As the nation’s top trade official, Katherine Tai says she would hold trading partners to their obligations, shape trade policies to benefit U.S. workers and strive for balance in dealing with geopolitical rival China.
“China is simultaneously a rival, a trade partner, and an outsized player whose cooperation we’ll also need to address certain global challenges. We must remember how to walk, chew gum and play chess at the same time,” Tai said during her confirmation hearing before the Senate Finance Committee Thursday.
Part of the chess game, Tai said, will require building on executive orders by President Joe Biden that call for reviews of key supply chains with an eye toward boosting domestic production where practical and sourcing from countries the U.S. considers allies. Tai also said the administration will invest in workers to keep them competitive.
Tai would be the first Asian American and woman of color to head the Office of the U.S. Trade Representative. Her parents were born in mainland China and grew up in Taiwan. They came to the U.S. as graduate students under immigration rules set by President John F. Kennedy.
Her father worked as a medical researcher at Walter Reed Army Institute of Research and her mother oversees a clinical trials network at the National Institutes of Health that is developing treatments for opioid addiction.
Tai has support from Finance Chairman Ron Wyden, D-Ore., as well as the backing of major agriculture groups, labor organizations, environmentalists and business groups, including the U.S. Chamber of Commerce.
She was the chief trade lawyer for the House Ways and Means Committee when Biden selected her to become the U.S. trade representative, which comes with the title of ambassador.
Ways and Means Chairman Richard E. Neal, D-Mass., and ranking member Kevin Brady, R-Texas, appeared jointly at the hearing to support Tai’s nomination. They said her extensive trade expertise, negotiating skills and knowledge of Congress will make her a formidable U.S. representative in global trade.
Tai fielded questions on digital services taxes, the long-running fight with Canada over subsidized soft-wood lumber and building resilient supply chains. She promised to consult with lawmakers and stressed the need to engage with trading partners.
To Sen. Tim Scott, R-S.C., Tai explained what she meant by a worker-centered trade policy. She said it applied to all workers whether or not they are union members and is meant to signal that their livelihoods won't be traded away to achieve broader goals.
Wyden said that worker-centered policies boil down “to expanding the winner’s circle.”
Tai gave no indication whether the administration will modify or end tariffs imposed under the Trump administration on Chinese imported goods valued at nearly $300 billion and on most foreign steel and aluminum sold in the U.S.
The Biden administration has kept in place the Section 301 tariffs on Chinese goods and the Section 232 tariffs of 25 percent on steel and 10 percent on aluminum. Section 301 tariffs are part of a 1974 trade law and Section 232 falls under a 1962 trade law.
Wyden noted that Section 232 tariffs fall under the Commerce Department, but Tai said she would work with Commerce and other agencies on a review of the duties.
She said tariffs “are a legitimate tool in the trade toolbox. Tariffs are a very important part of our fair trade remedies toolbox.”
The Section 232 duties were part of the U.S. response to China's overproduction of steel and aluminum that has disrupted global markets. Tai said a worker-centered trade policy would require the U.S. to look at a broad range of potential responses, but she did not cite a specific response.
Tai also put Canada and Mexico on notice that she wouldn't hesitate to use enforcement provisions of the 2020 United States-Mexico-Canada Agreement for violations of the trade pact by either country.
As chief trade counsel for the House Ways and Means Committee, Tai helped put teeth into the agreement during yearlong talks to address areas that Speaker Nancy Pelosi, D-Calif., said would have to be changed before she sent USMCA to the floor for a vote.
Tai told Wyden that the best way to keep USMCA a functional trade agreement “is to exercise the tools that were so hard fought in being incorporated into the agreement” to make sure obligations are met.
The Trump administration said in December 2020 that it had requested formal consultations with Canada on dairy tariff rate quotas the U.S. says undercut the amount of U.S. dairy products allowed into Canadian markets without tariffs.
Sen. Charles E. Grassley, R-Iowa, asked Tai to move ahead with the dairy complaint. She said the U.S.-Canada dairy trade is longstanding and said she would dig into the complaint.
Labor unions have said they could file complaints against Mexico under enforcement provisions in the agreement for harassment and violence against Mexican union organizers. The unions also have talked about filing complaints under the rapid response enforcement mechanism that could lead the U.S. to stop exports from individual factories found in violation of USMCA labor rights provisions.
Tai won praise and a reputation as a tough negotiator on the trade agreement. Wyden and committee member Sherrod Brown, D-Ohio, are among her supporters for her work to include their proposals for the rapid response trade enforcement to implementing legislation for the agreement, which replaced the 1994 North American Free Trade Agreement.
As the U.S. Trade Representative, Tai would return to an agency where she worked for seven years in the general counsel's office during the Obama administration. During that time, she was chief counsel for China trade enforcement, a role that included responsibility for developing cases and representing the U.S. before the World Trade Organization in disputes against China. She held that position from 2011 until 2014, when she joined the House committee as trade counsel.
Tai fielded questions on Section 301 U.S. tariffs on Chinese goods worth more than $300 billion and the phase one U.S.-China trade deal that has put the Washington-Beijing tariff battle on hold. The U.S. tariffs and retaliatory tariffs the Chinese placed on selected U.S. goods remain in place.
She told Sen. James Lankford, R-Okla., that she would review complaints about the exclusion process the Trump administration put in place for companies affected by the tariffs. She said “it is very high on my radar” and that the process needed more transparency, predictability and due process.
The phase one deal called for Beijing to end policies and practices like requiring U.S. businesses to enter joint ventures with Chinese partners and share technology with them, and to crack down on intellectual property theft.
Beijing also agreed to buy $200 billion in additional agriculture, energy, manufactured goods and services through 2021. China has so far fallen short of the targets for each category.
Grassley said he was disappointed about the shortfall, but said he was also interested in getting the communist government to make structural changes to align more with global trade rules.
“There are promises that China made that it needs to deliver on. With respect to structural changes in China, I think that we would all be delighted to have those structural changes in China, to have our economies be more compatible,” Tai said.
“Those are conversations and those are roads that have been well worn by U.S. trade representatives before me. On this issue, of the U.S.-China trade relationship, I would like to say we need to be exploring all of our options,” Tai said.