More action to enforce existing trade laws and regulations, and potentially new measures as well, are needed to help secure U.S. supply chains and protect U.S. workers, the House Ways and Means Committee heard at a recent hearing it held in New York to gather input on those issues.
Nury Turkel, who chairs the U.S. Commission on International Religious Freedom, praised the passage of the Uyghur Forced Labor Prevention Act but said tougher enforcement is needed. Turkel pointed out that no additional entities have been placed on the UFLPA Entity List since it was created with 20 entities in 2022 despite the research capacities of the seven federal agencies that make up the Forced Labor Enforcement Task Force and the “extensive solid research” that has been published since then. He also called on the FLETF to announce additional priority sectors for UFLPA and forced labor enforcement other than the 20 identified in July 2021.
Another witness at the hearing said existing Section 301 tariffs on imports from China should be increased. John Romano heads a major producer of titanium dioxide, which he said is “critical to nearly everything that is built or manufactured in this country” and is made through a process that produces rare earth minerals as a byproduct. Romano said the Section 301 tariffs have allowed his company to stay in business in the face of “unfair tactics” employed by Beijing that have helped China increase its share of global titanium dioxide production from 36 percent a decade ago to 52 percent today. However, he added, with that share expected to rise to 70 percent by 2030, “current Section 301 tariffs may not be high enough to prevent an uneven playing field in U.S. markets.”
Better enforcement of existing rules is also needed closer to home, said Dale Hemminger, who owns a dairy and vegetable farm in New York state. Hemminger chastised Canada for keeping its market “mostly closed” to U.S. dairy products for 30 years despite commitments under NAFTA and now USMCA. He added that Canadian subsidies, “including a trucking-for-export subsidy, investment grants and government-controlled low-cost inputs like energy,” give vegetable producers in that country an unfair advantage.
Witnesses urged the federal government to pursue new rules as well. For example, Turkel said, Congress should reconsider the de minimis entry level, which was increased from $200 to $800 nearly a decade ago, because it has contributed to “spotty or non-existing policing of Congress’ black-letter prohibitions on the importation of fake, dangerous, and forced-labor goods.” He asserted that this problem has been exacerbated by importers shipping goods into third-country free trade zones “to warehouse goods that could later be sold to consumers under the de minimis threshold.” Thomas O’Shei, president of a local steelworkers union at a New York state tire plant, echoed Turkel’s recommendation, adding that other countries have much lower de minimis levels and that this “lack of reciprocity means that U.S. businesses and workers do not have the ability to compete.”
O’Shei also urged Congress to “do more to ensure a level playing field” by further toughening trade remedy laws. Changes could include making it easier to address third-country subsidies (like those provided under China’s Belt and Road Initiative) and recognizing that global companies “can quickly shift dumping from one country to another.” He also expressed support for legislation now before Congress that would tackle evasion of antidumping and countervailing duties by increasing financial penalties for violating customs laws, allowing action against individuals committing customs fraud, and excluding individuals who have committed fraud from participating in the importer of record program.
More broadly, Turkel said, Congress should pass legislation patterned after the Foreign Corrupt Practices Act that would criminalize actions taken by business entities that are aiding, abetting, facilitating, or incentivizing forced labor or other violations. He said such a law should (1) place enforcement decisions in the hands of prosecutors instead of government entities such as U.S. Customs and Border Protection or private parties, and (2) compel companies to conduct internal investigations, report unethical business practices, enhance compliance programs, and create business and human rights due diligence programs.
It is perhaps worth noting that the hearing witnesses spent little if any time addressing some of the issues highlighted by Committee Chair Jason Smith, R-Mo., including “a smart and strategic decoupling from China,” reducing supply chain dependence on “nations who do not share our values or have aligned interests,” and “pushing more trading partners to open their markets” through measures that have the force of law. There was slightly more attention given to two issues identified by Ranking Member Richard Neal, D-Mass., including potential budget cuts for the federal agencies that administer and enforce U.S. trade laws (which he said could be as large as 22 percent under current House Republican proposals) and reauthorizing and reforming the Trade Adjustment Assistance program for domestic workers.
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