Lighthizer and Ross are Scheduled to Testify Before Congress, This is What Needs to be Asked

March 19th, 2018

 

This week, Ambassador Robert Lighthizer is scheduled to testify before the House Ways and Means Committee on Wednesday and the Senate Finance Committee on Thursday. Commerce Secretary Wilbur Ross will appear before the House Ways and Means Committee on Thursday. Both men will be asked to explain the Administration’s trade policies, including President Trump’s controversial steel and aluminum tariffs and the ongoing renegotiation of the North American Free Trade Agreement (NAFTA).

There are looming concerns on Capitol Hill about the administration’s handling of the NAFTA negotiations, and these hearings are an opportunity to get clarity on the Trump Administration’s negotiating positions and goals. The NAFTA negotiations are at a critical juncture and it is imperative that the American people get answers from Lighthizer and Ross.

To help facilitate the discussion, the Trade Leadership Coalition recommends seeking answers to the following questions:

 

1. Auto Rules of Origin: The automobile rules of origin (ROO) that the U.S. has proposed could have a damaging effect on the domestic automobile industry and U.S. economy. Independent economic analyses show that the United States’ proposed changes to the automobile ROO could make the domestic automobile industry less globally competitive and dramatically increase costs for producers. This all could culminate in pushing American production and supply chain jobs abroad.

  • If an updated NAFTA includes your proposal to increase auto ROO to 85% NAFTA content and 50%, how can you ensure that domestic production and jobs in this industry are not moved outside of North America?
  • Independent economic analyses have demonstrated that tightening auto ROO will be detrimental to the U.S. automobile industry and economy. Has your office also conducted an economic study on the impact of your automobile ROO proposal. If so, please explain and provide that study. If not, please explain why you feel that conducting an economic analysis on this policy is not necessary.
  • Please explain any impacts on U.S. consumer prices that could result from your auto ROO proposal?

 

2. National Security: On March 5th, President Trump tweeted “We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.” With his tweets, President Trump has public connected the NAFTA negotiations to the Section 232 tariffs on steel and aluminum.

  • Canada and Mexico are two of the United States’ closest national security partners, closely working with U.S. authorities on matters such as border security and emergency response capabilities. If these tariffs are truly about national security issues, how could you ever consider imposing these tariffs on such important and trusted allies?
  • Section 232 tariffs on steel and aluminum are fundamentally separate from the renegotiation of NAFTA. How and why does the Trump administration link these issues?

 

3. Investor-State Dispute Settlement: It is worrisome that the administration has proposed weakening or eliminating the Investor-State Dispute Settlement (ISDS) mechanism from an updated NAFTA. ISDS is critical to ensuring that American companies receive fair treatment when operating abroad. For example, ISDS is instrumental in facilitating the export of U.S. energy products. Mexico is now the largest export destination of U.S. natural gas and gasoline. Weakening or removing ISDS from NAFTA could threaten infrastructure investments that make these exports possible, severely harming the domestic energy industry and causing our trading partners to look elsewhere.

  • Given the fact that the USTR has publicly promised to modernize NAFTA while ensuring to “do not harm” to existing economic benefits, how does the U.S. ISDS proposal further this goal?
  • The 2015 Trade Promotion Authority renewal mandates that U.S. trade negotiators seek protections for US companies when they invest abroad, how will you accomplish this legal obligation?

 

4. Sunset Clause: When U.S. companies make long-term investments in supply chains and critical infrastructure, they rely on certainty and stability. The proposal to add a five-year sunset clause to NAFTA would only serve to create instability about future trade rules.

  • How does a sunset clause promote stability and help the U.S. economy if it clearly would be a detriment to U.S. businesses and their investments?

 

5. Trade Deficit: It is universally accepted by economists that more trade is better for the U.S. economy. The U.S. economy has been steadily growing for nearly nine years straight and unemployment is near historic lows. During this period of growth, U.S. trade with Mexico has expanded even as the U.S. has consistently run a trade deficit with Mexico, mostly due to imports of Mexican crude oil. Our recent economic growth suggests that the USTR and Department of Commerce’s concerns about the bilateral U.S.-Mexico trade deficit are unfounded.

  • Given these facts, shouldn’t the United States be more focused on expanding trade and less concerned about running a trade deficit?

 

6. Seasonality: One way that NAFTA has benefited American consumers is by increasing the availability and affordability of nutritious, fresh fruits and vegetables. Throughout the negotiations, the USTR has discussed including an anti-dumping provision for seasonal produce. Such a provision could negatively affect U.S. consumers by reducing availability and increasing costs.

  • Has your office conducted an economic analysis of the impact that a seasonal import-relief provision could have on consumers across the United States?
  • If so, please explain and provide the results of that study. If not, please explain why you feel that conducting an economic analysis on this policy is not necessary.
  • Do you believe that Canada and Mexico will impose the exact same type of remedies against U.S. agricultural products? Has your office fully analyzed the long-term impact that such measures could have on U.S. exporters and job losses?
  • If so, please explain and provide the results of that study. If not, please explain why you feel that conducting an economic analysis on this policy is not necessary.
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