By Yuka Hayashi 

WASHINGTON -- President Biden's pick for U.S. Trade Representative said she would accelerate negotiations with the European Union to resolve a longstanding dispute over commercial-aircraft subsidies, citing the fight's negative impact across several industries.

Speaking at her confirmation hearing Thursday before the Senate Finance Committee, Katherine Tai, a veteran government trade lawyer, said the 16-year-old dispute over how governments subsidize Boeing Co. and Airbus SE has led to counter-tariffs -- sanctioned by the World Trade Organization -- on food and beverage products, causing "disruption" and "pain."

"At the core of this...is the need for the U.S. and the EU to come together to figure out an answer," Ms. Tai said. "I would very much be interested in figuring out how to land this particular plane because it has been going on for a very long time."

Restaurant and beverage industries have been pushing for a solution to the aircraft dispute, which has heaped pressure on businesses already struggling with the Covid-19 pandemic. The Trump administration imposed tariffs on $7.5 billion worth of European wine and food items such as cheese and olives in late 2019. The EU hit back with levies on U.S. whiskey, nuts and tobacco.

The EU's trade commissioner, Vladis Dombrovskis, called for a mutual suspension of tariffs in the aircraft dispute this month.

Ms. Tai is expected to receive Senate confirmation as she enjoys support from lawmakers from both parties, as well as from business groups and labor unions.

Ms. Tai has spent much of her career in the government, first as a lawyer for the Office of the U.S. Trade Representative, then as a congressional staff member. If confirmed, she would be the first Asian-American and the first woman of color to serve in the position.

Asked if she would consider lifting steel and aluminum tariffs imposed by former President Donald Trump on America's allies, Ms. Tai suggested a simple and immediate elimination of the duties is unlikely, saying they should be dealt with as part of a broad policy to address global oversupply of the metals.

Mr. Trump in 2018 imposed tariffs on about $50 billion of imported steel and aluminum, calling the global oversupply of metals a "threat to national security." The duties hit allies such as the EU and Japan, not just China.

"We have to acknowledge that we have overall a very significant global marketplace problem in the steel and aluminum that is driven primarily by China's overcapacity," Ms. Tai told lawmakers. "What we are going to need...is an effective solution that looks at a whole slew of policy tools to address the problem."

Ms. Tai said tariffs are a "legitimate tool in the trade toolbox."

Biden administration officials have said they would review all tariffs and other trade policies introduced by Mr. Trump. Trade experts say that rather than eliminating tariffs already in place, the administration is likely to use them as leverage to win concessions from trading partners.

On China, Ms. Tai said the U.S. needs to work closely with allies while strengthening domestic industries and supply chains. She suggested a top-to-bottom review of the agency's China policy, the first since the early 2000s.

"I know firsthand how critically important it is that we have a strategic and coherent plan for holding China accountable to its promises and effectively competing with its model of state directed economics," she said.

During her previous stint at USTR from 2007 to 2014, Ms. Tai served as its chief enforcer against China. Her parents were born in mainland China, grew up in Taiwan and moved to the U.S. for graduate studies before she was born. A Mandarin speaker, Ms. Tai spent two years in China teaching English after college.

Asked whether the U.S. should join the Trans-Pacific Partnership, an Asia-Pacific trade agreement negotiated under the Obama administration and shunned during the Trump era, Ms. Tai didn't provide a direct answer. She said working with U.S. partners to counter China remains a "sound formula," but added that the U.S. has recently become more aware of some of the pitfalls of traditional trade agreements.

"In the longer term, we must pursue trade policies that advance the interests of all Americans -- policies that recognize that people are workers and wage earners, not just consumers," she said.

Ms. Tai said she would make it a priority to implement a renegotiated trade agreement with Canada and Mexico, including new tools to enforce labor and environmental standards. The United States-Mexico-Canada Agreement, or USMCA, went into effect in July last year, replacing the North American Free Trade Agreement.

"Too often in the past, Congress and the administration came together to finalize and pass a trade agreement," she said. "But then other urgent matters arose and we all moved on."

Write to Yuka Hayashi at yuka.hayashi@wsj.com

 

(END) Dow Jones Newswires

February 25, 2021 16:30 ET (21:30 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.