Washington Insider: Tracking Emerging US Trade Policy

While there seems to be less pressure on the future of NAFTA these days, there is still uncertainty regarding the outcome of the talks with Canada and Mexico, Informa Economics is reporting today. Now that more officials of the administration’s trade policy team are on board U.S. Trade Representative Robert Lighthizer is helping key congressional committees dig deeper into administration positions.For example, Informa noted that the stance outlined by Lighthizer in his appearance before the Senate Finance Committee on Wednesday differed from the earlier views of Commerce Secretary Wilbur Ross and others in the administration “who have signaled they want to wrap up the talks as quickly as possible.” However, even Ross has admitted that getting them completed yet in 2017 is not likely.Should the discussions get bogged down and reach a "total stalemate," Lighthizer said he would come back to the Senate panel for discussions. However, he said he would not accept a situation where the agreement stays in place without changes that address U.S. concerns.Lighthizer was urged by Senate Finance Committee Chairman Orrin Hatch, R-Utah, to use the talks to “improve” North American integration in order to make the region a “more attractive investment and manufacturing hub and serve as a counterweight to China."The coming weeks will be active on the U.S. trade policy front relative to NAFTA, Informa noted. USTR plans to publish detailed negotiating objectives July 17, following more consultations with Congress. Plus, there are three days of hearings set by USTR next week and already some 130 witnesses are scheduled to appear.The administration plans to push for stronger labor and environmental provisions in the agreement, as well as a digital trade chapter and strong intellectual property provisions, Lighthizer said.He also called on Japan should make unilateral changes to cut the U.S. trade deficit, including reducing high tariffs on U.S. beef, and outlined hopes to reach bilateral trade deals with many of the countries that were part of the 12-nation Trans-Pacific Partnership agreement. However, he admitted, "some of the TPP countries don't want to do bilaterals," apparently including Japan, at least for the time being, Lighthizer said.He told the committee that the controversial mechanism for resolving investment disputes may not be removed from NAFTA, as he would have preferred. At issue is the so-called investor-state dispute settlement provision, which creates a forum for companies to challenge government laws or regulation they believe have negatively impacted their business investments. "I really look forward to working with committee on that issue," Lighthizer said.Improving the functionality of the WTO is also a Lighthizer commitment, along with seeking “reforms to the WTO dispute settlement system.” "We expect to see meaningful changes in order to maintain the relevance of the system," he said.In addition, he noted that the pending WTO fight on China's market-economy status is "without question" the most serious litigation the global trading body is handling right now—and, concluded that a ruling in Beijing's favor would be "cataclysmic." While he cautioned, "Who knows how the WTO rules?" He reiterated the U.S. believes its position to be correct – that China is not a market economy.China insists it should have been treated as a market economy starting in December 2016, the 15th anniversary of its accession to the WTO. The change in treatment would likely affect how the U.S. calculates antidumping duties, resulting in lower margins for U.S. industry petitioners.Following Lighthizer’s testimony, Informa noted that it “should help ease concerns in U.S. agriculture circles about the administration's trade policy direction” following worries generated during the campaign.At the same time, Lighthizer’s testimony revealed remaining schisms among administration trade policy officials that could potentially raise new issues as groups try to determine which views will prevail in the various trade negotiations. As has been seen, these frequently involve very important issues that producers should watch closely as they emerge, Washington Insider believes.