Senator Sherrod Brown (D-OH) joins Restone Global's Lorne W. Craner, to discuss a new approach to U.S. policy toward China. Brown says that although integrating China into international systems and furthering dialogue may have been the best course in the past, China is failing to comply with international standards in trade, human rights, intellectual property, industrial policy, cybersecurity, and other issues. A tougher strategy of "principled resolve," he says, is needed to hold China accountable for its actions.
Please be advised that due to technical difficulties, there is a gap in the video at 42:33; the full audio and transcript are available below.
CRANER: Good morning, and welcome to our conversation with Senator Sherrod Brown. I've been asked to mention—and I will, since he's a good friend of mine—that this is part of the Global Stakes in Human Rights Roundtable Series. We hope you enjoy this event, and I want to specifically thank Mark Lagon, my friend, for helping to make it possible. I'm Lorne Craner. I stepped down earlier this year as president of the International Republican Institute and have now founded Redstone Global, a new business development and political risk firm.
We're delighted to have Senator Brown with us this morning. Now in his second term, he's Ohio's senior senator, having previously served six terms in the U.S. House. At the time of his election to Ohio's House, he was the youngest person ever elected to that body. He currently serves on the Senate Finance, Banking, Agricultural, and Veterans Affairs Committees, and he has a longstanding demonstrated interest in Sino-U.S. relations, so he's also chairman of the Congressional Executive Committee on China. The CECC was created during the 2000 PNTR debate to encourage the development of the rule of law and monitor human rights in China. By the way, if you have not read the commission's annual report, I highly recommend it.
With all that background, Senator Brown will give us his sense of where U.S. relations with China stand and where we ought to be headed. I'll then ask a few questions before turning to all of you. Senator Brown, thank you very much for being with us this morning.
BROWN: Lorne, thank you. Good morning. It's awfully quiet in here, so a little life here. So...
Thank you. Good to be with you. I'm thrilled to be in front of the Council on Foreign Relations, and I'm always interested in talking about China, our relationship with China, China's rise in the world, our agreements in China, our clashes with China, our engagement with China, all of that. Lorne, thank you, and thanks for the work that you have done for the institute and overall in your public service.
This is my real voice. I talk this way. I don't smoke. I'm not sick. I just talk like this.
True story. My wife and I were at the Democratic convention one year, and we were in a room about this size, except there were no tables and chairs. People were packed in close to one another, and it was a Democratic Senate Campaign Committee event, so three or four senators were there thanking the assembled the, I assume, Democratic activists and contributors. And I was one of the four or five on the stage. I took the microphone. Again, people are packed in close to each other, standing.
And this guy, as I started talking—true story—this guy turns to my wife and says, "I can't stand that guy's voice." She said, "Really?" And he said, "Yeah, when that guy talks, man, it's fingernails on a blackboard. I can't stand to listen to that guy." My wife said, "I kind of like his voice." He said, "You like that guy's voice?" And she said, "Yeah, you know when I really like it?" And he says, "When?" And she goes like this, and she leans in, and he leans in, and she said, "I really like it when he wakes me up in the middle of the night and says, 'I love you, baby.'"
So even the Council on Foreign Relations can laugh. I like that. So she—for a moment—and pardon my backtracking—my wife is a Pulitzer Prize-winning writer. She writes with the Plain Dealer, only time that paper has ever produced a Pulitzer-winner, ten years ago. I like to point out to George Will that she won the Pulitzer Prize as a columnist faster than anybody else ever had, including George Will, but he doesn't take kindly to that.
But nonetheless—but she—she for a while was—she writes once a month in Parade magazine, which she writes sort of family kinds of human interest stuff, and then she writes a once-a-week Creators Syndicate which goes to 150 papers, which are more political and more along the lines of kind of progressive politics. And so one day, apparently both articles appeared in an Alabama paper, and she gets a letter—this is back in the 2012 presidential primaries—and she got an e-mail from a guy saying, "How can a woman"—"Dear Ms. Schultz, how can a woman who's so kind to puppies be so mean to Rick Santorum?"
And she wrote back and said, "You know, women are complicated creatures. We can hold two thoughts at the same time." And he said, "Now you sound like my wife."
So, anyway, enough of that. We see the influence every day of a rising China. We see what it means on alternative energy. We see China's involvement in Africa. We see China's increasing engagement in the Middle East and all over the world. We see in the products we buy from toys to electronics to pharmaceuticals to pet treats, we see increasing Chinese involvement in our economy. China's role in the U.N. Security Council affects our foreign policy announcements by President Obama this week both on trade and on climate change, underscores China's importance on these policy fronts, as well.
More than any other nation, China will affect the worldwide economy—you know all this—global environment, geopolitical balance, in the decades to come. 2016 marks China's fifteen-year anniversary on the World Trade Organization. It marks the year when China's non-market economy status will be reviewed. But now is the time to take stock of our China strategy and re-evaluate our goals. We simply should not be waiting any longer.
The U.S. must adopt a bolder, more holistic approach that pivots from an engaged "let's talk about it" tolerance to a principled resolve, from an engaged "let's talk about it" tolerance to a principled resolve. Let me give you an example. Several weeks ago, the Congressional Executive Commission on China, a bipartisan commission I chair that Lorne mentioned, which monitors human rights and rule of law in China created by Congress a decade-and-a-half ago, held a hearing on democracy in Hong Kong. Mark Lagon testified. Mark is, by the way, today—he said he's having—Mark's in the back—he's leaving—told me not to take it personally, but it's the last—before he joins Freedom Watch, it's the last class he teaches at Georgetown, so thanks for your service that way. But his testimony was very good.
He was joined in that testimony, at least sort of joined, by Governor—by former Governor Lord Chris Patten, who was the last governor of Hong Kong, as you remember, the last British governor of Hong Kong who oversaw the 1997 handover to Britain. He argued—and Patten has not been terribly outspoken and critical over these years, as you know. He's—but he's now—he's arguing—he was from—we were Skyping it or whatever we were doing from London. He was arguing for a bolder approach. He said it's ridiculous to suggest that any attempt to stand up to our values means risking economic damage and our relationship with China. It's in a way encouraging China to behave badly.
China's exports to the United States have gone up by 1,600 percent in these fifteen years, so Lord Patten asked, who needs—who needs whom? He told us that China's had seventeen years—since 1997, seventeen years to fulfill its promise of gradual and orderly progress towards democracy in Hong Kong, but then he said this is 2014, plenty of time for gradual and orderly progress toward democracy. Instead, China was giving Hong Kong—Patten's words again, Lord Patten's words—was giving Hong Kong a democracy like Iran's, where you can vote but the leadership decides whom you can vote for.
That's not democracy. The people of Hong Kong shouldn't have to wait any longer. Again, Patten's contention; mine, too. Nor should we wait any longer.
In recent years, our approach has been to sort of manage China's rise. We focus on integrating China into the international system, hoping its compliance with the rules would follow. Our strategy has been one of sort of engaged "let's talk about it", wait-and-see tolerance. What China fails—when China fails to live up to its obligations, we push back, sort of. We accept arguments from Chinese leaders if they're a developing country that needs time to reform. We see signs of progress even when there are only a few. We applaud change when it's only cosmetic. We give China chance after chance, pushing for increased engagement, even though China clearly intends to play by its own rules.
Perhaps a decade ago, this was the right strategy. It was an appropriate strategy. Maybe it was a good strategy for us. Today it's no longer a strategy that works for our—for the rule of law, for our country, for the world economy.
Currency manipulation is a good example of this approach. Year after year, U.S. Treasury said China's currency is significantly undervalued. Year after year, we give China chances to change their monetary policy. Year after year, we make excuses for their behavior. We make statements urging appreciation of the yuan. But we don't see much action, and we're the worse off for it. Up to 5 million American workers have lost jobs. Reputable mainstream economists will estimate literally up to 5 million American workers have lost jobs because of—because of the gaming of the currency system. Our trade deficit has grown by hundreds of billions of dollars due to currency manipulation. These workers can't wait any longer for China to appreciate its currency, and neither should we.
Let's go back exactly fifteen years. Mike remembers those days clearly. Fifteen years ago right now, we were in the midst of the PNTR debate in the Senate, in the Senate and the House. I've never seen—I came to the House in '92, the Senate in '06. I've never seen the kind of intensive lobbying that we saw for PNTR.
A friend of mine said there were more corporate jets at National Airport than any time in the last twenty years. CEOs who normally only—major company CEOs from Chrysler to Boeing to many others, normally meet with House and Senate leadership and a few powerful committee chairs. CEOs were walking the halls of Congress, even visiting the lowliest House freshmen on the fifth floor of Cannon. At the same time, they were—while walking the floors of Congress, while walking the halls of Congress, they talked about they wanted access to 1 billion Chinese customers. What they didn't say is they also wanted access to 1 billion potential Chinese workers.
They promised economic growth, even though—they promised that economic growth would lead to a more democratic system, even though there were so many examples in world history that economic growth does not automatically lead to democracy. You can cite in the 20th century a number of examples where that simply hasn't worked out that way.
For instance, an example. A major manufacturer in my old House district—I sat in his office. He lobbied me, talked over and over asking me to vote for PNTR. I did not, but he asked me to vote for PNTR. He said it will make his company be able to export more products, it will be good for his company, good for the workers and his company, good for our communities, good for the tax base, for the schools, for police protection, all the things that came from a growing manufacturing enterprise. PNTR passed. Three years later, he moved production to China. He stayed some in Ohio, but he moved a good bit of production to China.
Again, I sat in his office. He said, the reason I moved to China is because my competitors are now in China, American companies that have moved to China, forgetting, again, that they changed the rules so that tax policy and trade policy made it—made these companies more likely to go.
In fact, what we began to see, what was emerging in the United States a decade ago is a new way of doing business, where a company in the United States, a manufacturing company, it would shut down in Mansfield, Ohio, or in Steubenville, Ohio, and move to Wuhan or Shiyan, China, and then sell products back to the United States.
As far as I can see—and there are historians and economists in this room—I've never heard anybody say otherwise. As far as I can see, that sort of business plan adopted wholesale by large American companies—small companies can't necessarily do that—adopted wholesale by large American companies that business plan of shutting down production in one country, moving abroad for a whole host of reasons, tax policy, trade policy, labor costs, environmental rules, worker rights, all those things. Companies that—that whole idea of a business plan of moving overseas and then selling products back into the original country is—as far as I can see, unprecedented in human history.
Then now we get to the World—China's entry into the World Trade Organization. There are ongoing problems of illegal subsidies, a lack of transparency, discriminatory treatment of foreign corporations, and rampant intellectual property theft. The United States trade representative's annual report acknowledges all this, but does little about it.
Yes, credit this administration—and I do on this—they filed more WTO cases than previous ones. I support that. I was speaking to Senator Portman last night on the phone about 9 o'clock, and he was—the other senator, Republican senator from Ohio—he was U.S. trade rep, as you remember. We have very different positions on trade, different votes, different positions, but we both talked about how we have had success together on trade enforcement.
I give credit to the administration there, but little else in terms of making real progress on the bigger picture. We continue to engage in dialogue, but we still haven't seen results on China's misuse of its anti-monopoly law, Beijing's failure to protect intellectual property, overall industrial policy. We pay a heavy price, our workers, our communities.
If any of you grew up in the Midwest and grew up in a town of 30,000 or 50,000 or 75,000 or 100,000, what was once a proud industrial town, you see—I don't blame it all on China. I don't blame it all on globalization. But you've seen what's happened to these communities. That's the kind of price we pay.
In a 2011 study, the International Trade Commission estimated that if China adopted the same standard of intellectual property protection that we have in the United States, one of our proudest—one of the proudest features of our democracy and of our capitalist system—strong intellectual property protection—if China had the same standards we do, U.S. annual sales would increase by $107 billion, an additional 2 million jobs—more than 2 million jobs would be added to our economy.
We can't wait for Beijing to decide whether they're really going to adopt high intellectual property standards. We need a new approach to China, instead of this sort of passive "let's talk about it," dialogue-driven tolerance, we need principled resolve. A policy of principled resolve means we make clear what international obligations we expect China, a country that says it will engage in the rule of law, follow the rule of law, we expect China to meet on cybersecurity, and the obligation we expect them to meet on cybersecurity, human rights, international trade, worker rights. Then we demand China meet those standards now. They could issue more visas to foreign journalists. They could stop censoring media, now.
They can—they can release political prisoners. They can shut down labor camps. They can start respecting the rights of the Uighurs and other ethnic minorities now. They could let their currency appreciate. They could take explicit permanent steps to comply with WTO obligations, which they promised, as they promised Lord Patten in Hong Kong, take explicit permanent steps to comply with their WTO obligations, today.
Increased engagement by the U.S. may have led to more agreements on paper, but we tolerate infraction after infraction after infraction. Under a policy of principled resolve, before we sign a bilateral investment treaty—we can talk about that later—or any other trade agreements with China, we demand China comply with its existing international obligations and its domestic laws. That includes giving workers the right to organize independent unions. It includes effectively enforcing environmental laws. China still will have none of that.
Given all at stake for its—all that is at stake for the U.S., why give China more opportunities to fail to live up to commitments? We push for progress on an issue-by-issue basis, but we don't step back to evaluate how our conversations on trade should also, for example, address China's persistent human rights violations. A principled resolve strategy recognizes that concerns about trade and human rights all stem from the same source: China's lack of respect for international standards, China's unwillingness to comply with the rule of law.
We must not treat these issues separately in the vain hope that improvement on market access eventually leads to the better treatment of Tibetans. You remember the discussions as I mentioned in 1999, as CEOs walked the halls of Congress, that more prosperous China will mean a China—a more democratic China that respects the rule of law and human rights. That's what our CEOs told us. That's what the Chinese told us, for all the reasons we talk about, that those haven't been met.
If China doesn't respect the human rights of its own people, how do you expect—how do we expect China to respect the agreements with—which we sign with them? Every year, the Congressional Executive Commission on China issues a report—and Lawrence Liu is here, whom I just wanted to call out for the terrific work he's done as staff director in that commission. Issues were reported detailing the extent to which China's failed to comply with its international human rights obligations. I encourage each of you to read the latest version, which we released in October.
A couple things—a couple highlights. This year's report, we found the human rights situation has gotten even worse under President Xi Jinping. President Xi has targeted moderate reformers. They've delayed and denied visas for foreign journalists. They've waged a campaign against church buildings. They've trampled on the rights of Tibetans and Uighurs. We've had a number of—a number of people come in and testify, including a young woman from Indiana University, whose father was just—whose father—whose family are Uighurs and whose father just was imprisoned again by the Chinese and clearly mistreated. We've heard testimony from people, from journalists, from others who have been affected by what the commission cites as human rights situation getting worse.
The commission maintains an extensive political prisoner database, now identifies 1,300 known political prisoners by name detained in the People's Republic of China. Many of those were detained under President Xi during one of the harshest crackdown on human rights activists in recent history. We can't wait to see if China's next leader will change course.
Last month, other—the co-chair of the commission, Chris Smith, and I did what nobody had done before. That is, we introduced legislation together as the two chairs of the commission, a bipartisan coalition of a number of senators, Senator Cardin and Rubio and Wicker and others, and House members to renew U.S. support for Hong Kong's democracy and freedom. We've spoken with one voice. We've reminded China that the U.S. and the world are watching.
Look at what's happening in Taipei in the last few days. Look what's happening in their elections. Look what's happening on the streets of Hong Kong. Our China policy needs to include other bold steps that clearly identify our commitment to these international standards, whether it's standards on human rights or democracy or labor rights or religious freedoms, and we must require China to comply.
Unless we start holding China accountable, in a coordinated, comprehensive way, it will continue to offer lukewarm, short-lived progress on individual issues, only to roll back these temporary achievements later, whether it's currency, whether it's these other issues. We continue—we can't continue to applaud ongoing dialogue, which is kind of what we do—we talk about it, we applaud them for meeting, we applaud them for the discussions and the promises, but the commitments themselves don't seem to hold up. We must identify our goals for China. We must firmly pursue them, engaging—withholding engagement or benefits if China doesn't agree to meet the high standards for the global leader, which they are, and which they especially aspire to be.
Now, China's been in the WTO for thirteen years. It's a permanent member of the U.N. Security Council. It has a responsibility to uphold the Universal Declaration of Human Rights. It sees itself as a great power. It's time it acted like the global leader that it has economically and militarily become. The U.S. should no longer value engagement, discussions, said talks, whatever, over results. Letting the yuan appreciate marginally only to depreciate significantly a month later is simply not good enough. Blocking and censoring U.S. websites while Chinese tech companies raise billions on our capital markets should no longer be acceptable. Talking about, having dialogue on human rights without releasing political prisoners, without shutting down the labor camps, without protecting workers, without respecting the rights of minorities, ethnic minorities shouldn't be tolerated.
We should forcefully call out China whenever it violates international standards and norms. We should condition additional agreements and commitments with Beijing on meaningful progress in fundamentally critical areas of human rights and democracy. We should not accept half-measures and cosmetic improvements. We've done that for over a decade. Under a new approach of principled resolve, we simply can't do that.
The China we say—China will say we're interfering in their internal affairs. They say we have no right to speak up for universal values in Hong Kong or defend the rights of journalists there. They'll continue to silence our companies doing business in their country, and our companies have been far too complicit in this for a decade, too. Things are changing, but James Mann and I were talking about how things have begun to change that way. We will see. And they will continue to prevent our government from bringing trade cases by hacking into our computers and threatening retaliation. That's why it's so important to do this right.
China will weaken international standards further if we don't. It will rewrite the rules that will make their unfair trading practices acceptable and their violations of human rights far too legitimate. There's no question that engagement will be a fundamental part of the relationship, but the U.S. must realize that we still have a lot of leverage. And that's what the U.S. has—I think has missed in our China policy over the last decade. The leverage is the largest, most lucrative, golden market in the world—in world history, that's our leverage with China. They want access to our markets, our technologies, our universities. The heft of the U.S. government and our consumers can be used, if we choose to, to achieve real change in China.
Under a principled resolve approach, our dialogue, our agreements with China cannot come at the expense of our economy or international human rights standards. Benefits from our relationship with China will accrue to workers where we won trade cases at the U.S. Steel in Lorain, Ohio, at TMK Ipsco in Brookfield, Ohio, at Vallourec in Youngstown, Ohio, not just multinational companies, not just Chinese state-owned enterprises.
The U.S. will push China to follow through on its announced abolition of re-education through labor camps and demand an end to crackdown on freedom of speech and freedom of religion. With a principled resolve strategy, the U.S. will not be afraid to speak out or to pursue aggressive policies. We'll make clear that if China wants our cooperation, it wants access to our markets, it must play by internationally recognized rules.
Finally, and in closing, we must improve our own policies at home. We must work harder to lessen inequalities, the growing inequalities in our society. We must work to protect our middle class and give people who aspire to the middle class in working-class America and low-income America the chance to do that. We should work to guarantee a living wage. We must ratify the U.N. Convention on the Rights of Persons with Disability. Only by doing so can we speak with credibility and moral authority to countries around the world, including the People's Republic of China.
I'll stop there and look forward to questions. Thanks.
CRANER: Thank you. Senator, you talk about this new policy of principled resolve. I was in the State Department from 2001 to 2004. My successor, David Kramer, is over there. I noticed even between 2001 and 2004 it got a lot tougher to deal with China on human rights issues. And I think David had a much tougher time than I did, and our successors have.
There was always the idea in our relations with China I think from the 1970s on that we would try and draw them into the existing international system to make them, in Bob Zoellick's words, a responsible stakeholder. Do you think the Chinese are satisfied to be drawn into the existing international system? Do you think they want to change the international system to a degree to suit their needs and desires? Or do you think that debate is still underway in Beijing? And if so, how can we affect it?
BROWN: All good questions. I think the debate is still underway in Beijing. I think that China—as we do—and I don't really—my speech in some ways may have appeared to fault China more than is fair at times, but—because I—I mean, China's acting—at least its leaders are acting in what it perceives as its nation's national interest and certainly its leaders' personal interest. Those are often conflated.
But I also think that, you know, we've contributed to that. We've allowed—our business community was willing particularly in the early years to do whatever it took there—our business—I mean, our companies were not in China to promote democracy. They were in China to oftentimes make products and sell them back into the United States or to sell into East Asia or to sell into the Chinese market. I understand all that.
But I think that the Chinese—as leaders, there's a quote from—Emerson used to talk about history as a battle between the conservators and the innovators. The conservators are protecting the status quo; the innovators want to move a society forward, however the innovators might define it. I think that plays out in American history with sort of conservators are conservatives and progressives and innovators. That goes further afield than your question, but I think that China is wrestling with that. The people—the people that run that country, generally have a huge—a huge array of terribly difficult problems, from labor unrest, ongoing always, to terrible environmental issues to how do you keep 1.3 billion people—a number of them, employed with—so I think they—I think they always lean, though, to Emerson's conservators. Leaders in a country like that hold on. They look to the future in the most manageable incremental way, I think. I think that's human nature. I think it's also Chinese history and culture.
There's a wonderful quote. When Zhou Enlai—many of you know this, as China experts—that Zhou Enlai was asked in the 1970s, he was talking to an historian, what do you think about the French revolution? And Zhou Enlai said, "It's too early to tell." And I think that—that China has a—you know, they have a longer view of the world than we do. Most countries probably do. But I think for them, it's a question of doing whatever they need to, but nothing especially bold to move forward, deal with their problems, have more influence in the world. I mean, China has such incredible—incredible and incredibly proud history of—you know, of—not world domination, but being a major country in the world for, you know, five millennia or longer, and I think they think of themselves that way. And in my conversations with Taiwanese, Chinese, Uighurs, people in that part of the world clearly, lead you to that. And so I think they move incrementally to sort of protect the status quo as much as they can.
CRANER: Right. Here in the—in Washington, as we go through this debate, what support are you finding for this idea of review of China policy, moving forward? You're talking about it today, but I'm sure you've talked to your colleagues about it.
BROWN: Yeah, I see a general disengagement. I think that, you know, the human mind and the Senate mind, I guess, it's—well, I'll back off that for a second.
I don't want to get into that. But the—I think that, you know, our economy has been such and the partisanship is so polarizing that China doesn't demand our attention the way the Middle East does and the way the domestic economy does, so I don't see all that much engagement. On our China commission, for example, there has been—the House Republicans have been very engaged as—I mean, the House Republican members who were appointed by Speaker Boehner, Democratic members on the commission have been engaged, those appointed by Democratic Leader Pelosi. In the Senate, we've seen less interest from Senate Republicans, for whatever reason. I just think it hasn't demanded—even though I think it's got a whole lot to do with our economic growth or stagnation or—where we are somewhere in between that. I think China policy and tax and trade have a whole lot to do with that.
I put an asterisk there that I think—I think we will see those senators who look to—for want of a better term—fashion themselves as sitting in the Oval Office someday, and that's not a small number of my colleagues—and you can almost always tell who they are by looking on who early in their term gets on either the Foreign Relations Committee or the Armed Services Committee. At one point in the Senate, on the Foreign Relations Committee, you saw Bayh, Dodd, Biden, Obama, and...
BROWN: ... and Kerry all on the Senate Foreign Relations Committee, probably not by accident. There's a—Senator George Aiken of Vermont, whom you remember from a generation-and-a-half ago, Aiken was asked once about his colleagues running for president. And he said, you know, the only—in the U.S. Senate, the only cure for the presidential virus is embalming fluid.
And, not too far off. So I would expect some of these—some of these potential candidates engaging a bit more. I mean, Senator Rubio—I mean, I'm not questioning his intent here or motives—I mean, he's on our Hong Kong bill. He cares about human rights. I know that from talking to him. I expect to see a little bit more of that, and I will—you know, I will work my colleagues in part based on that, because it's so much a part of, you know, where we go, what do we do on the investment, the BIT, the U.S.-China BIT, what do we on the green issues with China.
The response to the—I mean, that was really a response more of partisan—Obama—or on coal response on China, the China's and the U.S. agreement—or at least preliminary agreement on what we do with climate change. I think all that's good news, but we'll see.
CRANER: I think there is some expectation with the Senate changing hands to be a Republican majority that it will be more...
BROWN: I noticed that, yeah.
CRANER: ... sympathetic to FTAs. As you look at the TPP, what are you seeing so far in the negotiations? What would you like to see in a TPP?
BROWN: I'd like to see a TPP addressing issues—I mean, we—well, I'll start that. I think we need to address issues more on—we've done—we've done moderately well on labor and environmental standards—not as well as we should have—but moderately well. We've—number of Senate colleagues are interested in human rights component in what we do with—with TPA, with the trade promotion authority—used to be called fast-track, as you remember—and like everything in politics, if you get to name it, you're halfway there. And fast-track wasn't working for people that supported it, and TPA sounds really much better, because nobody knows what it stands for.
So—but I think that—so human rights—human rights issues, labor standards, environmental standards, better trade enforcement. We've seen significant progress in trade enforcement. The problem with trade enforcement—and I'll give you one example that affected my state—but many others—the Chinese were illegally dumping what's called oil country tubular steel, the steel that's used for—particularly for fracking in the Midwest and in North Dakota, South Dakota, eastern Ohio, western Pennsylvania.
And a number of U.S. companies, including companies in my state, make oil country tubular steel. The Chinese were found by the ITC and the Department of Commerce to be dumping—dumping their products in the U.S. We won on that case, but it always takes at least eighteen months off and two years before the industry can prove injury. And by then, a number of jobs have been lost, because the Chinese steel is coming into the country.
We won that decision within—Nora, was it weeks or maybe months? Weeks. South Korea started doing the same thing. South Korea—which at the time had—which still—has no domestic market in oil country tubular steel, so all of their companies that produced that were making these steel tubes for—these pipes for export. And they started that so they could dump in the U.S. market.
We're now in the middle of a trade case with South Korea. We'll probably win it. It'll take eighteen months to two years, again, more damage to the industry. So we've got to figure out in TPA, in trade promotion authority, in fast-track, how to do—how to do this in a way that we don't—that there's almost—that there are incentives for companies to dump because they—they have success for at least a period of time. It may win some of the cases, because we're a country of rule of law, and rule of law doesn't move fast, especially in an entity as big as the U.S. government, and playing fair, and all the delays that trade lawyers benefit from when they can cause those delays.
Last thing—and I mean, many more than the last thing—but I'll use one more example in TPA. We need to look very seriously—investor state relations, where before NAFTA, there was no—there was no—before NAFTA, there was no mechanism for a company to sue—to go to court, to a trade court or trade tribunal against another country. It always had to be my country, I'm a producer in the U.S. of Product X, I convince my trade rep in my country, my administration, to go to Geneva and advocate for my products and in a trade tribunal.
Under NAFTA and since, investor state relations has elevated—if not elevated, have changed the structure in a way that a company can go to Geneva and sue a foreign government. We've seen what happened with tobacco. Philip Morris has sued the government—under the—what, the Australian-Singapore—is it—Australia-Hong Kong trade agreement. They have gone to a tribunal there and sued the government of Australia on tobacco, because Australia passed a rule—passed a law that you had tobacco—a tobacco tax had to be plain black-and-white with no kind of symbols or logo of the company. That was just one of the things they did.
Philip Morris sued. And they had other kinds of consumer—tobacco consumer—anti-tobacco rules and regulations in their public health law. Philip Morris has sued, causing New Zealand to step back from passing its public health law. We've seen it on generic drugs in Latin America. We've seen it on—where companies are emboldened to step up on issues like—on all kinds of public health issues, compromising sovereignty in those small countries, particularly small countries that don't have the ability to fight back.
Mayor Bloomberg is actually paying for a lawsuit to defend, you know, a couple of these small countries, to defend against big tobacco companies, because if you're a small Central American country, you really can't afford to go to court against Philip Morris, I mean, they're a power of a company, and so you back off your public health rules.
And so that's got to be part of TPA. You're right about Republicans—sorry, I went off on that tangent—but Republicans are—and we've seen—we've seen two things. We've seen trade become a bit more partisan, where more Republicans support it, more Democrats oppose these agreements for a host of reasons, but we've also seen pulled in the other direction, if this is a Barack Obama initiative, there are—hard to believe that actually Republicans that might oppose it because it's Barack Obama—I don't mean to sound partisan, but it just seems that's been some recent history, so—that was funny, no? OK.
But I—so I think that...
CRANER: Both ways.
BROWN: Yeah, doing it both ways. I think TPA—I think TPA is going to be interesting, because the fundamental question especially in the House is, are a lot of Tea Party Republicans willing to give Barack Obama this kind of power? I mean, they don't want to give him power certainly with the EPA. They don't want to give him power on human rights. They don't want to give him power on health care. Do they want to give him power on international trade? Because, you know, TPA is all about shifting power from Congress to the executive.
So I—those of us who are concerned about the way TPA may look, if it goes back to the TPA of ten years ago, which sort of stripped of any kind of protections for anybody but investors, if that's the way we go, then it will be an interesting coalition of sort of progressive Democrats and anti-Obama Tea Party Republicans.
CRANER: Interesting. OK, we'll go to questions from the audience now. There are mics available. If you could speak clearly, just ask a question and state your affiliation. We'd appreciate it. Sir?
QUESTION: Steve Charnovitz at George Washington University. Good to see you, Senator.
BROWN: You too.
QUESTION: You talked about resolve and used—said we need to have more leverage against China. So my question is not about leverage, but it's about setting a good example in leadership. Let me give you two examples. You talked a lot about labor rights, and yet the United States has not ratified the ILO Convention on Freedom of Association. It's been before the Senate since 1949. And I'm wondering whether you think the Senate might find time to take up that convention next year. You mentioned the disability convention...
BROWN: Zhou Enlai said we could wait another few decades.
QUESTION: Maybe. It's—but that might be a good—a way to set a good example. And, secondly, WTO—you said China needs to comply, yet the United States loses many more cases in the WTO than China does. We have the worst record on compliance of any country in the WTO. So I'm wondering whether the Senate might set an example and stop passing laws that are found by the WTO to violate it.
BROWN: Good questions. From Lorne's earlier question, my party did lose the majority in the Senate, but even with the majority, we didn't do some of these things. The one that was most illuminating to me and most distressing was our inability to do the human rights on disability, the convention on disabilities, when Senator Dole, as you know, came down to the Senate floor in his wheelchair, and neither Kansas senator voted with him. And we fell short of the sixty-seven votes we needed, which was—and I think that our history on—you remember Senator Proxmire going to the floor day after day after day for—which was that...
BROWN: Genocide. And finally, in twenty-two years or something, he passed it, because—which—the Senate passed, or ratified it, which likely wouldn't have happened without his focus that way. I always—my criticism with China is always—at least in my own mind—tempered by the fact that no nation, even a nation as great as ours and as—you know, the world's second-largest democracy and longest continuing democracy—has fallen short on things. So I think that's always a struggle.
I don't think it means we don't challenge other countries, let them challenge us on things. I've always been a critic of trade policy, as you and I have talked about, Steve, so I don't—I don't defend some of the things we do that way. I would love to see us move forward on—particularly on labor rights. I think that we have seen—I mean, we have a government that's not been particularly friendly to—to forming trade unions and engaging in collective bargaining, and it's more hostile today in state after state after state than it has been in my lifetime. So those—I don't think we absolve—I don't think we abdicate our responsibility to speak on the world stage and to act that way, but, you know, cleaning our own house is always preeminent in this. And I will take the suggestions you have to heart. Thanks.
QUESTION: Allan Wendt, formerly with the Department of State. Senator, you talked about the U.S. exercising leverage against China. Could you give us some specifics? What sort of—what sorts of measures could we take that would really result in leverage against China, without us shooting ourselves in the foot by, let's say, restricting imports of products that many Americans want to buy?
BROWN: Good questions. I don't think it's a question of restricting imports. I think it's a question of, you know, what direction do we go in as a nation? I don't know this updated number, but I remember several years ago something like one-third of Chinese exports came to the United States. Yet we as a nation were unwilling to engage—if you move that same construct into a business relationship, when one-third of a company's sales go to one customer, that customer has an ability to say to that company, you know, you've got to do something a little differently here.
We've never been willing to play that card with China. Understanding the pressure from corporations, understanding the geopolitical issues—I mean, I can look at China a bit differently from President Bush or from President Obama, because they have geopolitical concerns in addition to more immediate, direct economic concerns. But I think that—and we've seen our—I mean, I go back to the importance of PNTR to the CEOs of America's largest, most prestigious companies, how important this was had nothing to do with human rights, had nothing to do with labor rights, had nothing to do with rule of law, had all to do—comments notwithstanding—promises—regardless of promises had all to do with what they saw as their bottom line in China.
I'm not giving specific examples, as you suggested, but I think what comes out of the State Department needs to be a little different. And I've—and what comes out of Treasury on currency, I think if an administration made some strong statements about currency and then actually followed up on those statements, one prominent person in the Treasury Department told me five or six years ago that, you know, I hope your currency bill gets a lot of attention, I hope it gets a really good vote, but I hope it doesn't—I hope it doesn't pass both houses. He was implying pass in one house, but not the other, because that will help us put pressure on China. But how much pressure do they really want on China on this is another question.
So I think it's—in summary, I think as a nation our State Department, our Commerce Department, our Treasury Department needs to actually mean what they say and needs to follow through, again, more principled resolve than a kind of "let's talk about it" tolerance that we've had.
CRANER: Jim, and then we'll move to the back.
QUESTION: Thanks, Senator. Jim Mann, author. To what extent do you think China will be an issue in the presidential campaign coming up for either side? And apart from the intensity of the issue, how do you—what will the issues be? Will they be trade? Will they be security? How will it come up?
BROWN: Thank you, Jim. And thanks for the writing you've done about a whole host of these issues. Unless there's a major cybersecurity attack that really reaches the minds and the hearts of—or the—that Americans really see as having an effect on our lives, I don't think—I would be a bit surprised if China is an issue in the presidential race in terms of security. I don't think people think much about China that way. This isn't 1949. It's not 1969. So I don't think that that plays any particularly prominent role, unless something major changes like that.
I think it's up to the presidential candidates. Do they want to make trade an issue? Do they want to make what's happened to American jobs an issue in the context of globalization? If you're going to talk about globalization, you don't just talk about TPP, you don't just talk about TTIP. You've got to talk about China.
Americans—and I go back—I think that—I run for the Senate twice in a state that's a marginally Republican state, but very much a swing state. A friend of mine in Connecticut said to me in 2012, we're sick and tired every four years of a presidential—of a campaign for president of Ohio. President—both candidates were in Ohio like thirty times over an eighteen-month period. So our state, you know—but I win races in part because I stand for something on globalization and China and economics and trade. I think that Democrats are very well situated to talk about these issues in a way that matter to working-class voters. But I don't think we do very often. And I think our presidential candidates fall short.
Both presidential candidates, both leading presidential candidates in 2008 in my state—in—Senator Obama and Senator Clinton spoke—debating at Cleveland State. I was sitting there with my wife watching the debate in—whatever—April of 2008. Both of them promised under questions from Brian Williams referring to efforts that I have of renegotiating NAFTA, both of them said we should do it. Neither candidate—I was guessing—neither candidate would probably follow up on that, just because of the pressures and how things work in Washington.
And I don't expect any bold differences between the—any—I don't expect either candidate to be bold about it. I don't expect stark differences. But I think the Democratic candidate could gain significantly by a more assertive trade and tax policy towards China on—within the context of globalization. I think it's a terrific issue politically, and I think it's very much the right thing to make the stark contrast between what we stand for as Democrats on human rights, on currency, on workers, on environment versus what the other side stands for. I don't hold great optimism that contrast will be made as starkly—to be as stark as it should.
CRANER: OK, back on the corner?
QUESTION: Good morning. My name is Stefan Grobe. I'm with Euronews, European television. I like your idea of principled resolve. All I can say is, good luck. I mean, we're talking about a country that owns much of corporate Europe, that owns most of the American debt. How are you going to be tough with your banker at this point? And what makes you believe that the Chinese would cave one day to American pressure?
BROWN: Yeah, I guess I don't see it—that's a very good question. When I—when I—in answer to Mr. Wendt's question earlier about—about China—about the—you know, we were 35 percent or 40 percent of Chinese sales, of Chinese—of Chinese—China's sales abroad, exports, we had more power then because the debt issue wasn't as great as it is, so every—every year, that percentage goes down slightly and our debt goes up slightly, so it makes it harder the longer we wait.
Again, I don't expect China to cave, but I do think we can do some things assertively on currency, not exactly unilaterally. We work with them as we—as we move forward on—legally on currency. So I don't expect China to all of a sudden say, we're not—we're going to not engage in this behavior. But I think—and China also doesn't really believe that we would follow a policy of principled resolve.
And so as we—as we grow our policy into something like principled resolve, China will not really believe it at first. And over time, if we—if we are assertive and as principled as we like to say we are, then I could see—I could see China beginning to accept that.
CRANER: Ma'am in the red?
QUESTION: Thank you. Elisa Massimino with Human Rights First. First, I want to thank you, Senator, for your blunt words about how U.S. policy should reflect our values and universal values of human rights. So much we get asked in the human rights community by people in government, "Well, you know, this isn't working, that's not working, why should we annoy China when they're really not going to change?"
And one of the things we always respond is that it's important for the United States to think about its audience in China as not just the Chinese government, but the Chinese people. And when change comes to China, which it will, it's going to come because of the people of China who demand change. And so it's very refreshing to hear you talk that way.
I wanted to follow up on the question from the European and see whether you have thought about ways to engage our allies in Europe to be part of this solution, because that's been a real stumbling block for the United States, trying to act alone in implementing any of the kinds of policies that you've suggested.
BROWN: Yeah, thank you for that question, Elisa, and thanks for the work you do with human rights. You've—there are European countries. I believe Germany, most notably, which I believe still has a trade surplus with China—is that correct? Or close to it? And so they sit at a very different place, so I—I think our—when European delegations come in to see me on a variety of different issues, I from time to time engage them on this, so far without—I mean, there doesn't seem to be—for whatever reason, Europeans seem less engaged as legislators and as nations perhaps than we are on this. I think we're sort of struggling and looking for ways to engage them more.
With the beginning of your comments, you made me think of something else. I've sort of struggled internally, as we—in these commission hearings—criticize China on human rights. I've always sort of asked myself, what is the Chinese government's response when we pick out somebody by name, when the Uighur daughter came in from Indiana University or when we've brought in people who have family members in China that are Tibetan or that are Chinese nationals that have had run-ins with their government, with Falun Gong, or whatever. And I am reassured continually—and I keep asking this question—that that, in fact, helps them.
Because sometimes I think if we call out somebody who has been mistreated, are they going to treat them worse? And the answer pretty universally—the answer I get is, no, it makes them—it protects them in some ways, that the Chinese want to be in the world community enough that—that they're not going to go more overboard than they already have on this—this dissident or this religious activist or this person who's spoken out on labor rights.
CRANER: In the back on the right?
QUESTION: Thank you. Kristine Schenck. I work for the U.S. Navy. Thank you for coming to talk to us today about—a lot about U.S.-China economic relationship. I was wondering how you would assess our current policy towards China in regards to security issues, such as the South China Sea and East China Sea, maybe even Taiwan, and where do you see—where do you think the trajectory of U.S.-China mil-mil relations should be headed? Thank you.
BROWN: Thank you, Ms. Schenck. I am—I'll start with what happened last week, or earlier this week in Taiwan, where elections—while they were local and President Ma wasn't defeated or his term hasn't ended for another—I think until '16, that it was a pretty resounding, by any interpretation I've read, from people I know in Taiwan, to newspaper accounts, it was a pretty resounding—understanding, too, how we all interpret elections in our own ways. I don't always totally believe the analyses of our elections or theirs, either, but—that with DPP doing very well, even though the Taiwan mayor was an independent. He was supported by the DPP and clearly it was a vote against KMT, and it was—it was almost certainly a vote against closer engagement with China by the Taiwanese government, Taiwanese people. That's the interpretation today. I have no reason to disbelieve that interpretation or to question it, although we always should.
So I think that—and that had—probably the Hong Kong demonstrations had something to do with the election. It probably accelerated a bit, although the countries—you know, Hong Kong and Taiwan aren't that close together, but in somewhat similar situations, they have a reach. I think that—I know the Taiwanese are increasingly concerned that we don't—we wouldn't necessarily step forward if there were cross-strait military issues. So far, we've kind of been reassuring that way. I don't know—I don't know enough to know if the Taiwanese still totally believe that and the Chinese totally believe that.
I think it's important that we continue to insist that we will, because Taiwan—Taiwan is—there are few countries in the world that have done what they did. They were—you know, as late as 1979, they were martial law, and then over a period of a decade or so, they have been a very prosperous economy, and they've been a very successful—it was 1989, they were martial law, not '79—they've been a very successful economy and had a quite fairly rapid move towards democracy and done it in a—in a—I mean, it was sort of a miracle of Taiwan that way. And they're a country that I—you know, it's worth kind of examining how they've done that from presidential succession to presidential succession, even when it's been of a different party.
So I guess beyond that I don't know. I think that our—our naval presence is—continues to be important there. Our alliances with South Korea and Japan continue to be important. Our uneasy relationship with China makes it harder—because of military security issues—makes it harder to focus as much perhaps on economic issues as I would like our presidents of either party to do.
CRANER: I'm afraid that's all the time we have questions for. Senator, I know a lot of people in this room are going to be following you in the next couple months and years on this policy with a great interest. You've been very kind to be with us today...
BROWN: Thank you.
CRANER: ... and we greatly appreciate it. Thank you.