Warner Says Trade Laws Need Revisiting
Sen. Mark Warner, D-Va., one of the primary movers behind the Chips Act, told an audience that more domains need policymakers' attention so that they don't wake up to find that China has become dominant in an important emerging technology. He noted that before becoming a politician, he "was in the telecommunication space," and said that realizing that China is dominating 5G with two heavily subsidized champion companies was the "final wake-up call" that engagement and deeper trade with China is not the right way to go.
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Warner was an early investor in cellphone network provider Nextel, and when it was sold to Sprint, he made millions of dollars.
Warner was speaking at a Nov. 28 launch event for a report by the Information Technology and Innovation Foundation. That report argues that changing Section 337 so that it focuses on unfair trade by companies in nonmarket economies would be more effective in protecting U.S. tech firms than antidumping and countervailing duty laws or than the Section 301 action (see 2211210072). Warner didn't endorse the proposal -- saying he is no expert in whether Section 337 or Section 301 would be more effective. But he said the U.S., South Korea, Japan, Australia, Canada and the EU need to coordinate a response to Chinese industrial policy, and part of that will be thinking about how to use our trade laws "in a smart and efficient way."
"I do think that we have to have a level of sophistication on this," Warner added, noting that if the U.S. restricts the sales of commodity chips to Chinese firms, all that will mean is lost revenue for U.S. companies as other Asian companies fill the demand.
He said he supports the goals of building up U.S. industry to meet the needs of the energy transition, but he said the government needs to "recognize there’s a timeline."
He asked, "Can we bring back the solar industry?" And then he said that the democratic advanced economies should discuss how they can support the development of nuclear fusion, green hydrogen or advanced batteries, so that they "can make sure that we don't end up with where we are, frankly, in solar, where we were headed in 5G" -- in other words, dependent on China for these goods.
Warner said Senate Intelligence Committee members, after consulting with industry, may introduce "legislation to make sure we keep this technology advantage in not only the domains that we’ve already addressed but a number of domains going forward." Warner also mentioned quantum computing, artificial intelligence and synthetic biology.
In the report that was the topic of the event, ITIF Founder Robert Atkinson wrote that ramped-up export controls, investment screening and growing domestic industrial policy also are not enough to "counter China’s industrial predation." Warner talked about outbound investment screening as a needed tool, but he noted the details are still being hashed out.
The foundation also hosted trade experts from the International Trade Commission, which hears 337 cases; the Office of the U.S. Trade Representative, which brings Section 301 cases; and former Commerce Undersecretary for International Trade Gil Kaplan.
Wendy Cutler, a former career USTR employee and now vice president of the Asia Society Policy Institute, said the paper was interesting, but said, "I think it’s important we look at all of our tools, including Section 337, but I also believe it’s worth considering 337 in a more comprehensive review of our trade laws."
Meredith Broadbent, former ITC chair and now a strategic adviser to the Center for Strategic and International Studies, said she doesn't think Section 337 was the right tool to use to better counter Chinese economic abuses.
"Coming up with another trade policy tool might help and might not," she said, and she agreed that congressional committees need to dive deeper into all the trade laws' strengths and flaws. She also said she thinks something as powerful as an import ban on certain products needs to be decided ultimately by the president, informed through the interagency process and political appointees at USTR and Commerce. She said such moves may protect some companies but harm innocent importers, and those competing interests need to be balanced.
But Kaplan said he likes the idea of making Section 337 the leading approach on China. He said that while Section 301 now looks more useful since it was activated by former USTR Robert Lighthizer, he doesn't like that there's discretion at USTR on whether to launch a case. With a 337 case, the ITC has to go forward as long as the complaint meets the requirements.
He said another advantage is that there's the possibility of doing discovery with Section 337, and not with Section 301.
Atkinson's paper was critical of Section 301 tariffs as ineffective, and he said at the event that they raised the cost of IT products and lowered productivity in the IT manufacturing sector as well. "We need a powerful tool but not one that shoots grapeshot everywhere," he said.
Broadbent said Atkinson's right that the tariffs weren't strategically applied, but she said she believes that USTR will have the authority to adjust them as part of its quadrennial review. She said she hopes the USTR will keep considering that.