[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

                              ----------                              

                           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

                              ----------                              


                        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]