Legislative Participation Concerning Section 301 Tariffs Ye Joo - - PDF document

Legislative Participation Concerning Section 301 Tariffs

Ye Joo (Quinn) Lee Mentor: Dr. Jack Zhang

My name is Quinn Lee and I am a junior in the College of Liberal Arts and Sciences at KU studying economics and political science. This project will be studying the role of the legislative branch of the United States federal government in the implementation

• f Section 301 tariffs set by the USTR and the Trump administration. The following

slides will outline the data I have collected for this study and its relevant implications. 1

Section 301 Tariffs and the US-China Trade War

August 2017 – Trump orders the USTR to conduct a “Section 301” Probe July 2018 – List 1 tariffs become effective August 2018 – List 2 tariffs become effective September 2018 – List 3 tariffs become effective May 2019 – List 4 tariffs are announced October 2019 – Trump announces a Phase 1 deal that suspends many List 4 tariffs

T imeline

The China—United States trade war began with the Trump Administration requesting that the USTR to investigate “unfair trade policies” conducted by the People’s Republic of China dealing with technology transfer, IP, and innovation practices which subsequently led to tariffs on $34 billion worth of imported Chinese goods in March

• f 2018. The Trump administration has historically advocated for tariffs in order to

decrease the United States’ trade deficit, and since the application of the List 1 tariffs, has pushed three more lists. Retaliatory action implemented by China under Xi Jinping and rapid escalation on both sides have led to the China—U.S. trade war which has so far led to $200 billion worth of tariffs in the U.S. on Chinese goods and $110 billion worth of tariffs in China on U.S. goods. 2

This project studies the motive behind legislators (congressional representatives and senators) who took action to address the US-China Trade War to better understand why they did act and why others didn’t.

Purpose

As a part of the Trump administration’s “America First” economic policy, the United States has dramatically escalated tariffs and trade restrictions with China over the past three years of Trump’s presidency. The president depended on the authority of Section 301 of the Trade Act of 1974 which gives the standing president the ability to act independent of Congress to defend American commerce from predatory tactics by other nations. Historically, such actions would be conducted by Congress as Article 1 of the Constitution gives Congress the right “To lay and collect Taxes, Duties, Imposes and Excises,” and “To regulate Commerce with foreign Nations”. The twentieth century saw an exponential increase in the authority of the president to create and implement tariffs, though ultimately the power rests with Congress which makes legislators’ response to such use of presidential authority of unique interest. Thus, the purpose of this research project is to observe which legislators (house representatives or senators) take action to participate in the trade conflict and why they are motivated to do so. 3

Methods and Approach

For each list of tariffs that the USTR released, it also held a public comments forum for individuals, organizations, and legislators to respond to its contents.

Comments Submitted to the USTR

Legislators often release open letters to relevant figures in the executive branch in order to make their concerns and priorities clear to both the receiver and the public.

Public Letters and Petitions

Since the introduction of the Section 301 tariffs, several bills have been introduced to Congress that relate to trade and relations between the US and China.

Legislative Participation

The reaction of legislators to the Section 301 tariffs warrants further study as it provides insight into what is truly effective for constituents when attempting to influence legislation. The conflict between the United States and China provides a unique opportunity to reexamine the relationship between districts and states that make up the country and the legislators who represent them in Washington. This project will contribute to the wider body of examination being conducted on the trade war by measuring the quantitative efforts of congressional representatives and senators, and observing the relative pressures that different leaders have imposed on them to act in situations like these. In order to achieve my research goals, I observed and analyzed three levels of legislative participation completed by house representatives and senators: comments submitted to the USTR, petitions signed either in support or against the tariffs, and congressional action. 4

Phase 1 – Comments Analysis

I have created a spreadsheet of the public comments that members of congress submitted to the USTR under lists 1 through 3. The most recent Section 301 tariff list, List 4, is still under deliberation due to the Phase 1 trade deal implemented in 2019. Statistics regarding this list will be collected once it is possible to do so. Having sorted through Lists 1-3 comments, I have retrieved the letters submitted to the USTR by each of the legislators who participated and have thus been able to decipher the intention behind their participation: whether they are opposed or in favor. So far, the data has shown that most comments participation from legislators is in representation of a specific company or industry and requesting exemption of products that deal greatly with the state’s/region’s economy. 5

Phase 1 Results

Su mmary Statist ic s

Total Comments: 99 States: 33 Republican: 74 Democrat: 24 Independent: 1

C o n g r e s s i o n a l P a r t i c i p a t i o n i n U S T R C o m m e n t s , H e a t m a p

A total of ninety-nine public comments were extracted and observed from the USTR comments forums for List 1 through List 3 tariffs. Those letters originated from legislators from thirty-three different states across the United States. Of those legislators that submitted comments, nearly three-fourths were republicans while around one-fourth were democrats. 6

Phase 2 – Open Letters and Petitions

6 open letters signed by multiple legislators. Addressed to Steve Mnuchin, the Secretary of the Treasury, and President Donald Trump. The most recent of the letters released (shown in the figure) requested a deferment of all tariffs for at least 90 days to better mitigate the financial burden

• f the Covid-19 pandemic.

In the search for additional participation from legislators, six open letters and petitions to the executive branch were identified that dealt specifically with the trade war and tariffs. Most of those letters were signed by multiple congressmembers and they were addressed to either the Secretary of the Treasury, Steve Mnuchin, or President Donald Trump. Two of the letters were from earlier this year, you can see an image of the most recent letter in the right side of the slide, and they both express the interest of certain senators from both the democratic and republican party to have the tariffs deferred while the economy is challenged by the coronavirus pandemic. 7

Phase 2 Results

Total Signatures: 40 States: 26 Republican: 23 Democrat: 17

Sum mary Statist ic s

S t e v e M n u c h i n

In the six open letters and petitions, there were a total of forty signatures from senators representing twenty-six states. California, New York, and Nebraska each had three or more signatures each and represented a significant percentage of this type

• f legislator participation. Twenty-three of the signatures were from Republicans

while seventeen were from senate democrats. 8

Phase 3 – Legislative Participation

• S. 2: Fair Trade with China Enforcement Act

H.R. 5982: Safe Medicine Act

• S. 3386: Protecting America From Foreign Investors

Compromised by the Chinese Communist Party Act

• f 2020

H.R. 5932: Ensuring Chinese Debt Transparency Act

• f 2020

The final stage of data collection for this research project deals with bills that have been introduced into the legislative branch. From my research, I have been able to identify four separate bills that relate with US-China relations and trade. The first bill listed is the “Fair Trade with China Enforcement Act” which is intended to “to safeguard certain technology and intellectual property in the United States from export to or influence by the People's Republic of China and to protect United States industry from unfair competition by the People's Republic of China, and for other purposes.” This bill is sponsored by Marco Rubio and has not yet passed through the Senate Finance Committee. The next bill listed is the “Safe Medicine Act” which is sponsored by Representative Bill Posey from Florida and its purpose is “to direct the Secretary of Health and Human Services to study American dependence on Chinese pharmaceuticals and to empower the Food and Drug Administration to issue boxed warnings in the case of critical contamination.” This bill has recently been introduced to house committees has yet to be voted on, but if it is passed, may have serious implications for intellectual property trade between the United States and China. 9

The third bill is titled, “Protecting America From Foreign Investors Compromised by the Chinese Communist Party Act of 2020” and is sponsored by Junior Senator Tom Cotton from Arkansas. The purpose of this bill is to require the Committee on Foreign Investment to screen imports that contain software or communications technology from “foreign adversaries.” The bill has been sent to the Senate Banking, Housing, and Urban Affairs committee and has not yet been voted on. The final bill, represented in the figure to the left, is the “Ensuring Chinese Debt Transparency Act of 2020” which passed a vote in the House in March of 2020. The bill, sponsored by Representative French Hill from Arkansas, serves to “ensure greater transparency regarding the terms and conditions of financing provided by […] China” 9

Phase 3 Results

Total Sponsors/Cosponsors: 14 States: 8 Republican: 11 Democrat: 3

Sum mary Statist ic s

In summary of the findings from this phase of the data collection process, there were a total of fourteen sponsors and cosponsors to the bills described above. These house representatives and senators spanned over eight states. Once again, the majority of the participating legislators were republicans with eleven republicans and three democrats. The final bill mentioned in the previous slide, “Ensuring Chinese Debt Transparency Act of 2020,” passed a unanimous vote in the House, disregarding null votes. Prior to being introduced to the House, it was considered in and voted on by the House Committee on Financial Services. 10

Conclusion

States: 43 Individual Legislators: 113 In Comments: 99 Letters: 40 In Bills: 14

Su mmary Statist ic s

In conclusion, combining the evidence from the three stages of data collection that I underwent for this research project, there has been widespread participation from the legislative branch in the Section 301 tariffs and the US-China trade conflict that correlates heavily with partisanship. Over one hundred legislators from forty-three different states participated at least once in the categories defined earlier in this presentation with the majority of the action occurring with the comments section which was previously identified to have been mainly concerned with particular industries and businesses within their constituencies. Moving forward, I plan to expand the research I have so far by profiling individual legislators to determine if elections, poll rating, and financial composition of their districts/states also play a role in why they display this level of investment in the Section 301 tariffs. 11

Thank You

S p r i n g 2 0 2 0 U n d e r g r a d u a t e R e s e a r c h S y m p o s i u m

A special thanks to my mentor Dr. Jack Zhang for his involvement and guidance in this research project. Thank you for reading! 12