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USTR Pressed on Opening Section 301 Exclusion Process During Senate Hearing

The chairwoman of the Senate Appropriations subcommittee highlighted in her opening remarks Congress' directive to the U.S. trade representative to establish an exclusion process for Section 301 tariffs. But when Sen. Jeanne Shaheen, D-N.H., tried to ask USTR Katherine Tai about how her office is "working to comply with this directive," Tai evaded the question and talked about the deliberations in the administration on whether there should be a partial rollback of the tariffs on the vast majority of Chinese imports.

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Tai was appearing in front of the Subcommittee on Commerce June 22 to defend the president's request for $5.5 million more funding for the office for the fiscal year that begins Oct. 1. That's an almost 8% increase in funding from the current $71 million budget.

Ranking member Jerry Moran, R-Kan., also emphasized the exclusion process, and noted the law says the office must "immediately" administer such a process.

When Shaheen pressed Tai on when an exclusion process would open, Tai said she and her staff "are taking into consideration in the design of the tariff exclusion processes that we have implemented and the ones we are looking to implement in the future all the feedback we have gained from Congress and stakeholders... ." She also said they are moving forward on all China trade policy "with a deliberativeness to ensure that any exclusion processes that we implement ... are fair, transparent, administrable and give our stakeholders the opportunity to make their case for relief."

Shaheen said that Congress is not requesting that exclusions be reopened, that it was a directive written into law, and she asked Tai to give her a time frame on when USTR would comply.

Tai instead told Shaheen that President Joe Biden told reporters over the weekend that decisions on how to handle China tariffs "are pending with him right now."

Shaheen asked with disbelief if Tai was suggesting that she and her colleagues ask the president when USTR will comply with the law?

Tai said, "These issues are under consideration as we speak."

Moran, when he got a chance to ask questions, told Tai that "we've seen no evidence the directive is being followed."

Almost half of senators had questions for Tai about the burden of tariffs, on Chinese goods, on imported fertilizer, which are under Commerce's purview, since they are trade remedy duties, or about the consequences of China's retaliation against U.S. exports, such as Maine lobsters and Alaskan fish.

But two Republican senators took Tai's side, saying that the China tariffs did not cause inflation, and that to roll any of them back without concessions from China would be very dangerous. Sen. Mike Braun, R-Ind., explicitly asked her if USTR needs to retain the decision-making authority on exclusions so the administration can determine if the criteria would be so loose that they would undermine the economic pressure on China that the actions were designed to create. "I absolutely agree with that," Tai replied.

At one point during the almost two-hour hearing, Tai said that the public conversation lately has been "very, very fixated on the issue of the tariffs. What does it mean to remove the tariffs? What does it mean for our leverage?"

Tai alluded to supply chain strains and inflation and said that whatever needs to be done in the China trade relationship or around the world to address that, "we will one day find ourselves on the other side of these challenges. And I think it is very, very important that what we do now not undermine the need that we have to make ourselves more competitive and defend our economic interests in a global system that, for the past several decades, has eroded our leadership in many, many areas in the economy,"