Pro-Trade Democrat in House Calls for Section 301 Tariff ‘Reset’ Under Biden
Rep. Rick Larsen, one of the chairpersons of the New Democrats' trade task force, told the Washington International Trade Association that he thinks the U.S. has not gotten any benefit out of the Trump administration's trade war. When asked by International Trade Today if a Joe Biden administration would roll back the Section 301 tariffs, even if China does not give concessions on industrial subsidies or state-owned enterprises, Larsen said, “I think the next administration needs to reset where we are, how we’re going to approach this.”
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“If the Trump administration’s view is what we were doing before wasn’t working, I think I can make a reasonable case that the way the Trump administration is approaching it also isn’t working,” he said. “This is the premise of going to a tariff war with China, was to get changes with the structural problems within China.” But, he said, aside from some language on intellectual property and forced tech transfer, the phase one deal is all about purchases.
He said he thinks a Biden administration would be inclined to work with allies, and Larsen said he believes the global trading community can make it clear to China what “we want the rules to be -- and it’s going to take patience, it’s going to take some humility, it’s going to take negotiation.”
The Washington state Democrat was speaking during a WITA/American Leadership Initiative webinar on July 7.
Boeing, which employed 20,000 people in and around Larsen's district before the COVID-19 pandemic created an economic crisis, is a major exporter to China, and Larsen has been on a House working group on China for 15 years.
“The nature of the center of gravity [in the House on China] has changed quite a bit,” he said. “The national security hawks, the economic hawks and the human rights hawks have found each other and are now flying together.”
He said that many members of Congress want to punish China, others want to sever the trade relationship, and still others, like himself, want to salvage the relationship. But, Larsen said, the national security issues around Huawei and ZTE are real and serious, and he expects the attempts to decouple in telecommunications will continue “to some extent” even if Democrats retake the White House in 2021.
“Decoupling is actually more of a technology approach,” he said. “Boeing is not decoupling from China. Boeing is going to sell to China, Boeing is going to build parts in China. Other heavy manufacturers are not decoupling from China.”
But, he noted, “Chinese-based technology does reflect the values of the Chinese Communist Party,” including using it as a means of social control and censorship.
He said the Trump administration's efforts to force manufacturing reshoring have not been successful.
“To the extent that decoupling is taking place, it is factories leaving China and going next door to Vietnam,” he said. And even though he praised U.S. Trade Representative Robert Lighthizer for his work on USMCA, he noted a recent anecdote reported about Japanese parts makers with operations in Mexico that will triple wages at their factories there (while adding robots) to meet the $16/hour requirement rather than move work to the U.S. or Canada. According to the Nikkei Asian Review, under 14% of parts in Mexican-assembled vehicles come from Canada and the U.S. The new auto rules of origin will require 40% of the vehicle's value to have been made with $16/hour labor.
“We’re not going to move jobs to the United States for USMCA, we’re going to increase the wages to Mexican workers,” Larsen said.