Press Releases

(As prepared for delivery)

Good morning and welcome. We are holding this hearing today at a critical juncture in the U.S.-China trade and economic relationship. The scale and speed of China’s economic growth over these last few decades will undoubtedly be one of the most remarkable and consequential developments we experience in our lifetime.  

When China joined the WTO in 2001, the U.S. Congress approved Permanent Normal Trade Relations with China. The expectation was that WTO membership would lead China to develop a market-based economy. It was accompanied by the hope that China’s political system would also become more open and democratic and embrace a greater respect for human rights.  

Over time it became increasingly clear that China’s economic and political policies were not converging with international norms as we expected. Instead of becoming more market-based, China’s economic structure has continued to favor state intervention and direction.    

Given the scale of China’s economy, policies issued in Beijing have had significant negative effects on U.S. and global economic competition and jobs. For example, China’s focus on subsidizing and dramatically building up its steel industry has resulted in massive overcapacity. This has led to depressed global prices, and the shuttering of steel plants throughout market-based economies including the United States.  

In the context of the digital economy, during the first half of the 2010s, China’s economically motivated cyberattacks against U.S. companies increased in intensity. In the fall of 2015, President Obama warned China’s President Xi that China’s state-sponsored cyber theft was a form of economic aggression that was outside international norms and unacceptable.
  
The problems and tensions in the U.S.-China trade relationship have been significant and have not been easy to resolve. That is why I kept an open mind when the Trump Administration took a new, more confrontational approach to managing the relationship.

Now that we are three years into the Trump Administration, we are deep in a trade war of tit-for-tat tariffs with China. The confrontation has incurred significant costs, with U.S. farmers, like our witness today, Mr. Dufault, bearing the brunt of the disruption in trade flows and opportunities.  

The only seemingly positive outcome so far is a limited “Phase One Agreement” with China. I recognize that this agreement is the culmination of hard-fought negotiations and that there are some important commitments that have been secured in this agreement.  

However, the “Phase One” agreement leaves on the table more significant, structural commitments for a future “Phase Two” or even “Phase Three” agreement. And there are other important structural issues that are not even part of the Trump Administration’s trade negotiations with China.  

Now, because of the outbreak of the coronavirus in China, purchase commitments and other promises made by China as part of this agreement may not even happen. And the potential economic consequences for un-diversified supply chains look like they will be severe.

In the meantime, the only strategy the President seems to have is a promise of more bailouts for farmers.

I have consistently urged the Administration to aim high in its China negotiations. And I have asked the Administration not to settle for superficial wins. The United States needs to obtain China’s commitment to the structural changes that will make a real difference to American workers and companies seeking to compete on a level playing field. 

Our task today is in part to evaluate the Phase One deal the Trump Administration has reached with China. The President has called the deal an “enormous win” for the American people. We are here today to test that claim. Does the deal address all of the unfair practices identified in the Trade Representative’s 301 investigation? What are the costs and benefits of the deal for U.S. workers, farmers, consumers, and businesses? 

Today we will also evaluate what the Phase One Agreement has not accomplished. What still remains to be done to eliminate the distortion and discrimination in our trade relationship? What issues does the Administration need to address with China that are not even part of our countries’ discussions? I look forward to hearing today from Ms. Thea Lee, President of the Economic Policy Institute and Commissioner on the U.S.-China Economic and Security Review Commission, for her views on what more needs to be done.  

And even more importantly, today we will consider what policies we should be pursuing, other than imposing tariffs, that will make the United States competitive with China and the rest of the world. I am eager for Mr. Owen Herrnstadt with the International Association of Machinists to share his views on what we need to do to ensure the health of U.S. manufacturing, including in aerospace.

A good, strategic, and enduring China strategy is one that the U.S. Congress and the American people support. One of the strengths of the U.S. Congress is the bipartisan interest we have in addressing the trade, economic, and competitive challenges presented by China – and a shared commitment to make U.S. workers, businesses, farmers, and innovators stronger and more competitive.  

We proved the strength of our commitment to consensus-based trade policy when House Democrats worked with Ambassador Lighthizer to make fundamental improvements to the enforcement, labor, environment, and pharmaceutical provisions of the U.S.-Mexico-Canada Agreement.  

Because of our efforts, the USMCA passed the House and Senate with overwhelming bipartisan support. The China trade relationship is too important for the President to go it alone, without input and consensus-building with Congress – and with other countries.

Today we welcome a distinguished panel of experts to help us flesh out the essential elements of a more comprehensive and informed approach to the China challenge. A critical part of this approach – and one that often gets short shrift in trade policymaking – is to ensure that we are prioritizing the investments in education, research, and training that our workers and businesses need to be competitive with China and the rest of the world.   

For that reason, I am very happy to welcome from my home state, Dr. Reif, the President of the Massachusetts Institute of Technology.

As the leader of one of our country’s pre-eminent science and engineering institutions, Dr. Reif has been outspoken about the need for the United States to fully invest in research and development and in training the workforce of the future. MIT has been an engine for the creation of jobs at small and large companies at the forefront of U.S. competitiveness. 

With that, I will recognize the Ranking Member, Mr. Brady, for an opening statement. 

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