[inaudible conversations] >> okay. i think we can get started. good morning and the president of global business dialogue it is a pleasure to welcome each and everyone of you here this morning.

but this program over the national security tariffs so just like the administration and to reach a critical stage or you may feel that dramatic action taken has precipitated the crisis. and now we will talk about this morning in this 90 minute. i'm aware we cannot get all of you and our trading partners have strong views and they are not represented here but to have the best panel you could

assemble i am grateful for each and every one of them especially those who was a little under the weather but made it here anyway. i also want to say a special thanks to this morning's program nobody knows the data better than those who create that company i worked back in the '90s for an electronics company and then to make electronic connectors to say we engineer the hell out of it and that is what the trade data if you're not familiar suggest you take a look also to say just a brief word so

with our tax filings with a for-profit company like a volunteer organization. and to mention to volunteers in particular our vice president has done something that i have mentioned right now to spend the last day or so at the library of congress to figure out where it is section 232 come from? the proof of that labor in this handout i was struck from this passage from the 1950 version which says in the administration of this section the director of the president shall further recognize the close relation of the economic welfare to the national security. so thanks for pulling that out

for us. and the other volunteer to give recognition to is what i think the vice chairman but as the moderator he is the conductor to the railroad of understanding and i will turn it over to him and i look forward to the discussion. >> good morning everybody. once again the judge has assembled just the right group at just the right moment in the world trade in the name of national security and now we

say that adam moment now that it has opened up on the operating table and number of hundreds of billions of dollars of trade and when according to this morning's clips the president wants out of the wto and then that has held up under scrutiny. but there are provisions to recognize the retained rights of each member.

so to adjust imports with those measures to rely on those exceptions for legal cover but section 232 tariffs are the measure and presently on track to the first substantive in the dispute settlement whether that is or is not self judging and meanwhile those are begetting restrictions and that is biblical now two-phase extra tariffs starting with steel and aluminum and it seems in a

short while to automotive trade and heaven knows what else? we are all very lucky to have this group of panelists to address what is going on going forward. i think i have the order of speakers right first president of the national foreign trade council serving at the highest levels of the human government of governments different flavors and for what i believe was record-breaking 11 years and in that capacity there is a line in his bio that says three decades of experience with u.s. trade negotiator to

and fingerprints are everywhere but but actually not on the 1962 act but during the time he was serving in u.s. government positions in the 80s and 90s the u.s. strategy -- strategy regime's provisions were there straight through. jennifer's main current affiliation georgetown university law center and along the way with the most interesting trade jobs a person can hold as the chief tax negotiator as a member of the appellate body to see her work in private practice and i

can see those skills extend way beyond public service for counsel for international affairs import producers counsel beyond what it does to the pork industry as you all know to attain that status on trade policy to take a leadership role with implementation with a series of trade agreements with the agriculture trade coalition. next we have president for the alliance of american manufacturing established 2007 by companies and labor interest. part of the white house initiative and host podcast the manufacturing report. so really a stellar group with an important topic and you are up first.

>> good morning everyone thank you very much to global business dialogue enjoying all of your work over the years certainly there is no better time to be active in this field then now and may you always live in interesting times we are certainly learning the wisdom of that thank you for all the work you've been doing for the colleagues on the panel but let me start this way as head of the national foreign trade council and association of 200 some companies the whole u.s. economy to the internet and everything in between but also

in connection with the 232 actions to put together with the alliance of competitive steel aluminum trade about 45 different trade associations representing hundreds and hundreds of producers both large and small of products that are consumers of steel and aluminum and then to step back just a minute this is a very fundamental point the country will be reaching where u.s. trade policy goes. it is a much sharper focus but

coming into a very sharp focus that really the administration believes the mercantile trade policy based on the use of instruments like tariffs to get us better results country by country the basic framework over the last 70 years and to describe it this way with a fundamentally believe you can fix the problems of 21st century economy industries with policy instruments like tariffs and 17th century

philosophy like mercantilism. that will not work in the long run so start with the impact to take tariffs up on the sector like steel and aluminum already we are seeing price increases it is driven by a genuine concern with the chinese government policy and practices that have created overcapacity but the ocean, rather than try to work together to build a much stronger global alliance with a bilateral tried agreements that we have but the wto

system itself and to think about if we join the tpp if we were leading in the system and if we could work with partners the things that came in those agreements what came in the right direction also a lot of instruments like the trade laws that have been used to deal with china versus where we are today not simply raising tariffs around the world including the allies and posing a big cost both large and small and i will get to that in a minute but really not putting that much pressure on the chinese. so the question becomes do we

want to continue down this path or expand further? may be a problem ten years from now like the auto sector so here is a sector 40 or 50 times, i'm sorry not the auto sector, ten times the size if you take all manufacturing that depends on steel and aluminum that is 40 or 50 times the size and if you start building restraints into the system in the industry like that you are really expanding the conflict tenfold and basing it on a concept that others will talk about it is essential to your national security to protect your important industries. of course other industries themselves don't in the long run prosper. i was in an auto plant this

week in indiana it happened to be a toyota plant they are a member of mine with 410,000 autos per year almost 20% of their production is exported i watch the highlanders come off the line do for the australian market. it is consuming 600 metric tons of steel per day 1700 trucks coming into the plant over 80% of what they produce is from the mystic content or north american content and relies heavily on nafta obviously we can talk about that later but hundreds and hundreds of large and small suppliers for that company and that is a reflection of u.s. auto industry today 2 million

exports last year, 17 million unit production and in the industrial midwest but in places like texas and alabama to export mercedes-benz from alabama to china we will see when retaliation hits and then to put us in a better position what are the terms and how quickly can they be resolved? with tremendous uncertainty

are we getting new agreements to open world markets to have this tremendous resurgence or are we going to face where the tariffs go up everywhere? against u.s. exports? in the consequences and that is the main point today so where is this in the long run? and then tpp countries have gone forward that includes obviously those two closest

neighbors and we know that the europeans issued a free-trade agreement with the canadians they up there deal with mexico and they have free trade with other asian markets with still the risk to draw on debt withdraw from nafta the most bilateral trade agreement so then to his -- revisit and with that free-trade zone development that involves the rest of the world. and most of the major trading partners with the national

security by closing the biggest markets? and then pulling from the multilateral framework so where the rest of the world may pass us by so there are that many examples in history in the economy i ask what is your biggest problem right now and by far is the unfilled jobs. it is to find the skilled workers in this one factory that i visited this week, 1000 unfilled jobs that they have to figure out how to fill over the next six months hiring

skilled workers the growth of our manufacturing sector, people look at the decline of jobs in manufacturing sector to draw that conclusion it is due to trade or trade agreements the second to draw the conclusion manufacturing output is declining. 80% of americans think the manufacturing output is declining actually it is increasing quite dramatically and has been consistently since the downturn in 2008. but of course we are producing the same number of autos we would produce in the 1990s but we are about one quarter of the workers if you go through a factory today you understand why. the productivity increases, and that is a phenomenon happening in manufacturing

just like in agriculture are 100 years before the economy has to adapt in policies have to be better to allow america workers to adapt and identify the kinds of skills that workers will need in the future. we spend one seventh of what germany and japan spend on apprenticeship and worker training and workforce development and we need to be concentrating in tremendous amount there and do a lot more with our infrastructure if they want to do something good to help trade then we need the infrastructure strategy that is credible to promote our greater global competitiveness. the path we are on now, not just where we have come so far people are accustomed to the battles with steel and

aluminum breaking out every ten or 15 years not to mention i just hit my 41st year and i sought repeatedly throughout that, i know we lived through a lot of them, through the steel fights, but if we start using more general strategy that this is the way to fix the economy, first of all what are we fixing? one of the most dynamic and global competitive economies in the world cannot find the workers for our most skilled and important jobs in the economy and meanwhile a lot of americans struggling because they aren't making good incomes and they don't have good jobs and you say something is wrong but the solution is not the one that has been identified by this administration and that is the concern that i have. i look forward for discussion

for q&a thanks for inviting me today. [applause] >> i did get the speaking order wrong the next presentation. >> thank you john and for the opportunity to have a conversation about the national security -based tariffs. as i think the ambassador demonstrated it is a complex set of issues that we are managing. first i want to say before i start particularly given the venue with the national press club given the shootings in annapolis and the murder of the senseless slaughter it is worth pointing out journalism is not an easy business under optimal circumstances and journalist all over the world including the united states

deserve unwavering support for their work and freedom of the press and they deserve a president who feels the same way as well. i am from indiana. i grew up in jasper county indiana part of the pork producer counsel and within sight of the steel mills it is the largest deal producing area in the country and has been since the 70s. this is an issue i take very personally. i'm glad judge set up the conversation to look back at the legislative history because it does make sense to look at the 1962 act the foundational documents for section 232 it was hailed as the trade expansion act as the biggest legislative achievement of the congress and included three fundamental things to give the president broad authority to negotiate

trade expansion with u.s. barriers, particularly with cold war partners developing nations as well designed for further economic ties with them and included the first iteration of trade adjustment assistance and we know over 50 some years the ups and downs of that program and how it has become a political football and viewed as an afterthought to have passed trade agreements as a pathway to readjust. in the third element was trade enforcement where 232 then it is important when president kennedy signed this bill he actually made a point to thank george was the president of the afl-cio to support the trade legislation think of the last time the president has thanked a labor leader for

passing a piece of trade legislation. you have to go back a long way to do that. part of that is to be the foundation for the trade policy with the enforcement and adjustment and expansion. we have done expansion reasonably well. the enforcement tools frankly are weak and reactive and the burden placed on businesses and workers say are incredibly not sharp tools and i mentioned the adjustment. so this 62 act with the three prongs of trade policy provide a foundation for understanding where we are today so in this particular case steel and aluminum are essential to national purity that may sound

very 20th century but if you think what protects us in this country it is aircraft carriers involved with armor plates and aluminum that was just invented in the last ten or 15 years it is a resilient electrical grid of which we have one remaining producer that is part of the nuclear triad for at least 50 years to contain an amazing amount of metal. if you do one -- don't think those conflicts involve steel and aluminum you are reading way too much because they do and that establishment

understands that. are we facing a challenge in particular? it is yes facing waves of bankruptcy in part because the administration refused to take action during the financial crisis. we face a situation with china coming online now five of the largest steel companies owned by the chinese government and don't respond to market conditions. have a nation producing half of the world steel and consumption varies widely depending on the domestic program does not stop making the steel so that creates bad

behaviors that only as chinese producers that governments around the world to hang onto the steel industry which otherwise are efficient and productive and should be competitive if not for this glut of steel coming from china. so the steel industry has search for solutions for many years and we would have done it by now it is not well-equipped to deal with a massive amount of state capitalism coming from china or overcapacity or the impact that has on the global market. but there is a global steel dialogue with producers plodding along at the exceptionally lopez meanwhile

it faces the latest crisis when the rest of the economy was humming a long and a technical recession. the only reason is because of the chinese excess capacity. all of these complaining about steel prices right now received an exceptional discount in 2014 through 2016 for the types of steel and aluminum that they produced i don't see car prices come down not to the can of bee beer, they held onto those savings so it is a little disingenuous to say we are facing this now some people say that military aspect may account for 3% so how is this a national security issue? we don't have nationalized

steel mills or subsidies they compete in a highly competitive market in the u.s. has the lowest -based tariffs for steel around the world it is correct to say we have dumping orders in place but a lot of these other countries have put up safeguards it ends up coming to the united states so if you have not read it yet read the 232 report because that lays out in great detail the goals of relief and why it is necessary the goals are to

get the steel industry to 80% of capacity utilization that is a rate financial analysts will say that the steel industry can operate on an adequate profit margin reinvest into their workers and capital to become even more competitive into the 21st century we are at 75% of operating capacity right now. we have seen import penetration coming in increase by 50% in the united states we have seen six or seven blast furnaces placed out of operation and during the most recent crisis we saw 15000 steel workers lose their jobs in a healthy economy.

some people will say why this broad effort? that is a fair question and here is the answer we do have dumping orders in place they have been effective enough to drop in terms of the volume down to 11 among all of the trade partners but that has found a different way into the united states and shipped via those that are not subject to dumping orders and through vietnam and malaysia and indonesia and korea and it has caused other governments to engage in bad behavior as well so if there was not a global solution would not be effective others may ask why is there a quota on some

countries for tariffs on allies? and how does that look so different? and there is an answer for that although it is trickier for canada and mexico and part of that is volume the largest volume of imports combined are from the eu, canada and mexico. i will say that i don't think dumping is the most serious problem that we face when it comes to steal that we need to be part of the solution. and the relief designed was to get you and canada and mexico to engage with us, to quarantine the chinese excess capacity. there are 500 or 600 metric

tons of steel that need to come out of the global market right now. the united states does not even produce 100 million metric tons so you can see the scope of the challenge. if we look to see this relief has had an impact so far, there are signals that are encouraging. first we see steel meals come back online and in granite city a place i visited many times to blast furnaces are starting up with 13 or 14 steel and aluminum facilities increase production and on workers or reopen after mom closures and some of those are attracting foreign and direct investment as well you have seen those job numbers continue to be.

found as the tariffs have been implemented and there is reason to believe that will continue as we are in a strong economy right now and you also have to consider steel and aluminum is about $6 billion in a 19 trillion-dollar economy imposed on the corporate sector that just received a 18 $5 trillion dollar tax benefit from listed ministration so the idea to spiral out of control it is not the same a limited set of products and in relation to the size of our economy and i

would submit if this is legal the ones that are retail -- retaliating the wto but it very clearly states it is self judgment without national security rationale and even for the footwear for our military so to assume that is essential to national security to assume that steel and aluminum fit the bill. people say they will lose the case at the wto i would not be so sure about that we will see what happens but i encourage

all of you to take a look at the ambassador's submission to the wto on the retaliatory tariffs. it is not a safeguard action by the national security action as well. finally, i don't disagree with the ambassador we do need to invest in infrastructure and then there is a lot we can do domestically but i submitted is less effective both in times of peace or to exert more strength and i look forward to the conversation to come. [applause] >> the honorable jennifer hillman. . . . .

>> there's some good reason to that, and if you look at the actual past decisions that were based on this 1962 statute, the fundamental question that was sort of answered in those decisions is is the united states overly reliant for critical materials on imports and if so, are those imports coming from countries that we don't want to rely on in a time of war? so that's really what the gist of this was. if you think about it, in the context of steel, again the answer is going to be flat no. imports are at best 20% of the u.s. market in most of the flat-rolled products.

so we're not overly reliant on imports to serve critical needs. and where do those imports come from? number one source, canada, number two, eu, number four mexico. no case in the ways in which 232 have been read to actually apply these duties to steel. hence the reason why the administration has gone to the one phrase, the one sentence in 232 that is the part that is highlighted that completely erases the notion of a distinction between national security and economic security, and it's basically saying anything that we deem to be in our economic security must be in our national security and vice versa. and there comes the legal problem because that may well be the definition under section 232 under u.s. law, it is not the

definition under international law, and it is not the definition under wto law. so what's happened since these 232 tariffs have been brought? there have been challenges at the wto within days by china, followed by a case brought by india challenging the united states, another one brought by eu, canada, mexico, norway, all filed pending before the wto. discussions that japan and others will similarly follow suit and bring a challenge. and what's the gist of the challenge? if you look at the eu's complaint, for example, it raises first of all a challenge under article i, we're going to the beginning of the beginning. what's the challenge there? challenge is most favored nation, to the extent you ever apply tariffs you have to apply them equally, but here we're not applying these tariffs to australia or korea or argentina or brazil, so we're clearly

violating mfn in the application of these tariffs. count two in the complaint, article ii, going straight back to basics, article ii says you may not charge tariffs that are in excess of your bindings. all right? you have bound tariffs. you are not allowed to add any duties above your bindings. what is our bound tariff on steel? 0. so anything above 0 is a clear violation of article ii, unequivocal, no question about it. what are our bound tariffs on alumini aluminium? they range depending on the product, so clearly unequivocal violation of our bindings. also claiming article 10-3 is arguing administering your trade laws in a fair open and transparent way. again unequivocal violation by the united states you cannot put duties on the goods already on the water before they got to you

and slap tariffs on them the minute they get there and say you applied your rules in anything resembling fair due process due notice, etc. unequivocal violation. also a violation of article 11 that says you may not impose quotas. all right, we've imposed quotas on korea and now on brazil and argentina, and we've imposed them in the most draconian way we could possibly have suggested. we told the koreans that we were going to give them a quota. it was the equivalent of 70% of their trade in steel over the last three years. 2.68 million tons. then you heard nothing about exactly how was this quota going to be administered. nobody knew until 9:00 at night, on the evening in which those quotas were going into effect at midnight. what did the administration do? they divided this quota up into 50 -- into 54 little specific limits and added quarterly limits on top of that. 216 specific little limits of to

quota and no flexibility, no ability to move quota from one category into another, no ability to borrow quota from next year into this year. no ability to transfer quota that wasn't used into next year's quota. for those us who have lived the quota world, flexibilities were always part of every quota regime including the 80 steel quota that was negotiated back then. in this instance, zero flexibility. if you look at how this pans out, one of the quotas on korean steel, the total amount in the quota for a quarter is 15 kilograms. you are allowed to put if your suitcase 30 kilograms. the notion you will be able to import 15 kilograms of steel is a joke. it means effectively a huge portion of the korean quota is not available. it is probably closer to 50% cut in their amount of trade because

of the draconian way in which these quotas were administered. that's a challenge by the eu. another challenge of article 19, the safeguards agreement and a whole series of challenges, general under the safeguards agreement. so to me the question of are these countries that are challenging these 232 tariffs likely to win? 100% chance they are going to win on the merits. there is no doubt, absolutely none that these quotas totally violate those obligations. so then the question comes what's the united states' response? here it is a clear question of real first instance for the wto. and arguably a very dramatic and important one because what the united states is going to say is that these are justified, that we have a defense to them, not an affirmative right. there is no affirmative right to impose a national security tariff. that does not exist in the wto. if you wish to impose tariffs, above your bindings, you can only do it in four ways, or you

negotiate a change in your bindings under article 28 and article 35. those are the only ways in which you can impose tariffs. so this is outside of those. all right? so then the question is, do you have an excuse for doing it? do you have a defense? and where the united states is clearly going to go is to article 21, the security exceptions, and here the emphasis i would put is on what john referred to as the dot, dot, dot. what i would contend to you they are not just dot dot dot, they are a very clear limitation on when can you use article 21? there's no comma, no semicolon, no anything else in the text. what it says yes a country can put on any action in which it considers to be in its essential security interests. a clear understanding it is self-judging, but it must, must relate to materials. this steel and aluminium are not

nuclear. it must otherwise relate to trafficking arms ammunition and implements of war, not so clear it fits into these, these are not directly implements of war or taken in time of war or international emergency. none of those. can the united states actually prevail on claim of article 21? no. unless the united states gets away with what they are doing right now in geneva, so for the first time ever, article 21 is actually the subject of a challenge. for all of the existence, from 1995 onward no one wanted to challenge under article 21, no one wanted to raise this defense. it was sort of considered the third rail, if you will, of trade law, and the concern was we really don't want panels at the wto deciding what is or isn't essential security or putting a lot of definitions around it. but this has come up very clearly now and is pending in a panel, in a dispute between russia and the ukraine. as a result of the in essence

time of war between russia and ukraine. russia did a number of things that are again equally as unequivocal violation of the wto what the united states has done here. russia among other things banned transit of goods between the ukraine and kazakhstan and going further east by ukrainian goods. among the most bedrock principles of the wto is you can't, if you are a land-locked country, be precluded from transiting through somewhere else otherwise every landlocked country would have no rights. so bedrock principle in the wto and that is that you can't bar transit through your territory. russia is barring transit of ukrainian goods moving -- trying to go east that must go over land over pieces of russia. so again, clear violation. and ukraine has challenged russia. russia has said article 21 defense. all right? because this is an issue of first impression, the panel went out and said, we want everybody's views. i mean, how should we interpret

article 21? what should this really mean? how do we read the phrase essential for its security interests? all right? what's happened in that dispute right now is the united states and russia and no one else have made the claim that this is totally non -- as soon as anybody says the word article 21 out loud, the panel has to stop and go home. it cannot rule on anything. nothing at all. as soon as you say those magic words, article 21, that's it, the case is over. all right? that's the u.s.'s position, with russia, so they are right there together. everyone else in the wto has taken a different position, ranging, sai would say the canadians view for example is at least a panel has to decide is it trafficking in arms, is it a time of war? you have to at least decide which of those three pillars you are under. and if you're asserting that it is a -- any one of those, you have to have some evidence that the materials actually were

nuclear materials or that they are actually was a time of war. you have to have some evidence to support what you're doing, sort of over on the far end of the range, would be the european union, that is basically contending that article 21 should be interpreted exactly like article 20, where you do a whole necessity test. is this measure necessary? does it contribute importantly to a national security goal? so you have a range of views. i think a lot of this is going to depend i think a lot of how the u.s. challenges -- challenges to the u.s. 232 are going to come out are going to depend to system degree on what happens in this russia ukraine case, the case is before a panel right now. the panel is chaired by very very prominent former member of the appellate body and very prominent international law scholar. my understanding is they are expecting to make a ruling by the end of 2018 on the whole russia ukraine case including this issue. am i done? do i have two minutes to address the second legal issue?

all right. so the -- >> 2 minutes. >> i'm sorry, apologize. the second major issue though of first instance for the wto, so we have this issue of first instance of how are we thinking about this article 21 and what do we have to prove, etc.? the other major issue of first instance has been the response by all of these other countries to impose their own tariffs on the united states? all right? so again, huge numbers of countries have put on their own duties, as we've heard about. i mean, china, the eu, mexico, pending are new duties by canada, russia, turkey, india, possibly japan. so again everybody else has said all right, you're putting unilateral duties on me. i will turn around and put unilateral duties on you. sort of a modest irony i find in the canada and mexico, for example, have started with duties on steel and aluminium, and if we think if this measure was really to benefit the u.s. steel industry, u.s. steel industry does also export steel, right? where does 50% of our steel exports go?

canada. where does 40% of our steel exports go? mexico. so we now have put on measures to try to help our steel industry that have resulted in u.s. exports being -- 90% of u.s. exports now being subject to those same duties being applied to them, not clear how much this is ultimately going to help on the steel side. but if we then go to what's the challenge that the united states is now contending against the retaliation dutys? all right. so everybody that's put them on has said we're going to deem them to be safeguard. they look like a safeguard. they act like a safeguard. they function like a safeguard. and to some degree a lot of the rhetoric around why are we applying these duties sounds like a safeguard, that the steel industry and the aluminium industry were injured because of this volume of imports coming into the united states, and it's a global solution, so in every other way, the argument is they look and sound like a safeguard. the question is, do they have the right to do that? do they have a right then under

the safeguards agreement to retaliate? so on the second issue of do they have the right to retaliate and the safe guard, it clearly says if you put a safeguard on, you are required to compensate everybody for the rights you have taken away from them. that's clear under the wto rules. you are allowed to do that under this 90-day provision. you have to wait 90 days from when the measure went into effect, which is march 2 3rd, so the 90th day is june 21st. we're past that time frame in terms of being able to retaliate. free to suspend your compensation, have to give 30 days notice, blah, blah, assuming those procedural requirements have all been met, the safeguards agreement says yes, you can seek to rebalance. if the u.s. does not agree to the rebalancing, you can do it unilaterally. however, the safeguards agreement goes on to say you don't necessarily have that right for three years unless the safeguard measure has been taken not as a result of an absolute increase in imports, which in a

number of the steel products is the case, not an absolute increase in imports. secondly you can do this if the measure does not conform to the safeguards agreement. again, obviously that's the contention everybody's making is it doesn't conform to the safeguards agreement, and it doesn't because the u.s. never considered it to be a safeguards agreement. so there is no conformity with the safeguards agreement. so then the big question is, do these countries have a unilateral right to make that decision? that they can deem it to be -- that they can deem this to be effectively a safeguard? that i think is a much harder question for the wto to answer. in theory, you are supposed to go to the wto first and ask them to adjudicate a case, before you go ahead and take any kind of unilateral action. and on the other hand, the concern is, this is such a direct and blatant violation by the united states of its commitments that the question is, you know, is it appropriate to ask countries to wait for an adjudication before they are

allowed to do anything, given that the safeguards agreement at least allows this relatively immediate form of retaliation? is it really right that the united states can deprive everybody of their ability to take this by virtue of the fact that they didn't call it a safeguard? and how much are we going to depend on what somebody calls a measure versus what the effect of a measure is going to be? is so if the wto says the form really matters, that you use those words safeguard, then i think the retaliatory measures will be a violation. if the wto says in a substantive matter these function like a safeguard, then you are entitled to do that. again two major cases of first impression that the wto dispute settlement system will have to deal with. it's assuming it is still functioning by then given that as of september we're going to maybe be down to three members, one of whom at least has to be recused on a lot of cases. we may be having a noneffective

appellate body as of september, we will see. thank you. [applause] >> last but not least, the pork producers council. >> i'm here on behalf of america's pork producers and it is an honor to be on this panel with these esteemed panelists. pork producers association is comprised of 42 state pork producer organizations, and we serve as the global voice of the u.s. pork industry. in 2017, we marketed over 120 million hogs. those hogs generated total cash

receipt ts of more than 20 billion and supported 550,000 u.s. jobs. you may not know this, so i'm going to tell you, pork, not chicken, not beef, pork is the number one meat protein consumed in the world. and the past ten years, the united states on average has been the top global exporter of pork in any given year we ship pork to over 100 nations. typically we're the low cost pork producer in the world, so when you couple affordability with safety and quality that o second to none, you can see why consumers worldwide value our product. exports add significantly to the

bottom line of each and every producer, all 60,000 of them regardless of their size, regardless of where they are located, and there's production in all 50 states, exports of pork import products in 2017 totalled 5.4 billion pounds. that's a lot of pork. that's a record. valued at nearly 6.5 billion dollars. that represented almost 27% of u.s. production, and those exports added more than $53 to the value of every pig marketed. to put that in context, so exports responsible for $53. put that in context, the average price received for a market hog in 2017 was $147. so you can see exports are very important. they support approximately

110,000 jobs in the pork and allied industries. because u.s. pork is an export juggernaut, it's an attractive candidate for trade retaliation. so our industry has a dubious distinction of being on three retaliation lists, china and mexico 232 and china 301. those are very important export markets for us. mexico is our largest volume market and our number two -- number two value market taking almost 802,000 metric tons of pork, worth more than 1.5 billion in 2017. china was our number two volume market at more than 495,000 metric tons and our number three value market at 1.1 billion last

year. there's never a good time to have a problem in an industry and for an industry like ours that's dependent on exports, there's never a good time for an export disruption, but the timing here is particularly bad. the u.s. pork industry is in the middle of an export-driven expansion, with production projected to grow by about 5% in 2018. as the world's most competitive producer of pork, the u.s. pork industry was anticipating increases in access to japan and vietnam and others through the transpacific partnership and was counting on shipping more pork under u.s. -- prior u.s. free trade agreements. obviously things have changed. ambassador greg dowd, the chief agricultural negotiator with the office of the u.s. trade

representative, summed it up recently by telling our producers, quote, the lead tip of the spear in all of this right now is your pork. and boy did he get that right. a january 2018 iowa state university analysis had forecast moderate profits for our producers this year. but now those retaliatory tariffs are expected to result in producer losses for the year of over $17 per pig, meaning industry losses in excess of 2 billion. while our producers are feeling financial pain, they also recognize that the administration is trying to make global trade more reciprocal and advantageous to the united states. right? so the focus of this panel is really 232 and legality, but i

think the broader question being asked by a lot of people in the united states is does the post-world war ii trading system that the u.s. was the primary architect of, does it still serve our national interests? and that's a big question. and if you're an industry that was built on the current trading rules and you export, it's tough. change is tough. so i got to say the administration has been very helpful in opening new markets. argentina and paraguay for us. we're working with the administration with us to open several other markets such as brazil, india, and thailand. our producers understand that the administration is balancing many interests and trying to realign u.s. trade policy. and again, we think that's what's going on here.

right? which is a broader question than what's being looked at today. it's a transition. i'm not saying it's good. i'm not saying it's bad. if you're an export dependent industry, like ours, that was, you know, built on one set of rules, it's a challenge. you know, but the question really here is, you know, putting trade and economic security at the center of national security and foreign policy, i mean, i know, a lot of times -- i have been with the pork industry since 1995. i'm a lawyer by training. lots of times in my career i said it seems like economic security, commercial interests are being subjugated to national security and foreign policy.

so you know, having said that, my sector's in a really painful position. we see this as a transition. maybe i'm wrong. but whether or not we're in a transition or not, it is a difficult spot, and we're clearly redefining the trade relationship with china, obviously modernizing the nafta, these are complex matters. our producers get it. they also know the president's committed to strengthening american agriculture and the rural economy, and they acknowledge that the tax and regulatory reforms the administration has implemented have set a course for significant -- and approved by the congress -- have set a course for significantly improved economic growth. now the president, ag secretary perdue and other administration officials have made it clear that the back of the american

farmer. the administration has told us point-blank that it is going to take steps to mitigate pork producers' pain. i want to be clear, we are not asking for payments to producers. we're not. the best outcome for us is a restoration of lost trade and the opportunity to increase exports so it should come as no surprise that we are very eager to see a completed nafta deal that among other things will exclude mexico and canada from 232 tariffs. and of course, we're also very eager to see a deal with china to resolve the problems at issue in that trade relationship. moreover, we're absolutely clamoring for fda negotiations with japan. japan is our top value export

market, and we are very concerned about the impact of the eu japan fta and the cptpp on our exports. so our -- today our issue is mexico and canada, two huge markets for us, we're also concerned down the pike about your shipments to japan. some pig farmers are on the front lines of what we see as a realignment in u.s. trade policy. i think our producers are showing tremendous fortitude and patience, but make no mistake, it is a very, very painful place to be. we had a financial collapse in our industry 20 years ago. it was horrible to see people

that you know lose everything that they worked for. i will never forget it. thank goodness we're not at that point. but the longer that this retaliation continues, this transition, the more difficult it's going to become not just for pork producers, but other sectors that are caught up in this. i always have to have an ask; right? so i ask all of you as potential consumers to think about our pig farmers, as you make your food choices this 4th of july and throughout the summer. [laughter] >> whether you are republican or democrat, pro trader or anti- -- pro trade or anti-trade, our pig farmers are hurting. please show them some love and eat a lot of pork. thank you. [applause]

>> we have a less than ideally long window here for q&a. there's a microphone that will be passed around. i think even more than usual we will have to be careful to stick with questions, not speeches, introduce yourself, please, and remember you're on tv. eric? >> eric, national association of foreign trade films, very interesting discussion, my question is if we are abandoning the current set of rules that have been established and worked over the past 70 years, what set of rules will they be replaced with? the administration's interpretation of its powers under 232 is setting a precedent

where the president can then impose tariffs at any level against any country at any time for an indefinite period of time, unreviewable by the wto, the u.s. courts or the congress. so what -- is it just the law of the jungle? what are we looking at that we might be transitioning to? >> i'll only comment really quickly that for what it's worth, you may know that a lawsuit was filed i believe -- i'm sorry i've been traveling soy'm not sure i will get -- so i'm not sure i will get the day right, but in the last two days, by the international iron and steel institute that is basically raising that precise question. so this is a challenge effectively suggesting that the delegation of power to the president under the 1962 act was unconstitutionally vague because it did not put the exact kind of restraints that your question implies on the president in terms of his exercise of this

authority, and that as a result, this broad delegation with this very broad definition of national security with this very, again, open window in terms of timing is in and of itself unconstitutional. so it may be that this lawsuit would bring at least a little bit of an answer to part of your question. >> you know, it is the right question to be asking now because, you know, i said we're looking at an administration that really does >> it is the right question to be asking how because we are looking at an administration that has a murder reconcile us model and the classic feature was the only real rules the rule of our. if you had enough power you got what you wanted out of your partners, if you were weaker you didn't and the accumulation of that power ultimately led to much greater conflict between nations but there weren't any real rules, there wasn't law

that governed the system. i have to say, if i was a government with the wto case i would certainly want jennifer for my lawyer. although i'm glad nick is here because apparently jennifer is not aware there never was a peace treaty settling the pig war with canada. for those who don't know the pig war that was when that soldier in colonial san juan island shot or us. and it never did get a peace treaty so the president may be arguing we are still at war with canada, i don't know. but i think the real issue is if we start to throw out all the rules and that is really what is happening, the rulebook is being thrown out. jennifer gave us a brilliant legal treatise on article 21.

ultimately what is the purpose of having the whole rest of the wto system including a sophisticated safeguard agreement that tells you when you can and can't print -- particular economic industry. if every country can do whatever it wants by simply invoking national security and in fact if those other countries were to lose on their retaliation against the us because their retaliation wasn't justified they can just do it on national security grounds. we are living in a world where this retaliation will be a fact of life upwards of $70 billion of us exports identified either retaliation in place where the us goes poorly, all its actions, you accumulate that and get into sectors like autos which are

do we end up with everyone for themselves, and era of mercantilism, tariff retaliation, tariff wars, escalation of those tariffs which is what we are seeing today is more industries face those challenges. you saw the harley-davidson story. there will be lots more stories like that. the question is is this all really worth it, is this going to give us a better economy than we already have or is there a better way to build on the system that evolved over 70 years. right now what american industry is facing, big producers, small producers. i have lots and lots of very small companies in this alliance, one of them was honest call with us yesterday,

small companies in the industrial fastener industry, making nuts and bolts that go into all kinds of machinery, upwards of half their members will be out of business if this retaliation continues and if costs increase in the us economy continue so that is the challenge industry faces, you are protecting your own economy more and more and getting hit by retaliation in export markets and your competitors costs are actually going down because you have created a high cost structure toward the basic input product of all manufacturing, steel. and the price is 40% lower than the price you are paying at home and if you export your

product your hit with tariffs abroad. what rules will replace that? that is what the administration has to answer. they have a secret plan to make all of us work brilliantly and if this is going to be some magnificent, brilliant coup that gets better agreements with the rest of the world to open markets that is what we want to see because 95% of the world's consumers live outside the us and as our industries get more productive we lose those export markets, american industry is dead in the water. >> anything else? >> jennifer -- i am hearing that what happened, kids are

auto dealers before the tariffs and the quality is good and my only question to you is are you hearing that in the midwest? evidence of a free by? a lot of us remember cash for clunkers which caused a huge free by. think in terms of demands, consumer activities, if that is a one off being particularly creative or taking hold? >> a good question, i have seen some of these too where aluminum gutter installers are saying get a deal before the tariffs go into effect so you have to take it with a grain of salt. they want to make sales as well. the larger question is a bigger factor, what is speeding up the business cycle by inadvertently capital investments companies

are making now rather than deterring a couple years mostly due to the tax law and not the tariffs. from a supply point of view there have been games played. this whole 232 process played out over the last year and a half we have seen in port surging in the united states, steel imports were up 15% last year, steel imports went up an extraordinary amount in february and march in advance of this so the game is being played both ways and i will say i am sensitive to price manipulation as well and secretary ross pointed out of dealers, brokers, warehouses are playing price games they ought to be stopped on this. the price of steel and aluminum will eventually settle down. keep in mind it is very cyclical, very commodity-based and you see wide swings in steel and aluminum prices in

just a couple years ago, they were at extraordinary, you could buy steel for less then at the bottom of the great recession two years ago so you will see price swings before it adjusts in light of all this. >> get ready for these kinds of speculative pressure tactics out there all over the place. don't know how many of you saw the remarkable comment by secretary ross that these price increases, speculators taking advantage of the situation, reminded me of claude rains in casablanca when he said shocked there is gambling in this establishment. that is exactly what is going to start happening across the board, the more sectors you

begin to apply this uncertainty to, that is going to happen. >> we have one over here. >> hello, i am from the embassy of malaysia. i was attracted to what was being presented just now. i heard malaysia mentioned. just for the record i want under the census bureau, our exports of steel and aluminum to the us has been quite low, consistently low for the last three years. in 2017, our exports of steel, 2.8% of us imports of steel and this amounts to 42,300 metric tons, not even 1 million. therefore, at this point i would like to ask mr. paul, how

do you think, and shipment is perceived as the problem coming from smaller economy, how do you think the us administration should be discussing with us to solve this problem. >> i refer to the 232 report, you can detect changes in trade flow from china with respect to volumes of steel and seeing exports diverges whether markets and a slight uptick from those countries coming into the united states, with respect to vietnam, an established trade case on this. i think that obviously the ustr

is willing to consider alternate arrangements, and tariffs through quotas, if the government of malaysia wishes to pursue something, engaging with ustr on that and alternate arrangements would be the right way to proceed. >> one over here on the right wing. stage right. >> international trade today. the two part question for scott paul. one is on the aluminum and national security, given we don't mind any box like, how can limiting the import of the finished product protect our national security and the other question is a simple one.

do you think we should be putting 20% tariffs on autos and auto parts? >> with respect to aluminum and box ice, less familiar with fundamentals of that case, it does raise questions about strategic materials including materials that are not found or mind in the united states or rare earth. i know the department of commerce is exploring that right now. with respect to the lines of aluminum that are subject to release, i point back to the fact that smelting capacity has been greatly diminished over the last couple years.

i don't think there should be aluminum tariffs placed on tariffs placed on canadian aluminum. that is and overstep and i will shift back to steel for a second. i think that my hope is nafta negotiations can get started after the mexican election and that they are quickly completed and there's a resolution of steel issue as well and a very integrated market. to your autos and auto-parts question i'm going to defer on that. it is too related to with the intent of the commerce department are, highly integrated industry in the united states, raises a lot of questions. harkening back, one of the rationales is if you need to mobilize the defense industry you need a platform to do that, hard to mobilize a shopping

mall to make armaments, easier to do that with auto-parts but i will defer until you see what the commerce department is thinking about. >> i have a hunch this will be our last one, waive the microphone, please. >> thank you. i came late from a meeting but if you covered this already, we can take it privately. too quick, i have to take an issue of compromise. we negotiated doing away with not voluntarily but into an agreement with us, standing under the wto, the great negotiator donald trump helps negotiate all these deal separately and so on. if we negotiated deal with somebody and somebody withdraws the case because of that deal it doesn't bring a case, how does wto deal with it. i love to help you but i'm a

religion that does not allow it. we are joined by many more muslims who do not eat pork. of pork is used in manufactured products, please let us know what they are. i will wait for july 4th, thank you very much. >> let me start with the second one first which can you withdraw a wto case? normally what happens is you don't actually seek the placement of panelists individually or you can reach a mutually agreed settlement. of the case is started before a panel you can stop the panel proceedings in order to reach a mutually agreed settlement. that part would be easy if the parties can agree and consistent with the wto rules that happened in many cases. on the vra issue the rule

changed with respect to what you can and cannot do, the answer is no, you are not supposed to, that is part of the point of doing that, to say you are not based on his old power base rule where one party has a lot of power and exerts it by effectively demanding an agreement to, quote, voluntary restraint. i'm not sure whether the koreans would agree they are voluntarily agreeing to these draconian limits on their steel exports when it was done in the context if you don't agree with this we will take away the korean free-trade agreement and if you don't agree to this we will charge 25% tariffs anyway. how voluntary was that? we could have a big debate about it but the clear point is you are not supposed to be going down the road of using your power to do -- to impose on countries quotas. that is not permitted under these rules. >> i will squeeze in a

moderator question since we have a short additional amount of time. this is for the whole panel but particularly jennifer, systemic implications of what we are seeing and in particular, not the systemic implications of what the united states is doing but what everyone else is doing, shoot first and litigate later ploy which is based on reframing this as a safeguard action. do you have concerns whether that will have systemic effects and implications additional to what we are looking at because of what the united states is

doing? >> part of me steps back from it and says the huge tragedy for me of this whole approach is i think everybody could agree with the united states substantively that a huge portion of this problem stems from china and china's overcapacity and china's like of discipline on subsidies and china's lack of bankruptcy law and lack of competitive law etc. etc.. and the huge agreement substantively with the section 301 report with respect to china so the whole world to a significant degree agreeing on the substantive promise with shiny and the importance of wto and other systems to deal with china and 100% disagreement with the united states, however you describe the tactics they are fundamentally unilateral and unilateral tactics driveway all of your potential allies.

the problem is even in a us approach that says we are going to solve a bilateral trade deficit problem with china by asking china to buy more us soybeans you have made an enemy of brazil because now they are not selling soybeans to china etc. etc. so to me the tragedy of it is there could have should have been a big broad deep case against china brought by the united states and the eu and mexico and japan that fundamentally went to the heart of what the real problem is in china and give the wto and its rules a chance to show they can deal with a deep case, the nullification case and series of challenges, and its commitments under its protocol, that is what should have happened and had that happened maybe it could still happen. i think the system could at least potentially come through with a long-term fix to what is a real fundamental disconnect

between what is going on in china and the need for rate based rating system. i hope we could get that kind of systemic case going. the problem is right now everybody is spending all their time and energy and resources dealing with unilateral actions by the united states and their response to them. is it a systemic issue? yes. a systemic issue in many ways. if on the national security friend you side with the united states, this is not just issue, any country can impose measures on anything at anytime and allege they are just as much inessential security interests as cars, steel and aluminum are to our interests, you walked away from the system. if on the other hand the wto says to the eu and everyone else you are free to recharacterize measures anytime you want and anything you want and then you didn't comply with provisions of whatever agreement you are saying they are under that raises huge

issues everybody is walking away from a binding rule system in taking unilateral action. either way you cut it unilateral is in is the threat to a rules-based trading system and to say the united states started it all it is the worst aggressor, not sure how far that gets you if everyone else is doing the too. >> i agree with jennifer's assessment. if you cut down all the trees in the forest to go after your enemy, what do you hide behind if we come after you. clearly there are systemic issues here, but those, we are going to see more and more countries saying the rules don't work because of the way this is unfolded, led by us actions. this is after we spent decades

talking lots of countries into observing a much more rule-based system. i take the point there's lots of cases enforcement has been week, you obviously have to do a lot more to make sure these rules work and are being enforced but throwing out the rulebook is not the way to do that and the second thing is what jennifer said. the big systemic problem we have is china's emergence as a major economy in the way their system operates that is not as easy to deal with under wto rules because there is lack of transparency, the degree of government intervention and all the opportunities to build that effective global coalition, to put the pressure on china. if you look at an agreement like tpp which made quantum

leaps in creating state owned enterprises on the digital economy and other things that will be the future challenges of china in the technological sphere and to build an effective alliance with europe, japan, our nearest neighbors, how do you get that to having that kind of collective will and collective pressure and sense of direction, the case jennifer just talked about is a doable case and could gain lots of international support if the administration were to focus on the systemic challenge of china to the wto system and can of the british instead of systemic challenges the us is presenting to the global system that we have built. >> everybody, give these fantastic talents the

appreciation they deserve. based on judges not there, we are adjourned, enjoy the day. [up inaudible conversations] [inaudible conversations] [inaudible conversations] >> syndicated columnist mona chair and talk about how modern feminism a touch with science,

loving common sense. >> we send such confusing messages to young people. young women, i don't envy them. this was a story in the book about a number of women athletes who posed topless or semi-topless for sports illustrated and one of them i quoted who said i am proud of my body and went to help young women with body image issues. that is a crock. women should be dignified. they should remember when you disrobe it is hard for people to take you seriously. a man looking at a picture of