[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
                        U.S. TRADE POLICY AGENDA

=======================================================================




                                HEARING

                               before the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 22, 2017

                               __________

                          Serial No. 115-FC05

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
         
         
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]      





                 U.S. GOVERNMENT PUBLISHING OFFICE
                 
33-478                 WASHINGTON : 2019               
 
 
 
 


                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
DEVIN NUNES, California              SANDER M. LEVIN, Michigan
PATRICK J. TIBERI, Ohio              JOHN LEWIS, Georgia
DAVID G. REICHERT, Washington        LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois            MIKE THOMPSON, California
VERN BUCHANAN, Florida               JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska               EARL BLUMENAUER, Oregon
LYNN JENKINS, Kansas                 RON KIND, Wisconsin
ERIK PAULSEN, Minnesota              BILL PASCRELL, JR., New Jersey
KENNY MARCHANT, Texas                JOSEPH CROWLEY, New York
DIANE BLACK, Tennessee               DANNY DAVIS, Illinois
TOM REED, New York                   LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania             BRIAN HIGGINS, New York
JIM RENACCI, Ohio                    TERRI SEWELL, Alabama
PAT MEEHAN, Pennsylvania             SUZAN DELBENE, Washington
KRISTI NOEM, South Dakota            JUDY CHU, California
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
TOM RICE, South Carolina
DAVID SCHWEIKERT, Arizona
JACKIE WALORSKI, Indiana
CARLOS CURBELO, Florida
MIKE BISHOP, Michigan

                     David Stewart, Staff Director

                 Brandon Casey, Minority Chief Counsel


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of June 22, 2017, announcing the hearing................     2

                                WITNESS

Honorable Robert E. Lighthizer, Ambassador, United States Trade 
  Representative.................................................     6

                        QUESTIONS FOR THE RECORD

Questions from Trade Subcommittee Chairman Reichert to Ambassador 
  Lighthizer.....................................................    61
Questions from Ranking Member Neal to Ambassador Lighthizer......    64
Questions from Trade Subcommittee Ranking Member Pascrell to 
  Ambassador Lighthizer..........................................    72
Questions from Representative Johnson to Ambassador Lighthizer...    77
Questions from Representative Lewis to Ambassador Lighthizer.....    78
Questions from Representative Nunes to Ambassador Lighthizer.....    84
Questions from Representative Larson to Ambassador Lighthizer....    86
Questions from Representative Jenkins to Ambassador Lighthizer...    88
Questions from Representative Crowley to Ambassador Lighthizer...    90
Questions from Representative Marchant to Ambassador Lighthizer..    92
Questions from Representative Higgins to Ambassador Lighthizer...    93
Questions from Representative Reed to Ambassador Lighthizer......    95
Questions from Representative DelBene to Ambassador Lighthizer...    96
Questions from Representative Holding to Ambassador Lighthizer...    97
Questions from Representative Chu to Ambassador Lighthizer.......    99
Questions from Representative J. Smith to Ambassador Lighthizer..   102
Questions from Representative Schweikert to Ambassador Lighthizer   104
Questions from Representative Rice to Ambassador Lighthizer......   105
Questions from Representative Walorski to Ambassador Lighthizer..   107
Questions from Representative Bishop to Ambassador Lighthizer....   109

                       SUBMISSIONS FOR THE RECORD

Advanced Medical Technology Association (AdvaMed)................   110
American Farm Bureau Federation..................................   121
Borderplex Alliance..............................................   126
Center for Fiscal Equity.........................................   136
Flexible Packaging Association (FPA).............................   139
Fresh Produce Association of the Americas (FPAA).................   143
National Pork Producers Council (NPPC)...........................   146
TechNet..........................................................   156




                        U.S. TRADE POLICY AGENDA

                              ----------                              


                        THURSDAY, JUNE 22, 2017

                     U.S. House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.

    The Committee met, pursuant to call, at 10:05 a.m., in Room 
1100, Longworth House Office Building, Hon. Kevin Brady 
[Chairman of the Committee] presiding.
    [The advisory announcing the hearing follows:]
    
    
    
    
    

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                                                CONTACT: (202) 225-3625
FOR IMMEDIATE RELEASE
Thursday, June 22, 2017
FC-05

                  Chairman Brady Announces Hearing on

                        U.S. Trade Policy Agenda

    House Ways and Means Chairman Kevin Brady (R-TX), announced today 
that the Committee will hold a hearing on the U.S. trade policy agenda 
with U.S. Trade Representative Robert Lighthizer. The hearing will take 
place on Thursday, June 22, 2017, in room 1100 of the Longworth House 
Office Building, beginning at 10:00 a.m.

      
    In view of the limited time to hear the witness, oral testimony at 
this hearing will be from the invited witness only. However, any 
individual or organization may submit a written statement for 
consideration by the Committee and for inclusion in the printed record 
of the hearing.

      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
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written comments for the hearing record must follow the appropriate 
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as a Word document, in compliance with the formatting requirements 
listed below, by the close of business on Thursday, July 6, 2017. For 
questions, or if you encounter technical problems, please call (202) 
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call 202-225-1721 or 202-226-3411 TDD/TTY in advance of the event (four 
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    Note: All Committee advisories and news releases are available at
    http://www.waysandmeans.house.gov/

                                 

    Chairman BRADY. The Committee will come to order.
    Good morning. Today, our Committee is honored to welcome 
United States Trade Representative Robert Lighthizer to testify 
on President Trump's trade policy agenda.
    Ambassador Lighthizer, thank you for joining us. We look 
forward to your testimony.
    Mr. Ambassador is a former Deputy U.S. Trade Representative 
under President Reagan, and as an experienced trade negotiator, 
you understand that U.S. leadership and participation in a 
rules-based trading system is essential to our Nation's 
prosperity. America has led the world in global commerce for 
the better part of the last 100 years. Through our network of 
strong and forceful trade agreements, we have expanded economic 
freedom so that our businesses, our workers, and our consumers 
can thrive.
    Through strict enforcement of the rules we created and our 
leadership in the World Trade Organization, we have held our 
competitors accountable. And through our steadfast commitment 
to the principles of free enterprise, open markets, and rules-
based international commerce, our Nation has set itself apart. 
The world looks to us, not China, to lead in setting the 
standards of global commerce. When we set an example, the world 
follows.
    Today, American leadership on trade is more important than 
ever, especially in the Asia-Pacific region where China's 
influence is growing every day. It is urgent that we take 
charge on trade in the Asia Pacific so that we don't lose 
ground to China. After all, to preserve and strengthen 
America's leadership in global commerce, it is not enough to 
simply buy American products and services; we also have to sell 
American. And we need strong trade agreements that allow us to 
do so in Asia and in fast growth markets throughout the world.
    Our trade agreements, including NAFTA, have been 
tremendously successful. They have created American jobs, 
lowered prices for consumers, and helped our businesses compete 
and win in all three crucial segments of our economy: 
agriculture, services, and, yes, manufacturing.
    That said, we have to take action to strengthen our 
existing agreements to ensure they continue to benefit the 
American people. I am pleased that President Trump is taking 
this approach with NAFTA. NAFTA was negotiated nearly 25 years 
ago. It should be updated to reflect the modern realities of 
trade on digital commerce, intellectual property, state-owned 
enterprises, and customs barriers, among others, following the 
negotiating objectives Congress set forth in TPA.
    And as you have committed to us during earlier 
consultations, Mr. Ambassador, this modernization must be 
accomplished in a manner that retains current benefits in a 
seamless way that doesn't disrupt the current agreement, 
ongoing trade, or the millions of American jobs at stake.
    With the Administration's commitment to our strong balanced 
negotiating objectives and deliberate timetable established by 
TPA, I am confident we can work together to deliver a high-
quality deal for the American people, one that can serve as a 
model as you move forward with other bilateral agreements.
    Given that the Administration does not support a 
multilateral approach, we must move quickly together on an 
ambitious network of deals that break down barriers and allow 
us to sell American all over the world. I am particularly 
interested in T-TIP once the European Union can conclude an 
ambitious and comprehensive deal. Also, I am interested in 
trade agreements with Japan and the United Kingdom, when it can 
come to the table, as well as the Trade in Services Agreement 
and the Environmental Goods Agreement. And we plan to renew GSP 
and move quickly on our miscellaneous tariff bill to help U.S. 
exporters.
    I am encouraged to see the President's dedication to strict 
enforcement of trade rules. The President has already taken 
important steps by putting in action many new enforcement tools 
passed by Congress last year. If countries fail to uphold their 
trade obligations, these powerful tools and our participation 
in the WTO allow us to challenge them and, if necessary, push 
back strongly on behalf of our businesses and our workers.
    And when it comes to America's trade deficit, we welcome 
the President's efforts to examine the issue. There are, as you 
know, many factors behind our trade deficit. Some may be 
related to trade, but many are not. For example, the dollar 
status as the world's reserve currency is a significant factor. 
Examining the trade balance as black or white conceals what is 
really going on. Many exports from, say, Mexico reflect 
tremendous U.S. value added through research, development, 
design, intellectual property, services support, and 
manufacturing. To the extent the trade deficit is caused by 
unfair trading practices, we must rip down those barriers. And 
through our powerful enforcement tools, we can. Another 
solution is to push for strong trade agreements that open up 
new markets worldwide for American products and services.
    Through trade agreements that are strictly enforced, we 
have reduced and even eliminated trade deficits in 
manufacturing, agriculture, and services. In many cases, we 
have even turned deficits into surpluses. While our first 
instinct may be to restrict imports, history shows that the 
most successful approach is not protectionism; it is breaking 
open new markets to American made goods and services. We have 
some of the best businesses, workers, and products in the 
world. If we can reach these customers on a level playing 
field, America will usually come out on top.
    That is the recommendation I offer as the Administration 
considers whether to restrict steel and aluminum imports. I 
agree: We must address market distortions created by China. 
Section 232 authority must be used with careful consideration 
of consequences to our economy and trade rules that we wrote 
and fully expect our trading partners to abide by. Done 
improperly, we cut off supply that our companies need to stay 
competitive. Done hastily, we raise costs and prove to our 
partners that we aren't reliable. Done indiscriminately, we 
harm countries that trade fairly and send a protectionist 
signal to those looking for an excuse to do the same. It will 
encourage others to restrict our exports even in unrelated 
sectors, which only hurts the growth of jobs and paychecks here 
at home.
    I want to work with the Administration to identify a remedy 
that is balanced, effective, and protects our national security 
and economic interests.
    America must continue to set the standards of global 
commerce. With 96 percent of the world's customers located 
outside of the United States, we cannot afford to sit on the 
sidelines, or worse, lead the world into abandoning the very 
rules that have served us so well.
    Ambassador Lighthizer, we are eager to work with you and 
President Trump on a pro-growth trade agenda that creates jobs, 
grows paychecks, and improves the lives of all Americans.
    Thank you again, Mr. Ambassador, for being here. We look 
forward to your testimony. And I now yield to the distinguished 
Ranking Member, Mr. Neal, for the purposes of an opening 
statement.
    Mr. NEAL. Thank you, Mr. Chairman.
    Ambassador Lighthizer, I want to welcome you on behalf of 
the committed Democrats. Today's hearing is an opportunity for 
us to hear from you about the Administration's vision for U.S. 
trade. The Administration has certainly been busy on trade. The 
headlines these past few months have been filled with stories 
about modernizing NAFTA, withdrawing from NAFTA, Executive 
orders, Executive memos, Section 232 national security reviews 
on steel and aluminum imports, Canadian dairy, Mexican sugar, 
U.S. China, a 100-day plan and certainly the issue of currency 
manipulation.
    What we have been missing in this overall vision, as well 
as the specifics behind all of it, is activity. What are the 
Administration's trade policy goals? What priorities are you 
trying to serve? How are you going to do it? And I hope this 
morning you can provide us with some answers.
    On a range of issues, there has been a lack of clarity, 
consistency, and consultation. For example, by statute, the 
Administration was required to submit a report on trade policy 
and its agenda by March 1st. On that date, the Administration 
instead submitted a statement and promised to submit a full 
report after USTR was confirmed and had the full opportunity to 
participate in developing the report. The report has still not 
been submitted to this Congress. So I hope you will clarify the 
Administration's position on a full range of trade issues 
today, from specific objectives of a NAFTA rewrite to the 
Administration's position on negotiating T-TIP and an 
Environmental Goods Agreement to how the Administration will 
address currency manipulation to the Administration's current 
thinking in steel and aluminum national security investigations 
as well.
    As you know, House Democrats have the most open mind when 
it comes to revisiting and taking new directions in U.S. trade 
policy. We look forward to working with you to prioritize the 
needs of American workers and their families through trade 
policy, and we await your testimony.
    Thank you, Mr. Ambassador.
    Chairman BRADY. Thank you.
    And, without objection, other Members' opening statements 
will be made a part of the record.
    Today's sole witness is Ambassador Robert E. Lighthizer, 
United States Trade Representative.
    The Committee has received your written statement. It will 
be made part of the formal hearing record. You have 5 minutes 
to deliver your oral remarks. Ambassador Lighthizer, again, 
welcome, and you may begin when you are ready.
    Ambassador LIGHTHIZER. Thank you, Mr. Chairman, Chairman 
Brady.
    Chairman BRADY. Ambassador, can you check that microphone 
just to make sure we have it on? There you go.
    Ambassador LIGHTHIZER. Is it better now?
    Chairman BRADY. Yes, sir.

STATEMENT OF HONORABLE ROBERT E. LIGHTHIZER, AMBASSADOR, UNITED 
                  STATES TRADE REPRESENTATIVE

    Ambassador LIGHTHIZER. All right. Chairman Brady, Ranking 
Member Neal, Members of the Ways and Means Committee, it is an 
honor to appear before you today. In recent weeks, it has been 
a pleasure getting to know the Chairman, the Ranking Member, 
and several Members of the Committee. I look forward to 
developing these relationships and to working with each of you. 
The USTR has a special relationship with this Committee, and I 
intend to continue that tradition.
    I met some of you for the first time on May 16th when I 
appeared before the House Advisory Group on Negotiations and 
the Ways and Means Committee bipartisan meeting. Those 
consultations are critical to helping the Administration 
establish its negotiating objectives for NAFTA, and more 
generally, they are helpful for developing trade priorities 
going forward.
    To implement this agenda the President has requested 
increased funding for USTR in the coming fiscal year. Our 
budget calls for $57.6 million, an increase of nearly 6 percent 
over the 2016 level.
    These additional resources will be used to implement the 
Interagency Center on Trade Implementation, Monitoring and 
Enforcement, and will allow USTR to hire eight additional staff 
to support our trade enforcement activities.
    The President's budget request is consistent with his 
desire to control Federal spending, as well as his insistence 
on a strong and aggressive trade policy.
    Since being sworn in last month, I have been working with 
our team to advance the President's trade policy. We have been 
active on the international front with trips to the APEC 
ministers meeting in Hanoi, a meeting of the OECD in Paris, and 
a WTO mini ministerial. At all of these meetings, as well as 
the numerous bilateral meetings here in Washington, I have 
conferred with my counterparts from almost every major world 
economy.
    In many cases, they have indicated a willingness to work 
with the United States on efforts to reform the global trading 
system in ways that will lead to market outcomes that are both 
fairer and more efficient. We have also reached out to Members 
of this Committee, other Administration officials, and key 
stakeholders in an effort to determine what improvements are 
needed in the international trading system.
    We are already making progress in four vital areas. One, 
the President's plan to renegotiate NAFTA. Two, advancing a 
strong enforcement agenda. Three, opening markets for U.S. 
exports. And, four, lowering the Nation's trade deficit.
    Let me briefly discuss each of these topics.
    First, on May 18th, I notified Congress that the President 
will conduct negotiations with Canada and Mexico in an effort 
to renegotiate and modernize NAFTA.
    As you know, the congressional notification is followed by 
a 90-day period of consultations with the public and Congress. 
This means that the NAFTA negotiating rounds can begin as soon 
as August 16, and we intend to move very quickly.
    In the meantime, USTR is talking to Members, stakeholders, 
your staffs, and the public to help us develop policy outcomes 
for the negotiations. We have put out a request for comments 
and received more than 12,000 responses. We have scheduled 
hearings for June 27, 28, and 29.
    During the 90-day period, we will continue working closely 
with Congress to develop and refine our negotiating objectives. 
In the interest of a transparent process and as required by 
TPA, we will be publishing a detailed summary of negotiating 
objectives on July 17.
    Second, we have an aggressive enforcement agenda. We are 
both defending our rights and holding other countries 
accountable for their trade violations. For too long, the 
United States, one of the freest and most open markets in the 
world, has been the chief target of litigation at the WTO. This 
makes no sense. At the same time, we are proceeding with 
several WTO cases, and this is only the beginning. We will 
aggressively pursue countries that violate trade deals with the 
United States. We have a number of potential cases under review 
as I speak.
    Third, we intend to improve market access for U.S. 
producers. Let me be very clear on this point. We at USTR want 
to help every American business that makes a product or 
provides a service increase exports to the world. Sometimes 
this requires an enforcement action. Other times negotiations 
are sufficient. The Administration is currently engaged with 
conversations with all of our major trading partners about how 
to lower barriers that harm U.S. companies, workers, farmers, 
and ranchers.
    Finally, we hope that these and other efforts by the Trump 
Administration will help to lower the Nation's chronic trade 
deficit. I understand that many observers believe that we 
should not concern ourselves with the trade deficit, that this 
figure is merely a number that reflects macroeconomic factors 
not related to trade policy. But the President's view, and 
mine, is that the trade deficits in the hundreds of billions of 
dollars that persist for years and years and years, regardless 
of changes in the broader economy, are indicative of structural 
problems in global trade.
    [The prepared statement of Ambassador Lighthizer follows:]
    
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    Chairman BRADY. Thank you, Mr. Ambassador.
    That 5 minutes always goes fast. Thanks for your testimony.
    We will now proceed to the question-and-answer session. Let 
me lead off. I want to ask two very basic questions about 
freedom and leadership.
    My view is that free trade is economic freedom. It is a 
freedom to buy and sell and compete around the world with as 
little government interference as possible. It is a freedom 
that, if you and I build a better product, we should have the 
freedom to sell it throughout the world, and if someone else 
builds a better product, we should have the freedom to buy it 
for our family and for our business. It is really one of the 
greatest economic rights of every American. So, given the 
choice between more economic freedom and less, we should always 
choose more. So the question is, will the Trump Administration 
work to expand American's economic freedom to trade or 
ultimately restrict it?
    Ambassador LIGHTHIZER. The Trump Administration wants to 
expand economic freedom, wants to expand trade, believes that 
we can reduce our trade deficits through sales. That certainly 
is our objective. Philosophically, I would say that the 
President believes in free trade. He doesn't think that it 
exists right now, and the question becomes, what do you do to 
get there? So there are a variety of approaches. I think his 
approach is to aggressively go after people that are engaging 
in unfair trade and hope that leads to market efficiency, more 
economic freedom, and globally more wealth.
    Chairman BRADY. Thank you, Ambassador.
    That really steps into leadership. I think the view of many 
of us is, if America doesn't lead in free and fair trade, we 
will grow weaker and our foreign competitors will grow 
stronger. Our factories and farmers, our technology companies, 
local businesses will be priced out and shut down around the 
world. My State of Texas is made for trade. America is made for 
trade. And that is nowhere more important than in the Asia-
Pacific region. It is imperative we continue to communicate to 
our trading partners and the rest of the world we are not 
abandoning the Asia-Pacific region, even though we are no 
longer part of TPP. This is one of the reasons that I, along 
with Ranking Member Neal, Chairman Reichert, and our Senate 
colleagues introduced a resolution last month expressing our 
strong support for continued U.S. leadership engagement with 
other APEC countries.
    So, in the area of leadership, especially in that region, 
at the end of the day, do you see America's trade values and 
standards prevailing in that region, or do you see China's 
trade values and standards prevailing in that region?
    Ambassador LIGHTHIZER. I certainly believe that America's 
trade values will prevail. I would say, this issue of 
engagement, I was on the job 4 days when the President sent me 
off to Hanoi to go to the APEC meeting. I remember walking 
around bleary-eyed trying to read briefing papers so that I 
could tell one country from another. But he did that because he 
wanted to make the point that you are making, that we have to 
be engaged. These people have to know that we are coming, that 
we are going to do business, that we are going to sell American 
products, that we are going to do bilateral agreements, that 
pulling out of TPP was by no means pulling out of the Asia 
Pacific. In fact, to the contrary, the President's view is that 
we can get better deals on a bilateral basis and engage.
    In terms of, overall, whose model works, ours or China's? I 
mean, that is a very big, very serious question. My belief is 
that ours is the best and it will prevail. And I believe that a 
lot of the people in that part of the world are concerned about 
this question, but the question that I ask is, how do we prove 
that? We have to take on China when they do things that are 
inconsistent with our values, with the way we think the economy 
should develop and work.
    If you look at it objectively, you would say, for example, 
in an area like steel, they have now a huge steel industry. 
None of it is based on economics. And somebody in a country in 
Asia looking at that might think their system is succeeding and 
ours is failing. They have at least 1.1 billion tons of steel, 
a billion tons of steel capacity, and we can't produce 100 
million tons.
    So what we look at, A, I think we are going to prevail; B, 
I think we have to prevail not just for our own good but for 
the good of the world. The question that I always had and that 
I believe the President has is, what do we do to assure that? 
And that to me is taking on China whenever they do something 
that is inconsistent with not only our model but their 
obligations. I apologize for that being too long.
    Chairman BRADY. No, Ambassador, thanks for your thoughtful 
answers.
    And, Mr. Neal, you are recognized.
    Mr. NEAL. Thank you, Mr. Chairman.
    Mr. Ambassador, I am very interested in T-TIP negotiations, 
which we discussed in my office when you paid a visit. And as 
we look at the negotiations between the United States and EU, I 
am hoping that you can give us an update on the plan. There are 
500 million consumers in Europe. They have a very similar 
lifestyle to us, and one of the things that I also found very 
interesting was I actually suggested to President Obama early 
on that we juxtapose the two trade agreements, Europe and Asia, 
that we would have considered Europe first because I think it 
would have been much easier to accomplish, and given the fact 
that there were many prospects of actually doing that and now 
to find that the Administration, I think, needs to update us on 
what their plans are for T-TIP, I do think it has an awful lot 
of potential for America's East Coast if done correctly.
    And the second question--and you perhaps can just answer 
both--we all read this week about Ford Motor Company deciding 
to build small cars not in Mexico but in China and importing 
those cars to the United States. That seems to be inconsistent 
with the President's promise to keep jobs here in America. And 
with Ford's decision, it also seems to indicate that now China, 
despite the President's comments during the course of the 
campaign, is hastening a relationship with automobiles in China 
and what we are trying to, I think, discover perhaps with your 
comments today, does this suggest that for some reason we are 
focusing more on China than we are on NAFTA?
    Ambassador LIGHTHIZER. Mr. Neal, first of all, on T-TIP, we 
certainly agree that is an important negotiation. For a variety 
of reasons, it stalled when it did, and this was not a very 
good year to get it started because of internal European 
reasons. They had a series of elections which made it difficult 
to make compromises and to really make an agreement. I guess 
the final one of those elections is September, and it is in 
Germany. And then, after that, I think we will talk to them. I 
have certainly met with the Trade Commissioner, Ms. Malmstrom, 
and I have talked to her about bilateral issues and cooperating 
issues, and I am not here to make any announcement about it, 
but it is something that we certainly realize the importance 
of.
    On the issue of Ford moving a plant, which I saw in the 
paper also, from Mexico to China, I agree with you. I think 
that is troubling. We don't have an Administration position 
that I have sat in on and talked about at this point, but as 
the USTR, I find that very troubling. I want to look and see 
what the incentives there are. It doesn't necessarily make 
sense to me. Obviously, it makes sense to Ford, or they 
wouldn't be doing it. But I think it is incumbent upon us to 
sit back and look at all the incentives and just figure out 
exactly why that happened. And if it happened for reasons that 
are noneconomic reasons, then I think the Administration should 
take action.
    In terms of the President's relationship to the Ford move, 
I guess I am reminded of a quote in the back of ``Profiles in 
Courage'' where--when he is sort of taking little quips, and he 
says that a Congressman once wrote in the thirties that one of 
the problems with being elected to Congress was that--this is 
in response to a constituent letter--he said: is that I get 
letters from people like you who say that I ran for Congress 
based on reforesting the Sierra Nevada Mountains; I have been 
in office 6 weeks, and I haven't gotten it done. I am sorry; 
can't help--or something like that.
    So I guess that is a long way of saying--I think it is 
probably early to say that the President's policies are 
responsible for Ford doing whatever it is that it is doing, but 
I think it is something we have to look at. We have to look at 
incentives, and it was as troubling to me as it was to you.
    Mr. NEAL. I thank you, and, Mr. Ambassador, I hope that you 
might inform the Committee of the Administration's position as 
promptly as you can on that issue.
    Ambassador LIGHTHIZER. I am sorry?
    Mr. NEAL. I hope that you can inform the Committee promptly 
on your position and the Administration's position on that 
issue of those cars being manufactured in China.
    Ambassador LIGHTHIZER. I will undertake that, and I 
appreciate that question. And I will use that as a mandate to 
develop a position and report it to you.
    Mr. NEAL. Thank you, Mr. Ambassador.
    Thank you, Mr. Chairman.
    Chairman BRADY. Thank you, Mr. Neal.
    Mr. Nunes, you are recognized.
    Mr. NUNES. Thank you, Mr. Chairman.
    Ambassador, I have three topics I want to cover with you 
and try to get through all three of them quickly here. The 
first is NAFTA. I think we are all for looking at ways to 
improve NAFTA. However, as you know, with all negotiated trade, 
whatever action becomes a reaction, and so there could be a 
reaction from our allies and our partners, trading partners. 
With agriculture specifically, as you know the United States 
produces more food than we can consume, and I am worried about 
any type of retribution that either Mexico or Canada could 
take. Canada could take on our U.S. farmers. And so I know you 
are aware of this, but I wanted to just get your thoughts on 
ensuring that we protect agriculture in these upcoming 
negotiations on NAFTA.
    Ambassador LIGHTHIZER. Congressman, that is very important. 
I have testified on this before. We realize there have been 
winners, and there have been losers in the NAFTA process as it 
has developed over these 23 years, 25 years since the 
negotiations themselves began. Agriculture has been a winner. I 
would say, even with that, I would drop a footnote down and say 
that, although we do have a $4.7 billion deficit even in 
agriculture, it is not for the kind of products that you are 
thinking about, and it is very important that we do no harm.
    So our very high priority will be making sure that we do 
not disrupt our sales in agricultural products to either Canada 
or Mexico, but presumably you are mostly thinking about Mexico. 
And that is a problem. It is a legitimate worry. It is 
something we are worried about and very concerned about.
    Mr. NUNES. There is no question that Canada could do a lot 
more to open up their trading practices for our agricultural 
products.
    If I could, I would like to move to India. I know I think 
you and I share and the Administration share the goal of 
enhancing our partnership with India, the world's largest 
democracy. They made a lot of growth over the years, but they 
have continued to have trading practices that make it hard for 
us to actually get to the table with each other. And one of 
those issues I want to make sure that maybe I can just bring to 
your attention in case you are not aware of it and maybe you 
can come back to us just for the record, but specifically with 
almonds and other types of walnuts and pistachios, there 
continues to be problems with moving those products to India, 
and I am not going to ask you to be an expert on specific 
products, but if you could come back to us with a report on 
India's different potential problems that they are creating 
with these trade practices, I would appreciate it.
    Ambassador LIGHTHIZER. I will certainly do that. And with 
the Prime Minister coming to Washington, this is an opportune 
time to do that. I have raised the almond issue with the 
Indians----
    Mr. NUNES. Great.
    Ambassador LIGHTHIZER [continuing]. So it is clearly 
something that we are concerned about, and part of my response 
always is, look, with the size of the trade surplus you have 
with the United States, you ought to be looking for things to 
buy to get that trade deficit down, and that is one of the ways 
we are trying to help America export.
    Mr. NUNES. Well, thank you, Ambassador. I appreciate that 
comment.
    Finally, I want to just explore a little bit, there has 
been a lot of debate about whether or not our tax system needs 
to have a border adjustment. As you know, 150 countries around 
the world border adjust. And I just find it hard to believe in 
the long run how we are going to be competitive if everything 
that we export to most of our trading partners has anywhere 
from a 15 to 25 percent VAT put on top of those products, and 
then, of course, anything that we import doesn't pay the VAT in 
their country.
    And I am not asking you to wade into whether or not you 
support or oppose border adjustment, but I would be interested 
in your thoughts as to how we can fix these discrepancies with 
these countries that border adjust.
    Ambassador LIGHTHIZER. Well, thank you, Congressman. I have 
from time to time written op-eds and the like on this subject. 
It is troubling to me. First of all, I am not the Treasury 
Secretary mercifully. So I don't have to worry about 
negotiating a tax deal, and I don't envy any Member of the 
Committee who has that ahead of them as we go forward. But I do 
agree that value-added tax creates an unfair advantage, and 
there has been a clear migration throughout the world from 
income taxes to value-added taxes precisely for that reason.
    So I don't agree with people who say it doesn't make any 
difference. I think that it does make a difference. So that 
isn't to say I am endorsing any particular solution or anything 
like that, but I am sympathetic to the problem, and I think it 
has an impact on exports. I think it has an impact on 
manufacturing and competitiveness in America, so it is a major 
issue.
    Mr. NUNES. Thank you, Mr. Ambassador. My time has expired. 
The Chairman is going to gavel. Thank you so much.
    Chairman BRADY. Thank you, sir.
    Mr. Levin, you are recognized.
    Mr. LEVIN. Welcome. Hi. NAFTA became very much involved in 
controversy mainly because of the lack of enforceable labor and 
environmental provisions. The auto sector is a major source of 
the trade deficit. So let me just review a few facts and ask 
you some questions.
    In the last decade or two, the employment in the Mexican 
auto sector has gone up over 200,000 people, while in the U.S., 
it has dropped 90,000; really more than that if you go back 
over a decade. And in terms of competition, Mexican workers in 
the auto industry are paid 19 percent of what is paid in the 
big three, and the President called Mexican factories 
sweatshops. And that is further evidence that autoworker wages 
in Mexico went down 20 percent, though productivity went up 80 
percent. And sweatshops, that is correct, because workers in 
the auto industry in Mexico cannot form unions. There are sham 
outfits.
    So let me ask you three questions, if I might, relating to 
it. First, do you agree that depressed wages in Mexico are 
leading to negative wage pressure and job loss in the United 
States? If so, can any renegotiation of NAFTA truly promote 
jobs here in the United States without addressing labor rights 
in Mexico?
    Two, with that in mind, can you tell us what specific 
proposals--specific proposals--the Administration is 
considering to require Mexico to change its laws and practices 
relating to labor rights as a way to create and safeguard jobs 
in the United States?
    And, number three, I take it on this you are the lead 
person in the Administration, though that isn't always clear, 
but I assume you will be and hope you will be: Will the 
Administration insist that Mexico bring its labor laws and 
practices into compliance with basic labor standards before 
Congress is asked to vote on a renegotiated NAFTA agreement? So 
fire away.
    Ambassador LIGHTHIZER. Yes.
    Mr. LEVIN. Since I did.
    Ambassador LIGHTHIZER. Thank you, Congressman.
    First of all, do I believe that Mexican labor laws are 
having a negative effect on the United States? Yes, I believe 
that. And I believe if we are going to get the deficit down, if 
we are going to have an appropriate agreement and one that will 
pass, it will have to have an effect on that. I do believe, 
though, that the Mexican government itself understands there is 
a problem, and I think they are taking steps, which is a good 
sign. But I am not suggesting----
    Mr. LEVIN. You need to talk further about that, but keep 
going.
    Ambassador LIGHTHIZER. With respect to what our specific 
proposals are, we are still in the process of talking to 
stakeholders and the Congress, and we are interested in 
people's views. We do believe you have to have basic ILO core 
standards, and we believe that they have to be enforceable just 
like we believe that every provision in the agreement has to be 
enforceable. Do I believe there should be a commitment and 
proof before a vote? No, I don't. I think we are going to put 
together an agreement. We are going to come forward. It is 
going to be an aggressive agreement that we have, and in the 
final analysis, the U.S. Congress will rule on whether it is a 
sufficiently good agreement, and I don't think there will be 
preconditions like this.
    Mr. LEVIN. Okay. I think, unless practice is showing that 
changes are made before we vote both in laws and practices, 
that essentially it will be difficult and should be difficult 
to pass NAFTA. We insisted with Peru that they change their 
laws and practices before we voted on it. May 10th was a major 
breakthrough, but unless it was made real before we voted it 
was impossible to vote for. And time has shown with Colombia 
and other countries that if you don't have that standard, you 
are chasing enforcement everywhere. So we are going to be very 
emphatic about that.
    Thank you, Mr. Chairman.
    Chairman BRADY. Thank you, Mr. Levin.
    Mr. Tiberi, you are recognized.
    Mr. TIBERI. Thank you, Ambassador, for being here. I know 
that you know that the volume, the complexity, the challenges 
of trade have only grown over the years. I want to associate 
myself with what Mr. Nunes said with respect to NAFTA and 
agriculture. In Ohio, my home State, Canada is our number one 
trading partner, and agriculture is our number one issue, 
number one job economic driver.
    But, Mr. Ambassador, I want to focus on our trade agreement 
with Korea. We have seen an influx of imports of oil country 
tubular goods, OCTG, from the Republic of Korea. In 2015, 
Congress gave the Department of Commerce new authority to 
address market distortions in the production of foreign 
merchandise and to calculate dumping margins that more 
accurately account for the unfair pricing practices of foreign 
exports.
    Can you commit to this Committee that you will make it a 
priority of this Administration to engage with our trading 
partners, particularly in this case, Korea, the Republic of 
Korea, who continue to dump these products into our country?
    Ambassador LIGHTHIZER. Yes.
    Mr. TIBERI. Thank you. I certainly appreciate that. The 
other issue the Chairman mentioned that I want to comment on is 
our ongoing section 232 investigation on national security 
implications of steel and aluminum imports. And I again want to 
applaud and say I appreciate the Administration's commitment to 
America's security in ensuring a level playing field with our 
trading partners. However, I have heard from a number of 
employers in my district, manufacturers, about the potential 
that some of our trading partners could misuse national 
security justifications to have retaliatory and protectionist 
actions taken against them. Are you at all concerned about the 
potential for retaliation by some of our trading partners and 
the effect it would have on domestic manufacturers?
    Ambassador LIGHTHIZER. Yes, we are concerned, although we 
start with the proposition that we have a global extraordinary 
excess amount of capacity that is basically created by China 
and that we can talk about some other potential problems, but 
we have this 1.1 or more billion tons, which I mentioned 
before, and the question becomes, how do you deal with that? 
You can't deal with it just at the border with China because it 
is not that kind of a problem. It is sending it everywhere in 
the world. And as you said in your first question, they are 
sending it to Korea, who is then sending it to us in the form 
of OCTG. So it is a huge problem.
    Given that problem, it is reasonable to sit back and say, 
what are all of the possible tools we have? And one of the 
tools we have is 232, because it does have a national security 
effect that is quite significant.
    Now, there is the response, one, of retaliation. We are 
always worried about retaliation, but if we don't defend 
ourselves because of a fear of retaliation, then we are just 
going to be the residual of what nobody else wants. So we can't 
let unfair trade go forward just for that reason, but it 
certainly is a reasonable thing to think about and try to 
control. So I don't disagree with that at all.
    The argument that, well, other people will use their 
national security exemption for ways that are really hidden 
protectionism, that is also a concern, something we have to 
think about, but I am inclined to believe personally that, with 
respect to a lot of these countries, they will use every tool 
they have right now to defend their interests and to take 
advantage of our market. So I am kind of less persuaded by that 
argument, although I think it is a legitimate argument, 
something we have to be concerned about, but I think we do have 
an obligation to all Americans: When you see something that is 
very bad going on, we have kind of a contract with all of our 
workers and all of our farmers that we are going to defend 
America or free trade doesn't mean anything. I think every 
Member of this Committee agrees with that. And this is one of 
the tools that it is legitimate to look at and use in that 
context.
    Mr. TIBERI. I certainly appreciate your work, your 
expertise on this issue, and I just would hope that you and 
your team would clearly review the Chairman's opening statement 
because I think it reflects on this side of the aisle some 
concern about the balance in this area.
    Thank you so much.
    Ambassador LIGHTHIZER. Thank you, Congressman.
    Chairman BRADY. Thank you, Mr. Tiberi.
    Mr. Doggett, you are recognized.
    Mr. DOGGETT. Thank you, Mr. Chairman.
    And thank you, Mr. Ambassador.
    You have been a personal long-time critic of WTO dispute 
panels overreaching and effectively declaring new obligations 
and undermining our democratic processes. Under NAFTA, the 
investor-state dispute settlement procedures with which you are 
very familiar, the ISDS, permit three private attorneys whose 
decisions are not subject to appeal to effectively create new 
obligations and commit unlimited amounts of taxpayer funds to 
foreign corporations for claimed violations.
    Yesterday, at the Finance Committee, you testified 
concerning your concerns about ISDS. You are aware that the 
National Association of Attorneys General, the National 
Conference of State Legislatures have objected to ISDS, that 
recently the American Automotive Policy Council, our major 
manufacturers said that ``ISDS provisions in NAFTA--or an ISDS 
provision in NAFTA is unnecessary.'' Do you agree with them?
    Ambassador LIGHTHIZER. I am sorry?
    Mr. DOGGETT. Do you agree--without reading it--do you agree 
that ISDS is unnecessary in NAFTA?
    Ambassador LIGHTHIZER. I think ISDS is something that we 
have to discuss and be informed of more by the Members. So I 
won't take a final position right now.
    I would say this: It clearly is a balance. There is a 
legitimate interest in people who go overseas and invest, and 
the United States has an obligation to do what it can to make 
sure those people are treated fairly.
    On the other hand, as you suggest, Congressman, I am 
troubled by the sovereignty issue. I am troubled by the fact 
that anyone, anyone can overrule the U.S. Congress and the 
President of the United States when it has passed a law. That 
is troubling to me. So trying to balance those two things is 
something that I really want to kind of work through and be 
informed of----
    Mr. DOGGETT. Certainly----
    Ambassador LIGHTHIZER [continuing]. Members' views.
    Mr. DOGGETT [continuing]. We do want to see our investors 
protected wherever they are, and Canada has a mature court 
system. There are a few more challenges in Mexico, but I hope 
you will be looking closely at a system that I think has failed 
us.
    And a second area, you say in your testimony--and I was 
pleased to hear it--that you expect significant action far 
beyond previous Administrations, including, for example, self-
initiated litigation in defense of U.S. workers. While that is 
good, it is a fairly low bar, since USTR under all previous 
Administrations I think has never successfully challenged a 
labor or environmental provision with any trading partner. And 
as you know, yesterday, the United States lost in its drug out 
lengthy 9-year action with reference to Guatemala labor with a 
finding apparently that it was not a matter affecting trade. I 
believe that the failure to effectively enforce our 
environmental and working condition provisions is one of the 
reasons many of us do not have confidence in the TPP or in 
other recent agreements, that the comments about labor and 
environment were really meaningless.
    Given the short time, I would just ask you to respond in 
writing as to whether you consider artificially suppressed 
wages to be a subsidy and whether these subsidies impact trade 
between countries? Tell us how this decision may affect the 
need for changes in the NAFTA agreement with reference to 
workers.
    Similarly, with Peru, there are both labor complaints on 
which there are provisions that have not been enforced, and I 
would ask you to respond concerning the complaint filed in 2015 
on Peru labor concerning the fact that we are effectively 
denying improved wages and conditions in Peru, and also, in 
Peru, on the environmental provision, that about 90 percent of 
all timber leaving Peru was harvested illegally when we set up 
the agreement and it still is and if you believe that Peru is 
in compliance with its environmental obligations under the 
forest annex, and why there have been no audits of producers 
and exporters.
    And I will submit others concerning all the pending 
enforcement actions on which we see really no effective 
enforcement.
    Finally, you have 500 advisers on trade agreements, 
corporate advisers. When will the Members of Congress be able 
to see the specific language that USTR proposes to Mexico and 
Canada on NAFTA changes?
    Ambassador LIGHTHIZER. Well, in the first place, we will 
submit an answer in writing as you requested, Congressman.
    In terms of the language, we have an agreement with the 
Chairman. We expect to be very transparent. We are going to 
follow the TPA to the letter. I realize that, in the past, 
there have been issues about whether or not the Congress has 
had adequate access to text, and I think I am in agreement with 
the Chairman. We have a plan. I expect to follow that plan and 
make that text available, and I expect the Chairman to 
instantly tell me when I haven't followed the plan, which, if 
it happens, will only be by accident.
    Mr. DOGGETT. Could you disclose what the plan is?
    Chairman BRADY. We are in discussions with the Ranking 
Member on this important issue. We agree with you, Mr. Doggett, 
about the access to text.
    So thank you, Ambassador. I let you run a little long 
there.
    So, Mr. Reichert, Chairman of the Trade Subcommittee, you 
are recognized.
    Mr. REICHERT. Thank you, Mr. Chairman.
    Welcome, Mr. Ambassador.
    Every Member on this panel will tell you that trade is 
critical to their home State, and I am here to tell you that is 
true of Washington State. Apple growers export one-third of 
their crop each year. State services exports over $26 billion a 
year, and of the jobs in Washington that are supported by 
exports, over 90 percent depend on manufacturers selling their 
world class products across the globe. But Washington workers, 
farmers, and businesses cannot be left behind as other 
countries race to establish strong bilateral and regional 
agreements that carve us out. So, while we work to update 
NAFTA, we must begin to put other negotiations in the pipeline.
    So I am an old career law enforcement retired. I get the 
enforcement piece, but there is always community outreach. In 
my view, the TPP countries have now been left hanging. And, 
frankly, I was disappointed but encouraged that the President 
wants to go with bilateral agreements. I am on board with that 
and ready to go. As you know, we have had a chance to visit. 
But I think there has to be an aggressive, energetic outreach 
to these countries, and my question is, beyond Canada and 
Mexico, which countries, regions, and/or sectors are priorities 
for the Trump Administration? What's the next step after NAFTA?
    Ambassador LIGHTHIZER. Thank you, Congressman. We are still 
in the process of developing those priorities and that list. 
First, I would say that the President is very pro-trade; 
second, that we, as you say, our objective is to have bilateral 
agreements and a series of them, and we think we can do that 
using model agreements and do it effectively and have 
agreements, which are better for American workers and American 
apple growers and others.
    In terms of what specific countries we would go to, there 
are a lot that are on the table. Obviously, there is T-TIP, 
which has been mentioned. There is a lot of people who believe 
that we have to go up to the TPP countries and start 
negotiating those, and, of course, foremost among those in some 
people's opinion is Japan. So that is something we have to 
think about now.
    Mr. REICHERT. But you are in communication with those TPP 
countries?
    Ambassador LIGHTHIZER. We are. I have met with several of 
them and there are, you know, there are a variety of issues in 
various places, and, you know, the Japanese, my guess is right 
now are not ready to do a bilateral agreement with the United 
States, but these things are all developing. We are in 
discussions----
    Mr. REICHERT. So, after NAFTA, you are still considering T-
TIP or Japan or the U.K.
    Ambassador LIGHTHIZER. The U.K. is another option. So these 
are things--but I do think there is a lot of pressure to move 
in the direction where the TPP would have filled a gap and to 
go in there--and my instinct is that Members of Congress would 
also feel comfortable if we started doing that. So there are a 
lot of reasons to militate in that direction, but the other 
thing is it does take two to tango, so we have to kind of 
develop this.
    Mr. REICHERT. I want to be engaged with you on that. I am 
sure other Members of the Committee do.
    How do you see the bilateral agreements coming together to 
create the high standards throughout the world? That has been 
touched on by a couple of Members. And, you know, just my 
personal experience with one country--Mr. Tiberi mentioned 
South Korea. In my discussions with assembly men and women in 
South Korea, asking them the question, after the Korean 
agreement was finalized, what was their opinion as far as the 
impact it had on China, I learned their first response was 
China should start to pay attention because high standards now 
are in the region and will be developing. Of course, back then, 
TPP was the thing that people were looking to. So that one 
agreement with Korea made an impact on that region. And so, 
again, emphasizing the need to reach out to those countries, 
TPP countries, strengthening that position of strong standards, 
how do you see a bilateral agreement with Japan, for example, 
or others strengthening that standard, our standards, 
throughout that region and the world?
    Ambassador LIGHTHIZER. Well, I would say, first of all, I 
don't want to suggest that we are going to have a bilateral 
agreement at this time with Japan. That is something that they 
are looking at and we are looking at and all that sort of 
thing.
    Mr. REICHERT. Sure.
    Ambassador LIGHTHIZER. But I certainly agree with the 
Chairman's basic point at the very beginning, which you have 
also endorsed, which is that the United States moves in; we 
have an agreement that is a high standards agreement. In many 
cases, on a bilateral basis, you can have higher standards 
because that country you are negotiating with may not have a 
particular problem in an area where you can get a high 
standard. A good example of that would be currency. If you are 
negotiating with someone who really isn't a currency 
manipulator it is easier to get to a high standard on currency 
and then set the standard. So there are a lot of things that 
can be done like that, but I think having those kinds of 
agreements does push back against China, does change the 
standards, and does have people realizing the United States is 
engaged, and it has a ripple effect throughout the region. So I 
completely endorse them.
    Mr. REICHERT. Great point.
    Thank you, Mr. Chair.
    Chairman BRADY. Thank you.
    Mr. Thompson, you are recognized.
    Mr. THOMPSON. Thank you, Mr. Chairman.
    Mr. Ambassador, thank you very much for being here. The 
priorities for our trade policy must be to support and help 
create good American jobs, grow the economy, set basic 
standards for our partners to live up to, improve market 
access, and protect the labor rights and the environment. And I 
think that Congress has an important role in this, and I value 
the opportunity to work with you to make sure that this 
happens. And increasing exports and eliminating trade barriers 
can really be a win for our economy, provided that the playing 
field is level and everyone operates under a fair and basic set 
of rules and that those rules are enforced.
    So, in that regard, I want to associate myself with the ag 
comments that have been made by a couple of my colleagues on 
the dais. And I also want to associate myself with something 
that Mr. Doggett said when he asked if you thought that wages, 
suppressed wages in other countries are a subsidy to 
manufacturers in those other countries. And I would ask, 
similarly, do poor environmental rules equal a subsidy to 
producers in other countries?
    Ambassador LIGHTHIZER. Let me say, first of all, that I 
think low labor standards are an unfair advantage to someone 
with whom we are dealing. Whether it is technically a subsidy 
under the countervailing duty laws is not something that I am 
addressing right now here in this case. So I don't want there 
to be any misunderstanding. The same thing is true with respect 
to the environment.
    But I think it is--I look at it the other way. I think it 
is wrong in the Ricardian way we think about these things to 
have some things be a legitimate competitive advantage, and to 
me, environmental pollution shouldn't be--it is not a 
legitimate competitive advantage in the way we analyze trade 
because, at a level, we are all really free traders. We all 
have the same objective. The question is, how do we get there?
    So I look at it the other way around. I think it is not a 
legitimate competitive advantage to have very low environmental 
standards. So that is why I am troubled by it, and I think the 
same thing is also true with respect to labor standards.
    Mr. THOMPSON. Well, I certainly know, in my business, if I 
didn't have to pay attention to regulations and rules and 
particularly with environmental standards, I could make a lot 
more money than I do, and that would put me at a competitive 
advantage over someone who had to do that.
    U.S. wine exporters continue to face highly burdensome 
trade barriers in Canada. British Columbia has a very 
discriminatory grocery store program that prohibits American 
wine from being sold on the same shelves as domestic wine, 
giving the BC producers an enormous competitive advantage.
    In January of 2017, USTR requested WTO dispute settlement 
consultations with Canada on this matter, but the consultations 
failed to bring about any grocery access for American wine 
makers. Given Canada's continued refusal to modify its 
discriminatory program in any way, will USTR now work to fully 
enforce U.S. rights under the WTO agreement and formally 
request a dispute settlement panel?
    Ambassador LIGHTHIZER. First of all, Congressman, I am, of 
course, very much aware of this problem. I completely agree 
with the sentiment of your question. Whether we go to the panel 
stage is something that is under review right now. You can take 
from my general attitude that I am very pro-enforcement. The 
only caveat I would add is, is this something you are better 
off dealing with in a NAFTA negotiation? So I think we have to 
think about that. The stakeholders have to think about it. The 
Members have to think about it. And I have to be informed by 
all of you. But it is a very serious problem. It is the kind of 
problem that ought to be brought to a panel, in my opinion, if 
it can't otherwise be resolved.
    The only thing I would say is we have to think about 
whether this belongs in the NAFTA context, in which case it 
would make more sense to negotiate it and do it in a less kind 
of hostile way. But it is a major problem, and it is an 
extraordinary problem for those people who are affected, those 
producers, and there is no justification for it.
    Mr. THOMPSON. So, in modernizing NAFTA, is this something, 
this elimination of this discriminatory practice, we can see as 
a possibility?
    Ambassador LIGHTHIZER. It certainly is something that we 
are going to raise and deal with one way or the other.
    Mr. THOMPSON. It was said that if TTP fails, that would 
give China an upper hand. How much time do you think we have to 
address that before they do, in fact, have an upper hand?
    Ambassador LIGHTHIZER. Do I have--I am minus 7 seconds.
    Chairman BRADY. You are, Mr. Ambassador. I am afraid we 
will have to come back to you on that question.
    Ambassador LIGHTHIZER. I am sorry, sir.
    Chairman BRADY. Thank you.
    Mr. Buchanan, you are recognized.
    Mr. BUCHANAN. Thank you, Mr. Chairman.
    I want to thank the Ambassador. I know all of us look 
forward to working with you going forward. Just a couple of 
points from Florida. We have 14 ports. One in five jobs in 
Florida are tied to trade. So trade is a big opportunity for 
us, but I believe--I am a free trader, but I think trade needs 
to be a win-win. I am concerned, especially with some of the 
bigger countries, with large trade imbalances. I think it is 
something we need to look at. I am sure you will. But I think, 
on some of our trade agreements over the years, we have been 
played. That is just my opinion, and that is something we can 
talk about further going forward.
    I want to drill down a little bit on a Florida issue in 
terms of NAFTA. We are the second largest State in terms of 
fruits and vegetables grown. We have pretty much the same 
growing season as Mexico. It is a $12 billion industry, but a 
lot of people feel, because of some of the techniques, the 
antidumping, and other things that are going on in Florida, it 
has cost us about $1 billion to $3 billion in terms of 
Florida's opportunities down there and a lot of jobs, and I 
just wanted to get your thoughts if that is on your radar, 
something you are looking at. Mexico is next to us, a good 
neighbor, but we want to make sure it's fair.
    Ambassador LIGHTHIZER. Well, I would say that I completely 
agree with you. I am familiar with the issue. I am not as 
familiar, obviously, as you are. I have talked to the Governor 
about it who has raised this issue a lot.
    When I say we have a trade deficit in agriculture with 
Mexico, what we are talking about is the problem that you 
raise, because with respect to everything else, we have a 
surplus.
    So I think it is something that we have to work on, 
something I would be happy to work with you on. It is something 
that we ought to be talking about in the NAFTA context. And 
then there are issues of whether or not there is unfair trade 
involved here. There are a lot of things we have to consider. 
But I realize it is an acute problem, and it has become more 
and more acute. And it is really something that I want to 
engage on.
    Mr. BUCHANAN. Well, I would appreciate the opportunity to 
work with you going forward.
    I want to talk--Mr. Neal had brought this up about T-TIP. 
It sure seems to me that--and I have had the opportunity to 
travel in Europe, I have met with a lot of American businesses 
in Europe. It makes a lot of sense. We have a lot of same 
shared values. When you look at labor rates, a lot of it is 
fairly competitive, comparable sized markets in terms of the 
EU.
    And I know that the last Administration, because I met with 
several folks in your office back a couple of years ago, there 
has been a lot of work product and a lot of effort that has 
been done. I know there are a lot of individual issues with 
various countries.
    What is your sense of where that is today? Is that 
something we can resurrect? Or do you just see that we are 
going to move forward on a bilateral agreement with every 
single country individually which would seem would take a long 
time to get anything done? But I wanted to get your comments on 
it.
    Ambassador LIGHTHIZER. Well, first of all, it is something 
that the President has spoken on. He mentioned it during his 
meeting with Chancellor Merkel some months ago. It is something 
we are looking at. We are reviewing all of these agreements.
    So I don't want to prejudge it, but it is clearly something 
that I understand there is a lot of momentum behind. There are 
a lot of reasons to do it. On the other hand, it wasn't 
accomplished, so there are obviously problems or it would have 
been done and we wouldn't be talking about it at this point.
    It is in the group of things that we are going to review, 
agreements that we are in the process right now of reviewing to 
decide where to allocate our resources. There are a lot of 
arguments against it. But, as I say, if it was so close to 
being done, it would be done and we wouldn't have to worry 
about it. Right now, it can't be done because of----
    Mr. BUCHANAN. Let me just throw this out. Being in Congress 
for 10 years, I have watched trying to get agreements done. It 
takes, seems like, forever. So when you go at it just on a 
bilateral basis, and there are probably reasons, strategically, 
to do some countries that way, but it seems like there has been 
a lot of work product in terms of the EU. Because of shared 
values, it makes some sense to see if there is not an 
opportunity to do something in a big way that would impact. And 
I know it is not easy because there are a lot of issues with 
individual countries in Europe, but I would be interested in 
you guys being open-minded to that as a possibility.
    Ambassador LIGHTHIZER. Thank you, sir. And we are. It is 
under review. And I could make an argument, if I had to, that 
it is a bilateral agreement.
    Mr. BUCHANAN. Well, thank you. And I yield back.
    Chairman BRADY. Thank you, Mr. Buchanan.
    Mr. Lewis, you are recognized.
    Mr. LEWIS. Thank you very much, Mr. Chairman. Thank you for 
holding this hearing today.
    Mr. Ambassador, thank you for being here. I would like for 
you to give me some idea when it comes to trade policy, what is 
your position on the issues of human rights, labor rights, 
protecting the environment? It is my belief that a trade policy 
should be a reflection of our own values. I would just like to 
hear you out.
    Ambassador LIGHTHIZER. Well, I think that is a very 
important point. I think it is not really fundamentally 
different than the point that the Chairman made. I mean, this 
is--we have a system. And we are proud of that system. And the 
system has created an enormous amount of good for not just 
Americans, but for people around the world. And we have an 
obligation to push that forward.
    To be honest, personally, I view myself as worrying about 
the dollars-and-cents part of it. I am not worried the foreign 
policy part of it or the----
    Mr. LEWIS. So are you suggesting, Mr. Ambassador, that we 
make money, we get the dollar, at any cost?
    Ambassador LIGHTHIZER. No. I think that----
    Mr. LEWIS. But you said you are concerned about the dollar.
    Ambassador LIGHTHIZER. No, I don't think that is right. In 
the first place, I don't believe that at all. In the second 
place, I view my focus has to be on trade and economics. That 
is really what I am paid to do. That isn't to say that the 
other things aren't even more important, but my focus is.
    But where we overlap, Congressman, is I think labor and the 
environment are economic issues, and I approach them as 
economic issues. That is how I think of them.
    I think the United States--and many of the Members have 
said this--the United States, every businessman, every farmer, 
every worker has a right to get a fair shake in their own 
market.
    And we have to remember that. This is not just about 
exports. We have a right to have a fair--we have a contract 
with these people where we will pursue a certain economic 
policy which we all think is the right policy, which makes 
everybody richer. But part of that contract is that we will 
give them all a fair break. And that means fair competition in 
their own market and overseas. And part of that fair 
competition, in my judgement, are things like labor rights 
overseas and the environment.
    Now, that isn't to say that I think you want to ratchet up 
or do any of those things. I am just saying there are certain 
minimum standards that are part of our system, and to fall 
below that is an economic advantage which I don't think is a 
fair advantage.
    So I don't disagree with your premise. I am just saying I 
am worrying about the economic side of it. I am worrying about 
workers and farmers making more money at the end of the day. 
And the other things are important, but they are not my focus.
    Mr. LEWIS. But you are not prepared to commit to me, this 
one Member, that our trade policy should be a reflection of our 
values as a country? We can't say one thing at home and do 
something else abroad.
    Ambassador LIGHTHIZER. I think it should be a reflection of 
our values.
    Mr. LEWIS. Thank you very much. I yield back.
    Chairman BRADY. Thank you. Thank you, Mr. Lewis.
    Mr. Roskam, you are recognized.
    Mr. ROSKAM. Thank you, Mr. Chairman.
    Ambassador, thank you very much for your time today.
    Just to shift gears a little bit, one of the big priorities 
is our relationship with Israel historically. And back in the 
last Congress, we overwhelmingly passed into TPA one of the 
stated trade objectives of the United States is to push back 
against the BDS movement, the anti-Israel Boycott Divestment 
and Sanctions Movement.
    This is into a larger context. The former Ambassador from 
Israel to the United States, Michael Oren, wrote an op-ed in 
which, a few years ago, he made this point. He said the first 
wave of anti-Israeli activity was military, and we know how 
that turned out. The second wave was terror movement against 
Israel. But the third wave is, in some ways, more insidious in 
that it is trying to take away Israel's legitimacy and, 
therefore, just simply remove it from the world stage.
    So one of the tools that you have as the Trade Ambassador 
is the capacity to push back against that, particularly as it 
relates to European governmental actors. Can you just give us a 
sense of where that stands and how the Administration is 
adopting that TPA objective?
    Ambassador LIGHTHIZER. Well, right now we are not in 
negotiations with Europe. But we understand that's an 
objective. And, indeed, I would say it is a threshold. It is 
more than an objective. I think that I shouldn't speak for the 
Administration on matters of foreign policy, but on this one I 
think it is so clear. The Administration very strongly agrees 
with that sentiment.
    And we think that these boycotts and divestitures and the 
like are very dangerous. They are not just dangerous for 
Israel, they are dangerous as a precedent for the whole 
economic system.
    So, personally, I am very sympathetic. I believe the 
President is very sympathetic. And that will be a very 
important objective when we get to the point that we are 
talking to Europe about T-TIP or other agreements.
    Mr. ROSKAM. Very good. Thank you. I yield back.
    Chairman BRADY. Thank you.
    Mr. Larson, you are recognized.
    Mr. LARSON. Thank you, Mr. Chairman.
    And thank you, Ambassador.
    In my State of Connecticut we have a great deal of exports. 
In fact, nearly 6,000 companies in Connecticut are involved in 
exporting. Nearly 90 percent of them are small businesses. That 
is why we believe it is critical to ensure our businesses and 
our workers maintain their economic and competitive position in 
the international markets.
    I know you understand this thoroughly. I know you also 
understand that many American workers feel that the 
international trade has eroded the middle-class wages and led 
to job loss, as you can hear in some of the sentiments and the 
questions that a number of our Members are asking.
    So that means that enforcement of labor and environmental 
provisions in our existing agreements and insisting on strong 
protections in any future agreements is essential. I know you 
understand that.
    But what I have, and there is not enough time for me, but I 
want to pose six questions with the permission of the Chair. If 
I could pose the questions and then have them answered in 
writing, because I don't believe the Ambassador, it would be 
fair to him. But at least he will get the gist, and then we can 
further correspond beyond the Committee, and I won't supersede 
the time that I have been allotted.
    The first is, with regard to NAFTA, how do you plan to seek 
greater access to the Canadian and Mexican procurement markets 
while protecting our own Buy American priorities? These seem to 
be in conflict. And so what specific changes will you seek to 
the government procurement chapter of NAFTA? That would be 
question number one.
    What kind of enhancements with regard to NAFTA, with 
respect to intellectual property protection, is the 
Administration contemplating in the NAFTA rewrite?
    Third, what is your plan when it comes to the enforcement 
of labor and environmental provisions in our future FTAs?
    The fourth has to do with currency that a number of people 
have discussed and you have raised here. What is the 
Administration's intention with respect to seeking the 
inclusion of currency rules in its trade agreements? You have 
already elaborated on standards and the need for those. And, 
again, I would appreciate if you could respond to that.
    Further, in that regard, do you support including strong 
and enforceable disciplines in NAFTA and other trade 
agreements?
    And, finally, Mr. Ambassador, we are very concerned about 
the issue that was raised when the President said that he might 
terminate the U.S.-Korea Free Trade Agreement. What are the 
Administration's plans with respect to the U.S.-Korea Free 
Trade Agreement? And if you could answer that, that would be 
great.
    Ambassador LIGHTHIZER. So I am going to put six in the 
record and answer the last one?
    Mr. LARSON. Yes.
    Ambassador LIGHTHIZER. We are looking at all of our trade 
agreements. And the KORUS is one of them that we are looking at 
very closely. There have been winners and there have been 
losers. I would be less than candid if I didn't say it is 
troubling to me the direction the trade deficit has gone with 
respect to that agreement. It has had a negative effect on the 
U.S. trade balance.
    Having said that, it is just in the group that we are 
looking at. There are no plans to drop out of KORUS at this 
point. It is just something that we are talking to the Koreans 
about.
    In fact, I have a meeting today or tomorrow with the 
Koreans on these issues. We have a variety of thorny issues, 
issues that we think are costing us exports, and those things 
are all we are going to raise.
    And it fits in that category of things that I say, if you 
have a big trade surplus with the United States, you had better 
get rid of the barriers to our exports to you. And it fits into 
that category of things. And I am going right down the line, 
insisting with these people, that you can't have barriers to 
trade and have a $20 or $30 billion surplus to us. You had 
better get rid of the barriers and let us sell there, because 
we are not going to tolerate it anymore.
    But in terms of a plan right now to get out of KORUS, no, 
there is no such plan. But it is under review. It is seriously 
being looked at. And the President is troubled by the trade 
imbalance.
    Mr. LARSON. That is reassuring, certainly, to hear. I know 
a number of people over the recess will be traveling to Korea 
for a variety of purposes, not the least of which is national 
security. So I do think it is important that message be 
reinforced.
    And I couldn't agree with you more in terms of the trade 
imbalance. So I commend you in that area, and also for the 
encouragement that we are not going to be dropping out of 
KORUS.
    Thank you.
    Chairman BRADY. Thank you, Mr. Larson. You may have set a 
record for the number of questions stuffed into a 5-minute 
period. Thank you.
    Mr. Smith, you are recognized.
    Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman.
    And thank you, Ambassador, for your service and for sharing 
your time here today.
    I certainly want to associate my comments and concerns with 
my colleagues who have raised the issue of agriculture and 
NAFTA, and the progress that has been made with NAFTA. I know 
that producers across rural Nebraska certainly appreciate the 
gains that have been made.
    And I think you have heard from us numerous times. They 
call us the agriculture delegation here on the Committee. You 
have heard us mention and emphasize several times how important 
these issues are, agriculture issues, that we not undermine the 
successes that NAFTA has brought to U.S. agriculture.
    Shifting gears just a bit, thank you for the work that you 
and the President and others in the Administration have done on 
pressing China on a number of trade issues. This isn't just a 
market access issue. For the biotech firms, the lack of 
approval for these products also forces U.S. producers to 
choose between the most current seed varieties or continuing to 
access--continuing access to China's 1.3 billion consumers. And 
it is obviously a big deal.
    As agreed to under the U.S.-China 100-Day Plan, China's 
National Biosafety Committee, or the NBC, recently met to 
review approval petitions for eight U.S. biotech products which 
have seen their approval for the Chinese market delayed by an 
average of 5 years. That's pretty astonishing.
    So following the Biosafety Committee meeting, the NBC 
meeting, the Chinese Ministry of Agriculture approved only two 
of the eight pending products. And so approval of only two of 
these eight, obviously, is disappointing, and I am concerned 
that China will not honor the spirit of the 100-Day Plan in 
approving the remaining six products.
    So I understand the NBC is set to meet again by the end of 
June, giving us the opportunity to have the other six products 
approved.
    What is USTR doing to ensure China follows through and 
approves the remaining six products before the conclusion of 
the 100-Day Plan?
    Ambassador LIGHTHIZER. Well, thank you, Congressman.
    First of all, I would say that there was some progress made 
in the 100-Day Plan, as you suggest, and this is one of the 
principal areas where there was progress.
    We are continuing to press China. We expect and will 
require that they, after they follow their process, very 
quickly approve all eight documents--I mean, all eight 
applications. This is important not just because of those, but 
because it actually delays U.S. farmers from implementing a lot 
of these high-tech techniques in the domestic market as well as 
internationally.
    So I can assure you that Secretary Ross is very focused on 
this, is making it very clear that this has to be done. We have 
been in contact with the Chinese as recently as the last couple 
of days on this. And my feeling is that, before long, we are 
going to have all eight of them agreed to. That is what we 
expect. That is what we think was agreed to. And the Secretary, 
as I say, who actually had that negotiation at that time, is 
very focused on it.
    Mr. SMITH OF NEBRASKA. Thank you. I know that there is 
great opportunity in being good stewards of our natural 
resources with biotechnology. We have a great story to tell of 
how far we have come utilizing biotechnology, and I think it is 
very promising for the future.
    I was pleased to see the President's budget did include a 
renewal of the GSP program, and this is very important. More 
specifically, the recent GSP reauthorization included language 
to also consider for duty-free access a variety of travel 
goods. The previous Administration did not provide the 
consideration for travel goods from all eligible countries as 
intended by the law, and instead only provided it to the least 
developed and AGOA nations. I appreciated Ambassador Froman's 
basically delegating that, or deferring that, expansion to the 
current Administration.
    Could you give us an update on that effort in GSP and 
travel goods?
    Ambassador LIGHTHIZER. Yes. Well, I don't necessarily 
appreciate him deferring it. But I say that just in jest.
    No, we are in the process of looking at it right now. We 
are very close. The documents are in front of me and I think 
you will see an outcome very soon. And my guess is you won't be 
disappointed.
    Mr. SMITH OF NEBRASKA. Okay. Thank you. Again, thank you, 
Ambassador.
    And thank you, Mr. Chairman.
    Chairman BRADY. Thank you.
    Mr. Kind, you are recognized.
    Mr. KIND. Thank you, Mr. Chairman.
    Mr. Ambassador, thank you for being with us here today.
    Mr. Ambassador, I want to just make a couple of comments 
before I ask you a question more specifically involving the 
dairy issue we have with Canada and NAFTA renegotiation.
    But my first comment is I hope--and this is a good start 
today--that your approach in dealing with Congress is going to 
be extremely open, consultative, collaborative. I think it is 
going to be beneficial that whatever you go out and negotiate, 
you are going to have to come back here for our approval. And 
it is better for us to be on the takeoff, rather than trying to 
get us on the landing with these agreements, because we have to 
justify and explain this to our bosses back home too.
    And Secretary Froman, I think, set a very high standard as 
far as outreach and time he spent on the Hill getting feedback 
from us, and us getting feedback from him, in the course of 
negotiations. That also included language of what was being 
negotiated.
    Now, past USTR offices have been loath or reluctant to 
share language with us. If that occurs in the future, that is 
going to cause problems. I am just telling you right now.
    And with that in mind, I recently just sent you, as well as 
Secretary Perdue, a letter inviting you to come back with me to 
my home in Wisconsin to have a good meeting with our 
agriculture producers. I think you are going to find that 
getting out of the bubble of Washington can be extremely 
helpful, just going out into the countryside and listening to 
people and getting feedback from them. We had a great farm 
visit with Secretary Froman a couple of years ago where he got 
a lot of good input from agriculture producers in my large 
agricultural area.
    So I hope you seriously consider the invitation and 
possibly find time to come to meet in the Midwest and have that 
conversation with folks back home.
    In regard to NAFTA, I may be in the minority on this side 
of the dais, or even within my own party, but I happen to 
believe our withdrawal from the Trans-Pacific Partnership trade 
agreement will go down as one of the great strategic mistakes 
that we made in the 21st century--unless you and this 
Administration figure out a way to get us back into the game, 
into the fastest-growing economic market on the globe, the 
Pacific Rim area.
    Because right now a tremendous vacuum has been created. 
These countries were looking to us for leadership and they 
didn't find it. We turned our back on them. And that vacuum 
will be more than willing to be filled by China. And if we have 
to operate from the outside looking in, trying to compete with 
China's rules, that will be a race to the bottom, and that will 
not help us or our people economically in this country.
    And with TPP in mind, I hope--and we have talked to 
Secretary Ross about this--it seems to me, just logically, a 
good place to start with NAFTA renegotiation is to look to what 
Mexico and Canada has already agreed to under TPP, the 
elevation of standards that were included in the agreement, the 
reduction of tariff and non-tariff barriers that they had 
agreed to. And if you have ideas on how to improve upon that, 
let's go. Let's do it.
    But if I see slippage in those standards from what they had 
already agreed to under TPP, that is going to be a problem from 
my perspective too. We can't be going backward now on something 
that was already agreed to with Canada and Mexico.
    And, you know, a lot of people think NAFTA renegotiation 
means mainly with Mexico. We also have problems with Canada. 
And one is the dairy issue right now with the Class 6 and Class 
7 pricing system with ultrafiltered milk, something that wasn't 
addressed with NAFTA but which many, if not all, of our dairy 
producers right now feel that they are being treated in an 
unfair and discriminatory manner.
    So I am hoping that you have a plan for moving forward to 
try to resolve this so that we level the playing field and it 
is a two-way street when it comes to the exchange of products, 
but especially the issue we are having with Canada right now 
with dairy. And I'd be interested to hear if you have been 
thinking about this at all, if you have some type of plan to 
move forward on, and hopefully look forward to some additional 
meetings where we could talk a little bit more in detail about 
what we feel needs to be done dealing with Canada and 
renegotiation.
    Ambassador LIGHTHIZER. Great. Thank you, Congressman.
    First of all, I do believe that this is a partnership. And 
we don't want to bring an agreement back here that doesn't 
pass, implementing a bill that doesn't pass. So that makes no 
sense. So we want to be involved. I completely agree.
    Senator Dole used to always say the same thing: If you want 
me on the plane when it lands, put me on it when you take off. 
And I always thought that was good advice.
    In the second place, I have some background on the Hill, 
and I understand the importance of Congress. And, to be candid, 
I enjoy working with Congress. So that is number one.
    Number two, with respect to TPP, the President didn't pull 
out of the Asia-Pacific area. He pulled out of TPP. He is very 
much--he wants to be engaged. And I think we are going to do a 
better job. It is not going to happen in a week or two.
    And there are also questions I always had when I talked to 
people about--TPP was going to pass anyway. There are questions 
as to whether or not that was ever--whether that train was ever 
going to--whether that, I guess, with your analogy, whether 
that plane was ever going to leave the airport.
    Having said that, the final thing I would say on--because I 
am so clock conscious here--is that on the issue of Canadian 
dairy, yes, we are very much involved in that. We care very 
much. You ask, do we have a plan? I have, like, this thick of 
options. So it is something we are focused on for a whole 
variety of reasons.
    Mr. KIND. Great. I would love to stay in touch with you on 
that as we move forward.
    Thank you, Mr. Chairman.
    Chairman BRADY. Thank you, Mr. Kind.
    Ms. Jenkins, you are recognized.
    Ms. JENKINS. Thank you, Mr. Chairman.
    Ambassador, thank you for being here to talk trade with us 
this morning.
    National security should, unquestionably, be a priority of 
any government. But I worry that using national security as a 
basis for trade restrictions in NAFTA or elsewhere could 
backfire if other countries do the same to us. In particular, 
food security for many countries is a vital component of 
national security.
    Along that vein, here at home wheat farmers in my eastern 
Kansas district are just finishing their wheat harvest, and the 
work continues to roll north and west across the State. Many 
Kansas farmers will then ultimately look to foreign markets, 
here in North America or abroad, to sell their products in the 
coming months.
    What argument would you make to a country that tries to 
restrict its imports of U.S. wheat or other products for food 
security reasons?
    Ambassador LIGHTHIZER. Well, in the first place, as I said 
before, it is a legitimate argument: Should you use national 
security in the case of steel? I believe it is a legitimate 
argument. I, however, think that it is a legitimate use of the 
statute if the President decides to go in that direction. 
Steel, aluminum, these are national security issues, in my 
opinion.
    Now, there is always the argument: Are you worried about 
somebody else using it? Yes, I am worried about somebody else 
using it. But they have to have a legitimate reason also. They 
can't just willy-nilly use it or we would challenge them. And 
my guess is that any country that thought they had a legitimate 
reason to use national security would, in fact, use it whether 
we use it or not. That is my own personal belief.
    I don't see how someone could preclude Kansas wheat based 
on national security of a food need basis. That doesn't strike 
me as a legitimate argument. If it certainly happened, we would 
have to decide what makes sense in our judgment. And I can 
assure you that the President will look at this very, very 
hard. And his--the reaction will be the same as we are going to 
have with respect to any time we take an action on trade at 
all, there is always the possibility of somebody retaliating 
against us. It even happens when you do something in anti-
dumping or countervailing duty or all the normal things.
    There is always a possibility of retaliation. And the 
question you have is, what are you going to do in response? And 
that is something that we are thinking about. But if we get 
unfair retaliation against us, I would expect the President to 
react very strongly. I would expect him to take the position 
that we won't tolerate that.
    Ms. JENKINS. Okay. Great. Thanks.
    About 50 percent of all U.S.-grown wheat is exported, 
making trade incredibly important to a wheat State like Kansas. 
Mexico, for example, was the largest export market for U.S. 
wheat last year, made possible by the benefits of NAFTA. In 
fact, according to the National Association of Wheat Growers 
and the U.S. Wheat Associates, Mexico imported 3.1 million 
metric tons of wheat in the 2016-2017 marketing year.
    In the views of many of my constituents, NAFTA has been 
overwhelmingly successful. I do agree, however, there is room 
for updating in this agreement, which is more than 20 years 
old, to include strong and enforceable SPS rules based on sound 
science, like those that were negotiated under the TPP. Kansas 
farmers and ranchers are also looking beyond NAFTA to future 
trade deals for additional markets.
    What are your views on how NAFTA renegotiation can serve as 
a blueprint for securing those future trade deals, which would 
mean the inclusion of strong SPS provisions that will help the 
Kansas producers gain new market access?
    Ambassador LIGHTHIZER. Well, SPS is something that needs 
updating, and it is an important objective. Generally, there 
are advantages in putting in model agreements in negotiation 
between Mexico, the United States, and Canada. Because we have 
a long history, we don't have a lot of the--some of the outlier 
economic activity that you might have if you were negotiating 
with somebody else. For example, we don't have massive state-
owned enterprises in either place.
    So I think that NAFTA is, as you suggest, it is a great 
opportunity to put in place between the three countries very 
high-level provisions with respect to a variety of things. SPS 
is one of them. But there are also, other people have suggested 
currency. It was kind of a classic example of what you are 
talking about where there really aren't currency problems 
between the United States, Mexico, and Canada, but that makes 
it a good opportunity for everyone to sit down and say, okay, 
let's put together a model agreement here that ought to apply 
to everyone.
    So I look upon NAFTA as a real opportunity to create a 
model. And I believe that with respect to some of these things 
the Canadians and the Mexicans look upon it the same way. And 
then take those provisions, with the additional legitimacy of 
being in the NAFTA and be able to use those in future 
negotiations.
    Ms. JENKINS. Thank you, Mr. Ambassador. We look forward to 
working with you.
    With that, Mr. Chairman, I yield back.
    Chairman BRADY. Thanks, Ms. Jenkins.
    Mr. Pascrell, you are recognized.
    Mr. PASCRELL. Good morning, Mr. Chairman.
    Chairman BRADY. Good morning.
    Mr. PASCRELL. Mr. Ambassador, congratulations on your 
confirmation. Good luck. You are going to need it.
    We have heard a lot of talk about what should be changed. I 
have to say that in various meetings with the U.S. Trade 
Representative and Department of Commerce, White House 
officials, I and many of my colleagues find ourselves confused 
by the inconsistency from this Administration when it comes to 
trade. We need some very basic questions answered. So I am 
going to get into the questions.
    But I want to associate myself with the words of Mr. 
Buchanan concerning the difference between the bilateral 
agreements and regional agreements. I think he is on target. I 
think it would be foolish simply to deal in those bilateral 
agreements. This is a different world, and we need to 
understand that.
    And I would like to associate myself also with Mr. Larson's 
comments on the relationship between our trade agreements and 
stagnant wages in the United States and the ability to create 
new jobs. There is a lot of data coming out on this. Trade 
affects things in our own country, and we need to take a look 
at the labor market to understand it fully.
    Now, the President called NAFTA a disaster, and all I am 
hearing so far is tweaking the edges. If it is a disaster, and 
I am looking at, at least, 22 speeches that he made during the 
campaign where he riled up people, riled up people, about the 
trade agreements.
    Now, I voted against many of those trade agreements. So one 
would think we are on the same side. We are not. We are not.
    In the Administration's notice to Congress of an attempt to 
renegotiate NAFTA, your office failed to provide us with 
specific negotiating objectives or detailed descriptions of 
what you would like to see changed. Many American manufacturing 
companies have moved to Mexico, for instance, because of the 
much lower labor costs across the border. Mexican manufacturing 
workers make only 20 cents on the dollar that we make. And they 
have yet to comply with minimum internationally recognized 
labor standards.
    So today, when Mr. Levin asked about implementing reforms 
prior to renegotiation, you would not commit to demanding labor 
improvements in Mexico. And you did the same thing yesterday 
when you were questioned by the good Senator from Ohio.
    Now, I am disappointed you did not respond. So how will you 
ensure Mexico--how will you ensure that Mexico enforces labor 
provisions in a new NAFTA, now that we are going to abandon 
this disaster, if they have failed to meet basic 
internationally recognized labor standards?
    Before you answer that question, I want to remind you, I 
did submit to you the principles of trade which we are having 
as our standards. I want to know what your standards are.
    Thank you, Mr. Ambassador.
    Ambassador LIGHTHIZER. We expect to negotiate an agreement 
that has enforceable labor standards. And we expect them to be 
consistent with the agreement that the Committee had with the 
Bush Administration on May 10, 2007. We expect them to be 
enforceable. And I look forward to working with the Members of 
the Committee to make sure that happens.
    In spite of the disagreements that you articulated, I think 
that with respect to labor standards, my guess is we are not 
that far apart.
    Chairman BRADY. All time has expired. Thank you, Mr. 
Pascrell.
    Mr. PASCRELL. Mr. Chairman, I will submit the other 
questions to the Ambassador with your approval.
    Chairman BRADY. Without objection.
    Mr. PASCRELL. Thank you.
    Chairman BRADY. Thank you.
    So we will now move to two-to-one questioning to balance 
out the rest of the hearing.
    Mr. Paulsen, you are recognized.
    Mr. PAULSEN. Mr. Ambassador, the movement of data around 
the world is essential for businesses of all types here in the 
21st century. From automobiles, to airplanes, to agricultural, 
and different apps, access to data around the globe is 
paramount in importance for businesses of all sizes in order to 
compete in a global economy. So data flows today have 
increased, they have grown by 45 times since 2005, and they are 
expected to grow by another 9 times by 2020.
    However, as you know, currently there are no enforceable 
trade rules specifically protecting data flows, which leaves 
American companies vulnerable to digital manipulation by 
foreign governments. And such efforts include data 
localization, forced technology, or source code transfers, and 
other pernicious efforts that undermine competition from U.S. 
companies.
    And both you and Secretary Ross have voiced public support 
for enforceable digital trade rules in your confirmation 
hearings as well as more recently. So does the Administration 
view inclusion of digital trade rules as a top priority for a 
NAFTA modernization and other future trade agreements?
    Ambassador LIGHTHIZER. Absolutely.
    Mr. PAULSEN. That is good to hear.
    And, Ambassador, you have also mentioned that you have 
notified Congress of the intent to initiate negotiations with 
Mexico and Canada regarding NAFTA. Given that NAFTA 
modernization will set that precedent also for future 
negotiations with other countries and other agreements, it is a 
tremendous opportunity to help break down barriers to digital 
trade and allow U.S. companies to compete in North America.
    Can you share with us, or the Committee, any information 
about Mexico and Canada's views on digital trade heading into 
those negotiations?
    Ambassador LIGHTHIZER. I have not had discussions with 
Mexico or Canada with respect to this issue. We expect to have 
a digital chapter, as you suggest. We expect it to be a very 
high-level agreement.
    I will have discussions with them. But I have to be 
careful, because we are not allowed to begin negotiations until 
we go through the TPA process, which we take as a very 
important commitment.
    Having said that, I guess I would be very surprised if both 
of them didn't agree fundamentally that we need this. Neither 
one of them are in the group of countries that are, as you 
suggest, trying to create new industries by using tactics like 
forced transfer of technology, like data localization rules.
    So I am optimistic that we will be able to put together a 
good chapter. But I certainly take it from our point of view 
that it would be very difficult to pass a NAFTA-implementing 
bill that doesn't have a very high standard digital chapter.
    Mr. PAULSEN. Good. That is good to hear.
    Let me just shift gears real quick. You know, the United 
States, and my home State of Minnesota, is a leader in medical 
device innovation and growing exports in that area that create 
a lot of really good jobs here at home and then help improve 
healthcare outcomes around the world. And other countries now 
are increasingly taking very extreme and misguided measures to 
control healthcare costs.
    As an example, in India, we are seeing severe price 
controls that disproportionately affect American medical device 
manufacturers, putting them at a competitive disadvantage. 
India has also rejected requests by U.S. medical device 
manufacturers to withdraw affected products from the market and 
then has announced its intention to impose price controls on 
additional categories of medical devices.
    And then another example would be in Italy where only U.S. 
publicly traded companies are required to account for expected 
revenue losses related to a yet-to-be-implemented and highly 
controversial payback law that would require companies to pay 
back to the government any medical device spending in excess of 
an arbitrary predetermined level of spending.
    These are policies that hurt American companies and deter 
these companies from introducing new, innovative technologies 
in these markets, which ultimately means patients are going to 
have less access to these products.
    So can you just share a little bit, how will the 
Administration work with India or other foreign governments to 
ensure that our companies are not being driven out of the 
market by arbitrary price caps or spending measures that make 
it impossible for innovative companies to compete?
    Ambassador LIGHTHIZER. Thank you, Congressman.
    I have met with a group of medical device executives and 
have heard the horror stories. And that really is what they 
are. This is an issue that we are raising with India, and we 
are going to use the Prime Minister's visit as a launching pad 
to make sure that this gets proper attention.
    So everything you say, we completely agree with. All we can 
do at this point is raise the issues with them, show the 
unfairness of them.
    And this, to me, fits into the category also of things that 
if you have a big trade surplus with the United States, you 
should not be doing things like this to the United States. They 
should be trying to encourage imports from the United States.
    And their problem is even bigger because this is another 
example, the medical device area, is another example where 
China is now going to move in, has it on their Made in China 
2025 list of industries that they want to become world class 
in.
    So this is an industry that I think we really do have to 
focus on. And we met with them and we expect to put together an 
action plan.
    Mr. PAULSEN. Thank you, Ambassador.
    Chairman BRADY. Thank you, Mr. Paulsen.
    Mr. Marchant, you are recognized.
    Mr. MARCHANT. Thank you, Mr. Chairman.
    Thank you, Ambassador, for being here today.
    I have a couple of questions and issues I want to bring to 
you about the negotiations of NAFTA and how they may affect my 
district in Texas.
    My district is the DFW Airport. The DFW Airport is the 
center of my congressional district. The airport has an 
astonishing value that it adds to our economy of $37 billion a 
year. The Metroplex area that encompasses my congressional 
district is generating nearly half a trillion dollars in the 
GDP, and the DFW Airport is the driving force behind much of 
that growth. Most people in Texas say that the airport really 
is the economic generator for the whole State.
    Just recently, the mayors of Fort Worth and Dallas and a 
delegation traveled to Toronto. And their main concern was that 
both parties, both those in Toronto and Dallas-Fort Worth, are 
uneasy about the upcoming negotiations, and they want to make 
sure that these relationships they have developed over the past 
few decades are going to last.
    So I would like to know what steps the Administration is 
taking to make sure that the areas of the country that 
experienced economic growth as a benefit of NAFTA won't be 
harmed or see a downtick in the results of the modernization.
    Ambassador LIGHTHIZER. Thank you, Congressman.
    First of all, we are very much aware of how important that 
airport is to the State of Texas. And we are also aware, as the 
Chairman points out, that Texas is the number one exporting 
State in the country, at this point, as I understand it.
    So our objective is to have more trade, not less trade. And 
our objective is to, first of all, do no harm. We expect that 
as a result of this the United States will have more sales and 
we hope that there is more trade. But, clearly, with respect to 
the provisions where NAFTA has been successful, we want to 
secure that going forward.
    Mr. MARCHANT. Thank you.
    Lastly, I would like to bring up a letter that was sent to 
you by our two Senators on June 8th. And, basically, the letter 
states that NAFTA has played a key role in all North American 
energy markets, such as oil and natural gas, and that the NAFTA 
agreement allows the United States to maximize the benefit of 
being the world's largest energy producer.
    As the Administration moves forward, I would like to echo 
the sentiments of this letter and ask for your opinion on the 
free flow of energy products, including electricity, oil, and 
natural gas, across the United States and Mexico and Canadian 
borders.
    Ambassador LIGHTHIZER. Yes. I agree with you. We think 
that--Senator Cornyn of course is on the Finance Committee, 
where I testified yesterday, and this did come up.
    We support the free flow of energy across the borders. We 
think it is one of the advantages we have as a North American 
market.
    Mr. MARCHANT. And you don't think that any of the NAFTA 
negotiations that we contemplate will have any effect on that 
free flow?
    Ambassador LIGHTHIZER. Well, I am not privy, obviously, to 
what the other people want to do. We think it has been a 
success. We hope it fits in the category of ``do no harm,'' and 
we hope that everyone agrees with that, although, there are 
complications in this area, as you know.
    Mr. MARCHANT. Thank you, Mr. Ambassador.
    Thank you, Mr. Chairman.
    Chairman BRADY. Thank you, Mr. Marchant.
    Following the practice of the Gibbons rule, Ms. Sewell, you 
are recognized.
    Oh, Ms. DelBene, you are recognized.
    Ms. DELBENE. Thank you, Mr. Chair.
    Thank you, Mr. Ambassador, for being here with us today.
    First, we talked a little bit about digital trade, and 
digital trade is critically important. We have 3 million 
Americans who are employed in the Internet sector, and it has 
helped the United States achieve a trade surplus, a $159 
billion trade surplus. So this is a very, very important issue.
    In order to build on this--and I know you mentioned that 
digital trade would be a priority in any NAFTA renegotiation--
how will you ensure that digital trade is prioritized within 
your office with appropriate levels at the agency?
    Ambassador LIGHTHIZER. Well, first of all, as I went 
through my confirmation process, and in meeting with Members of 
the Ways and Means Committee, digital trade, after agriculture 
probably, is the number one thing that is raised. And it is 
self-evident that it is very, very important to the U.S. 
economy, and it is an area where we have a real competitive 
advantage. So it is important.
    We have at USTR a position that was created just last year, 
it has not yet been filled, for an Intellectual Property 
Innovation Ambassador who is a negotiator, who is responsible 
for that area. We are in the process right now of filling that 
spot. And that will be someone who will, along with a few other 
things, focus very much on exactly this area.
    So we do understand how important it is, and we think it is 
an important way to get our trade deficit down, which is a 
primary objective of the President.
    Ms. DELBENE. Thank you. I urge you to fill that position 
quickly. That is important.
    Ambassador LIGHTHIZER. Are you available between now--you 
are probably booked.
    Ms. DELBENE. I also wanted to talk to you a little bit 
about cloud computing and some of the issues we are seeing with 
China. Various Chinese regulations are making it difficult, or 
even impossible, for U.S. technology companies to operate in 
China, possibly in violation of WTO commitments.
    Specifically, I am concerned with China's proposed draft 
regulations, that when combined with existing Chinese law would 
require U.S. cloud providers to transfer valuable intellectual 
property and effectively hand over control of their businesses 
to Chinese companies in order to operate.
    Global cloud services totaled more than $100 billion in 
2016 and has a very strong presence in my district and in my 
State. So it is very critical that the U.S.-China Comprehensive 
Economic Dialogue's 100-Day Plan includes a commitment by China 
to resolve this problem.
    And so I wanted to hear from you. Are you aware of this 
issue? And can you talk about any progress that the 
Administration is making toward addressing this issue?
    Ambassador LIGHTHIZER. Well, yes, Congresswoman, I am aware 
of the issue. It is an extremely important issue. And it, to 
me, when I read about it, is another example of a country being 
a mercantilist and basically having an industrial policy.
    They see an industry or sector that has value, that is high 
technology, that has a huge growth potential that affects not 
just its own sector, but every sector, right, because it is 
this linkage that is so important. And then they try to get 
themselves in the position where they take over, first within 
their own country, and then way beyond that. And it is exactly 
the same pattern that we see everywhere. They limit. You have 
to have a partner before you can go in.
    Anyone who hasn't followed this issue, it is worth looking 
at. It is a prototype of exactly how they have gotten to where 
they are in a whole bunch of industries for noneconomic 
reasons. None of this has anything to do with the economy.
    So it is an extremely important issue. It is something that 
I am focused on, that the Secretary of Commerce is focused on, 
and others in the Administration are focused on. And we are 
raising our complaints with the Chinese, and we are looking at 
all of our options. So we are aware of the issue. We realize 
how important it is, and we are engaged on it.
    Ms. DELBENE. Thank you.
    You know, the fact that China has these regulations is 
particularly really offensive given the fact that Chinese cloud 
computing companies don't face these types of restrictions when 
they operate in the United States.
    Ambassador LIGHTHIZER. I mean, this is an extremely 
important point. There is no reciprocity at all. And it is 
something that if we can take care of it through current law, 
we should do. And if we can't, the Congress should look at it, 
in my judgment.
    Ms. DELBENE. One quick point which will be for the record, 
because we don't have time. I want to make sure you are aware 
of some of the concerns and questions we have heard about the 
Covered Agreement with respect to the EU. And so I will submit 
a question for the record, and I would appreciate your feedback 
on that.
    Thank you.
    Chairman BRADY. Thank you, Ms. DelBene.
    Mr. Renacci, you are recognized.
    Mr. RENACCI. Thank you, Mr. Chairman.
    I want to welcome you, Ambassador, from one Buckeye to 
another. My district, Mr. Ambassador, starts in northeast Ohio. 
So it is in northeast Ohio. It starts in Cuyahoga County and 
then rolls all the way down into Wayne County. Because of that, 
Wayne County, actually, is one of the largest dairy-producing 
districts in the State.
    The Ohio dairy sector relies significantly on exports. I am 
particularly interested in the potential to make good use of 
our engagement with Canada to tackle both the excessive tariffs 
our industry still faces there, and just as importantly, the 
non-tariff policies Canada has been using to distort trade.
    Canada's new Class 6 and 7 pricing tools seem designed to 
let Canada have its cake and eat it too at our expense. The 
programs are a concern not only to companies exporting to 
Canada, but also those exporting protein products around the 
world, since the Canadian programs are designed to undercut our 
sales on both fronts.
    How do we tackle both the problems facing us now with 
Canada on dairy and find a way forward to establish more open 
and dependable trading conditions with them on dairy?
    Ambassador LIGHTHIZER. Well, first of all, if you had said 
Ashtabula County, I would have paid more attention.
    But seriously, we are very much aware of this issue. I have 
talked to Minister Freeland in Canada about it. And as you say, 
the way to think about it is exactly the way you put it. This 
is not just about exports from the United States to Canada. 
This is about exports from the United States to everywhere, 
because they have created such a, really as a byproduct, such a 
volume of dried skim milk that they can knock us out of markets 
everywhere.
    So it is way beyond just a problem with Canada. It is 
something that we are engaged on, and that we have heard from 
not only Members from Ohio, but obviously Members from 
Wisconsin and from all over the place. And it is something that 
we want to deal with in the context of NAFTA. Our agriculture 
people at USTR are engaged and they have a variety of options 
that we are looking at right now.
    Mr. RENACCI. Thank you.
    Mr. Ambassador, I am an avid motorcycle rider. I learned 
this past week that Vice President Pence is also an avid 
motorcycle rider. But on the EU-U.S. beef hormone trade dispute 
issue, motorcycles are on the approved list for a 100 percent 
import tariff, specifically 51cc to 500cc. If this import 
tariff goes into effect, it would do economic harm to 
motorcycle dealerships and facilities in the State of Ohio and 
seriously impact domestic consumers.
    My question to you is, a number of us here in the Congress 
have expressed our concern over the import tariff proposal on 
motorcycles and how harmful it would be on our constituents. As 
the USTR has done in the past, would you withdraw motorcycles 
from the approved import tariff list in the EU-U.S. beef 
hormone trade dispute?
    Ambassador LIGHTHIZER. Well, my hope is that we are going 
to negotiate our way out of this. That is our objective. I 
realize there are a variety of products that are on the 
potential list and nothing has been happening to anybody at 
this point.
    I know that the motorcycle industry, the motorcycle riders, 
have been very activated on this. I am sympathetic to their 
position. But right now we are just hoping to negotiate it out. 
I am not taking anything off of the list at this point. I think 
that would be counterproductive to the negotiation.
    Mr. RENACCI. I would hope we take a good look at this.
    Again, I want to thank you, Mr. Chairman, for allowing me 
to participate in this hearing. And I yield back.
    Chairman BRADY. Thank you.
    Mr. Meehan, you are recognized.
    Mr. MEEHAN. Thank you, Mr. Chairman.
    And thank you, Ambassador, for being here today.
    Many of the themes get repetitive by the time you get down 
to this point of the aisle. But I want to attach myself to the 
comments that have been made by a couple of my colleagues with 
regard to the importance of the free flow of data and the 
effort that we are putting forth with the recognition that what 
you do here with NAFTA may also have some influence with regard 
to bilateral agreements that you intend to reach with other 
countries.
    As we are looking at Europe and other places, the questions 
of privacy demands and others in the European sector create a 
genuine concern for the free flow of data.
    So you did say that you were looking toward putting the 
highest-level people in your organization as focused on those 
questions. May I inquire, the position that you are looking for 
with the IP Ambassador, is that something that requires Senate 
approval or is that within your own bailiwick?
    Ambassador LIGHTHIZER. It requires a Senate approval.
    Mr. MEEHAN. So this is part of a problem. I hope my 
colleagues on the other side who are concerned about this issue 
would be weighing in with their colleagues in the Senate to 
assure that we would have this kind of support for that very, 
very important position.
    But I thank you for your emphasis on that and hope in lieu 
of that appointment you will still look to assure that there 
are senior-level people working on those negotiations.
    Another issue which I know you are well aware of but which 
continues to have great significance has been the patent 
protection for innovation that takes place in the United States 
in the biopharma area. There are questions about data 
protection for biologic and other kinds of drugs.
    This has certainly been a part of TPP negotiations in the 
past and was not really resolved in a way that was as clear in 
TPP negotiations, with the Five Plus Three being about the 
best, notwithstanding many representations by the Trade Rep 
that they were looking for the 12 years of patent protection 
that are enjoyed here in the United States.
    Currently, as best as I can understand, Canada does not 
recognize 12 years of protections for the biologics, and Mexico 
is ambiguous at this point in time.
    Is it your intention to try to work in that space to 
maximize the protections for biologics?
    Ambassador LIGHTHIZER. Yes, absolutely.
    Mr. MEEHAN. We would be grateful for your continuing 
commitment to that.
    And can you address for me, as well, what you might be able 
to do with regard to mechanisms for patent disputes where they 
may arise in the context of that space?
    Ambassador LIGHTHIZER. Well, this is another area where we 
want to have discussions and where NAFTA will--the whole 
protection of intellectual property will be a major issue in 
this negotiation, not just in the biologic area, but in the 
dispute area.
    There have been, for those Members who aren't aware, there 
have been a number of cases in Canada where we think, unfairly, 
people have lost their patent protection, and this is something 
that we are going to focus on.
    We understand the issue. We think it is a significant 
issue. And it is a surprise to a lot of Members who don't focus 
on it like you do that this is something that would go on in 
Canada.
    Mr. MEEHAN. Well, I thank you. I thank you for your 
attention to those important issues.
    And, Mr. Chairman, I yield back.
    Chairman BRADY. Thank you, Mr. Meehan.
    Dr. Davis, you are recognized.
    Mr. DAVIS. Thank you, Mr. Chairman.
    And welcome, Mr. Ambassador.
    I live in Chicago, Illinois, and my hometown has the 
largest concentration of companies that process sugar-contained 
products made in our country. They are currently, though, 
paying 75 percent more for sugar than their competitors who can 
buy on the world market.
    In the TPP partnership agreement negotiations, a consensus 
was reached without significant dissent in the United States to 
increase the sugar export quotas for Australia and Canada. What 
my constituents would like to know is, are these legacy 
negotiations regarding additional access for the U.S. sugar 
market going to be on the table during the renegotiation of 
NAFTA with Canada and Mexico?
    Ambassador LIGHTHIZER. Well, we have, with respect to 
Mexico, we have an agreement that was entered into, a 
suspension agreement that was entered into, and it seems 
unlikely that is going to change in the context of NAFTA. 
Certainly, with respect to Mexico and Canada, if it is 
something that Members care about, we will be informed by what 
the Members' views are on it, and we will certainly take note 
of the fact that you are concerned about it. The biggest sugar 
issue we have right now is with Mexico and our chances in the 
context of that litigation, of the Title 7 litigation, is that 
we have a suspension agreement, and I think we will probably 
end up resolving that issue through the negotiation.
    Mr. DAVIS. I serve as Cochair of something called the Sugar 
Caucus, and, of course, Chicago used to be known as the candy 
capital of America. Our Members are expressing serious concern 
about the continuing domestic rise in sugar price, which has 
actually caused already a number of our companies and 
corporations and entities to move or relocate out of the 
country or to look elsewhere to purchase their sugar because 
they use huge amounts of it. Some of the candy and other things 
they make are mostly sugar.
    Could you share with us the Administration's concerns 
relative to this continuing rise in domestic sugar prices for 
these businesses?
    Ambassador LIGHTHIZER. Well, Congressman, I don't have any 
views on that issue. It is more of an agricultural issue from 
my point of view. I am concerned about the trade aspects of it, 
and will certainly want to engage with the Committee on that, 
but the domestic price of sugar is out of my purview. I am not 
unsympathetic to the points you make, but I have this whole 
world of things that are probably impossible to do, and if I 
add domestic agricultural prices to it, then I will go from a 
small chance to zero chance, so I think I have to sort of stay 
in the realm of trade.
    Mr. DAVIS. We would urge you to add this trade issue. Any 
time we continue to lose jobs that we can't replace, that 
becomes for me a trade issue, as well as an agriculture issue, 
and so we would just urge you to take a real serious look at 
this issue and this problem. I thank you so much for being 
here, and I yield back the balance of my time.
    Chairman BRADY. Thank you, Dr. Davis. Ms. Noem, you are 
recognized.
    Ms. NOEM. Thank you, Mr. Chairman, and thank you, 
Ambassador, for being with us today. I know you are busy 
working on NAFTA renegotiations and modernization and new trade 
opportunities for us and this country, but I also want to thank 
you for your work with Secretary Ross and the Commerce 
Department on allowing U.S. beef back into China. That is huge 
for my State of South Dakota and our cattle producers and 
access to the $2.5 billion market is welcome news for all of 
us.
    What concerns me about the deal is that our beef is going 
to have a tough time getting back up to that 70 percent import 
market share that American beef producers enjoyed previously. 
Australia, one of our top competitors in the region, has 
negotiated a free trade agreement with China to completely 
reduce tariffs on their beef by 2024. So as we work to 
modernize NAFTA, other countries are working on free trade 
agreements, and we are losing market share in foreign 
economies.
    So what is your plan to ensure that American agricultural 
exports are going to be on a level playing field in foreign 
markets, so we won't continue to see our market share reduction 
in other countries, and also getting there quickly before those 
other countries are able to snatch up that market share before 
we get other agreements completed?
    Ambassador LIGHTHIZER. Well, first of all, we are very 
pleased with what was accomplished with respect to beef in the 
China 100-Day Plan. And we think there are lots of other 
restrictions that we can eliminate with respect to all 
agricultural products in China. Many times the United States 
has the best and the cheapest product, and there is some 
reason, there is some impediment to the importation, and that 
was a classic example in the beef case, and in many cases, also 
poultry. There are a whole variety of these kinds of issues. So 
the first thing we have to do is remove impediments to trade, 
to U.S. trade. U.S. agriculture, as you know far better than I 
do, is the best, it is the most competitive, and it is the 
cheapest, and if we have a level playing field, we will do 
fine.
    I think it is extremely unlikely that we are going to end 
up with a free trade negotiation with China for a whole variety 
of reasons that I would be, you know, happy to sit down and 
talk about, but we do have a lot of leverage with China in 
terms of them removing impediments and granting access to U.S. 
agricultural products, U.S. beef particularly. I mean, the 
reality is that they have a $350 billion surplus with us. You 
get a certain amount of leverage with that if you are willing 
to use it. And it fits into the category of the people who 
can't have that kind of a--I mean, in the history of the world, 
there has never been anything that was so imbalanced as that, 
and that gives us a certain amount of leverage. So continuing 
to push on those issues is important.
    In addition, there is a lot of talk about other FTAs, 
bilateral FTAs. One of the ones that the beef producers always 
talk about, of course, is Japan. So we have discussions with 
the Japanese. We are not necessarily, at this point, moving in 
the direction of an FTA, because they are probably not ready to 
talk and neither are we, but we have a structure that is under 
the Vice-President where we are engaging in an economic 
dialogue. We are talking about a variety of issues, these kinds 
of issues, and it is the kind of thing that, at some point, may 
lead to an FTA, which I know is very important to agriculture.
    The final thing that I would say on this issue is Japan has 
had a $60- or $70 billion trade surplus with the United States 
since I was at USTR 30 years ago, and I have taken the position 
that on these kinds of areas, at least on a temporary basis, 
the Japanese ought to be making unilateral concessions. The 
reality is that it is in their interest, it is not like you are 
pushing out Japanese production, in that case, you would be 
pushing out another competitor's production.
    So I think that is something that we ought to look at. They 
ought to be letting our beef in at least on a temporary basis, 
just as an effort to get their trade deficit down and to show 
good faith in moving forward in developing a closer 
relationship.
    Ms. NOEM. I think any reassurance you can continuously give 
that we are not just focused on a seamless negotiation of 
NAFTA, that we are continuing to focus on China, we are 
continuing to focus on Japan, that there are many of these--I 
know that--our number one industry in South Dakota is 
agriculture. I am a lifelong farmer and rancher, and was a 
cattle producer for decades, so I know that market share is 
incredibly important, and they see other countries being 
aggressive and like reassurances that we are not unilaterally 
focused on renegotiating NAFTA, that we are continuing to push 
those other areas.
    And so, I appreciate your work on all of that, and also 
just will mention--I know I am out of time--but geographical 
indicators in the European Union as well is an issue on which I 
will talk with you later, but thank you for your time, and with 
that, I yield back.
    Chairman BRADY. Thank you, Ms. Noem.
    Mr. Holding, you are recognized.
    Mr. HOLDING. Thank you, Mr. Chairman. Mr. Ambassador, 
first, I would like to thank you and your very able staff for 
the assistance you have provided and continue to provide to our 
sweet potato farmers as they face an issue in the EU, a pending 
issue that could greatly harm their ability to export. North 
Carolina makes great sweet potatoes, and we wouldn't want to 
deprive the world of their great taste and benefits.
    Touching on some other issues, as you can imagine, and I 
know that you know, a lot of Members of Congress are looking 
forward to a bilateral agreement with the United Kingdom. I 
watched the press reports from the meeting that Secretary Ross 
had with Secretary Liam Fox earlier this week, and out of that 
meeting they announced that as early as July they will begin a 
preliminary scoping for a U.S.-U.K. trade agreement.
    So I would ask you to explain what preliminary scoping 
means? You know, what does the working group consist of? Do you 
have the lead in this? Is Commerce taking the lead in this? And 
then additionally, regarding TPA, will TPA procedures be 
followed in this preliminary scoping, including a consultation 
with Congress during the scoping process?
    Ambassador LIGHTHIZER. Well, thank you, Congressman. Yes, 
as you say, Secretary of State Fox was in town last week. We 
met with him, also. USTR negotiates agreements like this, so 
while Secretary Ross will be very much involved, USTR will be 
the hub of this negotiation.
    The first thing we have to remember is that the U.K. really 
can't do anything for a while. They have another several 
months, probably until the early part, I guess, maybe the 
middle of 2019 before they can actually get out of the EU, and 
then they would be eligible. There are a variety of things you 
can do that aren't really a trade negotiation that we can both 
agree on, things like licensing and this kind of thing, and I 
think there is an effort to try to talk about and do that in 
the meantime, to discuss the issues. As we get closer to the 
time that they can actually act, then we would start going 
through the process that you allude to.
    But I think at the right time, the U.K. would like to have 
an agreement with the United States, and I believe that the 
United States wants to have an agreement there, also, so it is 
an important activity. It is something that has its own 
timeframe because of their situation, which is kind of 
controlling in this case, but we have begun talks about matters 
of mutual interest, and they are, for us, a natural partner.
    Mr. HOLDING. Well, I agree with you, and as you engage in 
your preliminary scoping, Members of Congress who are engaged 
on this are engaging with our counterparts in the Parliament to 
talk about what the agreement would entail and get an idea of 
where potential sticking points might be, you know, certain--we 
will always have adverse interests in some regard.
    Staying on the topic of the U.K., you know, I would urge 
you, as you look toward 232 investigations, that you recognize 
the very unique relationship, the special relationship we have 
with the United Kingdom, particularly in the regard of national 
security between our two countries, and take that into account, 
and, perhaps, consider exempting countries like the United 
Kingdom, perhaps there is no other country like the United 
Kingdom regarding our special relationship and national 
security when you decide what actions you are going to take 
vis-a-vis 232.
    Lastly, ISDS has been touched on numerous times today. ISDS 
and the carve-out of tobacco from ISDS and the TPP was an 
absolute fatal flaw, and I would encourage you, as you look at 
trade agreements, and look at ISDS and whether that is 
appropriate in various trade agreements, that you commit to not 
carving out any sector of our economy from ISDS. As you and I 
have talked about before, you always have to be mindful of 
getting to 218 on a trade agreement. And any carve-out of 
tobacco from ISDS or really, any other privilege and benefit of 
a trade agreement would be fairly fatal to arriving to 218. So 
thank you.
    Chairman BRADY. Thank you, Mr. Holding.
    Mr. Smith, you are recognized.
    Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. Thank you, 
Mr. Lighthizer, for being here. The folks in southeast and 
south central Missouri definitely agree with President Trump 
and yourself that we believe our trade deals need to put 
American workers and American farmers and ranchers and American 
families first. I think that is extremely important.
    In the last two decades since NAFTA was signed, a lot has 
changed in our economy. When you talk with the folks that I 
represent, they associate NAFTA with job losses. They know 
someone who has lost a factory job making shoes or bicycles, 
and even clothing, in southeast Missouri. It is incredibly 
important that NAFTA be updated and modernized, and we need to 
do it in such a way that puts American workers, businesses, 
farmers, and consumers first.
    While the full promise of American manufacturing was not 
realized under NAFTA, American agriculture saw significant 
gains in the market access, and this must be preserved. The 
district I represent is the most diversified agriculture 
district outside of California. Every August, I do a 2-week 
farm tour visiting all 30 counties promoting the diversity and 
all the different aspects of our district. And in Missouri, we 
are the fourth largest rice producing State in the country. And 
all of that rice is produced in just the five counties in the 
Bootheel of Missouri, which is my entire congressional 
district.
    NAFTA is responsible for making Mexico and Canada the 
largest market for Missouri rice, with 87 percent of our 
exports going to those two countries. Mr. Lighthizer, Missouri 
farmers want to maintain the market access that they currently 
have in agriculture trade with Mexico and Canada. Any 
disruption of trade with Mexico and Canada is a concern of our 
farmers and our ranchers. What will your approach be in the 
renegotiations to be sure that no new barriers to U.S. 
agriculture trade are established under NAFTA?
    Ambassador LIGHTHIZER. Well, we certainly intend in this 
negotiation to do no harm to the agriculture sector. Our 
objective is to modernize, to put in place the things that have 
to be put in place, to correct such things as rules of origin 
and the like that have become outdated and have led really to a 
very large trade deficit. But we clearly will not be part of a 
negotiation where there are new barriers to agriculture that 
come up for sure.
    Mr. SMITH OF MISSOURI. I appreciate that statement. The 
task that you have at hand is not an easy one, but I stand with 
you and the White House and this Committee to make sure that we 
get the best agreement and the best deal for the American 
citizens. Thank you.
    Ambassador LIGHTHIZER. Thank you.
    Chairman BRADY. Thank you. Mrs. Black, you are recognized.
    Mrs. BLACK. Thank you, Mr. Chairman, and, again, welcome, 
Ambassador. We are delighted to have you here today and look 
forward to working with you in the future. I want to talk about 
one of the issues that are affecting some of the good people, 
and also companies, back in my State, and that is the lack of 
fairness in selling across the Mexican and Canadian borders 
where there is a very low-dollar value and shipments, the de 
minimis shipment threshold. Basically, it was set aside as a 
low-dollar shipping--shipments for faster and easier processing 
in and out of countries, but at this point in time, since it 
has been years since that agreement was made, we really are in 
a situation where there is an unfairness.
    For instance, in the United States, the de minimis shipment 
level is $800, but when you look at Mexico, it is less than 
$50. And when you look at Canada, it is $15. And so there is a 
real unequal treatment, and actually a real cost to some of 
those folks that are doing business, such as FedEx, and FedEx 
has thousands of workers and employees in my home State of 
Tennessee that potentially are affected by this, as well as 
individuals. And so I would like to know from you if that is 
something you are looking at, and that you think we can find 
some resolution and some equality in, for both individuals and 
also companies in this area.
    Ambassador LIGHTHIZER. Yes, thank you, Congresswoman. First 
of all, yes, that is something that we are looking at that we 
take very seriously. It is one of those issues where you think 
you know something about trade and then you look at this issue 
and you think how is it even possible this could be happening? 
And it is a real burden to everybody who shifts back and forth, 
probably more in Canada, but even as you say, quite a bit going 
back to Mexico.
    So it is a very large problem. It is the kind of thing that 
fits into the category of reciprocity where you say to yourself 
how is it possible that we could--in some ways, it could be so 
much easier to ship it here than it is to ship to those two 
countries. So we are going to look at it. And I hope there is a 
resolution that is satisfactory to your constituents. It is 
clearly a priority. It seems like the kind of thing that would 
be easy enough to fix. It can't be in anyone's interest, just, 
if I may, a management point of view, to have these tiny little 
thresholds. It has to be a burden on them, I would think, and I 
hope it is not done intentionally, I hope it is just a question 
of something that has just built up over time, but it is 
something we are going to look at and we are going to focus on.
    Mrs. BLACK. Well, I appreciate that, because my 
understanding is these thresholds were set many, many years ago 
when things were different as far as the way in which shipment 
was done, the cost of products and so on, and so this seems to 
be something that has been around for a while and needs to be 
revisited, and the sooner the better for both individuals and 
for companies on the cost that is borne by this inequity.
    The second item I want to talk to you about is one that has 
come to my attention most recently, and it is the issue of the 
U.S.-EU covered agreement on insurance. And it actually came to 
my attention by a couple of different sources. One was the 
Tennessee Farm Bureau in my State, which is a very large 
industry and does a lot of business around the country, around 
the world, as well. And then I also heard from the Tennessee 
Insurance Commission, and our own commissioner, Julie McPeak, 
who is the commissioner of insurance in Tennessee, who was here 
a couple of weeks ago testifying before the Senate. And so this 
agreement that was put into place, and I understand it was 
pretty much rushed through by the previous Administration in 
their closing days to change the way that insurance products 
are treated across borders, has not seemed to be in the best 
interest of those here in the United States, and probably the 
biggest part of this is there is just not clarity, and there 
are a lot of questions about what these agreements mean.
    And so I wanted to know if that is something you are aware 
of, and that you are looking at getting some clarity for the 
insurance--for those who do insurance.
    Ambassador LIGHTHIZER. Yes, thank you, Congresswoman. I am 
very much aware of the issue. It is something that the 
Secretary of Treasury and I have to come to grips with here in 
the not-too-distant future, and, in fact, have meetings 
scheduled very soon for he and I to sit down and discuss this 
issue. So it is a good time to have your view on it.
    Mrs. BLACK. Well, I appreciate that. I think since the 
President is really very adamant about America First, that we 
need to make sure we are not, in some way, putting our 
companies and our folks here in the United States behind other 
countries with a lack of clarity and making sure that there is 
an equality and treatment there, as well.
    Thank you, and I yield back.
    Chairman BRADY. Thank you. Mr. Rice, you are recognized.
    Mr. RICE. Thank you, Mr. Chairman, and thank you, 
Ambassador Lighthizer, for being here and your patience in 
waiting for 2\1/2\ hours to allow me to ask you a few 
questions.
    I think that I am very much aligned with the 
Administration. Mr. Trump says, ``Make America Great Again,'' I 
say make America competitive again. And two of the things that 
give me the most hope, most optimism about this Administration 
are your appointment, and the appointment of Mr. Ross. So I am 
really excited about fair and free trade.
    I appreciate your focus on the steel industry. I have 
already had one steel mill in Georgetown, South Carolina close 
during my 4 years here. During my 4 years here, I have had a 
constant stream of apparently legitimate complaints about 
abusive trade practices, particularly from China. So I have 
Nucor Steel still in my district, I have a company called 
Metglas in Conway who has lost employees because of these 
unfair trade practices, and I very much appreciate your focus 
on that.
    But I want to talk about something more fundamental. And 
that is what Mr. Nunes broached earlier, that being the fact 
that 140 other countries, including every one of our 
significant trading partners, have adopted border adjustment 
taxes generally through the value-added tax system.
    And I know this hearing is about trade, but we have heard 
how so many factors enter into fair trade earlier today, 
whether it be employment practices, environmental practices, 
taxes, and others. So what I am particularly curious about is 
in negotiating these trade agreements, how can you ensure that 
we achieve fair trade, trade where American companies and 
American workers can compete on a level playing field? How can 
you ensure that when other countries are applying border 
adjustment taxes on our products when they hit their shores, 
and we are not doing the same things to them? How can you, when 
you renegotiate NAFTA, account for the fact that Mexico has a 
16 percent border adjustment through a VAT, and we don't have 
the same offsetting tax, and, therefore, American workers and 
American companies are at a huge disadvantage?
    Ambassador LIGHTHIZER. Well, thank you, Congressman. First 
of all, I have spent a lot of time thinking about this issue, 
and I think that this equilibrium between direct and indirect 
taxes is a serious problem. Now, there are a lot of different 
ways to deal with that, and so I am not in a position where I 
want to say what is the best way. And, in addition, I am not 
paid to worry about taxes. I am pretty worried about other 
things.
    Mr. RICE. I agree, and I understand that you are not paid 
to worry about taxes, and this is a trade hearing, but don't 
taxes have a very direct impact on trade?
    Ambassador LIGHTHIZER. Absolutely. Taxes have a direct 
effect on competitiveness, and competitiveness is what trade is 
all about. At its core, trade is about competitiveness, so 
taxes are a huge issue. In terms of direct or indirect taxes, I 
think there is a real problem, but when I do my negotiations, I 
take those systems the way they are, and people make their own 
judgments for their own societal reasons as to whether or not 
they want to have value-added taxes or income taxes or how they 
want to structure all that, but I am not blind to the fact that 
it does make a difference in the real world.
    The most important thing, I think, is to get taxes down and 
to do all the other things that we need to do to become 
competitive. And in the area of taxes, there are a lot of 
different options, and as I noted, there has been a tendency on 
behalf of most countries really--or at least many countries, 
would probably be more accurate--to move from income taxes to 
an indirect tax system.
    Mr. RICE. There has been that tendency, and would you 
speculate that tendency was due, in some part, to the fact that 
it makes them more competitive with respect to manufacturing 
and importing and exporting?
    Ambassador LIGHTHIZER. Well, my guess is that they do it 
for a variety of reasons, and probably that is one. In respect 
to some issues, and this is something that has always been of 
concern to Republicans with respect to a value-added tax; I 
think to some extent, people go to it because they think it is 
easier to raise taxes, and there are a lot of people who are 
conservative Republicans who have the view that one of the 
principle reasons--that is an overstatement, but one reason 
that Europe has gone the way they have gone is because it has 
been too easy to raise taxes. So these are not totally--I mean, 
there are a lot of things to sort of think about in this 
discussion.
    Mr. RICE. And this issue on competitiveness of American 
products, it doesn't just apply to manufacturing, it applies to 
agriculture, as well, doesn't it?
    Ambassador LIGHTHIZER. Absolutely correct.
    Mr. RICE. Thank you, sir.
    Chairman BRADY. Thank you, Mr. Rice. Mrs. Walorski, you are 
recognized.
    Mrs. WALORSKI. Thank you, Mr. Chairman. Ambassador, it is 
good to see you. Thanks for hanging in with us, and I just 
wanted to thank you. I am from the State of Indiana, and I want 
to thank you for indulging me when you first came in today and 
talking and chatting about this Section 232 that we have talked 
a little bit about, but I am more than concerned about the 
impact on aluminum and the aluminum industry as it pertains to 
my district in northern Indiana and my State. I would just ask 
that, you know, to consider the anxiety from my constituents 
about the prospect of tariffs and quotas on imports that they 
depend on to make RVs, trailers, and all sorts of other 
products. I have already been contacted by some of these 
manufacturers, and they are already being impacted by price 
differences, and they are very, very uncertain as to what is 
going to happen as am I, and I appreciate your willingness to 
look into it.
    But could you convey to the President, to Secretary Ross, 
my request that they conduct these investigations and decisions 
that they are making thoughtfully, thoroughly, transparently, 
to determine what the impact of action might be for American 
companies and to avoid any type of quick action that would hurt 
these companies, could you just convey that information?
    Ambassador LIGHTHIZER. Yes, I will. I would be happy to do 
that.
    Mrs. WALORSKI. And then I just want to associate my remarks 
with previous remarks of Representative Paulsen about this 
issue in India. And our issue is the same type of thing, and it 
goes along with the medical device industry, and what we are 
seeing already, and, again, in Indiana, we are full of medical 
device manufacturers, so they are worried about the sudden and 
drastic nature of cuts, what it means to the products already 
being sold there, and products they may want to sell in India 
in the future.
    Myself and Mr. Kind, previously who spoke, sent a letter 
with 16 of our colleagues to the Indian Ambassador voicing our 
strong concerns, and I am happy to provide that letter to you. 
My question for you is, what else can we do on Capitol Hill to 
help you with these issues with the medical devices? We are 
looking specifically at stents, and some of the prohibitions, 
and just some of the things you referred to earlier, but is 
there anything else we can do to help you besides sending 
letters to their Ambassador?
    Ambassador LIGHTHIZER. Well, first of all, the issue is a 
very serious one. Second, I have met with the manufacturers, 
and they are in a position where they literally are forced to 
sell something they don't want to sell way below the price of 
manufacturing it. I mean, it is like you can't even understand 
it. I think it is something that we are taking seriously, we 
are focusing on, and just the more pressure Congress can put, 
the better, to be honest with you.
    Mrs. WALORSKI. Specifically to the Ambassador? Or does it 
need to go in any other direction?
    Ambassador LIGHTHIZER. Well, it is probably better if I 
don't talk about that in a public session. This may be one of 
those things that we have to go into executive session to talk 
about. No, I am kidding about that. The Prime Minister of India 
is coming to town to meet with the President.
    Mrs. WALORSKI. Right.
    Ambassador LIGHTHIZER. So there are a lot of opportunities 
where they are looking at irritants, and this is clearly a 
major, major irritant, and it is important that they know that 
because we have pressed them. Now from their point of view, you 
know, they have a different take on this.
    Mrs. WALORSKI. Sure. Oh, yeah.
    Ambassador LIGHTHIZER. And we press them and our arguments 
are stronger when they are backed up by the U.S. Congress. I 
mean, it is just that simple. I mean, the power in Washington 
is right in front of me, so.
    Mrs. WALORSKI. Okay. I appreciate that. And then a final 
issue I want to discuss, one I raised with you previously, and 
that is Canada's Promise Utility Doctrine. It has resulted in 
28 pharmaceutical patents being partially or completely 
invalidated, which is going to be a big priority for us in any 
NAFTA update. Do you have any comment on those protections and 
that doctrine?
    Ambassador LIGHTHIZER. Well, arguments too, but the result 
is you end up losing.
    Chairman BRADY. Ambassador, could you move a little closer 
to that microphone?
    Ambassador LIGHTHIZER. I am sorry. You end up losing 
patents because of abuse, and then somebody makes a generic 
drug out of the same product and starts selling it, so it is a 
serious problem, and it is clearly something that we are going 
to work on, and it is going to be part of this negotiation.
    Mrs. WALORSKI. I appreciate it. And can you just give me 
the bottom line, 20 seconds, as you see the Section 232 as it 
pertains to steel and aluminum? I am particularly interested in 
the aluminum part.
    Ambassador LIGHTHIZER. Well, I mean, I think you are going 
to see decisions on both of them fairly soon. I think the view 
in the Administration is that we have, you know, a very serious 
issue. The President has asked us to look at these things. They 
had hearings on one before. They have hearings on the other 
today, and the President wants action. He is worried about what 
is happening in those industries, and the President wants 
action. So to the extent you have concerns about effects, it is 
certainly timely.
    Mrs. WALORSKI. I appreciate that. I yield back. Thanks, Mr. 
Chairman.
    Chairman BRADY. Thank you. Mr. Curbelo, you are recognized.
    Mr. CURBELO. Thank you, Mr. Chairman, and thank you, 
Ambassador Lighthizer, for your presence here today.
    One issue I wanted to bring up is the effect trade 
agreements have on the farmers of my south Florida district. 
Many people not from south Florida might be surprised to know 
that Miami-Dade County is one of the largest ag producing 
counties in the State. Most people think about our beaches, and 
we are very proud of those, but we also have a very robust ag 
industry in south Florida. We have avocados, mangos, tomatoes 
and many other specialty crops which can be grown year-round. 
So as we renegotiate NAFTA, which I support, I am concerned 
with how the deal will affect our farmers across the country.
    We know a lot of farmers have benefited greatly from NAFTA; 
however, the story is a little bit different in south Dade. I 
try to spend as much time as I can with these farmers, and they 
have many issues that they are concerned about, immigration, 
taxes, but NAFTA is certainly a major one. Specialty crops like 
tomatoes, squash, eggplants, strawberries, pretty much anything 
that is hand-picked, faces a significant disadvantage when it 
comes to Mexican competition. Mexico has a similar climate, and 
for a whole host of reasons, can unfairly compete against many 
of my constituents.
    Ambassador, I have raised this issue multiple times as 
NAFTA is being renegotiated for the fair treatment of south 
Dade, especially these specialty crops and the farmers who grow 
them. I have mentioned this to you and your staff, Secretary 
Ross, and Mr. Navarro. This issue is of critical importance to 
the south Dade farming community. Can you discuss what we might 
be able to achieve through this NAFTA renegotiation to put 
these south Florida farmers on a level playing field with 
Mexico moving forward?
    Ambassador LIGHTHIZER. Well, first of all, we appreciate 
your input and those of other Members from Florida on this 
issue. We realize how important it is. As I said before, when 
we talk about how important agriculture is and the agricultural 
sales to Mexico, and they are extremely important, we, overall, 
have a trade deficit in agriculture with Mexico, and it is 
entirely because of the speciality crops, the fruits and 
vegetables that you are talking about. And there are a whole 
lot of additional elements of the seasonality and the 
perishability. There are just a lot of things that make it a 
very complicated issue, and I assure you, it is something that 
we are going to focus on in this negotiation and hopefully, we 
are going to get an outcome that is going to satisfy the 
producers in your district and in all of Florida.
    But it is a major problem, and you are right, it is the 
one--maybe not the one, but it is a major outlier in the whole 
agriculture story with respect to NAFTA, it is something that I 
think we have to be cognizant of and try to work on, so we very 
much appreciate your involvement on the issue.
    Mr. CURBELO. And I appreciate your commitment, and we will 
continue working with you and with your office and other 
Administration officials to try to make as much progress as 
possible.
    Another issue I would like to briefly touch on is the 
Transatlantic Trade and Investment Partnership. Earlier this 
month, I joined members of the T-TIP caucus, including seven 
Members of the Ways and Means Committee, in sending a letter to 
your office in support of continued T-TIP negotiations.
    Can you talk about the positive benefits T-TIP could have 
for our economy, especially with the inclusion of a dedicated 
chapter in the agreement identifying the importance of small- 
and medium-sized enterprises?
    Ambassador LIGHTHIZER. Well, we have an ongoing 
reevaluation of all of our trade agreements and all of our 
ongoing negotiations right now at USTR. And we are looking at 
the benefits and the drawbacks of the trade-offs that we see. 
But I think that T-TIP is an area where there are a lot of very 
positive reasons to go forward with that. It, of course, 
requires two people to be involved in a negotiation and for a 
variety of reasons, largely the electoral process, the European 
Union is not in a position to be negotiating at this point. The 
last election, I think, that they have this year is in 
September in Germany, and then I think at that point, they will 
start focusing on this. But then they have Brexit to focus on. 
So they have a lot of things they have to look at, too, and we 
also have priorities.
    But clearly, this is a very likely potential agreement, and 
it was entered into because an awful lot of people saw benefit 
to it. So as we go through this process, I think we will make 
an analysis, we will look at the pluses and minuses, and the 
views of the seven members of the caucus, of the Ways and Means 
Committee, will be very important to us, as I should say will 
all Members.
    Mr. CURBELO. Thank you. Thank you, Mr. Ambassador.
    Chairman BRADY. Thank you. Mr. Schweikert, you are 
recognized for the final question.
    Mr. SCHWEIKERT. Thank you, Mr. Chairman. And I think last 
and least, or however the saying goes, trying not to repeat any 
of the questions, and when you are last, a lot of them have 
been used up, but first off, just conceptually, I have a great 
appreciation for how complex your world is. You know, you have 
this area of authority, but everything from currencies, to 
local national regulations, to technology, to infrastructure, I 
mean, everything ends up affecting ultimately--how trade 
ultimately works.
    I do have a couple of odds and ends for you. Being from 
Arizona, we are one of the States that if you actually look at 
the baseline data, NAFTA has actually helped our State's 
economy. But as you move toward modernization, can I beg of you 
to have someone on the team fixate on just Customs technology, 
the ability to have those vegetables move across the border 
efficiently, the ability to say we are going to embrace a 
common platform for technology, and I don't care if it is based 
in a distributive ledger where you have GPS tags or RFIDs, but 
the ability to say how do you maximize the efficiency of those 
cross-border transactions and the movement of the Customs?
    Ambassador LIGHTHIZER. Thank you. That is such an important 
question, and we have sort of touched on it in various ways 
because we talk about de minimis, there is a lot of different 
things, but one of the things that we are going to focus on in 
trade facilitation is just--and I think that the Mexicans and 
the Canadians will be in agreement on this--just how do we make 
whatever you decide your policy is once you have set it, it has 
to be easier to move product and data across the border. So, 
you know, this is important. Efficiency is clearly our 
objective. Facilitating trade is our objective. There will be 
technical problems, of course, but as a matter of direction, I 
can't imagine that the three of us would have a disagreement on 
that.
    Mr. SCHWEIKERT. With this great opportunity with technology 
now, and the ability to track a truck, a lorry, down to 
certification at the dock to the movement to the backbone that 
actually is hack-proof. I am just, I embrace that technology.
    And the second thing, and this one may be slightly more 
conceptual, but as you are working on the drafting, how do you 
design something that is partially future proof if, you know, 
this is substantially the driver of much of the U.S. innovation 
and technology, what happens when, you know, that hand-held 
super computer is my transmission of making purchasing 
decisions, or paying my fees or moving money back and forth, 
that the agreement be robust enough to understand everything 
from, you know, the way we transmit data to where we house the 
data, to the encryption of such data. It is that sort of 
digital trade world that we are very good at that would also 
make the relationships with our trading partners more 
efficient.
    Ambassador LIGHTHIZER. Well, I think this has to be a 
focus. My guess is we will probably miss the mark because 
nobody really knows what is going to happen, and it is always 
unpredictable, but hopefully we won't miss it by as much as the 
people who did it 23 years ago. We will have the benefit of all 
that learning.
    Mr. SCHWEIKERT. And, Mr. Ambassador, that is one of the 
great difficulties, and trust me, I am part of a body where 
sometimes we commit the sin of thinking we know what the future 
looks like. And so how do you design at least language that as 
technology improvements move, you know, the movement of whether 
it be a cryptocurrency, whether it be documents of value, 
documents of certification, documents of ownership, that the 
way you have written the agreement, there aren't these great 
gaps that we have to wait 25 years for the next major 
negotiation to fill?
    Ambassador LIGHTHIZER. Well, this is so important, and 
hopefully, we are focusing on it enough, we will certainly try 
to, and then we have to build in processes, I think, within the 
agreement that allow you to make amendments when you--without 
actually going back through the whole process when there is 
sort of a huge directional change. But this is something that 
we are cognizant of, and we, perhaps, haven't thought enough 
about it, but certainly will, and we want to work with the 
Congress to do it.
    Mr. SCHWEIKERT. And the last thing, trans-shipments, 
something that actually may be a product made in Asia, comes 
through a Mexican port, brought up, I am hoping, actually, the 
same movement toward the identifications and technology that 
can actually deal with what are products that are actually part 
of the NAFTA agreement and what are just those who are passing 
through? And with that, I yield back, Mr. Chairman.
    Chairman BRADY. Thank you, Mr. Schweikert. I would like to 
thank Ambassador Lighthizer for appearing before us today. 
Please be advised that in addition to questions you received 
here, Members have 2 weeks to submit written questions to be 
answered later in writing. Those questions and your answers 
will be made part of the formal hearing record. Mr. Ambassador, 
we look forward to working with you on trade and expanding 
economic freedom, and with that the Committee stands adjourned.
    [Whereupon, at 12:48 p.m., the Committee was adjourned.]
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