[Senate Hearing 115-247]
[From the U.S. Government Publishing Office]
S. Hrg. 115-247
PRESIDENT'S TRADE POLICY AGENDA AND
FISCAL YEAR 2018 BUDGET
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
JUNE 21, 2017
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
______
U.S. GOVERNMENT PUBLISHING OFFICE
30-211-PDF WASHINGTON : 2018
COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming BILL NELSON, Florida
JOHN CORNYN, Texas ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia SHERROD BROWN, Ohio
ROB PORTMAN, Ohio MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina CLAIRE McCASKILL, Missouri
BILL CASSIDY, Louisiana
Chris Campbell, Staff Director
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
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OPENING STATEMENTS
Page
Hatch, Hon. Orrin G., a U.S. Senator from Utah, chairman,
Committee on Finance........................................... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 5
ADMINISTRATION WITNESS
Lighthizer, Hon. Robert E., United States Trade Representative,
Executive Office of the President, Washington, DC.............. 3
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Hatch, Hon. Orrin G.:
Opening statement............................................ 1
Prepared statement........................................... 37
Lighthizer, Hon. Robert E.:
Testimony.................................................... 3
Prepared statement........................................... 38
Responses to questions from committee members................ 41
Wyden, Hon. Ron:
Opening statement............................................ 5
Prepared statement........................................... 77
Communications
American Farm Bureau Federation.................................. 79
Department for Professional Employees, AFL-CIO................... 81
Marantis, Demetrios J. and Shawn A. Miles........................ 82
TechNet.......................................................... 85
Texas Cattle Feeders Association et al........................... 86
(iii)
PRESIDENT'S TRADE POLICY AGENDA AND FISCAL YEAR 2018 BUDGET
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WEDNESDAY, JUNE 21, 2017
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:20
a.m., in room SD-215, Dirksen Senate Office Building, Hon.
Orrin G. Hatch (chairman of the committee) presiding.
Present: Senators Grassley, Crapo, Roberts, Cornyn, Thune,
Isakson, Portman, Heller, Scott, Cassidy, Wyden, Stabenow,
Cantwell, Menendez, Carper, Cardin, Brown, Bennet, Casey, and
McCaskill.
Also present: Republican Staff: Chris Campbell, Staff
Director; Shane Warren, Chief International Trade Counsel; Rory
Heslington, Professional Staff Member; Douglas Petersen,
International Trade Counsel; and Andrew Rollo, Detailee.
Democratic Staff: Joshua Sheinkman, Staff Director; Elissa
Alben, Senior Trade and Competitiveness Counsel; Greta Peisch,
International Trade Counsel; and Jayme White, Chief Adviser for
International Competitiveness and Innovation.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
UTAH, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The committee will come to order--if we could
have order here.
Good morning and welcome to today's hearing, during which
we will discuss our Nation's trade policy agenda as well as
budget requests for the U.S. Trade Representative. We are so
happy to have him here.
I want to thank you, Ambassador Lighthizer, for being here
today. You have been in office for a little more than 1 month,
and we already have seen quite a bit of you here in the Senate.
I personally take this as a good sign that you understand the
importance of not only meeting with the Senate, but also
listening to the advice that you receive and incorporating it
into your negotiating postures and positions.
As you and I have discussed, following the letter and
spirit of the Trade Promotion Authority statute is the only way
to build the necessary support in Congress to execute the
President's ambitious trade agenda.
Members of the committee are looking forward to inquiring
about and discussing that agenda today. As required by law,
USTR issued its trade agenda report in March. Unfortunately,
due to unnecessary and politically motivated delays to
Ambassador Lighthizer's confirmation, that report had to be
issued before he took office. Now that Ambassador Lighthizer is
in office, today is an opportunity for him to update Congress
on the administration's trade goals.
Like I said, President Trump has outlined an ambitious
trade agenda. That is a good thing. The number-one goal for the
administration must be to build and maintain a healthy economy
for American businesses, workers, and families. And that
requires a trade policy that not only increases economic
opportunities for American companies and consumers, but also
holds foreign nations accountable when they abuse the system.
With that in mind, let me offer one piece of advice to the
administration. When tackling trade challenges, you should stay
focused on trade. That might sound obvious. But believe me,
some tend to disregard that particular piece of advice.
I was very critical of the last administration for using
American negotiating leverage to push a social agenda that was
often more concerned with labor, environment, public health,
and other policies than with improving the trade policy of our
trading partners.
I hope that this administration, in contrast, will keep
America's trade policy focused on trade. I would be similarly
concerned with the use of national security tools to achieve
trade policy goals, if doing so would risk undermining our
national security capabilities.
The President bears the responsibility for managing
significant national security threats from North Korea, Iran,
and elsewhere. And we must ensure that none of our Nation's
trade actions jeopardize the ironclad principle that the United
States has the absolute right to act in its essential security
interests, including through sanctions, embargoes, and other
economic measures.
Just as all national security options must remain on the
table to address security threats, we must use the full range
of trade policy tools to hold foreign nations accountable. I
expect and am confident that this administration will
aggressively pursue enforcement at the World Trade
Organization, utilize domestic trade remedy laws, combat
intellectual property rights violations, and work to resolve
market distortions in China and other countries.
Congress has provided the executive branch the tools
necessary to pursue these objectives. For example, Congress
recently authorized the Enforce and Protect Act to target duty
evasion and passed legislation improving the effectiveness of
the Special 301 mechanism and WTO-authorized retaliation
measures.
We also established a Chief Intellectual Property
Negotiator, a Trade Enforcement Trust Fund, and the Interagency
Center on Trade Implementation, Monitoring, and Enforcement.
All of these provisions were intended to give our Nation's
trade enforcers and negotiators the tools that they need to
ensure that our trading partners follow the rules.
Ambassador Lighthizer, I am interested in hearing your
views on how USTR and the administration will use these and
other existing trade authorities to challenge the improper
practices of foreign countries and what additional resources,
if any, might be needed in order to best utilize these
particular tools.
Of course, ensuring that our trading partners follow the
rules is only part of the equation. Establishing those rules
also is in our national interest. Toward that end, the upcoming
negotiations with Canada and Mexico provide the administration
with the unique opportunity to improve North American
integration. This will make this region a more attractive
investment and manufacturing hub and serve as a counterweight
to China.
Looking further ahead, the administration must build upon a
stronger North American base to expand opportunities for
American businesses, consumers, and workers in the Asia-Pacific
region, including through bilateral free trade agreements.
The administration is focused on addressing global trade
imbalances, and history has demonstrated to me, as well as many
others, that the best way to address those imbalances is
through U.S.-led free trade agreements.
Currently, the United States has free trade agreements with
20 individual countries. And in 2015, the overall U.S. trade
surplus with those countries was more than $8 billion. Long
story short, the best way to ensure a strong U.S. economy
through trade, of course, is to negotiate deals with foreign
nations that require them to play by our rules and allow us to
hold those countries accountable when they fail to do so. Now,
that is what I believe President Trump wants.
And I encourage you, Mr. Ambassador, to utilize the
authorities provided under the TPA statute to achieve these
goals.
[The prepared statement of Chairman Hatch appears in the
appendix.]
The Chairman. Now, Senator Wyden is going to be just a
little late; he is over at the Intelligence Committee doing his
work over there. But as soon as he arrives, we will give him
time to give his opening remarks as well.
But without delay, we are going to turn to you, Mr.
Ambassador, and take your statement right now and then go into
questions.
Ambassador Lighthizer?
STATEMENT OF HON. ROBERT E. LIGHTHIZER, UNITED STATES TRADE
REPRESENTATIVE, EXECUTIVE OFFICE OF THE PRESIDENT, WASHINGTON,
DC
Ambassador Lighthizer. Chairman Hatch, Ranking Member
Wyden, and other members of the Committee on Finance, it is an
honor to appear before you today. I am looking forward to
working with all members to implement a trade policy that
benefits America's workers, farmers, ranchers, and businessmen.
The President has requested an increase in funding for USTR
for the coming fiscal year. Our budget calls for $57.6 million,
an increase of roughly 6 percent over the 2016 level, which is
the last full year of the last administration.
These additional resources will be used to implement the
Interagency Center on Trade Enforcement and Monitoring and
would allow USTR to hire eight additional staffers to support
our trade enforcement activities. The administration's budget
request is consistent with both the President's desire to
control Federal spending as well as his insistence on a strong
and aggressive trade policy.
The overwhelming majority of USTR's resources are used for
personnel and travel. Payroll accounts for about 76 percent of
the budget, and travel is 11 percent.
Since being sworn in as USTR last year, 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 Asia-
Pacific Economic Cooperation Meeting in Hanoi, as well as a
meeting of the Organisation for Economic Co-operation and
Development in Paris.
At these meetings, as well as numerous other 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.
My team and I 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 also already making
progress on four vital topics: the President's plan to
renegotiate NAFTA, advancing a strong enforcement agenda,
opening markets to U.S. exports, and lowering the Nation's
trade deficit.
I would like to briefly discuss each one.
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 required by TPA, the
congressional notification is followed by a 90-day period of
consultations with the public and Congress. That means that the
NAFTA negotiating rounds can begin as soon as August 16th. We
intend to move very quickly.
In the meantime, USTR is talking to stakeholders, your
staffs, and the public to help us develop policy outcomes for
the negotiations. We put out a request for comments and
received more than 12,000 responses from the public. We have
scheduled public hearings for June 27th, 28th, and 29th.
During the 90-day period, we will continue working closely
with the Congress to develop and refine our objectives. In the
interest of a transparent process and as required by TPA, we
will publish a detailed summary of negotiating objectives on
July 17th.
Second, we will have an aggressive enforcement agenda, both
in terms of defending our rights and holding other countries
accountable for trade violations. For too long, the United
States, one of the most open and freest traders 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 WTO cases against
China's unfair support for agriculture, as well as challenging
their tariff rate quotas on key farm products. And this is only
the beginning. We will aggressively pursue countries that
violate trade deals with the United States, whether those deals
are at the WTO or in free trade agreements. We have a number of
potential cases under review as we speak, and we will keep this
committee informed as we proceed.
Third, we intend to improve market access for U.S.
producers. Let me be very clear on this point. If you are an
American company that produces a product or provides a service,
we at USTR want to help you grow exports around the world.
Sometimes that requires an enforcement action; other times,
negotiations are sufficient.
The administration is currently engaged in conversations
with all of our major trading partners about how we can lower
trade 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 argue 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, when you see a
trade deficit in the hundreds of billions of dollars and that
deficit goes on for years and years regardless of changes in
the broader economy, one must then be concerned that the
deficit represents structural problems in global trade.
The common thread throughout our trade policy is that we
want to make markets more efficient and we want higher living
standards for all Americans. We believe that as markets become
fairer and trade becomes freer, U.S. companies and workers will
be more competitive and our trade deficit will decline.
Thank you very much, and I look forward to answering your
questions.
The Chairman. Well, thank you so much, Mr. Ambassador.
[The prepared statement of Ambassador Lighthizer appears in
the appendix.]
The Chairman. Our ranking member is here, and we will take
his statement at this time. And he may have a colloquy with
Senator Crapo, as I understand it.
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Mr. Chairman, thank you very much. And I
appreciate all the courtesies. This is really pretty rare right
now in terms of trying to juggle so many things that are open
sessions.
I am very glad that today we are going to examine the
President's trade agenda. In my view, the agenda has to be
focused on creating more good-paying jobs for our people--red,
white, and blue jobs. That means aggressively going after the
trade cheats to make sure our workers are competing on a level
playing field. And it means opening up new markets for the
Oregon brand and the American brand.
In just a moment, I am going to have a brief colloquy with
our friend, Senator Crapo, on a trade matter that is vital to
us in the Pacific Northwest. I have just a couple of additional
remarks, and we will finish with our colloquy.
I know today we are going to focus extensively on NAFTA.
That is where I would like to begin. The President has
certainly talked a whole lot about NAFTA for going on 2 years
now, essentially since the start of the campaign.
In May, the administration set the renegotiation process in
motion. Despite that, neither the Congress nor the public has a
lot of information on what the administration looks for in
those talks.
My view is that NAFTA could use a complete overhaul. That
means high-standard, enforceable labor and environmental
commitments, removing chapter 19, which hurts our ability to
fight unfair trade practices, and addressing challenges that
are specific to dairy and wine and key manufacturing
industries.
We also have to combat currency manipulation, market-
distorting state-owned enterprises, and the trade cheats that
this committee has documented get more and more sophisticated
on an ongoing basis. That is not the end of where NAFTA,
though, needs improvement.
When container ships on the open seas began to transform
the global economy, our country fought for trade rules that
protected American-made products we were sending around the
world. The fact is, our country has not kept up with a key part
of our economy that nobody talked about back when NAFTA was
being written, and that is digital goods.
The Internet is the shipping lane of the 21st century and a
great platform for the free exchange of ideas, as good as
anything the world has ever known. That is worth fighting for.
And it is long past time we had trade policies that reflected
that new reality.
So here is what our new approach has to be. Our trade
agreements must protect the free exchange of ideas and
information, and they must protect access of American-made
digital products to people around the world. Just as we fight
against countries constructing barriers to our manufactured
goods and ag products, we must respond when countries block
American-made technologies, apps, and social media services.
In short, we cannot accept protectionist approaches to the
Internet, grounded in either mercantilism or authoritarianism.
So no administration, now or in the future, ought to expect to
have my support for any trade agreement that fails to include
provisions that protect the Internet as an open platform of
commerce, speech, and education.
Mr. Chairman, I look forward to discussing these and other
issues.
Just two last points. First, I think we have to be careful
about potential obstacles in the road ahead. They include an
artificial, accelerated timeline and a lack of transparency.
It has been reported the administration hopes to conclude
negotiations by the end of this year. I am all for being swift,
but I am also a firm believer that you get results before you
set a cutoff date. There is a serious danger that an artificial
deadline will push negotiators toward lower standard proposals
they know the other side will accept. That is not a recipe for
success.
Second, the administration regrettably has an abysmal
record on transparency. The Commerce Department has been
conducting what seems to be the most opaque trade negotiation
ever with the Chinese as part of the so-called 100-day plan. It
is unclear what factors are guiding the administration in the
process, and neither Congress nor the public knows what sort of
tradeoffs or commitments are being made. This is being repeated
in the national security reviews of steel and aluminum. So I
have some real doubts that the administration will be able to
hammer out a high-standard overhaul of NAFTA if it turns a deaf
ear to congressional and public input.
Failing on transparency is a sure way--a sure way--for any
administration, and let me just underline it, to deal a
potentially fatal blow to its own trade agenda.
[The prepared statement of Senator Wyden appears in the
appendix.]
Senator Wyden. Finally, my colloquy with my good friend,
Senator Crapo.
Meaningful consultations with Congress and communications
with the public are important for every aspect of our trade
agenda. And there is a very important matter relating to trade
enforcement where Senator Crapo and I have spent decades
advocating for the lumber mills and lumber towns of America
affected by Canadian export subsidies.
He and I, along with the rest of this committee, both sides
of the aisle, need to be fully apprised of any meaningful
dialogue between U.S. and Canadian officials to resolve the
ongoing dispute over softwood lumber and softwood lumber trade.
Senator Crapo. I agree, Senator Wyden. A trade accord that
does not work for affected stakeholders is counterproductive.
Going forward, this committee should be fully briefed on
the details of U.S. proposals before they are made to Canada.
Ambassador Lighthizer, as the statutorily designated lead
in trade negotiations, you are critical to ensuring that that
happens.
Historically, USTR has been a key voice at the table in
negotiations to find a durable resolution to this softwood
lumber dispute. And your expertise is critical if the
administration is to get the best deal for Americans.
Thank you.
Senator Wyden. Senator Crapo, thank you for your thoughtful
comments.
And, colleagues, it is important to know we are now up to
25 Senators, evenly divided between both political parties, who
care deeply about this issue that Senator Crapo has touched on.
I will close with one last point for the Ambassador,
because I am going to be running back and forth between
hearings this morning.
I was heartened, Mr. Ambassador, when you said during your
confirmation hearing that this question of softwood lumber was
at the top of your list and you expected to be personally
involved. We were encouraged by that. I hope that you will
commit this morning to brief Senator Crapo and myself and all
interested colleagues on proposals to date within one week of
this hearing and consult with us regularly as the negotiations
go forward.
We very much need and want you at the table during those
negotiations and consulting with us every step of the way. We
want your trade agenda to be a success. Democrats and
Republicans agree on that: more good-paying jobs in farming, in
manufacturing, in services, for businesses large and small. We
can do that if you will consult with us on a regular basis so
that Democrats and Republicans on this committee can continue
to look at ways in which we can--and Senator Stabenow probably
says it better than anybody--grow it here, make it here, add
value to it here, and ship it to people around the world who
are so anxious for the Oregon brand and the American brand.
I thank you for your courtesy. And I want to thank my
colleagues for letting me sort of airdrop in. And I will be
back and forth a little bit.
I thank my colleagues.
The Chairman. Thanks, Senator.
Ambassador Lighthizer, as you continue consultations with
Congress on modernizing NAFTA, one of your top priorities, in
my opinion, must be to ensure that the agreement provides
opportunities for America's most innovative sectors.
North America should be second to none in providing an
environment that fosters innovation and supports research and
development investment. An updated agreement should ensure that
our trading partners have streamlined, predictable, and WTO-
compliant procedures for granting patents. The agreement also
should improve online IP enforcement to combat digital piracy
in Canada and in Mexico.
How do you plan to use the upcoming negotiations to ensure
strong intellectual property protections for America's
innovative manufacturing and services sectors?
Ambassador Lighthizer. As you say, Mr. Chairman, this is an
extremely high priority for us. It is an area where the current
agreement is probably somewhat deficient.
We have issues with both Canada and Mexico in the area of
intellectual property protection, and we expect to make this a
model agreement in that area. So it is a high priority. It is,
as you suggest, not just patents; it is copyright, it is
trademark, it is across-the-board intellectual property
protection. And we understand how high a priority it is for
this committee.
We will continue to work with you as we go forward, and we
will not bring an agreement back here that does not satisfy the
committee on the IP area.
The Chairman. Well, thank you. As you are aware, the
Internet has helped American small businesses reach consumers
around the world. To ensure that small businesses continue to
have access to global customers, the U.S. has led efforts to
keep e-commerce free of Customs duties.
Moreover, just last year the United States increased the de
minimis threshold to help support the growth of e-commerce. Do
you agree that an updated NAFTA should ensure that Customs
duties will not be imposed on e-commerce and that our NAFTA
partners should increase their de minimis levels?
Ambassador Lighthizer. I certainly agree that that should
be the case, and that will be our position. There are real
differences in the three countries between the de minimis
levels. And as you suggest, the United States has what is
clearly the most modern, the most enlightened version, and that
is something that I am aware of and that we will pursue. And I
hope that we end up with a good result in this area.
And also, as you say, there is no digital chapter in the
NAFTA currently. We need to have a model agreement in this
area. And there is no reason in the world why we should not.
In many ways, this is an opportunity to negotiate with two
countries that we are very close to and that have similar
economies in many ways. And in a variety of these cutting-edge
areas, we ought to be able to have what is a model agreement
that, as we go forward to do bilateral agreements with other
countries, we can draw back on.
So it is a high priority, the de minimis level, but the
whole digital economy is something that we really have to
address.
The Chairman. Well, thank you. The President will meet next
week with the Prime Minister of India. As you know, India
maintains multiple trade and investment barriers that
significantly harm American businesses and workers.
India appears to be specifically targeting some of
America's most innovative and successful sectors through
insufficient protection of intellectual property rights,
imposition of price controls on medical devices, prohibitions
of foreign direct investment in online businesses to consumer
retail, and various other measures.
What specific actions is the administration taking or
planning to take with the government of India to eliminate
these particular barriers?
Ambassador Lighthizer. Well, as you say, Mr. Chairman, the
Prime Minister, Prime Minister Modi, is coming next week. As is
always the case in situations like this, there are a whole
series of pre-meetings that go on. And during those pre-
meetings--I have had some myself, and there will be more as we
get closer to the agreement--we have a list of items that I
will just euphemistically call ``irritants,'' but items that
clearly need to be addressed. And in this area of intellectual
property protection, there are several.
And we have had several stakeholders come in, quite
frankly, and complain about not only intellectual property
protections in India, but also pricing on pharmaceuticals and
medical devices and the like.
So we have a list of things that we want to go over. And we
are hoping that we end up with deliverables that come out at
the time of the President's meeting with the Prime Minister.
And we will have additional interactions with India after
that. We have a forum where we raise issues, and we will
continue to do so. And where we find ourselves believing we
have WTO violations or other violations, we are going to bring
enforcement actions.
The Chairman. Well, thank you. My time is up.
Senator Wyden?
Senator Wyden. Thank you, Mr. Chairman.
Mr. Chairman and colleagues, I know a lot of members are
juggling here, so I am just going to ask one question now.
And, Mr. Lighthizer, we will have several questions for you
for the record.
Obviously, we have noted the administration has an
ambitious timeline for completing negotiations with Mexico and
Canada. And we obviously want to make sure that we get real
improvements--real improvements--not just some small, cosmetic
changes. And we want to make sure that substance drives the
timing.
So if it becomes clear that you may not be able to get the
agreement as quickly as you would like, it looks to me like
there are kind of three choices: you cut your losses and agree
to a small set of improvements, you withdraw from NAFTA, or you
continue the talks with an aim of trying to really deliver a
high-standard model agreement.
I would like your thoughts on that and how you would
proceed if you do not get an agreement quickly.
Ambassador Lighthizer. Well, Senator, I have seen reports
that suggest that we have a deadline. And let me assure the
committee, we do not have a deadline. The only deadline we have
is that we are going to get a good agreement, one that is
transformative and that is a very high-standard agreement.
So there are people who have talked about this being done
by the end of the year. That may happen; I do not know. There
are reasons related to other people's electoral systems that
might make that beneficial. But from my point of view, I do not
have any deadline.
If we find ourselves in a total stalemate where we cannot
make any progress, then we will, in consultation with the
committee, decide on what the next steps should be.
But from my point of view, we are going to get a very good
agreement. We are going to do it as quickly as we can, but
without any artificial deadline of the end of this year.
Senator Wyden. So you are prepared to continue to negotiate
until you achieve a high-standard agreement?
Ambassador Lighthizer. Yes, Senator. I would say I am
prepared to continue to negotiate until we get a high-standard
agreement unless there is a total stalemate, in which case I
will be back in front of this committee, and I will consult
with Senators.
Senator Wyden. Okay.
Ambassador Lighthizer. I mean, this cannot--I am not going
to be in a position where I am going to commit to the status
quo going on forever. That is not going to happen. But we do
not have any artificial deadlines. Anything we do will be in
consultation with this committee. And I expect to get a high-
standard agreement or we are not going to come back with an
agreement.
Senator Wyden. I think that hits the bottom line. And I
think it strikes the balance between the executive branch and
the legislative branch on trade.
We want to work with you as you try to get the real goal
here, which is a high-standard agreement that produces more
family-wage jobs. We want you to continue to do that. And you
have basically told us now that you will do that. And if you
find yourself not in a position to do this, you will come back
and consult with us before the next steps. Is that correct?
Ambassador Lighthizer. That certainly is my intention, sir.
Senator Wyden. Great, thank you.
Thank you, Mr. Chairman.
The Chairman. Well, thank you.
Now, I am going to be tough on the 5-minute rule here
because we have everybody wanting to participate, and it really
does take an awful lot of time.
Senator Stabenow, you are next.
Senator Stabenow. Thank you very much, Mr. Chairman.
And welcome. It is wonderful to have you, Ambassador
Lighthizer, in a very important discussion.
I do feel compelled, though, Mr. Chairman, just for the
record----
We are talking about trade, which is incredibly important
to all of us, but next week we are going to be talking about
something that now is one-fifth of the economy.
And I just want for the record--sitting here today, I am
looking around and seeing colleagues from both sides of the
aisle whom I work with on individual health-care policies all
the time. And I think back to this place when we in 2009 held
53 hearings and committee meetings on health-care reform.
And we should be doing that now. So for the record, Mr.
Chairman, it is not too late for this committee to do what we
know how to do, which is work together. And it is not too late
to do the right thing.
Ambassador Lighthizer, it is, as I said, good to see you.
We have very important discussions going on. I particularly
want to talk about NAFTA.
As you have said, you want to negotiate a high-standard
agreement that will be used as a model for future agreements.
And this is very, very important. And we on the committee will
hold you and the administration to this promise. So given
NAFTA's importance to workers and farmers and our economy,
modernization is long overdue.
I have always said we want to export our products, not our
jobs. And particularly as is relates to Mexico and the tension
there, we have to stop this race to the bottom. We need good-
paying jobs, a high standard of living for people in the United
States.
And so we need to ensure that any changes to NAFTA lead to
an improvement in our quality of life and higher incomes in
Michigan and around the country, and to avoid revisions that
would harm export opportunities. We can move the factory, but
you cannot move the farm. And so that is the challenge, I know,
for us.
But I want to ask you about currency manipulation, because
this remains one of the most harmful 21st-century trade
barriers. And over the years, it has cost us millions of jobs,
many of those lost in Michigan.
Will the administration include enforceable currency
disciplines as provisions in the NAFTA negotiations?
Ambassador Lighthizer. Well, first of all, Senator, as you
say, I expect to have a high-standard agreement. And our
objective is exactly the same as yours. And my guess is, if we
go down most of the lists, there is not much daylight between
what I hope happens and what the members of this committee
want.
On the issue of currency manipulation, I have been an
outspoken critic of currency manipulation over the years. And I
would just note in thinking about the problem, it is not just
what effect it has during the time that somebody is
manipulating, but even if they end up bringing their currency
back into alignment, that negative effect, lost jobs and lost
industries and lost factories, that does not come back, it does
not reverse itself. It is like a permanent problem.
We are still debating the issue of whether to put a
currency manipulation provision in here. It is generally not a
problem with respect to Mexico and Canada. On the other hand,
that would make it a great opportunity for three people to sit
down and put together what is a model agreement.
I guess at this point, that is kind of where I am coming
out. But I still am in negotiations or in discussions with the
Secretary of Treasury and members of this committee and
certainly the Ways and Means Committee. But I am sympathetic to
your point, and I think this is an opportunity that we would
not have with respect to some other countries with which we
might have a bilateral agreement.
Senator Stabenow. Right. And just to underscore that, we
know that neither Mexico nor Canada are, in fact, manipulating
their currency, but that means they should not care, they
should not object to putting something in. And my concern is
that the President told people in Michigan that on day one he
would label China a currency manipulator and that has not
happened yet. This is an opportunity to actually focus on that
issue, which has cost millions of jobs and many of those in
Michigan.
So this is something Senator Portman and I and others on
the committee have worked on. We attempted to offer an
amendment to the TPA and encourage that under TPP. This would
be a moment to really fulfill what I believe was a promise that
the President made to my constituents in Michigan.
And finally, China continues to seek market economy status
at the World Trade Organization. They have not met any of the
six U.S. criteria for determining market economy status. I
would expect the administration to defend our position, the
American position on China.
But I would ask you, how is the administration working to
push back on this? And how are you working with other
countries?
Ambassador Lighthizer. Thank you, Senator. This is, without
question, the most serious litigation matter we have at the WTO
right now. And I have made it very clear that a bad decision
with respect to nonmarket economy status for China--and we can
talk about it further if members want to talk about it--would
be cataclysmic for the WTO.
So we have cases brought by China declaring that they
should no longer be treated that way. We are litigating those.
One was brought against Europe, one was brought against us.
They are active on the one against Europe. We are cooperating
with Europe, we are working with Europe and other countries on
this matter. We are litigating it.
Who knows how the WTO rules? It is without question, in my
opinion, that we are in the right. China clearly is not a
market economy. They should not be treated as such under our
laws or any other country's laws.
So we will keep you posted as we proceed on this. It is
extremely important. I am assuming, I guess, that the WTO is
going to do the right thing and rule in our favor. If it does
not, we will work closely with the committee, because I have
told the Director General of the WTO and other countries this
is absolutely cataclysmic if they take the position that China
is a market economy.
Senator Stabenow. I agree.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Roberts?
Senator Roberts. Thank you, Mr. Chairman.
Ambassador, welcome back to the Finance Committee. You have
been extremely busy since your confirmation.
I want to point out, the work you have done in the past 2
months has made it clear you are the administration's leader on
international trade, and I thank you for that and for spreading
the message and educating your colleagues and international
counterparts about the important role that trade plays in the
U.S. ag economy. And note I said agriculture economy.
Thanks also for your selection of Gregg Doud to be your
lead negotiator. He is a good man.
And, Mr. Chairman, I would hope that we could expedite his
consideration with regards to his confirmation.
I had the privilege last week to speak at the Agriculture
Symposium held by the Federal Reserve Bank of Kansas City,
which is right in the heart of farm country.
We discussed the severity of the current state of the ag
economy. It is clear we are in the middle of a very rough
patch. I hope it is not prolonged, but that seems to be the
case. The outlook will not improve unless we have a determined
effort on trade. We have talked about that. Thank you for your
support for that.
And I will just say, it was not too long ago people noted
the comments made by the President when he was campaigning, and
for that matter the candidate that he opposed, Secretary
Clinton. And both opposed TPP, and both had some pretty strong
statements about NAFTA.
I do not think NAFTA should be a target. I think it should
be an opportunity. I note that the verbs have changed. It is
not ``kill'' or ``terminate;'' it has gone to ``modernize,''
``strengthen,'' ``improve.'' My word is ``fix.'' And I think
you have been key to that.
As a matter of fact, in talking to producers whom I have
talked to in Kansas, Michigan, Montana, and soon to be Alabama
and everywhere we go, they are extremely pleased that you are
leading the effort on trade. You are called the green-light
guy, and we hope we can turn the green light on with regards to
specific products.
I think that is probably enough to say about NAFTA.
I was pleased to hear that U.S. beef is now headed to
China. I know we have problems with China, and you have just
outlined those, but thanks to the progress made in the 100-day
action plan of the U.S., the U.S.-China Comprehensive Economic
Dialogue, a shipment of beef from Nebraska--should have been
Kansas, but at any rate from Nebraska--went to China.
Another important component of the 100-day action plan was
a commitment from China to try to work towards a stable,
science-based system for approvals of agriculture biotech. Last
week, it was announced that two events received approval in
China; six more events remain sitting in the queue.
We are nearing the end of the 100-day action plan window.
Where are we on that with regards to any progress?
Ambassador Lighthizer. Well, Senator, as you say, there was
an early harvest that was beneficial to several sectors, but
the one you note is American beef, and the first shipments have
already gone off. We have, I think, another few days in the
100-day period. There are a variety of other items on which
there are negotiations.
There is a hope that we will get another harvest of some
level before the 100 days is up. And then the question before
the administration and before the Chinese government is, what
is the next step? What kind of a next tranche do we have?
There has been an exchange of a variety of priorities the
United States has as well as a variety of priorities that the
Chinese have. So we are still in the position right now of
trying to decide exactly what the procedure will be going
forward.
But there clearly is pressure, as you suggest, even on the
early harvest. We have not seen all eight of our applications
be approved yet. That is something that we have to keep leaning
on. We expect that that will happen. But, I mean, the pressure
is still on, the trade deficit has not gone down any, and the
President feels just as strongly as he did before the 100-day
start.
So we will find out whether or not that is a good way to
organize our talks with China, because we have an awful lot of
talks on an awful lot of matters, and a lot of agricultural
matters that you are aware of, as well as a huge number of
other ones. But at least we have had some progress, and I think
that is important.
And I think the President and Secretary Ross and Secretary
Perdue get a lot of credit for that. And they have followed
through to make sure that what the Chinese said they were going
to do, they have done.
Senator Roberts. Well, that is indicative of your team
effort that you have led at the White House, which I really
appreciate.
I appreciate your August 16th update and the fact that you
are going to have June hearings and that you have heard from
just an awful lot of folks involved in this. That should answer
part of the transparency issue that the distinguished minority
member brought up. And I know that you will continue on that.
Keep up the good work. You are a hero out in farm country
right now. And I truly appreciate that.
The Chairman. Thanks, Senator.
Ambassador Lighthizer. Thank you.
The Chairman. Senator Menendez, your turn.
Senator Menendez. Thank you, Mr. Chairman.
Ambassador, in your notification letter to Congress, you
indicated that many chapters of NAFTA are outdated and do not
reflect modern standards. And you went on to say that your aim
would be to modernize NAFTA to include new provisions to
address intellectual property rights, among others.
So can you tell me, how do you intend to ensure that any
modifications to NAFTA continue to promote U.S. innovative
industries, such as the biopharmaceutical sector?
Ambassador Lighthizer. Well, thank you, Senator.
As I said before, this is a very high priority. I know
that, not only from discussions with you, Senator, but almost
every member of the committee has brought this up as a high
priority.
We know what standards we ought to have. We also know that
there are deficiencies with respect to Canada and Mexico in the
intellectual property protection area. And this goes across the
board. I mean, it is copyrights, it is patents, it is
trademarks. There are problems in a variety of areas.
On the other hand, we do have systems that are not
incompatible. And our hope really is that we will end up with a
model agreement in this area and that we will get the two
countries to agree.
Senator Menendez. In this regard, are you going to be
seeking to include strong intellectual property and market
access chapters that reflect the standard found in U.S. law and
recent U.S. trade agreements?
Ambassador Lighthizer. Yes, sir.
Senator Menendez. Okay. Does the March draft notice still
represent the administration's position on labor obligations in
NAFTA?
Ambassador Lighthizer. Yes, sir.
Senator Menendez. So how, if at all, do your objectives
improve upon the commitments we got from Canada and Mexico on
TPP?
Ambassador Lighthizer. Well, in the first place, there are
more key international labor agreements that the three of us
agreed to than that all the parties in TPP agreed to. So my
hope is, in the first place, we can expand it.
In the second place, we have to find a mechanism to make it
enforceable, like every other provision in this agreement. My
hope, based on very preliminary discussions, is that we are
going to be able to make real headway in this area.
Our view certainly is that it is a huge benefit to the
United States if there are higher labor standards in Mexico. It
just makes us more competitive, and it is good for them, and it
is good for us. And the impression I have is that the Mexican
authorities agree with that position.
Senator Menendez. So let me ask you--maybe you can give me
a simple ``yes'' or ``no'' to these next two questions as we
try to move through a series of things here. Would you agree
that improving the labor provisions in NAFTA is critical--I
think you just referred to it--in a sense, to the long-term
success of the agreement and to ensure that American workers
see more of the benefits of trade?
Ambassador Lighthizer. Yes, I absolutely believe that.
Senator Menendez. Do you also agree that the existing
provisions in the NAFTA labor side agreement should be retained
and strengthened?
Ambassador Lighthizer. They certainly should be
strengthened for sure.
Senator Menendez. Okay. Let me ask you this final question
in this vein. Can you commit to us that any new agreement you
negotiate will build upon each of these principles already
included in the NAFTA labor annex and not take a step backward
by narrowing the scope of labor rights protected under the
agreement?
Ambassador Lighthizer. Yes.
Senator Menendez. Okay. And then finally, I had agreed as a
member of the Senate Foreign Relations Committee that the
President's efforts to try to get China to affect North Korea's
behavior was a good process. But having heard the President
come to the conclusion that it has not worked out, do you
believe, from your conversations, that the administration is
going to reconsider some of the punitive trade measures that
the President called for during the campaign as it relates to
China?
Because my understanding is, he was going to give China
some consideration if they ultimately affected North Korea's
behavior, but certainly that has not seemed to come to pass.
There is some talk about the possibility of another underground
nuclear explosion while we have visitors here.
So the question is, is that now back on the table?
Ambassador Lighthizer. Well, Senator, in the first place, I
am not involved in the President's discussions or decisions
about North Korea or China or any of that.
I would say we have a serious, comprehensive economic
dialogue that is going on with China. We also have a review at
USTR of whether or not there are enforcement actions that
should be taken against China on a variety of things.
Intellectual property is a classic example, which I know is so
important to the members of this committee.
And that process, our process at USTR, is, going forward,
just as it has been when we are in a position where we think we
have an enforcement action. We expect to go to the
administration and go ultimately to the President and have him
make a decision on that.
So I have no idea what the President's view is about the
relationship between China and North Korea. I kind of view that
as something that I was not hired to work on.
Senator Menendez. Well, the fact is that, from my
perspective, China is eating our lunch. I hope we are going to
take some aggressive actions as it relates to some of these
provisions that we should be enforcing, which has been a
constant refrain of mine.
The Chairman. Senator, your time is up.
Senator Isakson?
Senator Isakson. Thank you, Mr. Chairman.
Ambassador, I will be brief, because I have to run to
another meeting, but there is one subject that Mr. Carper
reminded me of a minute ago that I have to bring up, and that
is chickens.
I come from the State of Georgia, which produces more
chickens than anybody in the country. Senator Carper on this
committee does the same from Delaware. We were involved in
getting South Africa to finally open their marketplace to
American chicken this year. It has been a huge success. But
they were allowed to take advantage of the AGOA agreement for
years without us enforcing our rights for them to open their
market to our poultry.
The same thing happened in the Bush administration. There
was a period of time in the Bush administration where the lack
of emphasis on enforcing our rights on textiles caused us to
lose a great bit of our market share of textiles in the world,
which we never got back.
So my question is very much this. Will you consistently
look to enforce the rights of the United States' manufacturers,
exporters, and importers under all the agreements that we enter
into so that we are consistently standing up for our rights as
other countries will stand up for theirs?
Ambassador Lighthizer. Yes, sir, I will. And we will bring
actions whenever they are warranted, and we will do that in
cooperation with this committee.
Senator Isakson. In 16 years of dealing with trade as a
member of the Senate and the House, I have seen consistently
where an inability to or sending the signal you are not going
to enforce trade agreements or you are not going to play
rough--you get taken advantage of. When you send the signal you
are, you get your fair share of the agreement. So we need to
send that from the beginning of the Trump administration.
Ambassador Lighthizer. Thank you, sir. I completely agree
with your sentiment.
Senator Isakson. Thank you, Ambassador.
The Chairman. Thank you, Senator.
Senator Casey?
Senator Casey. Thank you, Mr. Chairman.
Mr. Ambassador, thanks for being here. Thanks for your
service.
I want to start with an issue that has been raised already
today: the labor and environmental standards and the workforce
that you have to do that work.
And I want to make sure that we are right about this. I am
told that in the Department of Labor there are six people doing
labor enforcement for all of our trade agreements. Is that
correct?
Ambassador Lighthizer. I do not know how many people are
doing it at the Department of Labor. I am sorry, Senator.
Senator Casey. Well, that is what we are told. And we can
confirm that. We are also told that USTR has four people
handling all labor issues. Does that make sense?
So to borrow a phrase from the law enforcement context
about cops on the beat, it seems like we are short. Do you need
more enforcement staff? That is my first question.
Ambassador Lighthizer. I would say we have a budget,
Senator, and we expect to do the best we can within that
budget. And I think we can do our job.
One of the things we do is, we borrow people from other
agencies, which helps us to stretch our dollars out a little
bit. We have a bit of an increase going into the new year, and
I believe we can do our job with the resources that have been
budgeted for us.
But I agree with you that it is a big job and we do not
have a lot of people. And the personnel at USTR, you know, view
themselves, as I said before, a little bit like the Marine
Corps. Without meaning to offend anybody who might be from some
other branch, they work very hard, they work very long hours,
they are very dedicated. And I think we can get the job done in
all areas, but the one you are focusing on particularly, labor,
is very, very important to us.
Senator Casey. Well, I hope that if a circumstance arises
this year or in the future where you need more resources, you
will not hesitate to tell us.
I have strong disagreements with the budget proposed by the
administration on a number of fronts. Part of that disagreement
centers on what I believe to be a kind of indiscriminate
cutting with not much of a focus on the result that that
cutting brings about. So we hope that when you need more
support for more staff, you will tell us.
Also, the administration committed repeatedly to making
trade fair for U.S. workers. And I know you believe that and
understand that, and your experience tells us that.
As you know, the labor provisions, if fully enforced, would
help ensure that our workers are not placed at a disadvantage,
a so-called unlevel playing field. And I know that you rely
heavily on other Federal agencies, as you indicated, to provide
the support and collaboration in trade enforcement actions.
With respect to the enforcement of the labor provisions of
trade agreements, I know that USTR works closely with the
Bureau of International Labor Affairs, so-called ILAB, at Labor
and that ILAB staff conduct monitoring and fact-finding for all
labor-related enforcement actions.
How would your enforcement efforts in this area be hampered
if ILAB and the Department of Labor are in fact understaffed or
have their staff reduced or cut back?
Ambassador Lighthizer. Well, Senator, I really do not know
much about the funding at the Department of Labor. I am just
presuming that it is adequately funded, as we are. I just do
not have any information to share on that.
We do, as you say, rely on other agencies, not just the
Department of Labor but others around the government, for
manpower. But I really do not know the Department of Labor's
budget situation.
Senator Casey. But that particular bureau is one that you
would work with. Is that correct?
Ambassador Lighthizer. That is correct.
Senator Casey. Okay. And finally--and I know we are out of
time, and I will submit one for the record that you can answer
more fully--China's non-market economy. Despite their promises
in their WTO accession protocol, China continues to exercise
significant control over state-owned enterprises and factors of
production.
I know you have been working with European Union nations. I
hope that with a fuller question for the record you could
outline the work you have done in that area.
Ambassador Lighthizer. I would be happy to do that,
Senator.
Senator Casey. Thanks very much.
The Chairman. Senator Cassidy?
Senator Cassidy. Hey, sir, thanks for being here. I am
going to ask you about sugar, shrimp, and steel, okay?
As regards sugar, Secretary Ross just concluded very
difficult negotiations with Mexico, hopefully to illuminate the
domestic sugar industry injury caused by Mexican dumping and
subsidization.
I guess first is, as you redo NAFTA, can you assure us that
no concessions or other trade negotiations undertaken by the
administration would undermine the agreement that Secretary
Ross just achieved?
Ambassador Lighthizer. It certainly is our intention not to
undermine that agreement.
Senator Cassidy. Okay. Secondly, the seafood traceability
rule--I will call it ``the rule''--published by NOAA in
December established permitting, reporting, and recordkeeping
procedures for the importation of certain fish and fish
products. It identified these products as particular risks for
illegal, unreported, or unregulated fishing and/or seafood
fraud.
Shrimp was to be two-thirds of this by volume and covered
under the rule. But the final rule had an indefinite stay of
the effective date as it pertains to shrimp, even though it is
two-thirds of the volume, because NOAA said that the current
data collection for domestic aquacultured shrimp, not wild, but
cultured shrimp, is not equivalent to the data that would be
reported for imports.
Now, we already have a traceability program for wild
shrimp, if you will. Aquacultured shrimp, I am told, is less
than 1 percent of the total volume. So something which pertains
to less than 1 percent is now staying a rule that would be
appropriately applied to the greater market.
And I should note as well, FDA does require aquacultured
shrimp to have some of this similar information.
I am told the previous USTR prevented the inclusion of
shrimp, frankly concerned more about the possibility of a WTO
challenge.
By the way, as a physician I am also concerned that we not
have high bacterial content or other things among these
imported shrimp.
So next question: would you support the Commerce Department
if Secretary Ross elected to lift the current stay placed on
shrimp? And obviously, if challenged by a foreign government,
would you commit to defending the U.S. position on that issue?
Ambassador Lighthizer. Well, I guess I would say that (a) I
expect to defend the U.S. position at the WTO without question.
And as a general matter, I agree with Secretary Ross on these
in particular.
Senator Cassidy. That is great. Okay. Lastly, as regards
steel, there is a specific issue that revisiting NAFTA allows
us to address. There is a domestic content provision in NAFTA
that allows Mexico to require at least 25 percent of pipeline
in Mexico to be made with Mexican products. But I am told that
because of lack of enforcement, Mexico requires this amount to
be as high as 50 percent. Obviously, that is not right,
disadvantaging our manufacturers and employees.
So my concern is, or I guess my request is, that during the
NAFTA negotiations this would be the opportunity to revisit
Mexico's ability to exclude American-made pipe in two products
over and above that which is currently allowed.
So I guess as an enforcement issue, but perhaps even a
decreasing of that 25 percent domestic content provision--just
the request being made is something that would do a lot of good
for our domestic employees.
Ambassador Lighthizer. Senator, that certainly is something
that we will raise during the negotiations.
Senator Cassidy. Sounds good. Thank you very much.
I yield back.
The Chairman. Thank you, Senator.
Senator Brown?
Senator Brown. Thank you, Mr. Chairman.
Ambassador, nice to see you again. Thank you for the
private and the public conversations. And you are off to a good
start; thank you for that.
Whether it is NAFTA or any agreement, the importance of
trade, getting trade talks right, right from the beginning,
cannot be underestimated. Whether it is the renegotiation of
NAFTA or addressing Chinese steel overcapacity, Ohio workers
are waiting for U.S. trade policy to change for the better.
I was pleased the administration's trade agenda underscored
the President's commitment to a real, new approach. I could not
agree more that a new approach is needed, and I hope you will
follow through on that commitment during the NAFTA talks. It
should be a high-standard model agreement, as you have said.
If you ask Ohio workers what factory they have seen move to
Mexico, they will often respond with a list, not just one.
Corporations move their plants across the border to take
advantage of lower labor standards, lower wages, lax
regulations. I know this is one of the President's main
motivations for renegotiating the North American Free Trade
Agreement.
As you know, I sent a letter last month to the President
outlining four points to change the direction of U.S. trade
policy. I urged, first, the President to secure commitments on
labor and environmental standards before the talks begin.
The U.S. loss of the Guatemala labor case shows why we
cannot wait until after the FTA takes effect for our trading
partners to implement and enforce their labor standards,
because often they evade that.
We know what causes outsourcings: it is low wages, it is
exploited workers, it is weak or nonexistent or unenforced
environmental protections. They encourage companies to relocate
to other countries where it is cheaper to do business. As you
and I have talked about, it is almost always a race to the
bottom.
We cannot stop the flow of jobs to Mexico without
addressing Mexican labor standards. It was the case in the
1990s, it was the case in the first decade of this millennium,
and it is the case now.
Let me say that I know that talks could begin in a matter
of weeks, but the agreement's impacts are long-term. If we do
not take this moment to enforce those strong anti-outsourcing
provisions up front before the talks begin, more Ohio works in
Ashtabula and Mansfield will lose their jobs.
My questions are primarily two. Do you agree that improving
Mexico's labor standards is central to stopping factories from
being offshored from your home State and my home State and
every State? Again, do you agree that improving Mexico's labor
standards is central to stopping factories from being
offshored?
And second, what commitment can you give us today that you
will require demonstrated improvement and enforcement of
Mexico's labor standards in the next 2 months, again, before a
new agreement is signed?
Ambassador Lighthizer. Well, first of all, I agree,
Senator, completely with the sentiment of your question. And I
agree that it is important for American workers that there be
better labor standards in Mexico. I think that is one of the
ways we get our trade deficit down. And I think that
outsourcing or shipments of plants to Mexico from the United
States is something that has happened, and it is one of the
things that makes the President angry.
In terms of agreeing that we should secure these
commitments before the negotiations start, my guess is we will
not do that. They will certainly be something that we will talk
about. From the very beginning, they will know what our
position is.
And I think, as I sort of alluded before, I think the
current Mexican government is amenable to the idea. They
realize that they have to make improvements in this area and
that it is in their own interests for their country and their
workers, too, to do the same thing.
So I think you are going to see--it will still be a very
difficult negotiation, but I think that they agree with us in
terms of directionally where they have to go.
I think it is unlikely that we will have commitments before
the negotiations start. I do not want to mislead anybody on
that. But certainly, that will be among the very first things
that we will talk to them about. And they know where we are
coming from on this. And as I say, I think they are not
unsympathetic.
Senator Brown. Okay. They need to know that that is a
condition of any real progress in these agreements.
Let me ask one other question.
And thank you, Mr. Chairman, for your forbearance.
In my letter to the President, the four points I laid out--
one of them is urging you and him to remove investor-state
dispute settlement from NAFTA. Investor-state is a handout for
the largest corporations in the world that allowed companies--
it was pretty unprecedented before NAFTA, not used. It was in
some trade laws, but was rarely used. It allows a company to
sue a foreign government, even to challenge a democratically
attained rule or regulation or law. And if the policies do not
suit those companies, they often sue.
I was pleased the American Automotive Policy Council, which
represents the big three U.S. auto producers, called for it to
be removed from NAFTA.
Given shrinking corporate support for ISDS and the
administration's commitment to making sure trade policy
benefits workers first, not corporations first, can you commit
that the U.S. will seek to remove investor-state dispute
settlement from NAFTA?
Ambassador Lighthizer. Well, thank you, Senator. First of
all, there is a negotiating objective, as I understand it, that
we are going to strengthen ISDS.
But having said that, I really look forward to working with
the committee on that issue. It is an issue that is troubling
to me. It is troubling to me on a variety of issues and on a
variety of levels. It is a balancing act that really--our
investors have a right to have their property protected.
On the other hand, there are, in my judgment, at least
sovereignty issues. I am always troubled by the fact that
nonelected, non-Americans can make a decision that a United
States law is invalid. Just as a matter of principle, I find
that offensive.
And that is what happens very often, or can happen at least
very often in this area. So I would not commit that we are
going to get rid of ISDS. I would certainly commit that I want
to engage with this committee and with the Ways and Means
Committee and others in Congress to see what we can do to
perhaps rebalance where we are in this situation where we have
two interests, both of which are valid.
But as I say personally, myself, the most troubling part of
all this is that it attacks our sovereignty.
Senator Brown. Thank you.
And, Mr. Chairman, thank you.
That principle of sovereignty should cut across all
political lines, from conservatives to liberals. This is not
about expropriation. We can build those protections into ISDS.
They just do not need to go to the place where foreign
corporations can challenge U.S. environmental laws and consumer
protection laws and other sovereignties.
So thank you for your statement.
Ambassador Lighthizer. Thank you.
The Chairman. Okay. Senator Portman?
Senator Portman. Thank you, Mr. Chairman.
And to Bob Lighthizer, we are glad you are here. We are
also glad you are where you are in the administration, because
I think the coordination of trade policy was needed, and
specifically the challenge we face with renegotiating the
current agreement with Mexico and Canada requires somebody of
your background and expertise. So I know you have been busy.
And I know your team has been busy.
And we want to be sure, by the way, that you have the
necessary funding to have your enforcement folks do the work
that they are asked to do. Having been in your job at one time,
that was always a frustration of mine. And I know we have made
some progress on that in your budget.
On NAFTA, I have been for this process of updating NAFTA.
Why? Because the thing is 23 years old, right? And a lot has
happened since then.
And to my colleague from Ohio who just talked about the
international labor standards, for instance, the labor
standards in the NAFTA agreement do not represent what we now
negotiate with countries with regard to bilateral trade
agreements and are not consistent with what would have been in
TPP, for that matter.
And the same goes for the investor-state issues that my
colleague just talked about. You know, we have made progress
that helps to protect not just American workers in that case,
but American laws.
Digital trade, I mean, you know, there was virtually no
digital commerce 23 years ago, believe it or not, so we have to
update it for that. And I will have a specific question for you
in a minute on that.
On currency, you know, since NAFTA, in fact really since
the last 2 years, we have changed our position as a country on
that because, despite the fact that some of us wanted to put
more teeth into it, we do now have a principled trade
negotiating objective which includes currency manipulation. I
am not suggesting that Canada and Mexico are manipulating their
currency, but I am suggesting this is an opportunity for us to
set a precedent for future trade agreements.
So I am excited about the opportunity to improve the
agreement from our perspective. It is always a negotiation,
though.
And one thing I will say--and I know you agree with this,
because at one point you said in public testimony ``do no
harm'' is part of your objective here--these countries are
incredibly important trading partners.
And from my home State of Ohio and your home State of Ohio,
you know, 60 percent of our exports go to 10 percent of the
world, and that is where we have a trade agreement--60 percent.
And 50 percent of them go to two countries, Canada and Mexico.
So whether you are a soybean farmer, and I met with some today,
you know, one out of every three acres we are planting is going
overseas, and Canada and Mexico are huge markets.
If you are a manufacturer of products, like the Crown lift
truck company, for instance, that now exports, I think, about
25 percent of their forklifts--boy, they need those markets.
So as we go about this, we have to be sure that we are not
eroding those markets.
One of the concerns I have, frankly, Mr. Ambassador, is
that I am already hearing about, particularly in Mexico,
imports being restrained into Mexico from the United States.
And I am sure you hear these stories as well.
There was a story, I know, in The New York Times recently
about it. The Wall Street Journal has run stories on it. And I
am concerned about what is already happening with the sense
that somehow we are going to pull back on our exports to these
countries. We cannot do that. We need more exports. These are
good-paying jobs. They pay 18-percent, on average, higher
wages, and we want them.
So the balance here is what you have to find. And I know
that is not going to be easy, but I know that you are up to the
task.
With regard to digital, let me just make a very specific
point. There are some entrepreneurs in Columbus, OH I have
talked to. Their kids have now gone off to college, they have
switched careers, they have started this digital company where
they sell products over eBay: kids' toys, kitchenware, home
decor products. For those of you who want to use their
products, it is called FUNsational Finds. It is a Columbus, OH
company.
So they are trying to sell into Mexico and sell into
Canada. And both of these countries have really low de minimis
thresholds with regard to Internet sales, much lower than we
do.
So in the United States, the de minimis is 800 bucks, as I
understand it. In Mexico, the threshold is $50 for express
shipments and $300 for postal shipments. Canada has the lowest
de minimis threshold in the world at just 20 Canadian dollars.
Is that accurate?
Ambassador Lighthizer. Certainly directionally,
directionally it is true.
Senator Portman. Yes, very concerning. And you know, to the
extent, as I said earlier, that we are going to bring this into
the modern age, this agreement, what are we going to do in
terms of leveling that playing field?
Ambassador Lighthizer. Well, I think it is clearly
something that we have had on our list to worry about. You are
not the only person who has raised this, Senator. And it is
clearly something that we are very concerned about.
I would say just, to drop a footnote on it, you are not the
only person who has raised it, but you are the only person
whose picture I look at every single day when I walk out of my
office who has raised this issue. [Laughter.]
I walk out of my office----
Senator Portman. Sorry it is not a better photograph. I
look very stern in that photograph.
Ambassador Lighthizer [continuing]. I turn right to go to
the stairway, and there is this smiling Senator Portman. And I
am thinking, oh, damn.
Senator Portman. Now, you have to explain that in most
Cabinet-level agencies there is a portrait, you know, like,
some fancy artist comes in and you sit and all and you pay a
lot of money. USTR is so cost-effective that it is a mere
Polaroid. I should not say Polaroid; it is a mere photograph
and probably not a very good one.
The Chairman. We all look at it too.
Senator, your time is up.
Senator Portman. I am sorry. [Laughter.]
Well, I hope we can continue the discussion on digital,
because I think this is an obvious opportunity for us, and this
is part of the growth that we are seeing, frankly, where we
have a comparative advantage in this country, and we should be
able to take advantage of that.
Thank you.
The Chairman. Okay. Thank you, Senator.
Senator Carper?
Senator Carper. Thanks. Thanks so much.
Ambassador, nice to see you.
I want to start off with a thought or two on irony, the
word ``irony.''
Our President, in a private meeting apparently last week or
so, described the House-passed Republican health care bill as
``mean,'' I think maybe ``too mean.'' And that was the same
legislation he described in a Rose Garden ceremony a month ago
as, quote, ``incredibly well-crafted and a great plan that will
end the suffering and ravages of Obamacare.''
So that was literally about a month between the plan he
said was incredibly well-crafted and a month later he said was,
like, too mean.
Our same President has described the Trans-Pacific
Partnership as the greatest danger to our country yet. And my
hope is that we will see a similar kind of change in opinion as
he learns more about what the Trans-Pacific Partnership was all
about. And I do not know that it will be as stark as his shift
in his views on health care, as reported out by the House, but
we can always hope.
I understand under the Trans-Pacific Partnership we did not
dictate to other countries, including Mexico, what labor
standards they should use, did not attempt to do that, or what
environmental standards that they should use. But what we did
say is that we think you ought to have tougher labor standards
and we think you ought to have tougher environmental standards.
But maybe the best part of the agreement was, whatever
standards they had were enforceable, we could make sure that
they were abiding by those. Is that correct?
Ambassador Lighthizer. That is correct; yes, sir.
Senator Carper. All right. Our friend, Johnny Isakson, has
talked with you already about poultry. And my understanding is
that, under current NAFTA with respect to poultry, there is a
quota with Canada, there is a quota on how much poultry they
will allow to be sold in their market. And up to that quota,
that poultry can be sold free of tariff.
When that quota is exceeded, there is a tariff of about 250
percent that is imposed on the poultry. My understanding is
that TPP raised the quota. It did not eliminate the tariff on
that which would exceed the new quota, but it did raise the
quota.
Is this something that you are familiar with?
Ambassador Lighthizer. Generally, yes, sir.
Senator Carper. Yes. It is something I would hope you would
become even more familiar with as we attempt to revisit NAFTA
and our friends in Canada.
Sometimes it seems to me that our President is very keen on
criticizing Mexico for their sins, in a variety of ways,
including not buying enough from us, but they happen to be a
very good market for us for agricultural products, I think, for
the most part, better than Canada.
And I hope that we will take a strong interest in Canada,
not just with respect to poultry, but other agriculture
products.
The other thing I want to get into is--as you may recall, I
was a strong supporter of TPP, disappointed, however, that the
TPP agreement excluded the financial services sector from the
prohibition on data localization requirements.
And I would just ask if you could maybe assure the other
members of the committee and me that if we have the opportunity
to explore this in renegotiating NAFTA, or renegotiating TPP
actually, that you will follow the requirements of something
called TPA, by ensuring the financial services sector is
treated the same as every other sector when it negotiates
future provisions on this issue.
Ambassador Lighthizer. Yes, sir, absolutely. I am very
familiar with the issue on that. Clearly, it is our position--
--
Senator Carper. All right, thank you.
I spent some time in Southeast Asia during the war over
there with John McCain and some others. He was a hero; I was
just doing my job.
But I was back over there last year with the President and
had a chance to visit with some of the Vietnamese leaders. And
we talked about a proposal that would put U.S. payment
companies at a competitive disadvantage relative to Vietnamese-
based competitors. I think they had a deal where, in financial
services, we would be competing with a state-owned, state-
operated bank that would not only be our competitor, but also
our regulator.
And I would ask if you can give us some assurance that our
former TPP partners, like Vietnam, follow through on the
constructive comments they made, commitments that they made,
when we were negotiating TPP on this regard.
Ambassador Lighthizer. Yes, for sure. And I actually raised
that issue with the Trade Minister from Vietnam now on two
occasions, both when I was over there for the APEC meeting and
also when he was in town with his Foreign Minister. So that is
an issue that is front and center. And our position basically
is, it is something that has to be taken care of.
They have a very large trade surplus with the United
States. This is an easy way for them to get it down.
Senator Carper. All right. And lastly, can you give us some
assurance that the administration plans to ensure that the so-
called TiSA negotiations, TiSA, I believe, is Trade in Services
Agreement, don't fall by the wayside as we go forward?
Ambassador Lighthizer. Well, we are in the process right
now of reviewing all these agreements, all the U.S. trade
agreements. And that certainly is an important one, and I do
not expect it to fall by the wayside. We are doing an
evaluation right now across the board.
The Chairman. Your time is up, Senator.
Ambassador Lighthizer. And when that is done, you know, we
will move forward where appropriate.
Senator Carper. Thank you, Mr. Chairman.
Thanks, Mr. Ambassador.
The Chairman. Senator Grassley?
Senator Grassley. I know you did not come here for praise.
And I do not really praise you, but I think there is some calm
because of your appointment compared to the fear of
protectionism that was out there late last year and early this
year.
So I think that when it comes to NAFTA particularly, and
some people in the administration taking the view that, first,
do no harm, I think that that is a wise approach and somewhat
calming.
NAFTA is very important for my State because Mexico is the
number-one importer of our corn and number two for soybeans.
So what can you say to give my Iowa farmers and also our
manufacturers peace of mind that these trade negotiations or
renegotiations are not going to be overly disruptive of their
businesses?
Ambassador Lighthizer. Well, I can say what I have said
before, Senator, and that is that it is very important that
when you modernize--our objective is to modernize, our
objective is to incorporate the ideas of this committee and to
get our trade deficit down, particularly with respect to
Mexico. We realize they are a huge agricultural market.
Anything that they would do that would reduce agricultural
sales would make the trade deficit worse, not better. And in
our opinion, that is clearly not our objective.
So I have met a lot with farmers, a lot with agriculture
groups and food-processing groups. It is very important. And I
think it is very important that we not move backwards on that
and that we, in fact, look for openings for additional access.
And certainly, both of our trading partners are aware that that
is our position.
So all I can say is that I have assured you, and I have
assured Senator Roberts and many, many other members, that we
are going to do everything we can to improve upon the
agricultural sales, particularly with respect to Mexico. And we
are not going to tolerate anything that moves backwards. That
is not the intention of this renegotiation. It is clearly not
the President's idea.
So we have a whole lot of very important things we can do
in this agreement, you know, that will make it a better
agreement for all of our workers, farmers, and ranchers. And
clearly, we expect to hold onto what we have in terms of
agricultural sales.
Senator Grassley. Okay. Senator Stabenow already asked a
question I was going to ask about currency manipulation in the
case of China. I believe she asked.
I would only say in regard to China, my own personal view
is, and you do not have to comment on it, but I think over a
couple of decades we have been awful timid towards China when I
think they have been doing us great harm in that area.
My next question deals with Argentina. Near the end of your
testimony, you mentioned progress has been made with Argentina
on trade, but offered no details.
Could you elaborate on what exactly that means?
Ambassador Lighthizer. Well, as I have said, we have had
talks with Argentina about several specific issues in
anticipation both of visits down there and also the fact that
we have a WTO meeting there coming up at the end of the year.
I would be happy to provide all the background with respect
to the recent Argentinian talks if you prefer, but I am happy
to provide that for the record.
Senator Grassley. Okay. Well, I hope it includes the issues
like seed trades, biodiesel, and Argentinian beef.
Let me go on to my last question. The United States has
negotiated bilateral, regional, and multilateral trade
agreements to open our markets and eliminate distortions and
level the playing field with 20 countries.
Beyond renegotiating NAFTA with Canada and Mexico, which
countries, regions, and sectors are priorities for the Trump
administration trade agenda? And I assume you help set that
agenda, right?
Ambassador Lighthizer. Yes, Senator. I am in the process of
helping to set it. There has been a lot of talk about starting
bilateral agreements with some of the countries that were part
of TPP. And I think there is an analysis right now within the
administration as to which of those countries we should start
with, which make the most sense strategically, which make the
most sense economically.
So the President's idea is to have a series of bilateral
agreements. We are in the process of trying to determine which
of those countries should come first. There are pluses and
minuses with respect to various ones.
But I think the area with the most focus right now would be
the TPP countries. And they are meeting and trying to determine
whether they can do something with what they call the TPP 11,
so there is a lot of activity in that area.
But I suspect that once we get started through the NAFTA
process, we will come to some conclusion as to which country we
should start with. Of course, it requires two people to be in
that position, and some of the TPP countries do not want to do
bilateral. They are hoping the United States will come back and
join the TPP, which I have assured them is not going to happen.
But there has been talk about a variety of countries. One
of the first ones, of course, that most agricultural State
Senators talk about is Japan, because there is a huge amount,
there is a huge market there.
You know, I would note, as I say, that right now I do not
think Japan is in the position where they want to do that
negotiation, and the United States is not at that point either.
But we are in talks with Japan.
But my own view is that, with the trade deficit that they
have had with us for decades--I mean, they had a $60-billion
trade deficit with the United States when I worked here, when
you first got on the committee. I mean, I think in areas like
beef and the others, they ought to be making some unilateral
concessions, at least temporary concessions. And I do not quite
understand why that does not happen. That is a simple way to
get that trade deficit down, and it does not cost them
anything. So I just gratuitously add that.
But a lot of people talk about Japan as a prospect. There
are reasons to have some others, you know, for a variety of
strategic or economic reasons. But this clearly is something
that is ongoing right now.
Senator Grassley. Thank you.
The Chairman. Senator Cornyn?
Senator Cornyn. Thank you. Mr. Ambassador, I too am
comforted by the comments that you and Secretary Ross made
about taking a Hippocratic oath when it comes to trade: first
do no harm. And I am glad that you are where you are.
One of the things we mentioned earlier that I just want to
recall is that trade deals are hard to get through the Senate.
We got Trade Promotion Authority authorized by the vote of 47
Republicans and 13 Democrats. Fortunately under TPA, it is an
up-or-down vote, so we are looking at a majority vote. But I
hope as you negotiate this modernized NAFTA agreement, you will
continue to keep that objective in mind to get 218 votes in the
House and 51 votes in the Senate.
I know you worked here a long time and so you understand
how this place works, but I just wanted to mention that.
With regard to beef and NAFTA, U.S. beef exports to Mexico
increased 750 percent under NAFTA. And there is some concern
among agriculture stakeholders that prolonged negotiations may
jeopardize existing ag provisions under NAFTA and put the U.S.
further behind in negotiations with other countries like Japan,
which you have already mentioned.
Could you give us an idea about how long you anticipate the
NAFTA renegotiations to take? How long will that be?
Ambassador Lighthizer. Well, thank you, Senator. First of
all, I want to assure you that I am very focused on the fact
that when we bring something back, it has to pass and that
there is almost no margin for error. That is one thing that it
seems to have in common with a lot of other pieces of
legislation. There is very little margin of error.
My hope, to be honest, is that we end up with a model
agreement that has a substantial number of Democrats as well as
Republicans; that really is my hope.
Senator Cornyn. That would be great.
Ambassador Lighthizer. And I have talked to a lot of
Democratic Senators who give me hope that that is a possibility
if we do the right kind of an agreement. So I am really looking
forward to that.
In terms of time, we are going to start the very first day
that we can start. We can start on August 16th, and we are in
the process right now of talking to our negotiating partners
about when the first day of the meeting will be.
But we are very, very eager for the kinds of reasons that
you say. There are real-life sales and real farmers and
ranchers and real businessmen whose lives are disrupted and
whose sales have been disrupted just based on uncertainty. So
we are cognizant of that.
There are people who have said we ought to try to get it
done by the end of the year. You know, that is a very, very
quick time frame. We are certainly not going to have a bad
agreement to save time. We do not have any arbitrary deadline.
When I talk to my people who have negotiated these
agreements in the past, they tell me about timelines that are
much longer than you would tolerate. And I say no, that is not
going to happen, and there are ways to compact it. There is a
history of, you make a proposal and then you wait several weeks
and then you--so I said, no, the President is not going to put
up with that, the Senate Finance Committee, the House Ways and
Means Committee, they are not going to put up with that.
We are going to have very short time frames, and we are
going to compact it as much as we possibly can. But there is no
deadline. My hope is, we can get it done by the end of the
year----
Senator Cornyn. Thank you.
Ambassador Lighthizer [continuing]. But there are a lot of
people who think that is completely unrealistic.
Senator Cornyn. Thank you.
Senator Portman asked you about digital commerce and
mentioned that as one area in which the world has changed a lot
in the 23 years since NAFTA passed.
Another area that occurs to me is the energy sector, where
the United States has become one of the very top energy
producers in the world. And exports are one of the ways for the
administration to accomplish its economic and trade policy
goals.
Do you see energy as a key tool in a trade agreement
renegotiation with NAFTA?
Ambassador Lighthizer. Yes, absolutely. Energy is a very
important part of the economy. When you look at the economy of
the three countries, when you look at the trade flows, there is
a lot of trade back and forth between the NAFTA partners.
Senator Cornyn. Right. In terms of a trade surplus, my
notes here indicate that energy has been a big winner with
NAFTA, generating a U.S. trade surplus with Mexico of more than
$11 billion, with more than $20 billion in U.S. energy exports
to Mexico and less than $9 billion in energy imports from
Mexico.
And I agree with you: I think we can build on this
incredible renaissance in American-produced energy and build on
that success story with NAFTA modernization by expanding the
energy chapter, and so I am glad to hear you say that.
Do you see cross-border energy permitting reforms as part
of this negotiation as well?
Ambassador Lighthizer. I guess I have not really focused on
the permitting. As a general matter, what I can say on
permitting is, I think, it is something that we are going to be
focusing on, just trade facilitation generally. But no one has
raised a specific issue with respect to energy with me.
The Chairman. Senator, your time is up.
Senator Cornyn. Thank you.
The Chairman. We will turn to Senator Cantwell. I think you
were here first. Am I right? Okay, Senator Cantwell.
Senator Cantwell. Okay, thank you so much. Thank you, Mr.
Chairman.
Mr. Lighthizer, thank you for being here.
I am very concerned about new Chinese regulations that make
it almost impossible for U.S. technology companies to be
involved in cloud services that operate within Chinese markets.
Their draft regulations, which I have had a chance to speak to
the Chinese Ambassador about, would require U.S. cloud services
to provide a transfer of intellectual property, surrender brand
names, give control of their businesses to Chinese companies
that they want to operate in China.
So obviously, Chinese cloud providers do not do the same in
the U.S. And it would be very bad if U.S. companies were locked
out.
What progress has the administration made towards resolving
this difference between the U.S. and China?
Ambassador Lighthizer. Well, Senator, this is an extremely
important problem, as you say, and if you sort of dissect it a
little bit, it is not unlike the way that the Chinese have
operated in a whole variety of areas where they have had an
unfair advantage in several different sectors of the economy.
I mean, it is not really unlike what they have done in
steel and aluminum and other things where they are basically
requiring a Chinese partner, they are requiring transfers of
technology. And clearly, their hope is to have China be the
dominant power in this industry.
So it is something that we have raised with them, something
that we are monitoring, and something that we take very
seriously. We think it is a very serious threat to U.S.
commerce. And we are watching them as they are developing, and
we are complaining to them, and we will continue to focus on
that.
At this point, if there are enforcement actions, you know,
we have not come to a conclusion yet on that. But it is a
major, major problem that we are focusing on.
Senator Cantwell. Good. Well, I hope that you will do more
than monitor. I know that was probably just a term that you
used, and I certainly want to work with you on that.
To me, I look at all of our issues here and, you know, we
have many companies that are doing business in China, not
always exactly the way we would like to see the market work,
but nonetheless, I think some of our companies have been the
best at continuing to push the envelope there.
And we certainly want to make sure that we are very loud
and vocal to the Chinese government that this is not the way to
do cloud services. We cannot have cloud services if you say
``Chinese government inside.'' No one is going to want to do
that kind of service. So in the end, it will not benefit them.
What opportunities do you see with, you know, the 100-day
agenda between the U.S. and China in the resolution of the
polysilicon issue between China and U.S. exporters?
Ambassador Lighthizer. Well, you know, this is something
that we also have worked on. I doubt that it will be done
during this part of the 100-day package, but it is something
where we have reason for optimism that the Chinese side may be
willing to make some kind of a compromise. So it is something
that we are watching.
It has been a long, long problem. It is multidimensional,
as you know well. And I guess our view is that there is some
reason for optimism that the Chinese producers may be willing
to come to some kind of a compromise.
But in terms of timing, the 100-day program is over here
very shortly, and then we will have next steps in terms of that
dialogue. The dialogue will not end, of course, with the 100
days.
Senator Cantwell. Well, I think that, you know, you and I
can discuss privately all that has transpired there. But I do
think that this is a telling story of what happens if we are
just going to escalate things. And you can see that both U.S.
and Chinese actions now have gotten us into a situation that
we, certainly on the U.S. side, want to resolve as it relates
to these suppliers and the number of jobs that are threatened.
The last issue I would just bring up, Mr. Lighthizer--and
you had at the confirmation hearing an opportunity to talk
about the Export-Import Bank. I know the President has now sent
up names.
You know, I do not think you are going to find a lot of
support on our side of the aisle for somebody who is not
supportive of the Export-Import Bank. I do not expect you to
respond to that, but either Mr. Garrett has changed his tune or
these will not be the kinds of things that are going to help us
sell U.S. products in overseas markets.
It is really critical that we have a functioning bank. And
I am actually proud that we make something that is worth
hundreds of millions of dollars that we sell overseas. We do
not want to just make things that are, you know, very low-end.
The fact that we can manufacture and make something as great as
an airplane and it helps to sell it in overseas markets should
be a victory for us, not something that we want to penalize.
So I hope that Mr. Garrett is not going to continue to
penalize the jobs and opportunities for U.S. exporters.
The Chairman. Well, thank you, Senator.
Senator McCaskill?
Senator McCaskill. Thank you, Mr. Chairman.
I noted Senator Cornyn's comment that you worked here for a
period of time. And he said that you know how things work
around here. I am not sure they work around here the same way
as they did back when you were the minority counsel for the
Finance Committee.
And I am looking back at the big tax-cut bill that was
passed in 1981. I am sure you remember it well. It was not done
through reconciliation. In fact, it was introduced by a
Democrat in the House and actually passed the Senate by a voice
vote.
So it does not work that way around here anymore. After we
finish the kind of bizarrely secret process of reforming health
care, we are going to begin on a strictly partisan exercise to
do tax reform. And I do not think it was that way in the
Finance Committee back in the late 1970s and early 1980s.
Let me ask you about the section 232 process on aluminum
and steel. I am very worried. I understand that the President
is asking this to be examined as a national security threat. I
do not have to tell you, this is highly unusual in our Nation's
history. I think there have only been two times in 50 years, or
something close to that, where there has been a determination
that imports were jeopardizing our national security.
And as you well understand, this is a much different
process than determining whether or not there is dumping going
on that hurts American industry. It is a different kind of
process. It is less open, less transparent. But I know you get
this.
When we put tariffs or quotas on steel and aluminum, there
will be a sweeping impact on U.S. manufacturing. We all want
U.S. steel to be rising. We want our aluminum to be
competitive. But I have businesses in Missouri who use raw
materials that are not made in the United States under this
category, and they are very worried, the manufacturers, about
the impact that any decision in this area is going to have on
not only their costs of producing goods and manufacturing
goods, but they are also worried about any other national
security blockades that are going to pop up around the globe in
response and/or retaliation to what might be determined through
the 232 process.
Could you address that?
Ambassador Lighthizer. Well, certainly, Senator. First, I
would say the problem that the government is worried about is,
this excess has created this huge noneconomic excess capacity.
It was created by China in both steel and aluminum, and other
areas. And it is going to be a lot of different things. So that
is the problem.
The normal tools do not seem to get to it. It does
potentially have a national security interest when we are in
the position where we cannot produce steel or our steel
industry cannot produce the new products that are needed.
So I think it is a legitimate question as to whether or not
there is a 232 action, whether there is a national security
impact. My sense is that that is being studied. And I think you
could make a good case that without the steel industry, we
really cannot defend ourselves. So I think that is important.
But it also is true what you say: there are other effects
from many of these actions, and they have to be balanced in
this case.
With respect to constituents who have products that are not
manufactured in the U.S., my expectation would be--and once
again, I cannot prejudge what is going to happen, if there will
be an exclusion process--certainly in the past there has been
an exclusion process where people would go in and apply to the
Department of Commerce and say, here is a product that is not
made in the United States.
Now, that has happened, and we have had quotas in the past,
at least in the 30 or so years that I have been involved, where
sometimes there are questions. People say it is not made in
America when they really mean it is made cheaper or whatever
elsewhere.
But situations where there are legitimate cases of a
manufacturer who needs a steel product or an aluminum product
that is not made in the United States, it is a legitimate
position that they should go in. And I think they will be
accommodated in those cases, at least in most of those cases
they will be accommodated with an exclusion to take them out of
the order, because clearly this is no----
Senator McCaskill. And there is going to be a process?
Because this is not like an ITC process obviously. This is a
different process. This is in Commerce.
Have you all figured out the process by which there will be
exclusions?
Ambassador Lighthizer. Well, let me say this. First of all,
this is the Department of Commerce and not the United States
Trade Representative, although I have some input. But it is
really not my process to create.
But if there are tariffs or if there are quotas, there
certainly has been discussion of, and I would expect there to
be, a process whereby people who need products that are not
made in the United States can have them without going through
the system. So I would expect there to be that process.
It is important that we have this conversation, and I will
certainly carry it back that the Finance Committee has stressed
that whatever we do--and once again, I cannot prejudge what the
actual outcome will be--that there has to be some accommodation
for people or companies that are----
Senator McCaskill. That would be terrific. And if you could
follow up with us and let us know how they are planning on
accommodating that process for manufacturers who could be
dramatically impacted----
The Chairman. Okay, Senator, your time is up.
Senator McCaskill. Thank you.
The Chairman. Senator Thune?
Senator Thune. Thank you, Mr. Chairman.
Ambassador Lighthizer, thank you for appearing before the
committee this morning. We appreciate your testimony on the
administration's trade policy agenda and its fiscal year 2018
budget with respect to USTR.
I think it is fair to say that for most of us here, the top
issue in the trade space is the administration's efforts to
renegotiate NAFTA. And I happen to believe NAFTA has been an
important and beneficial trade agreement for the United States.
I agree with the President's objective, however, of reviewing
and modernizing the agreement.
That said, I would ask you to proceed with caution,
especially with regard to the agricultural provisions, which
are extremely important and have been very successful for
farmers and ranchers in States like South Dakota.
While there is always room for improvement, I would ask you
to start with a policy of ``do no harm.'' We will be getting in
touch with you on this and other aspects of NAFTA before the
negotiations begin, a number of us who are very seriously
interested in engaging on that subject, and we would invite
some of our colleagues on the Democrat side in those efforts as
well.
NAFTA has done a tremendous amount of good for South
Dakota's farmers. It is, frankly, quite difficult to overstate
its importance to our agriculture sector. But any agreement
that is over 2 decades old can certainly stand to be examined
for areas to improve it.
I think the best place to start should be plugging the
holes that we have overlooked the first time around, and then
upgrading the trade rules to match the situation that we are
dealing with today.
One example would be South Dakota's dairy industry, where
we have one of the few sectors that still faces exorbitant
Canadian tariffs as well as nontariff policies that are
distorting trade.
Canadian class six and seven pricing programs have created
a lot of concern about how they are affecting not just U.S.
export opportunities to Canada, but also U.S. dairy exports to
third-country markets. And just as it is incumbent upon the
United States to play by the rules and hold up our end of the
bargain, it is essential that other countries do the same.
So can you assure me that these tariff and nontariff
concerns that are limiting the sales opportunities of South
Dakota's dairy industry will be addressed in the coming NAFTA
negotiations?
Ambassador Lighthizer. Yes, sir, we are very familiar with
them. A number of Senators and industry sources have raised it,
and it is very important, and it is something we have talked
about somewhat already with the Canadians and certainly expect
to deal with further.
Senator Thune. Thank you. I was very pleased with your
recent remarks indicating that it is unacceptable for our trade
partners to use nonscientific and non-risk-based regulatory
systems to suppress U.S. exports or influence what we produce.
As you know, China and the EU have adopted this strategy when
it comes to U.S. biotech crops.
Most recently, China committed to reviewing eight biotech
products that are currently awaiting final approval. And I
understand that these products have been in the Chinese process
for an average now of 5 years. However, China has only approved
two products and asked questions on the remaining six.
What does the administration intend to do to hold China
accountable to approve the remaining six products before the
conclusion of the 100-day plan?
Ambassador Lighthizer. Well, as you suggest, Senator, this
is one of the deliverables from the 100-day plan. And the
administration is very serious about that. It is continuing to
press China. Our expectation is that they will grant all eight
approvals in due course, but our pressure is on them to do it
as soon as possible.
We have not lost sight of the fact that there are six of
them that are still languishing out there.
Senator Thune. Good. In my home State of South Dakota, I
have constituents who are harnessing Internet-enabled tools to
access customers abroad in ways that would have been impossible
a decade ago. And all U.S. industries, from agriculture to
manufacturing to financial services, are increasingly reliant
on the Internet for their current and future global
competitiveness.
As a sector on its own, the Internet is an area of major
U.S. economic and export strength, adding to a positive trade
balance and supporting more than 6.7 million American jobs.
In order to build on that success, it is essential that
USTR have senior-level staff dedicated to combating foreign
restrictions and promoting U.S. digital economy and trade
interests. Currently, USTR has mid-level staff who are working
on these issues, but no senior-level leadership.
Given that digital trade affects a wide range of industries
that cut across issue areas and geographies, do you plan to
appoint
senior-level officials focused on digital trade to drive a
coordinated, consistent, and cross-cutting agenda to
comprehensively remove barriers to U.S. digital trade?
Ambassador Lighthizer. Yes. We have, as you know, Senator,
an Intellectual Property Innovation Negotiator, a position that
was created by the Congress and by this committee really. It
was not filled in the last administration. We are in the
process right now of moving ahead to fill it.
But in the meantime, I want to assure you that it is not
just mid-level people who are worried about digital trade at
USTR. It is a focus of the entire institution, and it is one
that cuts across lines. Almost whatever area you are looking
at, there is a digital aspect to it. And it is really something
that I focus on very much.
And I have a deputy who is before this committee, who
hopefully will be confirmed in due course. He has not been
before the committee very long, so this is by no means a
complaint. But I hope when he is done, he will also focus on
it.
But we do have an IP negotiator postition that we want to
fill, and we are in the process of working through that system
right now.
Senator Thune. Very good; thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, sir.
I want to thank everybody, all those who attended today and
participated, especially you, Mr. Ambassador. You have been
very patient. As usual, you have answered everything you
possibly could. You have done a great job.
There are a lot of things on the Ambassador's plate right
now, and his willingness to appear before the committee, that
reflects the important understanding of Congress's critical
role in setting our national trade agenda. So we appreciate you
being here. We appreciate the patience that you have had.
And I would like to request that Senators with questions
for the record please submit them by close of business on June
27th.
And with that, we are going to adjourn this hearing.
[Whereupon, at 12:10 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Orrin G. Hatch,
a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
today delivered the following opening statement at a hearing to examine
the administration's approach to trade policy and its fiscal year (FY)
2018 budget request:
Good morning and welcome to today's hearing, during which we will
discuss our Nation's trade policy agenda as well as the FY 2018 budget
request for the U.S. Trade Representative.
Thank you, Ambassador Lighthizer, for being here today.
You have been in office for little more than 1 month, and we
already have seen quite a bit of you here in the Senate. I take this as
a good sign that you understand the importance of not only meeting with
the Senate, but also listening to the advice that you receive and
incorporating it into your negotiating positions. As you and I have
discussed, following the letter and spirit of the Trade Promotion
Authority statute is the only way to build the necessary support in
Congress to execute the President's ambitious trade agenda.
Members of this committee are looking forward to inquiring about
and discussing that agenda today.
As required by law, USTR issued its trade agenda report in March.
Unfortunately, due to unnecessary and politically motivated delays to
Ambassador Lighthizer's confirmation, that report had to be issued
before he took office.
Now that Ambassador Lighthizer is in office, today is an
opportunity for him to update Congress on the administration's trade
goals.
Like I said, President Trump has outlined an ambitious trade
agenda. That's a good thing.
The number-one goal for the administration must be to build and
maintain a healthy economy for American businesses, workers, and
families. And that requires a trade policy that not only increases
economic opportunities for American companies and consumers, but also
holds foreign nations accountable when they abuse the system.
With that in mind, let me offer one piece of advice to the
administration. When tackling trade challenges, you should stay focused
on trade.
That might sound obvious, but, believe me, some tend to disregard
that particular piece of advice.
I was very critical of the last administration for using American
negotiating leverage to push a social agenda that was often more
concerned with labor, environment, public health, and other polices
than with improving the trade policy of our trading partners.
I hope that this administration, in contrast, will keep America's
trade policy focused on trade.
I would be similarly concerned with the use of national security
tools to achieve trade policy goals if doing so would risk undermining
our national security capabilities. The President bears the
responsibility for managing significant national security threats from
North Korea, Iran, and elsewhere, and we must ensure that none of our
Nation's trade actions jeopardize the ironclad principle that the
United States has the right to act in its essential security interests,
including through sanctions, embargoes, and other economic measures.
Just as all national security options must remain on the table to
address security threats, we must use the full range of trade policy
tools to hold foreign nations accountable.
I expect and am confident that this administration will
aggressively pursue enforcement at the World Trade Organization,
utilize domestic trade remedy laws, combat intellectual property rights
violations, and work to resolve market distortions in China and other
countries.
Congress has provided the executive branch the tools necessary to
pursue these objectives.
For example, Congress recently authorized the Enforce and Protect
Act to target duty evasion, and passed legislation improving the
effectiveness of the Special 301 mechanism and WTO-authorized
retaliation measures. We also established a Chief Intellectual Property
Negotiator, a Trade Enforcement Trust Fund, and the Interagency Center
on Trade Implementation, Monitoring, and Enforcement. All of these
provisions were intended to give our Nation's trade enforcers and
negotiators the tools that they need to ensure that our trading
partners follow the rules.
Ambassador Lighthizer, I am interested in hearing your views on how
USTR and the administration will use these and other existing trade
authorities to challenge the improper practices of foreign countries,
and what additional resources, if any, might be needed in order to best
utilize these tools.
Of course, ensuring that our trading partners follow the rules is
only part of the equation. Establishing those rules also is in our
national interest.
Toward that end, the upcoming negotiations with Canada and Mexico
provide the administration with a unique opportunity to improve North
American integration. This will make the region a more attractive
investment and manufacturing hub and serve as a counterweight to China.
Looking further ahead, the administration must build upon a
stronger North American base to expand opportunities for American
businesses, consumers, and workers in the Asia-Pacific region,
including through bilateral free-trade agreements.
The administration is focused on addressing global trade
imbalances, and history has demonstrated that the best way to address
those imbalances is through U.S.-led free-trade agreements.
Currently, the United States has free-trade agreements with 20
individual countries, and in 2015, the overall U.S. trade surplus with
those countries was more than $8 billion.
Long story short, the best way to ensure a strong U.S. economy
through trade is to negotiate deals with foreign nations that require
them to play by our rules, and allow us to hold those countries
accountable when they fail to do so.
That is what I believe President Trump wants, and I encourage you,
Ambassador, to utilize the authorities provided under the TPA statute
to achieve those goals.
______
Prepared Statement of Hon. Robert E. Lighthizer, United States Trade
Representative, Executive Office of the President
Chairman Hatch, Ranking Member Wyden, and other members of the
Senate Committee on Finance, it is an honor to appear before you today
as the United States Trade Representative. Under President Trump and
his administration, I am here to tell you that trade is certainly a top
priority, and it is my intent to work with this committee to achieve
true progress for all Americans. During my first few weeks on the job,
the President has instructed me to negotiate trade deals that put
American workers, farmers and ranchers, families, and businesses first,
and to complement those negotiations with a vigorous enforcement
agenda.
I am pleased to report to you today, that since January 20th, USTR
has been hard at work. The agency submitted a new budget request to
Congress and has started implementing President Trump's agenda on
trade. Thirty-five days ago, I notified Congress of the
administration's intent to renegotiate the North American Free Trade
Agreement (NAFTA), a principal priority of the President.
In addition, my USTR team and I traveled to Vietnam to participate
in the Asia-Pacific Economic Cooperation (APEC) Ministers Responsible
for Trade meeting, and led the U.S. delegation for the Organisation for
Economic Co-operation and Development (OECD) ministerial meeting in
Paris. These overseas engagements allowed me to press our trading
allies on a bilateral basis to open markets for American exports and to
reiterate the President's message that America and our workers insist
on a fair shake.
It has been a very productive first month, and all of us at USTR
intend to continue working at this productive pace in order to level
the playing field for American workers, ranchers, farmers, and
businesses.
Before discussing our activities and agenda in detail, it is
important to note that the President has requested increased funding
for USTR to enhance the agency's mission. USTR's FY 2018 request calls
for $57,600,000, a roughly 6% increase over the FY 2016 level. These
additional resources would be used to implement the Interagency Center
on Trade Implementation, Monitoring, and Enforcement, and would allow
USTR to hire eight additional staff to support the mission of that
office.
As is typical for our agency, the overwhelming majority of our
resources are used for personnel and travel in support of the core
mission of the agency; for the FY 2018 request, payroll is expected to
account for 76% of the budget and travel for 11%.
These resources are vital to fulfill USTR's mission. They will
enable the agency to meet our statutory obligations, including the
obligations to (1) enforce trade agreements, including detecting
violations and taking swift action to enforce U.S. rights, (2)
vigorously and successfully defend the ability of the United States to
exercise its rights to ensure fair trade in the U.S. market, and (3)
take action under U.S. law to advance U.S. economic interests. To
advocate for and defend U.S. economic interests in these ways, among
others, USTR is preparing to take significant action far beyond that
taken by previous administrations, including, for example, self-
initiated litigation in defense of U.S. workers, farmers, ranchers, and
businesses. And as we speak, USTR is reviewing the effectiveness of our
trade agreements, preparing to provide its assessment to the President
in October of this year.
First and foremost among our activities, on May 18th, in accordance
with the Bipartisan Congressional Trade Priorities and Accountability
Act of 2015 (TPA), I notified Congress that the President will conduct
negotiations with Canada and Mexico with respect to NAFTA. As required
by TPA, the congressional notification is followed by a 90-day period
of consultations with the public and Congress, and provides Congress
the opportunity to review and comment on the negotiations. That means
that the NAFTA negotiating rounds can begin as soon as August 17th, and
that is our intention.
In the meantime, USTR is talking to stakeholders, your staff, and
the public to help us develop our policy outcomes for the negotiations.
USTR is reviewing the more than 12,400 comments received from everyday
Americans during the open- comment process. The public had such a
strong interest in our work on NAFTA that the website crashed, so we
extended the comment period to ensure that everyone had an opportunity
to provide input. My staff is now busy reviewing and analyzing those
comments, in order to help formulate our positions on how to improve
the NAFTA. In addition, USTR will hold several days of public hearings
beginning on June 27th. Again, we expect great interest and look
forward to hearing the testimony of a wide range of stakeholders.
Of course, during the 90-day period, we will also be working
closely with the Congress to develop and refine our negotiating
objectives, consistent with TPA. To that end, we have already had
numerous meetings with congressional offices, members, and aides to
hear your ideas. And, in the interest of a transparent process, and as
required by TPA, we will be publishing a detailed summary of the
negotiating objectives at least 30 days before the negotiations begin.
USTR also is working to advance each point of President Trump's
trade policy agenda, which includes promoting U.S. sovereignty,
enforcing U.S. trade laws, leveraging American economic strength,
protecting U.S. intellectual property rights, and reducing America's
persistent trade deficit. We are doing this on a number of fronts.
For example, we are fully engaged in working with our trading
partners in Asia to increase market access and dismantle trade
barriers. My staff and I have had productive visits with officials from
Vietnam, Indonesia, India, and other countries and have been successful
in resolving some outstanding trade issues to improve market access for
both goods and services in these countries. Specifically, during my
bilateral meetings so far, I have raised several issues about which
members on this committee are concerned, including Internet
advertising, e-payment services, the export of agricultural goods, and
others. My team and I have made progress with respect to many of these
issues, but I intend to continue pressing them to ensure that markets
remain open.
The economic dialogues with China and Japan are also proceeding,
and USTR staff has contributed to those market-opening efforts as well.
Through the pursuit of these reforms, and securing more access for
American exporters, I hope to see Asian markets provide strong demand
for our exporters.
We are also involved in other areas of the world. I was in Paris
last week at OECD meetings where I had the opportunity to meet with
European Commissioner for Trade, Commissioner Malmstrom. We discussed
areas of common concern and a way forward on a U.S.-EU economic
dialogue. We are currently in the process, with our EU counterparts, of
establishing the scope of that engagement, which includes both
bilateral and global issues. We know that there are areas where we can
ally ourselves with our European trading partners to address issues
such as non-economic capacity and non-market economy status for certain
countries.
However, the President's agenda is not limited to new negotiations,
as the President takes seriously the need for the United States to
enforce laws already on the books. The Office of General Counsel, in
accordance with the President's recent directives in Executive Order
13796, is in the process of examining our trade relationships and
identifying issues that can be addressed through enforcement of U.S.
trade laws. We believe that too little has been done in this area in
recent years, and we are actively assessing ways to get tough on
countries who do not respect our economic system. We have also been
active in identifying countries that have serious problems with
protection of intellectual property, and we are reviewing and amending
our action plans to ensure that we can identify violations and take
appropriate enforcement actions. We have also initiated out-of-cycle
reviews or investigations of countries that receive trade preferences
under programs such as the Generalized System of Preferences and the
African Growth and Opportunity Act.
USTR is also working hard, defending the interests of the United
States through multilateral engagement at the World Trade Organization
(WTO). For many years, the team at USTR has been engaged in the WTO
dispute process regarding European Union subsidies for Airbus and EU
claims of American subsidies for Boeing. On June 9th, a WTO Compliance
Panel rejected 28 of 29 claims made by the European Union. Make no
mistake; this was a big victory for the United States. I look forward
to continuing the trend of defending American businesses against unfair
claims from foreign nations. Further, we will not hesitate to file
claims against nations that do not follow the rules.
During my first month in office, I have had several promising
discussions with the Director General of the WTO, Roberto Azevedo, in
order to express our priority to improve the functioning of the WTO. In
Paris, I had the opportunity to participate in candid discussions among
parties many of which showed the significant differences among members.
I have begun to articulate my desires to seek reforms to the WTO
dispute settlement system, and have made that clear to our partners.
This is now a topic of serious discussion at the WTO. We expect to see
meaningful changes in order to maintain the relevance of the system.
Looking ahead to December, we are pursuing successful ministerial in
Buenos Aires this December that reinvigorates the WTO. We do not
advocate a meeting that seeks major deliverables or significant
negotiated outcomes.
Finally, we at USTR are committed to enhancing U.S. food and
agricultural exports globally. Secretary Perdue and I will be working
closely together to ensure that we are effective in achieving this
goal. Thus far, USTR has made progress with respect to China,
Argentina, and Vietnam, in addition to the ongoing work that USDA and
USTR staff undertake every day to promote U.S. agriculture. We raised
our concerns with Canadian officials and at the WTO on Canada's dairy
pricing policy, and I engaged Vietnam to address concerns affecting
U.S. exports of offal and use of certain veterinary drugs in beef and
pork. I am moving forward with dispute resolution on China's trade-
distorting farm support for corn, wheat and rice with a panel formed
and dispute proceedings ongoing.
Again, it has been a very productive first month, and we hope to
keep the momentum in realizing the President's trade agenda as we move
further into the year. I look forward to working closely with Congress
and in particular the Senate Committee on Finance to work on the
President's Trade Agenda to make America great again.
______
Questions Submitted for the Record to Hon. Robert E. Lighthizer
Questions Submitted by Hon. Orrin G. Hatch
Question. America's strongest competitive advantage lies with our
innovative industries. We must ensure that our trading partners allow
cross-border data flows, do not impose data localization measures, and
protect encryption and source code used in commercial products. No
sector of the U.S. economy should be excluded from these protections.
What is your plan for engaging with Canada and Mexico to create a
strong foundation for digital trade?
Answer. The administration recognizes the importance of the digital
economy to American jobs, prosperity, and position as the global leader
for innovative industries, as well as U.S. companies' unique
competitive advantages in this area. I agree that addressing the
specific issues that you have identified, including restrictions on
cross-border data flows and data localization measures, in all sectors
of the economy, will be important to preserve U.S. firms' international
competitiveness. We are currently looking at how best to address these
issues in talks with Mexico and Canada, taking into account the views
of the Congress and stakeholders on the approaches in past agreements,
and existing frameworks in which our countries currently participate,
such as the Asia-Pacific Economic Cooperation (APEC) Cross-
Border Privacy Rules system.
Question. NAFTA provides reciprocal market access for government
procurement, enabling American businesses to participate in Canadian
and Mexican government procurements on a non-discriminatory basis. Such
participation is very important to American businesses, which have been
awarded contracts in Canada and Mexico worth as high as hundreds of
millions of dollars. In contrast, despite the reciprocal nature of
NAFTA government procurement obligations, Canadian and Mexican
businesses provide only a small fraction of U.S. Government
procurement.
How do you plan to ensure that any revised NAFTA agreement reached
with Canada and Mexico preserves NAFTA's existing government
procurement provisions and does not jeopardize government procurement
opportunities for American businesses in Canada and Mexico?
Answer. Government procurement obligations have been a part of
every U.S. FTA since the U.S.-Israel FTA. As we approach NAFTA
renegotiation, we will seek to ensure that the government procurement
chapter facilitates the participation of American businesses seeking to
take part in procurement opportunities in Canada and Mexico.
Question. The IP chapter of the TPP included a number of flaws that
contributed to TPP's failure to pass Congress. For example, certain
copyright provisions fell below the standard of protection provided by
U.S. law.
Since the U.S.-Korea FTA was the last free trade agreement to pass
Congress, and was acceptable to both rights holders and user groups, do
you agree that the administration should look to the IP provisions in
the U.S.-Korea FTA rather than the TPP provisions as a starting point
for NAFTA modernization?
Answer. NAFTA modernization needs to secure high IP standards, and
we will be seeking standards of protection similar to those in U.S. law
and that reflect our trade priorities with respect to Canada and
Mexico. Throughout the negotiation, we will be pressing for solutions
to both new and long-standing trade challenges in intellectual property
protection and enforcement. I look forward to working closely with you
on these issues.
Question. As part of Congress's most recent reauthorization of the
Generalized System of Preferences, the list of products eligible to
receive duty-free treatment was expanded to include certain luggage and
travel articles. Despite broad bipartisan support for this expansion,
the previous administration inexplicably elected to extend eligibility
only to imports from a small subset of countries. At your confirmation
hearing, you committed to reviewing whether duty-free treatment should
be extended to imports from all GSP-eligible countries.
Now that you are the confirmed U.S. Trade Representative, will you
commit to extending such treatment to imports from all GSP-eligible
countries?
Answer. I am pleased to report to you that the President has
decided to extend GSP eligibility for travel goods to all beneficiary
countries. This decision entered into force on July 1, 2017.
Question. I am concerned about China's efforts to use its Anti-
Monopoly Law to advance its industrial policy goals at the expense of
U.S. companies. In the past, the United States secured a number of
commitments from China to enforce its Anti-Monopoly Law in a
transparent and non-discriminatory manner. Nevertheless, as documented
by USTR's recent NTE and Special 301 Reports, China appears to continue
to use its AML to target U.S. companies, and U.S. intellectual property
in particular. In response to an earlier question of mine on the topic,
you stated that you would ``undertake efforts, in coordination with
other U.S. Government agencies, to ensure that China applies its Anti-
Monopoly Law in a transparent manner to address legitimate competition-
related concerns, not as a guise for industrial policies.''
Now that you are confirmed, what specifically is USTR doing to
ensure that China stops the discriminatory application of its Anti-
Monopoly Law?
Answer. China continues to apply its Anti-Monopoly Law (AML) to
private parties in a manner that is not sufficiently transparent or
even-handed and that appears to use the threat of AML penalties to
extract inappropriate, and sometimes unrelated, concessions from U.S.
firms, including with regard to their intellectual property. China also
appears to under-enforce AML provisions prohibiting government actions
that eliminate or restrict competition, of which there are many in
China. Both of these dimensions of China's AML enforcement affect
international trade and investment flows. To effectively address these
problems, U.S. trade and competition agencies will need to work
together on a strategy that allows us to deploy the tools available to
us in a way that leads to free and fair competition in China and
internationally.
Question. At present, China maintains a 50% foreign equity cap
restriction on foreign direct investment in the Chinese domestic life
insurance market. China's insurance companies control nearly all of
China's domestic market, and are actively expanding into foreign
markets, including the United States, where no such equity caps exist.
What is your plan for addressing China's life insurance equity cap
restrictions?
Answer. This administration recognizes the importance of removing
China's foreign equity cap for U.S. companies that seek to provide life
insurance services in China and will continue to use all appropriate
avenues, including high-level discussions, to endeavor to make progress
on this issue.
Question. On January 13, 2017, the Treasury Department and USTR
notified Congress of the conclusion of negotiations on the Bilateral
Agreement between the European Union and the United States of America
on Prudential Measures Regarding Insurance and Reinsurance (``covered
agreement''). Under section 314 of the Federal Insurance Act of 2010,
USTR is authorized, with Treasury, to negotiate and enter into covered
agreements on behalf of the United States.
As the administration considers signing the U.S.-EU covered
agreement, do you commit that USTR will fully engage with Congress and
stakeholders before entering into the agreement?
Answer. USTR and Treasury have undertaken a series of meetings with
interested stakeholders and Congress to gather feedback on the U.S.-EU
covered agreement and to provide updates regarding the administration's
decision-making process. USTR is currently considering next steps on
this issue in consultation with Treasury. I intend to ensure that
Congress and stakeholders remain engaged in this process.
Question. Canadian courts have invalidated approximately 30 patents
for innovative pharmaceutical products by applying a patent utility
doctrine that appears to be discriminatory and inconsistent with
Canada's international obligations.
How do you intend to address this issue?
Answer. We share your concern on this issue, and we have raised
this with Canada. In the AstraZeneca case decided on June 30, 2017, the
Canadian Supreme Court invalidated the use of the ``Promise Doctrine,''
saying it was not the correct method of determining utility. This
recent result is very encouraging. We will continue to use all
appropriate trade tools to ensure that Canada treats U.S. rights
holders in a fair and transparent manner according to its international
obligations, including with regard to the restoration of other
previously invalidated patents.
Question. With only one recent and discriminatory exception, the
Canadian Radio-Television and Telecommunications Commission
(``commission'') requires local Canadian television stations to
substitute Canadian ads for U.S. ads when a program is aired at the
same time in both the United States and Canada. This policy is referred
to as simultaneous substitution. In January 2015, the commission
issued, without notice, an order to prohibit simultaneous substitution
only for the Super Bowl. The prohibition applies to no other program.
This action undermines the NFL's ability to collect revenue on
copyrighted content, likely violates international agreements, and is
unfairly discriminatory to the NFL and would-be advertisers. This is
one of a number of concerns with Canada's protection of intellectual
property rights.
Given the administration's stated promise to hold trading partners
accountable for violating intellectual property rights, what steps is
USTR taking to address this issue?
Answer. We are strongly committed to obtaining the strongest
standard of protection for U.S. intellectual property rights holders in
Canada, and we believe Canada needs to treat all rights holders fairly.
That is paramount in all our trade engagement with Canada.
______
Questions Submitted by Hon. Pat Roberts
Question. Recently, I spoke at the agriculture symposium held by
the Federal Reserve Bank of Kansas City. While I was there, we
discussed the severity of the current state of the agriculture economy.
It is clear we are in the middle of a rough patch and the outlook will
not improve unless we have a determined effort on trade.
I have talked to you in the past about the need to export what we
grow in new markets. Since taking the helm at USTR, what progress have
you made with Asia-Pacific countries to export U.S. agriculture
products?
Answer. I fully recognize the vital importance of agricultural
trade to the U.S. economy and States such as Kansas. Over the past few
months, we have been engaging with our counterparts across the Asia-
Pacific region to discuss the urgency of addressing bilateral trade
barriers that our exporters face and how to deepen trade ties between
us. In this short time, we have already made progress in addressing
barriers faced by U.S. agricultural exporters. For example, as part of
the U.S.-China 100-Day Action Plan, China lifted the ban on U.S. beef
imports after closing the market 13 years ago. Since China has emerged
as a major beef buyer in recent years, with imports increasing from
$275 million in 2012 to $2.5 billion in 2016, I am optimistic that U.S.
beef producers will benefit from the re-opening of the China beef
market. We will continue to make addressing agricultural issues a
priority and a central element of our efforts to expand market access
to markets in the Asia Pacific.
Question. As the lead negotiator for NAFTA, I am sure that you have
heard as often as I have, the importance of preserving the gains we
have made, particularly as it relates to agriculture, with two of our
most important trading partners. However, there are areas where
challenges remain. The dairy and wheat industries for instance face
non-tariff barriers with Canada.
What is your overall plan for modernizing and strengthening NAFTA,
while ensuring that no harm is being done to the market access U.S.
agriculture currently holds?
Answer. The administration is committed to maintaining the markets
that our farmers, ranchers, and food processing industries have and
creating opportunities to expand exports. We are committed to doing no
harm, and our goal is to avoid agriculture tariffs being raised as a
result of NAFTA renegotiation. In addition, there are areas where our
agricultural stakeholders can gain, such as certain market access in
Canada. We will continue to consult agricultural stakeholders and
Members of Congress, consistent with Trade Promotion Authority, on the
United States' approach to and positions in the negotiations.
Question. The Department of Commerce is currently conducting two
section 232 investigations on steel and aluminum. While the
investigation is intended to address the national security implications
of certain imports, broad trade remedies could have unintended negative
consequences on manufacturers and consumers of products made with
imported steel and aluminum of superior quality or not currently made
in the United States. Many of the increased costs of production will be
passed on to consumers. In the case of aluminum, we will likely see
higher food prices for canned items.
As the lead trade expert for the administration, how will you work
with Secretary Ross to ensure that actions for steel and aluminum
imports do not result in harm to U.S. manufacturers and consumers?
Answer. The section 232 investigations on the effects of steel and
aluminum imports on U.S. national security are being conducted by the
Department of Commerce. Commerce is working with USTR and other
agencies in the administration to ensure all the relevant national
security, trade, economic, and other policy considerations are
evaluated before the President makes decisions in these cases.
______
Question Submitted by Hon. Michael B. Enzi
Question. As the administration seeks to modernize the North
American Free Trade Agreement (NAFTA), there are some areas in which
the agreement has led to positive benefits. Specifically, for the U.S.
beef industry, exports to Mexico and Canada have increased
dramatically. We have heard the Trump administration use the phrase
``do no harm'' when it comes to the agriculture industry and NAFTA
renegotiations.
Is the administration committed to ensuring the NAFTA provisions
specific to the U.S. beef industry that have proven successful will not
be jeopardized during the negotiations?
Answer. The administration is committed to maintaining the markets
that our agricultural sectors have and creating opportunities to expand
exports, including for beef. We are committed to doing no harm with
respect to agriculture, and our goal is to avoid tariffs being raised
as a result of NAFTA renegotiation.
______
Questions Submitted by Hon. John Cornyn
Question. As you know, U.S. cotton producers, and the other six
segments of the U.S. cotton industry, representing cotton growers to
textile manufacturers, operate in highly integrated and competitive
global fiber and textile/apparel markets. The vitality of the North
American supply chain and access to export markets are crucial to the
success and future of the U.S. cotton industry. On average, 75% of U.S.
cotton production is exported as raw cotton fiber, and another 20-25%
is exported as textile products, such as yarn, thread, and fabric.
Thus, nearly 100% of U.S. production is ultimately exported in some
form. NAFTA has been a success for the U.S. cotton industry. Through
the development of an integrated regional platform for textile and
apparel production, NAFTA helps ensure reliable export markets for U.S.
cotton producers and strengthens the competitiveness of U.S. textile
manufacturers.
Will you commit to maintaining NAFTA's export market access for
U.S. cotton?
Answer. The administration is committed to maintaining the markets
that our agricultural sectors have and creating opportunities to expand
exports, including for cotton and cotton-based textiles. We are
committed to doing no harm, and our goal is to avoid tariffs being
raised as a result of NAFTA renegotiation.
Question. Mexico is an essential market for Texas agriculture. In
addition to the beef we export there, it's our top foreign dairy market
by far. Nation-wide U.S. exports to Mexico are about triple what they
are in China, despite that market's tremendous importance. So when
we're looking south, we want to make sure there's a strong priority on
keeping the access we have, which is relevant for tariffs and nontariff
policies. Furthermore, it is essential that the NAFTA modernization
efforts incorporate text on the issue of geographical indications (GIs)
and common names. The trade agreement between Canada and the European
Union is set to be implemented this summer. The protections the EU
demanded from Canada will impair market access for cheese and other
food products from third countries and are in complete disregard of
Canadian intellectual property laws. Also, Mexico has been negotiating
FTA expansion with the European Union that is intended to incorporate
GI provisions. As the European Commission seeks to incorporate GI
provisions in all its FTAs, it has been attempting to use the
negotiation with Mexico to impose de facto barriers to trade and
competition on various common name products that the EU falsely claims
as GIs. It is critical that the U.S. continue to reinforce that GIs are
a type of intellectual property.
Will GI provisions similar to those in TPP be incorporated into
NAFTA and future U.S. trade deals?
Answer. I share your concerns regarding the impact of the EU's
policies regarding geographical indications (GIs) on market access for
U.S. owners of trademarks and U.S. producers and traders using common
names. We strongly object to the EU's efforts to secure unfair market
access through its approach to GIs in FTA negotiations. U.S. producers
need to be able to use common names to describe and market their
products. We will seek fair disciplines regarding GIs in the NAFTA
modernization negotiations.
Question. Foreign investment is a critical tool that allows
American manufacturing, services, and agricultural industries to grow
and thrive. But investors must receive fair treatment for that
investment to benefit the United States. That is why investor-state
dispute settlement (ISDS) mechanisms are such a critical part of our
trade agreements. All investors in the U.S. benefit from protections in
the U.S. Constitution, but such basic protections are not always
available when U.S. investors invest in other countries, meaning that
investors must lean on ISDS to ensure a fair treatment and the rule of
law in the face of foreign government mistreatment. Without ISDS, U.S.
property is left unprotected against discrimination, foreign seizure,
and other forms of unfair action. Congress included ISDS as part of
Trade Promotion Authority (TPA) to keep this important provision in our
trade agreements going forward--and the administration has been clear
that it plans to follow TPA in modernizing NAFTA.
Will you commit to preserving ISDS to protect U.S. property against
foreign seizure and theft as part of a robust U.S. enforcement toolkit
in NAFTA and future trade negotiations?
Answer. I am mindful that seeking improved mechanisms to resolve
investor-state disputes is a negotiating objective in TPA, and I am
aware of the importance of ensuring U.S. investors abroad are treated
fairly. At the same time, I acknowledge some of the concerns that have
been raised about ISDS, including with respect to U.S. sovereignty. I
look forward to working with members to achieve an appropriate balance
on this issue.
Question. The North American commercial market is the most
important market in the world for manufacturers in the United States.
Over 60 percent of U.S. manufacturing output in 2016 ($1.36 trillion)
was sold in the United States, Canada, and Mexico. Canada and Mexico
purchased one-third of all U.S. manufactured goods exports in 2016,
more than the next 10 U.S. trading partners combined.
While there are certainly opportunities to update and improve this
23-year-old agreement, what steps will the administration take to
ensure that any renegotiation of the NAFTA will make the North American
market even more competitive for manufacturers, and not put at risk the
2 million manufacturing workers that depend on these markets for their
jobs?
Answer. The administration supports measures that help U.S.
companies maintain and expand production and jobs in the United States,
and we are closely reviewing the hundreds of comments we have received
in relation to a NAFTA renegotiation to identify specific improvements
that will strengthen the North American market and help U.S.
manufacturers expand their exports to Canada and Mexico. We will
continue to consult with Congress and stakeholders as the negotiations
progress to ensure that this key objective is met.
Question. Intellectual property (IP) is crucial to the well-being
of our economy. More money is spent on R&D in the U.S. than in any
other country in the world. In fact, 30% of the American workforce is
employed directly or indirectly in IP-
intensive industries.
America is the world's leading financial contributor to many
multilateral forums. Despite this, the UN, the WTO and the OECD have
become places where the concept of intellectual property is attacked.
What can USTR do to play a more active role in promoting the protection
and enforcement of strong intellectual property policies in these
forums?
Answer. USTR recognizes the significant contributions that IP-
intensive industries play in expanding U.S. economic growth and
employment, as well as the benefits that accrue to the public from the
innovation and creativity incentivized by the rules-based IP system.
USTR strongly defends and promotes intellectual property protection and
enforcement at the World Trade Organization, where USTR represents the
United States, and works with other U.S. Government agencies to defend
these positions in other forums, including the United Nations and OECD.
Question. How do you intend to ensure that any modifications to
NAFTA continue to promote U.S. innovative industries, such as the
biopharmaceutical sector?
Answer. I recognize that an enhanced period of data protection for
biologic drugs, the cutting edge of medical development, is important
to make sure those complicated, research-intensive products are
developed. I intend to seek standards of protection similar to those in
U.S. law in our NAFTA negotiations.
Question. Will you seek to include strong intellectual property and
market access chapters that reflect the most recent standards in U.S.
trade agreements?
Answer. USTR seeks to promote U.S. innovation and IP-intensive
industries in all its trade work. Not only is this crucial to our
economy, but we also recognize the importance of protecting the
incentives for innovation, research and development that delivers
groundbreaking treatments and cures. We will seek standards of
protection similar to those in U.S. law in our trade negotiations.
Question. As you may know, in my home State of Texas, almost 9
million citizens work in services, exporting approximately $53 billion
in services to buyers around the world. These jobs are across multiple
sectors including arts and entertainment, education, financial
services, distribution, logistics, and professional services, to name a
few. The U.S. currently has a trade surplus when it comes to services.
As services are important to Texas and the overall U.S. economy,
how do you see services fitting into the U.S. trade policy agenda and
what specific policies do you think are important in promoting services
trade?
How will trade negotiations ensure that digital services are not
left behind, including when it comes to issues of forced data
localization, the transfer of private keys, and forcing U.S. companies
to hand over their software source code?
Answer. The administration recognizes the enormous value that
services and digital trade represent to the U.S. economy, and U.S.
companies' unique competitive advantages in these areas. We also
recognize the significant challenges for U.S. firms when foreign
governments impose barriers to U.S. services suppliers, restrictions on
companies' ability to transfer data across borders, or measures that
force the localization of data or the transfer of source code. We
intend to consider utilizing a broad range of tools, including building
on provisions developed in previous trade negotiations, to bolster U.S.
companies' competitive position in the services and digital realms and
thereby to strengthen the U.S. economy.
Question. There are concerns that the exclusive focus on
manufactured goods deficits as the basis for trade policy excludes a
major sector of the economy--services--which accounts for 80 percent of
U.S. GDP.
To what extent will you take a more holistic view of the economy in
assessing trade policy and include all types of trade flows to more
accurately represent trade deficits?
Answer. The U.S. trade balance includes exports and imports of
manufactured goods, natural resources, agricultural products, and
services. This figure, an overall deficit of $505 billion in 2016, is
the one the administration uses in describing the overall trade
balance.
Within the services sector specifically, the U.S. is the world's
leader in services exports, earning $752 billion in areas ranging from
intellectual property revenue to express delivery to financial services
and the professions, and running a $248 billion sectoral surplus in
services trade in 2016. Our goal is to help U.S. service providers
build upon this success, by enforcing U.S. rights, fighting unfair
trade practices, and thereby helping to grow exports.
Question. China is the United States' largest global trading
partner but with good reason also stands as one of the most frequently
cited trouble spots for industries in the United States due to a wide
range of market-distorting industrial policies and discriminatory
market conditions.
How would you seek to address problematic Chinese actions more
effectively while limiting damage to businesses and workers in the
United States?
Answer. For many years, China has failed to address the harm to
U.S. companies that flows from a wide-range of Chinese policies and
practices, including excess capacity, forced technology transfer, and
intellectual property rights infringement, among others. To address
these challenges, we cannot rely solely on dialogue. I can assure you
that enforcement will be a key component of our strategy as we work to
ensure that China plays by the rules and opens its market more fully to
international competition.
Question. At present, China maintains a 50% foreign equity cap
restriction on foreign direct investment in the Chinese domestic life
insurance market. An equity cap is unnecessary to protect a Chinese
life/health insurance industry that controls 95% of the market and is
actively expanding in foreign markets, including in the United States,
where no such equity caps exist. Removal of the Chinese equity cap
restriction has been an industry objective since the Chinese joined the
WTO in 2000. I applaud the administration's commitment to getting China
to play fairly in the international marketplace and note the recent
announcement of an agreement between the United States and China to
make progress on some issues. At the hearing, you suggested other items
were also being pursued as part of the ``100-day plan'' agreed to
between President Trump and President Xi.
Can you tell me if the life insurance equity cap restriction has
been or will be tabled as part of the 100-day plan?
Can you commit to pursuing this and other market-opening
advancements in the Chinese domestic financial services sector?
Answer. As part of the 100-day plan negotiations, the
administration has pressed China to remove the foreign equity cap that
it applies to the life insurance sector. The administration will
continue to use all appropriate avenues, including high-level
discussions, to endeavor to fully open China's market for life
insurance and other financial services.
Question. The U.S. semiconductor industry serves as an instructive
example of the negative impact improperly targeted foreign policy can
have on U.S. companies. According to a 2016 Report from the U.S. Patent
and Trademark Office and the Economic and Statistics Administration,
semiconductors are among the highest-value intellectual property-
intensive exports from the United States, accounting for over $54
billion in exports. As a recent report on the semiconductor industry
from the President's Council of Advisors on Science and Technology
highlights, foreign government efforts to support their domestic
companies through antitrust enforcement against foreign companies comes
as several Asian companies position themselves to dominate the 5G
wireless standard, which the international standards community is
currently developing. China has invested more than $150 billion in
creating a domestic semiconductor market. The use of antitrust as
another tool of industrial policy undermines U.S. patent rights,
suppresses innovation in wireless technology, and puts U.S.
competitiveness in the industry at risk.
What tools can USTR deploy to protect U.S. innovators from being
eclipsed by government-backed competitors?
Answer. Global leadership in the semiconductor sector is an
important competitive advantage for the U.S. economy, our exports, and
our workers. Our industry can compete with any on a level playing
field, and we need to combat any unfair efforts to erode our
advantages. China has ambitious goals in this sector and we will
leverage, as appropriate, all the trade tools at our disposal to
respond to all efforts to unfairly disadvantage U.S. industries.
Question. Despite frequent bilateral talks with India since 2014,
India continues to take steps to make it more difficult for Texans to
export there. Recent movement towards price controls on medical
devices, pharmaceutical products, and agriculture biotech take a big
bite out of our exports.
How can you turn back these and other trade barriers and create a
positive direction for our trade relationship with India?
Answer. The United States has a significant trade deficit with
India. The President emphasized during Prime Minister Modi's recent
visit that this dynamic must change. President Trump and Prime Minister
Modi stated their intention to undertake a ``comprehensive review'' of
the bilateral trade relationship, a process that would include an
evaluation of issues such as price controls on medical devices and
pharmaceutical products, as well as concerns in agricultural biotech.
We have had, and continue to have, extended bilateral engagement on the
importance of establishing and applying policies that create
incentives--not disincentives--for research and development of the
innovations that increase health and productivity, and about our
expectation that all U.S. industries must be treated fairly. USTR will
address these issues and others in the comprehensive review through the
U.S.-India Trade Policy Forum (TPF).
Question. Also, India has levied a duty of 36% on imported pecans,
which has significantly hindered U.S. and Texas pecan exports to that
country. Interestingly, India does not produce pecans so there is no
domestic industry to protect and there is little revenue from this
tariff since few pecans go to the country. U.S. pecan growers have
suggested reducing the tariff to the level of other imported tree nuts,
which is currently 10% and should result in increased pecan imports and
more revenue for India.
Will you commit to working with Congress and the Indian government
to reduce the current 36% tariff on U.S. imported pecans to the same
level as other tree nut imports to India?
Answer. Lowering tariffs on pecans and other tree nuts will benefit
both U.S. exporters and Indian food processors. I will continue to work
to expand market access for pecans and other tree nuts by urging India
to reduce its tariffs through its budget process.
Question. GSP saved Texas companies nearly $60 million last year
and is on track to save them even more in 2017, allowing them to invest
in their businesses and create good, American jobs. Not only do I
support renewal, but I also hope the Trump administration quickly
finalizes the process of expanding GSP eligibility for all travel goods
to all GSP beneficiary countries. This would match the intent of the
Congress under the Trade Preferences Extension Act in 2015, follow the
spirit of the GSP program, and provide U.S. companies with real
alternatives to China.
Will you commit to working with Congress to extend GSP and expand
GSP eligibility for all travel goods to all GSP beneficiary countries
soon?
Answer. I am pleased to report to you that the President has
decided to extend GSP eligibility for travel goods to all beneficiary
countries. This decision entered into force on July 1, 2017. Looking
ahead, we will continue to consult with Congress on the next steps for
GSP, which is scheduled to expire on December 31st of this year. The
administration welcomes your interest in renewing GSP and is open to
your ideas and advice.
______
Questions Submitted by Hon. John Thune
Question. There has been some speculation that USTR will use
intellectual property (IP) text from the Trans-Pacific Partnership
(TPP) final text as the United States' opening position for the North
American Free Trade Agreement (NAFTA) negotiations regarding IP.
However, the TPP final text reflected compromises among 12 parties and
does not represent the best defense of U.S. economic interests. A more
appropriate model for the NAFTA IP chapter would be a recent, high-
standards bilateral deal such as the U.S.-Korea agreement.
Do you agree that the administration's opening position should be
the best reflection of U.S. interests and not the outcome of a 7-year
negotiation among a dozen parties from which the United States has
withdrawn?
Answer. We will be seeking a very strong IP Chapter in the NAFTA
negotiation, and an outcome that reflects our trade priorities with
respect to Canada and Mexico. Throughout the negotiation, we will be
seeking solutions to both new and long-standing trade challenges in
intellectual property protection, and enforcement.
Question. The previous administration failed to appreciate fully
that copyright is a significant driver of digital trade. At times the
previous administration actually framed copyright as a barrier to
digital trade. This is clearly not an accurate reflection of our
experience in the United States. The problem clearly is not an
overprotection of copyright, but rather an under-protection of
copyright.
How will you ensure that a modernized NAFTA effectively enforces
copyright online for the development of a safer, cleaner online
marketplace?
Answer. Copyrighted content is a driver of the digital economy, and
effective protection and enforcement of copyright is essential to the
healthy growth of legitimate digital trade. We will seek strong
standards of copyright protection and enforcement, similar to those in
U.S. law, in NAFTA. We will also continue our comprehensive approach to
the trade problem of online piracy through our bilateral engagements,
our multilateral engagements, our Special 301 Report, our Notorious
Markets List, and all other tools at our disposal.
Question. Online marketplaces and e-commerce seamlessly connect
buyers and sellers in the North American market. Internet-enabled small
sellers who a generation ago would have faced unsurmountable barriers
to participating in international commerce and trade are turning to the
Internet to reach global consumers and suppliers. Today, nearly $8
trillion is exchanged through global e-commerce annually. De minimis
thresholds are increasingly important to small e-commerce businesses
that leverage the Internet to sell low-value items to customers across
the globe, but do not have the resources to manage complex customs
regimes. Unfortunately, both Canada and Mexico continue to erect
customs and trade facilitation barriers that limit the success of
Internet-enabled goods exporters, many that ship small, low-value
packages. Canada has a $20 CAD customs de minimis threshold and Mexico
has a $50 threshold--both of which stand in stark contrast to the
U.S.'s $800 threshold, which I worked to increase last year in the
Trade Facilitation and Trade Enforcement Act. Mexico has also recently
proposed changes to eliminate streamlined customs procedures to
disadvantage U.S. e-commerce companies exporting to Mexico.
The 2016 Customs Reauthorization law included a Sense of the
Congress that the USTR should use trade fora to encourage other
countries to establish commercially meaningful customs de minimis
values for low-value shipments. In NAFTA modernization negotiations, I
encourage you to seek parity from Canada and Mexico with the United
States' $800 de minimis threshold.
As you undertake these negotiations, will you make harmonization of
de minimis thresholds across North America a core U.S. priority?
Answer. I appreciate your repeated concern about Canada's and
Mexico's low de minimis levels and have heard from several stakeholders
on this important issue. We will look to address this issue in
discussions with Canada and Mexico during the renegotiation of NAFTA.
______
Questions Submitted by Hon. Richard Burr
Question. Canada and Mexico are among the top five markets for
North Carolina's agricultural exports. As the administration works to
renegotiate NAFTA, it is my hope that agriculture exports will not be
disadvantaged, and if anything, we get a better deal for our ranchers
and farmers.
Will you assure me this will be your goal during this process and
share your plans for making this happen?
Answer. The administration is committed to maintaining the markets
our farmers, ranchers, and food processing industries have and creating
opportunities to expand exports. We are committed to doing no harm, and
our goal is to avoid tariffs being raised as a result of NAFTA
renegotiation. In addition, there are areas where our agricultural
stakeholders can gain, such as certain market access in Canada. We will
continue to consult agricultural stakeholders and Members of Congress,
consistent with Trade Promotion Authority, on the United States'
approach to and positions in the negotiations.
Question. Intellectual property rights are pivotal to U.S.
manufacturing, technology, and industrial competitiveness--and support
more than 45 million U.S. jobs and 50 percent of total U.S. exports.
Yet intellectual property faces increasing challenges around the world,
ranging from efforts to erode global frameworks to protect intellectual
property to a growing number of counterfeit products.
How specifically do you plan to boost IP protection around the
world?
Answer. Obtaining adequate and effective protection of intellectual
property, and fair market access for intellectual property-intensive
industries, is one of my highest priorities. We identify and quickly
respond to bilateral problems as they emerge. Systemically, we work to
improve protection and enforcement of copyright, patent, trademark,
trade secret, and other IP rights on multiple fronts: through our
bilateral engagements, our international engagements, our Special 301
Report, our Notorious Markets List, and all other tools at our
disposal.
Question. What tools do you see as most critical in the fight to
protect American innovation?
Answer. Different challenges require different responses, and they
are all essential. First, we must hold other governments accountable
when they initiate policies or take actions that undermine the ability
of rights holders to fairly use and profit from intellectual property.
Direct engagement is essential. We also let other countries know that
we are always monitoring their compliance with their bilateral and
multilateral commitments, and are aware of both systemic and specific
obstacles to our industries in each market. We do that in a variety of
ways, including our public reports, which have led to specific,
critical improvements in other countries' protection and enforcement of
intellectual property rights. Finally, we will take enforcement actions
when appropriate.
______
Questions Submitted by Hon. Patrick J. Toomey
Question. On June 6, 2017, the U.S. Commerce Department announced a
new suspension agreement that increases prices and imposes new
restrictions on the amount of sugar Mexico can export to the United
States. Unfortunately, this deal fails to consider ordinary American
consumers and workers in the food manufacturing industry, who are
already forced to pay prices 75 percent higher than the world average.
Not only will American consumers see prices increase at the checkout
line as a result of this negotiation, but workers in the food and
beverage industry may face potential layoffs as American companies
consider relocating outside of the United States where sugar prices are
significantly lower.
I understand that your office was not involved with the recent
negotiations with Mexico, but I am still concerned that the United
States will continue to pursue policies that ignore the interests of
American consumers.
Can you assure me that future trade agreements negotiated by your
office will prioritize American consumers' interests?
Answer. As USTR negotiates trade agreements, I will continue to
consult with members of Congress and seek the full range of
perspectives in our private sector, including the important views of
consumers, as we advance our trade agenda.
Question. Dairy farming is Pennsylvania's largest agriculture
sector, supporting over 60,000 direct and indirect jobs across the
State. While most U.S. agriculture products enjoy duty-free access
under NAFTA, dairy products face Canadian duties of 200-300 percent and
nontariff barriers that are designed to prevent American farmers and
food manufacturers from competing in these markets. As the
administration prepares to start negotiations with Canada and Mexico
later this year, it is important that we identify and open new markets
for American-made goods while not closing off export opportunities in
other sectors, especially agriculture.
Will NAFTA renegotiations offer meaningful market access
opportunities for the U.S. dairy industry, and will you work to open
the Canadian market to U.S. agriculture products in general?
Answer. I understand that Canada maintains strict limits on imports
of dairy and agree that it is important to obtain new access to the
Canadian market. The administration is committed to maintaining the
markets that our agricultural sectors have and creating opportunities
to expand exports, including to Canada. We will continue to consult
with the U.S. industry and Members of Congress, consistent with Trade
Promotion Authority, on the United States' approach to and positions in
the negotiations.
Question. For years, the Colombian Government required the
scrapping of old commercial trucks before businesses could purchase
newly constructed ones, which created an artificial cap on their
domestic truck market. The Colombian Government recently announced its
intention to end the scrappage requirement; however, few trucks have
been sold under the new policy. Pressing Columbia to open up its
markets and cease protectionism could have a positive effect on U.S.
job creation. For example, Mack Trucks, which employs 1,700 workers at
its heavy duty vehicle factory in Macungie, Pennsylvania, could
potentially sell American-made trucks if these barriers were removed.
I appreciate your commitment to work with the Colombian Government
on this issue and reach an agreement to allow imported commercial
trucks.
What progress can you report thus far, and what additional actions
are needed to resolve this issue in a timely manner?
Answer. I share your concerns about Colombia's restrictive measures
with respect to imported trucks, in particular the so-called scrappage
requirements. My staff and I are working with U.S. stakeholders to
assess the impact of the new implementing regulations for the
transitional scrappage requirement, and are calling on Colombia to
ensure that the transitional system operates such that dealers can
import sufficient trucks to meet demand. We will also continue to
monitor closely the full range of Colombia's actions affecting imported
trucks and engage with Colombia on any specific concerns that arise.
______
Question Submitted by Hon. Dean Heller
Question. Many tourists come to Las Vegas and the great State of
Nevada from abroad--from China, Canada, and Mexico--countries this
administration intends to pursue or is pursuing new trade negotiations
with. However, international travel to the United States is down
significantly, 11 percent on a year-over-year basis, according to a
recent report. Of the many factors contributing to this decline, one
may be the perception that the U.S. is no longer as welcoming a place
for foreigners.
How will you ensure tourists from these and other foreign countries
still feel welcome in the United States as the administration works to
update and improve NAFTA and other trade deals?
Answer. Tourism and travel services are among the most dynamic
service sectors in the United States and also serve to support other
major segments of our economy. I look forward to working with you to
ensure that promoting tourism and travel-related services is an
integral part of the U.S. trade agenda.
______
Questions Submitted by Hon. Tim Scott
Question. China maintains a 50% foreign equity cap restriction on
foreign direct investment in the Chinese domestic life insurance
market. An equity cap is unnecessary to protect a Chinese life/health
insurance industry that controls 95% of the market and is actively
expanding in foreign markets, including in the United States, where no
such equity caps exist. In fact, many project that the Chinese
insurance market will overtake the American insurance market in size by
2030. Similar equity caps exist in other lines of business in the
Chinese financial services sector. I applaud the administration's focus
on leveling the playing field between the United States and China.
Allowing American financial services companies to enter the Chinese
market establishes parity between our countries and will grow our
economy at home.
During your oral testimony, you suggested that the administration
was considering a variety of issues to address through the ``100-day
action plan'' on the U.S.-China trade imbalance announced by President
Trump and Chinese President Xi Jinping.
What is the administration's view of the Chinese equity cap on
foreign investment in its domestic life insurance market and similar
equity caps in other areas of the financial services sector?
Have negotiations to raise or eliminate the life insurance equity
cap or other financial services sector equity caps been part of the
``100-day action plan'' discussions thus far? If not, will they be?
What are your views on the timeliness by which these issues can be
resolved in Bilateral Investment Treaty talks versus in the ``100-day
action plan'' or other economic initiatives?
In the administration's view, what are the merits of pursuing this
specific objective and other methods to open the Chinese domestic
financial services sector to foreign investment?
What else is the USTR doing to equal the playing field between the
United States and China in this regard?
Answer. The administration recognizes the importance of removal of
China's foreign equity cap for life insurance, and foreign equity caps
for other financial services, such as securities and asset management,
for U.S. companies that wish to provide financial services in China. As
part of our engagement with China through the CED, the administration
has pressed China to remove foreign equity caps that it applies to
financial services and will continue to use all appropriate avenues,
including high-level discussions, to endeavor to fully open China's
market for financial services.
The administration also is undertaking a comprehensive review of a
broad range of potential tools, including the U.S.-China BIT, to ensure
that China treats the United States fairly with respect to trade and
investment. The administration will take any decisions on future BIT
negotiations with China after this review has been completed.
Full access to China's services market would expand business
opportunities for U.S. companies while also making a positive
contribution to U.S. services exports. This administration understands
the importance of providing U.S. financial services companies with the
same high level of access that Chinese companies enjoy in the United
States.
______
Questions Submitted by Hon. Ron Wyden
Question. Ambassador Lighthizer, we have heard that the
administration has a very ambitious timeline for concluding
negotiations with Mexico and Canada. I am concerned that it will be
difficult to obtain the high standards we want to see in only four or
six months. We need to take the time to get real improvements, and not
cosmetic changes.
Can you confirm that you will let the substance drive the timing?
Answer. Our first priority is a high standards agreement and the
strongest possible outcome for U.S. farmers, ranchers, manufacturers,
service providers, intellectual property rights holders, and workers.
We will seek to achieve that goal as soon as possible. As always, our
process will be driven by getting the best result for the United
States, rather than meeting an arbitrary timeline.
Question. If it becomes clear that you cannot reach an agreement as
quickly as you would like, it seems like you have three choices: (1)
cut your losses and agree to a small set of improvements, (2) withdraw
from NAFTA, or (3) continue talks with an aim of reaching a high
standard, model agreement.
Do you agree that if you cannot reach an agreement quickly,
continuing to negotiate until you achieve a high standard agreement
would be the best result for American workers and businesses?
Answer. There are many reasons to renegotiate the NAFTA as quickly
as possible, and I agree with your view that we should not lower our
sights as we do so. We are looking for the strongest possible outcome
for U.S. farmers, ranchers, businesses, and workers.
Question. One significant area for improvement in NAFTA is on
digital trade--something that was barely on the radar screen when the
agreement was negotiated. I believe that we need to work to identify
the best, most ambitious proposals in this area to make NAFTA a model
for subsequent pacts. This means that, in addition to data flow
commitments, we need clear intermediary liability protections, non-
discriminatory licensing terms for online services, balanced approaches
to copyright, and more.
Do you agree with me that we need to set a high level of ambition
on digital trade proposals and that those could include texts advanced
by the United States in TiSA on data flows for financial services and
Internet intermediary liability?
Answer. We recognize the enormous value that digital trade
represents to the U.S. economy and U.S. companies' unique competitive
advantages in this area. We also recognize the significant challenges
for U.S. firms when foreign governments impose restrictions on our
companies, such as impeding their ability to transfer data across
borders, forcing the localization of data, or discriminating in
licensing. We intend to consider utilizing a broad range of tools,
including building on provisions from previous trade negotiations to
bolster U.S. companies' competitive position in the digital realm and
thereby to strengthen the U.S. economy.
Question. Back in 1995, Chairman Hatch and Senator Grassley, along
with several other Senators, wrote to your predecessor Ambassador
Kantor, described chapter 19 of NAFTA as a ``fundamentally flawed
system'' and urged that it be eliminated or substantially reformed. I
agree with them. Chapter 19 is harmful to American workers,
unnecessary, and constitutionally suspect. The NAFTA negotiations you
are about to begin present our best shot at getting rid of chapter 19
and creating a modern, high standard agreement.
Will you commit to seek to eliminate chapter 19 as part of the
NAFTA negotiations you are about to begin?
Answer. I share your concerns regarding chapter 19 of NAFTA and the
detrimental impact it has had on the administration and application of
our AD/CVD laws. I can assure you that we will address this issue with
Canada and Mexico during the renegotiation process, and will work
towards an outcome that will allow us to continue to maintain strong
AD/CVD laws that ensure that our companies, workers, farmers, and
ranchers are able to compete on a level playing field.
Question. In written questions for your confirmation hearing, I
asked about your intentions with respect to Canada and Mexico's de
minimis threshold for assessment of duties and taxes on imports. As you
know, the United States raised its de minimis threshold in 2016, as a
result of the passage of the Trade Facilitation and Trade Enforcement
Act of 2015. This was in large part a recognition that the digital
environment has opened up new opportunities for very small businesses,
making them capable of participating in the global economy. However,
low de minimis thresholds in foreign markets limit the ability of U.S.
small exporters to capitalize on the digital revolution, because of the
burden both customs duties and the associated red tape place on very
small producers. Both Mexico and Canada have de minimis thresholds much
lower than the United States, making them difficult to export to,
despite proximity.
Do you commit to addressing this disparity in the renegotiation of
NAFTA, so that the agreement benefits the smallest of U.S. business, as
well as very large ones?
Answer. I appreciate your repeated concern about Canada's and
Mexico's low de minimis levels and have heard from several stakeholders
on this important issue. I will look to address this issue in
discussions with Canada and Mexico during the renegotiation of NAFTA.
Question. Earlier this year, Chairman Hatch and I together sent a
letter to the Acting USTR on the misuse of geographical indications
that puts at risk U.S. market access opportunities and undermines
trademarks held by U.S. companies. The EU is currently negotiating with
Mexico to update the existing FTA between the two countries and has
sought commitments in that negotiation that would undermine market
access agricultural exports.
How will you use the NAFTA discussions to support ongoing
engagement with Mexico and other countries to prevent the misuse of
geographical indications and safeguard U.S. market access?
Answer. We continue to raise this issue with Mexico, emphasizing
the United States' deep concern about the EU's approach to GIs,
including in its FTA negotiations strategy that involves the wholesale
acceptance of GI lists undermining U.S. producers' market access. We
expect that Mexico will engage in our negotiations in a productive
manner on all issues.
Question. Poor fisheries management, illegal fishing and the
bycatch of turtles and marine mammals are problems in NAFTA countries.
Will the United States seek effective and enforceable commitments
as part of a NAFTA renegotiation to address poor fisheries management
standards, bycatch, and illegal, unregulated and unreported fishing in
waters fished by NAFTA countries?
Answer. I share your concerns, and I look forward to working with
you, other members of Congress, and stakeholders as we update and
improve on the NAFTA model. In particular, I look forward to discussing
ways in which we can strengthen environmental provisions to meet the
objectives in TPA and improve our trading partners' environmental
standards in ways that also help level the playing field for American
fishermen.
Question. Fully enforceable labor commitments designed to ensure
that weak labor standards cannot be used to undermine U.S. workers and
businesses are an essential component of any renegotiated NAFTA.
In the context of a NAFTA renegotiation, what steps will this
administration take to ensure that trading partners maintain laws
ensuring core labor standards and are effectively enforcing their labor
laws before they get the benefits of a renegotiated agreement?
Answer. I am committed to ensuring that our trade agreements
strengthen our trading partners' labor standards and meet the
negotiating objectives that Congress has set out in TPA. In
consultation with Congress, the administration will seek to modernize
the labor obligations, including by incorporating high standard labor
provisions into the core of the agreement rather than in a side
agreement, and ensuring that the obligations are subject to the same
dispute settlement mechanisms and trade sanctions as the rest of the
agreement. I look forward to working closely with you, other Members of
Congress, and stakeholders as we develop our proposals.
Question. One source of the U.S. competitive advantage in digital
trade is a legal system that has fostered its growth and supported the
growth of U.S. businesses across the spectrum. A key element of an
Internet-promoting legal system is a balanced approach to copyright. In
addition to strong copyright protections, U.S. copyright limitations
and exceptions like fair use and safe harbors, are critical to
innovation on the Internet, in areas as diverse as machine learning,
data mining, and e-commerce platforms.
Do you commit to pursuing in trade negotiations, including the
NAFTA renegotiation, not only the protections for copyright holders,
but also the limitations and exceptions critical to the digital
environment?
Answer. I am very committed to a strong digital trade agenda in all
trade fora. In NAFTA, we will seek copyright protections that
facilitate legitimate digital trade, including protections similar to
those in U.S. law.
Question. The investor-state dispute settlement procedures
contained in NAFTA are woefully out of date. Among other things, they
are missing important protections for countries designed to ensure that
investors get protections no greater than those available under U.S.
law, transparency and due process requirements, and procedural
protections for governments including protections against frivolous
claims.
What specific improvements will USTR seek to address these and
other shortcomings in NAFTA investor-state dispute settlement?
Answer. I am mindful that seeking improved mechanisms to resolve
investor-state disputes is a negotiating objective in TPA and that
updating the NAFTA investment chapter merits careful consideration. I
look forward to working with Congress on the approach to this chapter,
including the investor-state dispute settlement procedures, consistent
with the negotiating objectives set out in the Trade Priorities and
Accountability Act of 2015, including specific guidance on potential
improvements in key areas, such as enhancing transparency and
eliminating frivolous claims.
Question. The other two NAFTA countries, and Canada in particular,
maintain a number of barriers in the media and entertainment space for
cultural reasons, disadvantaging U.S. companies. In particular, Canada
carved out ``cultural'' industries from their NAFTA obligations, which
now includes the digital areas. While promoting cultural content is a
valid goal, a NAFTA renegotiation should reexamine these commitments
and address discriminatory treatment of U.S. firms and content.
Answer. The United States will seek commitments in NAFTA to
incorporate the digital economy, including in the media and
entertainment space, by pursuing fair, equitable, and non-
discriminatory market access commitments with Canada and Mexico.
Question. Ambassador Lighthizer, I am hearing a number of concerns
expressed by lumber producers regarding possible proposals that the
United States may be discussing with Canada. USTR has played a critical
role in lumber negotiations in the past, but I have not been briefed on
these proposals.
Will you commit to brief me next week on the latest proposals being
discussed in the negotiations and the administration's strategy for
addressing softwood lumber?
Answer. Senator, it was a pleasure to speak with you on June 29th
to discuss softwood lumber. I would be pleased to speak with you at any
time to discuss this important issue.
Question. Second, I would like your assurance that NAFTA
negotiations will not short-circuit ongoing negotiations for a durable
resolution to the softwood lumber dispute. Lumber has been on a
separate track from NAFTA for decades.
Answer. The ongoing softwood lumber dispute is the result of
provincial subsidies to Canadian softwood lumber producers. These
subsidies deny U.S. producers the ability to compete on a level playing
field. This matter is currently in the trade remedy process at the
Department of Commerce and U.S. International Trade Commission and is
unrelated to the NAFTA renegotiation.
Question. Do you agree that it is more important to get lumber
right than to simply get it done before NAFTA negotiations begin?
Answer. It is not in the interest of the United States to enter
into a softwood lumber agreement with Canada unless it meets the needs
of U.S. producers.
Question. Ambassador Lighthizer, in written questions for your
confirmation hearing, I asked you about the trade-distorting measures
undertaken by British Columbia that adversely affect wine exported from
the United States, including wine from Oregon. The situation there is
now only worse, and is spreading to other provinces. The United States
requested consultations with Canada on January 18, 2017 through the
World Trade Organization's dispute settlement mechanism.
Do you plan to request a panel to challenge Canada's discriminatory
treatment of U.S. wine?
The dispute only addresses one aspect of Canada's protectionist
policies regarding wine.
Will you commit to eliminating the full range of Canadian policies
that discriminate against U.S. wine in the NAFTA renegotiation?
Answer. Policies restricting sales of U.S. wine in Canada are a
major problem. USTR has held consultations with Canada under WTO
dispute resolution procedures on British Columbia regulations. I am
consulting with my staff on the most effective next steps to address
those regulations, as well as other measures in Canada that may be
harming our wine exports. I am very pro-enforcement. Whether we go to a
dispute settlement panel or address these measures in the NAFTA
negotiations, I will work to get this problem resolved for U.S. wine
makers.
Question. Trade in illegally harvested timber remains a serious
challenge, compromising international environmental conservation
efforts and undermining the ability of U.S. lumber producers to compete
on a level playing field. In 2015, when shipments of illegally
harvested Peruvian timber were denied entry to the United States after
arriving aboard the Yacu Kallpa, the ship rerouted to Mexico. While
Mexico's customs authorities cooperated with U.S. Customs to help
prevent the illegally harvested timber from being offloaded in Mexico
(potentially to be re-routed to a different port in the United States),
the episode highlights that the effectiveness of the Lacey Act and
other U.S. measures to prohibit trade in illegally harvested timber and
wildlife depends in part on countries throughout the region taking
effective measures to prohibit trade in these products.
With respect to the upcoming NAFTA negotiations, given the risk to
U.S. producers of unfair competition from illegally harvested Peruvian
timber being rerouted through Mexico, will the administration seek
commitments from Mexico that are at least as strong as those originally
sought by the Obama administration, to ensure that NAFTA parties
maintain effective measures to prohibit trade in illegally harvested
timber and other illegally taken flora and fauna?
Answer. I share your concerns, and I look forward to working with
you, other members of Congress, and stakeholders as we update and
improve on the NAFTA model. In particular, I look forward to discussing
ways in which we can strengthen environmental provisions to meet the
objectives in TPA and improve our trading partners' environmental
standards in ways that also help level the playing field for American
businesses.
Question. Pacific Northwest fruit growers depend on NAFTA for duty-
free access to Canadian and Mexican markets for cherries, apples,
pears, berries, and other horticultural products.
Will you commit to ensure that in any renegotiation of NAFTA,
obligations to maintain duty-free access for these products are
preserved, and that the negotiations include priority concerns for
Pacific Northwest farmers such as stronger disciplines on sanitary and
phytosanitary measures generally and resolution of specific SPS
barriers affecting Oregon stone fruit producers, as well as equivalency
for organics?
Answer. The administration is committed to maintaining the markets
that our agricultural sectors have and creating opportunities to expand
exports, including for horticultural products. We are committed to
doing no harm, and our goal is to avoid tariffs being raised as a
result of NAFTA renegotiation. We will continue to consult agricultural
stakeholders and Members of Congress, consistent with Trade Promotion
Authority, on the United States' approach to and positions in the
negotiations, including on the issues you raise.
Question. Ambassador Lighthizer, you have talked about the
renegotiated NAFTA as being a ``model'' agreement for future bilateral
agreements in Asia and elsewhere. That means that, in addition to
addressing the issues that specifically and directly impact our trade
relationship with Mexico and Canada, we need to think about the big
global challenges we are facing and how we can set a high water mark in
this negotiation to deal with those issues. A prime example of this is
the area of currency manipulation.
Do you intend to seek disciplines on currency manipulation as part
of a NAFTA renegotiation?
Answer. As you know, TPA includes principal negotiating objectives
with respect to unfair currency practices.
We are consulting with the Treasury Department, which is
responsible for currency issues, regarding efforts to address exchange
rates through our bilateral and international engagements and in the
context of our trade agreements.
Question. The Bipartisan Congressional Trade Priorities and
Accountability Act of 2015 included new negotiating objectives on state
owned enterprises (SOEs) and the rule of law. And, the United States
sought and obtained new disciplines on SOEs and due process on
competition policy in the Trans Pacific Partnership (TPP). But, those
negotiated outcomes were not as strong as the original U.S. negotiating
position.
Do you commit to seeking a higher standard outcome on SOEs and
competition policy in a NAFTA renegotiation than was ultimately
obtained in TPP?
Answer. In our renegotiation of NAFTA, we will be putting forth
proposals that improve upon and go beyond the SOE and competition
provisions negotiated in TPP. In particular, we will be seeking to
improve upon the definition of an SOE and, to strengthen the subsidy
and transparency provisions.
Question. A renegotiated NAFTA needs to tackle today's trade
enforcement challenges on a regional basis. For example, there are
concerns of products coming through NAFTA countries from outside the
region and fraudulently obtaining preferential treatment or evading
trade remedies. If all three countries cooperate, we can see better
enforcement of trade laws meant to protect U.S. companies.
In your NAFTA discussions, will you seek cooperation on customs
enforcement, for example, such as ensuring effective implementation of
NAFTA countries' trade remedies?
Answer. We agree that stronger enforcement should be a key priority
in the NAFTA renegotiations. We intend to explore multiple avenues to
enhance enforcement in areas such as preventing false claims of
preferential tariff treatment and evading trade remedies. Duty evasion
and other attempts to undermine properly applied duties are a shared
problem amongst the three countries.
Question. While NAFTA eliminated tariffs on U.S. agriculture
exports, Canada was permitted to preserve steep tariffs and other
barriers to trade in dairy products. Moreover, Canada has in recent
years used policies such as its Class 6/7 milk pricing directives to
further limit exports from the United States and erode the modest
market access gains provided to U.S. dairy producers as a result of
NAFTA.
As part of its NAFTA negotiations, will the administration seek to
eliminate Canada's restrictions on trade in dairy products--including
both tariff barriers that were not addressed as part of NAFTA and the
host of nontariff barriers Canada has established since NAFTA took
effect, such as its market-distorting Class 6/7 milk pricing scheme?
Answer. I understand that Canada maintains strict limits on imports
of dairy products and know it is important to obtain new access to the
Canadian market. We will continue to consult with the U.S. industry and
Members of Congress, consistent with Trade Promotion Authority, on the
United States' approach to and positions in the negotiations.
I know that Class 6/7 milk pricing is a critical issue for our
dairy farmers. President Trump and senior administration officials have
raised this concern with Canada, and I also raised the issue with
Foreign Minister Freeland. USTR and USDA have been focused on
collecting important information on the policy change and its
implementation, including from industry. My staff and I are analyzing
options on how best to move forward.
china
Question. Increasingly, Chinese regulation is making it difficult
or even impossible for U.S. technology companies to operate in China. I
am specifically concerned about China's proposed draft regulations
that, when combined with existing Chinese law, would require U.S. cloud
providers to transfer valuable intellectual property, surrender use of
brand names, and hand over operation and control of their businesses to
Chinese companies in order to operate in China. These are requirements
no other countries apply to foreign cloud providers, and Chinese cloud
providers are operating in the United States without these
restrictions.
Can you describe in detail for me progress the Trump administration
has made towards addressing these concerns for cloud providers and
other U.S. technology companies?
Will you advocate for securing a commitment on this issue in the
U.S.-China Comprehensive Economic Dialogue's 100-Day Action Plan?
Answer. As part of our engagement with China through the CED, the
administration has been pressing China to remove the restrictions that
it applies to the cloud computing sector, including those that affect
the ability to fully own and control data centers and provide cloud-
related services and that require transfer of valuable intellectual
property and know-how and surrender of brand names to Chinese companies
in order to operate in China. The administration will continue to use
all appropriate avenues, including high-level discussions, to endeavor
to fully open China's market for U.S. providers of cloud computing
services.
Question. Chairman Hatch and I sent a letter to the President in
April laying out our top trade priorities with China, including
discriminatory and distortive technology policies as well as market
distorting behavior that is harming American manufacturers. We are less
than a month away from the administration issuing its 100-day plan for
China yet this committee still does not know what specific issues the
administration intends to address. We have not been briefed.
Furthermore, the position of Assistant USTR for China remains vacant.
Our trade relationship with China is simply too important for USTR to
be left without key personnel and for Congress to be left in the dark.
On technology policy, for example, is securing a commitment on
China's blatantly discriminatory cloud computing licensing practices a
goal of the 100-day plan?
Will you commit to provide this committee with a full and detailed
briefing on the 100-day plan within the next 7 days and to fill the
China position within the next 30 days?
Answer. As part of our engagement with China through the CED, the
administration has been pressing China to remove the restrictions that
it applies to the cloud computing sector and will continue to use all
appropriate avenues, including high-level discussions, to endeavor to
fully open China's market for U.S. providers of cloud computing
services.
Question. On January 12, 2017, the United States filed a WTO
request for consultations to challenge China's illegal subsidization of
its aluminum industry. The consultation period has now passed, but
there appears to have been no movement.
What is the status of this case? Will the administration commit to
pursuing it in the interest of the U.S. aluminum industry, its workers,
and communities that depend on it?
Answer. The administration is reviewing all options to deal with
market-
distorting practices in the Chinese aluminum industry. At the core of
this issue is China's non-market economy system, which is creating
global oversupply and excess capacity in this and other sectors. We are
vigorously defending our right to apply a non-market economy
methodology to imports from China against China's challenge in the WTO.
Commerce is conducting a section 232 investigation on aluminum to
assess the impact of aluminum imports on U.S. national security. We are
committed to effective action to address unfairly traded aluminum
through strong enforcement of U.S. AD/CVD laws, bilateral and
multilateral engagement, and enforcement of our rights under trade
agreements, as appropriate.
services and digital trade
Question. The United States is the world's leader in the services
sector, which accounts for 30 percent of U.S. exports and supports
millions of jobs, in addition to supporting the manufacturing sector
and small businesses of all types. It is critical that we continue to
break down barriers to trade in U.S. services so that we can maintain
our competitive advantage and continue to grow jobs in the sector.
In light of the importance of the services sector to the U.S.
economy, do you intend to pursue negotiations on the multilateral Trade
in Services Agreement (TiSA) at the World Trade Organization (WTO)?
What is your strategy to eliminate services barriers across the
world, including with respect to new digital services?
Answer. The U.S. services sector is highly innovative and a key
driver of the U.S. economy. Maintaining a vibrant U.S. services sector
and expanding U.S. services exports is vital to a healthy economy and
is a core objective of U.S. trade policy. The administration is now in
the process of evaluating the various options that are available to
pursue these objectives, including TiSA, which as I noted during the
hearing is an important initiative. We are also looking closely at
approaches for other trade negotiations that address key services and
digital trade barriers.
Question. Digital trade plays a greater role in our economy and our
trade agenda than ever before. Digitally deliverable services account
for 61 percent of our overall services exports and are an area in which
we enjoy a $150 billion trade surplus. While the Internet is important
to every industry, digital-specific trade barriers like China's cloud
computing restrictions threaten a major source of American growth and
innovation. Despite its importance, digital trade is only the part-time
focus of a few mid-level USTR staffers. The last administration made
great strides in highlighting digital issues within the trade agenda,
including by launching USTR's Digital Trade Working Group that brought
together the various offices in the building with equities in digital
trade.
What will you be doing to ensure that USTR has centralized
leadership both within the agency and within the executive branch on
digital trade?
Answer. This administration recognizes the enormous value that
digital trade represents to the U.S. economy and U.S. companies' unique
competitive advantages in this area. We also recognize the important
role that USTR can play in expanding markets for digital trade and
addressing the challenges that U.S. firms confront as foreign
governments increasingly seek to impose restrictions on digital trade,
including restrictions on data flows. Digital trade is an important
priority for USTR. I have personally addressed digital trade issues
with my counterparts from major export markets, and I intend to
continue working closely with my staff and the administration more
broadly to ensure that digital trade barriers receive the necessary
attention and focus, to address problems facing U.S. firms and to
benefit the U.S. economy.
asia
Question. The President pulled out of the Trans-Pacific
Partnership, and you have said that you would like to negotiate
bilateral deals.
What specific deals are you planning to negotiate, and when will
those negotiations begin?
Answer. President Trump sees increasing trade with countries in the
Asia-Pacific as a priority. Since the beginning of the administration,
we have met with counterparts across the region both bilaterally and at
APEC and other economic fora to communicate this message and to set the
stage for new trade initiatives with these countries. We recognize the
importance of moving forward expeditiously, and for that reason have
already begun an economic dialogue with Japan, initiated a plan for
engagement with China, and hosted numerous Asian leaders and Cabinet
ministers in Washington in the past few months to discuss our existing
trade relationships and how we might further deepen them. We are
currently considering next steps, including potential bilateral deals
with Asia-Pacific trading partners, and I look forward to input from
you and your colleagues as we work to develop our strategy.
Question. With respect to Japan, what trade issues has the
administration identified as U.S. priorities for discussion as part of
the Aso-Pence dialogue? What trade issues has Japan prioritized for
that dialogue?
Answer. The dialogue is one vehicle to achieve expanded and more
balanced trade with Japan through a range of activities. The
administration is committed to breaking down barriers and leveling the
playing field so that American companies and exporters can enjoy high
levels of market access.
Question. In May, I wrote you a letter asking you to use the
President's visit with Vietnam's Prime Minister to resolve concerns
about discriminatory barriers to U.S. trade in digitally enabled
services. With respect to (1) Vietnam's decree establishing
restrictions on cross-border online advertising services, and (2) the
circular issued by the State Bank of Vietnam (SBV) that would require
U.S. suppliers of electronic payment services to route transactions
through an entity in which the SBV is a majority shareholder, please
describe:
(a) Whether both issues were discussed as part of the President's
visit;
(b) If they were raised, the progress that was made during that
visit in resolving them; and
(c) Steps the administration intends to take in the near term that
it believes will be effective in fully addressing the concerns
identified by U.S. service providers.
Answer. The visit of the Vietnamese Prime Minister was successful
in furthering the dialogue with Vietnam, a country with which we see
strengthening ties as important. During the visit, we raised a range of
trade issues, including the priority the administration places on
lowering the trade deficit with Vietnam and eliminating trade barriers
that our exporters face. Both digitally enabled services issues you
raise were among those barriers discussed during the visit.
With respect to Vietnam's decree establishing restrictions on
cross-border online advertising services, we pressed the Vietnamese
government to cease pressuring Vietnamese companies not to advertise on
U.S. Internet platforms, a request that it has honored. In addition, we
have made clear that imposing restrictions on cross-border online
advertising services would appear to violate Vietnam's WTO commitments.
My staff held follow-up meetings in June in Hanoi, and we will continue
to monitor this issue closely.
During the visit of Vietnam's Prime Minister, we also discussed
the circular issued by the State Bank of Vietnam (SBV) that would
require U.S. suppliers of electronic payment services to route
transactions through a gateway in which the SBV is a majority
shareholder. We made clear the priority we place on finding a mutually-
satisfactory resolution to this issue as soon as possible and we are
working closely with U.S. stakeholders on this issue. My staff held
follow-up meetings in June in Hanoi on this issue, and will be
traveling to Hanoi in July for further meetings, where we will seek
Vietnam's agreement to delay implementation of its measure to give the
United States and Vietnam additional time to resolve this issue.
Question. In a recent interview with The Wall Street Journal,
Secretary Ross stated with respect to China that ``[w]e've been in a
trade war for decades.''
Could you explain what that means, and how that backdrop guides
this administration's trade relationship with China and other
countries?
Answer. For many years, China has failed to address the harm to
U.S. companies that flows from a wide-range of Chinese policies and
practices, including excess capacity, forced technology transfer, and
intellectual property rights infringement, among others. To address
these challenges, we cannot rely solely on dialogue. I can assure you
that enforcement will be a key component of our strategy as we work to
ensure that China plays by the rules and opens its market more fully to
international competition.
budget
Question. With regard to USTR's budget request for FY 2018, as you
noted in your written testimony, the President's request includes an
increase in overall funding to cover costs previously assigned to the
Commerce Department for administration of the Interagency Center on
Trade Implementation, Monitoring, and Enforcement (``the Center'').
However, it does not include any new funding for enforcement
activities--the $3 million increase appears to only account for a shift
in resources to USTR from Commerce to account for Congress's
authorization of the Center. Moreover, USTR failed to request money for
the Trade Enforcement Trust Fund, which was created specifically to
enhance enforcement. Overall, the President's funding request for USTR
is $4.4 million lower than the $62 million appropriated by Congress for
FY 2017.
Why didn't USTR request funding for the Trade Enforcement Trust
Fund? What enforcement priorities could USTR pursue with an additional
$15 million, as prescribed by Congress in the customs bill?
Answer. When the FY18 budget request from USTR was finalized, there
had been no precedent for USTR permission to use resources from the
Trade Enforcement Trust Fund, which occurred for the first time in the
FY 2017 Omnibus. USTR had been using its operations budget and
continues to use its operations budget to fund enforcement activities.
Strong and effective enforcement requires resources--such as
lawyers, analysts, researchers, and translators--to support tackling
the challenges we face, and USTR funding goes towards U.S. capacity to
intensify these efforts. For example, language and other specialized
expertise are necessary to research issues such as subsidies, local
content restrictions, import licensing restrictions, and market access
barriers with important trading partners. Legal resources would also
aid in enforcing U.S. trade laws by defending disputes brought against
the United States. USTR's ability to absorb and fund the Center within
its own agency will help support these endeavors.
ega
Question. Since last year, ongoing negotiations for an agreement to
eliminate tariffs on environmental goods have been on hold. Trade in
environmental goods presents major opportunities for American
businesses and workers given that over 80 percent of clean energy
investments will take place outside of the United States and the United
States is a leading producer of a number of environmental technologies,
ranging from water filtration equipment to turbines to air quality
monitoring equipment.
What specific steps is the administration taking to secure new
market access opportunities for U.S. producers of environmental goods?
Answer. I am committed to securing new market access opportunities
for U.S. manufacturers of environmental goods. I am currently reviewing
the Environmental Goods Agreement (EGA), among other initiatives, and I
look forward to working with you and other Members and stakeholders as
we consider how best to advance U.S. manufacturing interests in
environmental technologies.
gsp
Question. The Generalized System of Preferences (GSP) program is
scheduled to expire at the end of this year. I have long supported a
robust GSP program as both an essential tool to lower cost for American
manufacturing, as well as a key development tool for future trading
partners.
Does the administration support an extension of the GSP program,
without amendment, qualifications, or ``riders,'' through calendar year
2021?
Answer. We will consult with Congress on the next steps for GSP,
which as you observe is scheduled to expire on December 31st of this
year. The administration welcomes your interest in renewing GSP, and is
open to your ideas and advice.
Question. During your confirmation hearing, you committed to
``carefully consider extending duty-free treatment to the more
economically advanced GSP countries for travel goods.'' Given the
importance of this issue to American industries, I urge you to finish
``carefully considering'' this issue and immediately grant travel goods
duty-free status for all GSP countries.
When can I expect a final decision?
Answer. I am pleased to report to you that the President has
decided to extend GSP eligibility for travel goods to all beneficiary
countries. This decision entered into force on July 1, 2017.
government procurement
Question. Ambassador Lighthizer, I have longstanding concerns about
agency's discretionary use of waivers to our laws that require the U.S.
Government to spend taxpayers' money on American made products. It is
unclear whether there is much analysis on whether a U.S.-made good is
available and cost effective before a government official signs off on
a contractors' request to buy that product from a foreign source. So, I
am glad that this administration is looking into the application of
those discretionary waivers. However, when you look at government
procurement in our trade agreements, it is more complicated, because
that involves reciprocal access to foreign governments' procurement
markets. As you review the commitments we have made on government
procurement, my view is that you need to look at how much goods and
services our government buys from foreign sources under those
commitments, compared with the goods and services U.S. companies sell
into foreign procurement markets. That is the only way you can tell
whether these commitments are a good deal for the United States.
Can you commit to undertaking that analysis as part of your
assessment under the ``Buy American and Hire American'' executive
order?
Answer. Yes. As part of the assessment of the impact of the GPA and
our FTAs on the enforcement of Buy American Laws under the Executive
order Buy American and Hire American, we hope to look at how much the
United States buys from our trading partners and how much our trading
partners buy from the United States. Unfortunately, as the recent GAO
report states, both the U.S. procurement statistics and the statistics
of our trading partners are not as good as they should be. We are
actively exploring ways to improve procurement statistics. For example,
the United States is currently chairing a work program in the WTO
Agreement on Government Procurement aimed at this very issue.
fisheries
Question. The United States imports about 90 percent of the seafood
that Americans consume. While the United States has generally well
managed fisheries and a number of stocks have been successfully rebuilt
under the Magnuson Stevens Act, there is concern that a significant
percentage of the seafood that we import (an estimated 20-30% of the
wild caught seafood) has been caught illegally. The United States need
information about the origin of seafood imports to assess legality, but
because of complex and opaque supply chains from the fishing vessel to
the United States, very little is known about the origins of imports.
Is USTR committed to the implementation of the Seafood Import
Monitoring Program to gather basic data on the origin of seafood
imports?
Answer. While USTR is not the agency responsible for the
implementation of and data collection under the Seafood Import
Monitoring Program, USTR supports the program's objectives and is an
active participant in the interagency process.
transparency
Question. There has been serious concern about lack of transparency
with respect to U.S. trade negotiations, both with respect to the
extent to which information is shared with the public as well as the
administration's engagement with the Congress. The Bipartisan Trade
Priorities and Accountability Act of 2015 included new provisions to
address these shortcomings, including a requirement that USTR establish
guidelines governing consultations and engagement with Congress,
advisors, and the public. USTR published guidelines in accordance with
this requirement on October 27, 2015.
In the process of renegotiating NAFTA, and any subsequent
negotiations, will USTR at minimum adhere to the procedures set out in
the 2015 guidelines?
Answer. Yes, USTR is committed to adhering to the procedures set
out in the Trade Priorities and Accountability Act and the 2015
guidelines.
Question. Trade advisory committees established pursuant to section
135 of the Trade Act of 1974 play an important role in ensuring the
administration and Congress have access to regular, detailed input on
the impact of trade negotiations on the United States. Yet there remain
concerns that these committees do not provide sufficient opportunities
for stakeholders, particularly small businesses, unions, and
environmental organizations, to provide input on trade negotiations.
What steps is the administration taking to ensure that the trade
advisory committees are fully representative of the U.S. economy and
U.S. stakeholders?
Furthermore, will the administration treat trade advisory
committees equally when it shares information on negotiating proposals,
such that each trade advisor is provided the same access to information
at the same time during a negotiation?
Answer. As the administration reviews membership in the various
trade advisory committees, it will seek a fair representation of the
U.S. economy and stakeholders in order to be able to receive the best
advice. The administration is committed to adhering to the procedures
set out in the Trade Priorities and Accountability Act and the 2015
guidelines with respect to providing opportunities for input and review
of information.
______
Questions Submitted by Hon. Debbie Stabenow
Question. While President Trump's budget proposes additional
enforcement funding for the International Trade Administration (ITA),
it also makes cuts to ITA's Commercial Services, which promotes exports
around the world. These cuts will close international posts as well as
U.S.-based Export Assistance Centers.
According to 2016 data from the ITA, over 270,000 jobs were
supported by exports from nearly 15,000 Michigan companies that sell
their products all over the world, and a majority of these businesses
are small or medium-sized companies.
Do you agree with these cuts to the ITA's budget?
Answer. Through the Trade Promotion Coordination Committee (TPCC),
USTR partners with the Department of Commerce, ITA, and other agencies
to coordinate trade information and resources to help small and medium-
sized businesses access new opportunities in foreign markets. The TPCC
is working to improve coordination of the overall export ecosystem that
assists small businesses. At USTR in particular, we are working to
increase the export competitiveness of U.S. small and medium-sized
businesses by seeking the reduction of costly tariff and non-tariff
barriers in foreign markets, which can disproportionately burden
smaller businesses.
Question. How will you prioritize increasing U.S. competitiveness?
Answer. Improving U.S. competitiveness and growing jobs are key
priorities of this administration. We are pursuing several avenues to
support growth in our industrial and agricultural sectors, including
through trade negotiations, enforcement of existing trade agreements,
and application of our trade remedy laws. We will consult extensively
with Congress--and businesses of all sizes--as we consider additional
policy options for pursuing new opportunities for U.S. exporters in
markets around the world.
Question. I have long supported increased engagement with Cuba as
an opportunity to grow markets for American farmers while improving the
lives of everyday Cubans. U.S. agricultural stakeholders strongly
support normalizing trade relations with Cuba and oppose undoing the
efforts to normalize relations undertaken by the Obama administration.
In 2016, the U.S. exported $195 million of agricultural products to
Cuba, a small fraction of Cuba's approximately $2 billion in
agricultural imports.
What impact will President Trump's new policies towards Cuba,
including restrictions on travel and trade, have on efforts to grow
U.S. agricultural exports to Cuba?
Will you commit to working with producers in Michigan as the
administration proceeds in implementing its Cuba policy in order to
ensure that we keep moving our farm interests forward?
Answer. The Department of the Treasury and the Department of
Commerce will be pursuing regulatory changes to implement the
President's policy as announced on June 16, 2017. The announced changes
do not take effect until new regulations are issued. As we work with
our colleagues at the Department of State, Department of the Treasury,
and the Department of Agriculture to implement the new Cuba policy, we
will work with producers in Michigan, and other States.
Question. For years, the U.S. aluminum industry and its workers
have been harmed by China's illegal subsidization of its aluminum
industry. In January, the United States filed a request for
consultations at the WTO to challenge this.
Can you provide a status update on this case?
How else is the administration working to address China's use of
illegal subsidies and overcapacity in the aluminum industry?
Answer. The administration is reviewing all options to deal with
market distorting practices in the Chinese aluminum industry. At the
core of this issue is China's non-market economy system, which is
creating global oversupply and excess capacity in this and other
sectors. We are vigorously defending our right to apply a non-market
economy methodology to imports from China against China's challenge in
the WTO. Commerce is conducting a section 232 investigation on aluminum
to assess the impact of aluminum imports on U.S. national security. We
are committed to effective action to address unfairly traded aluminum
through strong enforcement of U.S. AD/CVD laws, bilateral and
multilateral engagement, and enforcement of our rights under trade
agreements, as appropriate.
Question. During your confirmation process, I asked you a question
for the record regarding my concerns about subsidies some Middle East
nations provide to their state-owned airlines, which create
competitiveness issues and put our U.S. aviation jobs at risk. You
said, if confirmed, you would ``look into this matter and work closely
with other agencies, such as the State Department and Department of
Transportation, to sow everything we can to ensure that our
international carriers have a fair and equal opportunity to compete.''
Can you provide a status update on what the administration is doing
to address these concerns?
Answer. The Departments of State and Transportation, as the
negotiators of our Open Skies agreements, have the lead on this issue.
However, USTR has been actively participating in an on-going
interagency review of the issue by the new administration. As part of
this review, the administration has met with key stakeholders and is
currently evaluating appropriate next steps.
Question. Free flow of information and recognition of intellectual
property rights are essential for innovation and economic growth.
Unfortunately, we have seen inadequate implementation and enforcement
of market access and copyright protections from many of our trading
partners.
How are you and the administration working to identify and address
these trade violations?
Answer. Obtaining adequate and effective protection of intellectual
property, and fair market access for intellectual property-intensive
industries, is one of my highest priorities. We work closely with the
rest of the administration to identify and effectively address IP
problems in other markets, including copyright protection. At USTR, we
identify and quickly respond to bilateral problems as they emerge.
Systemically, we work to improve protection and enforcement of
copyright, patent, trademark, trade secret and other IP rights on
multiple fronts: through our bilateral engagements, our multilateral
engagements, our reporting, notably the Special 301 Report, our
Notorious Markets List, and all other appropriate trade tools at our
disposal.
______
Questions Submitted by Hon. Maria Cantwell
Question. Some American retailers in the outdoor industry sector
have voiced frustration over what they consider outdated and
unnecessarily high import tariffs. Importers, like outdoor recreation
retailers, whose industry generates $887 billion in consumer spending
and supports 7.6 million American jobs, sometimes face tariffs as high
as 40%.
How does the administration plan to address excessive tariffs on
products not produced domestically in the outdoor industry sector?
Answer. This administration is committed to supporting and
expanding manufacturing production in the United States, including
outdoor recreation products such as footwear. In the course of any
trade negotiation, we will consult closely with Congress and U.S.
industry to achieve a meaningful balance of outcomes on tariffs for
U.S. outdoor recreation product manufacturers, retailers, and
consumers.
Question. A large segment of the $45.6 billion which Chinese state-
owned enterprises invested in the United States in 2016 targeted
critical infrastructure and technological sectors. These industries are
essential to both our economic health and national security. Last year,
I joined 41 other Senators in a letter voicing our concern about the
acquisition of Vertex Railcar Corporation by the Chinese state-owned
China Railroad Rolling Stock Corporation.
The Chinese government provides generous loans to its state-owned
enterprises, estimated to having lowered financing costs 40% to 50%
below the benchmark rate. The government also provides their companies
with subsidies and discounts to make it very difficult for American
firms to compete. This has already had severe implications for
manufacturing and for jobs in the United States.
How are you ensuring that Chinese investments by state-owned
enterprises in areas like freight rail, semiconductors, and our
financial markets, do not threaten our economic security?
Answer. I frankly am troubled by the prospect of Chinese state-
owned enterprises using huge subsidies or other unfair advantages to
undermine or displace domestic competitors in the United States. The
administration is assessing a broad range of tools, including high-
level discussions and other trade tools, to confront this challenge. In
the event that a Chinese investment raises national security concerns,
USTR in its capacity as a member of the Committee on Foreign Investment
in the United States works with other agencies to ensure that the
United States effectively protects national security, in accordance
with applicable laws and regulations.
Question. When NAFTA was originally negotiated, environmental and
labor provisions were negotiated as part of a side agreement.
What is the administration's proposal on environmental and labor
provisions with regard to its proposed renegotiation of NAFTA?
Answer. I am committed to ensuring that our trade agreements
strengthen our trading partners' labor and environmental standards and
meet the negotiating objectives that Congress has set out in TPA. In
consultation with Congress, the administration will seek to modernize
the labor and environmental obligations, including by incorporating
high standard labor and environment provisions into the core of the
agreement, and ensuring that the obligations are subject to the same
dispute settlement mechanisms and trade sanctions as other enforceable
obligations under the agreement. I look forward to working closely with
you, other members of Congress, and stakeholders as we develop our
proposals.
Question. As the Department of Commerce conducts its section 232
investigation into the national security implications of imported
steel, I am concerned that resulting tariffs may threaten key
industries on the West Coast. Transporting steel produced in the
Eastern or Midwest United States over the Rocky Mountains creates
prohibitive costs for West Coast consumers. If imports are restricted
by high tariffs or strict quotas, hundreds of high paying steel worker
and longshore jobs on the West Coast could be eliminated, including
jobs the Columbia River, as well as in Vancouver, Kamala, and Seattle,
WA.
How will the section 232 investigation, and any decision to impose
tariffs, take the unique issues of the West Coast economy into account?
Answer. The section 232 investigation on the effects of steel
imports on U.S. national security are being conducted by the Department
of Commerce.
Question. From the Pacific Northwest, approximately 20 percent of
our pear crop and 15 percent of our apple crop is shipped to Mexico and
Canada each year. Mexico represents the most commercially important
export market for these goods while Canada finishes second. In total,
the annual sales for pears are valued at $97 million while the sales of
apples are valued at $345 million. Canada represents the top export
market for cherries with annual sales valued at over $100 million.
With ongoing reports that NAFTA will undergo revisions to its anti-
dumping and seasonal safeguard rules, the tree-fruit industry in
Washington is very concerned as such changes would be harmful to their
businesses.
How will you work to ensure that Washington's apple, pear, and
cherry growers are not negatively impacted by any changes to NAFTA?
Answer. We are aware of the concerns raised by certain segments of
the U.S. fruit and vegetable industry regarding the impact that imports
are having on their products. At the same time, we also recognize the
importance of our agricultural exports, not only to the industry
itself, but to the value that such exports provide to the economy as a
whole. I can assure you that we will be coordinating closely with the
entire industry to ensure that both the import and export concerns are
taken into account when deciding what, if anything, will be addressed
as we both prepare for and conduct our NAFTA negotiations with Canada
and Mexico.
Question. According to the administration's FY18 budget proposal,
agricultural market development programs--including the Market Access
Program (MAP) and the Foreign Market Development (FMD) program--will be
eliminated. As you know, foreign governments deploy their own versions
of MAP and FMD to compete in valuable export markets, often times
providing greater resources than our own programs do.
How will USTR work with other U.S. Government agencies to increase
U.S. agriculture's export competitiveness, while at the same time
proposing to eliminate programs that are vital to supporting the
agricultural industry's presence in global markets?
Answer. I support the President's FY18 budget proposal. U.S.
agricultural producers are among the most competitive in the world and
I will work closely with Secretary Perdue to strengthen enforcement of
international trade rules to address unfair or unjustified barriers to
U.S. agricultural exports.
Question. The dairy industry is responsible for more than $5
billion in annual Washington State economic activity and is responsible
for more than 18,000 jobs throughout the State. The largest cooperative
in the State of Washington happens to also be the second largest
private employer.
Over 40 percent of milk produced in Washington State is exported to
more than 20 countries around the world. Last February, the Canadian
government implemented new pricing regulations that indirectly
subsidize dairy exports. It is the U.S. dairy industry's belief that
Canada is aiming to meet increased demand for cream and butter by
producing more milk. In producing more milk to get butter fat, excess
skim milk is created. For Canada to keep domestic prices high, the
excess milk is being dumped in international markets at low costs.
Washington's dairy farmers compete on a commercial basis around the
world and cheaper Canadian prices hurt the 480 plus dairy farms in
Washington State.
What is the administration doing to address Canada's dairy pricing
strategy, and how will this Canadian pricing strategy factor into the
planned NAFTA negotiations?
Answer. This is a critical issue for our dairy farmers, and
President Trump, myself, and other senior administration officials have
raised this concern with Prime Minister Trudeau, Foreign Minister
Freeland, and other senior Canadian officials. USTR and USDA have been
focused on collecting important information on the policy change and
its implementation, including from industry. My staff and I are
analyzing options on how best to move forward.
Question. The current economic climate for wheat growers in
Washington State has declined. This past year brought high crop yields
with historic low prices and low Falling Numbers, affecting famers'
ability to market wheat crop.
For wheat, 50 percent of the crop grown is exported. While in the
Pacific Northwest, it is closer to 90 percent. This year, Mexico was
the number one export market for U.S. wheat--a market that has
drastically grown since tariffs were removed by the initial NAFTA
agreement.
It is vital that any NAFTA renegotiation does not undo benefits
that the wheat growers have realized over the past 20 years.
How will policies that benefit wheat growers be protected in any
NAFTA renegotiation?
What role will USTR take in coordinating with other government
agencies to address issues that affect wheat industry exports, such as
low Falling Numbers?
Answer. The administration is committed to maintaining the markets
that our agricultural sectors have and creating opportunities to expand
exports, including for wheat. The administration is committed to doing
no harm, and our goal is to avoid tariffs being raised as a result of
NAFTA renegotiation. USTR works closely with USDA and other agencies to
address a wide range of SPS issues and technical barriers affecting
U.S. agricultural exports.
Question. The U.S.-EU Covered Agreement on Insurance has the
potential to address long-standing irritants in the U.S.-EU
relationship, through mutual recognition of the jurisdictional
competence of the other Party. However, Governors and insurance
commissioners, including my own home State insurance commissioner, have
raised concerns with several ambiguities in the agreement. They are
concerned that if they are not clarified ahead of time with the
European Union, they will have then changed laws and regulations only
to find out years down the road, that the EU does not have a similar
interpretation.
It is my understanding that National Association of Insurance
Commissioners has submitted a few areas that they would like to see
clarified with the European Union prior to the agreement being signed.
I hope that USTR and the Treasury will consider exchanging letters with
the EU to clarify these concerns, clear up any uncertainty surrounding
these agreements, and ensure a smooth adoption of these regulations.
What are the next steps with the Covered Agreement and do you plan
to seek the clarifications requested by the State insurance
commissioners, including an exchange of letters?
Answer. USTR and Treasury have undertaken a series of meetings with
interested stakeholders and Congress to gather feedback on the U.S.-EU
covered agreement and to provide updates regarding the administration's
decision-making process. USTR is currently considering next steps in
consultation with Treasury.
Question. Due to the trade laws implemented by the Canadian
Government, U.S. wine exporters continue to face extreme barriers when
trying to sell their goods in British Columbia. For instance, one of
these discriminatory polices prevents U.S. wine from being sold on the
same shelves as domestic Canadian wine, giving B.C. wine producers a
tremendous economic advantage. To address this grievance, USTR
requested the WTO to organize dispute settlement consultations with
Canada on January 18, 2017. However, these consultations did not bring
about a settlement to the issue, due to Canada's refusal to modify its
trade barriers.
With Canada unwilling to modify its discriminatory trade barriers,
how will USTR work to fully enforce U.S. rights under the WTO
agreements and formally request a dispute settlement panel?
Answer. Policies restricting sales of U.S. wine in Canada are a
major problem. USTR has held consultations with Canada under WTO
dispute resolution procedures on British Columbia regulations. I am
consulting with my staff on the most effective next steps to address
those regulations, as well as other measures in Canada that may be
harming our wine exports. I am very pro-enforcement. Whether we go to a
dispute settlement panel or address these measures in the NAFTA
negotiations, I will work to get this problem resolved for U.S. wine
makers.
Question. In the last several years, Argentina and Indonesia have
increasingly dumped and subsidized biodiesel in the U.S. market. This
practice has depressed prices and decreased domestic producers' market
shares. American companies like General Biodiesel and REG--both with a
presence in Washington State--are disadvantaged by this anticompetitive
behavior.
How will you work to address these harmful trade practices that
hurt producers of clean-burning, domestic fuels?
Answer. By statute, the U.S. Department of Commerce (Commerce) and
the U.S. International Trade Commission (ITC) have the authority to
address allegations of dumped and subsidized imports. Commerce is
currently conducting antidumping and countervailing duty investigations
to determine whether biodiesel imports from Argentina and Indonesia are
dumped or subsidized. Commerce is expected to issue its preliminary
determinations in the countervailing duty investigations on August
21st, and the preliminary determinations in the antidumping
investigations on August 30th. If Commerce finds the imports are dumped
or subsidized, the ITC will then determine whether the dumped or
subsidized imports are injuring the domestic biodiesel industry. If so,
Commerce will impose duties to offset the level of dumping and
subsidization.
______
Questions Submitted by Hon. Bill Nelson
Question. Will you advocate for adding provisions to NAFTA that
require a minimum wage? If not, why?
Answer. Lower labor standards in other countries, including wage
issues, affect American workers and businesses. I am committed to
ensuring that our trade agreements strengthen our trading partners'
labor standards and meet the negotiating objectives that Congress has
set out in TPA. The administration is undertaking a comprehensive
review of U.S. trade policy to determine how best to ensure strong
labor commitments for future trade negotiations, beginning with NAFTA.
I will work with you and other Members of Congress as we update and
improve the NAFTA, as part of our examination of all aspects of the
U.S. trade relationship with Mexico.
Question. As you know, TPP included action plans for Brunei,
Malaysia, and Vietnam to ensure they made progress on building capacity
needed to meet their labor obligations. The action plans were made
enforceable through the threat of trade sanctions for violators.
What are your thoughts on including similarly enforceable action
plans for Canada and Mexico in NAFTA to make sure they can meet their
labor and environmental commitments?
Answer. I am committed to ensuring that our trade agreements
strengthen our trading partners' labor and environmental standards and
meet the negotiating objectives that Congress has set out in TPA. I am
aware of congressional and stakeholder interest in a labor consistency
plan for Mexico, similar to those negotiated with Vietnam, Malaysia,
and Brunei as part of the TPP. I look forward to working closely with
you, other Members of Congress, and stakeholders as we develop our
negotiating proposals.
______
Questions Submitted by Hon. Robert Menendez
Question. Last week, press reported that the U.S. lost to Guatemala
in its first ever labor enforcement case brought to dispute settlement
under a trade agreement. The press reports suggest that the United
States was unable to prove that Guatemala's failure to enforce labor
obligations in a manner that ``affected trade''--two key words that
appear in several of our free trade agreements.
What does this decision mean for labor rights enforcement going
forward, including in our ongoing dispute with Colombia?
Do we need to consider alternative language in our trade agreements
if the phrase ``affecting trade'' is too difficult to prove in a case
where there was clearly a failure on behalf of our trading partner to
enforce its labor laws?
Answer. The administration wants strong, enforceable trade
agreements that work for the American people, and USTR will continue to
require that all of its trading partners maintain fair labor practices
to help level the playing field for American workers. We strongly
disagree with some of the interpretations developed by this panel,
including with respect to whether Guatemala's substantial failures to
enforce its laws ``affected trade.'' We understand your concerns, and
also recall that no FTA panel can set precedent for future panels. We
look forward to consulting closely with you and your colleagues on
these important issues in the future.
Question. Last year's High-Level Panel on Access to Medicines came
out with conclusions that have been strongly opposed by innovative U.S.
pharmaceutical manufacturers. After the Panel's report, the U.S.
Government coordinated closely to develop a strong response to the
panel. These efforts were laudable: yet such interagency coordination
does not always happen. Some U.S. Government agencies, such as USTR,
are statutorily required to consult across agencies, but others are
not.
How would you improve interagency coordination to reflect inputs
across agencies, including trade and economic interests?
Answer. USTR remains committed to promoting robust IP systems to
stimulate innovation and creativity and defending the interests of U.S.
innovative and creative industries. USTR has primary responsibility for
developing and coordinating the implementation of U.S. trade policy,
which is facilitated by the Trade Policy Review Group and the Trade
Policy Staff Committee, both chaired by USTR. We also work closely with
other agencies on issues that may arise in forums that they lead,
particularly when such deliberations may affect U.S. trade interests.
Question. What are your thoughts on including similarly enforceable
action plans for Canada and Mexico to NAFTA to make sure they can meet
their labor and environmental commitments?
Answer. I am committed to ensuring that our trade agreements
strengthen our trading partners' labor and environmental standards and
meet the negotiating objectives that Congress has set out in TPA. I am
aware of congressional and stakeholder interest in a labor consistency
plan for Mexico, similar to those negotiated with Vietnam, Malaysia,
and Brunei in the context of the TPP. I look forward to working closely
with you, other members of Congress, and stakeholders as we develop our
proposals.
______
Questions Submitted by Hon. Thomas R. Carper
Question. As you know, I remain concerned about China's proposed
regulations that will require U.S. cloud service providers to transfer
their intellectual property and control of their businesses to Chinese
companies in order to do business in China. Chinese cloud providers are
not subject to similar regulations in the United States.
Can you describe in detail for me progress the Trump administration
has made in allow U.S. cloud service providers to do business in China
without being subject to these regulations?
Answer. As part of the 100-day plan negotiations, the
administration has been pressing China to remove the restrictions that
it applies to the cloud computing sector, including those that affect
the ability to fully own and control data centers and provide cloud-
related services and that require transfer of valuable intellectual
property and know-how and surrender of brand names to Chinese companies
in order to operate in China. The administration will continue to use
all appropriate avenues, including high-level discussions and, if
necessary, enforcement actions, to endeavor to fully open China's
market for U.S. providers of cloud computing services.
Question. The administration has set a high bar for what will be
addressed in a renegotiated NAFTA.
Do you anticipate this new version of NAFTA to serve as a model
agreement for future negotiations with other countries, including TPP
member countries with which you hope to strike bilateral agreements?
Answer. We do indeed intend to set a high bar in our renegotiation
of the NAFTA, and expect that these high standards will set a valuable
precedent for other negotiations we undertake in the future.
______
Questions Submitted by Hon. Benjamin L. Cardin
Question. While I had some concerns about TPP, it contained
significant improvements over past trade agreements, especially
regarding human rights and anticorruption measures.
Though some of these improvements apply to our NAFTA trading
partners, others do not. Nonetheless, as we have discussed previously,
I think it is critically important to create a very high standard in
the NAFTA negotiations that preserves the gains made on human rights
and anticorruption commitments in TPP. This will send an important
signal to any future parties to U.S. trade negotiations. It will also
help create a more level global playing field for our workers,
especially if we require the same high-standard agreement with all of
our trading partners--as opposed to creating a patchwork of agreements
that are inconsistent on these issues.
What are your views on incorporating high standards on labor
rights, human rights, the environment, and anticorruption measures into
a modernized NAFTA?
Will you ensure that even provisions that do not necessarily affect
our NAFTA trading partners be incorporated into the ongoing NAFTA
renegotiations?
Answer. I am committed to ensuring that our trade agreements
strengthen our trading partners' labor, environmental and anti-
corruption standards and meet the negotiating objectives that Congress
has set out in TPA. The protection of labor rights and the environment
is critical and will be an important part of the NAFTA renegotiation. I
look forward to working closely with you, other Members of Congress,
and stakeholders as we develop our proposals and work to create a more
level playing field for our workers and businesses.
Question. As you know, the U.S.-EU Covered Agreement, which was
negotiated by the previous administration, is currently being reviewed
by your office and the Treasury Department.
I have heard several concerns from U.S. stakeholders, including
U.S. insurance companies, the National Association of Insurance
Commissioners, and the National Governor's Association, about aspects
of the agreement that need to be clarified due to ambiguities in the
drafting.
These stakeholder concerns relate to central elements of the
agreement such as whether it recognizes the U.S. system of insurance
regulation as ``de facto equivalent'' under Europe's Solvency II
regulatory regime for insurance; ensures the reinsurance collateral
reductions in the agreement only apply prospectively to future
reinsurance contracts; and recognizes that the U.S. State insurance
commissioners' work on a group capital calculation satisfies the
agreement.
My understanding is that the stakeholders who have these concerns
are not seeking a rejection or reopening of the agreement, but instead
an exchange of letters between the United States and the EU to clarify
these elements of the agreement.
I'm hopeful that your office will be able to complete your review
in a timely and thoughtful way that levels the playing field for our
insurers and provides clarity and certainty to the industry going
forward.
Question. Could you please describe the current status of the
review your office is undertaking with respect to the agreement, and
indicate whether an exchange of letters is being considered?
Answer. USTR and Treasury have undertaken a series of meetings with
interested stakeholders and Congress to gather feedback on the U.S.-EU
Covered Agreement and to provide updates regarding the administration's
decision-making process. USTR is currently considering next steps in
consultation with Treasury.
Question. As you know, a 50% cap on foreign equity ownership in
life insurance has existed since China's WTO accession in 2001, despite
further openings in other areas of financial services. Currently,
foreign companies represent just 5% of the Chinese life insurance
market. I have heard from several U.S. stakeholders on the significant
positive impact that removing the cap would have for U.S. life
insurers.
Given this positive impact, are you considering, in conjunction
with Secretary Ross, including an objective to lift the 50% cap in
President Trump's ongoing ``100-day plan'' effort with China?
Answer. As part of our engagement with China through the CED, the
administration has pressed China to remove the foreign equity cap that
it applies to the life insurance sector. The administration will
continue to use all appropriate avenues, including high-level
discussions, to endeavor to fully open China's market for life
insurance services and other financial services.
Question. Although India has liberalized foreign ownership
restrictions in several areas, including food and online business-to-
business retail, India continues to prohibit foreign direct investment
in online business-to-consumer retail. This prohibition prevents a
number of U.S. companies, including companies in Maryland, from fully
operating in India and providing Indian customers with the widest
possible selection of goods and services.
Could you please describe the steps you are taking to address this
issue with the Indian government?
Answer. India is one of the few major economies with which, in
addition to goods, we have a significant deficit in services, and our
services exporters continue to face a variety of challenges in trading
in the Indian market. While we have welcomed recent improvements in
certain areas, they do not go far enough to provide meaningful market
access in important sectors. President Trump and Prime Minister Modi
stated their intention to undertake a ``comprehensive review'' of the
bilateral trade relationship, and we will address these issues and
others in that process under the U.S.-India Trade Policy Forum (TPF).
______
Questions Submitted by Hon. Sherrod Brown
Question. In your testimony, you indicated that the United States
would not seek improvements to Mexico's labor laws or enforcement of
those laws before NAFTA renegotiation talks begin. I appreciated your
honesty, but I was disappointed by the answer. Other U.S. trade
agreements provide plenty of evidence that the United States has not
successfully secured long-lasting, meaningful improvements to labor
standards after trade agreements are signed. I share your view that
improving Mexico's labor standards is important for U.S. workers, but I
do not see how the United States will have leverage to achieve
meaningful changes to Mexico's worker protections after NAFTA
renegotiations begin.
How will you prevent the United States from repeating past failures
on labor standards in the NAFTA renegotiations?
Answer. Lower labor standards in other countries can affect
American workers and businesses. I am committed to ensuring that our
trade agreements strengthen our trading partners' labor standards and
meet the negotiating objectives that Congress has set out in TPA. The
administration is undertaking a comprehensive review of U.S. trade
policy to determine how best to ensure strong labor commitments for
future trade negotiations, beginning with NAFTA. I will work with you
and other members of Congress as we update and improve the NAFTA, as
part of our examination of all aspects of the U.S. trade relationship
with Mexico.
Question. The announcement this week that the United States lost
its case against Guatemala for labor standard violations under the
Dominican Republic-
Central America Free Trade Agreement reveals two things: (1) the text
of the agreement's labor standards is unworkable; and (2) the free
trade agreement dispute settlement mechanism for labor violations is
ineffective.
What changes will you be seeking to the labor standards in NAFTA to
ensure that they are meaningful and workable?
What changes will you be seeking to NAFTA's dispute settlement
mechanism to ensure the agreement's labor standards are enforceable?
Answer. The administration wants strong, enforceable trade
agreements that work for the American people, and USTR will continue to
require that all of its trading partners maintain fair labor practices
to help level the playing field for American workers. We strongly
disagree with some of the interpretations developed by this panel,
including with respect to whether Guatemala's substantial failures to
enforce its labor laws ``affected trade.'' We understand your concerns,
and also recall that no FTA panel can set precedent for future panels.
We look forward to consulting closely with you and your colleagues on
these important issues in the future.
Question. In response to my question regarding whether the U.S.
position will be to remove investor-state dispute settlement from the
NAFTA agreement, you answered no but said that you wanted to strike a
better balance between national sovereignty and investment protections
in trade agreements.
Are you planning to use the Trans-Pacific Partnership text on
investment as the basis for the NAFTA negotiations?
If you are not going to use the TPP text for the basis of the NAFTA
investment chapter, what modifications will USTR seek to the investor-
state provisions to strike a better balance between national
sovereignty and protections for investors?
Will you consider limiting investor-state dispute settlement to
direct expropriation only?
Answer. As I indicated in my response to your question at the
hearing, I am mindful that seeking improved mechanisms to resolve
investor-state disputes is a negotiating objective in TPA. The United
States has a responsibility to ensure that U.S. investors abroad are
treated fairly, but we also need to acknowledge concerns about ISDS,
including with respect to U.S. sovereignty. The administration is
currently assessing the balance on these issues and is looking
carefully at past agreements as part of that analysis. I look forward
to working with Congress to ensure that rules that we negotiate--
including rules on expropriation--are consistent with U.S. legal
principles and practice, as specifically called for in the 2015 Trade
Priorities and Accountability Act.
Question. I was pleased that the President announced a 100-day plan
to negotiate trade issues with China, and I have supported the section
232 steel investigation. I'm concerned, however, that the
administration has not put forward a comprehensive plan to address
China's steel overcapacity. It is imperative that the U.S. make it a
top priority to pursue reforms of China's industrial policies and
State-run economy to provide long-term relief to U.S. steel producers.
What is USTR's role in negotiating the 100-day plan with China?
Answer. The 100-day plan negotiations are being held under the
auspices of the U.S.-China Comprehensive Economic Dialogue, and I am
actively involved in these negotiations and closely coordinate with
Treasury Secretary Mnuchin and Commerce Secretary Ross on these
efforts.
Question. What progress has been made in addressing China's steel
overcapacity?
Answer. The current global overcapacity situation in the steel,
aluminum and other industries, caused largely by China, is having a
detrimental impact on U.S. workers and industries. At the core of this
issue is China's non-market economy system, which is creating global
oversupply and excess capacity in this and other sectors. To address
this serious problem, the administration is working to address both the
root causes and manifestations of the problem and to utilize every
appropriate tool in our arsenal.
First, the Government of China works to conceal all of the
different means by which it provides support to its steel, aluminum and
other subsidies sectors. China's fundamental lack of transparency is
inconsistent with the way the United States and other major economies
participate in the global rules-based trading system. One step that we
are taking to address this problem is to press China to notify its
subsidy programs to the WTO by ourselves ``counter-notifying'' numerous
Chinese steel subsidy programs to the WTO Subsidies Committee. For
example, recently, we uncovered evidence of state supports in the
annual reports of some of China's largest steel companies, have
presented that evidence to the WTO Subsidies Committee and have raised
questions about dozens of other subsidy programs that potentially
should be notified to the WTO.
A second tool that we are using is trade remedy measures to address
the effects of China's overcapacity. For example, the U.S. Department
of Commerce and the U.S. International Trade Commission have completed
a number of AD/CVD investigations related to steel and aluminum
products, and are actively investigating other products, to address the
dumped and subsidized imports that are injuring our industries. USTR
also is working with the Commerce Department, Customs and Border
Protection, and other agencies to ensure that we enforce our trade
remedy laws and measures effectively and work to prevent fraud,
circumvention and evasion of U.S. trade remedies. These actions and
investigations underscore ways in which the administration is
addressing the overcapacity problems from a variety of angles.
Third, we are vigorously and aggressively defending our right to
apply a non-
market economy methodology to imports from China in antidumping cases.
China has challenged the right of the United States and the EU in the
WTO to continue to apply this methodology. We are working, including in
close coordination with the EU, to ensure that WTO rules are found to
uphold the right of countries to apply a non-market economy methodology
to imports from China.
Fourth, as we act to challenge China's unfair practices and address
their effects, we are also working with other like-minded countries in
forums like the Global Forum on Steel Excess Capacity, the G20, OECD
and other venues. We are using these opportunities to obtain more
information about China's capacity and practices and confer with
trading partners about effective steps to address excess steel
capacity. To be effective, the Global Forum must address the market
distortions contributing to excess capacity, including industrial
policies such as subsidies and other government support. While most
Global Forum participants are concerned about the negative effects that
excess capacity has on their industries and workers, we are
disappointed by the lack of responsiveness by some members, including
China, the world's largest steel producer, which indicates they do not
share our sense of urgency to address this global challenge.
We will continue to explore all appropriate means to deal with the
problem of excess capacity.
Question. What is the U.S. doing to dismantle China's steel subsidy
programs?
Answer. See answer to Question 4.
Question. Japan has a long history of non-tariff barriers that have
shut U.S. companies out of its market, particularly in the auto sector.
For these reasons, I did not support including Japan in the TPP
negotiations. You said in your testimony that you believe Japan should
agree to unilaterally address its trade deficit with the United States,
I agree, but I am not confident Japan will do so. After Prime Minister
Abe's meeting with President Trump in February, a bilateral economic
dialogue was convened between the two countries.
Is the purpose of this dialogue to secure from Japan unilateral
changes to the U.S.-Japan trade balance?
Answer. The dialogue is one vehicle to achieve expanded and more
balanced trade with Japan through a range of activities. The
administration is committed to breaking down barriers and leveling the
playing field so that American companies and exporters can enjoy high
levels of market access.
Question. What is USTR's role in this dialogue?
Answer. USTR is working closely with the Vice President and other
U.S. agencies to advance the trade-related aspects of the dialogue.
Question. Does the administration intend to negotiate a bilateral
trade agreement with Japan?
Answer. The administration is currently conducting a review of all
the United States' existing international trade and investment
agreements. No decision has been made yet regarding whether to seek to
negotiate a bilateral trade agreement with Japan.
Question. It is being reported that the administration plans to use
the TPP text as the basis for the NAFTA negotiations. President Trump,
however, withdrew from TPP, describing it as a bad deal for the United
States. In addition, the TPP text is the product of years of
negotiation, during which time TPP parties watered down U.S. standards
and priorities.
Does the administration intend to start from a weaker negotiating
position in the NAFTA talks by using the text of TPP? If so, has the
administration's position on TPP changed?
Answer. The administration believes that, in negotiating any new
trade agreement, we should learn from, and build on, earlier negotiated
outcomes, particularly those that included our NAFTA partners, but that
we should consider the best text available. There is much in TPP that
was agreed by Canada and Mexico that goes well beyond NAFTA. That is a
good starting point, but we will also consider other proposals that
improve on TPP.
______
Questions Submitted by Hon. Michael F. Bennet
Question. Some in the agricultural sector are concerned about
bilateral trade issues outside the confines of NAFTA that are important
to both market access and growth opportunities.
Given your resources, how do you plan to manage competing
priorities such as NAFTA renegotiation and other bilateral trade issues
like potatoes and softwood lumber?
Answer. The upcoming NAFTA renegotiation will provide USTR with the
opportunity to engage on key issues with Canada and Mexico, including
those directly related to the NAFTA renegotiation as well as other
bilateral trade issues. USTR will continue to work with members of
Congress, the interagency, and affected stakeholders to resolve
outstanding bilateral trade issues.
Question. Agricultural producers in States like Colorado are
worried that the renegotiating NAFTA will limit important market access
and that the renegotiation process will stall the flow of some
products.
Will you commit to ensuring that NAFTA renegotiation does not hurt
current market access for agriculture, and that you will work to
prevent the process from stalling goods?
Answer. The administration is committed to maintaining the markets
our agricultural sectors have and creating opportunities to expand
exports. We are committed to doing no harm, and our goal is to avoid
tariffs being raised as a result of NAFTA renegotiation. In addition,
USTR will continue to work with members of Congress, the interagency,
and affected stakeholders to resolve outstanding bilateral trade
issues.
Question. What are some specific opportunities you see for advances
in agriculture?
Answer. The administration is committed to maintaining the markets
our farmers, ranchers, and food processing industries have and creating
opportunities to expand exports. We are committed to doing no harm, and
our goal is to avoid tariffs being raised as a result of NAFTA
renegotiation. In addition, there are areas where agricultural
stakeholders can gain, such as certain market access in Canada. We will
continue to consult agricultural stakeholders and members of Congress,
consistent with Trade Promotion Authority, on the United States'
approach to and positions in the negotiations.
The administration is committed to maintaining the flow of U.S.
exports of goods and services during the renegotiation of NAFTA.
Question. This committee has been outspoken on the need for tougher
measures to stop unfair currency values. The previous administration
worked with the TPP countries to adopt a framework to address these
issues, which included working with countries to push for transparency
in monetary policies.
Do you consider language related to currency valuation as a
priority for NAFTA renegotiation?
Are you committed to pursuing the framework adopted by the previous
administration and the 11 TPP countries in November 2015 to increase
transparency and accountability in those countries' currency practices?
Answer. As you know, the Trade Promotion Authority (TPA)
establishes principal negotiating objectives with respect to unfair
currency practices. The administration intends to submit its
negotiating objectives to Congress consistent with TPA.
The Treasury Department is responsible for currency issues and
efforts to address exchange rates through our bilateral and
international engagements and in the context of our trade agreements.
______
Questions Submitted by Hon. Robert P. Casey, Jr.
Question. Despite promises from the Chinese government in their WTO
accession protocol, China continues to exercise significant control
over their state-owned enterprises and factors of production. China
wants market economy status at the WTO. The Obama administration
rightfully refused granting it, and I know this administration will
continue that stance.
Can you discuss how you are working with the EU and other allies to
defend the view that China is a non-market economy?
Answer. We are working closely with the EU and other allies, such
as Japan, Canada, and Mexico, which share the view that using a non-
market economy methodology in antidumping proceedings to combat China's
unfair market-distorting behavior is consistent with WTO rules. USTR
lawyers and staff are working closely with their European counterparts
to ensure the strongest possible joint defense.
Question. What other areas do you hope to work with the EU on to
curb the impact of China's market-distorting practices?
Answer. USTR and the European Commission's Directorate General for
Trade maintain regular cooperative engagement on China trade issues
that has yielded positive results, such as with regard to China's
indigenous innovation policies and cybersecurity policies, including
Chinese decisions to withdraw or delay certain problematic policies.
Commissioner Malmstrom and I have discussed the importance of expanding
and intensifying this work in areas of mutual interest. I intend to
work hard with the EU to ensure that China takes action to curb its
market-
distorting policies and practices, including those that have given rise
to severe excess steel and aluminum capacity in China, which harms both
the United States and the countries of the EU.
Question. Do you intend to include enforceable currency
manipulation provisions as a NAFTA negotiating objective?
Answer. As you know, TPA establishes principal negotiating
objectives with respect to unfair currency practices. The
administration intends to submit its negotiating objectives to Congress
consistent with TPA.
With respect to addressing exchange rates, the Treasury Department
is responsible for taking the lead with respect to those issues through
our bilateral and international engagements. However, our goal is to
ensure that any provisions addressing currency manipulation be
enforceable.
Question. Will you assure the Committee and the American people
that the renegotiated NAFTA agreement will not simply be a rehash of
TPP? That is, will a renegotiated NAFTA be a significant improvement on
TPP, particularly in terms of enforceable labor and environmental
standards?
Answer. I am committed to ensuring that our trade agreements
strengthen our trading partners' labor and environmental standards and
meet the negotiating objectives that Congress has set out in TPA. While
TPP included some noteworthy advances, it fell short on many important
issues. I look forward to working closely with you, other members of
Congress, and stakeholders as we develop our labor and environment
proposals for a modernized NAFTA and work to create a more level
playing field for our workers and businesses.
Question. Please discuss how you intend to increase wage growth and
manufacturing jobs through the NAFTA renegotiation.
Answer. Lower labor standards in other countries, including wage
issues, can affect American workers and businesses. I am committed to
ensuring that our trade agreements strengthen our trading partners'
labor standards and meet the negotiating objectives that Congress has
set out in TPA. The administration is undertaking a comprehensive
review of U.S. trade policy to determine how best to ensure strong
labor commitments for future trade negotiations, beginning with NAFTA.
I will work with you and other members of Congress as we update and
improve the NAFTA, as part of our examination of all aspects of the
U.S. trade relationship with Mexico.
Question. How do you hope to improve the rules of origin and
procurement obligations in NAFTA, if at all?
Answer. I hope to make the rules of origin as strong as possible,
so that they benefit goods genuinely made in the United States as well
their producers and workers. We are currently looking at ways to
achieve this objective and are in the process of reviewing comments
from stakeholders for further suggestions.
We are still looking at ways to improve our procurement obligations
under NAFTA. While no decision has been made, it is fair to say that
NAFTA's procurement obligations could be updated. More recent U.S.
trade agreements encourage the use of e-procurement technology. Beyond
greatly enhancing transparency, e-
procurement technology helps U.S. companies compete in foreign markets.
Additionally, more recent U.S. agreements reflect the importance of
labor and environmental issues in procurement practices.
Question. Currently, it is not easy to judge the line between what
is and is not a labor violation, further the language, which is often
purposefully ambiguous, makes enforcement much more difficult.
Will you sharpen those lines in a NAFTA renegotiation?
Answer. In consultation with Congress, we will seek to modernize
the labor obligations consistent with current TPA negotiating
objectives, in particular with regard to ensuring that there is
adherence to domestic laws that reflect core international labor
standards and application of dispute settlement and trade remedies for
non-compliance. Key aspects of this upgrade will include bringing the
labor provisions into the core of the agreement rather than in a side
agreement, and ensuring that the labor obligations are subject to the
same dispute settlement mechanisms and trade sanctions as the rest of
the agreement.
Question. How would you hope to address Mexico's lax enforcement of
labor and environmental standards?
Answer. I am committed to ensuring that our trade agreements
strengthen our trading partners' labor and environmental standards and
enforcement, and meet the negotiating objectives that Congress has set
out in TPA. I look forward to working closely with you, other members
of Congress, and stakeholders as we develop our labor and environment
proposals for a modernized NAFTA and work to create a more level
playing field for our workers and businesses.
Question. Agriculture has gained substantial market access during
the NAFTA years.
Will you ensure that our agricultural sector is not negatively
impacted by the NAFTA renegotiation?
What steps will you take to ensure there will be no additional
barriers to U.S. agricultural trade that come about from the NAFTA
renegotiation?
Will you work to enhance market access in areas like dairy and
specialty crops?
Answer. The administration is committed to maintaining the markets
that our agricultural sectors have and creating opportunities to expand
exports, including for dairy and specialty crops. We are committed to
doing no harm, and our goal is to avoid tariffs being raised as a
result of NAFTA renegotiation. In addition, there are areas where our
agricultural stakeholders can gain, such as certain market access in
Canada. We will continue to consult agricultural stakeholders and
members of Congress, consistent with Trade Promotion Authority, on the
United States' approach to and positions in the negotiations.
Question. Foreign subsidies and market-distorting policies have led
to steel overcapacity to the tune of 700 million metric tons--according
to OECD estimates. China accounts for 425 million tons of that
overcapacity. Last year, the G20 established the Global Forum on Steel
Excess Capacity to focus global efforts to address this overcapacity
crisis.
Do you think the Global Forum is working well?
Can you discuss any progress that has been made at the forum and in
other efforts to address the steel overcapacity problem?
Answer. The administration is seeking to address the root causes of
excess steel capacity in the Global Forum on Steel Excess Capacity,
which was launched in December 2016. More than 30 other steel producing
countries are participating in the Global Forum and have committed to
share information and to take effective steps to address excess steel
capacity.
The current global overcapacity situation in the steel, caused
largely by China, is having a detrimental impact on U.S. workers and
industries. At the core of this issue is China's non-market economy
system, which is creating global oversupply and excess capacity in this
and other sectors. To address this serious problem, the administration
is working to address both the root causes and manifestations of the
problem and to utilize every appropriate tool in our arsenal.
As we act to challenge China's unfair practices and address their
effects, we are continuing our work with other like-minded countries in
forums like the Global Forum on Steel Excess Capacity, the G20, OECD
and other venues. We are using these opportunities to obtain more
information about China's capacity and practices and confer with
trading partners about effective steps to address excess steel
capacity. To be effective, the Global Forum must address the market
distortions contributing to excess capacity, including industrial
policies such as subsidies and other government support. While most
Global Forum participants are concerned about the negative effects that
excess capacity has on their industries and workers, we are
disappointed by the lack of responsiveness by some members, including
China, the world's largest steel producer, which indicates they do not
share our sense of urgency to address this global challenge.
We will continue to explore all appropriate means to deal with the
problem of excess capacity.
Question. Can you discuss the progress being made through the use
of both our trade remedy laws, as well as actions at the WTO to address
steel and aluminum overcapacity?
Answer. I agree that the current global overcapacity situation in
the steel and aluminum industries is having a detrimental impact on
U.S. industries, such that it is imperative that we consider every
appropriate tool in our arsenal to try to address it. The U.S.
Department of Commerce (Commerce) and the U.S. International Trade
Commission have completed and are conducting several AD/CVD
investigations related to steel and aluminum to address the dumping and
subsidized imports that are injuring our industries. These
investigations underscore how the administration is addressing the
overcapacity problems from every possible angle.
In addition, the United States is working with more than 30
countries in the Global Forum on Steel Excess Capacity and other fora
such as the WTO Committee on Subsidies and Countervailing Measures to
discuss how the subsidization that created the overcapacity situation
and the shifting of this capacity to global markets can be addressed.
We will continue to explore creative ways to deal with the shared
problem of overcapacity and will keep the committee informed of
significant developments and initiatives as needed.
Question. As I understand, USTR relies on documented labor
violations and in-depth reviews to bring a labor-related trade case.
Would it be difficult for USTR to bring a labor enforcement action
absent documentation of a country's failure to comply with negotiated
objectives?
Which agency conducts these reviews and documents any apparent
violations?
Answer. Enforcement is a key aspect of our trade agenda and the
administration is working to ensure that trading partners comply with
the labor obligations in our trade agreements. USTR is the lead agency
responsible for enforcement of trade agreements, but in labor cases
consults closely with the Bureau of International Labor Affairs (ILAB)
in DOL to help compile and develop of evidence related to dispute
settlement. USTR works closely with the U.S. Departments of Labor and
State, as well as other agencies, to monitor labor practices in trading
partner countries, and to document any potential breaches of FTA
obligations as necessary. When DOL receives public submissions
regarding labor concerns under trade agreements, the Bureau of
International Labor Affairs (ILAB), in coordination with USTR and
State, is responsible for reviewing and reporting on the issues raised,
and ILAB's analysis and findings are reflected in USTR's decision
regarding whether to bring a labor enforcement action.
Question. The Department of Labor's core function is to protect
U.S. workers, that directive extends to their international work. As
you know, when overseas companies abuse their workers, pay them low
wages and engage in child and slave labor that means the products they
produce are unfairly competing with U.S. goods--which are made in safe
workplaces with high standards.
Can you please discuss how USTR will utilize the expertise within
the Bureau of International Labor Affairs (ILAB) at the Department of
Labor to support your work to ensure that our trade agreements are fair
for U.S. workers, that we use all tools available to ensure compliance
with those agreements, and that no country uses labor abuses to gain an
unfair competitive advantage.
Answer. My staff will continue to coordinate closely with ILAB and
other U.S. agencies to monitor compliance with labor obligations in
trade agreements and engage with trade partners. ILAB staff possesses
extensive expertise on internationally recognized labor rights and
plays a critical role in our ability to monitor and engage trade
partners. Enforcement is a key aspect of our trade agenda and I will
work together with the Department of Labor and other U.S. agencies to
ensure that trade partners are held to compliance with their labor
obligations.
Question. Please discuss how you intend to leverage ILAB's staff
and expertise to ensure our trading partners are adhering to strong
labor standards, both in instances where a country clearly fails to
comply with the labor provisions of a trade agreement and in instances
where lack of compliance may not be as evident, but a country's labor
practices still result in a negative impact on U.S. workers?
Answer. ILAB staff possesses extensive expertise on internationally
recognized labor rights, which we would hope to utilize to engage trade
partners to address labor concerns when they arise. They have the
ability to regularly engage with labor counterparts in trading partners
to continuously improve capacity and enforcement capability.
Question. As our principal trade negotiator is it to your benefit
for the United States Government to continue its policy of strong
engagement in the ILO to encourage countries to adhere to international
labor standards and help to ensure that our trade partners do not seek
to use low labor standards as a means to gain a competitive advantage
and undercut our exports?
Answer. I recognize the unique role that the ILO plays in
establishing and encouraging adherence to fundamental internationally
recognized labor standards. The ILO-recognized fundamental labor rights
are a key aspect of labor obligations in U.S. trade agreements and the
failure of trade partners to protect these rights places us at a
competitive disadvantage. I am committed to ensuring that our trading
partners respect those rights.
Question. You've expressed support for a level playing field for
workers.
Please elaborate on why it is important for U.S. working families
that working people in the countries we trade with, including Mexico,
be able to join together in unions and negotiate together for fair
wages and working conditions?
Answer. Lower labor standards in other countries can affect
American workers and businesses. Freedom of association and the right
to collective bargaining are internationally recognized labor rights.
If workers in Mexico do not have these rights protected, it negatively
affects workers and businesses in the United States and places us at a
competitive disadvantage. Mexico understands the need to address these
issues and is taking steps.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
Today the Finance Committee will examine the President's trade
agenda. In my view, the trade agenda ought to be focused on creating
more high-skill, high-wage middle-class jobs right here in the United
States--red, white and blue jobs. That means aggressively going after
trade cheats to make sure our U.S. workers are competing on a level
playing field, and it means opening up new markets for the Oregon brand
and the American brand.
I expect that much of our discussion today will focus on NAFTA, and
that is where I would like to start. The President has been talking a
big game about NAFTA for at least 2 years now--virtually since the
start of his campaign. In May the administration set the renegotiation
process in motion. But despite that, neither the Congress nor the
public has much of an idea of what the administration is looking for in
those discussions.
My view is, NAFTA could use a complete overhaul. That means high-
standard, enforceable labor and environmental commitments; removing
chapter 19, which hampers our ability to fight unfair trade practices;
and addressing challenges that are specific to dairy, wine and key
manufacturing industries. The United States also needs to combat
currency manipulation, market-distorting state owned enterprises, and
the trade cheats that have become more sophisticated in evading our
trade enforcers. But that's not the end of where NAFTA--and our overall
approach to trade agreements--need improvement.
When container ships on the open seas began to transform the global
economy, the U.S. fought for trade rules that protected the American-
made products we sent around the world.
The fact is, our country hasn't kept up when it comes to digital
products. The Internet is the shipping lane of the 21st century and a
greater platform for the free exchange of ideas and information than
the world has ever known. That is worth fighting for, and it is long
past time our trade policies reflected that reality.
So here's what our new approach needs to be. Our trade agreements
must protect that free exchange of ideas and information, and they must
protect access of
American-made digital products to individuals around the world. Just as
our agreements fight against countries constructing barriers to our
manufactured goods and ag products, they must respond when countries
block American-made technologies, apps, and social media services.
The U.S. cannot accept protectionist approaches to the Internet,
grounded in either mercantilism or authoritarianism. So no
administration, now or in the future, should expect to have my support
for any trade agreement that fails to include provisions that protect
the Internet as an open platform of commerce, speech, and the free
exchange of ideas of all kinds. Mr. Chairman, I hope to discuss these
and a host of other issues in a NAFTA-specific hearing before
negotiations are launched.
But today I also want to raise a couple of potential obstacles in
the road ahead. Those obstacles are (1) an artificial, accelerated
timeline, and (2) a lack of transparency.
First, it's been reported the administration hopes to conclude
negotiations by the end of this year. I'm all for swift negotiations,
but I'm also a firm believer that you get results before you set a cut-
off date. There's a serious danger that an artificial deadline will
push negotiators toward lower standard proposals they know the other
side will accept. That is not a recipe for success.
Second, this administration has an abysmal track record on
transparency. The Commerce Department has been conducting what seems to
be the most opaque trade negotiation ever with China as part of the so-
called 100-day plan. It's unclear what factors are guiding the
administration in the process, and neither Congress nor the public
knows what sort of trade-offs or commitments are being made. This
pattern is being repeated in the national security reviews of steel and
aluminum imports.
And I have real doubts that the administration will be able to
hammer out a high-standard overhaul of NAFTA if it turns a deaf ear to
Congressional and public input. Bottom line, failing on transparency is
a sure way for an administration to deal a potentially fatal blow to
its own trade agenda.
Ambassador Lighthizer, I want your trade agenda to be a success--I
want more good-paying jobs in the United States across the country, in
farming, in manufacturing, and in services for businesses large and
small. That's only possible if everybody works together, Democrats and
Republicans, Congress and the administration. So now that you're on the
job, I hope and expect that you will work closely and communicate
regularly with this committee.
______
Communications
----------
American Farm Bureau Federation
600 Maryland Avenue, Suite 1000W
Washington, DC 20024
202-406-3606
http://www.fb.org/
The American Farm Bureau Federation (Farm Bureau) offers the following
statement for the record on the hearing ``The President's Trade Policy
Agenda and Fiscal Year 2018 Budget.'' Trade agreements have
significantly contributed to the decades-long positive growth in trade
by U.S. agriculture. Between 2003 and 2016, U.S. agricultural exports
to countries we have trade agreements with increased more than 136
percent--from $24.1 billion to $57.1 billion.
Trade is critical to the livelihood of the U.S. agricultural sector
because it spurs economic growth for our farmers, ranchers, and their
rural communities. Agriculture supports jobs in the food and
agricultural industries and beyond. The fact is 95 percent of the
world's consumers live outside of the United States and over 20 percent
of U.S. farm income is based on exports. Expanding opportunities for
U.S. crop and livestock producers to access international markets will
boost farm income in the United States, while preserving existing
access is critical to maintaining farm income at current levels. U.S.
agricultural exports amounted to $134 billion in 2016. Imports,
critical for certain products, especially out of season produce,
totaled $112 billion in 2016.
Existing trade agreements have proved successful in tearing down tariff
and non-tariff trade barriers that hinder U.S. farmers' and ranchers'
competitiveness and prevent us from taking advantage of consumer demand
for high-quality U.S. food and agricultural products throughout the
world. For consumers, trade agreements provide access to new varieties
of food products and off-season supplies of fresh produce.
NAFTA
One of the most talked about trade agreements, the North America Free
Trade Agreement (NAFTA), has been overwhelmingly beneficial for
farmers, ranchers, and associated businesses all across the United
States, Canada, and Mexico for decades. While the sector as a whole has
seen substantial benefit, there are some individual commodities that
have faced challenges such as tomatoes and sugar with Mexico and a list
of products with Canada. With NAFTA, overall, U.S. farmers and ranchers
across the nation have benefitted from an increase in annual exports to
Mexico and Canada from $8.9 billion in 1993 to $38 billion in 2016.
Despite these numerous benefits, there are reasons to update and reform
NAFTA from agriculture's perspective. Some improvements at the
commodity level are detailed below; however there are some improvements
that are sector-wide. Improvements that reduce redundant regulatory
costs, expedite transit across borders and hasten the resolution of
disputes between members would go a long way towards more efficient
trade between NAFTA partners. The rules related to biotechnology,
sanitary and phytosanitary measures and geographic indicators are ripe
for amendment in order to reflect the progress that has been made in
these areas over the decades since NAFTA was enacted.
U.S. agricultural exports to Canada would grow if tariff barriers to
dairy, poultry and eggs were reduced or eliminated. The current
barriers to ultra-filtered milk exports to Canada need to be removed.
Remedies for our produce growers need to be strengthened. A timely
trade dispute resolution process should be added that takes into
account the perishability, seasonality, and regional production of
horticultural products. Well-constructed seasonal TRQs could help
maintain consistent supplies of fresh fruits and vegetables for
consumers, while helping to prevent a flood of imported product, while
U.S. production is at its seasonal peak.
There are a number of longstanding SPS and TBT issues that exist in
trade between NAFTA partners on specific products. This includes trade
in fresh potatoes with Mexico and wine trade with certain provinces in
Canada. The ongoing disputes over the classification of U.S. wheat and
the trade in softwood lumber with Canada are also a concern to many of
our members. The process of modernizing NAFTA should be viewed as an
opportunity to address these issues once and for all.
Clearly there are several areas where the NAFTA agreement could be
modernized to improve trade in agricultural goods, however, it is
critical that the modernization effort should recognize and build upon
the strong gains achieved by U.S. agriculture through the tariff
eliminations, the recognition of equivalency of numerous regulatory
issues, and the development of integrated supply chains that have
arisen due to the agreement.
Trade agreements also provide the highest standard of trade rules,
allowing the United States to lead in setting the foundation to
establish market-driven and science-based terms of trade and dispute
resolution that will directly benefit the U.S. food and agriculture
industry. We support adding to NAFTA the SPS Chapter language from the
TPP, which would strengthen the existing WTO SPS commitments. We
strongly support the inclusion of a rapid response tool, which will
help to resolve shipment-specific issues. Cooperative Technical
Consultations (CTC) would allow agencies to find science-based
solutions to SPS issues in a timely manner-most beneficial to
perishable products.
In addition to the TPP SPS text we recommend some additional,
significant provisions that would ensure that the revised NAFTA
agreement could be used as a model for future trade agreements the U.S.
may enter.
We support the inclusion of the TPP text on Geographical Indicators in
order to preserve U.S. market access opportunities for common name
products. The misuse of GIs is a constant and significant threat to
maintaining and growing sales of high value U.S. products, in the
United States, within the markets of our NAFTA partners, and in markets
worldwide.
We support adding a new chapter on biotechnology to the NAFTA. Under a
modernized NAFTA, USBCA requests that the U.S. government (1) enter a
mutual recognition agreement on the safety determination of biotech
crops intended for food and feed, and (2) develop a consistent approach
to managing low-level presence (LLP) of products that have undergone a
complete safety assessment and are approved for use in a third
country(ies) but not yet approved by a NAFTA member.
We oppose erecting new barriers to agricultural trade in NAFTA,
including adding mandatory country of origin labeling for beef and pork
products.
As an industry that is primarily made of price takers, however, it is
critical to appreciate that variations in trade surplus/deficit in any
particular year are impacted greatly by fluctuations in commodity
prices, exchange rates and the existence of trade barriers to U.S.
products. For example, the United States had a positive agricultural
trade balance with Mexico in 20 of the 23 years since NAFTA came into
effect. Two of the 3 years that the United States experienced a
negative trade balance with Mexico occurred in 2015 and 2016, largely
as a result of low commodity prices and a strong U.S. dollar.
For FY 2016:
U.S. agricultural exports to Canada--$20.2 billion.
U.S. agricultural imports from Canada--$21.6 billion.
U.S. agricultural exports to Mexico--$17.9 billion.
U.S. agricultural imports from Mexico--$22.9 billion.
While the raw numbers are impressive, they only tell part of the story.
Equally critical, is the fact that the agricultural sectors of the
member countries have become far more integrated, as is evidenced by
rising trade in a wider range of agricultural products, substantial
levels of cross-border investment, and important changes in consumption
and production.
Trade in goods consists of not only final consumer products but also
intermediate inputs and raw materials, as firms reorganize their
activities around regional markets for both inputs and outputs, spurred
in part by greater foreign direct investment (FDI).
This integration enables agricultural producers and consumers in the
region to benefit more fully from their relative strengths and to
respond more efficiently to changing economic conditions. The creation
of a larger, single market has given producers access to cheaper
suppliers of inputs, which allows U.S. producers to be more price
competitive domestically and abroad.
U.S. agriculture depends upon a growing international economy that
provides opportunities for farmers and ranchers to sell their products.
Modernization of NAFTA will expand market opportunities for U.S.
agriculture.
JAPAN
Farm Bureau supported the Trans Pacific Partnership (TPP) agreement due
to the gains for U.S. agricultural exports from the lowering of tariff
and non-tariff barriers with the TPP partner countries. The majority of
the export gains were with Japan, due especially to the lowering of
Japanese tariffs on beef, pork, dairy and other products. We encourage
the discussions by the administration with Japan towards a U.S.-Japan
trade agreement.
______
Department for Professional Employees, AFL-CIO
815 16th Street, NW, 7th Floor
Washington, DC 20006
(202) 638-0320
http://dpeaflcio.org/
September 6, 2017
Ambassador Robert E. Lighthizer
Office of the United States Trade Representative
600 17th Street NW
Washington, DC 20508
Dear Ambassador Lighthizer,
The Department for Professional Employees, AFL-CIO (DPE) is a coalition
of national unions representing more than 4 million professional and
technical workers. Included in DPE are 12 national unions that
represent people who work in the arts, entertainment, and media
industries. Our unions' members are actors, craftspeople,
choreographers, dancers, directors, musicians, stunt performers,
instrumentalists, writers, singers, stage managers, and many other
creative professionals.
We write to you with the understanding that the modernization of the
North American Free Trade Agreement (NAFTA) may include discussions
about NAFTA's copyright and intellectual property provisions. As our
unions' members depend on the sale of legitimate content to earn fair
wages and benefits, we urge you to prioritize the protection and
enforcement of copyright provisions in any such discussions.
In today's Internet era, creative content can be transmitted across
borders at speeds and in quantities few could imagine when NAFTA was
originally negotiated. Strong copyright protections appropriate for
today's digital age are needed to help ensure fair compensation for the
professionals who imagine, develop, design, and give life to creative
works that are responsible for over $1 trillion in annual economic
activity and regularly generate a positive trade balance for the United
States.
Any weakening of copyright protections for creative professionals in
NAFTA modernization could upend the economic security of middle-class
Americans who work in copyright-reliant industries. Stolen or otherwise
illegitimate content undermines the value of creative professionals'
work and threatens their hard-won pay and benefits.
We therefore ask that you prioritize the protection and enforcement of
copyright provisions in the modernization of NAFTA for our unions'
members, part of the 5.5 million people working in core copyright
industries.
Sincerely,
Kate Shindle
President, Actors' Equity Association
Ray Hair
International President, American Federation of Musicians
James Odom
President, American Guild of Musical Artists
Judy Little
Acting President, American Guild of Variety Artists
Paul E. Almeida
President, Department for Professional Employees, AFL-CIO
Thomas Schlamme
President, Directors Guild of America
Carlo Fiorletta
President, Guild of Italian American Artists
Matthew D. Loeb
International President, International Alliance of Theatrical Stage
Employees, Moving Picture Technicians, Artists, and Allied Crafts
Lonnie R. Stephenson
International President, International Brotherhood of Electrical
Workers
Richard Lanigan
President, Office and Professional Employees International Union
Gabrielle Carteris
President, SAG-AFTRA
Pam MacKinnon
President, Stage Directors and Choreographers Society
Michael Winship
President, Writers Guild of America, East
______
Letter Submitted by Demetrios J. Marantis and Shawn A. Miles
May 10, 2017
The Honorable Wilbur Ross
Secretary
U.S. Department of Commerce
1401 Constitution Avenue, NW
Washington, DC 20230
RE: Comments Regarding Causes of Significant Trade Deficits for 2016,
docket number DOC-2017-0003, with respect to Vietnam
Dear Secretary Ross:
Mastercard Incorporated (``Mastercard'') and Visa Inc. (``Visa'') are
U.S.-based payments technology companies that have led the growth of
electronic payments around the world for more than 50 years. Together,
Mastercard and Visa directly employ more than 10,000 talented people in
the United States, mostly in high-skill, high-wage positions, at
facilities in every region and many states across the country including
California, Colorado, Florida, New York, Ohio, Missouri, Texas, Utah,
Virginia, and Washington.
The basic value proposition driving our industry is that cash and paper
checks are less efficient than digital solutions, and the fundamental
business model is built around helping clients provide their customers
with new and better ways to pay and be paid. Our products help to drive
consumer spending and accelerate economic activity, especially as
commerce shifts to online and mobile platforms. In fact, Moody's
Analytics recently did a study that found increased use of electronic
payments contributed nearly $300 billion to worldwide consumption from
2011-2015.
While we are always intensely competing against each other to win
clients and business both in and outside the United States, we do share
similar concerns about the impact of trade barriers and an unlevel
playing field in certain international markets. It is on that basis
that we respectfully submit these comments focused on Vietnam, a
rapidly growing market to which we are collectively exporting tens of
millions of dollars' worth of electronic payment services. As such, we
are contributing to the U.S. bilateral services trade surplus with
Vietnam, and any trade barriers that might inhibit our ability to serve
and export to Vietnam could have a negative impact on the overall net
(goods and services combined) trade deficit, to the extent that the
services trade surplus helps to offset the goods trade deficit.
Unfortunately, the State Bank of Vietnam has issued burdensome
regulations and called for construction of a ``national payments
gateway'' in a way that would dramatically disrupt and inhibit the
ability of U.S. payments technology companies, such as Mastercard and
Visa, to continue exporting our services to Vietnam, and potentially
exacerbate the existing trade deficit with Vietnam.
Electronic Payment Services in Vietnam
Mastercard and Visa have been active participants in Vietnam's payment
market for more than 20 years and have made significant investments in
helping Vietnam to develop its electronic payment services (``EPS'')
industry.
Today, there is great opportunity for all stakeholders in Vietnam to
benefit from further growth of electronic payments as Vietnamese
consumers are increasingly willing to use payment cards. According to
Visa's 2016 Consumer Payments Attitudes Study conducted in Vietnam and
other Southeast Asian countries, 62 percent of Vietnamese consumers now
prefer to use electronic payments. Visa's survey also found other
positive outcomes from electronic payments. Eighty three percent of
respondents said they shopped online at least once a month, up 11
percent from 2015. The growth of smartphones in the country has also
resulted in an increase in mobile commerce. Almost 70 percent of
respondents shopped at least once a month on their smartphone. Seventy-
seven percent of Vietnamese respondents had a favorable view of
services that use automated payments to eliminate the physical process
of paying, such as apps like Uber.
Growing use of e-commerce and electronic payments will open up
opportunities for countless U.S. companies of all sizes to sell more of
their goods and services to a broader range of Vietnamese customers.
Electronic payments also enable the travel and tourism industry, which
supports tens of thousands of jobs in both countries and where there is
significant potential to grow U.S. exports in the coming years.
The Government of Vietnam also wants to grow the use of electronic
payments and has announced plans to make transactions almost totally
electronic by 2020. Moving to electronic payments will help the
government increase transparency, help combat corruption, and increase
tax revenues.
Yet despite these changes in consumer attitudes and behavior and the
recognized benefits of increasing electronic payments, much of the
potential for expanding electronic payments in Vietnam has yet to be
realized. The electronic payments sector in Vietnam is still in a
developing stage: less than 35 percent of the population has a bank
account, and of that population most use debit cards (more than 80
percent), while less than 15 percent use credit cards. Of all the cards
issued in Vietnam, more than 80 million are issued with local
Vietnamese brands, while about 10 million are foreign branded, mostly
Mastercard and Visa.
With so much potential yet untapped, it would be a major setback for
the payment industry if Vietnam's national payment gateway is
constructed in a way that undermines the ability of U.S. suppliers such
as Mastercard and Visa to continue providing secure and innovative
electronic payment services to customers in Vietnam.
Vietnam's National Payments Gateway Could Be a Barrier to U.S. Exports
of EPS
This ability to export electronic payment services to Vietnam could be
dramatically affected by regulations (Circular 19/2016/TT-NHNN) issued
last year by the State Bank of Vietnam (``SBV''). These regulations, if
implemented as they currently stand, would significantly disrupt the
normal and smooth functioning of electronic payment services in Vietnam
and will likely inhibit the pace and extent to which Vietnam is able to
continue developing a world-class payments system. Specifically, SBV
has proposed a prescriptive payment network structure requiring all
foreign (including U.S.) EPS suppliers such as Mastercard and Visa to
route all transactions--including both international (cross-border) and
domestic transactions--through a national electronic payments gateway
licensed by SBV.
It is widely understood that SBV has designated the National Payments
Corporation of Vietnam (``NAPAS''), a separate commercial entity in
which SBV is the majority shareholder, to operate the gateway in such a
way that would unnecessarily disrupt exiting relationships in the
market and impair the legitimate commercial interests of U.S.
suppliers.
NAPAS directly competes against Mastercard and Visa as it continues to
build a full-service payments network, with its own brand, contractual
relationships with banks, and the ability to perform transaction
processing. These are exactly the same services that Mastercard and
Visa provide to Vietnamese banks today. Consequently, requiring U.S.
EPS suppliers to route all transactions through a domestic competitor
distorts and reduces competition and would give NAPAS an unfair
advantage as the sole processing hub for all payment transactions in
Vietnam.
Circular 19 gives NAPAS license to operate the national payments
gateway in order to provide data and information to SBV for certain
public policy purposes. However, Circular 19 also appears to expand
NAPAS's role beyond merely routing transactions through the gateway to
include full processing (or ``switching'') services. In fact, Circular
19 would have NAPAS serve as the intermediary--or ``sole point of
connection''--between the foreign/U.S. suppliers (such as Mastercard/
Visa) and acquiring/issuing banks in Vietnam. Furthermore, it would
require Mastercard/Visa (or any other foreign supplier) to remove the
direct connections they currently have with banks in Vietnam. Having
direct connections to both issuing and acquiring banks is at the heart
of providing efficient and secure electronic payment services. SBV's
proposal to have NAPAS displace Mastercard and Visa (or any other
foreign supplier) in this role, would unnecessarily undermine our
commercial position and impair the quality of our services, the essence
of our brands, and the value we bring to the market.
More specifically, the gateway proposal in its current form creates
significant risks, which have been conveyed repeatedly to the
Vietnamese government, including: (1) reducing the speed and security
of, including the ability to detect and mitigate fraud, payments
processing by sending transactions through multiple networks; (2)
separating U.S. payment networks from their customers, making it
difficult for the networks to offer innovative services to their
customers; (3) duplicating services, resulting in redundant costs; (4)
degrading the quality of service to that of the weakest link in the
service chain; and (5) placing U.S. and foreign networks at a
significant competitive disadvantage as compared to NAPAS, which would
have a virtual monopoly on developing commercial relationships with
banks in the market.
Furthermore, while many countries around the world have built local
payment networks to process domestically acquired payment transactions,
no other country in the world has attempted to dictate how foreign
payment networks route transactions occurring outside of their national
borders. Instead, most countries promote competition among domestic and
foreign electronic payment networks, in order to lower costs, encourage
innovation , and give consumers choice.
Simply put, the State Bank's proposal to have NAPAS run the national
gateway would create barriers to U.S. exports of electronic payment
services and further exacerbate the current trade deficit with Vietnam.
It would also inhibit continued investment and innovation in Vietnam's
electronic payment industry, which would ultimately reduce Vietnam's
overall economic growth and global competitiveness. The United States
and Vietnam have held multiple discussions on this issue, but have yet
to reach a mutually satisfactory agreement on how the national payment
gateway should be run.
Conclusion
Mastercard and Visa remain committed to continuing to export to and
support Vietnam in developing a world-class payments system to serve as
a platform for increased economic growth and to expand financial
inclusion for the people of Vietnam. We believe a level playing field
in the payments industry is necessary to ensure Vietnam can pursue its
vision as a premier destination for global investment and a hub for
regional economic development. Both Mastercard and Visa remain
confident that this can be achieved if all parties demonstrate
flexibility and work together in a spirit of constructive
collaboration.
However, this issue must be resolved soon and certainly before Circular
19 takes effect in January 2018. A mutually-agreeable solution must
protect the right of U.S. electronic payment service suppliers to
provide the best, most innovative, and most secure payment services.
If Vietnam continues with its current plans to construct a national
payments gateway and fully implement Circular 19 as it stands today, it
will be creating an unnecessary barrier to its own goals of growing the
use of electronic payments. It also will undermine the contribution of
U.S. electronic payment service suppliers to the existing services
trade surplus with Vietnam and limit the ability of U.S. exporters of
other goods and services to access Vietnamese consumers through e-
commerce, all of which could increase the overall U.S. trade deficit
with Vietnam.
Sincerely,
Ambassador Demetrios J. Marantis Mr. Shawn A. Miles
Senior Vice President and Executive Vice President of Public
Policy
Head of Global Government Relations Mastercard Incorporated
Visa Inc.
______
TechNet
805 15th Street, NW, Suite 708
Washington, DC 20005
Telephone 202-650-5100 | Fax 202-650-5118
http://technet.org/ | @TechNetUpdate
June 28, 2017
The Honorable Orrin Hatch The Honorable Ron Wyden
Chairman Ranking Member
U.S. Senate U.S. Senate
Committee on Finance Committee on Finance
219 Dirksen Senate Office Building 219 Dirksen Senate Office Building
Washington, DC 20510 Washington, DC 20510
Dear Chairman Hatch and Ranking Member Wyden:
On behalf of TechNet and our 72 members, we appreciate your commitment
to modernizing our nation's trade agreements to empower American
innovators, entrepreneurs, and workers to seize all the economic
opportunities of digital trade in the 21st century. Following the
Senate Committee on Finance's examination of ``The President's Trade
Policy Agenda and Fiscal Year 2018 Budget,'' TechNet reiterates our
commitment to work with you, the committee's members, and the entire
U.S. Senate to enact U.S. trade policy that encourages job creation and
establishes clear digital trade rules.
TechNet is the national, bipartisan network of innovation economy CEOs
and senior executives. Our diverse membership includes the nation's
leading technology companies in the fields of information technology,
e-commerce, advanced energy, biotechnology, venture capital, and
finance.
Since the North American Free Trade Agreement (NAFTA) took effect 23
years ago, much has changed in our economy. As the breadth of our
membership demonstrates, while technology used to be an industry, it is
now the underpinning of every industry. Whereas floppy disks were the
preferred mode of sharing information in 1994, data can now be stored,
shared, and analyzed instantly through cloud computing platforms.
The ubiquity of the Internet has opened markets once out of reach to
the local entrepreneur; torn down barriers to entry that prevented
small businesses from growing past their communities; and facilitated
the transfer of goods and services at speeds once unimaginable. For
example, 79 percent of small businesses that use PayPal are exporters;
female Airbnb hosts have earned more than $10 billion since the
company's founding; and Facebook provides a platform for more than 70
million businesses. Simply put, digital trade has exploded in the
quarter-century since the U.S. entered into NAFTA.
While American innovators and entrepreneurs have adapted to these new
circumstances and capitalized, our trade policies have been slow to
respond. We recognize the American economy cannot grow at its full
potential without a thriving technology sector, just as the technology
sector cannot succeed without the right federal policies in place.
Chief among these federal policies are NAFTA and other trade agreements
the U.S. negotiates and enters into, as well as proper enforcement of
existing agreements.
More specifically, we believe a thriving 21st-century American
technology sector requires the following trade policies:
Reductions in tariff and non-tariff barriers to information and
communications technology products, services, and investments.
Protections for the free flow of data across borders, strong
protections for intellectual property, and safe harbors against
intermediary liability.
Greater expansion of market access for trade in services,
including those that are digitally delivered.
Heightened attention to the need for global supply and value
chains--particularly important to global innovation--which often are
disrupted by government imposition of localization requirements,
including forced technology and investment conditions that discriminate
against U.S. interests.
Customs relief and open payment systems that support digital
trade flows, particularly by Small and Medium Enterprises (SMEs).
Given the importance of modernizing the information technology
systems used by governments at all levels, it is important to preserve,
if not strengthen, the strong provisions currently in NAFTA related to
government procurement, which have enabled U.S. companies to gain
nondiscriminatory access to Mexican and Canadian markets on a
reciprocal basis.
Between 2005 and 2014, cross-border data flows grew by 45 times,
generating $2.8 trillion in economic value in 2014--a greater impact on
the world's GDP than the global trade in goods.
As more people come online and look to American companies for our goods
and services, it is imperative that the U.S. sets clear and enforceable
rules to oversee digital trade. This requires improving existing
agreements, including NAFTA, and negotiating new agreements with the
strong digital trade policies noted above as guideposts. Failing to do
so would prevent American workers, innovators, and businesses of all
sizes from fully benefitting from this new era of digital trade and
risk America's global economic leadership.
At TechNet, we represent a diverse group of 72 technology companies.
They range in size from small or medium, to large and multinational;
they operate across various sectors of the innovation economy; and they
include young startups as well as iconic and more established American
tech innovators. As you continue examining America's trade agenda and
the ways it can be improved, we look forward to working with you to
pursue policies that grow our nation's economy, create jobs and higher
paychecks here at home, and bolster America's tech leadership in the
world.
Sincerely,
Linda Moore
President and CEO
______
Texas Cattle Feeders Association et al.
June 20, 2017
The Honorable John Cornyn
517 Hart Senate Office Building
Washington, DC 20510
Dear Senator Cornyn:
The undersigned Texas agriculture groups urge you to strongly support
the North American Free Trade Agreement (NAFTA) and work with the Trump
Administration to ensure that renegotiation efforts do not erode our
positive trade relationships with Mexico and Canada.
The U.S. is the world's largest exporter of agricultural and food
products, and those exports account for 35 percent of U.S. farm income,
according to the attached report, ``Economic Impacts of U.S. and Texas
Agricultural Exports to Canada and Mexico,'' released February 16,
2017, by the Center for North American Studies (CNAS) at Texas A&M
University. In addition, U.S. agriculture historically maintains a
positive balance of trade. In FY 2017, USDA projects agricultural
exports will total $136 billion, while imports of farm products will
account for only $114.5 billion, leaving the U.S. with a net $21.5
billion trade surplus.
Much of the success in expanding U.S. agriculture exports,
especially from Texas, can be directly attributed to NAFTA. Since the
agreement's enactment in 1994, worldwide U.S. agricultural exports
expanded from $46 billion to $135 billion--a 192 percent increase.
During that same period, U.S. agricultural exports to Mexico and Canada
grew from $10 billion to $38 billion per year--a 288 percent increase.
Likewise, Texas agricultural producers and the state's economy have
benefitted greatly from NAFTA. According to the CNAS study, in 2016
Texas agriculture exports to Mexico totaled $833.5 million of which
$270.8 million were animal products and $562.8 were plant products.
Texas agricultural exports to Canada totaled $875.1 million of which
$222.6 million were animal products and $652.6 were plant products. The
top four Texas agricultural exports to each country are listed in the
following table.
------------------------------------------------------------------------
Top Texas Ag Exports to Mexico Top Texas Ag Exports to Canada
------------------------------------------------------------------------
Value ($ Value ($
Product Million) Product Million)
------------------------------------------------------------------------
Beef and Veal 141.7 Other 230.3
Horticultural
Products
------------------------------------------------------------------------
Cotton 125.4 Beef and Veal 110.2
------------------------------------------------------------------------
Sweeteners 64.5 Processed Grain 77.6
Products
------------------------------------------------------------------------
Corn 62.4 Food 77.3
Preparations
------------------------------------------------------------------------
NAFTA has been one of the greatest success stories in the history of
U.S. agriculture, with Mexico and Canada becoming two of our best
international customers. The total economic activity related to Texas
agricultural exports to Mexico and Canada accounts for more than $3.3
billion and supports 18,674 jobs. A successful renegotiation of NAFTA
must protect and improve the market access and scientific standards
that the agreement has provided Texas agricultural producers over the
past 24 years.
Sincerely,
Texas Cattle Feeders Association
Texas and Southwestern Cattle Raisers Association
Texas Farm Bureau
Texas Association of Dairymen
Plains Cotton Growers, Inc.
Texas Rice Producers Legislative Group
Texas Poultry Federation
Texas Turkey Federation
Texas Egg Council
Texas Broiler Council
Texas Poultry Improvement Association
Texas Pork Producers Association
Texas Grain and Feed Association
Texas Agricultural Cooperative Council
Texas Forestry Association
South Texas Cotton and Grain Association
Texas Cotton Ginners' Association
Texas Independent Ginners' Association
Texas Wheat Producers Association
Texas Nursery and Landscape Association
U.S. Rice Producers Association
Texas Grain Sorghum Association
Corn Producers Association of Texas
Texas Sheep and Goat Raisers Association
Independent Cattlemen's Association of Texas
Texas Quarter Horse Association
Texas Soybean Association
Texas Wine and Grape Growers Association
Texas Citrus Mutual
Texas International Produce Association
Western Peanut Growers Association
Panhandle Peanut Growers Association
[all]