USTR Nominee Lighthizer Outlines Trade Stance in Senate Hearing

16 March 2017

Robert Lighthizer, the nominee for the post of US Trade Representative (USTR), testified during a Senate confirmation hearing on Tuesday 14 March that he would work to implement President Donald Trump’s “America first” vision on trade, while fielding questions from lawmakers on topics ranging from the renegotiation of the North American Free Trade Agreement (NAFTA) to his planned stance on China.

The hearing in front of the Senate Finance Committee had been looked to for additional signs of the potential direction of US trade policy under the new Trump administration. (See Bridges Weekly, 26 January 2017)
While the Office of the USTR released its annual “Presidential Trade Agenda” earlier this month, the document was prepared with the caveat that the agency is still without its top trade official and that a more detailed version would therefore be forthcoming. (See Bridges Weekly, 2 March 2017)

Lighthizer is an international trade lawyer who previously served as a Deputy USTR under Republican President Ronald Reagan. At the time, his dossier involved topics such as agriculture and industrial goods, along with the field of services trade and the negotiating of bilateral trade agreements.

Should Lighthizer be confirmed, he would run an agency that has been responsible for overseeing the negotiation of international trade deals, as well as filing international trade disputes and playing an active role in investment policy and the development of commodity agreements with trading partners.

Trump has also indicated that US trade policy under his administration – including in negotiating international deals – would also include significant involvement of the US Department of Commerce, headed by Secretary Wilbur Ross, as well as a newly-formed National Trade Council run by Peter Navarro.

Ross is expected to play a major role in the NAFTA talks, having already met with Mexican Economy Secretary Ildefonso Guajardo Villareal and recently suggesting that the required notification to Congress regarding that process could be sent in the near term.

“America first” trade policy

In written testimony submitted ahead of the hearing, Lighthizer said that his views align with those of the president in terms of pursuing an “America first” trade policy.

Trump has used the controversial phrase “America first” to describe a policy focused on ramping up the country’s manufacturing potential, fighting the flight of companies overseas in order to centre more production at home, and otherwise taking steps that he says will support US workers.

However, the policy proposals and rhetoric that have emerged to date – including the prospect of a possible “border tax” for countries that do move their production base abroad, along with criticisms of WTO dispute rulings that allegedly may affect US rights and obligations – have sparked concerns in various quarters that Washington could be moving toward a more inward-focused agenda on trade.

“I agree with President Trump that we should have an America first trade policy and that we can do better in negotiating our trade agreements and stronger in enforcing our trade laws,” said Lighthizer.

The prospective US trade chief particularly referred to the importance of a well-functioning global trading system, adding that Washington would be seeking “like-minded trading partners to ensure fair trade and to encourage market efficiency.”

Lighthizer said his goal as USTR would be to work with stakeholders “to develop and implement a policy that increases trade, grows the economy and makes trade freer and fairer but, most importantly, that improves the economic wellbeing of our workers, farmers, ranchers and businesses large, medium, and small.”

NAFTA renegotiation – lessons from TPP?

Notably, in discussing the expected renegotiation of NAFTA with Canada and Mexico, Lighthizer suggested that some useful ideas could be drawn from the Trans-Pacific Partnership (TPP), a deal that had been a priority of the previous Obama Administration. According to comments reported by Politico, Lighthizer said that trying to make similar gains on agriculture as had been made under the TPP would also be an area to explore, stating that doing so with Asian economic giant Japan would be a priority.

Trump withdrew the US from the TPP in January, as he had promised to do on the campaign trail. The future of the TPP and broader Asia-Pacific regional integration was discussed from 14-15 March among representatives from all TPP members – including the US – during a summit in Viña del Mar, Chile.

The meeting was also set to have the participation of non-TPP countries China and South Korea as well as members of the Pacific Alliance. (See Bridges Weekly, 9 February 2017 and related story, this edition)

China in focus

The prospective USTR’s stance on trade policy involving China also drew scrutiny during the Finance Committee hearing this week, with a particular focus on enforcement both within and outside the WTO system.

“I believe [the president] is going to change the paradigm on China and, if you look at our problems, China is right up there,” said Lighthizer on Tuesday afternoon. “I don’t believe that the WTO was set up to deal effectively for a country like China and their industrial policy,” he said, hinting that the administration would look to develop “new tools” for addressing the subject.

The US and China, while often partners on policy issues ranging from climate change to the global economy, have also sparred on the international stage on topics ranging from currency valuation to the current global steel crisis, given the Asian economic giant’s role as the world’s largest steel producer.

Lawmakers indicate priorities

The Tuesday afternoon hearing in Washington also gave clues as to congressional priorities on trade, as lawmakers tabled questions for Lighthizer ranging from NAFTA-related priority areas to trade enforcement efforts.

Orrin Hatch, the Republican Senator from Utah who chairs the Finance Committee, indicated that his priorities include seeing the next USTR take a strong stance in defence of intellectual property rights; to make good use of the “Trade Promotion Authority” legislation that was updated and renewed under US President Barack Obama; and to improve monitoring and enforcement relating to the commitments of US trading partners.

Hatch also said that he hopes the Trump Administration’s trade negotiating agenda “will be able to rebalance the Obama Administration trade agreement template.”

“In my view, President Obama continually sacrificed US commercial interests at the negotiating table in favour of a liberal social agenda,” said the Utah senator, suggesting that his own views were more in favour of strong intellectual property rights; improved agricultural market access; and addressing topics such as trade secrets and anti-corruption provisions.

Ron Wyden, the Democratic Senator from Oregon who serves as the committee’s ranking member, suggested in his opening statement that his party’s lawmakers and the public are especially interested in seeing “some real specifics” on trade policy from a nominated member of the president’s cabinet.

“After a campaign of shouting that NAFTA could be the worst trade deal ever, the president got into office and said our trade relationship with Canada – a NAFTA member – only needed ‘tweaking.’ He spent the campaign talking tough about China, but his administration has largely been quiet about their plans when it comes to China’s unfair trade practices. So what I say is that our trade policy needs to deliver results, not just talk,” said Wyden.

Wyden similarly highlighted the value of trade enforcement, while also calling for greater transparency on trade negotiations as well as “being on the offense in overseas markets.”

Coming up

Lighthizer will next face a vote in the Senate Finance Committee and later on the Senate floor in order to be confirmed as the next USTR. Lawmakers are also debating over whether the USTR-designate will need a waiver to be confirmed, given past lobbying work done years ago for some foreign governments, though many on both sides of the aisle have expressed a commitment to finding a solution on the matter.

ICTSD reporting; “Lighthizer vows to crack down on unfair China practices,” FINANCIAL TIMES, 14 March 2017; “Trump’s trade pick sails through hearing but faces procedural hangup,” POLITICO, 14 March 2017; “U.S. Congress urges get-tough approach with Canada in hearing for Trump trade pick,” CBC NEWS, 14 March 2017; “Commerce Sec Wilbur Ross aims to start formal NAFTA renegotiation process in the next few weeks,” CNBC, 10 March 2017.

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