USMCA Will Benefit Auto, Dairy Exporters; Japan Deal Expected in 'Few Months,' Lighthizer Says

Auto exporters will be “among the biggest beneficiaries” of a ratified U.S.-Mexico-Canada Agreement, U.S. Trade Representative Robert Lighthizer said during a June 18 Senate Finance Committee hearing, adding that he has “hope” the U.S. will reach a trade deal with Japan within the next “few months.”

During the hearing, Lighthizer lobbied for what he said are the many benefits of USMCA, including increased wheat, dairy and wine exports. He also touched briefly on the trade deal with Japan, saying he is committed to increase beef, pork, coal and other energy-related exports to Japan and possibly the broader Asia-Pacific region.

But some senators raised concerns about struggling U.S. farmers, manufacturers and other exporters who they say are either being crippled by retaliatory tariffs or rapidly losing export markets in places like China and Japan. They said the trade agreements are not coming soon enough.

“One of the biggest concerns from farmers in my state is that we risk permanently losing market share if we don’t get some of these deals done,” said Sen. John Thune, R-S.D. “If we don’t, other companies will leapfrog the United States.”

While Lighthizer did not give a timeline for a deal with China, he said he hopes to have an agreement with Japan over the summer, adding that the Japanese have been “fully engaged” in negotiations with the U.S. earlier in June. Lighthizer said beef and pork exporters will significantly benefit from the deal, and said the agreement will include coal and other energy-related exports. Lighthizer said he will raise the coal exports "personally with my counterparts" in Japan. Negotiations will continue during the upcoming G-20 Summit, he said.

“I think we are making headway,” Lighthizer said. “We are at a situation where if we aren’t making headway quickly, people will lose customers and never get that market share back.” He did not directly answer a question from Sen. Steve Daines, R-Mont., on whether such a deal would need congressional approval, but said that once early gains are made, negotiators want to continue for a broad trade deal.

Lighthizer also said the USMCA should add to the opportunities for U.S.-built autos to be sold outside the NAFTA region. All companies operating in North America that comply with the USMCA’s conditions -- which would include an increase in the percentage of the car and specific car parts that must be made in the USMCA region -- will “be able to export more easily,” Lighthizer said. “I think the auto sector is among the biggest beneficiaries of this agreement,” he said. Lighthizer pointed to BMW, who he said has “substantially increased” its plant presence in the U.S. and will be an “even bigger exporter of automobiles.”

The USMCA will also make it easier for U.S. dairy exporters to ship to Canada, Lighthizer said, saying Canada’s current restrictions have had a “devastating effect on our dairy provisions.” Among other agricultural products, Lighthizer specially mentioned a provision that he said will “solve a discriminatory action against U.S. wine” exports (see 1810010006).

Senators pushed Lighthizer for more urgency, specifically in dealing with China and Japan, saying countries are taking market shares away from U.S. exporters. “We should move quickly,” said Sen. Chuck Grassley, R-Iowa, the committee chairman. “Japan and the EU haven’t been sitting still. They’ve been closing trade deals with other countries over the last two years.” Grassley also drew a hard line on including U.S. agricultural exports in a potential agreement with the EU. “Any deal with the EU that doesn’t include agriculture will not get through the United States Congress,” he said.