03.12.19

Senator Lankford Attends Finance Committee Hearing on the World Trade Organization

CLICK HERE to listen to Lankford’s questions.

WASHINGTON, DC – Senator James Lankford (R-OK) today participated in the first Senate Finance Committee hearing of 2019 focused on trade and specifically the current state of the World Trade Organization (WTO). Lankford questioned US Trade Representative Robert Lighthizer during the hearing entitled, “Approaching 25: The Road Ahead for the World Trade Organization.” Lankford focused on asking Lighthizer about our trade relationship with China, Lighthizer’s views on the Appellate Body of the WTO, and Section 301 of the Trade Act of 1974. 

A leading voice on improving international trade policy, Lankford recently introduced the bipartisan, bicameral Import Tax Relief Act to require the Executive Branch to create an exclusion process for List 3 (and any future list) of Chinese imports subject to Section 301 tariff imposition.

Transcript from Lankford’s Q&A:

Lankford: Thanks for being here again and for the engagement on this issue. WTO has just ruled against China that they have consistently exceeded their ag subsidies that is allocated, which they have done for years, that is something the United States has worked with WTO on for several years now, have won that. Now, the challenge is if China appeals that, and it goes to the Appellate Body, and we don’t have enough individuals on that Appellate Body once it goes into next year what happens then? So my thought is or my question for you is, ‘Where are we now that we just won a ruling from the WTO on ag subsidies with China on where this goes. If it goes to the Appellate Body, and it extends out past next year, and we don’t have enough people there to have a quorum there at that point.’

The Honorable Robert Lighthizer: So I would say, first of all, with respect to that case, it was a big case, as you know—a major win—and we have another case that’s floating out there, which is also important, that’s their TRQ [tariff rate quota] management, which I know you also are aware of and involved with. So it’s a major win. I should also say that in the context of our discussion with China we are trying to resolve this case in a way that we think achieves our goals and avoids the possibility of an Appellate Body decision is of course it’s not impossible you go to the Appellate Body and lose the case also, so, I wouldn’t necessarily assume that you’re going to win a case just because you go to the Appellate Body. So my hope with respect to that specific case that we can work it out in the context of this negotiation, and we are having those discussions. And that is my objective. In terms of the general question of what do you do? How do you get reform? That’s a big question, as you know. And, if you’re not willing to be bold and use the only leverage you have with the WTO, which is to say that, ‘We won’t approve the appointment of Appellate Body Members without reform.’ I don’t know any other way to do it. And I could go through, I know you know well, I could go through, ‘The Appellate Body doesn’t follow its own rules, it’s creating a jurisprudence, which there was never any contemplation that this would be part of this process right, the whole,’ I should take a step back for members who haven’t spent a lot of time with this. The notion was, ‘You would have specific disputes decided by a panel and the Appellate Body would come in within 90 days to say, ‘OK—fine, is there a crisis here?’’ If not, the panel would decide there would be no jurisprudence. What has developed over time, is in fact these things, the Appellate Body takes years, they have developed their own jurisprudence, so they’ll cite their own things, and this is, the effect of this has been to create obligations that we never agreed to and to take away rights that we bought. So what you’re saying is, ‘What do you do, you’re creating a problem to force reform.’ I looked up the short-term impact on an important matter. I’m saying I’m trying to deal with that matter in the context of these negotiations. But that doesn’t in any way obviate your more important point.

Lankford: So the bigger issue is, your opposition is not to the Appellate Body, it is to how it is actually operating. So the hope is to get it back to operating functionally and consistently and predictably rather than sporadically and be able to get it back to full functioning. 

Lighthizer: We clearly need reform, and there’s a whole lot of things that I could talk about at the appropriate time, whenever anybody asks me that are major problems, every other country, or almost every other country has made this same point. It goes to why we’re not a negotiating body anymore, the WTO, the litigation, these are all sort of link things. I have, you know, three former WTO director generals who even, you know, 15 years ago were saying, ‘This is a bad trend. This is a problem and we have to get away with it. It’s a major-major change from what the WTO was supposed to do, and the result is we don’t have rounds, we’re not making any real headway, it’s a very large, fundamental problem, and I think it is generally recognized to be such by thoughtful members.

Lankford: So let me bring one thing up quickly on this as well. You and I have talked about the 301, I do appreciate that in the first two tiers of 301, there has been an exclusion process in place. There has been a dialogue, and you and I have discussed before, that if it moves from 10 percent tariffs to 25 percent tariffs, there will be an exclusion process at that point as well, but I would tell you some Oklahoman companies that do a lot of trade and manufacturing are concerned that there may be a point where the 10 percent tariffs are left in place and there is still no exclusion process. So there has been an exclusion process for tier one and two, but there would never be for tier three, and I would just say that’s inherently inconsistent for how we have handled things in the past. And we can continue that conversation in the future.  

###