▶ 0:15:39Thank you to ranking member Sanchez, subcommittee members, and our witnesses for being here today. I appreciate you sharing your time. We meet at an important time for international trade. Next week, the world's economies will meet in Cameroon for the World Trade Organization's 14th Ministerial Conference, which which will frequently be referred to today as MC14. Today's hearing reflects Congress's support for strong US leadership to advance our interests at the WTO.
▶ 0:16:08I also believe there is significant support in Congress for the Trump administration's top priorities for proposed outcomes at MC14 and look forward to discussing these priorities today. The Trump administration has taken on a significant challenge in seeking to rebalance global trade through increased market access for US exports, removing unfair tariff and non-tariff barriers imposed by our trading partners and encouraging new investment and production in the US.
▶ 0:16:33For years, the US has pushed for our trading partners at the WTO to work with us to resolve these issues, but has continuously faced significant headwinds. But I believe the tide is shifting under the leadership of this administration. We stand at a critical juncture with respect to the relevance of the WTO in US trade policy. We should not concede core American priorities nor accept At the same time, I believe the WTO can still have a critical role to play in our global trade relationships.
▶ 0:17:04I hope this hearing provides an opportunity for members of this committee to have a constructive discussion on how the WTO can meet the needs of a new generation of global trade policy, delivering positive outcomes for American farmers, workers, and businesses. Certainly, not all of the United States concerns with the WTO can be resolved in Cameroon, and we should be realistic about potential outcomes.
▶ 0:17:27During this trade subcommittee's hearing two years ago ahead of the last ministerial conference in Abu Dhabi, I stressed the importance of showing strong US leadership at the WTO, something the Biden administration seemed intent on seating. As I think most of my colleagues here would acknowledge, given the WTO's requirement for consensus based decisions, real negotiated outcomes are time and time again undermined by a handful of spoiler countries.
▶ 0:17:52This undermines progress at the WTO and most importantly does not allow us to address long-standing priorities such as a stronger agriculture agreement or developing standards for emerging industries. Significant reform therefore is required at the WTO for the sake of its long-term durability and relevance in the global trading system. Even so, I believe that the WTO can still can provide value to the US and American industries, including at the upcoming ministerial conference.
▶ 0:18:23I'm grateful for the Trump administration's clear position on issues like the moratorium on the imposition of customs duties on electronic transmissions, and I'm hopeful we can finally agree to a permanent moratorum in Cameroon. This would benefit American businesses of all sizes and in many sectors and it also would prevent trading partners from leveraging this issue toward other ends in the future. The work should not end in Cameroon.
▶ 0:18:49Moving forward, members should focus their efforts on putting forward concrete proposals for reform at the WTO rather than endless scoping exercises that lead to vague and ambiguous negotiating objectives unlikely to result in real outcomes. I remain optimistic that strong US leadership at the WTO with support and oversight from the US Congress can deliver.
▶ 0:19:12I urge all our trading partners to engage constructively with the US delegation to achieve practical and mutually beneficial outcomes at MC14. With that, I yield to ranking member Miss Sanchez for an opening statement.
▶ 0:19:27Thank you, Mr. Chairman, and thank you to our witnesses for being here today. For nearly three decades, the WTO has been the cornerstone of the rules-based international trading system. Core principles such as most favored nation treatment and national treatment have helped ensure that American exporters are treated fairly abroad and that trade takes place under the transparent and predictable standards developed.
▶ 0:19:52Yet over the last two years, the Trump administration has attacked the WTO and upended the international legal order which American businesses and consumers rely on. As the Supreme Court recently ruled, President Trump's so-called reciprocal tariffs on our trading partners represented an egregious abuse of the rule of law.
▶ 0:20:12When the United States disregards the rules that we helped create, we hurt American businesses, workers, and families, and we weaken our ability to hold other countries accountable when they break those same rules. Instead of taking on the biggest trade cheats, the Trump administration has been working to figure out how to replicate its illegal tariff scheme while also desperately trying to get countries to strike deals with them.
▶ 0:20:39The US trade representative and Treasury Secretary are currently in Paris negotiating a milktoast trade deal with China. I don't even need a crystal ball to know that this deal will fail to address China's cheating through market distortions, egregious IP theft, and forced technology transfer and rampant human rights abuses.
▶ 0:21:00As the WTO prepares for MC14, addressing unfair non-market practices like these by China or any other country should be a priority for the global trading system. In this context, it is important that WTO members recognize the importance of the institution as a forum to convene, set rules, and resolve WTO members must see seek meaningful WTO reforms that strengthen the system while preserving its core
▶ 0:21:31foundations. This includes modernizing WTO rules so they can address today's challenges from forced sorry from forced labor to the clean energy transition. Another issue ministers are likely to confront at MC14 [clears throat] is the moratorum on customs duties on electronic transmissions.
▶ 0:21:50I also support extending that moratorum permanently because it strengthens American innovation and helps ensure that US entrepreneurs, especially small businesses, can compete globally. It is also long overdue that the WTO address its failure to incorporate labor standards. The issue of trade and labor has been with the WTO since its inception.
▶ 0:22:14While WTO agreement covered a wide range of range of issues from agricultural subsidies to technical barriers to trade services and intellectual property, there is no requirement for labor standards. The preamble of the Marrakesh agreement states that the WTO's purpose is to raise living standards and promote full employment.
▶ 0:22:36But the WTO has failed and will continue to fail this objective unless it meaningfully recognizes the importance of improving outcomes for workers, not just large corporations. In the 1994 EUR rounds Agreement Act, Congress required the president to establish a working party at the WTO that examined the link between trade and worker rights.
▶ 0:23:00In 1996 at the Singapore Ministerial Conference, the United States tabled a proposal calling for the study of labor rights in the WTO. And in the 1998 Seattle round, the US proposed the creation of a WTO working group on trade and labor. The WTO must finally establish a working party on trade and labor standards. and the WTO's assession process must include a mandatory review of an ascinged country's labor standards.
▶ 0:23:31Addressing known labor abuses was not necessary for China to obtain US support for WTO membership, a decision that American workers and workers around the world continue to pay for today. I look forward to hearing from our witnesses on what to expect at the upcoming ministerial conference and how Congress can help ensure the US engagement at the WTO advances the interests of American workers, farmers and businesses.
▶ 0:23:58And lastly, I will say that on a trip to Geneva in the last year, I heard that the United States, if it steps back from its commitment to the WTO, that vacuum is surely being filled now and will be in the future by China. We cannot afford to step back. Thank you, Mr. Chairman, and I yield back.
▶ 0:24:19Thank you. I now have the pleasure of introducing our witnesses for today's hearing. Again, thank you for sharing your time and your insight and expertise. Miss Kelly Anne Shaw is a partner with Aken and a former deputy assistant to the president for international economic affairs. Welcome. Mr. Steven is vice president of global innovation policy at the information technology and innovation foundation. Again, welcome. Mr. Peter Bachmann is president and CEO of the USA Rice Federation. Welcome.
▶ 0:24:50And Mr. Bruce Hirs is founder of Tailwind Global Strategies LLC. Again, welcome. Appreciate your time here. Your written statement will be made part of the record. You each will have five minutes to deliver your marks, your remarks, and you'll see the uh traffic signal lights there of for your uh uh appreciation. Mich, you may begin when you are ready.
▶ 0:25:17Good morning, Chairman Smith and Ranking Member Sanchez, distinguished members of the committee. Thank you for the opportunity to testify about advancing America's interests at the upcoming Prior to private practice, I spent a decade representing the United States in trade negotiations, including at the WTO in Geneva. I also served as a lead litigator representing American workers, farmers, and businesses in disputes against trading partners before the WTO. The views I express today are solely my own.
▶ 0:25:47Two years ago, I had the privilege of testifying before this committee ahead of the previous ministerial conference MC13. At that time, I argued that the WTO was stuck in a bygone era and incapable of addressing modern economic challenges in large part because its negotiating function, its core function, had been largely paralyzed. Two years later, my concerns remain.
▶ 0:26:10In fact, the limited agenda of the upcoming ministerial, which includes renewal yet again of the long-standing e-commerce moratorum for a 14th time, is further evidence of the WTO's decline. In my previous testimony, I suggested that the United States faces two choices. either abandon the project altogether and focus on an aggressive strategy of bilateral trade deals to advance American interests or attempt once again to persuade our trading partners to put real resources into rebuilding a multilateral framework.
▶ 0:26:42In today's environment, I would like to offer a third more realistic and perhaps better option for the committee's consideration. That is, the United States can simply accept the status quo. Accepting the status quo would mean accepting a more limited role for the WTO moving forward, focused on what it does well, which is committee work, technical discussions, transparency, and maintaining baseline rules that provide practical value to US farmers and producers.
▶ 0:27:08But it also means no longer pushing the organization to do something that it cannot, which is negotiate new, meaningful trade rules. Let me make three brief points in support of this approach. First, no other member has done more to try to reform the WTO for the past decade than the United States, particularly under the leadership of the Trump administration. Second, the real issues with the WTO are structural and at this point cannot be resolved through additional negotiations or resources.
▶ 0:27:38Third, a more limited WTO focused on what it does well is still in America's economic and national security interests. Starting with my first point, no WTO member has done more to reform the organization. Over the past 10 years, the United States has stopped judicial overreach and dispute settlement, pushed members to abide by their basic transparency and notification requirements, and tabled reforms to prevent some of the world's richest economies from misusing developing country status.
▶ 0:28:05As a direct result of our efforts, Brazil, Singapore, and South Korea have all declared that they will not seek SND treatment in future WTO negotiations. Last December, the United States tabled another ambitious set of reforms. This time addressing MFN, the role of the secretariat, and the WTO's essential security exception, among others. In the past year alone, the United States has advanced dozens of WTO plus reforms through its bilateral trade negotiations.
▶ 0:28:32The Indonesia art deal, for example, included a commitment by Indonesia to drop its long-standing objection to the e-commerce moratorum. Malaysia and Cambodia similarly agreed to implement the WTO's fish subsidies agreements in their arts. These and other recent outcomes demonstrate America's continued efforts to strengthen the WTO. No other member has done more, and it's not even close. Second, the real problems facing the WTO are structural.
▶ 0:28:58Fundamentally, the organization has become too large and too economically diverse to negotiate. The 166 member economies are not incentivized to reach consensus outcomes. Instead, they are rewarded for taking hostages. India in particular has held the e-commerce moratorium hostage for nearly 30 years as leverage to maintain its disruptive public stockholding program. To this end, I support the administration's view that the moratorium must be made permanent at or we should be prepared to move on.
▶ 0:29:30Third, and finally, a more limited WTO is still useful for Americans. As a recovering multilateralist who used to work in and strongly believe in the system, my own starting point when evaluating any international organization is simple. What's the business case for it? What are the problems that we're trying to solve? Today's economic and national security challenges are very different from those of the last century.
▶ 0:29:55America must preserve the ability to strengthen its supply chains, address market failures, and respond to unfair trade practices, particularly those involving China. An organization driven by consensus and lowest common denominator outcomes is unlikely to be part of that solution. In short, accepting the status quo is not a concession. It's a strategy to better advance American interests. Thank you. Happy St. Patrick's Day and I look forward to your questions.
▶ 0:30:22And likewise, happy St. Patrick's Day. Thank you. Mr. Delli, you're recognized for five minutes.
▶ 0:30:28Good morning, Chairman Smith, Ranking Member Sanchez, and members of the subcommittee. I appreciate the opportunity to testify today. ITF commends the subcommittee for debating the role of the World Trade Organization and how it can be reformed to better serve American interest. The WTO continues to play a vital role in shaping the contours of the global trading system. American businesses rely every day on the WTO's multilateral rules and plurilateral instruments to enable their sales of products and services to nations worldwide.
▶ 0:30:57As such, ITF applauds the Trump administrations administration's decision to maintain WTO funding and to appoint Joseph Barlon as America's ambassador to the WTO. At the 14th WTO ministerial conference in Yande, Cameroon, the United States has important equities in sustaining and ideally making permanent the WTO e-commerce customs duty moratorium.
▶ 0:31:20advancing the WTO joint statement initiative or JSI on e-commerce, reaffirming the importance of the information technology agreement, continuing to advocate for high standard global intellectual property rules, and promoting WTO reforms, especially ones to better address the innovation mercantalist policies practiced by countries like China that have dis significantly disrupted the rules-based international trade system. The US and global economy are increasingly digital.
▶ 0:31:50In 2024, US companies exported 1.15 trillion in services, of which 730 billion or 64% were digitally delivered. In 2024, America recorded a $282 billion global trade surplus in digital services. America's digital economy now employs 9 million American workers. They depend on the ability to export digital services to global markets.
▶ 0:32:22Moreover, the digital economy now accounts for at least one quarter of global GDP and the value of global e-commerce is expected to increase from 29 trillion today to $83 trillion by decades end. As such, it's vital that America's foremost priority at MC14 be securing continuation of the WTO moratorum on customs duties on electronic transmissions.
▶ 0:32:49This prohibits countries from applying customs duties to digital trade. Ideally, we should push to make this moratorium permanent. A lapse of the moratorum would significantly raise the cost of global digital trade and harm US digital exporters. For instance, the OCD finds that exports from highincome countries would likely fall if the moratorium lapses.
▶ 0:33:13The OCD further finds that a 1 percentage point increase in trade policy uncertainty reduces trade and digitalizable goods by up to 2%. We must make the moratorium permanent. Yet, the United States could go further in Yande by firmly joining the WTO's joint statement initiative on e-commerce.
▶ 0:33:31Um, in doing so, the US should advocate that the JSI include many of the high standard digital trade rules America has already committed to in the USMCA and which the Trump administration is working hard to get other trade partners to adopt, especially clear commitments to prohibit data localization, to ensure open crossber data flows, to ensure non-discriminatory treatment for digital services, and to protect source code from force disclosure.
▶ 0:33:58When the US withdrew its support from the gsi in the previous administration, it left room for China and the European Union to assume a greater role in glo in shaping global digital trade rules. We must get back in the lead there. An MC14, the United States should advocate for expanding the geographical coverage and product coverage of the information technology agreement. This is a plurilateral WTO agreement that elimmitates tariffs on trade in hundreds of ICT products.
▶ 0:34:27My think tank has found that an expansion of the ITA could boost US GDP by $200 billion and create 60,000 US jobs over the next decade. At MC14, the United States should use the WTO as a platform to continue making the case that robust IP rights fundamentally enable innovation both in the United States and globally.
▶ 0:34:49The US should be an advocate for robust IP rights at the WTO that would forstall future incidents such as the organization's acquiescence to the WTO trips CO9 IPR waiver. Lastly, the US should use MC14 to push for a reform WTO that active actively promotes fair market competition.
▶ 0:35:09The US should prioritize improving WTO transparency and members compliance with notification requirements, especially for industrial subsidies, which countries like China almost never timely notify the US or the World Trade Organization about. In conclusion, the 14th WTO ministerial will play a pivotal role in charting the future contours of the global trade system and the United States needs to take an active role in shaping those conversations and ensuring they unfold in America's interest. Thank you.
▶ 0:35:36Thank you, Mr. Bachman. be recognized for 5 minutes.
▶ 0:35:40Good morning, Chairman Smith, Ranking Member Sanchez, and members of the subcommittee. Thank you for the opportunity to testify before you today concerning agriculture and the WTO. I'm honored to serve as president and CEO of USA Rice, the global advocate for the $ 34 billion US rice industry, representing American rice farmers, millers, merchants, allied businesses, and end users.
▶ 0:36:05Rice is grown on roughly 3 million acres and primarily in the Midsouth, the Gulf, and the Sacramento Valley of California. And for well over a hundred years, the US has not only produced nearly all of its rice, but it's also exported half of it to more than 120 countries around the world.
▶ 0:36:23Unfortunately, over the last 21 years, that import and export ratio has rapidly shifted, putting more than 35 American rice mills and thousands of American family farmers at risk because of trade distorting practices happening on the other side of the globe. The impact of this distortion of world rice prices on our industry is the main reason we're represented here today.
▶ 0:36:47One of the best publicly available resources that outlines the scope and impact of this trade distortion by bad actors such as India is the 2025 section 332 study by the USITC. We commend Chairman Jason Smith for his support and foresight in requesting the commission update that.
▶ 0:37:06And to further illustrate the impact bad actors have on on the global market, over those last 21 years, rice imports here have grown by and they're displacing more than $1.5 billion in domestic sales for our industry. Without intervention, this trend will force American farmers out of business and send our rice processing jobs offshore. This situation is not because we have inefficient farmers.
▶ 0:37:33This situation is not because of President Trump's reciprocal tariff policies. This is because for years, administrations have let our competitors get away with subsidies that result in price distortions in nearly all of our export markets. US farmers and exporters are operating at negative margins. But we're we're still somehow nearly double the price of Indian, Thai, and Vietnamese origin rice because of those policies.
▶ 0:38:00The WTO has rules to ensure our industry can compete fairly. Unfortunately, those rules have not been enforced. India has demanded permanent exceptions to market price support at every ministerial since 2013, and this demand has come up repeatedly at negotiating meetings in the leadup to MC14. India has demonstrated that they are willing to hold ministerials hostage on pet issues and there's no reason to believe MC14 will be any different.
▶ 0:38:30It's not about public stockholding. It's a it's an export industry driven by government interference and that is pushing farmers in other countries out of business. An American rice farmer isn't competing against an Indian rice farmer. They're competing against the Indian government. We're grateful to USR and USDA for continuing to hold the line and prevent backsliding. And we know the system has flaws, but on behalf of your constituents who depend on trade, I'd ask what better system could replace it.
▶ 0:39:00Outside the WTO, we support bilateral negotiations. And if you look at what's been agreed to, these agreements are all clearly meant to build on, not replace the WTO. Even as the US government is trying to improve the global trading system, the WTO must remain a core part of it. So we in US agriculture need this organization to work effectively.
▶ 0:39:23Disputes take too long, have too many hurdles, raising costs of both litigation and exacerbating the economic cost of the policies being challenged. Former administrations have all correctly raised many of these concerns. We commend the Trump Vance administration for engaging with the WTO and putting forward a thoughtful proposal on reform in December. We hope that work continues with like-minded trading partners of the WTO to deliver meaningful reform.
▶ 0:39:51And we're grateful that following the completion of state's report to the president in 2025, the administration opted to back pay 2024 WTO dues and maintain membership of this critical body. Another sign of optimism is Ambassador Greer's participation in the MC14. If the administration had no faith in the future of the WTO, it would likely not invest in nominating an ambassador, a deputy general, or attending the ministerial.
▶ 0:40:18We see these as positive steps toward the US helping to reshape the WTO through strategic reforms of the dispute settlement system and the broader WTO in the coming years. In summary, the WTO is an important asset for US a and rice farmers. It needs to be more effective, not less, and we need stronger compliance to support global trade. It's critical that our competitors abide by the same rules that the US has agreed to follow.
▶ 0:40:45If they do not, these rules need to be enforced as early and effectively as possible. I'd like to thank the members of this subcommittee for their time and attention and welcome your questions.
▶ 0:40:56Thank you, Mr. Hirs. You are recognized for five minutes. Mr. Chairman, uh, Ranking Member Sanchez, and members of the subcommittee, uh, thank you for the opportunity to appear today to discuss the WTO's upcoming ministerial Reform discussions in Geneva since last June have reflected a deeper appreciation of the urgency of the topic and increasing recognition of the challenges facing the global trading system, including those posed by China's economic model.
▶ 0:41:25Today, I'll discuss some reform topics and touch on what is and isn't working at the WTO and the ongoing value of the Much attention has been paid to the WTO's stalemated negotiating process and broken dispute settlement system. However, this overlooks the WTO's most significant ongoing contribution to global economic activity, its extensive rule book.
▶ 0:41:48While in need of updating, the WTO agreements cover a broad range of topics that go well beyond tariffs, including disciplines on agricultural subsidies, standards, services, and intellectual property. The agreements also serve as the baseline for FTAs and other trade arrangements, including those of the US. The WTO rule book continues to provide a foundation for global trade and benefits US businesses and exporters on a daily basis, particularly in the A community.
▶ 0:42:16WTO disciplines are also the subject of regular committee work at the WTO. The United States has used these committees effectively to put a spotlight on foreign trade barriers and to build coalitions to dismantle them before there is a need for formal dispute settlement. Member notifications of their measures are critical to committee effectiveness and this will be a subject of discussions at MC14. WTO decision-making will be another key topic at MC14.
▶ 0:42:43The WTO and the GAT before it have relied on decision-making by consensus. The United States has long insisted on this and the WTO ambassador leading reform discussions has noted that no member challenges this approach. Consensus decision-making ensures that all members have a voice and all have consented so that any agreements that emerge are viewed as legitimate and will be implemented.
▶ 0:43:06Having said that, consensus has often been elusive in a membership of 166 members at various stages of development with diverse interests. Many developing countries have been reluctant to take on additional commitments because of the burdens of implementation. The challenge this creates has been magnified by WTO rules that permit members to self-desate as developing even large economies that play a significant role in global trade. The DOA round of negotiations illustrates the problem.
▶ 0:43:35China, India, Brazil, and South Africa were unwilling to offer market opening commitments based on their self-d designation as developing countries contributing to deadlocks in negotiations. As one African ambassador stated at the time, the elephants are hiding behind the In response, the United States has proposed establishing objective criteria for members to qualify for the special and differential treatment accompanying developing country status.
▶ 0:44:02Brazil, Korea, and Singapore have voluntarily announced they will not seek such treatment, and China recently did as A separate problem has involved members holding up decisions for unrelated matters. India has been especially prone to using this tactic, including in the decisions to formally adopt the trade facilitation and fish agreements and also in decisions to extend the e-commerce moratorum.
▶ 0:44:26India, South Africa and Turkey have similarly blocked the widely supported decisions to adopt plurilateral agreements among subsets of the WTO membership on topics such as e-commerce investment facilitation for development and services domestic regulation. With respect to the moratorium, there are hopeful signs it will be extended at MC14 as India is increasingly isolated. Many of its past allies have committed to a permanent extension.
▶ 0:44:53What all this says is that even without formal reform of WTO decision-making, the organization could have far more success at negotiating at least some topics if India and others were to no longer routinely block progress on widely supported WTO initiatives and if China were to become an advocate of ambition in the Fish and other Finally, I would note that reform conversations have provided an opportunity for the United States and others, notably the EU,
▶ 0:45:23to raise the particular problems for the global trading system posed by China's state directed non-transparent policies. Continued discussions postMC14 could shape debate both in and out of the WTO on how to address them. I'll stop there. Thank you very much.
▶ 0:45:41Thank you again to [clears throat] all of our witnesses for sharing your your perspective. It's important that we have I think a thoughtful discussion. These challenges certainly are, I think, very Trade overall around the world requires a good bit of diligence on any country's part. Like to remind folks that with 17,000 tariff lines and that's before you get to any non-tariff trade barriers, uh it just requires a lot of effort.
▶ 0:46:10And so I think we are seeing uh some engagement now that we haven't seen for some time that I think can be very helpful has proven helpful already. But when we look at innovation and and digital trade, this is what I think sets America apart in terms of what has been created here and innovated here and that IP intensive industries account for 41% of US GDP and 63 million jobs including
▶ 0:46:408.9 million in the US technology sector alone. So, uh, like I said, this success is in large part thanks to, I think, robust and fair domestic laws that that don't pick winners and losers, but rather incentivize that creativity, innovation, and development. Currently, it seems as though the United States is playing a game of whack-a-ole with discriminatory digital policies proposed by a variety of trading partners.
▶ 0:47:06platform competition and streaming regulations such as the EU's digital markets act or or Canada's online streaming act continue to be replicated around the world. Mr. Eel, beyond efforts to make permanence of the e-commerce moratorum, what role should the WTO serve in facilitating broader conversations on digital regulations? Thank you for the question, Representative Smith.
▶ 0:47:36Well, as I attempted to uh indicate in my opening remarks, I think this is why it's so important that the United States rejoin negotiations at the WTO for the joint statement initiative on e-commerce. This is a pluralateral effort at the WTO which currently involves 90 countries with 71 official co-sponsors.
▶ 0:47:58uh they have already made substantial progress towards stabilized text in a number of areas that would be of importance to US digital exporters such as consumer protection, spam, e- signatures, e payments, e invoicing, cyber security cooperation.
▶ 0:48:14But if there's a significant problem with the negotiations at the WTO around the gsi is that it does not include four absolutely critical topics which the United States has negotiated in USMCA and is currently pushing for in the other bilateral trade agreements we're currently uh addressing with other nations and those are um commitments to ensure open crossber data flows to prohibit forced localization of data storage to prohibit the forced uh transfer of uh technology source coder algorithms
▶ 0:48:44which are absolutely critical to the artificial intelligence solutions and applications that our companies are developing. So what I'm saying is that uh the WTO does provide a form in which the United States can uh um attempt to develop rules that would forstall countries efforts to implement policies like the DMA or Korea's Fairness Act.
▶ 0:49:10But so long as we do not have at the WTO this language um that we're going to have non-discriminatory treatment for digital products, then the WTO is not going to provide a very effective form for us to go after those types of digital trade scoff laws we have in Europe or Korea. Um again, this is why it's critical that we rejoin these negotiations and shape the rules in a way that is in our interest.
▶ 0:49:36Um but you know it's to your point representative uh we got to be absolutely clear how damaging policies like the European Union's DMA are to American companies. Uh our research finds that American tech companies have been fined more than $30 billion globally over the past decade for antitrust or data protection issues.
▶ 0:49:57Uh a new study uh found that over the course of this decade, if the DMA is allowed to persist as currently designed, it will result in revenue losses of up to 114 billion euros for US companies competing in US services markets.
▶ 0:50:14Uh so getting a handle on these unfair digital trade practices uh which we'll probably need to do uh through bilateral negotiations or making clear to the Europeans that we're going to bring a heavier stick with like section 301 action uh needs to be a priority for uh the United States. Let's push for better digital rules as we can in MC14, but know that the solution to that problem is is is it's far beyond what we can accomplish in Yande.
▶ 0:50:41Right. No, I I appreciate that. uh you know we oftenimes think in the theoretical and but also have to be aware of the practical and and so as we have various disputes out there you know dispute settlement um needs a practical side of it uh so that it it can be so that our uh enforcement can be robust and just immediately enforceable and and that enforcability mechanism should be swift
▶ 0:51:13American American businesses should not have to wait years for disputes enforcing US rights to conclude. And that said, we should not outsource our regulatory sovereignty to international tribunals headed up by career bureaucrats. I think that's important to note. For years, the US has complained of judicial activism at the WTO.
▶ 0:51:33presidents, multiple presidents, Obama, Trump, and Biden blocked appointments to the appellet body, all ostensibly to create the leverage needed to reform the dispute settlement system and reduce judicial overreach. Little progress on dispute settlement reform has actually been made. Miss Shaw, do you see this as a live issue? uh does that remain or have WTO members accepted just accepted that the WTO WTO offers more value as a negotiating forum rather than an international court?
▶ 0:52:05Thank you, Mr. Chairman. Um I I should start by saying that the US has p been pursuing dispute settlement reform since 2001 for 25 years. There was this DSU review process. I was a negotiator for the United States for three years between 2011 and 2014. So these are not new issues. But I think the real challenge with dispute settlement is there's not a meeting of the minds between the member states as to what they want. The Europeans want an international court.
▶ 0:52:32The United States wants a body that is going to resolve the dispute between the two members and not create this broad precedent that's going to infect negotiations or impair as you said our regulatory space. So without a meeting of the minds, I think we probably are in the best position we can be, which is by blocking the reappoint of appellet body members, we've really sent the message to the WTO that judicial overreach shouldn't happen.
▶ 0:52:56And what we've seen in subsequent reports, both at the panel stage as well as this international appeal mechanism that other countries have created, is much more disciplined reports. So from my perspective, I think we've come as far as we can. Um but unfortunately we just don't have a meeting of the minds of what this dispute settlement system should really look like.
▶ 0:53:14Okay. Thank you. Miss Sanchez, you're
▶ 0:53:19Thank you. Um Mr. Hirs, the United States played a central role in creating and shaping the rules-based trading system that has governed global trade for decades. The WTO has provided predictability for American workers, farmers, and businesses. even as we recognize that the system is not perfect and that the reform that reforms are needed to address modern trade challenges. But beyond the headlines like negotiations or disputes, the WTO also performs important day-to-day work that often receives less attention.
▶ 0:53:50Could you please talk for a bit about the WTO's convening power and the role it plays in bringing members together? In particular, could you explain how the WTO's regular committee work and technical discussions help surface trade irritants, encourage compliance with WTO rules, and resolve problems before they escalate into formal disputes?
▶ 0:54:12Uh, thank you for the question, Ranking Member Sanchez. Um, you know, the WTO provides a unique opportunity uh to serve as a location for discussion of all trade issues. um there's nothing else available that allows you to talk to 165 members um and in particular um it is doing the work that you identified um behind the scenes in its committees where all members are represented.
▶ 0:54:38So the committees meet to discuss uh implementation of the various agreements, how they can be improved but more importantly they discuss the specific measures that particular members are taking um and whether they are conforming with the rules. So it provides an opportunity to build coalitions. U the US has used it very effectively. The US has been urged to use it very effectively by multiple stakeholders and we've been able to build coalitions against measures that we didn't like.
▶ 0:55:08We've been able to actually prevent those measures from going into effect or having them withdrawn before there's dispute settlement as you mentioned. So they're uh they're very active, definitely below the radar screen, but very valuable.
▶ 0:55:20Thank you. Um another issue that comes up frequently in discussions about WTO reform is transparency. And as you note in your testimony, WTO rules require members to notify the organization about certain trade related measures such as subsidy programs. However, compliance with the notification requirements have been uneven. Improving transparency seems like an area where WTO members could make meaningful progress even if broader negotiations might prove more difficult.
▶ 0:55:50Could you discuss um why transparency and notification requirements are so important to the functioning of the WTO and how reforms in that area such as stronger notification compliance or improved committee process could help the WTO better serve its members and strengthen confidence in the system?
▶ 0:56:08Uh yes, transparency and notifications are critical to the work um of the committees. They're also critical for traders um all the members traders who need to know what u members are um um policies they're undertaking at at the WTO itself. The notifications are theoretically required. Uh you're supposed to be notifying to the committees the measures that you're taking that relate to that committee's work.
▶ 0:56:32Um and without that it's very difficult for the committees to actually examine those measures ident uh both to address them specifically and to identify future topics of negotiation. Um at various points the United States has actually counter notified when there have not been notifications and actually put in place um information on other members um activities. Um so you know the the record is uneven.
▶ 0:57:00It's not uh you know US has been very good with its notifications. Many others have as well but many including China and sometimes India have also not been very good. So it is critical that they be improved. Uh the US has submitted a proposal that would uh try to improve matters giving technical assistance uh to developing countries that have had trouble with uh notifications but also in putting in place administrative penalties for those who just repeatedly refuse and have the capacity uh to submit.
▶ 0:57:29Uh, so there are proposals on the table and hopefully they'll make some progress.
▶ 0:57:33Great. Do members of the WTO pay pay dues to the WTO?
▶ 0:57:38Um, yes they do. Um,
▶ 0:57:40and has the United States paid its dues
▶ 0:57:43Um, the United States did pay some back dues last year. Um, they uh still owe uh the more recent dues. Um, and what happens when a leader like the United States steps back from helping fund an agency like that?
▶ 0:57:59Well, um,
▶ 0:58:00who steps in?
▶ 0:58:01Um, they're at this point nobody. Um, so they are being very cautious with their expenditures is one thing. Um, you know, certainly there would have to be some consideration of how to backfill uh those dues though if uh the US were not to in fact pay them
▶ 0:58:18because last word I heard was that China was all too willing to fill that void and with it comes uh staff um and other supplements to the work that WTO does, but that don't necessarily share our values. And with that, I will Oh, I will ask one last question. What happens if the United States withdraws from WTO?
▶ 0:58:39Uh well, if the WTO um withdraws from the WTO, it's important to recall that this is a consensus decision-making organization and um US interests would not be represented and the US would not be in a position to uh to block a consensus on core interests and values.
▶ 0:58:57And what happens if we leave and then want to come back? How do we get back in? Well, presumably we would be subject to an accession process the same as every other member where every member of the negotiation would be negotiating with us uh to determine which measures are and are not ones that they would like to see a WTO member holding.
▶ 0:59:17Thank you and I yield back.
▶ 0:59:18Thank you. I now recognize chairman of the full committee, Chairman Smith.
▶ 0:59:23Thank you, Mr. Chairman. The Trump administration has been breaking down [snorts] barriers after barriers to American exports and leveling the playing field uh for American workers, producers, and farmers through bilateral negotiations with multiple nations. Um, President Trump has achieved huge wins against many different types of trade barriers.
▶ 0:59:48For instance, he helped end Australia's use of non-tariff barriers to discriminate against US beef. He also eliminated tariffs on US a exports to Cambodia, to Malaysia, and Indonesia. And he successfully negotiated with Japan to secure a commitment to purchase $8 billion in US agriculture products.
▶ 1:00:16and he secured Canada's commitment to drop its digital service tax against American innovators. Donald Trump did that, not the WTO. Even with these successes, I'm still struck by some of the remaining trade imbalances that seem ripe for the WTO to help address with some of its biggest members.
▶ 1:00:42At a conference in Sweden last summer, I pointed out to a room of European diplomats. They didn't like what I was about to say, but this is what I pointed out to them. That the EU as a whole purchases less US chicken than the tiny country of Angola and purchase less US pork than the country of Honduras.
▶ 1:01:10The EU's GDP is 200 times larger than that of Angola. Honduras is a country of 10 million people compared to the EU that is 450 million people.
▶ 1:01:29Miss Shaw, is it fair to say that the Trump administration has achieved success in opening markets in ways that never would have been achieved through negotiations at the WTO? And to what extent, if any, could the administration deploy the same tactics we've seen achieve success in bilateral negotiations in the multilateral multilateral arena that is the WTO.
▶ 1:02:01Good morning, Mr. Chairman, and I wholeheartedly agree. I I think what the Trump administration has been able to accomplish in less than a year in terms of opening up market access opportunities, resolving longstanding regulatory barriers, legal barriers, other types of programs that disadvantage US exporters has been incredible.
▶ 1:02:21And on top of that, in many of the deals that they've struck through these art programs and framework deals with Indonesia, Malaysia, Cambodia, you talked about Australia and Japan, we've actually seen commitments by other governments to make reforms in Geneva, things that never would have been possible within the context of WTO negotiations themselves.
▶ 1:02:41It's really incredible and I think the leverage the president has used has been powerful and So, one of the ongoing and more concerning issues at the WTO is the question of a permanent moratorum on e-commerce tariffs.
▶ 1:02:55After the Biden administration foolishly never affirmed the longstanding US support for a permanent moratorum, the Trump administration has restored American leadership and secured individual commitments from several nations to support a permanent moratorum. The current temporary extension of the moratorum will expire at MC-14 and it is critical that we settle this once and for all. Mr.
▶ 1:03:24Easel, how significant is it that the Trump administration use bilateral leverage to increase support for a permanent moratorum on ecommerce Thank you for the question. Well, in my opening testimony, I tried to lay out what's at stake for the United States and the global economy.
▶ 1:03:46If we do not continue and ideally make permanent the WTO e-commerce customs due to mortorium, um, US digital exports could fall as much as 1% almost immediately thereafter. Um, and other countries might implement similar t for tat duties. So it would just be incredibly destructive uh to the global digital economy and that impacts what is one of America's most successful industries of course the digital economy.
▶ 1:04:12Uh so I agree that bilateral our agreements are away which we can uh add pressure with our allies to uh line up with us on a a permanent moratorum. But I also think one thing that's very important is that we have a more responsible conversation with India because the reality is if India ever actually got its way and we lapsed the WTO e-commerce moratorum it would destroy their digital economy which now accounts for 11% of Indian GDP.
▶ 1:04:41Two years ago I wrote a 70page report about India's attempts to get into the global semiconductor industry. Well, if they could actually impose customs duties on their transportation of uh the blueprints for semiconductors uh or blueprints for semiconductor fabs, it would completely forstall any ability for India to compete in the global digital economy.
▶ 1:05:03And India in fact has already inflicted tremendous damage upon itself by multinational companies not wanting to make semiconductors in India because they know that this is a possibility that the movement of a of a blueprint for a semiconductor might get taxed.
▶ 1:05:18So what I want to say here is you know if India wants to become a core US partner we have the trust initiative with this administration between Biden between Trump and nodi we want to have deeper collaboration with India on semiconductors on AI on clean energy on critical minerals then it's time the United States has a conversation with India and and demonstrates to them that it's time for a more mature approach to trade policym in the global digital economy if they want to be a critical ally with the United States and advanced technology industries.
▶ 1:05:48So with all the discussion on India, it leads to my next question. Um I have previously raised countless concerns over India's um unfair trade practices that undermine US rice producers. This included requesting a report from the US International Tax Commission which confirmed threats including foreign subsidies that undermine the competitiveness of US rice farmers.
▶ 1:06:16A substantial number of these farms operate in my home state of Missouri and specifically in the communities that I represent. In in fact, farmers Uh but [laughter] I represent um in fact Missouri farmers rank fourth in the nation in rice production and all the
▶ 1:06:46rice production in the state of Missouri is solely in my congressional district. So Mr. Bachmann the truth the the Trump administration has made substantial progress in its initial trade negotiations with India but India's behavior in the global rice market continues to be a problem. Where do you see the administration being able to secure an advantage in negotiations over US rice exports with India?
▶ 1:07:14And where in our global trading partnership do you see a model for successful negotiations on this front andor additional work with other nations that is needed?
▶ 1:07:27Thank you, Mr. Chairman. I I think that what we see coming down the pike is uh more opportunity to gain leverage over India through what the administration announced last week with section 301 investigations into forced labor and uh and I think that that and global both of those are targeting India and both of those are areas where India is producing rice with forced labor
▶ 1:07:58and they're also over over producing rice and manufacturing and exporting it around the world. Uh we also hope to see a rice specific section 301 investigation that would look at India's unfair trade practices and use those as a durable source for uh protecting the US rice industry and gaining additional leverage over India moving forward. I think we're going to have to see multiple nations come together to address the problem with India.
▶ 1:08:28Uh when it comes to rice and wheat subsidies, the US announced its latest its fourth counter notification at the WTO yesterday uh for rice and wheat subsidies and we had several co-sponsors. We're going to need to see continued efforts there to take an actual dispute settlement case against India jointly with other countries, but as well we're going to need to see some sort of enforcement through tariff action in the United States to to keep that leverage.
▶ 1:08:58Thank you all for being here. Thank you, Mr. Chairman.
▶ 1:09:00Thank you, Mr. Panetta. You're recognized for five minutes.
▶ 1:09:02Thank you, Mr. Chairman. I appreciate this opportunity and thank you uh and ranking member Sanchez for having uh any type of hearing on trade. Something that needs to be discussed a lot more here on Capitol Hill, especially considering our constitutional purview over trade and foreign foreign commerce which needs to be uh exacerbated and uh I think encouraged a lot more. Um I also want to thank uh Mr.
▶ 1:09:29uh EEL and Bachmann for your uh comments to the chairman Jason Smith's questions about India. I completely agree with you on that and there's definitely something that needs to be done in regards to that country especially if they want to be a player uh at the global level especially with trade. So thanks to both of you. Um, look, given the circulated WTO reform proposals and in the ambassador's memo, it's clear that reform will be a major topic of discussion at the upcoming conference in Yaundi.
▶ 1:09:59Uh, deliberations that I believe could and should help shape the future of our global trading system. However, the president's approach to trade, I believe, has eroded norms that have benefited our country for decades. His 40-year fixation on tariffs and the tariff policies that he's put in place, I believe, have undermined US trade agreements and hurt our country's credibility when it comes to foreign commerce.
▶ 1:10:26If each, as each of you have noted in your testimony, be it written or verbal, today, the WTO needs reforms. We get that. And the US though can be an effective part of that reform process. But if we've abdicated our role, especially here in Congress, in the global trading system, we lose the ability to help shape its future.
▶ 1:10:45Despite the many, many shortcomings of the WTO that you highlighted, the WTO can still be a forum to address emerging trade issues and advance a fair and open and open global trading system. The WTO can help deliver important agreements and advance critical trade standards like the e-commerce moratorum that was mentioned and the even the fisheries agreement which are examples of this.
▶ 1:11:10Ultimately, American companies I believe benefit when the rules of the road are clear and certain and functional structures exist to enforce those rules. The WTO can provide it with proper reform. Now look, some of the core organiz organizing principles of the WTO are the most favored nation status and non-discrimination amongst members.
▶ 1:11:34However, both the United States and Europe have suggested re-examining those trade edicts, which I think would be a significant change to the trading status quo and could lead to more plurilateral agreements outside of the WTO structures. Mr. Bachmann, you know that the United States has a large agricultural sector as you talked about, especially when it comes to rice.
▶ 1:11:58Because of that, nations though are incentivized to protect their ast putting tariffs or non-tariff barriers on our agriculture without MFN, the most favored nation status. Are there any other rules to prevent those types of nations from doing that?
▶ 1:12:16Yes, I think the SPS agreement within the WTO has been a very strong and useful uh tool for US agriculture in bilateral agreements to to be able to reference that. I think around the world largely countries abide by the SPS agreement uh terms and and that's been a great example of success for US agriculture especially specialty crops grown in your district.
▶ 1:12:41Great. Thank you. Appreciate that. Now over the past year, the EU has increased the pace of its engagement on trade and struck several agreements without the United States. It includes agreements with South America, the Marser agreement, uh, Indonesia, Mexico and and even EU India agreements.
▶ 1:13:00It's a very fast pace for these types of agreements, not frameworks, agreements that are based on negotiations and not coercion, which seem to be a signal to our global partners that our global partners are hedging against US absence in trade leadership. Mr. Hirs, what are the strategic risks to the United States when major trading partners like the EU advance large regional agreements without the United States?
▶ 1:13:28And could these EUdriven agreements incentivize third countries to align more closely with EU regulatory frameworks over United States standards that we've pushed for?
▶ 1:13:41Well, most directly um they these agreements um potentially will put our exporters at a disadvantage since they do provide for preferential tariffs for EU and and goods and with uh for those countries with the EU. Um but yes, they they do um mean that the EU is very actively involved in setting the global rules of trade through these bilateral agreements. Um and um you know those are not necessarily the the same values and the same approaches that we would take.
▶ 1:14:10Great. I'm out of time. Gentlemen, ma'am, thank you for being here. Thank you, Mr. Chairman. I yield back.
▶ 1:14:14Thank you. I now recognize Miss Miller for five minutes.
▶ 1:14:20Thank you, Mr. chairman and for hosting this and thank you all for being here today. The importance of cementing the e-commerce moratorum goes without saying. The US and our companies will unfairly bear the brunt of any tariffs that are imposed on transfers of data and it is important that our negotiators act quickly to ensure this does not occur.
▶ 1:14:45US tech companies are already suffering from harmful digital policies outside the scope of the e-commerce Our tech companies are facing harmful non-tariff barriers such as exorbitant fines and fees, harmful competition policies, data localization requirements, digital service taxes, and local content requirements.
▶ 1:15:09These barriers are imposed by some of our allies and fellow WTO members, including the European Union, Korea, and Canada. And they blatantly discriminate against US companies. These policies have already threatened innovation and growth on the global stage and inherently go against the principles of the WTO and the e-commerce moratorum. Mr.
▶ 1:15:37Jazelle, do you believe there is value in seeking similar moratoriums at the WTO on the imposition digital non-tariff barriers? And are there other avenues at the ministerial or post-ministerial to push back against these policies?
▶ 1:15:58Well, I think in Yande and at the WTO, uh it's imperative that our trade policy makers use uh both instruments as a platform to document and to speak out against these types of discriminatory digital trade practices against US companies. As as you said, um this is a global contagion.
▶ 1:16:21Um, one concern is that when the United States is not taking a leading role in shaping global digital trade rules as indicated by us in the previous administration pulling out of the JSI is that we seed leadership uh to Brussels and Beijing and we have seen uh the Brussels effect where countries around the world from Turkey to Brazil to Indonesia are adopting EU like policies uh like DMA policies
▶ 1:16:52that designate US firms as gatekeepers and subject them to ownorous regulatory requirements. Um so we need to do several things. Uh first we need to take the lead in setting rules and making it clear at the WTO that you cannot discriminate against digital products. Um that said, we're going to have to u of we could use other formal uh tools.
▶ 1:17:19we could request formal cons consultations or bring a WTO dispute. Um, so this is a form where we can bring cases and disputes against foreign companies that are discriminating against our firms. But as I said previously, I think that we're going to have to look outside the WTO.
▶ 1:17:35If we're gonna really make progress against the European Union, North Korea in attacking some of these discrimin digital trade practices, uh, we may need to bring a section 301 case direct directly against the European Union, saying that their policies like the DMA, the DSD are discriminatory against US companies. What I'm saying is we can pursue a WTO track. We should do so. Uh but I think this is going to require bilateral uh activity by USDR if we're going to get real action uh from our trade partners to emulate these
▶ 1:18:05Thank you so much. I want to highlight Beckistan's progress in joining the WTO. I've long advocated for lifting the Jackson Vanic amendment for Yuzbekiststand and other Central Asian countries and for granting them permanent normalized trade relations. Granting Usbekiststan and other Central Asian nations PNTR will give American companies shity to invest in the region and move our supply chain away from China in key sectors such as critical minerals.
▶ 1:18:35Yuzbekiststan is eager to partner with the United States and President Trump has already secured key deals with them including the sale of 22 Boeing aircrafts. A predicate for lifting Jackson vanic for usestan and other central Asian nations is that these nations join the WTO. Kazakhstan successfully joined the WTO in 2015 and Usuzbekiststan is making great strides.
▶ 1:18:58Usbekiststan has finalized 30 bilateral market access negotiations with the WTO members and has had several meetings with the working group level. This highlights their commitment to following the principles of the WTO and readiness to become players. Miss Shaw, do you think Yusbekistan's successful assession to the WTO, which is hopefully occur this year, can be used as a pathway to granting PNTR for Yusbekiststan and other Central Asian nations.
▶ 1:19:28Very quickly and good morning, Congresswoman. Thank you for the question. Absolutely. For use, I welcome their accession to the World Trade Organization. PNTR comes with meeting the standards of WTO membership and as soon as they are able to meet those standards, I think the United States should move forward in granting them
▶ 1:19:46Thank you so much. I yield.
▶ 1:19:49Thank you. I now recognize Miss Delbeni for 5 minutes.
▶ 1:19:52Thank you, Mr. Chairman, and thanks to all of our witnesses for being here today. Um, for decades the WTO has set the rules of our global trading system and that there are wellocumented bipartisan concerns about how the WTO operates, but American interests are served well by having a common system that allows our businesses to compete globally with a consistent set of rules. Um, I appreciate Mr. Isel's comments on the importance of the e-commerce moratorum. I'm a supporter of the moratorum.
▶ 1:20:21Um, we can't allow it to lapse. it would effectively invite our trading partners to put tariffs on the digital transmissions that increasingly drive small business growth and create jobs. Um so uh appreciate your comments on that.
▶ 1:20:35Um I and I think as part of our conversation about the importance of WTO reforms, um it feels strange to be talking about international norms and standards without also noting that this administration continues to undermine nearly every standard of WTO and US trade policy through reckless tariffs.
▶ 1:20:57Um, after the Supreme Court struck down the AIPA tariffs, Ambassador Greer and the president quickly pivoted to section 301 with a goal of creating a long-term replacement for the reciprocal tariffs. And just last week, USR initiated a 16 country excess capacity investigation and a 6D60 country forced labor investigation. To top it off, Ambassador Greer announced he plans to have these investigations concluded in five months. Um so I have a few questions.
▶ 1:21:27Mr. Hirsh, what are the core steps in the process for a section 301 investigation?
▶ 1:21:33Well, in addition to the um hearings and um the request for written comments which USR has already undertaken in those investigations, um they will uh typically or they're required to consult uh with the foreign countries that are the targets of the investigations. They're also required to consult with the uh leg uh the statutory um private sector advisory committees. Um then over the course of their investigation they will develop a retaliation list.
▶ 1:22:01Um but they will ultimately have to determine whether in fact uh the unfair or discriminatory practices exist, whether they burden or restrict US commerce and um what steps to take um if in fact they do find affirmatively. Um, how does the administration's fivemonth timeline compare to the typical timeline for a section 301 investigation?
▶ 1:22:23Well, a typical timeline for one of these investigations would be about a
▶ 1:22:28Um, are you worried that running 76 simultaneous section 301 investigations would strain the capacity of USR to perform thorough and fact-based investigations? Well, it is certainly going to stretch uh the resources at USR, though probably they've done some work ahead of time. Um it'll be really difficult though to conduct all of the negotiations that they need to, all the consultations that they need to with all of the targeted countries in that period of time.
▶ 1:22:56Uh the combined breadth and the speed of these investigations is unprecedented. Uh the administration is willing to accelerate this process. Um and unfortunately because it already knows the outcome it wants. Um so this is not a thoughtful study of how to address industrial overcapacity or forced labor practices.
▶ 1:23:16It's clearly a misuse of section 301 authority aimed at resurrecting the illegal IPA tariffs which added about $1,400 to the expensive of the average American family in 2025. You know, folks are depending on us to uphold the rules and protect them from an administration that thinks it has blank check authority to tax families. Congress has its constitutional role over trade policy to perform real oversight over these section 301 investigations.
▶ 1:23:45Um, we should be doing that work. I appreciate all of you being here and I yield back.
▶ 1:23:50Thank you, Dr. Murphy. You're recognized for five minutes.
▶ 1:23:52Thank you, Mr. Thank you, Mr. Smith. Before I get started, it just kind of reminds me, you know, when I was a kid, I got an allowance, but if I didn't act like my parents wanted me to act, and after admonishment and cajoling, they didn't pay me my allowance. So maybe the WTO should act like we wanted to act and reform like we wanted to reform and then we'd pay. Just just a thought out there. Um I do want to talk about China.
▶ 1:24:21um China being uh class still classified as a developing country. You look at China, they're our biggest adversary. Um but they have also made immense progress in infrastructure and technological developments. It's still investing in developing countries through the Belt and Road initiative. Upwards of some people project over a trillion dollars in projects worldwide. I mean, I've been throughout Africa, Central America, and the Chinese are everywhere.
▶ 1:24:48So that begs the question, how does a country that is so-called developing have enough money to build ports, roads, etc. in other countries? They are by far our biggest global competitor and sectors such as AI, advanced manufacturing, and I can go on and on. And China is making billions of dollars investments in these critical technologies, even out competing America in many regards and out politicizing them just by being present in so many of these countries.
▶ 1:25:16China declares itself a developing country despite being the second largest economy in the world and has received special and differential treatment at the WTO. As a result, the classification is not only wrong, it undermines the integrity of the WTO itself. Well, September last year, China's premier Lee Chang announced that China will lost this differential treatment, but will continue to continue to call itself a developing country. It's kind of ironic.
▶ 1:25:42Miss Shaw, is this a positive step or just a a political shenanigan stunt?
▶ 1:25:48Thank you for the question, Congressman. I will say the fact that the second largest economy in the world is allowed to label itself a developing country undermines the credibility of the system. And I think the administration and on a bipartisan basis, other administrations have pushed for objective standards to define who is and who is not developing. I think it is positive that China has said they will not avail themselves of special and differential treatment, but they continue to maintain a label that simply doesn't fit them.
▶ 1:26:17I I think it undermines the institution's
▶ 1:26:20Yeah, I I think it's done as a political stunt, but what do I know? Um Mr. Bachmann, can you do do you mind if you just could mention about how China's self-declared status in this respect? I just want to talk about China for a second has impaired global uh agricultural markets.
▶ 1:26:36Sure. Thank you. Uh, China has been a a a the largest rice producer in the world for a long time. Uh, up until last year when India took that role. Uh, the United States took two cases against China that were one under they they were taken under the Obama administration, one under the Trump administration.
▶ 1:26:56Neither of those cases have been able to proceed forward despite the US winning those cases on corn, rice, and wheat uh subsidies and how they handle their TRQ. And so we we see China as still a bad actor out there, somebody that's refusing to play by the rules. They play just enough to to keep everybody happy, but we realize that what they're doing is impacting uh many countries and markets around the world in a negative way. Okay. Well, let me follow up with that question then.
▶ 1:27:26Can how can the US then prioritize data, science, and riskbased approaches including agricultural policies, human health and safety, environmental factories when we're facing these things with China.
▶ 1:27:41I think we need to increase our own uh our own research and our own advancements to be able to combat what the Chinese are doing. Uh and we need our own we need to to not let them take the vacuum in the room at the WTO.
▶ 1:27:55Yeah. So, you know, as tough as sometimes trade policy is, um it takes a strong will because truth be told, we've been abused as a country for so long and we've accepted it being the good guys. And I'm glad we're finally just drawing a line and sand saying we're not going to be uh abused anymore. It's difficult. It's challenging. There's no doubt about that. And there is collateral consequences.
▶ 1:28:17But if we look at the as this as a national security meas measure we look at as a national economic measure if not now when and if we don't do it now it will be too late. Uh thank you Mr. Chairman I'll yield back.
▶ 1:28:30Can I make one comment to that
▶ 1:28:32It would just be that since China entered the WTO it has accumulated a 7.2 trillion trade surplus with the United States. In 1990 China had $200 million in foreign currency reserves. By 2016 it had 4 trillion. A great deal of that large s directly came out of the pocketbooks of Americans.
▶ 1:28:50Right. So, don't you think we should do something about that?
▶ 1:28:54Absolutely. Happy to respond further, but yeah,
▶ 1:28:57I wrote a whole report 20 years after China entered the WTO comprehensively documenting how they simply have not complied with the foundational commitments they made to entering the organization two decades ago.
▶ 1:29:06And the WTO should enforce that. Thank you very much. Yield back.
▶ 1:29:09Thank you. And I now recognize Mr. Byer for five minutes.
▶ 1:29:13Mr. Chairman, thank you very much and thank all of you for for being here. I am deeply opposed to Trump's destructive tariffs. They've jacked up US prices. They've seriously harmed American exporters. They've angered important trading partners and allies. And whatever small benefits have been gained by our trade negotiators leveraging them, and the so-called deals that have been struck in recent months, they're more than outweighed by the massive economic costs and the reputational damage that we will bear for years to come.
▶ 1:29:40One underdised aspect of the president's reciprocal tariff regime was his blatant disregard for our obligations under WTO rules, specifically the most favored nation principle and the idea of MFN is the bedrock of WTO and a key tool in promoting stable and equitable global trade. The Trump administration expressed a desire to fundamentally revisit MFN in its communication on WTO reform last December.
▶ 1:30:06And while it is positive that the administration is engaging at all in the WTO and that it unlocked our pause funding to the organization, I'm concerned about what this communication means for the future. It seems like just another effort to move the world away from rule-based order that has brought enormous prosperity to all since the end of World War II.
▶ 1:30:25I mean, just think about where we were in 1950 or 1948 and where we are now across the world and in the United States and move it to a world where of rival blocks, high tariffs, and multiplying barriers to trade. Mr. Hirsh, I know that MFN is not absolute. There are plenty of exceptions to rule, but what would it mean for the WTO and the global trading system if MFN was adjusted the ways the Trump administration has been signaling?
▶ 1:30:51Well, you know, the the value of MFN you've already note pointed to and you know, I would just reiterate there that, you know, it's really critical for traders. Uh the simplicity and the predictability that it provides, you know, helps them to navigate global trade, especially for small companies. W2 negotiators would have a very difficult time negotiating without it.
▶ 1:31:14Um and as you mentioned there are certainly exceptions already um for MFN for preferential trade for FTAs uh for various measures secure um health security environmental so there are already exceptions for MFN and so the real question really should be when can you take exceptions and are they sufficient we understand that for China there are circumstances that may not be well handled at the WTO and therefore they might be might need to have an exception there.
▶ 1:31:44But you know to your question um you know if we were to abandon MFN alto together it would be much more difficult uh for traders and uh to operate much more difficult for companies to operate. Um and um as you noted it would really undermine uh really some of the foundations of the global trading system. By the way, just as an aside, there's so much criticism so far.
▶ 1:32:09Um, I think at least one short paragraph about the advantages of trade, you know, since we liberalized the international trade thing before any of us here were born. We've had the greatest growth in human welfare. We've listed billions of people out of poverty. America's net worth is hugely ahead of where we were. And yes, there are certainly problems out there.
▶ 1:32:31But let's not forget that one of the benefits of trading the American people is we've been buying lowcost products often well-made from around the world that have lifted the the lifestyles and the net worth of Americans um for decades and decades and decades. Mr. Hershe, you discussed in your testimony how the WTO's dispute settlement was hobbled in 2019 when they blocked appointments to the appellet body and that creates this p situation persist to the day of appealing into the void or looking through third things.
▶ 1:33:01But you've also talked about workarounds. So four fundamental questions. Is the status quo of the non-functional appellet body preferable to its pre209 composition? Who've been the beneficiary since it ceased to exist? what's being lost by his continued absence and what's needed to revitalize this now dormant reform
▶ 1:33:24Yeah, thank you. Um so right right now the status is that it is broken. Um you mentioned the workarounds that members are undertaking but they still always have the option of appealing into the void and that means that um on difficult issues there will not be resolution and there will be limited assistance from the dispute settlement system.
▶ 1:33:44Um the I would say that while we we absolutely must um before fully restoring the system uh ensure that US concerns are addressed um I was very encouraged um a few years ago by some of the progress that was being made in Geneva in [clears throat] closing gaps that others are getting a lot closer to understanding and appreciating US concerns and a lot of work was being done to close gaps and to respond to US concerns. concerns.
▶ 1:34:14So hopefully um that will continue um uh at some point and that this important tool for enforcing our rights will be restored.
▶ 1:34:24Thank you very much. And Mr. Chairman, I yield back.
▶ 1:34:27Thank you. I now recognize Mr. Moore for five minutes.
▶ 1:34:31Thank you, Mr. Chairman. Mr. Ezel, I have a quick question on question. I'm going to add some context, but um question I have is does the administration have a strategy for using the the USMCA model right to to it has kind of a template to push other digital trade and data local data flow localization um to bring that to a more multilateral experience.
▶ 1:34:58So, you know, American dominance in AI, cloud infrastructure, data services represent one of the most significant growing US capabilities out there and with with respect to our trade surplus. Yet, is it increasingly it's increasingly threatened by data localization requirements that force US firms to store data within foreign countries or submit to local audits. Right?
▶ 1:35:21USMCA contains some of the strongest digital trade and data flow protections that's ever been negotiated and these include explicit prohibitions on data localization requirements. So a simple you know but this is just three that's just three countries. Our digital services is by far one of our biggest assets right now in the global um trade space.
▶ 1:35:43Is there thoughts strategy to um to expand that out be you know we take what we learned from USMCA good policy and expand it to some of our plural or multilateral um partnerships. To the first point I I want to emphasize how serious of a challenge this is.
▶ 1:36:07uh ITF research has found that from 2017 to 2021 the number of data localization policies in force globally doubled. Uh such that in in 2017 35 countries had implemented 67 such barriers. By 2021 62 countries had imposed 144 restrictions with dozens more under consideration. So this is [clears throat] a global problem that we have to get a handle on.
▶ 1:36:32To your second point, yes, absolutely the USMCA uh can provide a framework of structure uh for the exportation of higher standard digital rules into other agreements. Um as I said in my opening statements uh where the joint statement initiative on e-commerce falls down very severely at the WTO is that it does not include uh provisions against non-discriminary treatment for digital products.
▶ 1:36:58does not include protections for source code or algorithms that are critical for artificial intelligence and does not include explicit bans on data localization uh um or or making it clear uh we have to have open crossber digital trade. Um so yes absolutely the USMCA can serve as a template uh for uh what the US should seek with digital rules uh in other bilateral agreements as well as a plurilateral form like the WTO.
▶ 1:37:23Um, in my testimony, uh, we submitted a comparison of the digital rules that exist under the CPTP, um, the REP, uh, that's the regional comprehensive economic partnership, uh, DEPA, USMCA, and the WTO. And, um, yes, right now, the USMCA has the highest standard digital trade rules, uh, that are enforced worldwide.
▶ 1:37:43And what's your overall feel for how that can continue on even within a renewed USMCA? Are you positive on that? Is there is there potential um of of of lessening that or where are we just standing with with with even within
▶ 1:37:57Well, I think we can go further um in the USMCA. Um in particular, uh we need to uh have the USMCA uh explicitly ban digital service taxes. So, we got to get rid of DSTs. Uh, one thing we should push for as well in the USMCA is ensuring that Canada uh, does not discriminate against our digital companies.
▶ 1:38:21Uh, in particular, Canada's online streaming act um, uh, wants uh, to impose uh, a 5% taxes on uh, revenues of uh, North American streaming of American streaming companies to support Canadian local content. That's similar to an Australian law that would uh, demand 10% of revenues. Uh so we got a uh in the USMCA push back against other uh forms of uh digital regulation that are discrim that are specifically discriminatory against US digital tech
▶ 1:38:51Excellent. Thank you very much. U Mich briefly uh just a question on um the administration. Do we have a strategy for building a you know multilateral plurilateral subsidy discipline within the within the WTO among some of our market partners? um just to close the loophole that puts genuine pressure on Chinese malpractice, right? Their their ability to subsidize sectors like solar, steel, EVs, semiconductors.
▶ 1:39:17This is the kind of bad behavior that the WTO's agreement on subsidies and counterveailing measures was designed to address. Your thoughts on that very
▶ 1:39:26Sure. And and thank you for the question. I think it's great. I mean, these are some of the most pressing challenges that American producers are dealing with right now. I do not think the WTO is equipped to handle them. I do think the administration should pursue biateral and plurilateral negotiations with like-minded trading partners to try to box China out.
▶ 1:39:47This is what they're doing in terms of these plurilateral critical mineral negotiations where they're trying to set floor prices, create an alternative market so that we're not overly dependent on China or subject to the chokeold. That's what needs to happen in some of these critical sectors. Unfortunately, the WTO is not equipped to handle it.
▶ 1:40:02Excellent. Thank you so much. appreciate your appreciate your perspectives. Yield
▶ 1:40:06Thank you. I now recognize Miss Su for five minutes.
▶ 1:40:10First, I want to thank our witnesses for being here today. I think that this topic is pretty timely given a ministerial conference that's around the corner. Um, I represent the great state of Alabama and my constituents benefit every day from a rules-based trading system that was established by the WTO. Uh farmers and manufacturers in my district depend upon foreign markets uh to export Alabama goods. In 2024, Alabama's exports were valued at 26.8 billion.
▶ 1:40:39But because of Donald Trump's um tariffs, exports from Alabama has dropped over $2 billion last year. We all agree that the reforms are that reforms are needed for the WTO. The dispute settlement system is broken and the organization has come up short when dealing with issues like forced labor, climate change, and unfair trade practices.
▶ 1:41:04However, many of the principles established by the WTO, like the most favored nation treatment, continue to be the foundation of our rule-based trading system. While Donald Trump continues to to cause chaos around the globe, we in Congress must stand up for the WTO and the value that it provides to the American consumer. So, we must support some reforms. Um, Mr.
▶ 1:41:26Hirsh, uh, in your testimony, you stated that while China was traditionally more of an obstructionist when it came to WTO, they are currently repositioning, uh, for example, in the fish subsidies discussions um to becoming a defender of the multilateral uh, trading system. Is China sensing an opportunity to take a leadership position in WTO as they see uh, President Trump continuing to attack our allies?
▶ 1:41:51Um they're definitely acting very opportunistically to present themselves as defenders of the system even as their actions do really do not support that.
▶ 1:42:02Yeah. Um in this current um global environment where we see the rise of authoritarianism and growing reliance on industrial policy, is the WTO's consensus based decision-making process still workable with 160 plus members? Mr. Harsh?
▶ 1:42:19Well, I think what what it's there's there's really hardly any other way unfortunately for them to make decisions because you know given what is being negotiated, members really do need to be able to consent to what you know the commitments that they are agreeing to.
▶ 1:42:33Um when they are able to reach agreement, it means that you've got a very strong and durable agreement and that's really quite important. So you know again we've there have been successes even with those constraints. You know there have been two multilateral agreements so far concluded on fish subsidies and trade facilitation. These plurilateral agreements offer a lot of opportunity as well for reaching agreements at the WTO. So yes, consensus is important.
▶ 1:42:58Um but it it does not mean that you can't do anything constructively or valuable at the WTO.
▶ 1:43:04And so if you had a magic wand and could only do one reform for the WTO, what would that be and why? Um [clears throat] well the magic wand frankly would be [laughter]
▶ 1:43:14be nice to have wouldn't it
▶ 1:43:15not necessarily even a reform but as I I said in my statement it would be wonderful if um the small handful of members that have been obstructing progress in so many areas would simply recognize the value of the organization sincerely recognize it and by and in doing so step back from obstructing because a lot would be getting done right now without that.
▶ 1:43:35Good point. You know, I think that most favored nation treatment is probably uh one of the core principles of the WTO that has been uh helpful, but the United States uh seems to be uh weakening the most favored nation status. And uh would that strengthen um our leverage uh in trade negotiations or or risk unraveling the unilateral trading system
▶ 1:43:59if the United States were to abandon it? Yeah, I mean you know it to the extent that it is it would unleash you know chaos in the in the global trading system that would not serve any businesses any traders or any countries. So you know MFN is a is a princip simple principle that helps traders and and it helps uh serve as a foundation for meaningful durable agreements.
▶ 1:44:22um if our president continues to pursue this sort of trade war that we're in um and he doesn't engage in good faith reform of WTO, what are the likely consequences for the United States economy um over the next decade, would you say?
▶ 1:44:36Well, I'm I'm not an economist. Um but um you know and I think that we've we've already seen uh that you know chaos is not friendly for business and that it's not friendly for you know consumers or for those who need any kind of steady rules uh since business really relies on steady rules.
▶ 1:44:55Yeah. Well I mean I think that WTO plays an important role and while there are needed reforms definitely I think uh the US sort of walking away from the WTO is not the answer. it. Thank you so much all of you for your testimony. I yield back the balance of my time.
▶ 1:45:12Thank you. I now recognize Mrs. Fishbach for five minutes.
▶ 1:45:16Thank you, Mr. Chair, and thank you all for being here today. And um you know, it's funny that I'm asking this question right now because it's going to be related to egg and I was literally in the hallway um meeting with Minnesota Farm Bureau and you know what the first question they asked about tariffs and trade. And so it's kind of and I said, "Well, that's what we're talking about in there." So, um, but farmers and ranchers, obviously in my district, I have a heavy egg district, depend heavily on export markets.
▶ 1:45:43Um, yet they so often face significant tariff and non-tariff barriers and are forced to compete abroad against producers benefiting from heavy subsidies, challeng challenging their ability to compete on a level playing field in international markets. We've seen the Trump administration find success in negotiating stronger and fairer access for US agricultural products uh uh ab abroad, including addressing tariff and non-tariff barriers.
▶ 1:46:11But obviously, and I think you probably all know, there's still work to be done. Mr. Bachmann, as the United States heads into the WTO U ministerial conference, what uh specific priorities should the US pursue to ensure the WTO better better prevents trade distorting practices and expands real market access for American producers?
▶ 1:46:33Thank you, Congresswoman. I think most important to us would just be to hold the line frankly is to no backsliding and and maybe encourage uh setting up some sort of a work plan towards reforms that the US could be a a effective part of rather than hoping for some sort of true reform or true progress on a negotiations this year.
▶ 1:47:00Thank you very much. And anyone else have anyone they want to add to that or anything? I mean, I'll let Okay, just checking because someone looked like maybe they But um if the WTO cannot meaningfully address the the distortions that are happening um particularly in countries that refuse to address non-tariff barriers, what tools should Congress and the administration consider to protect US farmers while still supporting a rulesbased trading system? Mr.
▶ 1:47:30Bachmann, you want to start?
▶ 1:47:31Sure. I I think that the it would be helpful if Congress continued to support the administration's use of tools like section 232 and section 301 uh investigations to be able to use legally durable tariffs as leverage in order to get uh better agreements, bilateral agreements across the finish line.
▶ 1:47:53We've already seen the success of some of those uh over the last year and I think we're going to continue to see many more in the next couple of months that benefit US agriculture and other
▶ 1:48:05Thank you, Miss Sha.
▶ 1:48:07Thank you. I I may have looked like I wanted to say something previously because I almost always do. That's my resting face. Um, but I'll I'll add on just to to agree with my colleague here as well and just say look there there are limitations to what we can accomplish at the WTO at this point in time to Representative Su's point. We have 166 member countries each of who have a veto. We want to take action against India, they get to veto it. We want to take action against China, they get to veto it.
▶ 1:48:33So there have to be solutions that the administration has tools the administration can use to go after trading partners on a bilateral basis or a plurilateral basis. And so the tools that my colleague identified, the 232, the 301, these art deals, these negotiations, this leverage that the president has been able to achieve, this is the only thing that has worked in the last decade to try to extract some of these commitments from our trading partners. And I think it's been remarkably successful.
▶ 1:49:00Thank you.
▶ 1:49:01Thank you very much. And I'm just wondering if um Mr. Bachmann, as we approach obviously the conference, how should the United States approach negotiations on the public stockholding, particularly given that some of the members are seeking permanent protection beyond the current peace clause? Yes, I think we want to make sure that we push back on any Indian approach towards uh making permanent the the public stockholding provisions.
▶ 1:49:30I think public stockholding on its face sounds honorable. uh you you want to the government wants to procure food for food security for their country. But what happens is they're buying billions of dollars worth of food, in this case rice and wheat, and then they sell it to exporters for cents on the dollar and then that floods not only the US market but the world market and it makes it difficult for our farmers and ranchers to compete around the world against Indian products or Chinese products or other countries
▶ 1:50:00that abuse the public stockholding provisions within uh the the Bali agreement. Thank you very much. And um I am almost out of time, so I will yield back my eight seconds.
▶ 1:50:11Thank you.
▶ 1:50:13I recognize Mr. Schneider for five
▶ 1:50:16Uh thank you, Chairman Smith, and I want to thank you and the ranking member for holding this hearing and and our witnesses for uh joining us and sharing your perspectives. Uh the World Trade Organization has helped shape the rules-based trading system and helped remove trade barriers and facilitate strong international relationships and expand access to markets of all sizes. Uh at its core, the WTO aims to limit unfair trade practices and promote strong and diverse trade flows uh around the world. Uh Mr.
▶ 1:50:45H, a couple things I've heard in just sitting here. Uh you know, cha you noted chaos is not good for business. I think that's something we can all agree on. Um and that reform is needed. Both sides of the aisle recognize that. Uh and to achieve reform, we need clear and shared goals. We need specific details of what we want to accomplish and then obviously agreed upon uh metrics and uh milestones.
▶ 1:51:10But there's the issue, and Michelle, you just touched on it, that the veto, the the ability of of obstruction to rule the day. And there's an obstruction calculus. I believe that as long as any country believes that they have more to lose than they hope to gain by either getting out of the way or actively engaging in the reform process, reform becomes uh all but impossible. Uh at the same time, I I think it's critical that the US engage in in leads.
▶ 1:51:39Uh unfortunately, we've seen President Trump over the past year plus start, lose, and restart uh trade wars. And this is a time when trade norms are rapidly changing. The I believe the US has to reaffirm its commitment to being an active participant in the WTO and working together with our allies, not against them to further those shared goals.
▶ 1:52:01It's imperative that we have a WTO with a working appellet body that improves the speed and predictability of dispute settlement processes and addresses the needs of the United States and other free and open economies in the 21st century. So, I was frustrated to see the United States stop contribut contributing last year to the de WTO, but happy to see that the Trump administration has reversed policy and restarted those payments.
▶ 1:52:27But I remain concerned about a shifting US trade prior priorities alienating our country in a forum where our leadership is desperately needed. Um, let me touch on consensus based decision-making and I'll start with you, Mr. Hirs. What reforms do you see is needed for the WTO to help more members or every member reach decisions in a consensus based uh forum? And what are other members doing to help advance this goal?
▶ 1:52:56Um well there there have been some proposals that have been made um by various members. You know things like so-called responsible decision uh you know consens consensus and other attempts to um uh at least create norms as to when it is appropriate and guidance as to when it's appropriate to block something that's widely supported. Um there have been some proposals out there now uh to take the really the basic administrative jobs that are also done by consensus.
▶ 1:53:24winning chairman and such uh and and making those something less than a consensus. But I mean I I I think that ultimately you know what is really required is recognition on the part of of the members themselves of the value of the organization and the value of its ability to take decisions and therefore to step back from some of the um obstructive uh behavior that they've taken.
▶ 1:53:48um you know they have an opportunity to uh look at what the world maybe looks like without the WTO and um maybe judge that it is in their interest to um make progress there.
▶ 1:54:00Um Miss Shaw, if we could do one thing, especially for Congress, if we were to give Congress guidance on what we could do to try to move it forward to get to that reform, what would you tell us to
▶ 1:54:11I I there's no silver bullet. I I'd start with that, but but just
▶ 1:54:15there never is.
▶ 1:54:16Yeah. Just just to say reform at the WTO actually takes a lot of work outside of the WTO. So if you look at what the Trump administration did in its negotiations with Indonesia, Malaysia, Cambodia, it got these economies to agree to not stop renewal of the e-commerce moratorum in our bilateral deals. Right? So you have the US exerting pressure to try to fix issues in Geneva. And as a result, the United States doesn't actually need a permanent moratorum this year. We want it. It's good for our innovators.
▶ 1:54:45It's good for our digital companies, but we already have commitments by Indonesia to not impose tariffs and we can use section 301 to have other countries agree to not impose and disadvantage US digital companies, too. So, I think it's pressure on the outside.
▶ 1:54:58Let me build on that because I think it's an important point in the few seconds we have left. Um, there are many ways to get to the top of the mountaintop, but if you are beating up on your friends, going back and forth, uh, sometimes arbitrarily, sometimes capricciously, does it make it harder to bring people together to get to the collaborative productive work we need to do to reform the WTO?
▶ 1:55:21What I would say is the United States has been pushing for WTO reform 25 years and the other way didn't work. And so while this approach has some benefits, it also has some drawbacks. The other way didn't work. So we have to find a new way forward.
▶ 1:55:37I I agree with that and I yield back.
▶ 1:55:42Thank you. I now recognize Mr. Arrington for five minutes.
▶ 1:55:46Mr. Chairman, ranking member, um witnesses, thank you for your time and insight. Um, we gave permanent normal trading relations to China and the WTO uh many years ago with great expectation for good things, namely um to democratize, if you will, the country of China under the regime of communist control, but also we expected that
▶ 1:56:16we would have a rules-based trade order that would be enforced forced on every member of of the trade community, including this new member that was um advocated for by the Clinton administration, I believe, at the time. It hadn't worked out quite so well.
▶ 1:56:35We haven't seen that uh the vigilant enforcement to prevent transfer uh uh transferring sensitive uh intellectual property uh and other sensitive uh information around technologies.
▶ 1:56:50American technologies, all kinds of unfair trade practices, not to go through the lit litany of them, but it doesn't seem that WTO has been effective or has cared to uh equally enforce um the the the trade rules uh to all its uh uh members.
▶ 1:57:16So, Miss Shaw, um h how are how are things going to address that issue because um that seems to be the big one for the United States and we seem to have to be going it alone to address these in a bilateral way when most of the things that we're doing to address the unfair trade practices should be resolved and being resolved.
▶ 1:57:45um by the World Trade Organization. Can you just give me a status on that?
▶ 1:57:50Yeah, thank you, Congressman. And I think it's a great question. I what I would say is that, you know, China takes the view that some of its most egregious unfair trade practices are not covered by WTO rules. And unfortunately, we had an activist appelllet body that shared that view and limited the tools the United States had to address the China challenge. the United States and its allied countries there.
▶ 1:58:15So, at the moment, there isn't really a lot we can do at the WTO to address some of these state subsidies, the uh terrible practices of stateowned enterprises, the technology theft, the excess capacity and overcapacity. We have to address those issues outside of the WTO. Unfortunately, that doesn't mean the WTO doesn't have value in terms of the committee structure, the technical level discussions, the the body of rules that help US agriculture, farmers, producers, but we can't address China there.
▶ 1:58:44So, we have to turn out
▶ 1:58:45well. effects of that at least uh in large part have been millions of manufacturing jobs that we've lost because somehow they've been treated as a developing nation and are allowed uh some of these um privileges in the trading community like mass subsidizing their manufacturing base.
▶ 1:59:06We've hollowed out ours um and we've become dangerously dependent on ironically on China for things that are important to safety and and security of our country and the American people.
▶ 1:59:19So the consequences have been uh grave and I can't think of anything more important for us in the in the trade policy space to address than this central uh uh you know perverting dynamic that is emanating from the WTO.
▶ 1:59:39Representative, could I just comment that I believe Arthaint believes that China foundationally rejects the basic principle of the WTO and that is that nations specialize in areas where they have comparative advantage like making airplanes or semiconductors and they trade with other countries for things they make better. China wants absolute advantage across all advanced technology industries. They want import substitution. We have to recognize that in dealing with China, we're dealing with a nation that fundamentally rejects the basic principles of the WTO.
▶ 2:00:08Well, I that's why it's hard to consider WTO as a cred a credible rules-based trade sort of referee, which you have to have. I think in concept it's great. The principles are only as good as they are enforced. And so I I think this is the fundamental problem.
▶ 2:00:31I was going to talk about the uh issues with um agriculture specifically and the unfair tariffs there and um get your thoughts uh Mr. Bachmann on on um on what we can do to continue to uh open up access and level the playing field for producers. We were at a 3 to one disadvantage, but I don't have any more time. Uh I think we addressed the most important issue in my mind with respect to WTO.
▶ 2:00:59With that, I Uh, the gentleman yields. The gentleman from Texas, Mr. Moran, is recognized.
▶ 2:01:08Thank you, [clears throat] Mr. Chairman. Uh, Mr. Chairman, it's clear that the Trump administration has brought to light an issue that has been overlooked uh but has disadvantaged the United States for years. US trade relations with our partners around the globe must be realigned in a manner that promotes free and fair trade. and international organizations like the WTO must not stand in the way or make that goal harder to achieve. They need serious reforms and they need to help us in that in that priority.
▶ 2:01:37When you look back several decades, free and fair trade was the priority of one of our finest presidents in American history. That's Ronald Reagan, who in his 1985 State of the Union called for a new multilateral negotiations platform that would lead to true progress in trade relations. His goal was to combat unfair and distortive trade practices. And he also understood though that the US needed strong economic markets worldwide for US goods.
▶ 2:02:01These goals and these discussions ultimately led to the creation of the World Trade Organization sometime later in 1994. These goals remain the same today. Combat unfair and distortive trade practices ensure strong markets with friends and allies for US goods and several other uh great ideals. But we have gotten a skew a little bit.
▶ 2:02:24When operating correctly, the WTO can be a comprehensive trade negotiation platform that does allow economies from around the world to interact in a manner that was not possible for before its creation and that meets these goals. It's a platform that the US can use to pursue free trade and push back against discriminatory trade measures. But reforms, transparency, and accountability must also exist. Miss Shaw, I want to start with you.
▶ 2:02:48Since you have worked both in Congress and at the office for the uh US trade representative in Geneva and in DC, your perspective on our steps forward with the WTO are very valuable. How do you think the US can use our position at the WTO to promote free trade and work with our trading partners to advance priorities that will benefit all member
▶ 2:03:09Thank you, Congressman. I think it's a great question. Look, I I think we've taken the WTO as far as I think the WTO can go in terms of negotiating new trade rules. I think right now it's about monitoring transparency and continuing to push our trading partners to abide by the commitments they've already committed to. When it comes to some of the more advanced trade rules, the China challenge, the other issues that we're facing, market failures, overstretched supply chains, we need to address these in other forum through plurilateral negotiations with our trading partners, through these bilateral deals.
▶ 2:03:40But I think the WTO is really going to struggle to take some of those issues on. You've got 166 member countries, every single one of which has a veto. That's hard to overcome.
▶ 2:03:49It is the structure has been very difficult for us to get the results that we need that actually support American ideals, not uh under undermine them. You said, I think you said to Jody Arrington just a little bit ago that we've been working on reforms or proposed reforms for 25 years in the WTO without really getting anywhere that we needed to get with those reforms.
▶ 2:04:09So, I'm curious specifically, what do you think we need to do differently to achieve the results and the changes we need from within the WTO without expanding its scope or or it's uh or or what it can handle, but actually the things that it's currently handling. How do we make it do better?
▶ 2:04:26Yeah. I I actually think some of the steps the president has taken in the last year have already helped. And we were talking earlier about the fact that the president got other countries through these bilateral negotiations to agree to reforms at the WTO. We've never had leverage like that before and we've used it to better the institution and the organization. I think that's one way to make progress.
▶ 2:04:47Mr. Eel, I'm going to ask you the same question. What What do you think specifically we need to do to turn the screws to make sure that we get the changes we need in the WTO? Well, I'd like to associate myself with Kellyanne's comments, which is that we should use the vehicles that are available to us in the DBTO to uh where they're appropriate and and effective in advancing our interest like the information technology agreement, lowering global
▶ 2:05:18tariffs on trade and information technology goods. That's probably been the WTO's most successful pluralateral instrument. It's helped our exporters tremendously. Let's use the plural lateral instruments that we have at the WTO to great effect. We could add to that with a joint statement initiative on e-commerce. So defined areas within the WTO we can leverage um and make progress on without having to deal with the reality that there is a veto and requires consensus to
▶ 2:05:44and for both you Mr. Zel and Miss Shawn, what other nation countries are are supporting our efforts to to change the things that need to happen in the WTO? Where are we getting support? So, a lot of our like-minded allies are at the point where they recognize the WTO needs serious reform and on certain issues they see our point, but I don't think there's a meeting of the minds among all 166 countries on the types of reforms that are necessary. Even with the EU, we see some of the biggest gaps. So, it's a challenge.
▶ 2:06:14And I would add that on issues like the intellectual property rights, the co9 IPR waiver, countries like Switzerland and United Kingdom wanted the United States to stand up against India and South Africa on that waiver. But when the previous administration relented on that issue, support against it. So there are countries and allies around the world that are counting on the United States to stand up for the United States to stand up and show leadership and IP and digital trade roles as WTO.
▶ 2:06:39I agree with your statements there, Mr. And I'll finish with this by saying the US has to st take take a strong role in the WTO to make the reforms necessary to happen. We don't want to step away, let China get more influence in that organization or to push it further in direction. It does not need to go. Uh but certainly we should not let ourselves be run over uh by uh the procedures and the structure of the WTO.
▶ 2:07:02We must stand with President Trump in his uh resetting of the trade world these days and make sure that we come out with freer and fairer trade on the backside as Ronald Reagan uh initially said we should. Thank you. I yield back.
▶ 2:07:18gentleman from the lower DAS yields and the gentleoman from the US Virgin Islands, Miss Plask is recognized.
▶ 2:07:23Thank you very much, Mr. Chairman. I'm not going to be very long. Um, I wanted to ask our witnesses if there was any uh information or discussion they had with regard to in particular uh labor standards currently for developing countries.
▶ 2:07:43We know that some developed country member states um have argued that the US that the WTO must take up the issue of worker rights to build confidence in the organization and the global trading system. And some developed countries and most developing countries believe the issue of core labor standards does not belong in the WTO.
▶ 2:08:07And I wanted to ask you all what your opinion is on that and how do we combat um governments to view the efforts to bring labor standards into the WTO as a way to undermine the comparative advantage of lower wage developing countries and make a compelling case that the economic growth will lead to better working conditions and improve labor conditions for labor standards for individuals within those Does anyone have any thoughts about
▶ 2:08:38Well, why don't I start and you know and that is you know as the ranking member noted you know there have been efforts in the past uh to push forward labor rights at the WTO um you know they've they've met with the same challenge that every other significant decision has which is the need for consensus um and you know there has been some skepticism um among developing countries as to you know the intentions there and in general um skepticism of just taking on new commitments as a general eneral matter.
▶ 2:09:06Having said that, you know, this is obviously a critically important area and it's one which the US should continue to be pushing on. Um, you know, one uh observation that, you know, I would make is that in the time since we uh first started to push at the WTO on the issue, we've made significant progress in the context of bilateral agreements and FDAs.
▶ 2:09:29And as a general matter, not just in the labor area, when we have been able to advance work bilaterally, it's built up a constituency which has made work at the WTO easier. Um, I don't know when, you know, we'll reach the tipping point on labor, but it's definitely something that we should be continuing to push on.
▶ 2:09:48Thank you. Um, another issue that I Does anybody else have an opinion or any It's not about labor standards specifically, but a World Bank study of 99 developing countries found that small businessesmemes accounted for 66% of their permanent full-time employment and 86% of new jobs created.
▶ 2:10:11So the role of international rules like the WTO e-commerce moratorium 1 trillion dollars of globally digitally delivered services come from developing nations and especially in those cases small businesses. So things like the e-commerce moratorum at the WTO are actually critical to supporting developing countries, small businesses across the world that are a key driver of employment growth in developing
▶ 2:10:33Thank thank you for that information, that statistic. I appreciate that. Um did you have anything you wanted to add?
▶ 2:10:40Yeah, just just to add quickly look the international um trading system, so the World Trade Organization is is a tradebased organization. I think we have other forum to address international labor rights. But I will say it is a trade issue when other countries maintain lower wages, lower labor standards that disadvantage US workers and US products. And I think that is something that is relevant for for trade discussions.
▶ 2:11:05But I'd also note that just the other week, the administration launched a section 301 investigation into forced labor to address the competitive advantage other countries have in maintaining um insufficient laws against forced labor. And I think that's one way the United States can handle it is through these these bilateral tools.
▶ 2:11:22Thank you. Um before my last question, um Mr. Chair and ranking member, you know, we have some incredible staffers who work with us here on Ways and Means, the utmost professionals, just absolutely stellar individuals. And myself and my team have had the pleasure of working with Mr. Ruda. understand that he is uh going to be leaving um his work with the trade uh subcommittee.
▶ 2:11:51I just want to publicly thank him for his support particularly of the Caribbean region. And as uh a fellow Caribbean individual, I want to thank you for your service not just to this committee but to our nation. Um as a marine, as a veteran, thank you so much.
▶ 2:12:09And then my last question is related to I know that the uh trade representative has argued and we've heard discussion from my colleagues on both sides about China's continued um embracing a state-led non-market and increasingly predatory model.
▶ 2:12:27Um there was question that was raised about the efficacy and the importance and use of the WTO when one of the major trading components, China, is not moving into a space in which it confines itself to WTO standards. How can we best use and adapt the WTO to address that unique, serious, and constantly evolving challenge for the global trading system? And as you respond I I am finished.
▶ 2:12:57Thank you very
▶ 2:13:02Um you know very quickly um you know I would just say that you know we have been using the WTO to flag the problem of China and we have used it I think effectively in helping to persuade other members that there is a problem there even if specific actions are difficult to take within the organization that is shaping the debate. You know, countries are supposed to timely notify their subsidies to the WTO. Mark at Harvard found that China notified six to eight years later on average.
▶ 2:13:32So, we should introduce at the WTO a presumption that subsidies, a presumption of harm for subsidies that are not timely notified at the WTO. You should also incorporate that in trade law like under section 37 of the United States. If a country is not timely notifying, then the presumption that they harmed the US company should be something we push for at the USTO at the WTO and within our own trade laws.
▶ 2:13:57Thank you to the gentleoman from US Virgin Islands. I also echo the congratulations and thank you to Thank you for his service, Mr. Ruda. Uh the uh the chair now recognizes the gentleman from the Ohio State, Mr. Miller. [snorts]
▶ 2:14:11Thank you, Mr. Chairman. Uh appreciate all witnesses being here. I'm just going to get right to it. Miss Shaw, I know it's been probably a long day on the last one, I think. So, uh, Miss Shaw, the administration's 2026 trade policy agenda admits that the WTO is fundamentally flawed. You and others have proposed plurilateral agreements as one potential path forward. Do you see plurilateral agreements as the best way to make progress?
▶ 2:14:34And if you do, how should Congress think about strengthening WTO enforcement mechanisms versus working with like-minded partners to pursue alternative approaches? Thank you. Last but not least, Congressman, it's a great question. So, right, the pluralateral approach seems to be the only way to make progress at the WTO when you have so many members with different economies, different views about the future of the global trading system.
▶ 2:15:00The problem with doing pluralateral negotiations within the WTO is you actually need consensus from the other members to allow you to negotiate on a plurilateral basis. You can see the catch 22 here. So when I'm talking about plurilateral negotiations, I'm not talking about pursuing them within the WTO. I think that would have been great if we could have achieved it, but we've been asking for that for years. I I don't think it's possible realistically, and I think I want to be realistic with you.
▶ 2:15:24Um I'm talking about plurilateral negotiations outside of the WTO like the administration is doing with respect to critical minerals and working with allies, like-minded partners on issues to address supply chain constraints, excess and over capacity, and some of the challenges posed by China.
▶ 2:15:39Thank you. I I really appreciate that sound and detailed answer. Uh and I'm shocking it's hard for you guys to get a consensus as well. We don't have that problem at all in Congress when it comes to anything um even partisanly. Thank you for that answer. Uh Mr. Bachmann, the United States is facing a growing agricultural trade deficit and global agricultural markets continue to be distorted by subsidies and other barriers.
▶ 2:16:03What priorities should the United States pursue at the WTO to expand market access for American farmers and address trade distorting practices such as India's public stockholding programs and continued use of special and differential treatment by relatively advanced economies.
▶ 2:16:20Thank you. I think it's uh important that the United States continue to press against any efforts by India and others for a per making permanent the public stockholding provisions. Uh what what they're doing and what they want to do is honorable except for the the way that they implement it is not actually following the rules. They're they're they're releasing stocks from the public for cents on the dollar uh to exporters.
▶ 2:16:49Those exports then make their way around the world and compete with our a products uh rice, corn, wheat, soy, many other things. Uh in addition to that, we have other players around the world that are are filling the void that we've seen uh in a number of markets where Brazil for example has filled back filled into China. Something like that is uh is because we're we're not able to keep up with the rest of the world in terms of subsidies.
▶ 2:17:18If we were to try to do that, we would we would uh you know further increase the US deficit significantly. So I think our best case scenario is to continue to use uh US tariffs as leverage in order to get countries to play by the rules, get them to come to the table in a meaningful way, whether it's at the WTO or or bilateral agreements, uh like Kellyanne mentioned earlier.
▶ 2:17:42And so it's going to be an uphill battle and it's not something we're going to win today, but I think uh we need to continue focusing on that to make uh make sure US a products continue to be um successful around the world. Thank you very much. It's incredibly important to our district back home in Ohio 7 as uh three out of the four counties that I currently represent are agg and rural counties. Um but I'm shocked, Mr. Bachman to hear you say that countries like India and others aren't following the rules.
▶ 2:18:12Wow, that is surprising and that is why President Trump has taken the stance that he has when it comes to negotiating with other countries to be treated fairly. I'm glad and I'm grateful for your answer today so everyone can hear it and I'll just wrap up with this. I know it's been a long day. Uh in closing, it's clear very much from today's discussion that the WTO needs meaningful reform to remain effective and credible.
▶ 2:18:34Uh at the same time, we should prioritize practical outcomes at MC14, such as securing a permanent extension of the e-commerce moratorum and addressing trade distorting practices that disadvantage American workers and farmers that we see every single day. I look forward to working with my colleagues and stakeholders to advance these priorities, and I'm very grateful for your testimony. Uh Mr. Chairman, I yield
▶ 2:18:56Thank you to the gentleman from Ohio. sincerely would like to thank our witnesses for appearing before us today for answering many questions on many many fronts. I appreciate your dialogue. Please be advised that members have two weeks to submit written questions to be answered later in writing. Those questions and your answers will be made part of the formal hearing record. And with that, the subcommittee stands
▶ 2:19:20Good job, Chairman War. Hey