USTR Nominees Questioned on Argentine Beef, AGOA, China

Two Republicans also asked for protection from foreign competition for local ag interests, which agricultural negotiator nominee Julie Callahan endorsed.

Deputy USTR nominee Jeff Goettman declined to answer questions about the USMCA renegotiation and a trade preferences program for Africa because they would be part of his job, if confirmed.

Goettman pointed to his upbringing in Springfield, Ohio, which lost more than 90% of its factory jobs since he was a child, and dropped from 82,000 to 58,000 residents, as shaping his views on trade. He said, "This hollowing out of what was once a vibrant manufacturing community is emblematic of the hundreds of towns across America that have suffered from the devastation of deindustrialization beginning with NAFTA and accelerated by China’s ascension into the World Trade Organization."

Even though Goettman avoided saying whether he would help Congress write a new version of the African Growth and Opportunity Act, when asked by Sen. Raphael Warnock, D-Ga., he said the administration does support an AGOA renewal and a renewal of Haitian trade preference programs that also ended Sept. 30.

Warnock said that AGOA and Haiti HOPE/HELP lower prices for American consumers, support American business and "preserve American influence in areas where China is aggressively trying to expand its reach."

He noted that China eliminated tariffs on all imports from 21 African countries while the U.S. let a more limited preference program lapse.

"I was glad to see the Trump administration supports a short-term extension, but the reality is, the businesses are not going to really invest until they get a longer-term" horizon, he said. He said he wants Congress to tee up a longer-term commitment during the one-year renewal. "I hope we will take this seriously," he said.

While some Democrats complained about prices rising because of Trump's tariffs, most questions were on agricultural trade.

Sen. Michael Bennet, D-Colo., complained that the Treasury is propping up the Argentinian peso as China makes "enormous purchases" of Argentinian soybeans.

He also complained about Trump's social media post saying that he'd be importing Argentinian beef to lower prices for U.S. consumers.

"Argentina accounts for just about 2% of our imported beef; even if that amount were quadrupled, it would be nowhere near enough to change grocery store prices," Bennet said. But commodity prices fell after the post, nonetheless, he said. "Producers have paid the price of those tweets."

He said China's boycott of U.S. soybeans "is a result of President [Donald] Trump's policies," starting with the Section 301 tariffs in the first term.

He said he is worried that Trump will sign a deal on Oct. 30 with China that would help domestic soybean farmers, because, "I’m worried the price for that is we will be sending U.S. technology to China that we shouldn’t be sending to China. I’m very concerned he’s going to claim to solve the China soybean problem -- which he created -- at the expense of national security."

Callahan replied: "This will not be a one-way conversation with Argentina on beef," because that country has tariffs on U.S. beef and non-tariff barriers that the U.S. is seeking to eliminate.

Sen. James Lankford, R-Okla., chimed in on cattle, as did Sens. Steve Daines, R-Mont., and John Barasso, R-Wyo. Barasso said cattle is Wyoming's No. 1 cash crop, and cattle outnumber people in his state two to one. He asked, "What assurances can you provide that Argentine beef imports won't undercut prices for American beef ranchers?"

Daines said having the China market allowed producers to export cuts to China that were not as valuable in the U.S., which made them profitable after years of losses.

"It’s also a win for consumers. Profitability helps secure food supply," he said, and eventually, producers would grow their herds, bringing down prices.

Callahan said that after the phase one deal, the Office of the U.S. Trade Representative provided a report to President Trump weekly on China's ag purchases. "Unfortunately, over the last several years, China has slid back, and was not purchasing as they should."

She said in addition to beef and soybeans, sorghum and cotton exporters still need to recover Chinese market share.

"China, across the board, has been weaponizing agriculture, but I am looking forward, if confirmed, [to the time] that we can have a transactional relationship. We don't want to over-rely on China as an export market, but we also don’t want it to be zero."

Grassley complained about trade remedies on phosphate fertilizer, acknowledging it's a Commerce Department issue, not one that USTR has jurisdiction over.

"However, I would hope that you take back to your team the message to get rid of the Biden Phosphate Duties that removed Moroccan phosphate as an option for American farmers," he said. He said Morocco has about 70% of the world's phosphate.

That represents roughly 70% of the global reserves of phosphate, almost making it non-accessible to American farmers.

Sen. Roger Marshall, R-Kan., told Callahan that USMCA is the best trade deal of his lifetime. She said she 100% agreed on its value, but added, "That said, the U.S. has a massive agricultural trade deficit with both Canada and Mexico." She said the USTR is taking all comments on the pact into consideration.

Sen. Maria Cantwell, D-Wash., expressed concern that Section 301 fees on Chinese ships arriving in U.S. ports will exacerbate her home state's port problems, and that ships will instead call on ports in Vancouver or at Prince Rupert port, the closest North American port to Asia. She asked Goettman if they would consider lowering the fees.

He replied, "We are looking to ensure that American jobs and American ports will be robust," and that they don't lose market share to Canadian ports. They are considering both the 301 fees and the Harbor Maintenance Tax, he said.