Ross touts tough China policy, one-on-one trade deals in Senate testimony

Wilbur Ross, the billionaire financier nominated by Donald Trump to be secretary of Commerce, said Wednesday that he would pursue more treaties with individual trading partner nations and vowed to crack down on trade agreement violators, singling out China repeatedly.

“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 said before the U.S. Senate's Commerce, Science and Transportation Committee, which will deliberate on his nomination.

Trump's tough talk on trade — including threats of high tariffs and renegotiating trade deals — has unnerved economists and exporting companies that fear retaliation. But Ross sought to sell the idea that more bilateral agreements, which are "easier and quicker to negotiate" than the ones involving multiple countries, can boost exports. Negotiating with a dozen countries for a trade agreement will result in multiple and unintended concessions, he said. "The more complex the environment in which you negotiate, the less likely you'll get sensible results," he said. "You take a lot of nicks."

China "is the most protectionist country among very large countries," Ross told the lawmakers in the committee. "They actually talk more about free trade than they practice. We’d like to level the playing field."

His hearing, which was scheduled for last week, had been delayed to give Ross more time to complete the ethics and financial disclosure forms that are required. Several other confirmation hearings are scheduled this week — including one for Steven Mnuchin, the nominee for Treasury secretary Thursday — before Trump is sworn in Friday.

If confirmed, Ross will head the key executive branch agency that enforces American trade policies, generates 40% of publicly available federal government data, manages patents, oversees the nation's wireless spectrum, operates the Census, and monitors the conditions of the oceans and the atmosphere. But his nomination primarily signals Trump's oft-stated plans to re-examine global trade and bring private sector experts to produce more jobs and favorable trade terms for U.S. companies. And Ross' role is expected to be expanded beyond the traditional parameters of Commerce secretary so he can work with other key trade officials.

"I’ve made my livelihood for over five decades dealing in international commerce,” Ross said. “I think I’ve probably had more direct experience than any prior Cabinet nominee has had with unfair trade in the steel business, in the textile business, in the auto parts business and other sectors.”

Ross, whose net worth is estimated by Forbes to be about $2.9 billion, made his fortune in private equity. Hailed as "the king of bankruptcy," he bought struggling companies and overhauled their operations, often leading to layoffs, before selling them at hefty profit margins.

Ross defended the work of his investment firm, WL Ross & Co., pointing to jobs saved in rescuing companies that may have otherwise been liquidated. On Tuesday, Reuters reported that the companies controlled by his firm eliminated about 2,700 jobs since 2004 in the textile, finance and auto-parts industries.

In his filing with the Office of Government Ethics posted Tuesday, Ross disclosed plans to sell about 80 assets in the coming months to avoid conflicts of interest. He will also step down from dozens of companies and organizations he’s involved in as investor and board member. Ross declined to say whether Trump should follow suit and divest holdings, saying the rules are different for presidents and that he didn't have the "exactitude" of Trump's financials to give an opinion.

Ross and Trump have known each other for decades. Ross lives in a Palm Beach estate with his third wife, not far from Trump’s Mar-a-Lago club. In 1990, Ross, then working as head of Rothschild Investment’s bankruptcy advisory practice, represented a group of bondholders who were looking to have Trump's Taj Mahal casino in Atlantic City declare bankruptcy after it missed a bond payment. Ross and Trump eventually worked out a bankruptcy transaction to keep the casino running.

Wilbur Ross: From 'king of bankruptcy' to face of American business

Ross then formed his own private equity firm in 2000 with $440 million in investor money. In the early 2000s, he acquired the factories of Pennsylvania’s Bethlehem Steel, Cleveland-based LTV and other manufacturers and consolidated them into a new company, International Steel Group. It was then sold to Mittal Steel for $4.5 billion in 2004.

In keeping with Trump's recent Twitter announcements and campaign rhetoric across the Rust Belt states, Ross echoed Trump's message about restoring jobs in the industries that have been affected by trade and automation. The North American Free Trade Agreement and other trade deals will be reviewed. And he's also in favor "automatic reopening" of trade agreements after a few years to gauge effectiveness and changes that need to be made. “We should not put up with malicious trading activities, state-owned enterprises, or subsidized production," he said.

China was mentioned frequently by lawmakers, and Ross was blunt in his assessment of the country as a difficult trading partner. He was particularly critical of China's non-tariff barriers, saying he had been exposed to them while running his companies. "In a lot of cases, it's not a fair fight," he said.

Citing product entry delays, shifting environmental standards, currency manipulation and unexpected inspections as some examples of non-tariff barriers, Ross said the U.S. needs to investigate potential violations. "They’re quite insidious," he said. "They’re also very effective. And we need to deal with them."

When asked if tepid economic growth – lower than 3% gross domestic product growth per year -- is “the new normal,” Ross replied that the U.S. economy can do better and “1.5% to 2% is not the new normal.”

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He then summarized the core components of Trump's nascent economic policies, including regulatory reform and export promotion. While penalties for trade rule-breakers will be considered, Ross said increasing exports was more crucial.

Some regulations need to be rolled back, he said. "I’m not anti-regulation. But the pendulum has swung further than it should," he said. "We should try to deal with things that inhibit business but are not all that important."

That the U.S. is still a net energy importer is a "drag on the economy," and the U.S. needs to be more self-sufficient, Ross said.

Ross was also questioned about a household worker who turned out to be undocumented during a review of his employees in preparation for his confirmation. "We did the best we thought we could do to verify the legality of employment. It turned out it was incorrect," he said. The employee has been terminated.