Ross Signals Commerce Will Go to Bat for U.S. Firms

International Trade Daily™ provides rapid, reliable notification of the most significant developments affecting U.S. trade and international business policy, as well as the policies of major U.S....

By Rossella Brevetti

Commerce Secretary-designate Wilbur Ross Jan. 18 signalled that he would not hesitate in using the Commerce Department's long-dormant authority to bring unfair trade cases on behalf of struggling U.S. industries.

“I’m an activist,” Ross told the Senate Committee on Commerce, Science and Transportation during his confirmation hearing. The hearing was heavily focused on enforcement but also addressed Cuba policy, export financing and the North American Free Trade Agreement renegotiation, among other issues.

Self-initiation of trade cases would be a significant departure in current Commerce practice and would allow for quicker relief for U.S. industries. Commerce has only self-initiated investigations on three occasions—most recently in 1991, according to a Commerce official.

Sen. Gary Peters (D-Mich.) complained to Ross that the authority to self-initiate dumping and subsidy cases on behalf of domestic industries has seldom been used. Dumping and subsidy cases are usually started by U.S. companies filing petitions to Commerce and the International Trade Commission. But Commerce can bypass this step and save U.S. industries time and resources by self-initiating cases on behalf of U.S. industries.

Commerce’s self-initiation authority is particularly useful for small companies that lack the resources to compile the necessary data to bring a successful case, according to Ross. The duration of dumping and anti-subsidy cases should be shortened, he said. Ross added that he wouldn't “look kindly” on foreign companies—under investigation in dumping and subsidy cases—that stall in providing information to Commerce, thereby delaying relief for domestic firms.

Ross said he would provide for “people power” to allow Commerce to self-initiate cases. By picking “strategic cases” and self-initiating them, Commerce would send the message that it is getting more serious about enforcement, he said.

Ex-Im Bank, Cuba

A mechanism to help finance exports is needed in the U.S., particularly for small businesses, according to the secretary designee. Ross said he understood that the U.S.-Export-Import Bank had been criticized but added that “some sort of financing tool” for U.S. exporters is important.

The agency supports U.S. exporters by providing loan guarantees to foreign governments or companies to purchase U.S. goods. The agency needs a quorum of three board members to approve transactions greater than $10 million but currently only has two board members. Efforts to confirm other board members have been blocked.

Sen. Amy Klobuchar (D-Minn.), a supporter of Cuba engagement, asked Ross if he would back ending the U.S. trade embargo with Cuba or would recommend rolling back steps the Obama administration has taken. Ross said he doesn’t have a “firm view” on the embargo and would like to become more educated on the issue.

Trade Team

Commerce Committee Chairman John Thune (R-S.D.) questioned Ross about reports that he, instead of the Office of the U.S. Trade Representative, would lead the administration’s trade policy. “We’re well aware of the legislative powers of the U.S. trade representative, and obviously neither the president nor I will try to do anything that is adverse to the congressional mandate given to the U.S. trade representative,” Ross told Thune. However, he said U.S. trade policy could benefit by bringing together all the “intellectual resources and experience that we can” to resolving issues. Ross said there would be a collaborative process between the U.S. trade representative, Peter Navarro, who has been named as White House director of the National Trade Council and the commerce secretary.

According to Ross, there should also be an automatic reopening of trade agreements after several years to see if they are working as intended. He said U.S. trade deals have had weak enforcement, especially in the areas of labor and environment.

Bilateral Agreements Preferred

Negotiating bilateral trade deals is quicker and easier than multilateral deals, according to Ross. There is nothing “inherently wrong” with multilateral deals but “the more complex the environment gets in which you’re negotiating, the less likely you are to get to a sensible result,” he said. Ross added that after delving into thousands of pages on the Trans-Pacific Partnership (TPP) text, he found that parts “were not as advertised.” He cited a provision that he said would allow more than 60 percent of a car’s components to come from outside TPP countries but still get tariff benefits under the deal.

Several Republican senators, including Todd Young (R-Ind.), said they were concerned about the effect of high tariffs. When pressed about a 35 percent tariff proposed by President-elect Donald Trump, Ross said: “I think that it’s a complicated issue whether we should have one flat tariff on everything or whether it should be more tailored to [the] individual situation.” He said tariffs “play a role as a negotiation tool and, if necessary, to punish offenders who do not play by the rules.”

China’s steel overcapacity is resulting in low-priced steel being dumped, according to Ross. He said additional steps should be taken to ensure that unfair trade duties are collected, adding that billions have gone uncollected. “That kind of thing has to be fixed.”

To contact the reporter on this story: Rossella Brevetti in Washington at rbrevetti@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

For More Information

Sen. Thune's opening statement is available at http://src.bna.com/lxi.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.