Lighthizer Lays Out US Trade Policy Agenda, NAFTA Hearings Get Underway

29 June 2017

US Trade Representative (USTR) Robert Lighthizer discussed with lawmakers the Trump administration’s trade policy priorities for the coming year, covering areas such as the renegotiation of the North American Free Trade Agreement (NAFTA) and the upcoming WTO ministerial conference.

The first hearing was held under the Senate Finance Committee on Wednesday 21 June, with another hearing held under the House Ways and Means Committee on Thursday 22 June. These meetings came just days ahead of the USTR public hearings on NAFTA, which are taking place this week from 27-29 June.

Lighthizer has been in office since May, after his confirmation by a Senate majority of 82-14. (See Bridges Weekly, 18 May 2017).

While his office released the annual President’s Trade Policy Agenda in March, in line with existing statutes, Lighthizer had not been confirmed at that stage, and the document included a caveat to that effect which promised a more detailed report later in the year. (See Bridges Weekly, 2 March 2017)

Along with outlining how the administration is approaching trade policy, Lighthizer also asked lawmakers for an increase in the Office of the USTR’s resources to address trade enforcement and related needs.

“To advocate for and defend US economic interests… USTR is preparing to take significant action far beyond that taken by previous administrations, including, for example, self-initiated litigation in defence of US workers, farmers, ranchers, and businesses,” said Lighthizer in his prepared testimony for the Senate panel.

NAFTA: Negotiating objectives expected in July

The administration is preparing for the NAFTA talks to launch as early as 16 August, Lighthizer confirmed, once the 90-day consultations period mandated under US trade laws is completed.

The Office of the USTR is already in talks with Canadian and Mexican negotiators to prepare for those negotiations to kick off.

Lighthizer confirmed that there have been well over 12,000 public responses since the comment period opened for NAFTA. He also said that his office will be releasing a detailed summary of NAFTA negotiating objectives by 17 July, in line with requirements under Trade Promotion Authority, the legislation which delegates the authority for negotiating international trade deals to the US executive branch and outlines the terms for doing so. (See Bridges Weekly, 2 July 2015)

The new USTR also confirmed that, in his view, there is no formal deadline for concluding the upcoming NAFTA talks, countering media reports that have emerged in recent weeks that the parties may be aiming to clinch an updated accord before the end of the year – which would essentially give them just over four months to do so.

The administration is aiming for a “good agreement, one that is transformative, and that is a very high-standard agreement,” he said in response to questions from lawmakers over whether the administration might accept a lower ambition deal to meet an “artificial accelerated timeframe.”

Lighthizer also pledged to consult regularly with lawmakers going forward, including if the talks hit a “stalemate.”

Some US senators raised questions over whether a NAFTA upgrade would include enforceable currency disciplines in a revised trade accord, while acknowledging that currency manipulation is not a problem with Canada or Mexico.

“I have been an outspoken critic of currency manipulation over the years,” said the USTR, noting its potential long-term effects. “We’re still debating the issue” on whether to include currency provision, Lighthizer added, while suggesting that “generally it is not a problem” and that the trade negotiations could provide the “great opportunity… to put together what is a model agreement.”

Throughout the hearing, Lighthizer repeatedly suggested that NAFTA could indeed serve as a “model agreement” on various issue areas, such as intellectual property protections, and fielded questions on how the administration may address labour provisions, energy, and other areas of interest within the tri-country grouping.

EU-US discussions ongoing

Another issue raised during the hearings was how the US would address its trading relationship with the European Union. The US and EU were previously engaged in negotiations for a Transatlantic Trade and Investment Partnership (TTIP) under the former Obama administration, but those talks have been on hold since late last year pending clarity on approach from the new leadership.

Lighthizer has already met with EU Trade Commissioner Cecilia Malmström during his time in office, with the US trade chief describing the meeting as one where the two sides reviewed “areas of common concern and a way forward on a US-EU economic dialogue” – with the details of the latter still being hammered out.

“We know that there are areas where we can ally ourselves with our European trading partners to address issues such as non-economic capacity and non-market economy status for certain countries,” he told Senate and House lawmakers in his prepared testimony for both hearings.

Lighthizer told legislators in the House committee on Thursday that TTIP is one of the proposed trade deals under review by his office, and that “TTIP is an area where there are a lot of very positive reasons to go forward in that.”

He also cited “electoral processes” in the EU as a factor that may end up holding the 28-nation bloc back, suggesting that renewed US-EU talks might need to wait until after the German national elections this autumn.

However, tensions between the EU and US have also flared in recent weeks in light of Washington’s ongoing “Section 232” investigations into steel imports – which involve the possibility of trade actions on that sector using a national security investigation. An announcement on those duties is expected within days, and a similar probe is also ongoing for aluminium.

Malmström told reporters in Brussels this week that the investigations were a matter of “concern” to the EU and its member states, and that numerous officials have reached out to the US on the subject. She also warned that, should the EU face steel duties as a result of this investigation, then Brussels will act in response.

“We are a friend and ally of the United States, and we think that we would be unjustifiably hit by this. We would have to see if that measure is in compliance with WTO, of course, and if it hits us, like it could, we will of course retaliate,” she said, while adding that she would not describe specifics in terms of the type or timing of a response at this stage.

WTO: Dispute settlement, MC11 prospects

Lighthizer also outlined to US lawmakers last week how the Trump administration will be approaching WTO matters, flagging the global trade body’s dispute settlement arm as an area where Washington will be seeking changes.

“In Paris, I had the opportunity to participate in candid discussions among parties, many of which showed the significant differences among members,” he said in his prepared remarks to both congressional panels, referring to talks with other officials during the Organisation for Economic Co-operation (OECD) Ministerial Council Meeting and Forum. (See Bridges Weekly, 15 June 2017)

The new USTR added that his office will be seeking “meaningful changes to maintain the relevance of the system” when it comes to dispute settlement.

He also described briefly what Washington’s plans for the WTO’s Eleventh Ministerial Conference (MC11) will be.

That event is scheduled for 10-13 December in Buenos Aires, Argentina, and is the global trade body’s highest-level meeting. Negotiators at the organisation’s Geneva headquarters have been working to craft a deal disciplining harmful fisheries subsidies, along with looking at whether deliverables can also be developed in agriculture, among other areas. (See Bridges Weekly, 22 June 2017)

“Looking ahead to December, we are pursuing [a] successful ministerial in Buenos Aires this December that reinvigorates the WTO. We do not advocate a meeting that seeks major deliverables or significant negotiated outcomes,” said Lighthizer in his prepared remarks.

Interest in TiSA?

The new US administration is also considering how to address the multi-country services trade negotiations for a Trade in Services Agreement (TiSA), Lighthizer said.

“That [agreement] certainly is an important one and I don’t expect it to fall by the wayside. We’re doing an evaluation right now across the board, and when that is done, we’ll move forward,” said Lighthizer in response to questions about TiSA.

The TiSA includes 23 WTO members, who have spent the past few years working to develop a trade deal that would address both market access and the development of rules across various areas, such as telecoms and financial services.

Negotiators for this services liberalisation agreement attempted to reach a political deal before the end of last year. However, those efforts were put on hold after disagreements on some substantive issues and uncertainty over the new US leadership’s approach. (See Bridges Weekly, 24 November 2016)

ICTSD reporting.

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