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tv   Commerce Secretary Ross Others Discuss Trade Policy  CSPAN  October 17, 2019 8:07am-9:34am EDT

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total cash prizes plus a $5000 grand prize. >> go get a camera, go get the microphone and go start filming and produce the best video that you can possibly produce. >> visit studentcam.org for more information today. >> commerce secretary wilbur ross talked about the trump administration's trade policy at a a federalist society been. after his remarks a panel discussed the administration's approach to trade and tariffs. the federalist society posted this hour and 20 minute event. [inaudible conversations]
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>> good afternoon. good afternoon and welcome. i'm dean reuter, vice president and general counselan director f practice ethical society. thank you all for being here. and a special welcome to the folks joining us and c-span. we're looking forward to a spirited debate in our panel following opening remarks from secretary wilbur ross. i am pleased and privileged to introduce the 39th secretary of commerce wilbur ross. the secretary he is the principal voice of business in the trump administration trying to ensure that u.s. businesses have the tools they need to create jobs and pursue economic opportunity. he served as secretary since the beginning of the administration february 2017. he's got limited time with usst today so i'll be brief mi introduction so we can get right to his talk. he will be leaving at thebe
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conclusion of his talk secretary ross is no stranger to this talk and then the panel will ensue. commerce with over half a century of experience in investment banking and private equity come restructuring over $400 billion in assets across numerous industries and serving as chairman or director more than 100 companies in over 20 countries. he's also the only person elected to both the privatere equity hall of fame and the turnabout management hall of fame. we are very pleased to welcome here today, , please join me in welcoming commerce secretary wilbur ross. [applause] >> thank you, dean, for that kind introduction. and thank you for the opportunity to discuss the trump administration's trade policy and how it fits into our long-term goals for the country. federalist society has always
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advocated for informed debate, and the commitment to our constitutional government. the overall goal of our administration fits perfectly within the federalist charter. only by maintaining a strong and viable economy can americans live freely under the rule of law with guaranteed individual liberties and a separation of powers. today, thanks to policies focused on rebuilding american industry, american jobs, american communities, and american prosperity we are turning the tide toward a far more prosperous and hopefula future. but you would never know it by listening to liberal politicians
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hell-bent on impeaching the most successful president since ronald reagan, nor to the left wing medias desperate efforts to frighten americans into a recession. in fact, the u.s. has the strongest economy of any major economy in the world. our unemployment rate of 3.5% is the lowest it's been since 1969. since the election of president trump, the united states hason added 6.4 million new jobs, including 500,000 in the manufacturing sector alone. and 136,000 new jobs in the month of september itself. income and wages are up, poverty is at the lowest level in almost twolo decades. the number of americans needing
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federal food assistance has fallen by more than 10 million, from 44.2 million in 2016 to 33.7 million this year. retail sales up by 4.6% over the past 12 months. and interestingly, the u.s. import price index fell by 2% over the past year, despitey te fears that people had had about the impact of tariffs. last friday, the president announced phase one agreement in principleay with china. this would phase in 40-50 billion of agricultural purchases over a two-year llperiod. more than twice our prior annual peak sales.
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would also address some of the issues regarding intellectual property. the remaining issues, the remaining structural issues and their enforcement remain to ber negotiated. in return, the u.s. has agreed not to raise tariffs from 25% to 30% on october 15. and as a sign of good faith, the chinese recently made substantial purchases of agriculture, especially soybeans and pork. i believe that china came to the negotiations mainly because we imposed substantial tariffs onta them, but also because of the personal relationship between
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president trump and president xi. now, they naturally retaliated to the tariffs we put on, but because they sell us more than four times as many goods as we sell them, a given amount of tariff action means that they would run out of goods before we do. and also their economy is only 60% the size of ours. therefore, a given amount of tariff product hurts them far more than it hurts us. the eu recently to buy more ag products from us and to begin negotiations of the topics. and it is the reason why japan agreed to buy more meat and why the koreans renegotiated korus. the tariffs are now having a
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direct impact on chinese producers. and perhaps more importantly, are accelerating the taliban out of china's supply chain. china already was suffering some manufacturing immigration because of rising costs. companies have begun too move operations elsewhere, in southeast asia, africa, and to north america. that will be hard to stop. china's problems with hong kong also hinders its economy, and may further accelerate an exodus of foreign producers. last week the commerce department added 28 chinese governmental and commercial organizations to the entityy list.
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that list restricts the export of items used to target uighurs and other ethnic minorities. we also responded the china's belt and road initiative with our new indo-pacific strategy. last week i was in new delhi, bangalore, singapore, and sydney to discuss with the prime minister's and other ministers of the three countries our engagement with them and with others in the indo-pacific region. in november i will be in bangkok, jakarta, and possibly other cities in the region. through the belt and road initiative, china has invested in 117 nations, and those
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nations account for two-thirds of the world's population. their state-owned enterprises use chinese materials in chinese nationals to build projects with very little local content. and if defaults occur, they foreclose on the assets rather than renegotiating the loans. for example, in sri lanka, china has already foreclosed the chinese built port. it is also taken control of natural resources such as cobalt mining in the congo and hydrocarbons in venezuela. belt and road is also effectively a jobs program for china that eases some of the impact of tariffs on their
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domestic employment. by electing president trump in 2016, the american people instead demanded free, fair, and reciprocal trade. the section 232 tariffs imposed by the department of commerce are part of that strategy. part of -- prior to the imposition of the 232 tariffs in march of 2018, both the u.s. aluminum and steel industries were on the verge of collapsing. now utilization rates have improved noticeably, and $13 billion of vital expenditures have been committed to expanded and modernize capacity, including 1.3 billion from an indian steel company.
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now that our corporate tax system and regulatory environment are so business friendly, foreign companies are more eager than ever before to invest in our market. we have the largest foreign direct investment stock of any nation, totaling $4.3 trillion. to foster rapid growth in fdi, i and other commerce executives constantly speak to business leaders around the world, and every june we host the select usa conference here in washington, a three-day summit promoting foreign direct investment. last year this event attracted 3100 participants.
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we've also created a recent initiative to encourage american companies to reselect the united states as their domestic and export manufacturing hub. and last but not least, the trump administration aggressively pursues bilateral trade deals. we have signed an initial trade agreement with japan that opens that market to u.s. farmers and should generate $7 billion in sales. that's about 40% of the agricultural trade that we lost to chinese retaliation. the chinese -- the japanese trade pact also will facilitate $40 billion in bilateral trade between the u.s. and japan in digital services.
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this is close to 90% of what we would have achieved from the transpacific partnership, yet without the harmful tpp concessions that the u.s. would have made to other countries besides japan. and this is the third major trade deal announced by president trump in less than three years, a remarkable achievement since trade agreements normally take many years, often more than a decade to execute. for the record, the other two agreements are the korea free trade agreement, and the u.s.-mexico-canada agreement, which is pending congressional approval.ee let me conclude by talking about the situation in turkey. yesterday, president trump announced two actions against
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turkey that involve the department of commerce. we are raising their steel tariffs back up to 50% from the current level of 25%. turkey is the eighth largest steel producer in the world, and steel was about its largest export to the united stateses before the tariffs. its exports of steel to the u.s. surged 303%, from 10,000 metric tons per month to 42,000 per month when we dropped the tariffs originally back to the 25%. the president also directed the department to cease work on the plan we had been developing with the turkish government to expand our bilateral trade from the
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current 20 billion annual total, to 100 billion over the next few years. already, 1700 u.s. businesses operate in turkey, and in september i have traveled to istanbul and ankara, vetting the detailed plan with leading turkish businesses and government officials. the three major businesses associations there all endorsed it, and one of them hosted a large celebratory dinner on 42nd street in new york city during the u.n. general assembly week in september. if achieved, the plan would increase turkish gdp by 4% and provide more than 150,000 direct jobs. the plan was always contingent
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on resolving the military differences between our two countries. will these now include the excursion into syria. it would be an excellent time for turkey to break into global supply chains in a big way, as many companies are reassessing their earlier decisions to concentrate so much on china. but there will be a cost to the turkish economy if present military practices continue. turkey will bear the costs of the war and forgo the potential trade benefit. in conclusion, the trump administration is focusing more intently on trade than any prior administration. there are some short-term costs
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associated with this shift, but they are much greater long-term potential and probable gains. millions of americans have demanded that we put theirmi interests first. that is what we are doing, and that is what we will continue to do. thank you, and i appreciate thai federalist society's discussions about these issues. they are critical to the health and preservation of our democracy. thank you. [applause] >> thank you, secretary ross. if we could call the panelists forward, we will move on to the next phase of our program.
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>> thank you so much, secretary ross for joining us today. we are going to begin our panel. we'll hear opening remarks from each panelist in turn right down the lane and i'll introduce them in the order they're going to speak. each will have about five to eight minutes strictly enforced for the opening remarks and then we'll have some discussion and ultimately questions from the audience, so do of those in mind for when we get to the portion of the program. ron cass is our first speaker,re he's dean emeritus at boston university school of law.
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he's also a former vice-chairman and commission of the u.s. international trade commission. he is currently the chairman of the center for the rule of law and president of cass & associates. there he is an arbitrator or mediator for commercial international and intellectual property rights disputes. he also interestingly has been appointed six times, six presidential appointments spanning president ronald reagan to barack obama which i sigrid think was a ploy for him to jusr like it into a bigger office with wall space to make all those commissions.s. we were there next from donald cameron, partner in the morris, manning & martin law firm right here in town with an international trade practice. he's got over three decades of experience representing multinational businesses, foreign governments, foreign trade associations and u.s.en importers. he's got particular experience defending clients in industry sectors that are politically sensitive so we welcome him today.
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and lastly we will hear from jeffrey kessler, confirmed unanimously by the u.s. senate on april 3, 2019, so he's been with the secretary for quite a while turkey serves as assistant secretary of commerce for enforcement and compliance with the goal of promoting u.s. jobs and economic growth. prior to serving at commerce he was an international tradese attorney in private practice litigating several precedent-setting wto cases, among other things. with that, five to eight minutes for each of you. dean cass. >> thank you very much, dean it i actually thought we were here today to talk about your best-selling book. dean is recently published a book. i'm envious. my books are what my wife calls academic books. she says once you put them down, you just can't pick them back up again. [laughing] i urge you to look at his book
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instead. i'm going to start first with a small story from the pre-gps age about the great american philosopher yogi berra. he was in his apartment in new york, and was cooking and started a grease fire in his kitchen. he called the fire department, told them that he had a grease fire in his kitchen any need them to come put it out. the person taking the call at the fire station said, will be there since we can, mr. berra,wi can you tell us how to get there? his response was, what happened to those little red trucks you use to have? there are times, there are certain things that are quite obvious but not always obvious to everyone else. i am a proponent of open trade. trade is a source of
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competition, competition is generally good. obviously it's not good for everyone. it's not good for somebody who is competing with me, but, or not good for me to have extra competition. but competition generally promotes giving more things to more people at better prices and with better quality. having an opportunity to have trade and trade on terms that open economies one to another is generally something to be supported. but competition takes place in other spheres as well. one sphere that i am particularly focus on is the national security sphere.fo we are competing with other players in the world, not justno to get our products into their country and to get the products we want from their countries. we are also competing on various
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military and security dimensions. and in that regard i want to say that i regard everything that is being done by the administration as generally supporting trade, but with a special focus on china. and i think that focus is appropriate because china has special interests in the national security sphere that we must be aware of. china has a lot of state run parts of its economy. it is opening the economy more. it is allowing more free enterprise, but it has also maintained a lot of state control through both investment and personnel. there are more than 150,000 state-owned enterprises in china and many other enterprises in china that have state investment and state control, both direct
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and indirect. we have to be aware that this affects a lot of products that come into the u.s., particularly in the information and communications technology sector. there is a lot of discussion in the united states about huawei and zte as potential threats to american national security, but the problem is much broader than that. a lot of products from companies that wem all know and many of s have purchased from, including go pro and one nova and lexmark and many other chinese brands are products that have been found to have backdoors in their software, or flaws in their construction that allow security
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threats to be maintained and to have chinese espionage and cyber espionage elements, make use of those opportunities. but those are things that i believe the department should look at through the section 232 process which is a process that allows us to take considerations of national security into account when we are making our decisions on what imports are appropriate into the united states. the great majority of products are products that are outside the space, productspr that invoe the sort of technologies that are relatively easily evaluated. a lot of complex products, a lot of uss carry on cell phones that have computing power far greater than the first large-scale computers had, then the
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computers we had that said people to the moon with. those are very highly complex technologically dense devices, hard for any of us to know what's in there. the same is true of the computers we use, which now most of us have notebooks or laptops or other computing devices that we do almost all our work on. again, hard you know what's in there. hard to make sure we're protected from a security standpoint. my wife and and i were in a hol room recently having a conversation, and a voice, not yours or mine, started responding to us, asking us things. we hadus not realized that there was one of those i think it was alexa device in the room that was turned on. we don't know what sort of information is going out in a lot of the communications we're doing as well as not knowing what comes in. that aside, and get i think that something to be taken very
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seriously and something in which is different than other players in the world, that aside, i'm very supportive of initiatives to expand trade, to facilitate trade, facilitate trade on open competitive grounds and look forward to further discussions on both the trade, economic, andnd security fronts. >> thanks, dean. the discussion used to be free but fair trade which supplied the logic behind extensive use of the expansion of unfair trade laws, primarily at the dumping countervailing laws which is unfair, is a separate discussion. what we have now isn't, is not fair trade here it's managed
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trade. as long as we're all understanding that, then that's fine but it's managed trade to an extent that we haven't had really since smoot-hawley. and it's not necessarily being managed particularly well. the other casualty of the trade policies, the administration, has been rules-based trade. the united states has taken unilateral action that led retaliation.o wto was constructed to eliminate to the extent possible unilateral actions which are the antithesis of rules-based trade. now, the decision thats apparently has been made at the rules-based system constructed largely by the united states out of the ashes of world war ii the longer work, but they no longer work for the united states. and i question that conclusion. we had seven years recovery come into 2016. strongest economy in the world.
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we now are seeing slowing of the economy, but that's not particularly surprising since we're not at ten years since the recovery. the abandonment of rules-based system thatth leads to one, predictability, and unpredictability translates into manyed things including less for investment. if you talk to businesses out there, predictability is something that they see. this is the way they base their business. according to the "wall street journal" a majority of economists currently believe the manufacturing sector is in a recession. one reason given, unfair trade practices. the agriculture sector has been severely hurt by these trade policies. soybean exports have been decimated, and you know, the farmers have been the first ones hit by the 232 retaliation. with respect to steal, there are
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approximately $900,000 per job created. this is like an 80-one disparity between steelworker jobs and steel consuming jobs.sp and the 80 is the steel consuming jobs here let's just talk for one minute about 232. so 232 on imports, steel is the first action by the secretary,, determining imports of steel threaten national security of the united states. as a result, president and post 25%% tariffs on most suppliers and quotas on others. the secretary of defense who had to be consulted under the law specifically inform the secretary of commerce that imports were notot a threat to e national defense, had no impact on the decision. in 2001, then president bush investigated the same issue and conclude within one month off following 9/11 that imports just you were not a threat to national security. now, you might want to ask why
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the administration chose this route rather than a safeguard investigation under section 201 which president bush also did in 2001. in that case the itc made an affirmativee determination in 16 out of 33 product categories leading to tariffs of varying degrees for those products. by thehe way, there was no retaliation for those actions. but the administration, and this is a guess because i don't know the answer to this, the administration i think did not want to chance the possibility of negative determinations in some or all product categories. but i would point out that primarily because of the impact of the antidumping and countervailing duty orders, which by the way was said to be not having any impact on imports of steel, well, between 2014- 2014-2016 consumption of steel declined by 16.2%.
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total steel imports declined by 25.5% from 44 million, the 33 million tons. 44 billion to tons. as a result, imports as a percentage of apparent consumption declined from 31 ã 27 percent. the justification for the 232 was chinese overcapacity. so instead of targeting imports from china, which would've had little impact on the steel industry since its imports had largely been cut off by adc bd decisions, we imposed 232 on everybody else including china. one result of section 232 was countries beginning with china retaliated against the united states agriculture. the irony of all this is that of all the countries that were subject to 232 restrictions
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china had the least stake. other countries such as eu canada and mexico retaliated. canada and mexico are no longer there because of the impact of the u.s. mca agreement. as a result they lifted that they look to the retaliation. but the reason is that it's self-evident why is it that they would import why would people retaliate immediately? why not wait? they didn't retaliate in section 201 but the reason is pretty self-evident because these were actions unilateral taken under the guise of national security and claimed that with they were conforming to the national security exception in article 21 of the gatt. if you look at article 21 of the gatt will see that they don't meet those criteria at all. the u.s. is still threatening to impose 232 restrictions on
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automobiles. on behalf of the american iron and steel institute american institute for imported steel aaii as we are working together with professor alan morrison who was supposed to be giving the speech by the way. and we filed a constitutional challenge to section 232 alleging it constitutes unlawful delegation of legislative functions to the executive branch. there are no boundaries of definitions of national security nor limits on what actions can be taken against imports and that appeal is pending before the court of appeals for the federal circuit. subsequent to the 232 the united states also imposed tariffs on import to china which has led to retaliation. there is apparently another cease-fire that was referenced by the secretary but we've seen cease-fires in the past that have fallen through so we have to see exactly what happens.
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we will talk some more in the question answer i think that's all i've got. thank you. >> thank you. >> i will respond to those comments but let me first fill in some details about what the trump administration is doing in trade policy. what the administration is doing to pursue free, fair, and reciprocal trade. i think one thing that's come across in the comments we heard this morning is that the administration is using new tools to greater extent than prior administrations. 232 would be one of them but there are others as well. there is a reason for the administration's increased willingness to turn to tools that some consider unconventional. when the administration took office in early 2017 the united states had been suffering from
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a series of trade policy damages that were getting worse over time. not better. the administration came into office with a mandate to address them. and to be more proactive than prior administrations in addressing them. that's what the administration has done. for example, there is the you china challenge and i agree with professor cass that that's a huge challenge for the united states. over many years china had systematically pursued discriminatory trade investment policies that put u.s. companies and workers at a cyber intrusion, forced technology transfer, international subsidies toio state-owned enterprises as well as some of the specific problems that professor cass mentioned. a study in 2016 by mit
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economists and others showed that import competition from china had led to the loss of more than 2 million jobs from 1999-2011. it also showed a contributor to the erosion of the american base.cturing so this this is a significant challenge for the united states, and one that the tools, the traditional tools of trade policy has failed to resolve, structured dialogues with china and one of wto disputes that not invent the problem from intensifying in the years before the president took office. another problem that had been getting worse was the global crisis and excess steel and aluminum capacity. for example, from 2000-2016 global capacity and steel increased by 127%. as of 2016 china had so much
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excess capacity to produce steel that it's excess capacity for the entire production of steel of the united states -- dwarfed. the situation was similar for aluminum. these were serious problems the traditional tools fail to meet them and the administration decided to take a different course. the administration, for example, with respect to china, the administration impose tariffs under section 301 starting in july 2018 and those tariffs certainly have put pressure on china and as the deal announced last week shows they are starting to work. they are starting to bear fruit in a way that the approach of previous administrations have not. section 301, using section 31 io this way had not been done since
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the 1990s. section 301 had its heyday under presidentse reagan but it is pretty effective. another example of section 232 tariffs that don mentioned, in the section 232, section 232 is a tool that has not been used also since president reagan but the administration decided to impose visa tariffs to stem the global crisis in excess capacity and prevent excess capacity reaching american shores. it's true that it affected all countries, not just china, and it's true china was the main driver of excess capacity but this was aal global problem and merited a global solution. another example is the section 201 tariffs that president trump announced in january 2010 on solar cells and modules and washing machines. these are industry-specific but
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these tariffs also addressed a serious problem of imports surge in these particular sectors. section 21 had not beenad used since president george w. bush. just to be clear also, the administration is doing much more than tariffs and the secretary discussed that in his remarks. the administration also has negotiated a new u.s.-mexico-canada agreement, which once congress ratifies it should generate $68 billion annually in economic activity, and 175,000 jobs. the administration also negotiated a new deal with japan and renegotiated existing agreement with korea. and has expressed interest in a possible new agreement with the united kingdom. so the administration is pursuing a free-trade agenda. and i would also add that the administration is working with allies and partners and
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multilateral to advance free, fair, and reciprocal trade. there's been a series of trilateral dialogue between the united states, japan and the european union aboutil reforming the wto which i think there's bipartisan consensus wto is very much in need of reform, and many outside the united states acknowledged that as well. in addition, the administration has been a leader in the global forum on steel excess capacity to address that problem. the administration has spearheaded e-commerce total lateral negotiations at the wto. the administration is working with partners to address these problems but wã are not shying away from bold action, even when some of our partners and allies are involved. so over all, the administration is making trade policy in a way that's reasonable response to
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the world as it stood in 2016. again, traditional tools had not been working. something new was needed and administration isn't flinching from trying new policy approaches. let me address a few of the other comments that i heard, if i have time. okay. first, as to the charge that the united states is now somehow a country that uses managed trade rather than free trade. what i would say is in the heritagehe foundations 2019 indx of economic freedom, the united states was 12. the united states was one of the mostgh highly ranked countries n the world works pics so i thine still have a h pretty good systm of free trade. we have tariffs on a lot of, on
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some imports, but it only represents a small proportion of total u.s. imports. under 400 million -- $400 billion that are affected by tariffs in the context of more than $20 trillion t econom. you know, i also want to address the reference to smoot-hawley, which i think is an exaggeration, a big exaggeration. smoot-hawley, the problem with smoot-hawley is it reduced use export from 1931-19 33 x 60% as result of retaliatory terrorist or by contrast, experts are going up today. experts are going up today. exports went up from 2016 to 2017, 2017 to 2018, and a 2019 year to date there on track to be the same as 2018. i don't see that as an apt list for comparison are often smoot-hawley is invoked as we have just charging that any use
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of tariffs is bad, any use of tariffs is bad. i think the administration views tariffs more neutrally. tariffs are a policy instrument that can be used to achieve different objectives, economic objectives, geopolitical objectives, and so on, and whether tariffs are appropriate in a particular case should be based, should be evaluated on that basis. one other thing that want to address is why, there was a a question of why the united states used section 232 rather than another tool to impose tariffs on steel and aluminum. i woulds just say a unique fit with the statute and i wrote down some of the statute. i'm not sure i can make my own writing, but the statute says that the secretary and the president shall further
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recognize the close relation of the economic welfare of the nation to our nation security, and shall take into consideration the impact of foreign competition on the economic welfare ofcu individual domestic industries. and it goes on to talk about employment, loss of skills or investment. soso section 232 is just a neat fit for the situation that the steel and aluminum industries found themselves in. i'll stop there. >> thank you very much. i noticed that don was scribbling furiously while you were speaking, and ron to keep you know since osama to give folks a chance to respond. i can't get this of the microphone to work so we'll sure a microphone. let me turn to you first. just take two or three minutes. >> thank you, and appreciations
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to both panelists. first of all, i do think that by and large it is positive to look at trade overall rather than with respect to one country. i try not to look at bilateral trade issues unless i really have to. i have a terrible bilateral trade problem with my grocery store. i keep giving the money and all they give me our groceries. so a lot of these issues are ones that a are better look atn terms of how all the countries we deal with operate. i also think it is worthwhile looking at tradede and tariffs n connection with how they work at trade opening. a lot of times putting tariffs on a product is a strategic decision in order to try to get more open trade ratherut than simply too close trade, although there are many industries that
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like tears because it inhibits competition. and i think you have to look at what any administration is doing, not just in the question of whether it has tariffs going up o or down any particular moment, but whether the use of tariffs is intended to and effective at getting more trade opening broadly with respect to other nations. i also think it's important, and jeff emphasizes this, when we are working with respect to what we're going to do on the trade front, to be working with other nations your jeff emphasized we working with trade partners on different initiatives. a lot of people will criticize any administration if it doesn't cite a trade deal that a particular set of people like. deal is a good deal, and that every trade deal opens trade but we've negotiated some trade deals that run eight
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or 900 pages. it doesn't take eight or nine other pages to say we want to open trade. which again is not to say that even at long trade deal can't be good, bute we should recognize that our trade negotiations are not uniformly going in one direction under any sort of negotiations. one thing i wanted to pick up in don's remarks, talks about the intersection of gatt article 21, and the 232 process here. and there is a serious interpretive question as to whether and towh what degree i u.s. domestic law should be interpreted iby looking at a collateral trade agreement that deals with the same issues. the gatt article 21 safeguards provision will determine thete degree to which a u.s. action is
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viewed as consistent or inconsistent with our agreements.l that's a separate question than the question that a court or administration faces in interpreting the law, u.s. law, that is on the books and directs the administration and how to act, and directs the court and what is legitimate under u.s. law. that was a point that scalia often made to others who wanted him to look at international agreements when he was interpreting u.s. law. last point, when i was talking earlier about the threat from china onre the national security front, i think many people can make decisions that protect themselves into economic purchases. none of of us is very effective at making decisions that protect us from a national security standpoint. i can't tell whether something i'm doing is helping the national security or not, and my
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own individual action is not going to be terribly determinative in terms of national security. that is something we do need the government to look at and the government toti take actions acd on. i have a paper on china, chinese exports and national security that will be published on the federalist society website. it is unlike dean's book on hidden nazis. itat is one of those reads thaty wife would encourage people to really focus on when you are tired and having difficulty asleep. [laughing] >> i should imagine him a introduction, he's also my literary agent. dawn, i want to give you a couple of minutes to respond and we will move on from there. >> first, i would like to dress the gatt article 21. i actually agree with ron on that. the reason i pointed to gatt
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article 21 was not to say that that was germane to whether or not there was some illegal, something wrong with respect to the domestic law. gatt article one was pointed to specific because the question arises by which people unilaterally retaliate and the answer is measures taken by the unitede states did not conformo gatt article 21. even close. not so i agree, with respect to whether or not the u.s. law is or is not a good thing, that's the reason we have a constitutional challenge that is pending for the court. this is not an action against the actions of the administration. this is an action against the law itself that was just passed in 1962. the provision itself, if you look at it, basically say that
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in order to define it you can first of all, a secretary should give great consideration, give consideration to domestic production needed for national defense requirements which of course the secretary of defense said everything was okay. but section d so broad it says at the end there are number of factors and jeff reeled off a number of the language and then it said without excluding other factors. in other words, anything can be used to make a decision here. .. 201 the itc ma section 201.
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there are no limitations on what the president can do in order to restrict imports. just for one second with respect to managed trade, if you don't think there's managed trade then you're not a farmer and you're not a steel consumer because if you're one of those two things, you can understand. there is managed trade. there are choices being made. now, managed trade, i don't find that to be particularly offensive. there's managed trade all the time. but in this room, i think that managed trade takes on a different context, maybe, than in other forums. but i would tell you that it's heavily managed and that is, really, as long as everybody is upfront about the fact that, sure, we're picking winners and losers and you've got an exclusion process and granting to the 232 tariffs, it's a
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cumbersome process and the fact that steel consumers are having to do that, that's one outgrowth of managed trade. they have an enormous number of people that are in charge of trying to administer this process. they work extremely hard, but they're also not steel experts nor can they be. and so, the system works about as well as you would think that it works and it doesn't work particularly well. finally, with respect to smoot hawley, again, it was kind of an example i think that jeff may be right that that's going too far, but then again, the economy these days is not as dependent upon manufacturing as it was in 1928, and i would say to you that if you are a farmer or in the agricultural sector these days, those differences between now and smoot hawley, i'm not sure how dinner they
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are. >> thank you. before you surrender the mic. can you give us the case game on that nondelegation challenge? >> sure. we'll come back to you. jeff, i think you probably want to take a couple of minutes and elaborate. >> sure. >> respond. >> well, i won't comment on the pending litigation. [laughter] >> i, you know, with respect to the gat issue, all i have to say is the united states believes all of its actions including under 232 are fully consistent with wto rules and on 232 i disagree with your characterization of, again, of managed trade and of the way that the exclusion process works. we're proud of the way that the exclusion process is working and we've processed many excloo you gos -- exclusions and it's based on
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many criteria and i disagree. >> terrific. we are going to start taking questions from the audience. there are floor mics, if you go to the floor mic to ask a question. and while we're waiting-- please go to the floor mic if we will. the program says we'll go to 2:30, but we agreed as we were eating lunch that we'll go to 2:00, and it's important that the panel finishes before the audience does. >> plus we didn't eat dessert yet. >> and please ask questions that end in a question mark rather than a statement and be as clear and crisp as possible. i want to ask a question of all three panelists. i'm not an expert in this area. what if anything should the united states take into consideration, in trade policy the form of government of the country with which it's dealing? and here i'm thinking about some of the national security issues that lauren raised, but
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also some of the economic issues if we're dealing with a country that has state-owned or state-supported enterprises? how do you do the math on those and how do you figure out what free trade is and how also do you take into consideration the national security implications. >>s an a general rule, i think it's better to look at economic flows and try to open up economic flows rather than looking at any factor of the production of goods. we do have certain rules both internationally and domestically that allow us to look at state subsidies and the degree to which the subsidies are intended to and do, in fact, distort trade flows. and those are processes that go through the department and
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international trade commission, subject to the laws on counter veiling duties and also to some degrees are in the anti-dumping regulation. i think it's a different matter though when we talk about security. if you have a country that has an authoritarian government that has very consciously used its authority domestically to regulate aspects of the economy that have an impact on national security, to facilitate espionage efforts and cyber espionage efforts, when you control the way that products are produced and marketed in a particular country, that has an impact on what you should be doing from a national security standpoint. now, i would draw a distinction between that and the usual matter of dealing with economic
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funds. we do have provisions in both the international agreements and our domestic law that allow us to use different sorts of computations when we're trying to figure things out in cases involving dumping from nonmarket economies. those, however, are a different question from looking at the structure of government itself, which i think you were asking about. >> right. don, let me give you a chance to speak up. >> i generally agree with what ron said although i must say that i don't agree that the nme doesn't go to the structure of government. the nme rules, look, the anti-dumping and theory of anti-dumping to the extent any of you into the trade policy and trade law, long ago left the intellectual mooring of
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something one would call real policy. anti-dumping is a way to assess a tax on your foreign competition and that's fair enough and what it agreed to and that's what it is. when you get down to the unfairness element, that's a pejorative term that's useful in political discussion, but doesn't really get to the heart of the matter. with respect to mne methodology, that's so far afield from anything that one would call intellectually honest, that it's really-- that has nothing to do with anything aside from, we can put more penalties on. let me just give you one example. the commerce department determined a few years ago that it would be a good idea and
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should be-- would be legitimate to bring counterveiling duty cases against companies in china. why? because prior to that they decided it's all a government-run enterprise anyway and so everything is 100% owned and run by the government so we're going to just do nme methodology by which what we do is create surrogate benchmarks to compare the prices in the united states. this is why you get dumping margins of 200% and higher many times in these cases. well, the commerce department looked at this and determined, well, we believe it was 87%, i don't remember the precise number, but 87% of the economic in china actually is not state-run. not state controlled and therefore, it's legitimate for
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us to do counter veiling duty cases against china. that's fair enough, okay. so you're now going to measure subsidies in china. if you're going to measure subsidies in china, that means you're not going to follow an anti-dumping methodology, might? because if you're going to do a subsidy case and you're going to treat their-- the dumping as a market economy, right? no, we're not going to do that. we're going to keep the nonmarket economy and do the subsidies so week get the 200% dumping and counterveiling duty margins up to 300%. okay, i get it. it's a matter of how high to you want the tax, but it has to do with the form of government. >> and did you dig out that case name? >> it's aias american institute for imported steel versus the united states. it's pending at the court of appeals for the federal
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circuit. there's also a court of international trade case there. i'll send you the court number on it. >> jeff, let me give you a chance to weigh in and then we'll go to the audience questions. >> sure. thank you. well, on the last point that mr. cameron made, i think his concern is with congress and the way that congress set up the laws. congress actually changed the laws to permit commerce to both impose counterveiling duties and dumping duties at the same ply. congress applies the law vigorously and commerce decided what's unfair tried and commerce applies that in cases. we have a fair commerce that's subject to judicial review. if we ever depart from the statute there may well be a
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consequence in the form of a court case that appeals our determination. so, you know, again, all of our determinations are rigorous. they adhere to the statute and, you know, we administer the law the way that congress enacted it. on the other topic, your original question about whether the form of government is important. the answer is absolutely. you know, the united states experience with china shows this. it is largely due to the nonmarket based practices of china and the nonmarket structure of china's economy that the united states has encountered so many problems with china. you know, the ones that i mentioned that have been intensifying in recent years. and it's largely in recognition of the special talent as posed by nonmarket-based economies that the united states, japan, and the european union are having this tri-lateral discussion about forming wto
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rules. the discussions are focused on topics like industrial properties, tech following properties, forced transfer and other non-market based practices. so the form of government of countries is absolutely critical in that the model of progressive liberalization that the united states pursued after world war ii gradual reductions in tariffs, extremely valuable, extremely important, but when it comes to an economy like china's it's insufficient to breakdown the trade and investment barriers that pose a threat to u.s. companies and workers. >> all right. let's move to the audience now and remember, please, a question rather than a statement. i think you might have been first at the microphone. >> this question is for mr. kessler. i want your assessment, ultimately, do you think that china will make those structural changes that
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demands, basically, that the chinese communist party to change the way they run their economy, to change the way they run their country and basically to change the way they rule? and isn't that something that just say fundamentally couldn't do? that's the first question. second question regarding hong kong. if hong kong situation largely stay the same with no chairman style massacre, but continue the demonstration and more and more those so-called suicides, would the u.s., trump administration support the revoke of the special hong kong trade status? thank you. >> okay. on the first question, i think that it is possible that china will make structural changes. it certainly has made structural changes to its economy in the past, dramatic ones and it's within its capacity to make further
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structural changes and to pursue more reform in opening up. you know, unfortunately, china, you know, has not adhered to opening up in recent years, but i believe it's possible to return to that path. i don't have a comment on the hong kong situation. >> the question was for jeff, but let me give our other panelists a chance to respond if they'd like to. >> i would say that, even though a lot of the changes that would make trade more similar with china to trade with other market-based economies, the united states has not refused to trade with countries that have authoritarian governments, nor has it refused to trade with countries that have nonmarket-based economies. that's a different question than the question how some of the rules operate.
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that's what don was talking about earlier. and it's a different question from what sort of trade agreements are mutually advantageous to the united states and other countries. >> right. >> question on this side. >> yeah, hi. my name is elaine middleman, i'm an attorney and i have a background in the auto industry. i wondered with the general motors strike and the pressure on the companies to keep plants open in the united states the uncertainty with autonomous vehicles, i just wonder what you thought about how that's going to impact the trade issues? >> go ahead. >> well, i mean, the gm strike is obviously problematic. for instance, you had a closing at lordstown. you are in the auto industry, you know lordstown. i grew up in cleveland, i know lordstown, too. lordstown has had issues for over 20 years, but the other
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issue that lordstown faced which was rather new to the party was that lords townes makes small cars, right? and steel costs increased by over 25% because the 25% tariff didn't just affect the price of imports, right? it affected the price of steel. that the price of steel sheet has been coming down recently, but that's the reality. so, they were also caught in the cost price squeeze. now, the administration denies that import steel tariff had anything to do with the shutting of lordstown. i'd say that that's a tough thing to say because there was no way they were going to be able to make a profit once those prices went up. but, you know, strikes are problematic. they are-- but strikes happen regardless of the--
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of who is in power and what the trade policies are, but they are going to observe more pressure, just as the pressure from the ag community, pressure from the ag community is real. why? because many of those people are going bankrupt and they're going bankrupt specifically because of the trade policies of this administration. >> jeff or ron on this point? >> i mean, i guess it's just a reminder that many americans continue to experience economic anxiety and you know, it's a reminder for the administration that we have a responsibility to do something about it. >> ron. >> the sort of economic dislocations you're talking about affect how people feel about not only their own circumstances, but the u.s. economy and trade that has an impact on their own lives, their own sort of production. a lot of people look at trade
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through the lens of what that does for competition with what i produce, even though they would then go to the store and try to find i think so this from other markets, that they're purchasing needs. it has less to do with the sort of trade policy that we ought to be following and more to do with the way people will feel about it. >> another question from the audience? >> this question is for mr. kessler. you talked about section 232, mr. ross talked about the turkey sanctions. so, my question is, how is this justifying raising the chair to 50% on steel imports from turkey under section 232 or will it be under a different authority? >> i'm not going to comment on that right now. i think details of that policy action are forthcoming.
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>> another question on this side? >> yes, for the gentleman, his first na i am is don. i'm not an expert in this area. in the investment business, however, i do know that a lot of apparent disagreements can be understood by contrasting someone who is looking at an issue from the short-term or from the long-term. and i don't know what constraints are on the secretary of defense when he's asked to make a determination as to whether or not a certain situation is problematic, from the standpoint of defense, but i would guess that's-- would be a relatively short-term point of view that he's taking. as we look at the situation right now, is there sufficient steel, sufficient input to the defense industrial base from allies that are available to the united states. one could make a prudential call for the long-term that looks more about in terms of what -- how could one recover
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an industry that had closed or ceased to exist because of trade differentials, thereby simply by looking at the extended time view justifying a different prudential view. does that make any difference to your analysis? >> thanks. no, it doesn't. the secretary of defense made this-- basically made the same analysis recently that he did in 2001, it was a different secretary. basically what they found was that the needs of the steal, the current production of the steal industry dwarfed the needs of the defense industry and he doesn't look at it in the short-term because that's the point of national security analysis. i would also say that the rumors of the demise of the
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steel industry are greatly exaggerated. the steel industry in this country is the most protected industry historically ever. it's even more protected than the textile industry was. we've had protections for the united states steel industry since 1974. you had the vra's, you then had the trigger mechanism, and then vra's again and anti-dumping counterveiling duties followed by the escape clause followed by more anti-dumping counterveiling duties. it's not a coincidence between 2014 to 2016 they fell, they fall because they worked in limited imports of steel. you talk about the demise of the steel have i. at the same time they were starting to do 232 big river was investing in a greenfield plant of three million tons
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down in texas. there's an additional six million tons coming on from nucor, that's flat rolled steel. you're somebody in the investment field, i guess what i would ask you, if the steel program is going to make the rich richer, what about the people-- what about the companies on the margins, let's say integrated facilities. integrated facilities like u.s. steel. there's a real question exactly how they're going to compete in flat rolled steel with 9 million new tons of flat rolled steel by the three most sufficient producers in the country. it's a very good question, and there's another question, which is whether or not the 232 program is actually accelerated that dynamic by making the rich richer. because while they were getting richer, u.s. steel was hanging on and u.s. steel is still
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hanging on, but it raises an interesting question. [inaudible] >> pardon me? well, textiles, textile production wasn't the way it was because there isn't much left, but steel, there's a lot of -- i get it and steel there's a lot of capacity. >> ron on this point? >> i would reiterate a point that secretary ross made in his remarks, we're seeing positive results from the 232 tariffs including from the increased steel production in facilities, modernization of existing facilities and form of direct foreign investment running into the billions of dollars. >> ron cass. >> the argument how you look at the national security question is one that i've been engaged with since the reagan administration when people inside the administration took
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very different views on what we should be looking at. there were people like jean kirkpatrick who really thought that we should be protecting industries that we might need in the case of a war when we would have difficulty getting products from other nations. there were other people in the same administration who said that anything we do now that raises the cost of those products takes money out of what we could otherwise spend on other defense investments. they take money out of what we could use for other parts of our economic support and that has long-term implications for national security as well. i don't think that two different sides come any closer over the last 40 years, but i think you raise an issue that is one that will continue to be debated. >> i think we have time for a final question. >> hi, this is for assistant secretary kessler, marilee,
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national trade today. the president said back in may said he wanted to give six month for the parties to discuss ways to deal with the national security threats that the report outlined. we're a month away and europe and the u.s. have not been able to agree on the scope of talks because of the agriculture. is there a way for the government to offer yet another extension or are we going to see some kind of action in november? >> i believe what the executive order that you're referring to calls for is the u.s. trade representative to provide an update to the president six months after the issuance of that executive order so sometime in mid november. so that will be up to the u.s. trade representatives and the president. >> is there a requirement in the statute that the report be made public once it goes to the president? >> i'm -- is there a requirement that a report --.
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>> the report on the auto report that it be made public? >> i don't have a comment on that. >> eventually it will be. >> we've got a few minutes left. let me give to each of you, 60 seconds to express a final thought and then we'll wrap up and go in the order we started. ron cass. >> well, the trade issues have been issues of controversy since the beginning of the nation. the first substantive law passed by the first congress was a tariff act hotly debated, a matter of regional disagreement. those things will remain matters of disagreement, but i'm glad that the federal society gave us an opportunity to talk about them today and that secretary ross and assistant secretary kessler were willing to be here to both give and take the ammunition on both sides. >> terrific. don? >> well, thank you for all
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listening. i found it to be an interesting discussi discussion. and i understand the controversy and the disagreements, but in the end, i do think that the unilateralism that's been exhibited, i agree that it's a new-- that these are new tools, new policies. that doesn't-- new doesn't necessarily mean good and new policies aren't necessarily better than old policies. if you want to see what happens to the economy if they do 232 on autos, just wait because the largest facility at that produce bpw's is in south carolina and if you're going to start cutting off and raising the cost of auto parts and automobiles, it's going to have a severe impact on the economy. so let's see, i think that this latest deal with china, we'll
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see how it works out, but it appears that there may be some efforts to at least draw things a little bit back in and try to move forward rather than strike out at just one more adversary. thanks. >> jeff, final thought? >> yeah, i would just thank the federalist society for convening this discussion. i think we are in a new era in trade policy and we're in a new era geopolitically as well, and it's really important for the public for intellectuals. i suppose that's at least the majority of federalist society members to think through -- to think through how trade policy adapt to changing circumstances. this administration has taken a new approach, a bolder approach to trade policy problems and
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it's in recognition of changing realities, strategic, geopolitical, and economic, and you know, i think that it's important for everyone to understand what tools in the tools box the united states government has, how we're deploying them and how we should continue to deploy them to meet the challenges of the future. >> thank you. thank you to the panelists, thank you all for being here and please join me in thanking the panelists, as well. [applaus [applause]. [inaudible conversations] >> our c-span campaign 2020 bus team is travelling across the country visiting key battle ground sates states in the 2020
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presidential race, asking what they'd like the candidates to address during the campaign. >> i'd like the candidates to focus on public funding for universitying. in recent years they haven't had as much attention as they should regarding funding for music programs, for reading, for some of our va programs, so i'd like to see how we could increase funding for those programs, that's an important issue to me being a student currently. >> i want candidates to tell me, as well as tell the electorate, how they are going to fix this country's budgeting issues in order to ensure that we can have the money to fund programs for generations instead of just leaving a mess for future generations to enherit and have to figure out down the line. >> this year i want the presidential candidates to focus on gun control, climate change, abortion, women's
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reproductive rights and-- >> and the most issue to me is the student loan crisis and just how it is crippling my generation. the current career that i'm in, i majored, it's not my passion, it's strictly for job security and the hope one day maybe i could have a house and i don't think the powers that be are really looking at how much this is going to cripple our generation, like everything that's going to be a major financial in the next 20 years of my life is going to be affected by the fact that i still have to pay off my student loans. >> on the campaign trail, part of c-span's battle ground states tour. >> yesterday, oklahoma republican senator james lankford spoke on the floor about turkey and the situation
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with the kurds and he goes through the area and looks at the turks, as well as the kurds. . >> and ed markey spoke about impeachment inquiry in the house expressing his report. >> lets me take you back to 2016. we're all getting ready for christmas, the month before president trump is elected. he won't take his office for another month after that, but in turkey they're reeling from a coup attempt that happened in october. hundreds of people were killed, chaos, turkish president erdogan overreacted, locking up hundreds of thousands of people, including one of our pastors, pastor brunson and implemented marshal law for years after that,

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