Senate Finance Committee Members Hear How End of 301 Exclusion, MTB Is Destroying Jobs

David Baer, chief operating officer for the Winnsboro, South Carolina, company, testified April 22 that since the 7.5% Section 301 tariff on LCD panels returned at the end of the year and the MTB expired at the same time, employment at the plant has fallen from about 520 employees to 370. The most favored nation tariff that was waived under MTB was 4.5%; Baer noted that Mexican-assembled TVs come in duty free and that the MFN tariff on a TV is 3.9%.

He said if the Office of the U.S. Trade Representative does not retroactively renew Section 301 exclusions, Congress should enact legislation to do so.

A number of committee members talked about the need for Section 301 exclusions and MTB during the hearing, including ranking member Mike Crapo, R-Idaho. Crapo told Baer, "Your company is just one example in America. There are hundreds of exclusions that need to be reauthorized." The previous day, 38 senators sent the USTR a letter asking that Section 301 exclusions be renewed, and that companies be given the chance to apply for exclusions. Crapo also said in his opening statement that it's important to reauthorize the Generalized System of Preferences. "We need to cut tariffs on inputs that support American manufacturing, or on goods consumed by the American consumer, especially middle and low income families," he said.

Sen. John Cornyn, R-Texas, also brought up the need to reauthorize MTB and GSP.

House Ways and Means Committee ranking member Kevin Brady, R-Texas, told International Trade Today that he did not bring up Section 301 exclusions with USTR Katherine Tai in an April 21 phone call but did talk about the need to renew the MTB and GSP.

During the Finance Committee hearing, Sen. Maria Cantwell, D-Wash., also said she's hearing from businesses about expired 301 exclusions causing "a great deal of difficulties."

"We already have such an integrated economy," Cantwell said, which makes it tricky to know how to move forward on pressuring China to have better behavior.

Several senators asked about their recently introduced bills, or a bill they have pushed in the past. Ohio's two senators, Republican Rob Portman and Democrat Sherrod Brown, discussed a bill they proposed to change antidumping and countervailing duty laws (see 2104160037).

Portman said that antidumping or countervailing duty cases have affected the home state of every senator on the committee, whether it's steel, aluminum, glass, textiles, lawnmowers or woven sacks.

Witness Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, told Portman, "I think your legislation is critical … especially as we face the recovery out of the pandemic." He also suggested the injury standard should be looked at differently.

Akin Gump partner Clete Willems, a trade staffer during the Donald Trump administration, said he agrees with the idea of considering Chinese subsidies to its companies operating in other Asian countries, and said Europe is also looking at applying countervailing duties to products subsidized by a country rather than the one where production is happening. He said producers move to new countries to avoid our duties, and domestic producers "need to find a way to stop playing whack-a-mole."

He also said the public body decision at the World Trade Organization was wrongly decided, and "we need to figure out a way to fix that." He said that it undermined CVD enforcement.

Cornyn asked witnesses about a proposal from Sen. Lindsey Graham, R-S.C., (see 2104210049) that would change how companies could ask for import bans over intellectual property theft. Cornyn said, "Right now it seems like China steals intellectual property with near impunity." Wessel said an approach to change the burden of proof to exporters could have value. "The utility of Section 337 is somewhat limited in the ability to respond quickly," he said, and the responsibility for companies to bring the suit is a burden. Willems also said it's a good idea to explore.

Sen. Chuck Grassley, R-Iowa, brought up his recent bill to tackle counterfeits (see 2104160033). He said, "As Americans turned to e-commerce, criminals took advantage of innocent consumers greater than they did before e-commerce." He asked if there are other ways Congress can prevent the trade in counterfeit products beyond the enhanced information sharing his bill proposes. Wessel said, "Your legislation is an important anchor. It needs to be supplemented by giving CBP the resources to support that policy."

Sen. Pat Toomey, R-Pa., brought up his repeated efforts to give Congress the ability to rein in Section 232 tariffs. He said the 25% tariffs on imported steel and 10% tariffs on aluminum "have been harmful to the U.S. economy by any objective measure," and have alienated our allies, at least to some degree. "They’ve done nothing to reduce overcapacity," he said, and he reminded his colleagues that the Pentagon said that the health of the domestic steel and aluminum industries was not so poor that it was a threat to defense procurement.

"Worst of all there’s nothing we in Congress can do about it," he said. "Congress has no option but to sit on our hands… in an area the constitution delegates specifically to us."

Toomey has not yet reintroduced Section 232 revisions in this Congress, and the chairman's comments after Toomey's remarks did not seem to suggest it would get a hearing in committee. Sen. Ron Wyden, D-Ore., said he agrees with Toomey that former President Donald Trump misused tariffs. But, instead of expressing interest in asserting congressional authority over tariff decisions, Wyden said, "I'm very hopeful we'll see a fresh approach" from President Joe Biden's administration.