tv U.S. Trade Rep. Lighthizer at House Ways Means Cmte. Hearing CSPAN March 21, 2018 4:19pm-7:55pm EDT
mr. brady: the committee will come to order. before we get started, i want to express ent to condolences on the passing of louise slaughter and her candor and intelligence and humor and her passion will be deeply missed. today our committee is honored welcome back our u.s. trade adviser to testify on president trump's trade agenda. thank you for joining us. our country was born us because of trade. we led the world in trade. and the freedom to trade is our greatest economic freedom, the freedom to buy and sell and
compete anywhere in the world which is little government interference as possible. we built roads and bridges and we bought freedom and peace. at this moment, we stand at a crossroads. if we stand still or worse take the path of isolationism, we will abandon the greatest d.n.a. there is a better path where we are seeing benefits from hi tax cuts that president trump has signed into law which is increasing america's competitiveness and making us the best place on the planet. our trade policy must build on that growth and it is not enough to buy american, we have to sell american to billions of customers outside of america. that's how we help our businesses and farmers to spur economic american growth. mr. ambassador, america must continue to lead and when we
lead, americans win. when we open up our markets to high standards and ambitious and enforceable trade agreements. this has to be our top priority. trade depreements with countries like japan, u.k. will be left behind. china and europe will write the rules and cut american producers and workers out of other markets. we can't wait any longer. i strongly support president trump's request for the renewal. i look forward to your report show how you will negotiate agreements and consistent with congressional objectives and good for america as you set out to do. i'm pleased with your progress to modernize nafta, the largest and most successful trading relationship in the world. u.s. trade represents the u.s. you have worked to achieve bold and ambitious standards.
i'm hopeful we will be able to vote on and pass a new modern nafta for america by year end. that said, the road ahead isn't easy. congress wants strong protections for intellectual property and increased ack cyst for our dairy farmers and end the restrictive customs barriers such as low levels. we need levels on rules of origin and procurement. otherwise, we lose out to china. i caution any agreement without a binding dispute settlement including won't find sufficient support in congress. congress set out this requirement knowing it is the only way to hold trading partners accountable to make sure the strong agreement you negotiate, our trading partners will be held accountable. america must lead on china.
china's chronic oversupply has put americans out of work and companies out of business. it is a plate ant theft of our technology and intellectual property. strong enforcement is needed and i appreciate president trump's leadership in holding china accountable. but we can't do this alone. we heard our allies that america will lose. our challenge is to target remedies to address true national security risks to eliminate unfair trade and take into account our entire economy. the wrong remedy would put significant american jobs at risk. we have to make sure we don't punish american jobs and workers. oftentimes indiscriminate tariffs are not the right approach. and the administration should provide a strong opportunity for
public comments about the effect of these tariffs on our economy can be assessed. it is about hitting the target and china and its bad practices and not our allies. and i want to be clear, constitutional vets congress with the authority of the u.s. trade policy agenda. the relationship is a true partnership in implementing that agenda. we want to partner with you to make sure america has the freedom to trade. we must lead the world and defining what it means to have an open and free economy. and our values and jobs depend upon it. thank you for being here today on a snow day. we look forward to your testimony. i yield to mr. neal, for the purposes of his opening statement. mr. neal: for those of us from new england, we don't consider this a snow day.
[laughter] the administration has decided to impose tariffs on steel and aluminum and is in the process of deciding on country exemptions and product ex clutions. the administration will announce its findings in section 301 investigation into chinese sflule property abuses and will impose tariffs on imports from china. the president is tapped into raw
feelings in some important communities about our trade policies. we have seen in the past month this administration and you personally, have not been shy about challenging the status quo. we have taken notice of the promises that the administration has made to improve u.s. trade policy and make it work. we have been skeptical about the promises that have been made because they are big promises and we have heard them before. we have seen evidence of your commitment. we hear when you say your task is not to renegotiate nafta but to update and restructure it to fix flaws of the original agreement, flaws that prevented members of congress from porting it originally. we recognize the intention of providing relief to industries and work i.r.s. that have called for action for a very long time but we have a lot of questions and we are working to determine
whether the promise the administration has made will be delivered upon. whether it is nafta, the trade agreement or china's 301 investigation. i think it should be clear to all of us some of the greatest challenges facing our economy and values are being posed by countries that rely on state intervention and do not operate on market-based principles. we should be on the same team in talking about these challenges. if we want to be effective, it seems to me, it would make sense that we should build upon what has been happening between democrats and republicans as we address many of these challenges. i look forward to hear your delivery and plan to deliver this administration's promise on trade and how we take on and how the administration partners with congress. mr. brady: thank you, mr. neal. ambassador is the
and your statement will be made and you will have five minutes. and welcome. >> thank you very much. and members of the committee. i'm pleased to be here today. we at usgr appreciate the expertise of the members of this committee. we are grateful for the time you give us in working up a truly bipartisan trade policy. the efforts you have helped with us on nafta and the many issues we face. before i continue with my statement. let me say, when i come here, i complain about the fact that i have no deputies, i have deputies now. since they are all going to be senior members, i believe, but members of your staffs, that i probably ought to have you know who is working for you besides
me. effrey, he is our deputy for europe, middle east and asia. c.j. is our deputy for africa, china and the western hemisphere. and he will be our transparency officer. you will recall we selected an important official as our transparency officer. so, those are the two people that i wanted you to focus on, if you would, since they are brand new. first, i would like to draw the committee's attention to the fact that this year, the trade deficit in goods and services ose to $565 billion and in ods alone, it was $811 billion. these numbers are lots of causes in these numbers and i agree
that long standing trade deficits to some extent reflect market distortions and they are having a negative effect on u.s. workers and businesses. we also have a massive trade deficit with china which we should talk about. so the numbers got worst last year. i know members have a variety of views but the president believe they raise significant concerns and indicate that sometimes the global rules of trade make it harder for u.s. companies to compete and export. trade deficits indicate that the united states the cost of globalization are falling more heavily on blue collar workers and this is something that is bad for the economy and bad for the society. and finally they tend to undermine the support. so trade deficits are a problem. quickly, i would outline the
president's trade agenda. usgr will support the president's national security strategy. if you haven't looked at it that means it will build a stronger america and preserve our national sovereignty and sponged to hostile competitors and seek opportunities to work with other countries that share our goals. second, u.s. companies for workers to be competitive in u.s. overseas markets, we need a strong and robust economy at home. third, we are negotiating trade deals that will work for all americans. as members know, the president directed us to seek significant changes to nafta and we had seven rounds with our partners in canada and mexico and we have made a great deal of progress and we have begun discussions,
as most of you know with south course. updating now that we have a full team of deputies, we intend to aggressively pursue other free trade agreements. we have a trade working group with the united kingdom and told japan we will have a free trade agreement with them at the appropriate time. and we will explore the countries in africa and south asia who might be appropriate for us to enter into free trade agreements. and the president has asked for the extension of trade promotion authority. fourth, we are enforcing our trade laws. and he will louis the trade laws to defend u.s. workers, farmers and ranchers and he is doing that. nd we the w.t.o. has failed to
promote trade labelization. too many litigations and not as a negotiation reform. us tmp r is seeking to build a better, fairer system of global trade that lead to higher standards. thank you. and i look forward to taking your questions. mr. brady: thank you for introducing your chief negotiators. e sent a letter urging the senate to move. >> i view that as unprecedented and hugely helpful. i appreciate the committee. mr. brady: we need a full-time. that.o congratulations on i'm convinced that nafta done job can create incredible
growth and paycheck growth for america, our workers, farmers and local businesses. i think it is a modern nafta, is our number one economic priority this year. and i believe not only will it grow jobs in america but when combined with our trading partners can make our businesses more competitive in china, europe and the rest of the world. first, let's start with the steel and aluminum tariffs. president trump's efforts to target unfairly traded steel and aluminum. we made it clear it's important that we allow steel and aluminum to move forward and it's critical for nearly every economic sector in america. in the president's determination was included an exemption process for countries
negotiating with you, mr. ambassador and the president directly to address transshipment issues, multinational efforts against china's unfair trade practices and strengthening america's national security footprint. can you give us an update on the process? >> the president did say a process that would allow products to get out in specific circumstances and that is something that is being handled by the department of commerce and us working with the department of commerce is working on this question of country exemptions. initially, the nafta countries are out of the 232 subject to certain conditions and subject to a successful nafta negotiation. we have a similar circumstance
with respect to korea because we are in the process of renegotiating. i guess we could be -- i won't say renegotiating but the refurbished but talking to the koreans about course. there have been other countries that have come up that i believe we are in the process of talking to now, australia, argentina and the e.u. there are a couple of other, but a number who have asked, a great number as you can imagine, another one that we will soon begin talking to is brazil, but there are a number of countries that have come forward in the process. the kinds of things we talked about, maybe i'll let it go with that and follow up on the criteria. mr. brady: waste the time frame for those discussions roughly?
on that, we need more customers and many of those customers live outside of the united states and many are in mexico and canada and when we compete and win, we grow american jobs here. we have to invest in those home countries to compete against china and the rest of the world. if the investment, our investors have to receive fair treatment and many countries don't provide basic or procedural protections for american businesses. that means american businesses have to rely on dispute processes to ensure they are treated fairly and not discriminated against, that the rule of law, the property and investment is protected as it is in america without -- americans'
property is left unprotected against discrimination, foreign seizure. this issue is basically a question. other countries treat american investment unfairly, who has their back? the answer should be america has their back. i'm deeply concerned about reports that they have been negotiating provisions. mr. schweikert from arizona has a letter that many of us have signed now by 103 republicans affirming that inclusion of a strong agreement is essential. mr. ambassador, we had many discussions about that. this is a key part of passing the strong nafta agreement that we are convinced you will
>> and they are stuck with what they get. a foreign national can do that and at the end of the day say i want three guys in london saying we want to overyou'll the entire system. and i view myself as a conservative. on the outgoing side, there are mr people who believe that in some circumstances and i can discuss the varieties, it's more
than outsourcing issue. what is it? it's the situation where someone says i want to move a plant from texas and put it in mexico. and when i go down there, i don't want to take the political risk that going to win in mexico and change my bargain. i want the u.s. government to buy political risk. if you want to move a plant and the economics suggest that, you should suggest that and your responsibility is to make the u.s. competitive so that isn't a problem. but if you are going there because we are underwriting the that's the job of the united states government. i would say also this is an area that is not without controversy.
the cato institute, which i don't always agree with, they think we shouldn't have. the national association of state legislatures which is controlled by republicans is against isds. i could go on and on and on. and we haven't lost cases in the united states and our position. and while, in fact, that is the case, we have come close to losing some, but more importantly, we had situations where real regulation which should be in place which is bipartisan and everybody's interest has not been put in place because of fears of isds, it is something we have to think about very carefully. our view is rather than have this provision which we think is problem in terms of our
sovereignty encourages outsourcing and lowering standards. that we should be very careful. what are the alternatives for these companies? the first alternative is state-to-state settlement. if you go to these companies and ask them why do you need this and why don't you put an arbitration provision in your contract? and they did do it. and in the country like mexico, they subscribe to all the conventions and have to enforce them. if they put that provision, these things are then resolved in a similar manner but without the united states ceasing authority. it's not a good trade. i realize that as a controversial provision and that my view is in the minority and
some very intelligent proxies. your client is congress and speaking out for our ag community and wants to have america's back and invest in other countries, energy, manufacturing, technology, services, every key industry in america that is asked to compete in china and the rest of the world is saying we need to have their back when they make their investments. you are right. there is a disagreement there.
is this something that is on the radar screen and are you ready to prioritize this? >> they are and free flow of energy is something that i testified about before. i believe the committee's and we support it and we are aware of your situation and something we are concerned about. mr. neal: china, as i mentioned earlier, we are reading about substantial tariffs about a wide of exports from china that will be announced before the week is over. can you talk about the goals of the administration and what you are trying to achieve through section 301. if the goal in china is abusive china and abusive products that you are subjective, electronic or toys and consumers that rely upon them and enjoy these goods
and concerned that some of these penalties will penalize them as well and what makes sense for our economy or are we proposing to discipline china? mr. brady: mr. ambassador, can you touch the microphone. >> that is a great question and topical as you suggest. the president is going to make a decision i believe in the very near future on this issue of this 301 which we started in august and which we have been thoroughly examined. we have studied and had hearings and spent thousands of hours reading pages in chinese and stud yesterday with american companies and our view -- and no decision until the president
makes it. we have a very serious problem of losing our intellectual property, which is really the biggest single advantage of the american economy in my opinion. we are losing that to china in ways that are not reflect tive of the underlying economics. it is an enormously important issue. i will be happy to talk about it at some length. it is the most important thing that will have been done in terms of rebalancing trade, specifically with china. the problem with the intellectual property is something that has been going on for a long time. if you look at george herbert walker's presidency, there was a 301 on the chinese basically not protecting intellectual property
in china and we had another one in the clinton administration, both of which didn't amount to much. we had a third one in the obama administration where there was cyber theft in the agreement. of course, none of this changed any of the activity in my judgment. so the question becomes one, do you think there is a problem that strikes me without question and clear that there is. do you thoroughly study it. if it is so important, what are the likely remedies you would have? the remedies would be one, doing something on the tariff front and two, doing something on the investment front and perhaps other things, because these are the crucial areas where it comes together. in terms of what you would do on the tariff front, which was your specific question, the us gmp r
has the power to raise tariffs in these circumstances. the way we would approach if the president would make this discussion, one is to study and decide to which there is a problem among things that are quantifiable. but worth hundreds of billions and you take what is quantifiable and come up with a number. and apply tariffs to that number. the process you would use presumably would be one, you develop that would put minimum pressure on u.s. consumers and certain products that are high-tech products. and the combination of those two would be the kinds of things you would decide to put tariffs on and then you would take additional action. i could go through at some detail if the committee wants to do it or another time, i know this is a great matter of interest to the committee and
i'm happy to talk about it and go on and wait for muslims to ask questions. mr. neal: thank you, mr. ambassador. mr. brady: mr. johnson, you are recognized. mr. johnson: ambassador, welcome. a-86's inw up, i flew korea and had dog fights and that is dangerous and one of our allies and south korea needs to know we got their back. i voted for the u.s.-south scree free trade agreement and since that time hundreds of thousands jobs have been created here from the trade agreement. in fact, over 40,000 jobs in texas are directly tied to that depreement. by the way, according to your own agency, export of goods have
increased as a result of the agreement. as the president looks to renegotiate this trade agreement, i would like to express my support for doing it in a way that strengthens the alliance with south korea. can you give me an update on the south korean negotiations and when do you think they will wrap up? >> thank you very much. so we are the process of having discussions that the president announced his desire to update and rebalance to the extent we can not using t.p.a. the koreans are going to their process to get a mandate with their own legislature to discuss it. we had several rounds that minister kim is in town right now. i think we are down to the last few issues. i'm hopeful we will be able to
come to sole agreement that will make the committee happy and in addition to this, we are talking about steel and aluminum because it has come up and in the opinion of many people, korea is a particular problem in the area of steel primarily. but we are trying to work our way through all of those things and i hope we can make head way on it and my objective would be to get a good agreement andville amendments to the agreement that will satisfy this committee and we are moving in that direction. mr. johnson: i would like to take my remaining time to highlight the importance of nafta, text asand the nation as a hole. over a million jobs in texas are supported by nafta and this trade supports nearly 14 million
american jobs. that's a lot of american workers and while i support the efforts update nafta, i'm concerned about the proposed sunset clause. businesses need certaintyy. can you tell me what the sunset clause is and what they are trying to accomplish with that? >> so the way the sunset clause works is that at the end of five years, the president would make a decision as to whether or not the agreement should continue. it would not require congressional action or a difficult decision. the thought behind it is, number one, we have a number of members in this committee, particularly on the republican side ought to be sunsetting things. and the idea is if it is such a
good agreement, we will roll it over. if it is not a good agreement, we won't. after a period of time, we ought to be sitting down and reviewing what happens to these agreements. nothing about trade in my opinion that makes it above all other logic in the way we approach the legislation. so the basic idea of an agreement like this is that you have baseline w.t.o. trade and we are giving someone a benefit, a benefit versus the rest of the world and they are giving us approximately similar benefits d that's how you create an f.t.a. and five years is a reasonable period of time where -- what we gave and what we got is so out of balance, we ought to rebalance it. indeed, i would think nafta is a classic example where we have a
24-year agreement and that agreement, the whole economy has changed. we have gotten way out of whack in terms of what our deficits are and having a peculiar effect and reasonable to sit back and look at it. business people tell me that it is going to be so spectacular, the president looking at it after five years, won't be a huge hurdle. and that's the nature of it. mr. brady: time has expired. we will discuss it as we go through that. mr. johnson, thank you. mr. levin. mr. levin: two major trade issues, nafta and steel have a major common attribute. the clash over both of them has been decades in the making. after the failure to act by the u.s. government and to be
acknowledged as a problem by traditional theoryists, outsourcing to mexico increased dramatically lured by mexico's industrial policy of labor. during many much of this period, china undertook a massive increase in steel production, using enterprises reaching that 10 times of u.s. production in contrast to their equal amounts of production nearly 20 years earlier. the impact in the industrial sector from these two investments what loss of middle-class jobs and suppression of wages. in both cases, the response was the lack of any coordinated action in this country, either handcuffed by allegiance to theories ill-equipped to the
realities of globalization, by a willingness to settle for talk in the conference after conference or putting the personal impact. this create add vacuum. it has made it more difficult to remedy them effectively and responsibly. . . i suggest we all look at the recent remarks where he said, and i quote, these truths will be most -- these tariffs will will be most effective if used strategically. targeting china and other countries that are the source of the problem. in fact, instead of retaliating against the u.s., as some have threatened, our allies should work together with us to address this global glut that threatens our economic and
national security. as to nafta, there cannot be a successful renegotiation, mr. ambassador. which i believe most democrats want. unless the central problem, as we have discussed, is fixed. mexico must tear down its structures of an industrial policy, build on suppressing its workers that impacts american jobs and wages. instead there is evidence that in its congress, mexico is now moving backwards. mexican workers today often make less in real dollar terms than they did 25 years ago. and less on the average now than those in china. i recently met two workers in mexico from the auto parts industry who said their take-home pay was 75 cents an hour in one case, and $1.25 in the other.
the president has spoken about this suppression. now he must deliver. mr. ambassador, we've talked about this. you are now addressing this problem? mr. lighthizer: -- mr. levin: steel we'll talk about tomorrow with the commerce secretary, though you're an expert. in terms of mexico and their industrial policy, their endless so called protection agreements, where are the discussions? mr. lighthizer: thank you, congressman levin. as you know, i -- every time i've testified here i've taken the position that wage increases in mexico are in the u.s. interest. it's better for our competition and creates customers for us. so it's something that we have as a priority. i think that in the mexican political system, there are a number of people who agree completely with that process. so, with that thought, we are in the process of having these
negotiations really even as of today. my focus has been on trying to get to a position where mexican workers actually vote on -- have real secret ballot votes on their collective bargaining agreements. and if mexican workers have real votes and they decide for bad contracts, that's none of our business. but it's reasonable for american workers to expect there will be a process whereby mexican workers have this. mr. levin: let me just say on isds, and i'll finish with this and there will be discussion, it's an important issue and we raised it in t.t.p. -- t.p.p., republicans just sat doing nothing. but it isn't the basic problems in terms of mexico. they are using moneys to lure industry, not cracking down on american investment. mr. brady: the gentleman's time has expired. mr. nunes, you're recognized.
mr. nunnelee: thank you, mr. chairman. ambassador -- mr. nunes: thank you, mr. chairman. i want to go first into another region of the world and that's asia. you've talked a little bit about what you may do in the coming weeks. and i can assure you that we have tremendous concerns about investment that's being made here in the united states, buying up companies, stealing our intellectual property. a lot of that's not being done through trade, it's the way they make investments into the united states and on the intelligence committee we continue to investigate that and we have legislation pending in the congress now on reforms as it relates to some of these concerns we have with what china's doing here in the united states. i would also submit that i heard you -- i think you've talked a little bit about the philippines, possibly vietnam. perhaps another direction that we can go in the coming weeks and months would be to look at, is it possible to do bilateral
agreements with the philippines , vietnam, fixing the south korean agreement, possibly japan, and i don't know if you can comment on any of those negotiations, because i know you're in the middle of them, but in terms of planning for the philippines and vietnam, i'd be very interested in. mr. lighthizer: thank you, congressman. first of all, the issue of chinese investors in the u.s. is, as i say, is something we're completely focused on. in my judgment this is going to help to define whether or not we have all succeeded or failed in terms what have we were sent hered to -- to do. and any members who are not on the intelligence committee, i hope they excess themselves of the information the intelligence committee has because i think in making these judgments it's really important that you know the basic facts. having said that, now that i have a deputy, i've spoken general about the idea of having a bilateral agreement or an f.t.a. with some of these people in that part of the
world, in the pacific part of the world. some of the t.p.p. countries, but also some others who weren't in the t.p.p., like the philippines. so ambassador, my deputy is going to undertake to do a thorough study of that. both within the administration, but as importantly, within congress to find out where the targets are. we have spoken and thought ourselves about the philippines as a reasonable first step in that direction. it's extremely important that we have a positive agenda. it's extremely important that we show that part of the world that we're very interested in them. besides the philippines, which is kind of a smaller kind of a deal, generally, smaller economy, you mentioned vietnam. vietnam is one that there's been a number of members and people in the administration who also think we ought to be moving there. each of these have their own complications, of course. japan, we've indicated that we are interested in, at the appropriate time, having an f.t.a. with japan.
right now i believe it's not that time. japan is in the process of having the t.p.p. become implemented and was just signed on the eighth of this month so there's a kind of process there. but they're aware that we think it's in our interest and their interest. mr. nunes: thank you for. that i appreciate that. i'd be willing to work with you on any of the countries in asia that you've -- you'd be interested in making bilateral agreements or beginning the iscussions at least. let me switch to the nafta negotiations. for a long time canada's been getting away with murder in their dairy industry. it's causing tremendous problems for farmers here in the united states. they have a very protectionist program. have for a long time. they're dumping in product into this country. and if anything, it's one of
the reasons why you are trying to update nafta. and i don't know if you can update us on the process and where we're at in the negotiations on specifically darey, but we'd be interested to hear what you have to say. mr. lighthizer: well, this is something that we have focused on. it was one of our objectives. the dairy program. but also their agricultural programs and other areas. ag -- eggs and powellry is another one where -- poultry is another one. where they have what are not market oriented and very protectionist approaches on these things. it's difficult for them to change their policies in these areas because they're sensitive, just like they are in every single district in america. having said that, it's a very high priority to make changes in the canadian dairy programs, although we have the kind of access that u.s. farmers did have and even greater access.
so it's a high priority. i'm hopeful that when we put the final deal together, it's something that we make real headway on. mr. brady: thank you. mr. doggett, you're recognized. mr. doggett: thank you, mr. chairman. thank you, ambassador. nafta is very important in texas. it was signed in the district that i currently represent in san antonio. and i sincerely appreciate your efforts to significantly improve it, learning from the experience of the last two decades. though i personally continue to support more trade through nafta and around the world, one of the major reasons that i have voted against a number of previous trade agreements is the way they have been subverted by various special interests to serve their own selfish agenda to the detriment of our public health. big tobacco, big pharma have been examples of that in the past. and i'm very troubled by this morning's "new york times"
front page story that advises that your office is currently involved in nafta negotiations to serve the obesity lobby. you're aware that the centers for disease control reports that almost 1/3 of the american youth between the ages of 17 and 24 are too overweight to serve in our military. that the defense department reports that one in 13 american service members is collinically obese. i know there's no panacea for this problem. and i don't endorse every action taken by a foreign government. but i think that it is wrong to limit the power of american states and local governments, as well as foreign governments, to address this challenge. i want to draw your attention specifically to that times d article in which it is said the trump administration's proposal and the corporate pressure behind it hold the potential to handcuff public health interests for the decades.
the american provision seeks to prevent any warning symbol, shape or color that, quote, and this is apparently drawn from the documents you're advancing, inappropriately denotes that a hazard exists from consumption of the food or nonalcoholic beverages. is it correct that your office is urging adoption of that provision as a part of the nafta renegotiation? mr. lighthizer: first of all, i'd like to put my office on the record as being against obesity. mr. doggett: i'm glad to hear it. the question is whether you're against things that prevent us addressing that problem. and if you're supporting this provision, you're certainly not. mr. lighthizer: i guess i would say that for us, it is in a slightly more nuanced than that. mr. doggett: just answer first, is this a provision that's being advanced by the american government now? mr. lighthizer: yes. the idea of putting limits on the ability of countries to put warning labels or symbols on
products is something we are concerned about. mr. doggett: it is accurate that this provision, the language that i just tried, is being advanced by our negotiators? mr. lighthizer: i can't comment on the exact language in the statute, what's in the article, i don't have the article in front of me. the issue is one we're concerned about. the other side -- your point is an excellent one and i agree with it. on the other side of it, there are lots of examples of countries that are using this loophole to basically create a protectionist environment. so we have -- that's why i say it's more nuanced from our point of view. we have companies that come in with products that literally, they're on shelves with no wrapping on them. there's a kind of extreme between one way or another. this can be used as protectionism to the extent it's used as protectionism, we have to be very careful of it. mr. doggett: we certainly do. i welcome any further written
answer you might have. i want to turn to investor state. because there's one that i applaud your answer to the chairman. hen he asked the question, whose got our back? the lobby wants it to be three lawyers operating behind closed doors as much as possible. we know from the billcon case that corporate interest went around canadian law with writes they couldn't have there, and they're only asking for a half a billion dollars now because they were denied the right to expand a quarry. i hope you will stand firm for protection of american investors, but not a mechanism that allows them to invade our sovereignty, as you correctly noted, and to subvert and undermine health and safety regulation. there is no reason foreigners should be given more rights than american citizens and american companies have, and that's what's happening through the investor state mechanism. you were right to be skeptical on it. and i hope you will continue to
urge that position because if we don't see some genuine reform of the investor state mechanism, renegotiation of nafta will not have met the objectives that we set set out initially. thank you and look forward to your further response about this very troubling issue on obesity. mr. lighthizer: yes, sir. mr. brady: thank you. >> thank you, mr. chairman. ambassador, thank you for your time today. mr. doggett: may i ask unanimous consent to put the "times" article in the record as well as the earlier stories from the times about mexico and chile. mr. brady: without objection. mr. doggett: i'm sorry, mr. reichert. mr. reichert: that's ok, mr. doggett. ambassador, thank you for being here today. and welcome to jeffrey and c.j. i look forward to working with all of you and your team. i know that you and i have a few shared priorities, including successfully updating nafta and combating unfair trade practices. and i want to continue to work with you to accomplish both. in doing so, we should build
upon our work done during tax reform to boost the unexet -- the competitiveness of american workers and businesses. even though i'm a very appreciative of your -- as some have defined unconventional approach, i still have concerns about several actions that have been taken by the administration that i believe could undermine the good work that we've accomplished through the tax reform effort. to successfully update nafta, our farmers and manufacturers require certainty. i know you're keenly aware of that and accountability. they need to know their investments will be protected and the agreement will be enforced. they need to know they can rely on this greefment in targeting unfair trade practices, we must take a targeted approach and work in cooperation with other global partners. we cannot take actions that put our consumers, manufacturers and exporters at risk.
i am deeply troubled by the questions that remain with section 232 exclusion process and the possibility of tariffs from section 301 investigation. its american manufacturers and consumers th hurt by an ineffective exclusion process and the placement of tariffs on imports. i implore you to think about my constituents, for example, the family in maple valley who will face higher prices. the manufacturer in auburn who will pay more or lose access to imported parts. and the apple exporter in -- who will suffer from retaliation. we must also begin to focus on opening markets. as our trading partners move forward without us, our farmers, workers and businesses fall behind. whether it's dairy, wine, potatoes, wheat or tree fruit, washington's producers will lose market share to their foreign competitors without new
trade agreements. trade agreements ensure washington's businesses are treated fairly and can sell their high-quality products around the world. i believe the u.s.-korea free trade agreement is an example of a successful trade agreement. i do agree with you, however, that korea's implementation of the agreement has been disappointing and that any remaining issues related to korea's implementation need to be resolved quickly. i am glad to see the chorus committee system being used for this purpose. of course the down side to using the joint committee is that there is less transparency surrounding these discussions. maybe with jeffrey and c.j.'s help, we can lend some transparency to the prosefments i recommend and would strongly suggest that u.s.c. -- uscr publish detailed negotiating to sing cig in a at that time --
signal to the public the changes you are seeking within that agreement and those talks. can you comment on the transparency of the process and maybe providing thosedetailed negotiating objectives? o you have a timeline on that? mr. lighthizer: first of all, i agree that chorus is an important agreement. on the issue of transparency, i guess i would say since we're not using t.p.a., we don't have that statutory umbrella. what i've tried to do to the extent possible, talk to members and i'm happy to talk to any members individually or n groups to talk about this. it's not always a good idea to talk openly about negotiating objective and certainly negotiating tactics. but from the point of view of the united states, we are troubled by implementing a whole variety of implementing issues. speed roubled by the
with which some tariffs are going to come off on some roducts. we have issues with currency. we have a variety of issues. i'm happy to talk to members about this. in terms of publishing something, it's probably unlikely that i'm going to do it. my hope is that what we will do is talk privately to members and have some kind of an agreement in principle quickly. my objective is to try to do this as quickly as possible with as little disruption as ossible. it really is better why we limit what we were going to do, not go through the t.p.a. process and overload the system and work with members and deal with this on a smaller level, in a smaller way than a normal big agreement would be. but to the extent members view themselves as not knowing what our specific objectives are, i'm happy to talk to members and look forward to doing that. my hope is this is a process that comes to a conclusion
fairly quickly. because i think it's having negative effects in a lot of different ways. mr. brady: thank you. mr. thompson, you're recognized. thompson thompson thank you, mr. chairman -- mr. thompson: thank you, mamplete thank you for being here this morning and hearing our concerns. mr. ambassador, i'm pleased that you acknowledge not only my colleague, mr. nunes' issue, regarding dairy, but also went on to talk about other agricultural problems. eggs and poultry. and i want to ask you, though, about the u.s. wine exports. because they continue to face some highly burdensome trade barriers in canada. canada's discriminatory policy in british colombia, ontario and quebec are restricting market access for american wine and giving canadian wine producers a real competitive advantage against us.
and as you know, you and i have talked about this before, ustr requested w.t.o. dispute settlement consultations with canada on the british columbia matter last year. but that really hasn't yielded any resolve or any benefit. since then, australia's also launched its own complaint on discriminatory practices affecting australian wine exports. in addition to that, we have another agricultural problem with china. and that's our ongoing effort to get exported u.s. rice into the chinese market. for 10 years we've been trying to find some equitable resolve to that issue. we've had promise after promise but still those markets haven't been opened to us. so i'd like to know what it is you're doing to make sure that u.s. wine exports are treated
fairly in canada, and what you're doing to make sure that u.s. rice exports are treated fairly in china. mr. lighthizer: thank you, congressman. i would say, first of all, the wine problem is exactly as you say. it's just rank protectionism at the provincial level in canada and it's something that in fact is spreading. as you say, we brought a w.t.o. case against them. w.t.o. cases take time. e're in the process of aggressively litigating that action. having said that, we're far better off trying to resolve this issue in the context of a nafta negotiation. it's more likely to have a near-term solution that's satisfactory to the industry. so it is something that we are negotiating on our hope is with respect to that, we can see improvement in the nafta talks. and that's -- mr. reichert: other than
telling us you're working -- mr. thompson: other than telling us you're working on it, are there any specifics you can report? mr. lighthizer: it's one of these issues that you won't know if you're making progress until you get to the end. if you look at the kinds of issues, generally it's the tough issues. it's i.p. issues and agriculture issues that are brought together at the end of an agreement because no one's going say they're going to do anything in that area. so you go through and you make progress in 30 or 33 chapters. when you get to the ag one, there's no progress. you talk it through and the reason is that no one's going to make any concessions other than as part of a final agreement. having said that, i believe we will make headway in this area. mr. thompson: how about china and the sflice mr. lighthizer: on china and cases. have two w.t.o. it's another example of both on subsidy side but also on the market access side. they're not doing what they in our judgment, are obligated to
do. we're pursuing those and we'll retaliate. we'll do whatever is required. but i'm not -- there are limitations on the w.t.o. process to solve these kinds of issues. and you're seeing it just heads up in the issue of all of those products. mr. thompson: i guess it's certainly frustrating to have been trying to deal with this for quite some time now and even more frustrating now to hear that we don't know until we fix it. and as i point out, the china problem, with the rice, has been going on for 10 years. the wine issue has been going on for quite some time too. both in my view are pretty obvious and pretty blatant violations. i guess i'd like to hear more about what we can expect. and if things start to go better in your negotiations, if you collet us know, if you
could circle back and let me know how that's going. i'd appreciate it. but to date it just doesn't look like we're making much progress. mr. lighthizer: on the wine thing i'm happy to talk to you. on the rice and other w.t.o. issues, that's a difficult process. it's a slow, difficult process. which is seriously flawed. mr. brady: the gentleman's time has expired. mr. roskam. mr. roskam: thank you, mr. chairman. ambassador, just a personal word and two questions. personal word, is i appreciate the way the candorer with which you approach things. my wife tells me the older i'm getting the more direct i'm become and i find your ability to engage us on these things really refreshing. so you don't have to -- i'm not trying tome bars you, but i find it refreshing. so two questions. let me give them both to you and then if you can just respond i'd appreciate it. he first is, shifting gears on 232 and the press is reporting and i don't need you to comment whether this is true, but
they're saying, there's all these cry tear onby which you're evaluating these country decisions and they're all rational as far as i can tell. a country's participation in other questions that relates to trade and so forth. here's my question. with ukraine, for example. are you considering the strategic interest of the united states as it relates to changes for ukrainian steel? ukraine is in a situation, under incredible pressure, incredible duress. a country that's been invaded by russia. we have sanctions on russia. you know the whole story. so is there a national security element to your consideration? that's question number one. shifting gears entirely. question number two is, as it relates to cat fish, this is not an unfamiliar issue to you, we've got a situation in the united states where there's double evaluation or u.s.
f.d.a. has a program and ago has a program. it's -- ag has a program. it's pretty ridiculous. there are a number of us who are trying to correct that. so my question is, can you issue o how the cat fish in particular has an impact on he negotiations? mr. lighthizer: let me say with respect to the first element, i outlined, we didn't put it on our website, we find that if we say something to anyone that's in the paper, so it saves the issue of having to actually type things on your website. everything becomes public in five minutes. we have criteria and one of the elements of course is the national security interests of the united states. so we do have that as an issue. the final criteria is that the president makes that judgment. and that's a kind of broad decision on his part.
he defies national security in the conventional way, but also more broadly as affecting u.s. economic security as part of national security. you'll see that's a theme that's run through the national security strategy, it's through our trade eagget agenda and the entire administration. the national security is defined broadly and the united states can't defend its allies and itself unless it has a strong economy. that's something the president has broadened. the issue of the ukraine specifically, there clearly are national security issues why that would be a consideration. i would say the likelihood at this point right now is that we're starting to focus more on trade and economic issues. once you get below a threshold of national security interests, and of course it's clear that the ukraine meets that threshold, but there are a lot of other issues that are probably more difficult for them to do it. so, i guess that answers that.
on the question of cat fish. cat fish is a problem in our trade negotiations, in some areas we do have a complicated regulatory process in the united states. we have had cases involving people critical of our system as being basically a protectionist system. on the other hand, we have a situation where in some other areas -- countries there are legitimate health issues. so it's a complicated issue. it is one that we are familiar with. i would be misleading if i suggested it rose to the level of some of these other things. but to the extent it does for you, then it does for us. and we're happy to work on it and to the extent we can have influence on your effort to sort your way through this, to try to clean it up, we're happy to have our people do it and to work with you on it. mr. brady: thank you.
mr. larson, you're recognized. mr. larson: thank you, mr. chairman. and thank you, ambassador. along the same lines with respect to section 232, with regard to aluminum tariffs. perhaps seen through the eyes of people down stream who are impacted, now, i represent a district that hails many manufacturers, including general dynamics. and throughout the state of connecticut, precision manufacturers. to zoun stream people who will be imnlt -- down stream people who will be impacted and have graven concerns about the -- grave concerns about the impending tariffs. one such manufacturer, jarvis in my district, makes compresser and turbine blades for jet engines and they were asking me this recently about what can they expect. and here's the questions.
i couldn't agree more with mr. roskam about your candor and your ease of going through a number of these issues. but from their perspective, and i appreciate thed national security interest, when you talked about what is the criteria for exempting countries, but what is the timeline for exempting countries? and what type of alternative arrangements are you seeking from those countries? and i say that in -- of this perspective. because do you plan on making these decisions on all the exemptions by the time the tariff goes into effect, which,ify understand it correctly, will be friday? so you can imagine the intensified concern that that creates about that large supply chain. not to mention, of course, the
manufacturers themselves in general. i'm wondering if you might give us more clarity on that. mr. lighthizer: yes, sir. first of all, these matters are a balance, in terms of the consumer impact and the producer impact. and this is something the president and the people in the administration have tried to balance. in terms of the aluminum generally, it's a pretty clear case that u.s. industry is under assault and is really close to being completely destroyed 90% of the primary aluminum is coming into imports. it's a very, very serious problem. but that's not in any way to minimize the effect it's having on consumers. so in terms of the -- what the president tried to do was balance. in terms of the effect, i mean, the timeline, our hope is to get these things resolved by he end of april. mr. larson: so i'm to assume from that, twropt making decisions on all -- with
respect to making decisions on all exemptions by the time tariff goes into effect on friday, would not be the case. you're shooting for april? mr. lighthizer: that's correct. i would say -- so there will be two categories of countries. and setting aside your constituent may very well have a product exclusion issue. so setting that, i'm sure he knows that or he's doing whatever he's going to do and he may well not have a problem on that. mr. larson: i'll submit that to you in writing and tuck respond on that, i'd appreciate that -- if you can respond to that, i'd appreciate that. thank you. mr. lighthizer: that's important. i want -- being done through the department of commerce. but we will be a part of the process to the extent it helps your interest. so in terms of the countries, you'll have a certain group of country, i believe. there's been no decision and there is no decision until the president makes a decision as far as i'm concerned when he signs something, there's a decision. but there are certain countries , the principle examples, of course, would be canada and mexico, where during the
process of this negotiation of trying to decide whether they're going to get out of this, and i should say get out means they can't be in a position where they get out and take advantage of all the benefit. it doesn't go to u.s. producers there. will have to be some limitation on their own shipments but presumably not one that's a problem. during the course of that process, with respect to certain countries, the tariffs will not go into effect. that's how i envision it. now, where this happens, it's up to the president. but i envision it during the course of this negotiation between now and the end of april, that those countries do not see their tariff goes into effect. there are other countries that think they should be excluded, that it will go into effect and it will on friday. for those people there will be more of a disruption. ut in terms of access for your constituent, i don't think you're going to see an enormous shortage of alime numb. once again, i'm not -- aluminum. once again, i'm not an economist. we can all make our own guesses. but you're going to have a
variety of countries, in the case of aluminum, the fact that you're negotiating with canada is enours because they're such an important -- enormous because they're such an important supplier and the other countries i mentioned. those countries will not see be a an increase, as i believe this will work out. but with respect to the others, you will see a 10% tariff increase, as of friday. mr. larson: thank you. mr. brady: thank you. mr. buchanan, you're recognized. bukebuke thank you, mr. chairman. and -- bukebuke thank you, mr. chairman. and -- mr. buchanan: thank you, mr. chairman. thank you, mr. ambassador. like many of us, i have two situations in our district that i'd like to have you give some thought to in terms of 1/2 at it. one good and bad -- in terms of nafta. one good and bad. but my sensesy want it to be, whatever we do, pro-growth for the united states and jobs. but one is a company is tropicana. it was founded in my district.
creates over 1,000 jobs. was acquired by pepsi could he. but in terms of nafta, it's been good for them and good for their industry in terms of eliminating tariffs. so that's one thing i'd like to have you just talk about a little bit, tropicana. basically they're an orange juice business, who can't imagine florida without orange juice. let me say also, on the second scenario, as you know, we have pretty much the same growing season as mexico does. so in terms of the second situation, unfair trade practices, a lot of people feel in florida as it relates to tomatoes, strawberries and peppers, it cost that industry, that business, $2 billion a year. one to -- $1 billion to $3 billion in terms of unfair trade practices. so i'd like to have you take a minute to address both of those as quickly as you can because i have one other question.
mr. lighthizer: i'm not very good at the quick part. but i'll try to be quick. mr. buchanan: i'll let you know. mr. lighthizer: there's big advantage, one of the principle advantages in nafta is the reduction in those tariffs. i'm not sure exactly which tariff we're talking about or what the numbers are. but the reality is if we end up with a successful agreement, the tariff benefit will be preserved. so i think that will probably be less of a problem and it's more in favor of them saying we want to get nafta through and that's a provision i'm aware of. the seasonality is an important, significant and controversial provision. so i start with the proposition that, with all the great things of sales in mexico of agriculture products, and there's a lot, whatever there is, 18 or 19 billion dollars worth of sales by the united states in mexico, of agriculture products, the reality is that we have a trade deficit with mexico. on agriculture products. a good part of that or exact --
are exactly the ones that you're very familiar with. so the idea, the idea is that these producers, even if they're victims of unfair trade, can't take advantage of the unfair trade laws because they really weren't dealt, they really weren't constructed to deal with products that are perishable. so the idea is to put in place some kind of a provision that shrinks the amount of time you look at in terms of calculating margins and injury. so that these countries -- so that these products, which if you spread out over a year over three year on injury, are always going to lose. you give them a shot at proving unfair trade. that's the nature of the proposal. it's extremely controversial with respect to a variety of people who don't like it. mr. buchanan: we'll take time a little bit later and talk more about that. let me just hit you quickly, because you have some of your team here today, your new team, is on t tip. there was a lot of work that i
think or let's say some work that was being done by the last administration in terms of europe. and the thought is there we have a lot of the sam values, a lot of the same background. it seems like it makes a lot of sense, it's a real opportunity for america. especially as you look at wages and benefits, there's a lot of comparable things with the united states. and they've been, you know, overall it's been pretty fair both ways. so maybe you can comment on that. now that you've got a little bit more of your team in place. mr. lighthizer: thank you. i will. it's something we have looked at, clearly making headway with europe as a top priority. we have with the european union $150 billion trade deficit. after china, it's literally our biggest problem. and it's basically germany $60 billion, ireland, $38 billion, italy, $30 billion, and france, $15 billion. and everyone else we're basically more or less in balance with. so it is a problem. making headway in that area is very important and something we
are looking at. they're a little bit in flux right now. but i think making headway in europe is a high priority. it's something the president wants to do. whether it's in the form of t-tip which some people think is more cumbersome than we need or in another form, your point is one that we completely endorse. and think that we have to make headway on that front. and i believe will make headway. mr. buchanan: thank you. i yield back. mr. brady: mr. kind, you're recognized. dind kind -- mr. kind: thank you, mr. chairman. mr. ambassador, thank you for your time here. when it comes to chorus renegotiation or however you want to call, it it's better to have congress with you on the takeoff rather than just the landing. we know we're getting into sensitive discussions with them. but many businesses in my district that benefited under that agreement and they're getting nervous about where the stage of these talks are going. secondly, i'm all for nafta modernization, bringing it into the 21st century. the global economy has changed. i'm all for aggressive enforcement of our trade
agreements, 301 or otherwise. what i have a problem with, and what i hesitate about, is this go it alone attitude with this administration. and trying to promote a trade agenda by further isolating ourselves. america first does not mean america alone. there's a huge benefit to having friends and allies around the globe that we can work with in order to establish a trading system that works for all of us at the end of the day. either this president or this administration has conveniently forgotten or maybe never learned the lesson of our preeminence since the second world war. it's not only our military strength but was our willingness to take the lead and shaping a rules-based global trading system with countries across the globe with shared values. and by isolating us and by demonizing many of our friends and eye lies with a broad scope of re-- allies with a broad scope of retaliatory action i think makes our trade agenda that much more complicated. i'm worried about potential for
retaliation when it comes to the steel and aluminum tariffs. i think the whole approach to that was ill considered. it was chaotic. it was confusing. now we're going on a business by business exemption basis and now we're going to allow some of our friends and allies to apply for exemptions without clearly defined criteria? and i hope this administration's thinking about what plan b's going look like. if there is retaliatory action taken against us. because back home in my state in wisconsin, my dairy farmers' backs are up against the wall. we lose market share down in mexico, that could destroy our dairy industry in this country overnight. because of the number one export market being taken away frulls. that could cause a -- from us. that could cause a lot of problems in the heartland of our country. and dealing with steel and aluminum. for every job that is involved in steel or aluminum producing in this country, there are 200 jors jobs that are involved in consuming this material. and as we learned from the 2002 steel tariff case, which was quickly rolled back under the
bush administration, the unintended consequences can be pretty severe. for many workers, for many businesses and industries throughout our country. so i ask you to consider that as we move forward. and including the 301 approach to china. and what type of action they could take against us. but what troubles me perhaps more than anything today is sitting here is this love affair that our president seems to have with vladimir putin. and i come to a very fearful conclusion that the president of russia owns the president of the united states. and that manifested itself in a telephone call yesterday. where the president called to congratulate vladimir putin on a completely bogus and fraudulent election. and then failed to even raise the issue of a chemical weapons attack on one of our allies' soils -- ally's soils, great britain. and failed to raise the issue of russia direct meddling in
our direction process as a nation. so it leaves us scratching our head, just what is going on? with this president and this administration and our relationship with russia? we passed enhanced sanctions last year almost unanimously through the house and the senate. only to see it sat on with the administration for months before any action was taken with it. and that was problematic and very troubling as well. , d right now i couldn't think vladimir putin having a better strawman occupying the oval office. given all the missed opportunities this president has passed up when it comes to standing up and defending our also have and our strategic interests throughout the globe, against russia, who is not our friend. and they are not our ally. and yet somehow the president misses this important ingredient. so i was just wondering whether you are part of the economic team involved in the application of sanctions
against russia that was patsed almost on a unanimous basis -- passed almost on a unanimous basis by this congress last year and why it took so long for any action to be taken on it? mr. lighthizer: with respect to the stuff you're talking about on trade, yes, we're worried about retaliation. yes, we want -- don't want to go it alone and with respect to all this russian stuff, i completely disagree with every single thing you said. mr. kind: were you a part of that decision as far as the application of sanctions? mr. lighthizer: i'm the u.s. trade representative. i do trade work. i don't do sanctions work. it has nothing to do with me at all. not for five minutes in my entire life. but i appreciate you bringing it up. mr. kind: thank you. mr. brady: the gentleman's time has expired. mr. smith, you're recognized. mr. smith: thank you, mr. chairman. thank you, mr. am bams -- ambassador, grour time here today, as we have very important discussions. whether it's nafta or chorus or whether it's various trade issues that we know are important to american producers, particularly nebraska ag producers.
that is my focus. but we know that consumers live in every one of our districts obviously and we always want to be mindful of that. as it does relate to agriculture, certainly i've expressed to you and i've expressed to the president as well, that as we modernize our trade agreements, certainly i appreciate that, if we could also obviously do no harm to those areas we have done particularly well, namely agriculture, energy has been discussed as well. 45% of nebraska's agriculture exports go to canada and mexico. so it's no surprise that nafta is important, as we do move forward. and i just continue to strongly urge you to keep this in mind, of how important these ex portlands -- exports are, especially as i can appreciate the need to close the gap, the trade gaps that do exist. one thing, you know, agriculture exports do help us
on narrowing those gaps and i hope that we can continue to expand our international reach and expand the international markets for agriculture. briefly, the president touched on the possibility of re-engaging the countries in t.p.p. i have two questions. that would be one of them. is if you could elaborate perhaps or reflect on the potential of re-engaging t.p.p. thats as you know has moved forward -- that as you know has moved forward without the united states. and also the president has touched on the bilateral trade agreements that he would like to pursue. perhaps. and if you could also reflect on that and how we might be able to utilize that moving forward, whether it's with japan or other countries, that we would like to see more exports of u.s. products
heading in those directions. go ahead. mr. lighthizer: thank you, congressman. we appreciate your intervention on this issue on the importance of agriculture. we completely agree with it. not only you have raised it repeatedly here, but in all other contexts. it's very important to us both in terms of the consequences of our other action on agriculture, but more importantly probably using the trade agenda to promote agriculture. so we sit back and we talk about the fact that we have whatever it is, $140 billion worth of agriculture sealts, -- sales, in most of the market guess into, we could sell vastly more. and we're really facing protectionism and europe is a good example. china is a good example. there's enormous opportunity and a lot of the things that we are designed, we designed with that in mind. agriculture is important. it's crazy to sit back and be defensive in agriculture
because of the reality, we're being stopped in a lot of places from just local political pressure, creating protectionism. on the issue of t.p.p., i guess i would say the following. it's complicated to get in and renegotiate that. but if you analyze t.p.p., you have 11 countries in t.p.p., with respect to six of them right now, we already have a free trade agreement. so the idea of upgrading that and getting those in a position where you think what you want is fine. with respect to the other five, by far the most important is japan. i don't know what the total amount is. japan is maybe a $5 trillion economy. i bet all the rest of them together weren't d 1 trillion. because the next biggest one is malaysia, which is just over $300 billion. and then vietnam the next one after. that of the five, if you got an greement with japan, you solve the whole problem. certainly if you got one with
japan, vietnam, which some people have suggested, or ma lasheyarks you have taken care of 95% of what's -- malaysia, you have taken care of 95% of what's outside the u.s. right now that's in the t.p.p. sphere. so i think when people think about t.p.p., sometimes they think of it as something we're not a part of. we're already have f.t.a.'s with six of these countries. not to say they can't be improved and they should be improved. but i way i analyze it, i say, number one, you have a problem because you want to work it out with japan, because they're by far the biggest, third biggest economy in the world, and by far the biggest of those. then somebody has to sit down and decide, do you allocate resources to malaysia or do you allocate resources to vietnam and there are reasons for that, you can argue all of then and our view is that -- them and our view is that that's the job this deputy has to do. we have to come to grips with that. the japan is clear, but the next tier we have to come to
grips with that and we have to get the opinion of this committee. mr. brady: thank you. the gentleman's time has expired. mr. pascrell, just a reminder, after your questioning, we'll go to two to one so we can balance out the rest of the hearing. after your questioning, we'll move to two to one so we can balance this out. you're recognized. mr. pascrell: thank you. mr. chairman, thank you, mr. ambassador. i think it's clear, after montreal and mexico city, and thank you for your indulgence up there, that we're getting -- we're approaching i think a culminating part of the negotiations. that's my judgment. we have a lot of tough issues to address. some of -- and i quickly went through the document that we're supposed to be talking about today. part of it is nafta. some of your nafta proposals
have really challenged the status quo of u.s. trade policy. and i think hav been created in trying to make the agreement work for the many and not just the few. ll the boats have to rise. and i have confidence still that you are working to ensure the labor chapter of nafta is fully enforceable. building on the strength of the may 10 agreement as a floor and not a ceiling. and i want you to interrupt me if i say something that is not in place. please feel free to do that. forcible labor standards alone will not entirely solve the key driver of outsourcing under nafta. we all know that. for 25 years, mexico has
engaged in a purposeful strategy of labor and wage suppression in order to attract investment at the expense of the u.s. and the expense of canadian workers. in ways that have expanded poverty for mexican families instead, the regard is clear on this, the numbers are clear, building a middle class market for the u.s. exports. you identified in the trade , nda report, you identified you said this. since nafta went into effect, the gap in mexican wages and labor productivity with the united states has widened. the o.e.c. date, the organization that we know about for many years, reports that
the average annual wage in exico fell from $16,008 in 1994 to $15,311 in 2016. unquote. i met with the workers in mexico city just a few weeks ago. because reading about it and looking at statistics is very different than hearing stories about actual situations that are tangible. and no democrat and no republican can deny these. they're in the auto parts factory, many of them. and were making less than $1 an hour. no options to bargain for better treatment. both the labor rules in nafta and in mexico, mexico's own labor law, and practice, must be upgraded to make real changes for workers, both in mexico and my district.
do you agree that mexico has failed to live up to its obligations with respect to nafta's labor side agreement? yes or no? mr. lighthizer: yes. mr. pascrell: so, please explain how ustr is working to lve the problem of low wages and so-called protection unions, which you identified yourself, not i, you, in mexico. and i agree with you wholeheart lid. how are we working -- wholeheartedly. how are we working to get it done? explain. mr. lighthizer: i would say, first of all, while wages have been stagnant, and that's not our expectation at all when we entered into this agreement, if you look at the way it was sold, it was clearly sold as wages go up in mexico. they became customers for us, we get to sell a lot more stuff and that has not happened. i would say from the point of
view, mexico has created a lot of jobs, though. low-income jobs. in our opinion. but a lot of jobs. and a lot of those have been in the auto industry. i would suggest many of those at the expense of u.s. jobs. mr. pascrell: and that's important, isn't it? understand the relationship between how low wages, i'm putting it as simple as possible, in mexico do effect jobs and -- can i at least finish what i'm saying? mr. brady: i'm so sorry, mr. pass screll. all time has expired. maybe another member can yield to you. mr. pascrell: i don't want anyone else to yield. i'm asking a question. mr. brady: i'm sorry. mr. pascrell: that stinks. mr. brady: thank you. mr. pascrell: you're welcome. mr. brady: ms. jenkins. ms. jenkins: i want to reiterate my support for the continuation of strong investor protections, like investor state dispute settlement in 1/2 at it. and i've grown concern -- in nafta. and i've gwn conceed about
reports of making this protections optional. the u.s. investers in foreign countries benefit from the same process and due compensation rights that foreign investors enjoy in the u.s. under our constitution. that sounds a lot like the reciprocity and trade deals that this administration wants. foreign investment by u.s. companies also creates and supports u.s. jobs. for example, the family farm and ranch operations in my district who depend on exporting their products to mexico utilize kansas city southern's railroad to provide that vital link to reach these crucial markets. this cross-border infrastructure will not be possible without the $4.5 billion in kansas city's southern invested in mexico over the past 20 years. national when the house and the senate -- in additiony, when the house and senate passed trade authority, it established isds as an a negotiating objective. so not including isds in nafta
would be a direct rebuke to congress' explicit direction and could undermine critical support for a renegotiated nafta, lacking such protections. i urge you to reconsider your position on isds, continuing to include isds in nafta makes those good policy -- both good policy and political sense. and to speak just a little more broadly, i can't overstate the importance of nafta for the farmers, ranchers and manufacturers in my district. in fact, about two dozen county farm bureau members from eastern kansas were just in my office yesterday to hammer this point home. they depend and rely on being able to sell to mexico and canada as though their lie lie -- livelihoods depend upon, it because they do. the message i received is the need for certainty that nafta benefits, which have allowed kansas exports to surge, remain
in place. this certainty is paramount to providing desperately needed assurance to all aspects of the kansas economy. the small towns across my district that make up america's agriculture heartland are depending on the administration getting this modernization right and moving on to expanding into new markets and joining new trade deals. that's why i strongly support nafta and why i encourage this administration to follow through on its promise of doing no harm. with that, mr. chairman, i yield back. mr. brady: thank you. mr. paul scenario, you're recognized. mr. paulsen: -- mr. paulsen, you're recognized. mr. paulsen: thank you for your work and progress on the nafta renegotiations, particularly in the area of regulatory practices, anti-corruption issues, customs issues, and digital trade. modernizing nafta with the digital chapter is essential not only to protecting american innovation, but also access to
markets through ecommerce that many of our american products and services are sold from. but i have to tell you, the president's decision to invoke a very little-used 1962 law to impose these broad tariffs is a creating a lot of uncertainty and it does threaten to derail some of the economic gains and benefits that we have seen recently in our economy and it seems like every they haveal lot of questions about this uncertainty. i usually beginhe conversation about talking about the real economic benefits that they have seen from the tax cuts and jobs t and tell me they are re-investing in their new employees and they will talk about the new tariffs. and there was one fortune 500 company said that half of their
economic benefit made by tax reform will be wiped out. and it's not just large employers that are putting these proper queggets on hold. we have small businesses like r and m manufacturing sa said they are opposed to the tariffs saying it would shall disastrous for them as well as small companies because raising their prices, they will be clubbered. i support your objective of fighting for the american worker and and some of those gains are going to be swamped that will be lt by other areas across the country and with the trade partnership, the united states
would lose five jobs for every job created savings. and that's without retaliation, it could be a net loss and 470,000 jobs and blue collar than the type of jobs that you and the president are protecting. and we are on the needles later this week because retailers like a company and i'm targeting chinese intellectual property and holding them accountable and what we want china to be changed.
with respect to that trade partnership study, i haven't looked at that. and the accuracy, i wouldn't have it keep me awake at night. and we understand that and nobody wants a trade war. you have to ask yourself, can we go on with a 800 and growing bill quon trade deficit. and so we have to do something and the people who are benefiting from the status quo are going to be against it. but the reality is if you are on course that is unsustainable.
>> what is your view of the united states relationship with canada does it have a trade surplus or deficit. >> one of the great questions of all time. this is something on which i have spoken about for years. so here's the situation, the numbers are all confusing and it would be appropriate to ask if you are not confused, then you are not paying attention. r. higgins: i only have -- >> the fact is if you look at goods on a customs basis you
have a $17 bill quon deficit with canada. if you look another customs basis, what does cappeda say their surplus is. that is $97 billion. they have a surplus with us. and what's the cause, the cause is a lot of things and prouts that come into the united states and go into canada. we count them even though they are u.s. exports. the canadians would look at it as the appropriate country. if you look, then the numbers are different. f you look at it on a customs' basis, people will say what is the services surplus.
but on a customs basis, so you have to the number from another data. and if you use our number then we have a small surplus. we still have an enormous deficit. >> has the strong arm tactics of the presidents as it relates to ariff threats has it helped or hurt us. >> i don't think there is a strong arm tactics. mr. higgins: in other words, the president in published reports as stated that he isishing tariff threats against canada and mexico as leverage to get a better deal in naftavehha negotiations. >> does the 232 affect the
negotiations? mr. higgins: does the strong arm ctics threaten or hurt the comboirkses? >> i see no strong arm tactics. mr. higgins: 93% of the heroin .eized came from canada and the president has demanded that mexico do more to prevent drugs from entering the united states as lifting steel and aluminum tariffs. is that something that has found its way into the negotiation? > well, there is a lot going between the united states and
united states. the i.p. provisions will be a benefit to the united states. there is huge improvements that will be made in digital trade and there are services, we have 33 chapters and i personally don't think there is a single one that will be a significant improvement and of the 33, the members here would agree that 0% of them are huge improvements to the united states. but i think it is a very, very important improvement. . brady: mr. h you are recognized. >> thank you for your time today. my district is in texas, north texas and it's home of the dallas-for the wrt airport so
operation there. these are important to our communtse and one right there in smyrna which is home of the nissan plant which produces is a big issue. and considerable press and proposals which as the press reports appears torkable fothe industry and could have effect on american jobs which is a real concern for us. understand that canada presented a framework of ideas as a counterproposals in montreal and canada's proposal could have we have now. could you update whether they have provided additional details
>> canadian content, the idea it shouldn't just be a model and subsidize and make stuff in canada or mexico and 80%. that isn't a good model. so our objective is to encourage them to have the parts back to the united states. and which are in the process of talking to the companies and trying to do that. and our hope is that we get something that at least some of the large manufacturers will find useful.
high-paying jobs. the relationship is very important to the people of people of alabama. this administration has concerns about the original agreement and i can appreciate those concerns. i like many of my colleagues who have spoken earlier want to re-emphasize the importance of transparency. i share the concerns about this re-north koreas process. reason rstand it, the why i would assume that you are invoking t.p.a. for nafta and not doing it for the agreement because they are only minor amendments. and the executive branch can make to keep the legislative
say that other parts of this strategic who is paying for what and i know there is that is very important and -- mr. brady: i apologize. time has expired. mr. kelly. mr. kelly: thanks for being here. and i think you are being filled out. but you know where i'm from in western pennsylvania and i know there are others waiting to talk. but at one time, steel and aluminum were a big part and the towns are decimated and the president's talking about putting tariffs on alum and steel are giving them big hope. what's the trade imbalance
because people talk about etting us into a trade war and $800 billion. and not really a war? >> it is the goods number. fox 65. mr. kelly: we are in a real battle to main our jobs. you are leading the process and there will be firefighter criteria and olympicing and participating in the capacity and supporting anticipate dumping lodged by the u.s. one of the things i want to bring up in the companies i represent is ml inch k. they have 00 people that work. and they have another 150.
>> the administration is onsidering a a package and including consumers on the section 301. and so i wondered if you could explain for us how you could explain how it could make it easier around the country to compete in the global economy? >> the question is will the 301 because we are not putting far fs on the assault on
>> it is not clear to me that the basis upon which they claim a culture exemption would apply to something like this. it looks like a way in which they are preventing what we would hope to be the fair competition to work to the distinct advantage. i know you have a big advantage to nafta. and i hope when we cross the t's and i's is an issue that is on the negotiating table and the
>> a lot of the ugse coal goes to bras it in order to be used in some of the preparation of that steel which cols in as a semi-finished product. so there is a lot of characteristics, whichr i think speaking to the idea that even people have been identified that these are the kinds of consideration tsta would qualify
>> with respect to what progress has gone on, there has been an enormous amount of time. this is one of those issues that it never resolved until the end of the negotiations as i'm sure you know. s exactly as you say, they are ot protected splule protect. but it is surprising. third as third world world intellectual property and is not easy and the speed
>> and i know you'll call. >> on another subject. one of the keys to is strong enforcement of our labor obligations. we have agreements with peru and hond you are asand there have been labor violations that have been filed in each one of these countries and there are numerous .iolations that include and yet, in most of these case is, there haven't been an update
future. if you look under president trump's leadership we passed a tax cut for prm farmers and small businesses and repealed d created $1.6 million new jobs. as of just the day after the president did his tariffs on aluminum and steel i was in jobs. orse anounsing new these are real jobs and real aspect and affecting real people that have not always been on the right side of victory. the next step is to go out and negotiate the best possible trade deal so they win around the world. we couldn't have a better person. the person wrote a book. in the book, he wroted.
the worst thing you could do is to seem desperate to make it and deal from strength and lenching of lemping is the and the president knows where our strengths are. they are in our superior goods and our world-leading services. you know this as well and the task for before you and other bills is not an easy one. whale those are the hot topics, want to talk to you about unfair trading practices. i applaud you. like i mentioned before, america is ready to compete as long as the playing field is level. but unfair trade ink practices. to ignore violations does not
strengthen free trade. in fact, it weakens free trade. this has been a mounting evidence that they are ignoring w.t.o. rl obligations well above the commitment they agreed to. the result and surplus production that ends up in the world market displace themselves. it is not conservative to allow for rampant breaches of contracts. it is just wrong. in what ways is this administration to ensure that hese countries play by the rules? >> i gry with everything you said. >> i must be right. >> some people disagree with me from time to time. i agree. you are absolutely right.
we are seeing a proliferation of agriculture subsidies. in the last round we had in i ended up hanging up the negotiations because people anted to their idea of an ag negotiation was where they could have fewer subsidies. they called food programs but the reality it was going to do nothing but encourage more subsidies in subsidies. we are trying to get in a market environment. and it was india who was very much a subsidizer. >> the grain -- >> you are exactly right. >> and they were having
negotiations about increasing subsidies and said we aren't going to do that. every time we find a situation, we bring the w.t.o. case. it isn't the greatest forum for these kinds of actions and it is a problem. if subsidies is in our market and we have tools to deal with that. and if we have to go to the w.t.o., far from bersome, flawless forum. so we are aggressively bringing these cases. we completely agree with you. we're using the tools we have at hand. and hopefully we can improve those tools and make a difference. >> please continue. thank you. >> thank you, mr. rice, you're recognized.
>> thank you, mr. chairman. thank you ambassador lighthizer for being here today. i've told you publicly and preistly that your presence in the administration and mr. ross' are two reasons i have so much faith in this administration. i appreciate a man of your experience taking on this job, it's so important for the american worker. i'm a big believe for the american competitiveness, i think our tack code went a long way toward helping our economy be competitive in the world and trade is very important in american competitiveness. so obviously also infrastructure. a lot of things that the president -- immigration. a lot of things the president is trying to work on. if we could get two or three more of those notched, our economy would be well poised in the world. with respect to the tariffs, my opinion is, as you said, nobody wins in a trade war. nobody disagrees that there are people who have been bad actors
in the world, china particularly. we've ignored it for too long to the destruction of the american middle class. so we just can't accept that any more. we've got to respond and it needs to be targeted and i appreciate your efforts in that regard. but i want to talk a little bit more about and a half tasm i've been to montreal, met you in montreal. been to mexico city, met with mexican officials and regulatory people and business people, chambers of commerce and in canada the same and in america the samism haven't met anybody who doesn't think nafta doesn't need to be continued and that it doesn't need to be modernized. everybody is pretty much on board. and the me topics are brought up, the same four or five things you raised today, rules of origin and de minimus rules and all these things. sounds like you're making great
progress there and i just have been in both of those places that everybody recognize this is odd earn -- modernization process is a good thick and needs to be pursue. i wanted to zero in on one question that was asked to you at the american chamber, american chamber of commerce in canada and i love your response to it. i just want to ask you so you can respond publicly to everybody. what would you see as a win in nafta? what's your goal? what are you shooting for when you're trying to renegotiate this? can you explain that to the public? >> it was such a good answer, i don't want to change it. from our point of view, first of all, we have to have an agreement that's good for all three countries, right? we have to have that. secondly, we want an agreement that's going to end up getting
these trade deficits down. we have large trade deficits. and it has to move more jobs to the united states and create better job, not only more jobs but higher paying jobs. i'm in the group that think what is we need is a little bit of wage inflation. i want to do something in the first place i think it has to be in everyone's interest or you won't get abagreement. i want it to be something that gets the trade deficit down, that moves some of these jobs back to the united states and they're all coming back, we understand that completely. but this notion that none of them are coming back has been proven wrong by all of you because you've seen what happened after your tax bill. it has moved jobs back. so jobs, wages are what the president focused on. that's what i'm focused on. and i think that this agreement will lead to efficiency and higher wages and more jobs in the united states. >> that's pretty much the same answer you gave in can d except you said one other thing, i
want to eliminate incentives to offshore. all those are great objectives. i want to point out one anecdotal thing, when we were in canada, having lunch with the canadian-american business council, a down sulltant -- a consultant said we have clients who have positions in america and canada, we're advising home to ramp down in canada and ramp up in america because of the tax reform bill. it seems we've lost our competitive advantage. under my breath i said, yes! so i appreciate very much your efforts to lift the american middle class. t's -- it hasn't had a raise since 1990 and i think your efforts and tax reform will change that. >> i want to give some of the credit for this tax bill, the trade deficit went down, i'm not going to give you any credit when that happens. it's entirely trade policy. >> we know how that works, mr. ambassador. 10 mr. blumenauer, you're
recognized. >> thank you, mr. chairman. mr. ambassador, thank you. appreciate your patience here for the last three hours. dealing with our questions and comments. i must say i appreciate the role that ustr has assumed on an area that i have been working on for the last 10 years, dealing with illegal lobbying, particularly what's going on in peru. it's been sort of a struggle, i thought it was harder than it should have been in the last administration. but i appreciate the work that you and your team have done. this, as you know is not just an issue of enforcing trade obligations, illegal logging, damages the environment, it undercuts the rule of law in developing countries and it has negative impacts on americans who play by the rules. i just want to say how much i appreciated that.
and i do want to identify myself with comments that my friends mr. thompson and mr. doggett mentioned earlier. i won't take my time or yours but i am concerned about having american wine industry, particularly in the pacific northwest, on a level playing field. i am concerned about american interference with the ability of other countries to protect the health of their citizens. i appreciate there are nuances there but historically i think we could have done more to be more open. i think it is a larger issue and i hope that we can collectively focus on this because i think it is very significant. i listened to my friend from missouri referenced the art of the deal or some such publication by the president. i think there's a pretty significant difference when you're negotiating in real
estate, when you can as he states in his book exaggerate as you can go bankrupt and leave other people holding the bag when things collapse and move on to the next project. we're talking about the american economy. we're talking about our role in the world. and i think, for example, exaggerating or making things up in a discussion with the head of the state of an ally anitting it publicly doesn't help us on the world stage. and i identify with some of my colleagues who say we feel more comfortable knowing you are in the role that you're in. you have broad experience. i think you understand some of these dynamics. it's in that context i would like to raise one point with you. and that deals with some of the impacts of the imposition of tariffs and the 301 with china, particularly as it affects retail trade and mr. reichert and i have some involvement
with companies that are involved with apparel and footwear and we've been working for a long time to try and see if we can have some more rational policy as it relates to tariffs. as you well know, tariffs are not just magically imposed on somebody else. it's cost of doing business. it affects what happens. the american manufactures and retail. they are ultimately paid by the consumer. and we have a system now that is tilted against low and modern -- moderate income people. when you look at clothing and footwear, the percentage paid at the lower end is outrageous. and i'm hopeful that we don't rush into something with china that ends up actually making it worse. so i am hopeful that this is an area that can be entered with great sensitivity, mr. chairman. i would request unanimous
consent to enter into the record correspondence addressed to the white house but also to the ambassador and the committee that speaks to this in terms of tariff understanding the dynamic and i wondered if you had any observations. >> without objection. >> thank you, sir. if you could offer any observations that might make some of my constituents feel better. >> when you talked about "the art of the deal," all i was thinking was i hope i don't look disparate. so i had a different take on it than you do. we understand if there are tariffs, one, we have to establish what the amount is and e as much science as you can. and two, when you pick the products on which you'd put a tariff, you start with a logarithm that tries to maximize the effect on china and minimize the effect on u.s. consumers. and if you think about products on our ground you'll have a
line over here of products ere they are minimally a problem for u.s. consumers, maximally a problem for canada. you can't always follow that. that's one of the big factors. that's part of the logarithm and we are aware of that and are cognizant of it and if we end up doing this, it won't be perfect but you'll see a methodology which you'll say, that's a simple enough methodology. >> time is expired. mr. schweikert. >> thank you, mr. chairman. mr. ambassador. first a quick comment on a global basis and particularly more for even some of your newer staff. long-term, earth has a fascination of what worldwide trade can do, particularly considering our tell graphic issues. as a country, as we're get mutching older, we're going to need populations of folks in the prime consumer ages for us to sell stuff to. that's always -- in a long-term
-- there's some great articles about trade that may help us with some of our demographics that are -- that we're facing. it's just math. mr. menser, i want to thank you on the de minimus, the last time you and i had an opportunity to talk about it, you in the only got it, you were amazing advocate. particularly for some of our -- as a country we're presently negotiating with are listening to this hearing right now. there's many of us on this committee that are just fix stated on the de minimus value with mexico and canada and the inequities that creates. do you think they're hearing that part of the discussion? >> i certainly hope so. it's one of those issues where anybody who starts focusing on it becomes more and more important to them. it affects a lot of product. and the more you study it, the more it's bothersome, products
coming into other countries in bulking, being broken up into smaller things and shipped. the fact that most of the canadian, one of the articles i read, most of the canadian online sellers sell far more than the u.s. -- in the u.s. than they do in can dafment and we can't go in that direction essentially at all. $20 is ridiculous. it's a huge -- hugely important issue and affects a -- an enormous number of sectors. it is something that's very important to us. look, everybody knows the right answer is to be above $20. no one can argue that. it these go up. >> you make -- look, for those of us, being a border state, arizona, where we're trying to set up trade hubs and inland ports, and yet if you look at the current de minimus, particularly with our trading partner, mexico, it's always going to be inbound. because our ability for small retailers, for high tech
commerce to go outbound doesn't work. just because time is so precious. i'm one of those safe communities because being in the desert southwest has intense concern on seasonal tariffs. if you actually game theory it, it create distortions and then retributions on the distortions. and if you start thinking about when certain crops come in and the seasonalities, it ends up becoming very, very ugly. particularly for those who do a lot of cash crop growing. we -- arizona provides the winter lettuce crop for the country. and if you're doing seasonal tariffs, the tails of those tariffs end up creating pricing distortion particular already -- particularly for consumers on both sides of the border. >> so you're against the proposal? >> absolutely livid. >> there are enormous number of
products that are -- that would be subject to these that come in from mexico through arizona. so basically it's the interest of importers in that state and i just want to make sure i was understanding. >> if you're doing certain type of cash crops and you've just had a seasonal tariff that benefited the growing season in one part of the country and then it falls off, all of a sudden you're on the fold side. think of that constant moving of that bell curve. last thing, and look, you've spoken about this elegantly so substantially disagree with some of the characterization, ifdf. i know so often rhetorically, we have speakers that will say well it's sovereignty. but if you actually really walk
through the mechanisms, it is not. issue. ue vat it doesn't rewrite our lures the mexican laws or the canadian laws. it's not -- it's not a precedent for the next case. ultimately it's -- think of it more like a -- if we were to ever lose, which we have not, you would have to make compensation. but it does not rewrite your sovereign statute. and so when people use the sovereignty quotes, i think it's an absolute distortion of how it actually works. >> thank you, mr. ambassador. >> ambassador, good to see you. i want to talk about 232. a couple of point of clarifications. so my understanding, and i just want you to confirm this, you are considering participate in
the global forum on excess fuel capacity, that's under consideration? >> we d participate and one of the things we've asked people who might -- is that they do participate and help us with that. most do, by the way. >> the recent forum on steel excess capacity held a first minister level meeting last november but you were not there, correct? >> i had no deputies in place at that time so i was staying here. >> i understand. will you in the future attend those yourself since the rest of the world is looking at this with incredible significance and bringing their ministerial level folks to the table? >> i wouldn't guarantee all times. i think at that meeting there were maybe three ministers. it might have been a ministerial level but about 30 countries did not send ministers and three did. >> the one i'm concerned about you and this country. >> the idea was that it was like ministerial level.
you had europe sent one because it was basically around the corner. other minister. >> but the reason i'm asking the question, sir, is because while all of those countries have irons in the fire here, you are the ambassador that's going to go forth under all these rules in 232 and i want you to do as best as you can for our nation and for my district. that's my concern. and i believe you can and i believe you will. i want to switch gears really quickly to this issue of retaliation. in my district in northern indiana, the second largest concentration of manufacturing jobs in the country, there's a whole host of agatha i'm concerned about, corn, soybean, dairy, pork, poultry, beef, eggs, tomatoes and the list goes on. but half of the soybeans grown in indiana are exported to china. honeywell makes brakes and avionics that go into boeing
airplanes. china is threatening retaliation against both. today china's state-run "global times" ran an article alleging that u.s. is dumping soybean into china. motor boats and cars are exported from my district to the e.u. both of those are subject to tariffs. there is anxiety over the tariffs. that anxiety is shared because many will be affected. are you tcherg effect that retaliatory measures could have especially on small businesses and family firms that don't have the resources to absorb big losses? >> yes. >> in what way? we are -- we are gaming out what would happen, what the most likely areas are for retaliation, what kinds of things you would do. we can't be in a position where we take no action because of
threats of retaliation. that's how you end up having an $800 billion trade deficit which costs literally millions and millions of jobs in america. but there is a legitimate threat and as i've said a few times here today, many times in the past, agriculture is always on the frontline of retaliation. i said that when i first testified. members would say to me do you think we should be concerned? if you're in agriculture you have to always be concerned. anything that happens is going to have, they're going to figure we can do something on agriculture. it's an unfair situation but one we have to come to grips with. and you have to think about counterretaliation, programs for farmers who are in this situation, last lot of things that are outside of my realm that have to be considered. but it's a serious problem, we're very aware of it. >> thank you. thank you, mr. chairman, i yield back. >> thank you.
ms. sanchez, you're recognized. >> thank you, mr. chairman. ambassador lighthizer for joining us today to talk about the trump administration's trade agenda. for many years now when democrats have been talking about the impacts that trade agreements have on american workers and we lament the fact that they've caused countless good-paying american jobs to be shipped everseas, most notably in the manufacturing sector. and those jobs are really the bedrock of the american middle class and critical for our economy. those jobs have been lost to countries whose labor standards are impossible for our workers to compete with on a level playing field. so i think that a lot of us were hopeful when the president talked about bringing american manufacturing jobs -- jobs back and creating new jobs through renegotiating our existing trade deals this administration time and time again has said that they want a level playing field for american workers. but i have yet to hear the administration lay out a clear
vision for how you plan to achieve this goal. it's no secret that we met with secretary ross last year. and when i pressed him on that issue what is your strategy for bringing back american jobs, or maintaining american jobs here, the only answer he provided us was that they're going to renegotiate the rules of origin for auto. that was it. that was his single, sole idea, or plan for bringing back manufacturing jobs. i think we have to do a lot more than that if we're going to create the kind of jobs we want here and ensure that american workers and industry are not on an unlevel playing field, first of all, and second of all , in a race to the bottom for wages and working conditions. workers in mexico earn pittance of what u.s. workers make and is it any wonder that we're
losing jobs to mexico? i think canada as well has a vested interest, their labor standards are similar to ours. so mr. ambassador, i would like to know, the president has said he'll bring back jobs through renegotiating trade deals. what pieces of nafta specifically are you negotiating that you think is going to deliver on that promise? >> the most important thing that's been done so far is pass the tax bill. that was an important part. >> i'm not talking about the tax bill, i'm talking about renegotiation of nafta. >> i understand that. >> i want to know specifically what parts of nafta would you renegotiate to ensure that u.s. jobs stay in this country or that we bring back jobs that we've lost? >> i think the regulatory improvements made have helped also. >> i'm not talking about -- can we stick to the subject matter of this hearing please. what pieces of nafta will you renegotiate to ensure that we keep u.s. jobs here and bring
back manufacturing jobs that we've lost? >> well i would say the first thing is rules of origin. rules of origin are not just -- >> aside from auto rules of origin, what is the plan? >> we have a plan for -- we have a plan for labor standards. we have a plan for -- >> what is the plan for labor standards? lay that out for me, specifics. >> in the first place there's a limit to how much i'm going to talk about this in a public forum. i'm sure you can understand that. i'm involved in negotiations. >> i understand that. >> good. so i've already talked about this a couple of times but i'll do it again. it's our view that u.s. workers have the right to expect that collective bargaining agreements in mexico are the result of secret ballots and legitimately verified to be such. there's a whole series of processes that we're involved with in negotiating that element including even today.
so that's a hugely important issue. and the objective is to try to get to mexico, which makes the united states more competitive and creates customers for the united states. >> would it be fair to say that you're seeking labor standards with our trading partners that are on the level with u.s. labor standards? or do you intend to bring u.s. labor standards down to the lowest commn denominator? >> did i say anything at all about u.s. labor standards? if i did i misspoke. we're doing nothing about u.s. labor standards. >> i'm asking a simple question. >> and the answer is we're dealing with mexican labor standards. not the u.s. labor standards. >> it's fair to say you're trying to raise the standards of our trading partner it is comparable to that have othe united states? is that what i'm hearing? >> no, what i'm trying to do is raise the standards in mexico. >> you raise them but not to
u.s. standards? not that high? more in between? >> it is not my point, what i'm focusing is on -- focusing on is the basic elements of what you expect in basic labor law. that's what i'm talking about. i'm not talking about u.s. -- >> i.l.o. conventions of labor law? >> time has expired. >> mr. chairman, if i could simply just make the request that we receive the answer to the last question in writing. >> absolutely. >> i yield back, thank you, mr. chairman. >> thank you. ambassador, i will tell you i see significant wins for the u.s. in energy, agriculture, telecommunications, digital trade, services, technology, manufacturing, because you're being so aggressive in these areas and we appreciate the work there. mr. curbelo, you're recognized. >> thank you, mr. chairman.
welcome, ambassador. thank you so much for your time. i first want to say i was thrilled to hear earlier your statements regarding engagement with argentina and brazil. i think our country in many ways has been absent in our own neighborhoods over the last few decades and i think in both those countries we're seeing positive developments and this is very exciting for south florida as you can imagine. because we're poised to grow and benefit greatly from further engagement in the region specifically with countries like brazil and argentina. on a couple of issues that have been discussed extensively here, i want to associate myself with the comments made by chairman brady and others on ists i think it's an important tool for american companies, for american stake holders, and also with chairman johnson on the sunset clause. do believe that one of the major components to successful business and enterprise generally is certainty.
i think that if companies are operating under the threat of the expiration of a deal that could inhibit their ability to invest and by the way, it's not just american companies' investments abroad but the investments of canadian and mexican companies in the united states. so i really hope that we have a strong provision to review the deal, to revisit the deal, to make sure we keep it up to date which we haven't done over the last 25 years, but certainly not always to have the threat of a potential expiration. another issue i wanted to bring up is the effect trade agreements have on the farmers of my south florida district. many people not from south florida may be surprised to know that miami-dade county is one they have largest ag producing counties in the state. we have avocados, mangos, tomatoes and hundreds of other crops and because we're warmer than even other parts of the
state crops can be grown year round, for example, it is not snowing in south florida today, something we're very pleased with. so i'm concerned with how the nafta renegotiation will affect farmeracross florida but specifically how it will immaterial pact the agriculture community i'm honored to represent. i know the administration has een advancing a seasonal and proposal. can you give us a brief update on where we are and what the nature of the administration's commitment with this is at this time? >> it's a provision that's very important and not without its controversy. the point that i tried to make is that while we have a lot of agricultural sales in mexico, we have a agricultural sales
deficit of about $5 billion. so we're not on the positive side of our agricultural sales with mexico. the area is -- that is most affected negatively are the seasonal and pearishable fruits and vegetables as you suggest. so we have a provision that we have designed that allows those people only in cases where there is unfair trade to take advantage of unfair trade statutes. until now they're concluded by the way the statutes are taken out. we have put forward this proposal. it's not been wildly popular th our trading partners, ill say in all candor at this point. but it's an important provision and one we're negotiating on right now. >> thank you, ambassador. i encourage you to do the best you can in this area. we know the specific proposal you put forward may not be able to make it but i think anything that improved the status quo for these farmers which have been decimated quite frankly
would be something we'd welcome. and i'm more concerned with fairness and less concerned with the deficit issue. i always tell people i have a deficit, my family has a trade deficit with a supermarket and we want to keep it that way. we're not interested in changing that. i think the key question is, is it fair? and are american companies, in this case american farmers, being given the same opportunities to compete as mexican farmers, as canadian farmers? and i think in in this area, seasonal product it's not the case. so i appreciate your commitment to this provision and your commitment to the farmers of south florida which are counting on us to improve the status quo. thank you, ambassador. i yield back. >> the gentleman yields back. mr. bishop, you're recognized. >> thank you, mr. chairman, thank you, mr. ambassador for being here today and for your time and effort. i know this is a long hearing. you waited all this time, i
appreciate it. nafta is vitally important to the state of michigan, the state i represent. it's important to our economy and it's important to the u.s. automakers. i want to applaud your efforts for the way you conducted yourself. i had the opportunity to attend he last round in montreal. it's evident to me and all of us that you have done a spectacular world class job in representing the united states. and in preserving to the extent that you can the great relationship that we have with canada and mexico. so i want to thank you for that. i also want to thank you for your efforts to update and improve nafta so that it better represents the 2 st century global economy. i'd like to continue if i could the subject that's been raised add nauseam here but important. it has to do with the rules of origin and the concern i have specifically on behalf of the u.s. automakers is that there's substantial concern that the proposed rules of origin will
jeopardize their global competitive position and furthermore will likely cost vital u.s. manufacturing jobs. that's especially true in the state of michigan. now i know this is high in your mind. u indicated in your original testimony, you said the pup of the rules of origin proposal was to move more jobs back to the united states. but are you concerned that the aggregate impact of the proposed rules of origin might have the exact opposite effect than what you intended? and also, we're also aware that the canadian government introduced -- introduced in the last round in mexico city a modified version of their proposed rules of origin, i wonder if you might elucidate on that proposal and whether or not mexico has its own proposal regarding the rules of origin. thank you, sir. >> well, thank you,
congressman. thank you for your kind remarks. the rules of origin are extremely important, as you say. our objective is to bring more we back to michigan and think that the direction that we're moving will have that effect. the united states had a proposal, canada had a proposal, i think, and mexico has been engaged on the issue. i think we are in a position where we're probably starting to converge. we're working very closely with the u.s. industry. we have people on monday and i think maybe even until yesterday in detroit trying to work out the details of this kind of agreement. once again i can't really say exactly what's going to happen but i think we're in a pretty good place. our objective is to stop the hemorrhage of jobs from the united states and to bring jobs back to the united states.
that's our objective. the way we onlyize this is that canada and mexico basically sell their cars to the united states. so in the case of the united states, we sell 900,000 cars to canada, they sell almost two million to us. in the case of mexico they sell us, i don't know what the numbers are, maybe 2.3 million, we send them 200,000. so basically these are industries designed to sell cars in the united states. it's not unreasonable for us to say if you're going to do that we ought to have rules of origin that give some fair share of that manufacturing in the u.s. so how much are you actually working with? in the case of trucks, 25%. we have an enormous amount of leverage. in the case of cars, 2.5%, it's $900 a car. that's the best we're talking about. our view is if you're going to save $900 it's not unreasonable to say some part of that should come back to the united states. at some point, you may get to the point where they can't compete and that's clearly -- we're aware of that.
that's not our objective. our objective is to find that sweet spot where we get some of these jobs back. we are the market. we can't forget that. we're the market for all of these cars. not like they're going north and south except in small numbers. >> thank you, sir. i appreciate your sharing that information with us. we like to hear that in michigan. we appreciate your efforts and your intention in this. i'm glad to hear your team has been in detroit to talk to our folks. mr. chairman, i yield back. >> the gentleman yields back. mr. lewis, you're recognized. >> thank you, mr. chairman, thank you, ambassador, for your service to our country. ambassador, my district is the eighth largest ag district in the country in terms of corn and soybean production. we have some of the most fertile farmland in the entire world. and there's real concern with
farmers and agriculture folks on the administration's position on nafta. and withdrawal. and you know a couple of statistics i think are important, 98% of the corn that mexico imports comes from the united states, much of it from the midwest. but one third of the products produced in illinois go to canada or mexico. about 35,000 jobs tied directly to nafta. that's just in agriculture. by the way, agriculture is the number one industry in the state of illinois. and when i've heard repeatedly about withdrawal, you know, the groups that i work with, national pork producers counsel, american farm bureau, national cattlemen's beef association, national corn growers association, corn refineries association, american soybean association. americans for farmers and families. all agree that withdrawal is not an option here.
would you -- i guess my question to you ambassador is, do you know any ag groups that think withdrawal is the right approach? >> our objective is not to withdrawal. -- to withdraw. our objective is to get a good and improved agreesm. so i don't know of anying a groups that want to withdraw. but i don't know, there may be some out there, i'm not aware of them. our objective is not to withdraw, our objective is to get the best agreement we can. we always say, it's $1 trillion worth of trade. last year it was $1.1 trillion or $1.2 trillion, an enormous amount of trade between the three countries. oyou are objective is to have the agreements more beneficial to the united states and more beneficial to american agriculture. >> thank you, i appreciate the comments on that. i for the record will submit an article from "farm week" in february entitled "nafta is
u.s. farmers' lifetime." saying if the u.s. quits on nafta, it quits on its farmers. i know the president tweet recently, nafta is a bad jeck. do you agree with that? >> i have no idea about that quote. >> it was a tweet. >> i don't know -- i didn't see that. >> i would just say that causes a lot of concern, mr. ambassador, when farmers and by the way, the farmers in my district and in rural america overwhelmingly support the president and continue to support him particularly in all the things we have talked about today but i can't emphasize enough the concern with farmers in rural america when it comes to nafta. let me switch subjects here. rules of origin has been talked about a lot here. when we think about the constituencies that we all deal with, mr. ambassador, can you name a constituency that agrees with your position on rules of origin?
for instance, chamber of commerce, national federation of business, heritage foundation -- >> how about the afl-cio, do they count? >> that's fair. so afl-cio. any business groups that you -- >> listen, i don't know that -- there are business groups all over the place, i don't know where they are on rules of origin. >> could you submit those for the record, whatever those are? >> no, i can't. i don't know. i don't have that resources to go out, if the chairman wants me to go out and use resources to find out where business groups are on rules of origin i'll do it but otherwise i won't. >> as we look at trade agreements this place, when we look at the provisions, we've talked about rules of origin, sunset provision, these all appear to be unorthodox and unconventional as we negotiate and a half tark we we look at our other trade agreements. i think there's real concern, mr. ambassador, with the position we've had there and having a trade policy. and with that, i want to just mention, last year when you were going through your senate
confirmation, the administration quoted, you will be shocked by the speed at which bilateral trade agreements will begin to materialize. so i'm a supporter of bilateral trade agreements, many of us are, but we're 15 month into the administration and we have not seen a template or a model for bilateral trade agreements. i understand you haven't had people in place, i'm cognizant of that. but when we look at, is there a model -- a model, is there a mechanism out there, particularly with your position on isds, rules of origin and sunset, can you comment on that? >> i can comment but not in nine seconds. number one, of course we're going to have different policies than the chamber of commerce. their policies got us $00 billion worth of trade deficits. of course we're going to have unconventional policies if we're going to have a different result. if we do exactly the same thing nothing is going to change. this is unsustainable trade deficit. we a $560 million fwoods and
services trade deficit. we have the deficit with china which can't go on, $375 billion. we need to do things differently. i personally believe that the people who voted for the president voted for him because they didn't want it to be exactly like half of those groups wanted to be. of course it's going to be different. number one. am i out of time? >> way out of time. thank you, mr. ambassador. mr. reed, you're recognized. mr. ambassador, way over here. >> it's a pleasure to have you here today. i want to follow up. the unconventional nature of what the administration is doing is something i applaud. i have stood with. because i agree that we just cannot maintain the status quo because to your point this policy is unsustainable. i think we wt to get tthe same outcome. that's where we have broad agreement in the issues before us today. i would be remiss not to go on the record to raise the issues of dairy and wine coming from
western new york. the finger lakes wine industry is blossoming and the access to, and our dairy farmers of western new york and the access to can dark i shared with this with you and with prime minister trudeau directly is very critical to our future. i just put that on the record. what i want to do is ask some questions that haven't been covered here. one issue i have been concerned about in my entire tenure as a member of congress on the issue of trade is currency manipulation and state-owned enterprises. and i so appreciate my understanding of the negotiations that you're having right now with canada and mexico that those issues are being discussed, those issues are being potentially put on the table in regards to updating nafta. and one, do you agree that there are issues of currency manipulation across the world with other trading partners such as china, japan, european union members, and if that is
the case, how do you see the present negotiations being a tool to put us in a position where we can take on truly what i believe is one of the unfair practices that is out there that's gone unaddressed for decades? >> first of all, i completely agree with you. i think it's one of the absolutely fundamental problems is this issue of currency manipulation. and it's -- and if you go to the auto companies they're going to tell you it's japan, it varies, 6%, 7%, %, we're worried about 2.5% on our auto tariffs if the curbcy manipulation is 6% it's multiples of that. it's also an issue we believe with korea. the administration is dealing with this, it varies. i sit down with the pros and do this, my professional people who have done this for 30 years. and i'll say, what did you do the last time you had this or that kind of conversation with the treasury department on the issue of curnry manipulation? you know what they say?
we've never had a serious conversation with treasury department before this treasury department. secretary mnuchin is completely engaged in this in a way that no former, my career people, republicans and democrats, say we've never had a conversation like this where people have to come to grips with currency manipulation. we're dealing with it in the context of nafta, even though we ralize these countries are not currency manipulators. they have the same interests we do in tackling this problem. and where you go, we'll see. clearly a huge, huge impact is, or factor is transparency you saw it at the position, didn't even know what these people are doing. d competitive currency devaluation is unacceptable. it's the -- it's a complicated issue, something we're involved with, it's the treasury issue more than it is ours. we have treasury officials
besides the secretary, blocked in on this issue. they're going to get absolutely as much as you can get on it. i don't think you can overstate how important it is. i think it'll be me important in 10 years than it is now if we don't do something about it. >> i totally agree with you, mr. ambassador. i look forward to working with you as well as the trashry secretary as i have raised this issue with prior treasury secretaries. the orissue i want to raise and highlight, as we deal with intellectual property, i know it's been trash -- touched on a little bit here, but coming from an area with some interests that have been a spot -- a bright spot in regards to our innovation economy and the development of technology, i just want to go to your commitment or thoughts are on how we can best protect our intellectual property, our innovation and the next generation of the economy opportunities i see come tounge the pipeline for us. >> first of all, you understate the importance of intellectual property in your district, it's extremely important and we
understand that. because it's important those companies, particularly one company, is important to the whole economy. 10 we are completely committed both in nafta where i talked about what our position pro visions are, until now. there hasn't really been a -- there has been a movement away from intellectual property. in the last administration there was a movement away from the protection of intellectual property. we are recentering that in our opinion. but even more important, i would suggest, the whole i.t. protection with china, that is the absolute frontline of protection. >> appreciate the hard work, mr. ambassador. i yield back. >> the gentleman yields back. mr. holding, you're recognized. >> thank you, mr. chairman. thank you for being here, you've missed an incredible winter wonderland going on on the outside today. be glad you'll be going down the hill after this, not up the hill. regarding the tariffs on alum -- aluminum and steel, i encourage you to move
expeditiously to determine which our our trading partners will be exempt from the tariffs. there are countries that we know are routinely engaged in unfair trade practices but others that are undeniable allies to the united states. not only economically but for our national security as well. you and i talked before about the special relationship the united states has with the united kingdom. we've discussed the pre-- the tremendous opportunity. let's present it to the united states as the united kingdom exits the european union. the united kingdom and the u.s. have a long standing relationship that goes without saying. certainly one of our closest allies. as you go through the exclusion process for specific countries, i would hope that the united kingdom is quickly identified by your office as being exempt and i'm sure you are also aware that on monday there was a draft agreement put forth between the united kingdom and the e.u., so they're another
step forward to finalizing their exit. and in my opinion, i think the opinion of a number of my colleagues, this is a time when we need to be encouraging the united kingdom. they're a defense partner a nato partner, i think not exempting them would be a step in the wrong direction. the free trade agreement, particularly good at services. but i'd say that not only are they a nato partner but if you look at how we're aligned with them and the promotion of capitalism, very few countries out there promote it the same way the united states and the united kingdom do. promotion of free markets. and perhaps most importantly of all is entrepreneurism. entrepreneurism is alive and well in the united states and it's alive and well in the united kingdom and it's not alive and well in our sense of the word in other places around
the world. so if i were -- so i would encourage you to work on those expeditiously as possible. i know that liam feather was here last week, the minister of international trade. i'm sure you all had several meetings and i just give you a minute or so if you wanted to recap, having anything to say about those meetings and about any thoughts you or the administration might have on our potential bilateral trade agreement. >> it is exactly as you say, i've met many times with dr. fox and found them all to be informative and enjoyable. we have an enormous amount in common. they clearly are, i think it's probably the universal view in the administration that we should at the appropriate explore the idea of an f.t.a. with the u.k. when that time is is more up to them than it is to us. in the meantime what we're trying to do is do the kinds of
things that are in area where the -- where they haven't ceded competence to the e.u. so for example, certifications of professionals, there's a lot of things we can do. we have a working group started about a year ago that's had a number of meetings, a number of staff level meetings, we're getting a lot of work done that would have to be done in advance. so that at the right time we can move quickly. the issue of the u.k. and 232 is a complicated one because of the fact that they're in the e.u. that is something that is sort of as yet to be worked out. but clearly an f.d.a. and clearly other examples of working together is very high on our priority list and i see no impediments at all to moving in that direction at the appropriate time. >> i'm glad to hear you say that. i believe that a bilateral agreement with the united kingdom could be a signature accomplishment of this
administration and would be the first time that we've encapsulated in writing what the special relationship means. it's a great opportunity for this administration to lee a lasting mark not only on geopolitical politics but trade and trade policy. thank you, mr. ambassador. >> thank you, mr. holden. thank you, mr. ambassador, for being our witness today. clearly there's strong bipartisan support, the best way to lower our trade deficits are not to buy less but to sell more. we're confident in your ability in renegotiating nafta agreement to create a level playing field for american farmers and workers and businesses because when you do, we win. there's no doubt there's strong support for your very aggressive stance in opening these markets and modernizing nafta. the significant way. that's why 103 republicans, your strongest supporters, are
encouraging you to, urging you to include a strong accountability provision because we want your strong new trade agreement for america to be accountable and to be supported here in congress. we look forward to being partners and clients as we go forward. ambassador, be advised mens of the committee have two weeks to submit written questions to be answered laettner writing. those questions and your answers will remain part of the formal record. with that, mr. ambassador, thank you and the committee stands adjourned. [captions copyright national cable satellite corp. 2018] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]
>> we're waiting for the house to come in so they can vote tonight on a bill that would allow terminally ill patients to try experimental drugs. we're also waiting for an update on the omnibus bill to fund the government past the friday deadline when current funding runs out. homeland security secretary kristen neilson testified about election security at a senate intelligence committee hearing today. she was joined by former homeland security secretary jay johnson and they were both asked about u.s. sanctions against russia by west virginia senator joe manchin. >> russia or any other country that's been found guilty of
meddling in our elections, which i think that we have confirmed by all intelligence communities, what punishment, or what recommendations of punishment or sanctions would would you all recommend that would be stringent enough to prohibit that from happening or any other country going down this path that russia is going down? >> i can just tell you, i think it's a very important question. we have a multifaceted relationship with russia. we still seek their cooperation when it comes to north korea, syria, iran for example. the consequences and what we do in reaction to their meddling in the election needs to be proportionate but also needs to be driven in a way that they understand the specific behavior that we are speaking -- seeking to avoid. as the secretary said, the hope in general is that the international community continues to recognize that affecting and attacking critical infrastructure of another nation is a red