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USTR Lighthizer Highlights Trump Administration’s Trade Priorities

Renegotiating the North American Free Trade Agreement – a 1994 trade deal that includes the United States, Canada and Mexico – is a top priority for the Trump administration, but trade relations with the European Union, reforming the World Trade Organisation and enforcing existing trade deals are also high on the list, U.S. Trade Representative Robert Lighthizer told the Senate Finance and House Ways and Means committees in June.

Lighthizer said talks with Canada and Mexico on updating NAFTA can begin as soon as 17 August “and that is our intention.” In the meantime, USTR is reviewing the more than 12,400 public comments received and will hold “several days of public hearings” beginning on 27 June to help formulate its negotiating positions. Lighthizer committed to publishing a detailed summary of negotiating objectives at least 30 days before the talks begin. According to press reports, Lighthizer said the administration would like to reach a new deal by the end of 2017 but has no specific deadline.

With respect to the EU, Lighthizer said the two sides are currently in the process of establishing the scope of their economic dialogue, which includes both bi-lateral and global issues. Non-economic capacity and non-market economy status for certain economies (mostly notably mainland China) are among the issues where the United States anticipates being able to ally itself with the EU.

The United States is also looking to improve the functioning of the WTO, Lighthizer said, particularly its dispute settlement system. The United States has begun to “articulate [its] desires” on needed reforms and expects to see “meaningful changes in order to maintain the relevance of the system.” While this is now “a topic of serious discussion at the WTO,” Lighthizer acknowledged that there are “significant differences among members.” He also noted that the United States is not pushing for “major deliverables or significant negotiated outcomes” at the WTO’s next ministerial meeting this December.

Lighthizer also emphasised the need to enforce “laws already on the books,” asserting that “too little has been done in this area in recent years.” On-going efforts include “actively assessing ways to get tough on countries who do not respect our economic system, … reviewing and amending our action plans to ensure that we can identify [intellectual property rights] violations and take appropriate enforcement actions,” and initiating out-of-cycle reviews or investigations of countries that receive trade preferences under programmes such as the Generalised System of Preferences and the African Growth and Opportunity Act.

Lawmakers on both sides of the aisle have expressed scepticism about President Trump’s trade policy, however. At a 22 June hearing on the Trump administration’s trade policy agenda, for example, House Ways and Means Committee Chairman Kevin Brady (Republican-Texas) signalled concerns with some of the administration’s positions and actions along with cautious support of others.

In his opening statement Brady took issue with Trump’s negative characterisation of U.S. trade policy over the past few decades. Countering claims that trade agreements have been disastrous for U.S. workers, Brady said the country’s network of “strong, enforceable trade agreements” has “expanded economic freedom so that our businesses, workers, and consumers can thrive.” He asserted that the United States has held its competitors accountable through “strict enforcement of the rules we created and our leadership in the World Trade Organization,” whereas Trump has held that foreign trading partners have taken advantage of the United States. Brady also alluded to the broader geopolitical importance of a “steadfast commitment to the principles of free enterprise, open markets, and rules-based international commerce,” particularly in the face of growing competition from mainland China.

Brady defended NAFTA and urged caution as the administration moves to renegotiate the nearly 25-year-old agreement. While this and other U.S. free trade agreements have come in for consistent criticism from the White House, Brady asserted that they “have created American jobs, lowered prices for consumers, and helped our businesses compete and win in all three crucial sectors of our economy – agriculture, services, and, yes, manufacturing,” NAFTA does need to be updated “to reflect the modern realities of trade on digital commerce, intellectual property, state-owned enterprises, and customs barriers,” he said, but this modernisation “must be accomplished in a manner that retains current benefits in a seamless way that does not disrupt the current agreement, ongoing trade, or the millions of American jobs at stake.”

More broadly, Brady said, the White House should move quickly on “an ambitious network of deals that break down barriers and allow us to sell American all over the world.” He cited particular interest in the Transatlantic Trade and Investment Partnership with the EU, which has not been a particular emphasis for the administration, as well as bi-lateral FTAs with Japan and the United Kingdom, which Trump has appeared more favourable toward. Brady also stressed the importance of U.S. leadership on trade in the Asia-Pacific region “so that we do not lose ground to China,” a possible criticism of the president’s decision to withdraw the United States from the Trans-Pacific Partnership agreement a dozen countries concluded in 2016.

Among Brady’s strongest positions was his objection to the administration’s emphasis on lowering trade deficits and its threats to raise trade barriers to achieve that goal. “There are many factors behind our trade deficit – some may be related to trade, but most are not,” he said, echoing the views of a number of economists. “Examining the trade balance as black or white conceals what is really going on.” In addition, while the White House has stressed the concept of reciprocity as a way of addressing trade deficits (i.e., raising tariffs on goods from countries that impose higher tariffs on U.S. goods, and vice versa), Brady said “history shows that the most successful approach is not protectionism – it’s breaking open new markets.”

In this context Brady expressed particular concern about potential restrictions on steel and aluminium imports if separate on-going section 232 investigations determine that such imports are endangering U.S. national security. If section 232 authority is used improperly, he said, “we cut off supply that our companies need to stay competitive. Done hastily, we raise costs and prove to our partners that we aren’t reliable. Done indiscriminately, we harm countries that trade fairly and send a protectionist signal to those looking for an excuse to do the same.” The U.S. Department of Commerce could make its recommendations in these cases as early as early July, although press reports state that disagreements within the administration could push that back.

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