1 UNITED STATES TRADE REPRESENTATIVE + + + + + 301 COMMITTEE + + + + + SECTION 301 TARIFFS PUBLIC HEARING + + + + + WEDNESDAY MAY 16, 2018 + + + + + The 301 Committee met in the Hearing Room of the U.S. Trade Representative, 500 E Street, SW, Washington, D.C., at 9:00 a.m., William Busis, Brooks Allen, and Arthur Tsao, Co- Chairs, presiding. PRESENT BROOKS ALLEN, Chair U.S. Trade Representative WILLIAM BUSIS, Chair, U.S. Trade Representative ARTHUR TSAO, Chair, U.S. Trade Representative ALEXANDER ABAJIAN, Council of Economic Advisors MICHAEL ADJEMIAN, Council of Economic Advisors CHRISTOPHER BLAHA, Department of Commerce SARAH BONNER, Small Business Administration JULIA HOWE, U.S. Trade Representative NICOLE KORKOS, Council of Economic Advisors SAGE MITCH, Department of the Treasury DEWEY MOORE, Department of State BRYAN O'BYRNE, Small Business Administration MAUREEN PETTIS, Department of Labor KATE PSILLOS, Department of Commerce PETER SECOR, Department of State ADAM SULEWSKI, Department of Homeland Security, Customs and Border Protection TIMOTHY WINELAND, U.S. Trade Representative Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 2 STAFF PRESENT BILL BISHOP, U.S. Trade Representative TYRELL BURCH, U.S. Trade Representative WITNESSES PRESENT DAVE ALLEN, Vista Outdoor, Inc. SHEILA ANDERSON, Daktronics, Inc. ERIK AUTOR, National Association of Foreign- Trade Zones AMBASSADOR KARAN BHATIA, General Electric Company ANDY BINDER, Office Supplies Solutions, HP Inc. JOHN CAMPBELL, Ball Corporation and Ball Metal Beverage Container Corporation SAGE CHANDLER, Consumer Technology Association EVI CHRISTOU, Dana Corporation KATHLEEN CLAS, Kodak Alaris, Inc. JOHN CONSTANTINE, Apex Tool Group, LLC JONATHAN DAVIS, SEMI ERIN ENNIS, US-China Business Council DAVID FRENCH, National Retail Federation DOUG FRIESEN, SANY America MIKE GRAY, Valmet Corporation CHARLES GRAY, Teradyne, Inc. JORDAN HAAS, Internet Association EVA HAMPL, U.S. Council for International Business RICK HELFENBEIN, American Apparel & Footwear Association ANNE HOEF, Mabuchi Motor America Corporation JOHN HOFF, Global Point Technology JULIA HUGHES, U.S. Fashion Industry Association DAVID HULL, Precision Components, Inc. RAYMOND KEATING, Small Business & Entrepreneurship Council MICHAEL KERSEY, American Lawn Mower Co., Great States Corporation JUDD LARNED, Culligan International Company MARK MAROON, Maroon Group, LLC STEVE McGUIRE, McGUIRE Bearing Company GREG MERRITT, Cree, Inc. BILLY MILLIGAN, Commercial Metals Company Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 3 CHARLIE MURRAH, Southwire Company, LLC GREGORY OWENS, Sherrill Manufacturing/Liberty Tabletop JASON OXMAN, Electronic Transactions Association JOHN PFEIFER, Mercury Marine BLAKE PHILLIPS, EQI Ltd KYLE PITSOR, National Electric Manufacturers Association RYAN RASMUSSEN, Dover Artificial Lift DYLAN REED, Advanced Energy Economy ALAN SHAW, Electrolux Major Appliances North America BRIAN SMITH, LBC Bakery Equipment, Inc. JON STOKES, The Flexitallic Group ERNEST TAI, LW Scientific, Inc. CAMMIE TEEMS, Bestway (USA), Inc. RUSTY THARP, Goodman Global, Inc. BRAD THOMPSON, Columbia Forest Products NICOLE VASILAROS, National Marine Manufacturers Association DOUGLAS WAGNER, International Imaging Materials, Inc. ANN WILSON, Motor & Equipment Manufacturers Association RICHARD WOLFF, JST Power Equipment AMBASSADOR RUFUS YERXA, National Foreign Trade Council Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 4 C-O-N-T-E-N-T-S Opening Statement from Chair . 7 Congressional Comments: Representative Kevin Cramer (ND) . 9 Panel Seven David French, National Retail Federation . .16 Rick Helfenbein, American Apparel & Footwear Association . .20 Anne Hoef, Mabuchi Motor America Corporation . .25 Julia Hughes, U.S. Fashion Industry Association. .30 Nicole Vasilaros, National Marine Manufacturers Association. .34 Richard Wolff, JST Power Equipment . .40 Panel Eight Billy Milligan, Commercial Metals Company. .57 Charlie Murrah, Southwire Company, LLC . .62 Gregory Owens, Sherrill Manufacturing/ Liberty Tabletop . .66 Brad Thompson, Columbia Forest Products. .71 Sheila Anderson, Daktronics, Inc.. .76 Douglas Wagner, International Imaging Materials, Inc.. .82 Panel Nine Amb. Karan Bhatia, General Electric Company. .97 Jonathan Davis, SEMI . 103 John Pfeifer, Mercury Marine . 108 Kyle Pitsor, National Electric Manufacturers Association. 113 Dylan Reed, Advanced Energy Economy. 118 Evi Christou, Dana Corporation . 124 Mark Maroon, Maroon Group, LLC . 130 Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 5 Panel Ten John Campbell, Ball Corporation and Ball Metal Beverage Container Corporation . 158 Charles Gray, Teradyne, Inc. 161 Alan Shaw, Electrolux Major Appliances North America. 165 Mike Gray, Valmet Corporation. 170 Ann Wilson, Motor & Equipment Manufacturers Association. 175 David Hull, Precision Components, Inc. 181 Greg Merritt, Cree, Inc. 183 Panel Eleven Amb. Rufus Yerxa, National Foreign Trade Council. 201 Eva Hampl, US Council for International Business . 206 Erik Autor, National Association of Foreign-Trade Zones. 212 Sage Chandler, Consumer Technology Association. 217 Erin Ennis, US-China Business Council. 222 Raymond Keating, Small Business & Entrepreneurship Council . 225 Jordan Haas, Internet Association. 230 Andy Binder, Office Supplies Solutions, HP Inc.. 235 Panel Twelve Judd Larned, Culligan International Company. 261 Ryan Rasmussen, Dover Artificial Lift. 267 Jon Stokes, The Flexitallic Group. 271 Cammie Teems, Bestway (USA), Inc.. 277 Rusty Tharp, Goodman Global, Inc.. 281 Dave Allen, Vista Outdoor, Inc.. 286 Kathleen Clas, Kodak Alaris, Inc.. 293 Jason Oxman, Electronic Transactions Association. 298 Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 6 Panel Thirteen John Constantine, Apex Tool Group, LLC . 320 Doug Friesen, SANY America . 326 Michael Kersey, American Lawn Mower Co, Great States Corporation . 332 Blake Phillips, EQI Ltd. 337 Brian Smith, LBC Bakery Equipment, Inc.. 344 Ernest Tai, LW Scientific, Inc.. 349 John Hoff, Global Point Technology . 353 Steve McGuire, McGuire Bearing Company . 359 Adjourn. 375 Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 7 1 P-R-O-C-E-E-D-I-N-G-S 2 9:01 a.m. 3 MR. BISHOP: Good morning and welcome. 4 The Office of the United States Trade 5 Representative, in conjunction with the 6 interagency's Section 301 Committee, is holding 7 this public hearing in connection with a Section 8 301 investigation of China's acts, policies, and 9 practices related to technology transfer, 10 intellectual property, and innovation. The 11 United States Trade Representative initiated this 12 investigation on August 18th, 2017. 13 The scope of the investigation is set 14 out in the Notice of Initiation published in 82 15 FR 40213. On April 6th, 2018, USTR published a 16 Federal Register notice describing the Trade 17 Representative's initial determination in the 18 investigation. That notice is published at 83 FR 19 14906. 20 The April 6th notice also seeks public 21 comment on a proposed trade action to be taken in 22 the investigation. The proposed action is an Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 8 1 additional 25-percent duty on a list of products 2 from China with an annual trade value of 3 approximately $50 billion. 4 The purpose of this hearing is to 5 receive public testimony regarding the proposed 6 tariff action. The Section 301 Committee will 7 carefully consider the testimony, the written 8 comments already received in response to the 9 Federal Register notice, and the rebuttal 10 comments due on May 22nd. The 301 Committee will 11 then make a recommendation to the Trade 12 Representative on the action to be taken in the 13 investigation. 14 We are honored to have a member of 15 Congress here as our first witness. After the 16 Congressman testifies, I will have some 17 procedural and administrative instructions for 18 the witnesses. And before Mr. Bishop introduces 19 the Congressman, we'll ask the 301 Committee to 20 introduce themselves, starting with DHS. Adam. 21 MR. SULEWSKI: Hello. Adam Sulewski, 22 U.S. Department of Homeland Security, Office of Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 9 1 Policy. 2 MS. PETTIS: Good morning. Maureen 3 Pettis, Department of Labor, Bureau of 4 International Labor Affairs. 5 MR. BLAHA: Christopher Blaha, 6 Department of Commerce, International Trade 7 Administration. 8 CHAIR BUSIS: William Busis, Deputy 9 Assistant United States Trade Representative for 10 Monitoring and Enforcement and Chair of the 11 Section 301 Committee. 12 MS. HOWE: Julia Howe, Director of the 13 China Office at USTR. 14 MR. SECOR: Peter Secor, Department of 15 State, Economic Bureau. 16 MR. BISHOP: Mr. Chairman, I'm pleased 17 to present the Honorable Kevin Cramer, United 18 States Representative from North Dakota. 19 REPRESENTATIVE CRAMER: Thank you, 20 Chairman Busis and Members of the Committee for 21 the opportunity to testify on the 22 administration's Section 301 investigation Neal R. Gross and Co., Inc. (202) 234-4433 Washington DC www.nealrgross.com 10 1 responses which resulted in China's proposed 2 retaliatory tariffs on agricultural products. 3 First, I want to express my support 4 for the president's goals of combating China's 5 unfair and harmful acquisition of U.S. 6 technology. Like so many other issues, I 7 acknowledge that