China is ‘most protectionist’ nation, says US commerce nominee Wilbur Ross
Billionaire Wilbur Ross, nominated by US president-elect Donald Trump to serve as commerce secretary, has branded China the “most protectionist” major economy, as he warned America’s partners to practise “fair trade”.
“The United States should provide [trading] access to nations who agree to play by our standards of fair trade,” Ross said in testimony on Wednesday in Washington before the Senate Commerce Committee, which will vote on his nomination. “We should not put up with malicious trading activities, state-owned enterprises or subsidised production.”
Trump, who will be inaugurated Friday, has promised to take a tougher approach toward China and to renegotiate the 23-year-old North American Free Trade Agreement, which he has called a “disaster.”
Ross vowed to level the playing field for US companies competing with Chinese imports and those trying to do business in China. Chinese officials, he said, “talk much more about free trade than they actually practise. We would like to levelise [sic] that playing field and bring the realities a bit closer to the rhetoric.”
Ross said that state-owned enterprises in China were a particular problem that needed to be dealt with, charging that up to one-third have never made a profit and this has fueled overcapacity that has led to dumping of products such as steel and aluminium.
“They’re being kept alive by state-owned banks. To me that looks and feels and tastes a lot like artificial subsidies,” he said, adding that the Commerce Department will be “very scrupulous” in identifying unfair subsidies that require countervailing duties.
Ross did not specifically mention Trump’s threats to levy punitive tariffs on Chinese goods imported into the United States but said countries that dump products below costs or fail to provide a fair trading field should be “severely punished.”
He said he would pay particular attention to sectors in need of anti-dumping tariffs, including steel and aluminum. The Commerce Department may initiate some anti-dumping and anti-subsidy cases on its own, rather than relying on private companies to build the cases, to shorten the processing time, he said.
Ross also was critical of moves by Chinese firms to buy control of US entertainment and distributors when Beijing was denying such opportunities to US firms in China.
Ross, 79, would be one of the most seasoned business leaders on Trump’s economic team. As a private-equity investor, he restructured companies across a range of industries including steel, banking and textiles. Bloomberg values his fortune at US$2.9 billion, and in financial disclosures released Tuesday, he revealed assets topping US$336 million, including at least US$150 million held in bank accounts and an art collection worth more than US$50 million.
Senator Marco Rubio, a Florida Republican who introduced Ross at the hearing, said Ross has valuable business experience and created jobs in many sectors of the economy. As a cabinet member, he’ll be able to connect policy debates to what’s happening in the real world, Rubio said.
In Wednesday’s prepared statement, Ross said the companies he’s invested in operated in 23 countries, and he’s been in complicated situations involving the U.S. manufacturing sector. He said he’s probably had more direct experience than any cabinet nominee with unfair trade practices such as non-tariff barriers and state subsidies of foreign exports.
“I am not anti-trade,” he said. “I am pro-trade. But I am pro-sensible trade, not trade that is detrimental to the American worker and to the domestic manufacturing base.”
Ross’s vast business holdings may open him to the same line of attack Mitt Romney faced when he ran for president in 2012 -- that he was a corporate raider who flipped companies for profit while laying off American workers. The Center for American Progress, a left-leaning think tank, says Ross’s corporate holdings represent a conflict of interest.
In an ethics agreement released Tuesday, Ross said he’ll resign his positions with 38 entities. Those include Invesco Ltd., which bought Ross’s private-equity firm in 2006, as well as seven named subsidiaries. He will also divest his stakes in publicly traded companies and some bond positions within 90 days of confirmation and his interests in WL Ross private equity funds, which are less liquid, within 180 days of his being confirmed.
Ross has set an example in avoiding business conflicts that Trump should imitate, Bill Nelson, ranking Democrat on the Senate Commerce Committee, said at the opening of Ross’s hearing. He is positioned to elevate the status of the Commerce Department and help lead Trump’s trade agenda, he said.
“In recent years the Commerce secretary post has not been one of the most sought after or appreciated positions in Washington. But I have a feeling that’s about to change in a big way,“ Nelson said.
Additional reporting by CNBC