tv Commerce Sec. Wilbur Ross at National Press Club CSPAN May 15, 2018 6:39am-7:44am EDT
rasmussen rasmussen recently became subject to a 25% tariff. china's response was to add this small flanged at one end of the product and the actual product is many yards longer. wto rules require such specificity and tariffs that this change avoided the original tariff. you can't make this stuff up. this happens every day in the real world. the problem with plastic free-trade theory is it does not correspond to reality. the real world is filled with distortions like the ones i have mentioned. this explains why the pres. has
assisted on a robust trade policy. in terms of enforcing the rules commerce department has initiated 75% more trade cases than the comparable, the last administration and we will continue aggressively to pursue violations. because of the loopholes i mentioned, more comprehensive action has become necessary. two separate investigations, one in steel and the other in aluminum have been completed by the department of commerce under section 232 of the trade expansion act of 1962. investigation under section 301, the act of 1974 has been undertaken by the us trade route against china for
intellectual property right violations. the steel and aluminum cases are aimed at dealing with today's problem, the 301 is to protect our future from an already evolving negative trend in technology trade balance. this is the us china trade balance in high-ch goods. you can see back in 2000 it was more or less breakeven and just about every single year, now it alone is around $150 billion, close to 1% of the whole economy. china's decision to subsidize the most promising technologies in order to become dominant in them, by 2025, is a major issue. we welcome legitimate
competition but we cannot tolerate competition based on massive government subsidies and industrial cyber espionage. another demonstration of the importance of technology is the patent office, part of the department of commerce will issue 10 million patents in june. this remarkable accomplishment far exceeds the patent activity of any country and demonstrates again the importance of intellectual property to the united states. taken together the 232 and the 301 are bookends around trade policy initiatives. the logic is indisputable. both focused on protecting key elements of the economic base that is essential for national security. the retaliation list published
by china have created worry about a trade war so let's analyze how far it might go. as the president has pointed out china sells as far more than we sell them and given the lopsided balance they would run out of targets for tariffs much sooner than we would. also their retaliations would negatively impact their own economy as well as ours. china buys no products from us when they have cheaper alternatives. the tariffs they impose will come at a cost to them. this would be particularly true in agricultural products. china has 20% of the world's population but only 11% of the
land. they cannot cede themselves so they must import to fill the gap, especially as the shift toward more protein content. take soybeans as an example. it is true china is our largest customer but also true that brazil already accounts for more than 50% of chinese imports while we are at 30%. for brazil to replace us they would have to increase their exports to china by 60%, 60% but if brazil could ship that much more at competitive prices they wld do so already. they have not been holding back just to help the united states. brazil has issues with climate variability and its transportation networks and
those limit the ability to export materially more than it already does. realistically, then, to fill the additional chinese demand, they would have to diverse and soybean, in return for a higher price to china they might be willing to disrupt existing customer relationships but if they did so the market that had formerly been supplied by them would now open up for us producers so at the end of the day it would be a victory for china. it was true because food is a much higher percentage of income in china because their incomes are much lower. against this background two weeks ago treasury secretary
mnuchin, larry kudlow, peter navarro and i spent two days in china. it was an interesting week, 30 hours on the plane and 30 hours of negotiating. i don't know which was more tiring. we negotiated with the senior training leaders from various ministries led by the vice premier before landing in china, we sent an extremely detailed list of our needs and they responded with a similarly detailed but quite different list of their proposals. the gap remains wide. as has since been announced, china's vice premier will soon come to washington to follow up on those discussions. it is difficult to handicap the outcome but my hope is the
strong personal relationship between donald trump and pres. xi will facilitate an agreement as it is doing relative to north korea. one sure thing, the president meticulously honors his campaign promises and key among them making our trade relations with china much more fair. some pundits have said this activity on trade will result in retaliation and undo the benefits of deregulation and the tax cuts. that is an exaggeration. if china retaliates with a 20% tariff on $50 billion of our exports as threatened we would lose a major fraction of that volume, but not all. for the sake of argument
assumes that we did move that value, the hit would be $50 billion, a big number and this would be painful to the direct target but it would have left them 3/10 of 1% impactn our $18 trillion economy. less then 3/10 of 1% and partly offset by the reduced imports of the goods on which we imposed our original 25% tariffs, some portion of those would be produced domestically. also, the president has directed the agriculture department to use all of its power to ameliorate the impact on pharma. the inflationary effects would be more muted. replacing $50 billion of chinese imports with our own production or imports from elsewhere with likely causing a
lot less than the tariff percentage but let's pretend that we have to absorb the fool 25% of the tariffs, $12.5 billion. this is even more of a rounding error. 71,000of 1%, within the margin of error, following the same logic, it would take $180 billion of tit for tat to call one percentage point reduction in gdp. however, this is far more than the total of $130 billion in new goods that we export to them. the goods amounting to more than 130 would have no effect because we don't sell it to them right now. some of the food and lots of
the technical products would not be readily replaceable. therefore, there is no real-world circumstance where china could cut our gdp by that much. we simply don't export enough to them for that to be able to happen. at the $180 billion level, which is $50 billion more than our total exports to the maximum inflationary impact would be $45 billion, or one 12:45% of our economy, given various offsets the actual impact on inflation of retaliation would be even less than that. china could easily reduce our trade deficit by purchasing from a larger percentage of
their existing $1.5 trillion of imports. a 10% diversion of imports that they make already from other parties to us would almost double total sal tthem. to do so, they might have to get around trade barriers, both tariff and nontariff but the more difficult challenge for them probably would be the intellectual property area. they are rapidly ramping up their own r&d but are years behind us in semiconductors. respecting our intellectual property, therefore, would slow but not stop their efforts to use their manufacturing up the intellectual value-added scale.
the commerce department's recent enforcement actions against cte, china's second-largest telecom equipment manufacturer essentially caused them to cease operations. donald trump tweeted yesterday that we will review that action but it does demonstrate china's dependence on us technology. given all of these factors i hope we can make a fair deal but if it doesn't happen, the trade tit for tat will not be economically life-threatening to the united states. i look forward to hearing your questions. [applause] >> thank you, secretary ross. when chinese economic envoy visits washington this week, what are the main topics you
will be discussing? >> there will be a lot of things. one will be tariff barriers. another will be nontariff trade barriers. the third will be the forced partnerships and forced technology transfers for companies operating within china, next would be discriminatory practices in the procurement area and finally, the big question, respect for intellectual property rights. it wouldn'surpse me if they bring up the cte but our position is that is an enforcement action separate from trade. >> give us a few more specifics on specifically what we will be seeking from the envoy regarding intellectual property rights? >> pretty clear we would like them to respect the rights of
our companies, not force them to give up codes, to localize data, to do any of those things. that is the biggest area and there are illicit uses of intellectual property by hiring people, who have trade secrets. and same things we have been reading about and hearing about. >> donald trump tweeted over the weekend asking your department to, quote, get it done with getting cte back into business. this is a couple parts. will you? if so, how? >> cte did do some inappropriate things.
they admitted to that and there are alternative remedies to the one we originally put forward and that is the area we will be exploring very promptly. >> and how does that work with the message, how does that message work with known sanctioned violators, sanctions violators? >> what the te did was violated sanctions against north korea and iran. that was the original case. we then settled that for a fine of $1.6 billion and an agreement to do lots of other things. the texas court appointed an examiner who wrote his report, followed up and turned out a
number of statements the cte made to us were simply inaccurate and not correct during the negotiations and what happened. that is what led to the second round and our initial thought was to impose the bad lists so they could not receive exports of high-tech material and that is what led, as i mentioned in my prepared remarks, to the shutdown. >> can you confirm whether you are willing to get beijing to ease agriculture tariffs? >> we are opposed to their discriminatory tariffs in all sectors, in agriculture, non-agriculture, and opposed to their nontariff barriers. they have lots of non-science-based restrictions that essentially are tailored
to keep us goods out of china. the meetings where they raised the problem of the so-called problem i pointed out to them that the president and i eat quite a lot of american beef and other than the fact we are in public office, no signs of mental instability as a result. >> i would point out for our viewers online and live broadcast, in this room there are a number of people who are not members of the working press. any reaction you hear is not necessarily that of the working pres >> i assume she is referring to applause and lghter with that. >> or anything. to you or the president dispute intelligence agencies warning on cybersecurity risks of the
cte phones and if not, how will the us litigate the risk of restrictions? >> i have great respect for our national security agencies and national intelligence agencies. the pres. and i and the rest of the cabinet get detailed briefings every day and so i can assure you we know even more about the situation than the leaks that let on. >> tell us about that. >> since it is classified it wouldn't be appropriate. >> it is classified? >> the part that would be interesting is classified. >> fair enough. where do negotiations stand with the eu on steel and aluminum tariffs? >> the trade person, maybe 8 or
10 times since we announced the 232 results. we are continuing be discussions, talking with her again tomorrow. as we get closer to the june 1st deadline, hopefully we will come to a reasonable conclusion. if not the tariffs will go into effect. >> of the eu agrees to a quota on steel but not to use lower tariffs on auto, will that be enough to exempt the steel tariff? >> that is hypothetical. they haven't agreed to anything. we just have to see what comes through negotiations. >> for aluminum and steel tariffs, with the country's exemption be permanent or continue to be cited one month
at a time. >> i don't think we would do them one month at a time and thus we are in continued negotiation. canada and mexico have postponement until june 1st so depending where we are with nafta on june 1st the president will decide whether or not to extend their situation. it is not for castable at the moment. >> the talk has been hot and heavy over the weekends. were any agreements reached this past weekend? >> i don't believe any of the hot topics, rules of origin, sunset provision, dispute resolution, topics like that are a work in progress and those are very complex issues
particularly. origin so it will eventually come down to every thing before we can figure out something workable. >> regarding rules of origin, canada is asking for comments on a lighting their rules from the country of origin to apply to us standards. how significant is a loophole for shipment of steel and aluminum into the us? how much foreign steel is making it into the us between the two countries? >> we have significant interest in all countries with whom we are involved, having better safeguards against the shipment. not a situation -- europe has announced a whole bunch of
potential safeguard actions. and steel and aluminum on such a broad basis is what i mentioned earlier. namely the rules of trade are so specific that to get around them, if you don't have a blanket solution, we have imposed the tariff provision on countries that even sell as little or no steel or aluminum because we don't want them suddenly to become a shipment vehicle. one company which for the moment will remain nameless to protect the guilty but doesn't even have steel mills, recently started shipping steel to us so that is aggravating as you might imagine. >> if nafta is not concluded by june 1st what is your
recommendation exempting canada and mexico on steel and aluminum? >> you will be the first to know on june 1st. >> promise? >> a little before. >> thank you. to what extent is china coordinating its allies? >> i don't know the answer. i do know that the vast majority of countries have agreed with us either to accept the tariffs we put on or accept quotas which produce a similar result. the most noteworthy of the first of which was south korea. as you know, they agreed to accept the 10% tariffs on aluminum without protest and take a quota on steel equal files to 70% of average shipments from 2015 through
2017. other countries agreed to different quotas. it depends on what their history has been. i would say the vast majority of countries are not going to make serious opposition. >> what trade or other actions do you anticipate or are you taking regarding foreign companies doing business with iran, russia or north korea? >> the nor korea sanctions are in place. i am not aware of immediate plans to change them. the pres. announced there will be more sanctions, it is his intention to keep ratcheting up the pressure on them to bring them back to the table just as he did in north korea with some early results in the case of
north korea. >> on april 8th the treasury department announced sanctions, specified he was designated for his activities in the energy sector. if you take his ties to the putin regime into account can you tell us why you kept your stake in the shipping company navigator holding which holds millions of dollars transporting energy for almost a year? >> the office of government ethics did not require the sale of those holdings. number 2, they were fully divested prior to sanctions coming in on april 8th. prior to april 8th there were no sanctions on that company so there was no reason not to hold. >> what is the biggest adjustment moving from the business world where people reported to you to the world of government where you report to
many with different and sometimes conflicting interests and how would you rate congress? >> i hope you have two days for the full answer. the most gratifying thing about people in his apartment has been 47,000 people, the most gratifying thing has been the high quality of long-term civil servants who have been in there. i have found an extremely capable, relatively nonideological and amazingly, because of the trapezoid like government pay structure, willing to work late at night, even on weekends, this past weekend because of the speech. >> you described a strategy of
pursuing new trade relations, something like the mentality of a large industrial customer, and trading partners against each other. now that you're in the middle of trade negotiations what differences have you seen between the process of business negotiating with potential business partners where it is driven by profit and trade negotiations by politics and special interests. >> you probably noticed the canadian negotiator in the state spent 21/2 hours in negotiations, 40 hours lobbying capitol hill and that is not an unusual ratio for foreign countries that tried to get around us through the political process, the same reason on the tariff list they pick a
particular product from one state where mitch mcconnell is from, take another product from the state where speaker ryan is from and another product from the state chairman brady is from, trying to be sensible about putting maximum political pressure on us and in the case of china they are blessed by the fact that they don't have a november election. there is not much we can do to reciprocate in terms of levy. >> what are your thoughts on the current level of the us dollar and how does that help or hinder you in your talks with china? >> the dollar is the provenance of secretary mnuchin. i urge -- he will be discussed it at great length. >> we would love to have him here. please come to the national press club.
you have commented on dollar levels in the past. let us know where you would like to see it and what you would like to see happening by the end of the year. >> it really is secretary mnuchin's problem, not my problem. clearly the level of the dollar relative to other currencies does factor into trade balances. .. all of that is true. okay. moving on from the level of our currency. have you spoken with special counsel miller or been asked about cyprus in many going to
trump? okay, thank you. can you speak clearly if you would expect findings that humans are the primary driver of climate change? >> the question is more to it. >> it does. can you explain the commerce department especially in regards to fisheries? >> sure. i'm not going to get into the climate debate. commerce department noaa has their thinking in those reports in general have been reviewed sometimes favorably, sometimes less so that people in that field. i think i will let the record speak for itself. as to fisheries, one of the great surprises to me both in the confirmation hearing and
even more so now that i'm occupying this job has been the amount of congressional attention to fishing, especially to red snapper. it's been so many men about the allocation of phishing capabilities between the commercial fishermen in the sport fishermen in the gulf of mexico that for a moment they refuse to read any red snapper. i'm more than had my fill of it every day. fisheries are very complicated area. many, many species. each one of them has a whole apparatus around it. i have one particular ax to grind and that is more than 80% of our seafood consumed in the u.s. is imported. that seems a little bit silly to me given the coastlines we have
been given everything else. one of my objectives is to try to change the trade deficit into a trade surplus. that should be a thing we are very good at, it is a thing we are very good at premise so we are going to try to fix that. that's a big preoccupation that i've been working a lot with the fisheries group and with the private sector how to solve that problem. that strikes me a lot of the seafood being imported here is grown in agriculture under conditions that would never be permitted, so it's a kind of subsidy of them. there's also some health issues for some of those import. we are going to try to deal with that a going to deal with how we can to the maximum
sustainable harvest in our waters and how do we bring in select the elements of agriculture done properly honoring parts. it's a very complicated question, but a very important one. >> thank you if we've discussed a lot of trade issues here today. >> yes, i've noticed that. >> living to a very u.s.-centric topic, and senses. you announced during a senate appropriations hearing that you submitted to the white house the name of your census director nominee. can you share that name with us? >> of course not. that would be a violation of all sorts of rules. >> okay. any hints? >> you love the name if and when the white house approves it in the formal process begins. >> do you have any idea when that might be? >> no, i don't know.
but i do know i have very strong confidence in the existing leadership that to top people are longtime career people, 20, 30 year people. i think they are doing an excellent job and he wouldn't be such a bad thing if they were there for quite a while. >> thank you. the addition of the citizenship question in the 2020 census truce truce with bipartisan opposition including state's attorney general and group and others. is there any chance the 2020 census will not get their citizen status. >> it also drew lots of support. there's a dozen or so states for attorney general have come out icly in support of adding the question. it's not a novel question. it's been asked every year on
the american community survey in the exact same form that we are planning to do on the census this year. 61 million families have already been exposed to the question in the sky has not fallen. so i don't think the sky will fall when we add to the senses itself in 2028. what we are doing to try to ensure that maximum participation that we can achieve these several things. first of all, we are spending roughly $500 million on advertising for the census, x weighting to folks why it's important in explaining why under title 13 there is no risk their data will be used for immigration or any other purpose other than compiling regular
census statistics. the law has been in effect for a couple decades. there has never been a violation of the debate don't think there will be because every census employee who has access to the data takes a lifetime oath not to reveal it in the penalty imposed by law if someone could do it of violating not do some combination of up to four years in prison and $250,000 fine. that is a pretty stiff impediment for people. we are also taking extreme measures for cybersecurity so we can try to protect as best we can against intrusions they are in homeland security and other government agencies have been helping us with that. people do not need to worry that their privacy will be abused by
the senses. number two, to facilitate people for whom english is not their main language, we are going to have instructional material in 12 languages available. the basic senses themselves will be printed universally in both english and spanish with a very active call center operation and those will have multilingual resources available to them. ideally, we are working with community groups. community hospitals, social organizations, community advocacy groups, trying to get their operation to explain to the population why it is important for them to participate. so we are doing everything we
can to maximize participation in the census. we are also putting the citizenship question last so that someone who for whatever reason feels uncomfortable with that question, at least they came deal easily with the questions of which they are not uncomfortable. >> we have less than a minute left. i'm going to ask you two questions very quickly. you have known donald trump from the early days of business in new york. as the presidency changed at all? >> that's a very interesting question. i don't think so. i think he's had more impact on the national thought process than the fish into the presidency has had on him. i think he's very much the same person as before.
it is just that his focus now is in big public issues, not on the next real estate transaction with the next other transaction. his focus has changed. i don't think the person has changed at all. >> finally, i wanted to ask you about the president space agenda. how do you see that been ruled out and can america be ruled out? >> we've been given a commerce at task of becoming one-stop shopping commercialization of space. space is becoming a reality much sooner than you would think. it's probably going to be space tourism no later than next year. when space operator has already gotten 600 people to pre-paid $250,000 each for a space ride suborbital space ride.
so it's coming. what is also coming will be space eventual mining activity on the asteroid's very rich in minerals. there'll be space colonization of the most interesting of all, there was some day be a gas station attendant. what i mean by that is this. in order to get very big payloads to mars, they will be using rockets that go with enough fuel to get to the moon and then re-fueling on the moon, which has very little gravity and therefore it is an easy read lunch and that's how they will make it much more economical. ubc in the coming days in editorials explained in greater detail. i really think that space is already $340 billion industry.
i think it will be a trillion dollars industry before we get too much older than we are already. and so i am very, very excited for the last truly new frontier. >> thank you fared much. i would like to watch you all know about a couple of upcoming events. may 17th with a luncheon with sba administrator linda mcmahon. the former president of mexico, mentioned that fox will be here speaking pidgin for taint harris faulkner and june 20th in practice today but jon meacham, author of the soul of america, battle for a better angels. secretary roskam at thank you very much for joining us here today. we would like to present you with a mug. to give this to all of our honored speakers. we hope you'll use it in good health and soon come back to the national press club to pick up
another. >> well, thank you very much. [applause] >> this may be one of the cheapest at the office of government will let me accept. they will of course have to put it through their appraisal process so i'm not likely to see it for a couple months. when it does come back, i'll be happy to use it. >> thank you very much. [applause] >> this luncheon is adjourned. i would just ask that everybody stay seated for a moment. the secretary has a tight schedule and we would like him and his staff to be able to exit and once they have gone, everyone else is welcome to leave. thank you very much.