Lighthizer Says China Will Either Reach a Deal or an Impasse 'Before Too Long'

When U.S. Trade Representative Robert Lighthizer was asked during his Senate Finance Committee testimony March 12 if the China trade deal might come together by the end of March, he said it remains to be determined. "Well, we’ll see ... I don’t know when something’s going to happen. Something is either going to have a good result or we’re going to have a bad result before too long," he said. "But I’m not setting a specific time frame and it’s not up to me. I’m working as hard as I can, and the president will tell me when the time is up or the Chinese will." He told Sen. Rob Portman, R-Ohio, a former USTR himself, that the Chinese are offering concessions with the goal of getting Section 301 tariffs lifted, and he said that "is under debate."

He also told the committee that they're trying to get China's excessive agricultural subsidies resolved in the context of this negotiation and avoid appeal of the case at the World Trade Organization (see 1902280031). And he said that if there's an agreement with China -- "and that's a big if" -- China will commit to not competitively devaluating its currency, and will commit to "certain transparency" of its currency management.

When pressed by Sen. Maggie Hassan, D-N.H., on the time table, he said, "our hope is that we are in the final weeks of having an agreement, but I'm not predicting one. There still are major, major issues that have to be resolved. And if those issues are not resolved in a way that's beneficial to the United States, we will not have an agreement." Sen. James Lankford, R-Okla., brought up the lack of exclusions for List 3 of Section 301 tariffs, a matter on which he has introduced a bill to address (see 1902280033).

Japan was also on senators' minds, particularly those from agricultural states. Sen. Steve Daines, R-Mont., noted that 80 percent of Montana's wheat is exported, most of it to Japan, and said he's worried about losing market access in Japan to other countries that remained in the Trans-Pacific Partnership. "When can we expect negotiations to begin with Japan?" Lighthizer responded, "This is a very high priority for me. It'll take a while to get an entire [free trade agreement], but my own view is we have to take care of agriculture at an earlier stage."

Also on agriculture, Lighthizer acknowledged that the U.S. and Europe cannot pursue an FTA where things stand now. "We're at a complete stalemate with them," he said, with whether they're going to talk about agriculture. "It wouldn't make any difference if we conceded or not, it would be a dead letter if we came up here" with an FTA without agriculture included, he said.

Although the topic of the hearing was supposed to be the future of the World Trade Organization, few of the questions concerned it. Lighthizer did tell Sen. Maria Cantwell, D-Wash., that he thinks "we're close of getting that real important outcome" in the Airbus subsidy case.

Lighthizer was asked several times about lifting Section 232 tariffs on Canada and Mexico, and he said he knows that it's a big problem both in terms of retaliation and prices for downstream users. "How do you relieve the burden of tariffs on steel and aluminum on Canada and Mexico and still maintain the integrity of the program?" Lighthizer asked rhetorically, and then said one way to do so would be to "put in place a historic quota." He said the level of the quota is crucial, that if it's the wrong level, it's a problem for downstream users.