Being here. Any special welcome to the folks joining us on cspan. We are looking forward to a spirited debate this afternoon in our Panel Following opening remarks from secretary wilbur ross. And please and privilege to introduce the 30 night secretary of commerce, wilbur ross. As secretary he is the principal voice of business in the Trump Administration trying to ensure that u. S. Businesses have the tools they need to create jobs and pursue economic opportunity. He served as secretary since the beginning of the Administration February 2017. Hes got limited time with us today so ill be very brief in her introduction so we can get right to his talk. He will be leaving at the conclusion of his talk and the panel will ensue. Secretary ross is no stranger to commerce with over half century of experience in Investment Banking and private equity restructuring over 400 billion in assets across numerous industries. In serving as chairman or lead director of more than 100 companies in over 20 countries. He is also the only person elected to vote the private equity hall of fame and tournament knowledge and hall of fame. We are pleased to welcome him here today please join me in welcoming number secretary wilbur ross. [applause] thank you dean for that kind introduction. And thank you for the opportunity to discuss the Trump Administrations trade policy and how it fits into our longterm goals of the country. The Federalist Society has always advocated for informed debate and the commitment to our constitutional government. The overall goal of our administration fits perfectly within the federalist charter. Only by maintaining a strong and viable economy can americans live freely under the rule of law with guaranteed individual liberties and a separation of powers. Today thanks to policies focused on rebuilding american industry american jobs, American Communities and american prosperity we are turning the tide toward a far more prosperous and hopeful future. But you would never know it by listening to liberal politicians hellbent on impeaching the most successful president since Ronald Reagan nor to the left wing media desperate efforts to frighten americans into a recession. In fact, the u. S. Has the strongest economy of any major economy in the world. Our Unemployment Rate of 3. 5 percent is the lowest its been since 1969. Since the election of President Trump United States has added 6. 4 million new jobs including 500,000 in the Manufacturing Sector alone. In 136,000 new jobs in the month of september itself. Income and wages are up, poverty is at the lowest level in almost 2 decades. The number of americans needing federal Food Assistance has fallen by more than 10 million from 44. 2 million in 2016 to 33. 7 million this year. Retail sales up by 4. 6 percent over the past 12 months. Interestingly, the u. S. Import price index fell by two percent over the past year despite the fears that people have had about the impact of tariffs. Last friday the president announced phase 1 agreement in principle with china. This would phase in 40 to 50 billion of agricultural purchases over a twoyear period, more than twice our prior annual peak sales. It would also address some of the issues regarding intellectual properties. The remaining issues, the remaining structural issues and their enforcement remain to be renegotiated. In return, the u. S. Has agreed not to raise tariffs from 25 to 30 on october 15. As a sign of good faith the chinese recently made substantial purchases of agriculture, especially soybeans and pork. I believe china came to the negotiations mainly because we imposed substantial tariffs on them. But also because of the personal relationship between President Trump and president xi, they naturally retaliated to the tariffs we put on but because they sell us more than four times as many goods as we sell them, a given amount of tariff action means that they will run out of goods before we do. Also, there economy is only 60 the size of ours. Therefore, a given amount of tariff product hurts them far more than it hurts us. Fear of tariffs also cause the eu recently to agree to buy more egg products from us and begin negotiations on other topics. Its the reason why japan agreed to buy more meat and why the koreans renegotiated corals. The tariffs are now having a direct impact on chinese producers. And perhaps more importantly, are accelerating the hollowing out of chinas supply chain. China already was suffering some manufacturing immigration because of rising costs. Companies have begun to move operations elsewhere. In Southeast Asia to africa and to north america. That will be hard to stop. Chinas problems with hong kong also hinders its economy and may further accelerate and exodus of foreign producers. Last week the Commerce Department added 28 chinese governmental and commercial organizations to the entity list. That list restricts the export of items used to target readers and other ethnic minorities. We also responded to chinas built in Road Initiative with our new North Pacific strategy. Last week i was in new delhi, bangalore, singapore, canberra and sydney to discuss with the Prime Minister and other ministers of the three countries our engagement with them and others in the endo pacific region. In november i will be in bangkok, jakarta, paranoia and possibly other cities in the region. Through the belt and Road Initiative china has invested in 117 nations and those nations account for two thirds of the worlds population. They are state owned enterprises uses chinese materials and chinese nationals to build projects. For little local content. If default occurred, they foreclose on the assets rather than renegotiating the loans. For example, in sri lanka china has already foreclosed the chinese built port and had been toda. It is also taken control of Natural Resources such as cobalt mining in the congo and hydrocarbons in venezuela. Belted road is also effectively a jobs program for china that eases some of the impact of tariffs on their domestic employment. By electing President Trump 2016 the American People instead demanded free, fair, and reciprocal trade. The section 232 tariffs imposed by the department of commerce are part of that strategy. Prior to the imposition of the 232 tariffs in march 2018 both the u. S. Aluminum and Steel Industries were on the verge of collapsing. Now utilization rates have improved noticeably and 13 billion of vial expenditures have been committed to expanded and modernized capacity. Including 1. 3 billion from an indian steel company. Now that our Corporate Tax system and Regulatory Environment are so business friendly, Foreign Companies are more eager than ever before to invest in our market. We have the largest Foreign Direct Investment stock of any nation totaling 4. 3 trillion. To foster rapid growth in fdi i and other commerce executives constantly speak to Business Leaders around the world and every june we host the select usa conference here in washington three day summit promoting Foreign Direct Investments. Last year this event attracted 3100 participants. We have also created a reselect usa initiative to encourage American Companies to reselect the United States as their domestic and export manufacturing hub. Last not least, the Trump Administration aggressively pursues bilateral trade deals. Weve signed an initial trade agreement with japan that opened that market to. [singing] flowers and should generate 7 billion in sales. Thats about 40 of the agricultural trade that we lost to chinese retaliation. The chinese the japanese trade pack also will facilitate 40 billion in bilateral trade between the u. S. And japan in digital services. This is close to nine percent of what we would have achieved from the Transpacific Partnership yet without the harmful tpp concessions that the u. S. Wouldve made to other countries ab a remarkable achievement since trade agreements normally take many years often more then a decade to execute for the record, the other two agreements are the career freetrade agreement and the u. S. Mexico Canada Agreement which is pending congressional approval. Let me conclude by talking about the situation in turkey. Yesterday President Trump announced two actions against turkey that involved the department of commerce. We are raising their steel tariffs back up to 50 to the current level of 25 turkey is the eighth largest steel producer in the world. And steel was about as largest export to the United States before the tariffs. Its exports of steel to the u. S. Surged 303 percent from 10,000 metric tons per month to 42,000 per month when we dropped the tariffs originally back to the 25 . The president also directed the department to seize work on the plan we had been developing with the turkish government to expand our bilateral trade from the current 20 billion annual total sees 100 billion over the next few years. Already 1700 u. S. Businesses operate in turkey. And in september i had traveled to istanbul and ankara vetting the detailed plan with leading turkish businesses and government officials. The three Major Business associations there all endorsed it and one of them hosted a large celebratory dinner at tipper yanni on 42nd street in new york city during the Un General Assembly week in september. If achieved, the plan would increase turkish gdp by four percent and provide more than 150,000 direct jobs. The plan was always contingent on resolving the military differences between our two countries. The use now include the excursion into syria. It would be an excellent time for turkey to break into Global Supply chains in a big way as Many Companies are reassessing their earlier decisions to concentrate so much on china. But there will be a cost to the turkish economy if present military practices continue. Turkey will bear the cost of the war and forgo the potential trade benefits. In conclusion, the Trump Administration is focusing more intently on trade then any prior administration. There are some shortterm costs associated with this shift but they are much greater longterm potential and probable gains. Millions of americans have demanded that we put their interest first that is what we are doing and that is what we will continue to do. Thank you and i appreciate the Federalist Societys discussions about these issues. They are critical to the health and preservation of our democracy. Dq. [applause] [applause] thank you secretary ross. If we could call the panelists forward we will move onto the next phase of the program. a thank you so much secretary ross for joining us today. We are going to begin our panel we will hear opening remarks from each panelist in turn moving right down the lane. I will introduce them in the order they are going to speak, each will have about 5 to 8 minutes, strictly enforced for their opening remarks. Then we will have discussion and ultimately questions from the audience. Do have those in mind for when we get to that portion of the program. Ron kass is our first speaker he was dean of narratives at Boston University school of law is also the former vice chairman and commissioner of the u. S. International trade commission. He is currently chairman of the center for rule of law and president of kass and associates. There he is an arbitrator or mediator for commercial international and intellectual Property Rights disputes. He also interestingly has been appointed 6c president ial appointments spanning Ronald Reagan to barack obama which i secretly think was a ploy for him to justify getting a Bigger Office with wall space to hang all the connections. We will hear knox from donald cameron, abwith International Trade practice. Hes got over three decades of experience representing multinational businesses, foreign government, Foreign Trade associations and u. S. Importers. Hes that particular experience defending clients and Industry Sectors that are politically sensitive. We welcome him today. Lastly we will hear from jeffrey kessler, he was confirmed unanimously that the same accident on april third 2019 so hes been with the secretary for quite a while he serves as assistant secretary of commerce for enforcement and compliance. With the goal of promoting u. S. Jobs and economic growth. Prior to serving at commerce he was an International Trade attorney in private practice litigating several precedentsetting wto cases among other things. With that, 5 to 8 minutes for each of you. Dean cass. Thank you very much. I actually thought we were here today to talk about your bestselling book. Dean has recently published a book im envious my books are what my wife calls academic books. She says once he put them down you just cant pick them back up again. [laughter] i urge you to look at deans book instead. Im going to start first with a small story from the pregps age about the Great American philosopher yogi berra. Mr. Barrow was in his apartment in new york, not at cipriani and was cooking and started agrees fire in his kitchen he called the fire department, told them he had a grease fire in his kitchen and needed them to come put it out the person taking the call with the fire station said we will be there as soon as we can mr. Barrow but can you tell us how to get there. Yogis response was, what happened to those little red trucks used to have. There are times when there are certain things that are quite obvious but not always obvious to everyone else. I am a proponent of open trade. Trade is a source of competition, to competition is generally good. Obviously its not good for everyone its not good for somebody competing with me. But or not good for me to have extra competition but competition generally promotes getting more things to more people at better prices and with better quality. Having an opportunity to have trade and trade on terms that open economies one to another is generally something to be supported. But competition takes place in other spheres as well. One sphere that i particularly focused on is the National Security sphere. We are competing with other players in the world not just to get our products into their country and get the products we want from their countries. We are also competing on various military and security dimensions and in that regard i want to say that i regard everything that is being done by the administration as generally supporting trade but with a special focus on china. I think that focus is appropriate because china has special interests in the National Security sphere that we must be aware of. China has a lot of state run parts of its economy it is opening the economy more it is allowing more Free Enterprise but it has also maintained a lot of state control through investment and personnel. There are more than 150,000 state owned enterprises in china and many other enterprises in china that have state investment and state control direct and indirect. Of those enterprises. We have to be aware that this affects a lot of products that come into the u. S. Particularly in the information and Communications Technology sector. Theres a lot of discussion in the United States about walc and cte as potential threats to american National Security but the problem is actually much broader than that a lot of products from companies that we all know and many of us have purchased from including gopro and one elbow and wag smart and many other Chinese Brands are products that have been found to have backdoors in their software or flaws in the construction that allow security threats to be maintained and have chinese espionage and Cyber Espionage elements make use of those opportunities. Those are things that i believe the department should look at through the section 232 process which is a process that allows us to take considerations of National Security into account when we are making our decisions on what imports are appropriate and the United States. The great majority of products are products that are outside the space they are products that involve the sort of technologies that are relatively easily evaluated. A lot of complex products a lot of us carry around cell phones that have Computing Power far greater than the computers we sent people to the moon with. We carry those around they are very highly complex technologically dense devices hard for any of us to know whats in there. The same is true of the computers we use which now most of us have notebooks or laptops or other Computing Devices that we do almost all our work on, again, hard to know whats in there how to make sure we are protected from the security standpoint. My wife and i were in a hotel room recently having a conversation and a voice, not hers or mine started responding to us we hadnt realized there was one of those i think alexa device in the room that was turned on. We dont know what sort of information is going out and a lot of the communications we are doing as well as not what comes in. That aside, again, i think that something to be taken very seriously and something on which china is different than other players in the world. That aside, im very supportive of initiatives to expand trade to facilitate trade to facilitate trade on open competitive grounds and look forward to further discussions on both the trade economic and security fronts. Thank you. Is this working . Thanks dean. The discussion used to be free but fair trade. Which supplied the logic behind extensive use of the expense of unfair trade laws primarily ab whether the trade is indeed unfair as a separate discussion. What we have now is it fair trade. Its managed trade and as long as we are all understand that, then thats fine. Its managed trade to an extent that we havent had really tense mood holly. Its not necessarily being managed particularly well. The other casualty of the trade policies the administration has been rule space trade. United states is taking unilateral action that led predictably to retaliation. Wto was constructed to eliminate to all extent possible unilateral actions was the intent is us of rule trade sprayed. ab were they no longer work for the United States. That question conclusion. We had seven euros recovery coming into 2016. Strongest economy in the world. We now see a slowing of the economy but thats not particularly surprising since we are now at the 10 years into the recovery. The abandonment of rulesbased system leads to one predict ability. And unpredictability translates into many things including less Foreign Investment and if you talk to businesses out there predictability is something they see. This is a way that they base their business. According to the wall street journal, a majority of economists currently believe the Manufacturing Sector is in recession. One reason given, unfair trade practices. The Agriculture Sector has been severely hurt by these trade policies. Soybean exports have been decimated and farmers open the first ones hit by the 232 retaliation. With respect to steel they are approximately 900,000 per job created. Theres like an 80 1 disparity between steelworker jobs and still consuming jobs. The 80 is the still consuming job. So lets just talk for one minute about 232. The 232 on import to steel was the first action by the secretary determining that imports of steel threaten National Security the United States. As a result, president imposed 25 tariffs on most suppliers is on others. The secretary of defense who had to be consulted under the law specifically informed the secretary of commerce that imports were not a threat to the National Defense. That had no impact on the decision. In 2001 then president bush investigated the same issue and concluded within one month of following 9 11 that imports of steel were not a threat to National Security. You might want to ask why the administration chose this route rather than safeguard investigation under section 201 which president bush also did in 2001. In that case the itc made an affirmative determination in 16 33 product categories leading to tariffs of varying degrees for those products. By the way, there were no retaliation for those actions. The administration, this is a gas because i dont know the answer, the administration i think did not want to chance the possibility of negative determinations in some or all product categories. I would point out that primarily because of the impact of the antidumping and counter adoing the orders which by the way was said to be not having any impact on imports of steel. Between 2014 and 2016 apparent consumption of steel declined by 16. 2 percent. During the same period total still imports declined by 25. 5 percent. From 44 billion to 33 million tons. As a result, imports as a percentage of apparent consumption declined from 31 a 27 percent. The justification for the 232 was chinese overcapacity. So instead of targeting imports from china, which wouldve had little impact on the Steel Industry since its imports had largely been cut off by adc bd decisions, we imposed 232 on everybody else including china. One result of section 232 was countries beginning with china retaliated against the United States agriculture. The irony of all this is that of all the countries that were subject to 232 restrictions china had the least stake. Other countries such as eu canada and mexico retaliated. Canada and mexico are no longer there because of the impact of the u. S. Mca agreement. As a result they lifted that they look to the retaliation. But the reason is that its selfevident why is it that they would import why would people retaliate immediately . Why not wait . They didnt retaliate in section 201 but the reason is pretty selfevident because these were actions unilateral taken under the guise of National Security and claimed that with they were conforming to the National Security exception in article 21 of the gatt. If you look at article 21 of the gatt will see that they dont meet those criteria at all. The u. S. Is still threatening to impose 232 restrictions on automobiles. On behalf of the american iron and Steel Institute American Institute for imported steel aaii as we are working together with professor Alan Morrison who was supposed to be giving the speech by the way. And we filed a constitutional challenge to section 232 alleging it constitutes unlawful delegation of legislative functions to the executive branch. There are no boundaries of definitions of National Security nor limits on what actions can be taken against imports and that appeal is pending before the court of appeals for the federal circuit. Subsequent to the 232 the United States also imposed tariffs on import to china which has led to retaliation. There is apparently another ceasefire that was referenced by the secretary but weve seen ceasefires in the past that have fallen through so we have to see exactly what happens. We will talk some more in the question answer i think thats all ive got. Thank you. Thank you. I will respond to those comments but let me first fill in some details about what the Trump Administration is doing in trade policy. What the administration is doing to pursue free, fair, and reciprocal trade. I think one thing thats come across in the comments we heard this morning is that the administration is using new tools to greater extent than prior administrations. 232 would be one of them but there are others as well. There is a reason for the administrations increased willingness to turn to tools that some consider unconventional. When the Administration Took Office in early 2017 the United States had been suffering from a series of trade policy damages that were getting worse over time. Not better. The administration came into office with a mandate to address them. And to be more proactive than prior administrations in addressing them. Thats what the administration has done. For example, there is the you china challenge and i agree with professor cass that thats a huge challenge for the United States. Over many years china had systematically pursued discriminatory trade Investment Policies that put u. S. Companies and workers at a disadvantage. The theft of intellectual property, cyber intrusions, force Technology Transfer and industrial subsidies to state owned enterprises as well as some specific problems that professor cass mentioned a study in 2016 by some mit economists and others showed that import competition from china had led to the loss of more than 2 million jobs from 1999 to 2011. It also showed that had contributed to the erosion of the American Manufacturing base. This is a significant challenge for the United States and one that the tools the traditional tools of trade policy had failed to resolve, structured dialogues with china and one off wto disputes did not prevent the problem from intensifying in the years before the president took office. Another problem that had been getting worse was the Global Crisis and access steel and aluminum capacity. For example, from 2000 to 2016 global capacity and steel increased by 127 percent. As of 2016 china had so much access for capacity to produce steel that its excess capacity dwarfed the entire production of steel of the United States. The situation was similar for aluminum. These were Serious Problems that traditional tools failed to meet in the administration decided to take a different course. In the administration, for example, with respect to china the administration imposed tariffs under section 301 starting in july 2018 and those tariffs certainly have put pressure on china and is the deal announced last week shows they are starting to work. They start to bear fruit in a way that the approach of previous administrations hadnt. Section 301 using section 301 in this way hadnt been done since the 1990s, section 301 actually had a heyday under president reagan but it is proving effective. Another example is section 232 tariffs that don mentioned. The section 232 is a tool that hadnt been used also since president reagan but the administration decided to impose these tariffs to stem the Global Crisis in excess capacity and prevent excess pack capacity for reaching american shores. It is true that it affected all countries not just china and its true that china was the main driver of the excess capacity but this was a global problem and merited global solution. Another example is section 201 tariffs that President Trump announced in january 2018 on solar cells modules and washing machines. These are industryspecific but these tariffs also address the serious problem of an important surgeon these particular sectors. In section 201 hadnt been used since president george w. Bush. Just to be clear, the administration is doing much more than tariffs. The secretary discussed that in his remarks. The administration also has negotiated a new u. S. Mexico Canada Agreement which once congress ratifies to generate 68 billion annually in Economic Activity and 175,000 jobs. The administration also negotiated a new deal with japan and renegotiated the existing agreement with korea. And has expressed interest to the possible new agreement with the united kingdom. The administration is pursuing a free trade agenda and i would also add that the administration is working with allies and partners and multilateral to advance free fair reciprocal trade. Theres been a series of trilateral dialogue between the United States, japan, the European Union about reforming the wto which i think there is a bipartisan consensus that wto is very much in need of reform. In many outside the United States acknowledge that as well. In addition, the administration has been a leader in the global forum on steel excess capacity. To address that problem. The administration has spearheaded ecommerce plural lateral negotiations with the weird world trade organization. ab we are not shying away from bold action even when some of our partners and allies are involved. Overall, the administration is making trade policy in a way thats a reasonable response to the world as it stood in 2016 the traditional tools hadnt been working. Something new was needed and the administration isnt flinching from trying new policy approaches. Let me address a few of the other comments i heard. If i have time. First, as to the charge that the United States is now somehow a country that uses managed trade rather than freetrade, what i would say is in the heritage foundations 2019 indepth of Economic Freedom the United States was 12th. The United States was one of the most highly ranked countries in the world. I think we still have a pretty good system of free trade. We have tariffs on a lot of on some imports but it only represents a small proportion of total u. S. Imports. Under 400 million abillion dollars that are affected by tariffs in the context of more than 20 trillion economy. I also want to address the reference to smoothawley which i think is an exaggeration. A big exaggeration. Smoothawley, the problem with smoothawley is it reduced u. S. Exports from 1931 to 1933 by 62 percent as a result of retaliatory tariffs. The contrast experts are going up today. Exports went up from 2016 to 2017 2017 2018 and 2019 year to date on track to be the same as 2018. I dont see that as an apt historical comparison. Often smoothawley is invoked as a way of charging that any use of tariffs is bad. Any use of tariffs is bad. I think the administration views tariffs more neutrally. Tariffs are a policy instrument that can be used to achieve different objectives economic object moves. Geopolitical objectives and so on. And whether tariffs are appropriate in a particular case should be based should be evaluated on that basis. One other thing that i want to address is there was a question of why the United States used a section 232 rather than another tool to impose tariffs on steel and aluminum. I would just say its a neat fit with the statue. I wrote down some of the statutes. Im not sure i can read my own writing but the statute says that the secretary and the President Shall further recognize the close relation of the economic welfare of the nation to our nation security. And shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries. It goes on to talk about employment, loss of skills or investment. Section 232 is just a neat fit for the situation that the steel and aluminum industry found themselves in. I will stop there. Thank you very much. I noticed that don was scribbling furiously while you were speaking and ron took a few notes so i want to give folks a chance to respond. I cant get the other microphone to work so we are going to share a microphone. When returned to you ron first, just take two or three minutes and respond. Thank you and appreciations to both panelists. First of all, i do think that by and large it is positive to look at trade overall rather than respect to one country. I try not to look at bilateral trade issues unless i really have to. I have a terrible bilateral trade problem with my grocery store. I keep giving them money and all they give me our groceries. A lot of these issues are ones that are better looked at in terms of how old the countries we deal with operate. I also think its worthwhile looking at trade and tariffs in connection with how they work at trade opening. A lot of times putting tariffs on a product is a strategic decision in order to try to get more open trade rather than simply to close trade although there are Many Industries that like tariffs because it inhibits the competition. I think you have to look at what any administration is doing, not just the question of whether it has tariffs going up or down in a particular moment but whether the use of tariffs his intended to an effective at getting more trade opening broadly. With respect to other nations. I also think its important and jeff emphasized this, when we are working with respect to what we will do on the trade front to be working with other nations and jeff emphasized we are working with trade partners on different initiatives. A lot of people will criticize any administration if it doesnt sign a trade deal that a particular set of people like. Not every trade deal is a good deal. And not every trade deal opens trade. We have negotiated some trade deals that run to 800 or 900 pages. It doesnt take 800 or 900 pages to say we want open trade. Which is not to say that even a long trade deal cant be good but we should recognize that our trade negotiations arent uniformly going in one direction under any sort of negotiations. One thing i wanted to pick up and domes remarks you talked about the intersection of gatt article 21 and the 232 process. There is a serious interpretive question as to whether and what degree a u. S. Domestic law should be interpreted by looking at a collateral trade agreement that deals with the same issues. The gatt article 21 safeguards provision will determine the degree to which a u. S. Action is viewed as consistent or inconsistent with other International Agreements. Thats a separate question than the question that a court or administration faces in interpreting the law, the u. S. Law, thats on the books and directs the administration and how to act and directs the courts in what is legitimate under u. S. Law. That was a point that scalia often made to others who wanted him to look at International Agreements when he was interpreting u. S. Law. Last point, when i was talking earlier about the threat from china on the National Security front, i think many people can make decisions that protect themselves and their economic purchases, none of us is very effective at making decisions that protect us from a National Security standpoint. I cant tell whether something in doing is helping the National Security or not and my own individual action is not going to be terribly determinative in terms of National Security. That is something we do need the government to look at and the government to take actions based on. I have a paper on china, chinese exports and National Security that will be published on the Federalist Society website its unlike deans book on the hidden nazi. It is one of those reads that my wife would encourage people to really focus on when you are tired and having difficulty falling asleep. I shouldve mentioned in my introduction also my literary agent. First i would like to address the article gatt article 21. I actually agree with ron on that. The reason i pointed to gatt article 21 was not to say was germane to whether or not there was some illegal something wrong with respect to the domestic law. Gatt article 21 is pointing to specifically because the question arises why would people unilaterally retaliate and the answer to that question is, because the measures that were taken by the United States not conform to gatt article 21, they are not even close. I agree, with respect to whether or not the u. S. Law is or is not a good thing, thats the reason we have a constitutional challenge thats pending for the court. This is an action against the law itself that was just passed in 1962. The provisions itself if you look at it basically say in order to define it the secretary should give great consideration to Domestic Production needed for National Defense requirements which of course secretary of defense said everything was okay. Section d is so broad that it says at the end that theres a number of factors and jeff reeled off a number of the language and then it says, without excluding other factors, in other words, anything can be used to make a decision here. The point that weve made in our constitutional challenge is that indeed there are no standards and there are no limitations. That actually is an illegal delegation, unconstitutional delegation of legislative powers to the executive branch and thats the difference between that and for instance, section 201, section 201 the itc makes determinations injury, no injury, limitations on what the president can do for one second with respect to matters trade, if you dont think theres managed trade you are not a farmer and you are not a steel consumer because if you are one of those two things you can understand there is managed trade. There are choices being made. Managed trade i dont find that to be particularly offensive. Theres managed trade all the time. In this room i think managed trade takes on a different context maybe then in other four out but i would tell you that its heavily managed and thats as long as everybody is upfront about the fact that we are picking winners and losers you got an exclusion process at the Commerce Department for exclusions to 232 tariffs. Its a very cumbersome process and its a very difficult process to wind your way through. Thats a fact and the fact that steel consumers are having to do that thats one outgrowth of managed trade they have an enormous amount of people in charge of trash history discusses, they work extremely hard but they are also not steal experts and nor can they be. Works about as well as you would think it works and it doesnt work particularly well. Finally, with respect to smoothawley, it was an example. I think jeff might be right but thats going too far. I wont comment on the pending litigation. With respect i do say the United States believes all its actions consistent with the rules and on 232 i disagree with your characterization of management and of the way the exclusion process works and weve processed many exclusions. We are going to start taking questions from the audience please go to the microphone if you have a question its important for the panel to finish before the audience. We need those that end with a question and not a statement so please be as clear as possible. I want to ask a question of all three panelists. I am certainly no expert in this area and i am just wondering to what extent if at all sure that the United States take into consideration from the country with which ron raised into some of the Economic Issues we are dealing with as a country how do you do the math on those and figure out what free trade is to look at the economic flows and open up the economic flows rather than looking at factors in any country that lead to the production of the goods we do have certain rules both internationally and domestically that allow us to look a at state subsidies and the degree to which the subsidies are intended to distort to some degree in the regulations i think it is a different matter. It has an authoritarian government that used its authority domestically to regulate aspects of the economy that have an impact on the National Security to facilitate espionage efforts into slavery espionage efforts and that controls the way they are produced and marketed. That has an impact on what you should be doing from a National Security standpoint, and i put all a distinction between that and the usual matter of dealing with economic flows. We do have provisions in both the International Agreement and a domestic flaw that allows us to use different sorts of competitions for the cases involving the nonmarket economies. Those however are different question from looking at the structure of government itself. I generally agree although i must say i dont agree that it doesnt go to the structure of government. The enemy rules which look at the theory to the extent that any of you are into the trade policy and trade law. It is a way to assess the attacks on the foreign computation and the International Rules that we have agreed to and that is what the u. S. Does, but thats what it is. When you get down to the unfairness of lament, thats a pejorative term that is useful in the political discussion but that doesnt really get to the heart of the matter. In the methodology that is so far from anything one would call intellectually honest. It really that has nothing to do with anything aside from weekend with more penalties on. Let me just give you one example. It would be a good idea and should be legitimate to the cases against companies in china because its all only governmen enterprise anyway, so everything is 100 owned and run by the government, so we are just going to do the methodology by which what we do is create a surrogate value added benchmarks to compare prices in the United States. This is why you get the margins of 200 and higher many times in these cases. Weve determined it was i believe 87 . I dont remember the precise number of 87 of the economics in china actually is not a state fund or controlled and therefore it is legitimate for us to do countervailing cases against china. Fair enough, so you are going to measure subsidies in china. If you are going to measure subsidies that would mean youre not going to follow the nonmarket economy in the methodology because i mean, if youre going to get a subsidy case and then treat the dumping of the market economy, thoug noe not going to do that. We can get the 200 . There is also an International Trade case. Let me give you the chance to weigh in and then we will go to the audience question. On the last point made, i think his concern is with congress and the way they set up the law and changed the wall to prevent commerce to the countervailing duties at the same time. They apply the law rigorously and congress decide on the fair trade. We have one subject to the judicial review. All the determinations are rigorous that adhere to the statute and we administered the ball the way the congress enacted. On the other topic the original question about whether the form of government is important absolutely. The United States of china experience knows that this and the structure of the chinese economy that the United States has encountered so many problems and the ones i mentioned that had intensified in recent years the United States, japan and European Union are having those trilateral discussions about reforming the rules. The discussions are focused on topics that industrial subsidies, the state owned enterprises, forced Technology Transfer and other non marketbased practices. So, you know, the form of government in the countries it is critical. The model of the progressive it is pursued after world war ii is extremely valuable and important but when it comes to an economy like china it is insufficient. Lets move to the audience now and remember please a question rather than a statement. To change the way they rule, and isnt that something that they couldnt fundamentally do, that is the first question. Second, regarding hong kong. If the situations largely stayed the same with no style of massacre but continued demonstration with the administration would they support the special trade status . Think you. It has made changes to its economy in the path. Its in the capacity to make a further changes and pursued more reform and open it up. Unfortunately, china has not adhered to the reform but i do believe that its possible to return to that path. I dont have a comment on the hong kong situation. It hasnt refused to trade with those that have authoritarian governments nor has it refused to trade with countries that have non marketbased economies. That is a different question. How some of the rules operate them is what dawn was talking about earlier and its a different question from what sort of trade agreements are mutually advantageous to the United States. With the General Motors strike and the pressure on the companies to keep the plants opening in the United States, the uncertainty i just wonder what you thought about how that would impact the trade. I grew up in cleveland and theyve had issues for over 20 years. It didnt just affect the price of imports. The administration denied the tariffs had anything to do with the shutting down. The strikes happened regardless of who is in power and the trade policies are a they are going bankrupt specifically because of the trade policies of the administration the sword of economic dislocations that you are talking about they feel about their own circumstances on the u. S. Economy and trade as an impact on their own sort of productions a lot of them look at trade through the lens of what that does for competition with what i produce even though they would go to the store and try to find things from other markets. This question, you talked about section 232 and turkey sanctions. My question is how is the administration justify raising 50 on steel imports from turkey under section 232. Another question on this si side. I am not an expert in this area. When they make the determination as to whether or not a certain situation is problematic from the standpoint of defense but that would be a relatively short term point of view that hes taking us that the situation right now with sufficient input to the Defense Industrial base from allies that are difficult to the United States. One could make a provincial call for the long term tha longterms more about in terms of how good one recover it has ceased to exist because the trade differentials, thereby justifying a different provincial view does that make any difference to your analyst is . Thing, and no it doesnt. In 2001 it was a different secretary and what they found is that the needs of the current production of Steel Industry dwarfed the needs of the defense industry, and he doesnt look at it in the short term because that is the whole point of the National Security analysis. Analysis. I would also see the rumors of f the demise of the Steel Industry are greatly exaggerated. The Steel Industry in the country is the most protected industry has directly after. Its even more protected than weve had a protection i have pe United States industries since 1974 and you dont have to be countervailing duties in the escape clause that big river was investing in the plant there is an additional 6 million tons coming on stream and theres all flat steel. If you are somebody in the investment field i guess what i would ask you is if the program is going to make the rich richer, what about the companies that are on the margins, lets say integrated facilities like u. S. Steel there is a question how they are going to compete to the producers and the country it is a very good question and theres another question which is whether or not 232 Program Accelerated at the dynamic by making the rich richer because while they were getting richer, u. S. Steel was hanging on and still is hanging on but it raises an interesting question. Textile protectionism the way that it was, but with steel there is a lot of capacity. To reiterate the remarks we are starting to see positive results from those including in the form of increased investment and Steel Production facilities, new facilities and modernization the argument about how you look at the National Security question there are those that really thought we should be protecting industries that we might need in the case when we would have difficulty getting products from other nations and for the other administration they said everything we do now that raises the cost of those products takes money out of what we could otherwise spend on other defense investments. They take money out of what we could use or other parts of our economic sand that has longterm implications for National Security as well. I dont think that the two sides have come any closer over the last few years, but i think that you have raised an issue that will continue. We have time for a final question. On the alto 230 to the president said he wanted to give six months for the parties to discuss ways to deal with the National Security threats that the report outlined is there a way for the government to offer another extension or some kind of action . That u. S. Trade representative to provide an update six months after the issuance. Let me give you 60 seconds to express the final five and then wrap up and go where we started. It is hotly debated as a matter of regional disagreements and those will remain in the matters of disagreement but im glad they gave us an opportunity to talk about it today and secretary ross and kessler were willing to be here to give and take the ammunition on both sides. I found it to be an interesting discussion and i understand the controversy and the disagreements. And in the end i do think that these are new tools and policies. The new doesnt necessarily mean good. If you want to see what happens to the economy, just wait because the largest facility in South Carolina and then if you are going to start cutting off and raising the cost of auto parts and automobiles that is going to have a severe impact on the economy, so lets see. I think that this latest it appears there may be some efforts to add one more adversary. One final thought . We are in the new era geopolitically as well. Its how the trade policy should adapt to the circumstances. Theyve taken a new bold approach to the trade policy problems and it is in the recognition of changing the realities, strategic, geopolitical and economic and its important for everyone to understand what tools in the toolbox the United States government has and how we are deploying them and how we should youtube deploy them to meet the challenges of the future. Thank you to the panelists and all of you for being here and thank you to the panelists as well. [applause] [inaudible conversations] the programs that the public universities and in recent years but havent got as much attention given as they should and could increase funding for the programs thats an important issue to me being a student currently. I want candidates to tell me as well as the electorate how they are going to fit the Budgeting Issues in order to ensure that we could have the money to Fund Programs for the generation. The issue to me is the student loan crisis and that is how it is crippling the generation. Of the powers that be are really looking at how this is going to. Its going to be affected by the fact i still have t had to pay y student loans. Who taught the agenda over in the house of representatives. Fullstop i
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