USTR Nominee Sheds Light on Priorities During Senate Hearing

Global steel overcapacity, agricultural market access and Canadian softwood lumber imports would be top priorities for Robert Lighthizer if the Senate confirms him to serve as U.S. trade representative, a position he expects will continue to lead the executive branch’s execution of trade policy, he said during his Senate confirmation hearing March 14. “I fully expect to have the full statutory authority that the Congress provides,” Lighthizer told the Senate Finance Committee. President Donald Trump named Lighthizer the nominee for the position in January (see 1701030018).

Lighthizer added that the role of USTR in the past has been to take the lead in sorting out the executive branch’s overall approach to trade policy, and that he expects to work collaboratively with Commerce Secretary Wilbur Ross and White House trade leaders, including National Trade Council chief Peter Navarro and National Economic Council Director Gary Cohn. “I expect it to work the way it has. I expect it to be very collaborative,” he said. There have been some expectations that Ross and Navarro would exert inordinate influence over Trump administration trade policy (see 1612200018 and 1612210054).

The U.S. should engage China bilaterally and multilaterally whenever possible to push the nation to reduce its steel overcapacity, largely caused by government intervention, Lighthizer said. The U.S. could potentially self-initiate antidumping and countervailing duty cases, as well as help other countries enforce their laws to prevent Chinese steel dumping, and engage China through the December-created Global Forum on Steel Excess Capacity, Lighthizer said. Other potential responses could involve a more “systemic approach,” including bringing cases to the World Trade Organization, he said. “We have to sit down and have private discussions where we think about what other remedies we have,” Lighthizer said.

Lighthizer said he would keep in place the U.S. designation of China as a “non-market economy” for AD purposes, and engage with the EU in hopes that they maintain their current “non-market” AD duty treatment for dumped Chinese goods. During the hearing, Sen. Bob Casey, D-Pa., expressed continued concern that the EU appears to be amending its position that China is a non-market economy (see 1612230033). The U.S. should also negotiate with nations party to the defunct Trans-Pacific Partnership, particularly Japan, to secure the same high level of access the agreement would have provided for U.S. agriculture into those markets, he said. Breaking through global market distortions that prevent U.S. agricultural access is a “very high priority,” he said.

On NAFTA, Lighthizer said the agreement can be renegotiated in such a way as to not stifle the substantial agricultural market access that U.S. producers and exporters have gained through the agreement. He acknowledged Mexico has options to export to countries outside of the U.S., but said the U.S. has leverage because the agreement has substantially helped Mexico, adding that the agreement can be improved if done properly. Lighthizer also noted his understanding that the Trump administration hasn’t arrived at a firm stance on whether NAFTA will remain as one trilateral agreement or morph into two bilaterals.

The ongoing U.S.-Canadian softwood lumber issue would also be at the “top of the list” regarding his approach toward trade negotiations with Canada, the nominee said. Senate Finance Committee Ranking Member Ron Wyden, D-Ore., said he liked that Lighthizer is prioritizing the issue. “Quantitative restraint is what the domestic industry wants in both parts of Canada,” Lighthizer said. “The last agreement really did not work the way it was supposed to work, and … we need to have a new one -- either litigation or a new agreement -- that does work.” The last U.S.-Canada Softwood Lumber Agreement expired in October 2015 and Canadian softwood is currently undergoing AD and CV duty investigations at the Commerce Department (see 1702010014).

Lighthizer also pledged to strongly enforce U.S. intellectual property rights, in response to questions by Senate Finance Committee Chairman Orrin Hatch, R-Utah, on how the nominee would reckon with India’s poor intellectual property rights record and Canada’s “well-documented” refusal to enforce IP rights for in-transit cargo destined for the U.S. The U.S. maintains a competitive advantage in innovation and science, and weak IP enforcement would compromise that, as U.S. IP rights holders are wrestling with slow and inefficient patent protection, IP theft and insufficient property protection overseas, Lighthizer said. Hatch also expressed concern that the Obama administration brought no IP cases to the WTO. Lighthizer expects to bring “as many actions as are justified both to the WTO and in our bilateral agreements," he said. "This will be a point of emphasis. I think the President asked me to do this job, in part, because of my enforcement background, and I expect to do it across the board.”

Lighthizer defended Trump’s trade approach, after a line of questioning from Sen. Debbie Stabenow, D-Mich., about whether Trump’s businesses around the world might pose conflicts of interest in trade discussions. Stabenow raised concern that, while Trump during his campaign vowed to label China a currency manipulator on his first day in office, he has yet to do so, tying this inaction to China’s recent provisional approval of Trump trademark applications that were pending for 12 years. Lighthizer said learning any deep knowledge of the Trump family’s business dealings around the world would “absolutely not” help him do his job as USTR. “I don’t want to know anything about it,” Lighthizer said. “I believe that, if your concern is that the president would somehow not defend America against China because of trademarks, I want to let you be assured that that is not the case, and I’ll also say that I’ll bet you, you and I will sit down in your office between now and the time I leave, and you’re going to say, ‘Bob, you’re right. He really is going to change the paradigm on China.’”

During the hearing, Sen. Pat Toomey, R-Pa., expressed general concern that Navarro is focusing too much on reducing the U.S. trade deficit, and that he might home in on reducing imports to achieve that objective, which Toomey said could invite retaliation. Toomey said balancing trade in goods shouldn’t be the top priority of negotiations, and that he hopes the Trump administration will focus more on expanding exports than cutting imports. “Whatever mechanism one uses to reduce imports, whether it’s quotas or tariffs or bureaucratic hurdles that foreign exporters can’t get over, then that result is fewer choices for American consumers,” Toomey said.

Hatch and Wyden clashed over Lighthizer’s confirmation process in opening statements. Senate Democrats are pushing for GOP counterparts to support unrelated legislation in exchange for leaving a clear path for Lighthizer’s confirmation (see 1702150047). Senate Democrats continue to assert that Lighthizer needs a legislative waiver to secure Senate confirmation, stemming from his 1985 legal representation of Brazil, but the Senate Finance Committee’s GOP Majority disagrees (see 1703140011 and 1701250061). Democrats are still “willing to work with Republicans” to provide an exception to allow Lighthizer’s confirmation, Wyden said (here). Wyden also gave a nod to Lighthizer, noting his “understanding about the impact of unfair trade on America’s manufacturers and workers.”

In Hatch’s opening statement (here), the chairman called Democrats’ insistence to move the unrelated bill “legislative hostage-taking,” and said such a move is “unprecedented” in the context of consideration of USTR nominees. Without specifically mentioning the waiver, Sen. Rob Portman, R-Ohio, during the hearing said it appears as though, for Lighthizer’s advancement, “we’ll have to work out something … but we need him.”

The Committee to Support U.S. Trade Laws (CSUSTL) said Lighthizer's confirmation hearing made "crystal clear" that there is no real reason to further delay his confirmation. "It’s going to take someone who knows current policy in great detail, who can devise legal and negotiation strategies to get us to that better arrangement and who can foster the kind of collaboration with Congress that will make it work and make it stick," CSUSTL said in a statement. "To no one’s surprise who know his work, Mr. Lighthizer showed that he brings all that to the responsibilities with which he has been entrusted by the President."

Email ITTNews@warren-news.com for a copy of CSUSTL's statement.