USTR Says Reducing Trade Deficit No. 1 in His Job, Sets Mid-May as NAFTA Goal

U.S. Trade Representative Robert Lighthizer said it will be very difficult to get China to change the policies that are the reasons the U.S. opened the Section 301 investigation. "I am always hoping, but not always hopeful," he said to a U.S. Chamber of Commerce audience two days before he leaves for negotiations in Beijing.

The Chinese goal to become industry leaders in 10 technology areas, a plan called Made in China 2025, is not one Lighthizer expects China to abandon under pressure from the U.S. Although he thinks Made in China 2025 is based on getting technology from other firms without paying for it, protecting Chinese firms from competitors -- as well as $300 billion in government subsidies -- he doesn't think China will stop doing what has worked so well for it in solar panels, semiconductors and other fields. However, he said, his goal is to find a way "where the United States isn't the victim of it."

The trade deficit the United States has -- he pegged it as a $800 billion problem -- is unsustainable, he believes. "If we can't make a change in the paradigm, then I'm totally wasting my time. A big part of that is getting the relationship with China right."

Lighthizer demurred when asked how long the U.S. would talk to China before activating tariffs on $50 billion in goods. The earliest they could come is in June. As was the case on country exemptions for the Section 232 tariffs, it will be the president's decision. David Rubenstein, the private equity titan who was interviewing Lighthizer on May 1, asked him why Japan wasn't exempted from 232 tariffs at the same time the European Union was. "That's by no means a closed door," Lighthizer said of Japan and an exemption from 232 tariffs. But he threw cold water on the idea that the U.S. might join the Trans-Pacific Partnership -- something Japan would prefer to a one-on-one free-trade deal with the U.S. "I agree with the president completely that bilateral deals are far more effective than these multilateral deals. They're enforceable in a way the others are not."

The Chinese Section 301 investigation is coming to a head at the same time Lighthizer is trying to wrap up the NAFTA negotiations. Chamber of Commerce President Thomas Donohue, speaking before Lighthizer, said he has told the trade representative many times "failure is not an option" for NAFTA. The top negotiators for Canada and Mexico will return to Washington next week to work on a revised NAFTA, Lighthizer said, adding: "I'd like to get it done a week or two after that. If not, you start to have a problem" getting a vote in the current Congress. But he said he has no idea if that will happen.

Lighthizer dismissed the idea that there might not be the votes in Congress to pass a revised NAFTA. "I think if we get an agreement that's acceptable to the president, and to the Mexicans and the Canadians ... I believe we'll have the votes." He said he hopes to get 65 or 70 votes in the Senate for the new NAFTA. "My objective is to get an agreement that's going to have overwhelming support."

Lighthizer said that if a deal among the three countries is not finished in time for a vote during the lame duck session, and if the Democrats were to win a majority in the House, he doesn't think that ruins the chance for passing a revised NAFTA. "The new Congress will have some new priorities," he said, which he suggested could mean a return to the bargaining table. But, he said, "I've had Democratic Congress people, even very senior ones [say], 'You're better bringing this up in January.'"