find it ironic and funny that 11 of the people that are nothing i cannot believe that President Trump is saying these things, he is just saying things others have been saying for a very long time. He so the feeds for what weve seen today have been planted by others that showed them over the past several years, several decades going after nafta. Talking or complaining about trade deficits. Saying and prefacing that any kind of trade there has to be an element of unfairness to it. Now we are just seeing the results of those several decades of statements. If i may bob, i think it exactly makes my point. Now we are seeing obama may have made an offhand comment about renegotiating nafta during a primary debate in ohio but he did not send a notice of nafta renegotiating objectives to the congress. Nor did he bring the other two parties to the table. Never have i seen such a determined barrage, maybe during transport a long time ago but this is really pronounced campaign backed by repeated remarks by rhetoric, by secretary ross. This is serious, this is not just camping stuff. I have to, i certainly have to side with nelson. Lets turn to the audience. Get out of the hot seat here. You can come back. You have more time. Anybody have a comment . Joann. Thank you everybody. This is on . It is. I am joann and i wondered if we could talk a little bit about the arena that nelson mentioned. In the context of negotiation as well as what other countries may or may not be doing with respect to trade whether it is in response to our trends or not. For example in the nafta objectives, it seemed like there were some pretty important departures. Some strengthening of the remedy laws beyond getting rid of chapter 19 and the safeguard exception. There country dumping i am thinking about. Which was mentioned in the wall street journal article. At the wto, the chinese have made proposals that i gather are completely unacceptable to the us but is there a prospect of a fruitful discussion about trade remedy rules at the wto . The eu is implementing some reforms in its remedy laws. So if anyone cares to address what is going on in the arena that will either be detrimental or helpful to us, that would be great. I think it is a great question. I would step back from it though and try to reiterate that thinking about it through the lens of trade remedies is really the reaction. So what we really need to think about is the underlying problem, what is it that we are trying to address . The underlying problem arguably right now is that it stems back to dealing with china and china is a different Economic System than what we have in the United States. And in the case of a special case of steel and aluminum. These are special cases. Still, we see these episodes of overcapacity time and time again. Now it is china. 12 years, 15 years ago when in 2002 it was not china, it was the collapse of asia. The Asian Financial crisis but we had to deal with it then. We had the recession of 91 and 92. Today it is, china grew tremendously 10 to 12 percent every year. Its growth has slowed down. It does not need this deal anymore. So it faces a choice. Does it want to steal back or close down plans or lay off workers in manufacturing and skill production like we have found in the United States . Or does it try to export some of that and not have to shut things down . That is the problem, the issue that has to be addressed. Trade remedies will not get us to easily compete we already use trade remedies in the United States and that is arguably what tied our hands right now. We have very little unilateral leverage to deal with china. Because we have ready stopped inputs from coming in from china. Now we have to deal with that they are going to other countries, getting transformed into or other countries sensibly send us there still is spread because they can use the chinese steel. We had to stop thinking about in my mind as trade remedies and find out a way to target the problem. I think what came out of the g 20 was potentially a solution. This forum on overcapacity. And getting countries to the table and actually dealing with the underlying source of the concern here. William reinsch, comment. Good question. My only comment was the politics have changed although im not sure the politics one of the things in the last 20 years has been the for a long time it was the us and European Countries now the indians filed dozens of these things there certain chinese actually, everyone has their own law. The countries that have been a target, the japanese who were targets forever, mostly by americans. They have their own lock. And these countries have learned how to use those laws in the same way that we have. So that you have got everybody out there playing this game where you used to have a group of people that felt with victims. In a group of people that felt like they were grieved plaintiffs. Now you have everybody and with supply chains you have a much more complex domestic politically dynamic in every country. I asked one of my members when this was on the table, what do you think about dumping rules . His own luck, my company, we are petitioner in one case, a respondent in and were there and we buy products object to antidumping. Chided you tell me what our position is. Company after company are finding themselves in that position. I cannot quite understand that the politics has not caught up with the reality. A number of countries who are worse than the chinese on this are determined to got these laws basically. And render them harmless because they perceive themselves only as victims and not beneficiaries. If you look at what is actually happening the economy is not true. But they continue to maintain the same position they have for years. I do not see any solution for this i would not say that the United States as opposed to the chinese they have refused to negotiate on the grounds of the mandate for doing everyone else is opposed. And has said so. I do not think they have a Bright Future and i do not see a near future outcome. I think the politics will catch up with that and maybe it will be easier to come to some conclusions that will produce some modest changes. Another question . Let me just agree that dumping cases etc. Are treating symptoms and not the cause. Especially in the Steel Industry, is the persistent overcapacity. I do not agree to the chinese argument that they merely overbuilt and miscalculated what they would need for their 12 year plans or the fiveyear plan instead of come out and in sequence in talking about going abroad, it clearly intended to dominate global still production. It is far beyond what they would ever need. They have also become excellent avoiding enforceable commitments about overcapacity. They have massive i was involved in us steel China Dialogue many years ago. There was a whole series of s i must say, although im sorry for all of the other industries and Service Organizations that wanted to get something out of the current ced, comprehensive economic dialogue, i do not consider that happening in washington because for the very first time, the us basically said, this is on the agenda. This is at the top of the agenda. We are not going to start agreeing to a whole bunch of stuff and go back and tell the industrywide we raised it. This was an important moment. We do not know what happened in that room. There were no press conferences or had not been really any good readouts or Something Like that but the fact is Many Industries are now very upset. With the way it came out. But that is not a bad thing because Many Industries have gotten what they wanted. The Steel Industry has been upset. So it is kind of a reversal of fortunes here. And creating a little bit of leverage. I also do not believe that we have no unilateral leverage left. A question right here. Bob fienberg, american university. To some extent this holds with antidumping but it seems to me even more so with the 201 and 232s. There doesnt seem to be any discussion of retaliation, precedent that we are setting. If we say by americans . It had to be react to europe saying to buy european when it comes to airplanes and such. Im just curious your reaction about why retaliation on exporters. Us exporters seems to be totally i think that is a great point bob. We are starting to hear that in the media. We saw a right before the g 20, reported by the Financial Times that the europeans have already drawn up there product for the 232, this ultimately hits them. Theyre going to go after bourbon from kentucky and Dairy Products from wisconsin and florida orange juice, right . A similar strategy. I think what this administration has yet to sort of fully internalize is retaliation is actually much more strategic and can be more economically costly and politically costly than the benefits of protection. Until you see that working its way out in practice you do not realize it. But the threats that are happening out there, i am hoping the potential cost of these actions would actually be before the decisions are made to do them. Well said. Anyone else want to comment . Just a quick, again, 30,000 foot, pulling the lens back. The president s view of retaliation is, you punch me, i am going to punch you harder. This has been his, this is what he learned from roy cohen many years ago when he was his lawyer. You punch me, i am going to punch you harder. So i think of american industry says we are afraid of retaliation, he will say, just you wait. Wait. Let them retaliate and see what i do. Right here. I was hoping maybe. National trade commission . Yes. I was hoping you can speculate about self initiation might work out . What problems that is adjusting, what is driving this and d. C. Major expansion in the cases in the next couple of years as a result of that . Thank you. I will pick that up. I mean, secretary ross has talked about self initiating cases. I think although again, not to be repetitive but the issue is self initiation has been around for a while. It has been in law for a long time. It has not been used very much. But over the past i would say 10 years, and has been talked about more and more. The perception is that to bring a case, require such an outline of resources and time from an industry that is to be already injured and not doing well that the burden is too high to be able to avail themselves of these laws and therefore, the department of commerce should use its authority to self initiate. That is the idea. Obviously no cases have been self initiated yet. That gets to my point again, you have to look at the rhetoric and where it meets reality. At the end there is a lot of talk about action but so far there has not been any. There are rumors that congress is open to the idea. But as you know, even if all senate companies, industries that think this is a panacea will be sorely disappointed because they will still have to go to the International Trade commission and show that the imports now, are they unfairly priced or unfairly subsidized by a cause of injury or material injury. You need to show that the imports are unfair either by price or subsidization but actually that there is a cause on the excess between the imports and the domestic industry being materially injured or threatened. So they are still going to have two expend those resources to be successful. They will still expend resources to participate at the process that department of commerce to comment on the information provided and things like that. My own personal view, it gets, there is already a low statutory hump to get a case going in commerce. After that, i do not think it will be any great savings of resources or time. Okay, a hand here i think. Another question over here. My name is trevor, my question is for mr. Cunningham. You prescribed judging relationships with our trading partners based on bilateral surpluses and deficits. I am curious what other metrics would you use to judge a relationship with our trading partners . [laughter] somebody who has worked on north american issues since the late 90s. I think our relationship with mexico and canada is so much broader than any bilateral trade deficit to begin and end there. It is terribly, not only dangerous but it is it is not based on anything truly important. Look at our relationship with europe. They are selling goods to us, 150 billion more a year than we sell to them. Is that because they are taking advantage of us or just because they make machines and cores that we want to buy . Economists will tell you it is about savings versus investment. If we here in this country, saved more, investing more, spend less, it would take care of our trade deficit bilaterally with most of our trading partners. I think for the any of them saying why are you punishing us . Because you are a hyper consuming nation. I think that is a fair question. I would like to comment i think it is brandnew that we divide the world into good and bad based upon whether we have a deficit or not. That is just contrary to any economist appreciation of global commerce. You just do not say okay mexico, france, etc. They are bad because we have a deficit with them. It is just, it is very nearsighted. And dangerous this is not a direct response to one of the things i found peculiar about the debate. If youre trying to reduce the number, there are only two ways to do that. By lester some more. One of the things either by less or sell more. What seems to be missing in all of this is export promotion. And it is astonishing, it is the easiest thing to do. The last three or four president s have all come in with a grand export promotion plan. It is the secretary of commerce climbing aboard air force whatever number and off signing deals and coming back to say we just increased exports by 80 billion. This is not rocket science. Everybody has done this. I worked for ron brown and watched him do this. And all of his successors have done it also. If the ministration has missed the boat entirely, they do not talk about trade. They do not talk about export promotion. They focus only on the other half of the equation. Which is buying less. Is a former chair of the Advisory Committee at the bank i think i can point to the ministration of lack of support for the bank is exactly what youre pointing to. Thank you very much. Rachel library of congress. Many of you talked about the decision that came out at the g 20 summit. In terms of endorsing the oecb form on still overcapacity. What solutions could actually come up with . What sort of enforcement could there be . And do think there could be a precedent for how we deal with other issues such as aluminum . I would merely repeat what i said before that china has been very good at sliding off either making commitments or fulfilling commitments. It seems to me that the ced may be a little hands of how to do it. And that is you know unless you create a new cause of action that you can bring a case in the wto on overcapacity or you can take overcapacity into account. It seems to me that it is a negotiation in that we just have to do what happened at the ced and say this is what we are talking about. When you not only commit to take down a certain percentage of nonnecessary capacity and stop building new stuff, which they keep doing, then we will talk about all the other things on your agenda. It is a very tough and frustrating position to take. It will anger a lot of american industries. Especially those interested in exporting to china. Up until now, nothing else has worked. That is our leverage. Okay talking about leverage, i would like to tell a little story. The conversation i was part of with a senior official at ustr. Who made the case that things were great up until lets say the wto came into force. And things went bad. We started hitting deficits and we were being treated unfairly and now we are in this negative position where we have no leverage. We gave all of our leverage away. We cant our restraints but we and for other major players, most of them did not. And that is true, they didnt. Most of the developing world then did not comply, did not go along. And schedule commitments to the extent that we did etc. In a way they are right. We lost leverage in the trade negotiations. So a very senior guy, very seriously, said that we have to begin our leverage. How do we begin our leverage . Leaves trade restraints. We use remedies. One country at a time, however, it works. Whichever law applies, 232, etc. Go to chads database and you will see. Well just do it one at a time. Ramp up the ante so that we get leverage in negotiations. Whatever it takes to get that, we have got to get it. That is what this guy said. Very senior guy. And i believe it based upon what has happened since that was in may. So if anybody disagrees with that i would like to hear it. I do not disagree with that area. [laughter] i do disagree. Again i think it goes back to the issue of their needs to be a longterm strategy to deal with the new kid on the block that is just fundamentally different and that is china figure vomited ministration had a strategy whether you like it or not and that was writing down in a 21stcentury trade agreement that would have rules, ultimately to do with china down the road. On digital trade, labor, environment, anticorruption, lots of different issues. We have not seen with the Trump Administrations actual longterm plan to address systemic issue that china is just a fundamentally different economy than we are. And so this could be, lets retaliate, lets impose trade barriers. But i do not see with the endgame is. Under that approach unfortunately. Time has come to the end. If there is any opposing, lets go for it. [laughter] here is the dirty secret and everyone else in the trade community might hate me for saying this. If you want to get rid of a trade deficit, it is not trade policy. It is tax policy. Education policy, healthcare policy, labor policy. Those are the real things that they will drive whether us companies and us workers are competitive globally. Not trade policy. The very fact that, and i do not blame you for doing this, the very fact that the retailers bought and aired on saturday night live regarding tax policy never bought an ad regarding then shows that they recognize what actually drives their competitiveness and what affects them the most. As much as we like to talk about trade policy, it is important but it is not the most important thing as far as our companies and workers. Bipartisan agreement. Lets thank everybody. [applause] [inaudible conversations] you are watching booktv on cspan2. Where top Nonfiction Book and the authors every weekend. Booktv, television for serious readers. Next on booktv we look at some of the memoirs published this year. Including the bush sisters that talked about spending a childhood in formative years and the white house in their book, sisters first. And former Dallas Police chief david brown shares stories from his 33 year long career in the book call to rise. First, we have Haroon Moghul on