U.S. GOVERNMENT PUBLISHING OFFICE

33–478 WASHINGTON : 2019

U.S. TRADE POLICY AGENDA 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JUNE 22, 2017 

Serial No. 115–FC05 

Printed for the use of the Committee on Ways and Means 

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ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

PETER J. ROSKAM, Illinois 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

TOM RICE, South Carolina 

DAVID SCHWEIKERT, Arizona 

JACKIE WALORSKI, Indiana 

CARLOS CURBELO, Florida 

MIKE BISHOP, Michigan 

RICHARD E. NEAL, Massachusetts 

SANDER M. LEVIN, Michigan 

JOHN LEWIS, Georgia 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

BRIAN HIGGINS, New York 

TERRI SEWELL, Alabama 

SUZAN DELBENE, Washington 

JUDY CHU, California 

DAVID STEWART, Staff Director 

BRANDON CASEY, Minority Chief Counsel 

iii 

C O N T E N T S 

Page 

Advisory of June 22, 2017, announcing the hearing ............................................. 2 

WITNESS 

Honorable Robert E. Lighthizer, Ambassador, United States Trade Representative ....................................................................................................................... 6 

QUESTIONS FOR THE RECORD 

Questions from Trade Subcommittee Chairman Reichert to Ambassador 

Lighthizer ............................................................................................................. 61 

Questions from Ranking Member Neal to Ambassador Lighthizer ..................... 64 

Questions from Trade Subcommittee Ranking Member Pascrell to Ambassador Lighthizer ................................................................................................... 72 

Questions from Representative Johnson to Ambassador Lighthizer ................... 77 

Questions from Representative Lewis to Ambassador Lighthizer ....................... 78 

Questions from Representative Nunes to Ambassador Lighthizer ...................... 84 

Questions from Representative Larson to Ambassador Lighthizer ..................... 86 

Questions from Representative Jenkins to Ambassador Lighthizer ................... 88 

Questions from Representative Crowley to Ambassador Lighthizer ................... 90 

Questions from Representative Marchant to Ambassador Lighthizer ................ 92 

Questions from Representative Higgins to Ambassador Lighthizer ................... 93 

Questions from Representative Reed to Ambassador Lighthizer ........................ 95 

Questions from Representative DelBene to Ambassador Lighthizer .................. 96 

Questions from Representative Holding to Ambassador Lighthizer ................... 97 

Questions from Representative Chu to Ambassador Lighthizer ......................... 99 

Questions from Representative J. Smith to Ambassador Lighthizer .................. 102 

Questions from Representative Schweikert to Ambassador Lighthizer .............. 104 

Questions from Representative Rice to Ambassador Lighthizer ......................... 105 

Questions from Representative Walorski to Ambassador Lighthizer ................. 107 

Questions from Representative Bishop to Ambassador Lighthizer ..................... 109 

SUBMISSIONS FOR THE RECORD 

Advanced Medical Technology Association (AdvaMed) ........................................ 110 

American Farm Bureau Federation ....................................................................... 121 

Borderplex Alliance ................................................................................................. 126 

Center for Fiscal Equity .......................................................................................... 136 

Flexible Packaging Association (FPA) .................................................................... 139 

Fresh Produce Association of the Americas (FPAA) ............................................. 143 

National Pork Producers Council (NPPC) ............................................................. 146 

TechNet .................................................................................................................... 156

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U.S. TRADE POLICY AGENDA 

THURSDAY, JUNE 22, 2017 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:05 a.m., in Room 

1100, Longworth House Office Building, Hon. Kevin Brady [Chairman of the Committee] presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3625 

Thursday, June 22, 2017 

FC–05 

Chairman Brady Announces Hearing on 

U.S. Trade Policy Agenda 

House Ways and Means Chairman Kevin Brady (R–TX), announced today that 

the Committee will hold a hearing on the U.S. trade policy agenda with U.S. Trade 

Representative Robert Lighthizer. The hearing will take place on Thursday, 

June 22, 2017, in room 1100 of the Longworth House Office Building, beginning at 10:00 a.m. 

In view of the limited time to hear the witness, oral testimony at this hearing 

will be from the invited witness only. However, any individual or organization may 

submit a written statement for consideration by the Committee and for inclusion in 

the printed record of the hearing. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page 

of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select the date on the calendar to 

see the list of hearings. Select the hearing for which you would like to make a 

submission, and click on the link entitled, ‘‘Click here to provide a submission for 

the record.’’ Once you have followed the online instructions, submit all requested 

information. ATTACH your submission as a Word document, in compliance with the 

formatting requirements listed below, by the close of business on Thursday, 

July 6, 2017. For questions, or if you encounter technical problems, please call (202) 

225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any materials submitted for the printed record, and any written comments in response to a request for 

written comments must conform to the guidelines listed below. Any submission not in compliance with these guidelines will not be printed, but will be maintained in the Committee files 

for review and use by the Committee. 

All submissions and supplementary materials must be submitted in a single document via 

email, provided in Word format and must not exceed a total of 10 pages. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

All submissions must include a list of all clients, persons and/or organizations on whose behalf 

the witness appears. The name, company, address, telephone, and fax numbers of each witness 

must be included in the body of the email. Please exclude any personal identifiable information 

in the attached submission. 

Failure to follow the formatting requirements may result in the exclusion of a submission. All 

submissions for the record are final. 

3 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available at 

http://www.waysandmeans.house.gov

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Chairman BRADY. The Committee will come to order. 

Good morning. Today, our Committee is honored to welcome 

United States Trade Representative Robert Lighthizer to testify on 

President Trump’s trade policy agenda. 

Ambassador Lighthizer, thank you for joining us. We look forward to your testimony. 

Mr. Ambassador is a former Deputy U.S. Trade Representative 

under President Reagan, and as an experienced trade negotiator, 

you understand that U.S. leadership and participation in a rulesbased trading system is essential to our Nation’s prosperity. America has led the world in global commerce for the better part of the 

last 100 years. Through our network of strong and forceful trade 

agreements, we have expanded economic freedom so that our businesses, our workers, and our consumers can thrive. 

Through strict enforcement of the rules we created and our leadership in the World Trade Organization, we have held our competitors accountable. And through our steadfast commitment to the 

principles of free enterprise, open markets, and rules-based international commerce, our Nation has set itself apart. The world looks 

to us, not China, to lead in setting the standards of global commerce. When we set an example, the world follows. 

Today, American leadership on trade is more important than 

ever, especially in the Asia-Pacific region where China’s influence 

is growing every day. It is urgent that we take charge on trade in 

the Asia Pacific so that we don’t lose ground to China. After all, 

to preserve and strengthen America’s leadership in global commerce, it is not enough to simply buy American products and services; we also have to sell American. And we need strong trade 

agreements that allow us to do so in Asia and in fast growth markets throughout the world. 

Our trade agreements, including NAFTA, have been tremendously successful. They have created American jobs, lowered prices 

for consumers, and helped our businesses compete and win in all 

three crucial segments of our economy: agriculture, services, and, 

yes, manufacturing. 

That said, we have to take action to strengthen our existing 

agreements to ensure they continue to benefit the American people. 

I am pleased that President Trump is taking this approach with 

NAFTA. NAFTA was negotiated nearly 25 years ago. It should be 

updated to reflect the modern realities of trade on digital commerce, intellectual property, state-owned enterprises, and customs 

barriers, among others, following the negotiating objectives Congress set forth in TPA. 

And as you have committed to us during earlier consultations, 

Mr. Ambassador, this modernization must be accomplished in a 

4 

manner that retains current benefits in a seamless way that 

doesn’t disrupt the current agreement, ongoing trade, or the millions of American jobs at stake. 

With the Administration’s commitment to our strong balanced 

negotiating objectives and deliberate timetable established by TPA, 

I am confident we can work together to deliver a high-quality deal 

for the American people, one that can serve as a model as you 

move forward with other bilateral agreements. 

Given that the Administration does not support a multilateral 

approach, we must move quickly together on an ambitious network 

of deals that break down barriers and allow us to sell American all 

over the world. I am particularly interested in T–TIP once the European Union can conclude an ambitious and comprehensive deal. 

Also, I am interested in trade agreements with Japan and the 

United Kingdom, when it can come to the table, as well as the 

Trade in Services Agreement and the Environmental Goods Agreement. And we plan to renew GSP and move quickly on our miscellaneous tariff bill to help U.S. exporters. 

I am encouraged to see the President’s dedication to strict enforcement of trade rules. The President has already taken important steps by putting in action many new enforcement tools passed 

by Congress last year. If countries fail to uphold their trade obligations, these powerful tools and our participation in the WTO allow 

us to challenge them and, if necessary, push back strongly on behalf of our businesses and our workers. 

And when it comes to America’s trade deficit, we welcome the 

President’s efforts to examine the issue. There are, as you know, 

many factors behind our trade deficit. Some may be related to 

trade, but many are not. For example, the dollar status as the 

world’s reserve currency is a significant factor. Examining the 

trade balance as black or white conceals what is really going on. 

Many exports from, say, Mexico reflect tremendous U.S. value 

added through research, development, design, intellectual property, 

services support, and manufacturing. To the extent the trade deficit is caused by unfair trading practices, we must rip down those 

barriers. And through our powerful enforcement tools, we can. Another solution is to push for strong trade agreements that open up 

new markets worldwide for American products and services. 

Through trade agreements that are strictly enforced, we have reduced and even eliminated trade deficits in manufacturing, agriculture, and services. In many cases, we have even turned deficits 

into surpluses. While our first instinct may be to restrict imports, 

history shows that the most successful approach is not protectionism; it is breaking open new markets to American made goods 

and services. We have some of the best businesses, workers, and 

products in the world. If we can reach these customers on a level 

playing field, America will usually come out on top. 

That is the recommendation I offer as the Administration considers whether to restrict steel and aluminum imports. I agree: We 

must address market distortions created by China. Section 232 authority must be used with careful consideration of consequences to 

our economy and trade rules that we wrote and fully expect our 

trading partners to abide by. Done improperly, we cut off supply 

that our companies need to stay competitive. Done hastily, we raise 

5 

costs and prove to our partners that we aren’t reliable. Done indiscriminately, we harm countries that trade fairly and send a protectionist signal to those looking for an excuse to do the same. It will 

encourage others to restrict our exports even in unrelated sectors, 

which only hurts the growth of jobs and paychecks here at home. 

I want to work with the Administration to identify a remedy that 

is balanced, effective, and protects our national security and economic interests. 

America must continue to set the standards of global commerce. 

With 96 percent of the world’s customers located outside of the 

United States, we cannot afford to sit on the sidelines, or worse, 

lead the world into abandoning the very rules that have served us 

so well. 

Ambassador Lighthizer, we are eager to work with you and 

President Trump on a pro-growth trade agenda that creates jobs, 

grows paychecks, and improves the lives of all Americans. 

Thank you again, Mr. Ambassador, for being here. We look forward to your testimony. And I now yield to the distinguished Ranking Member, Mr. Neal, for the purposes of an opening statement. 

Mr. NEAL. Thank you, Mr. Chairman. 

Ambassador Lighthizer, I want to welcome you on behalf of the 

committed Democrats. Today’s hearing is an opportunity for us to 

hear from you about the Administration’s vision for U.S. trade. The 

Administration has certainly been busy on trade. The headlines 

these past few months have been filled with stories about modernizing NAFTA, withdrawing from NAFTA, Executive orders, Executive memos, Section 232 national security reviews on steel and aluminum imports, Canadian dairy, Mexican sugar, U.S. China, a 100- 

day plan and certainly the issue of currency manipulation. 

What we have been missing in this overall vision, as well as the 

specifics behind all of it, is activity. What are the Administration’s 

trade policy goals? What priorities are you trying to serve? How are 

you going to do it? And I hope this morning you can provide us 

with some answers. 

On a range of issues, there has been a lack of clarity, consistency, and consultation. For example, by statute, the Administration 

was required to submit a report on trade policy and its agenda by 

March 1st. On that date, the Administration instead submitted a 

statement and promised to submit a full report after USTR was 

confirmed and had the full opportunity to participate in developing 

the report. The report has still not been submitted to this Congress. So I hope you will clarify the Administration’s position on a 

full range of trade issues today, from specific objectives of a 

NAFTA rewrite to the Administration’s position on negotiating T– 

TIP and an Environmental Goods Agreement to how the Administration will address currency manipulation to the Administration’s 

current thinking in steel and aluminum national security investigations as well. 

As you know, House Democrats have the most open mind when 

it comes to revisiting and taking new directions in U.S. trade policy. We look forward to working with you to prioritize the needs of 

American workers and their families through trade policy, and we 

await your testimony. 

Thank you, Mr. Ambassador. 

6 

Chairman BRADY. Thank you. 

And, without objection, other Members’ opening statements will 

be made a part of the record. 

Today’s sole witness is Ambassador Robert E. Lighthizer, United 

States Trade Representative. 

The Committee has received your written statement. It will be 

made part of the formal hearing record. You have 5 minutes to deliver your oral remarks. Ambassador Lighthizer, again, welcome, 

and you may begin when you are ready. 

Ambassador LIGHTHIZER. Thank you, Mr. Chairman, Chairman Brady. 

Chairman BRADY. Ambassador, can you check that microphone 

just to make sure we have it on? There you go. 

Ambassador LIGHTHIZER. Is it better now? 

Chairman BRADY. Yes, sir. 

STATEMENT OF HONORABLE ROBERT E. LIGHTHIZER, 

AMBASSADOR, UNITED STATES TRADE REPRESENTATIVE 

Ambassador LIGHTHIZER. All right. Chairman Brady, Ranking 

Member Neal, Members of the Ways and Means Committee, it is 

an honor to appear before you today. In recent weeks, it has been 

a pleasure getting to know the Chairman, the Ranking Member, 

and several Members of the Committee. I look forward to developing these relationships and to working with each of you. The 

USTR has a special relationship with this Committee, and I intend 

to continue that tradition. 

I met some of you for the first time on May 16th when I appeared before the House Advisory Group on Negotiations and the 

Ways and Means Committee bipartisan meeting. Those consultations are critical to helping the Administration establish its negotiating objectives for NAFTA, and more generally, they are helpful 

for developing trade priorities going forward. 

To implement this agenda the President has requested increased 

funding for USTR in the coming fiscal year. Our budget calls for 

$57.6 million, an increase of nearly 6 percent over the 2016 level. 

These additional resources will be used to implement the Interagency Center on Trade Implementation, Monitoring and Enforcement, and will allow USTR to hire eight additional staff to support 

our trade enforcement activities. 

The President’s budget request is consistent with his desire to 

control Federal spending, as well as his insistence on a strong and 

aggressive trade policy. 

Since being sworn in last month, I have been working with our 

team to advance the President’s trade policy. We have been active 

on the international front with trips to the APEC ministers meeting in Hanoi, a meeting of the OECD in Paris, and a WTO mini 

ministerial. At all of these meetings, as well as the numerous bilateral meetings here in Washington, I have conferred with my counterparts from almost every major world economy. 

In many cases, they have indicated a willingness to work with 

the United States on efforts to reform the global trading system in 

ways that will lead to market outcomes that are both fairer and 

more efficient. We have also reached out to Members of this Committee, other Administration officials, and key stakeholders in an 

7 

effort to determine what improvements are needed in the international trading system. 

We are already making progress in four vital areas. One, the 

President’s plan to renegotiate NAFTA. Two, advancing a strong 

enforcement agenda. Three, opening markets for U.S. exports. And, 

four, lowering the Nation’s trade deficit. 

Let me briefly discuss each of these topics. 

First, on May 18th, I notified Congress that the President will 

conduct negotiations with Canada and Mexico in an effort to renegotiate and modernize NAFTA. 

As you know, the congressional notification is followed by a 90- 

day period of consultations with the public and Congress. This 

means that the NAFTA negotiating rounds can begin as soon as 

August 16, and we intend to move very quickly. 

In the meantime, USTR is talking to Members, stakeholders, 

your staffs, and the public to help us develop policy outcomes for 

the negotiations. We have put out a request for comments and received more than 12,000 responses. We have scheduled hearings for 

June 27, 28, and 29. 

During the 90-day period, we will continue working closely with 

Congress to develop and refine our negotiating objectives. In the interest of a transparent process and as required by TPA, we will be 

publishing a detailed summary of negotiating objectives on July 17. 

Second, we have an aggressive enforcement agenda. We are both 

defending our rights and holding other countries accountable for 

their trade violations. For too long, the United States, one of the 

freest and most open markets in the world, has been the chief target of litigation at the WTO. This makes no sense. At the same 

time, we are proceeding with several WTO cases, and this is only 

the beginning. We will aggressively pursue countries that violate 

trade deals with the United States. We have a number of potential 

cases under review as I speak. 

Third, we intend to improve market access for U.S. producers. 

Let me be very clear on this point. We at USTR want to help every 

American business that makes a product or provides a service increase exports to the world. Sometimes this requires an enforcement action. Other times negotiations are sufficient. The Administration is currently engaged with conversations with all of our 

major trading partners about how to lower barriers that harm U.S. 

companies, workers, farmers, and ranchers. 

Finally, we hope that these and other efforts by the Trump Administration will help to lower the Nation’s chronic trade deficit. I 

understand that many observers believe that we should not concern ourselves with the trade deficit, that this figure is merely a 

number that reflects macroeconomic factors not related to trade 

policy. But the President’s view, and mine, is that the trade deficits 

in the hundreds of billions of dollars that persist for years and 

years and years, regardless of changes in the broader economy, are 

indicative of structural problems in global trade. 

[The prepared statement of Ambassador Lighthizer follows:] 

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WRITTEN TESTIMONY OF AMBASSADOR ROBERT E. LIGHTHIZER 

HOUSE COMMmEE ON WAYS AND MEANS 

HEARING ON U.S. TRADE POLICY AGENDA 

THURSDAY, JUNE 22, 2017 

Chairman Brady, Ranking Member Neal, and other Members of the House 

Conm1ittee on Ways and Means, it is an honor to appear before you today as the 

United States Trade Representative. Under President Trump and his 

administration, I am here to tell you that trade is certainly a top priority, and it is 

my intent to work with this Committee to achieve true progress for all Americans. 

During my first few weeks on the job, the President has instructed me to negotiate 

trade deals that put American workers, frumers and ranchers, fatui lies, and 

businesses first, and to complement those negotiations with a vigorous 

enforcement agenda. 

I am pleased to report to you today, that since Januru·y 20, USTR has been hard at 

work. ll1e agency submitted a new budget request to Congress and has slatted 

implementing President Tnunp's agenda on trade. Thirty-five days ago, I notified 

Congress of the Administration's intent to renegotiate the North American Free 

Trade Agreement (NAFTA), a principal priority of the President. 
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33478A.002

In addition, my USTR team and I traveled to Vietnam to participate in the AsiaPacific Economic Cooperation (APEC) Ministers Responsible for Trade meeting, 

and led the U.S. delegation for the Organization for Economic Co-operation and 

Development (OECD) ministerial meeting in Paris. These overseas engagements 

allowed me to press our trading allies on a bilateral basis to open markets for 

American exports and to reiterate the President's message that America and our 

workers insist on a fair shake. 

It has been a very productive first month, and all of us at USTR intend to continue 

working at this productive pace in order to level the playing field for American 

workers, ranchers, farmers, and businesses. 

Before discussing our activities and agenda in detail, it is important to note that 

the President has requested increased funding for USTR to enhance the agency's 

mission. USTR's FY 2018 request calls for $57,600,000, a roughly 6% increase 

over the FY 2016level. TI1ese additional resources would be used to implement 

the Interagency Center on Trade Implementation, Monitoring, and Enforcement, 

and would allow USTR to hire eight additional staff to support the mission of that 

office. 

As is typical for our agency, the ove1whelming majority of our resources are used 
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33478A.003

for personnel and travel in support of the core mission of the agency; for the FY 

2018 request, payroll is expected to account for 76% of the budget and travel for 

11%. 

These resources are vital to fulfill USTR 's mission. TI1ey will enable the agency to 

meet our statutory obligations, including the obligations to (1) enforce trade 

agreements, including detecting violations and taking swift action to enforce U.S. 

rights, (2) vigorously and successfully defend the ability of the United States to 

exercise its rights to ensure fair trade in the U.S. market, and (3) take action under 

U.S. law to advance U.S. economic interests. To advocate for and defend U.S. 

economic interests in these ways, among others, USTR is preparing to take 

significant action far beyond that taken by previous administrations, including, for 

example, self-initiated litigation in defense of U.S. workers, farmers, ranchers, and 

businesses. And as we speak, USTR is reviewing the effectiveness of our trade 

agreements, preparing to provide its assessment to the President in October of this 

year. 

First and foremost among our activities, on May 18, in accordance with the 

Bipartisan Congressional Trade Priorities and Accountability Act of20l5 (TPA), 

I notified Congress that the President will conduct negotiations with Canada and 
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33478A.004

Mexico with respect to the NAFTA. As required by TPA, the Congressional 

notification is followed by a 90-day period of consultations with the public and 

Congress, and provides Congress the opportunity to review and comment on the 

negotiations. That means that the NAFT A negotiating rounds can begin as soon 

as August 17, and that is our intention. 

In the meantime, USTR is talking to stakeholders, your staff, and the public to 

help us develop our policy outcomes for the negotiations. USTR is reviewing the 

more than 12,400 comments received from everyday Americans dming the opencomment process. The public had such a strong interest in our work on NAFTA 

that the website crashed, so we extended the comment pe1iod to ensure that 

everyone had an opportunity to provide input. My staff is now busy reviewing and 

analyzing those comments, in order to help formulate our positions on how to 

improve the NAFfA. In addition, USTR will hold several days of public 

hearings beginning on June 27. Again, we expect great interest and look forward 

to hearing the testimony of a wide range of stakeholders. 

Of course, during the 90-day period, we will also be working closely with the 

Congress to develop and refine our negotiating objectives, consistent with TPA. 

To that end, we have already had numerous meetings with Congressional offices, 
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33478A.005

members, and aides to hear your ideas. And, in the interest of a transparent 

process, and as required by TPA, we will be publishing a detailed summary of the 

negotiating objectives at least 30 days before the negotiations begin. 

USTR also is working to advance each point of President Trump's trade policy 

agenda, which includes promoting U.S. sovereignty, enforcing U.S. trade laws, 

leveraging American economic strength, protecting U.S. intellectual property 

rights, and reducing America's persistent trade deficit. We are doing this on a 

number of fronts. 

For example, we are fully engaged in working with our trading partners in Asia to 

increase market access and dismantle trade batTiers. My staff and I have had 

productive visits with officials from Vietnam, Indonesia, India, and other 

counuies and have been successful in resolving some outstanding trade issues to 

improve market access for both goods and services in these cotmtries. 

Specifically, during my bilateral meetings so far, I have raised several issues 

about which members on this Committee are concerned, including Intemet 

advertising, e-payrnent services, the export of agricultural goods, and others. My 

team and I have made progress with respect to many of these issues, but I intend 

to continue pressing them to ensure that markets remain open. 
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33478A.006

The economic dialogues with China and Japan are also proceeding, and USTR 

staff has contributed to those market-opening eftorts as well. Through the pursuit 

of these refotms, and securing more access for American exporters, I hope to see 

Asian markets provide strong demand for our exporters. 

We are a lso involved in other areas of the world. I was in Paris last week at 

OECD meetings where I had the opportunity to meet with European 

Commissioner for Trade, Commissioner Malmstrom. We discussed areas of 

common concern and a way forward on a U.S.-ED economic dialogue. We are 

cunently in the process, with our EU counterpatts, of establishing the scope of 

that engagement, which includes both bilateral and global issues. We know that 

there are areas where we can ally ourselves with our European trading partners to 

address issues such as non-economic capacity and non-market economy status for 

certain countries. 

However, the President's agenda is not limited to new negotiations, as the 

President takes seriously the need for the United States to enforce laws already on 

the books. The Office of General Counsel, in accordance with the President's 

recent directives in Executive Order 13796, is in the process of examining our 
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33478A.007

trade relationships and identifying issues that can be addressed through 

enforcement of U.S. trade laws. We believe that too little has been done in tllis 

area in recent years, and we are actively assessing ways to get tough on countries 

who do not respect our economic system. We have also been active in identifying 

countries that have serious problems with protection of intellectual property, and 

we are reviewing and amending our action plans to ensure that we can identify 

violations and take appropriate enforcement actions. We have also initiated outof-cycle reviews or investigations of countties that receive trade preferences 

under programs such as the Generalized System of Preferences and the African 

Growth and Opportunity Act. 

USTR is also working hard, defending the interests of the United States through 

multilateral engagement at the World Trade Organization (WTO). For many 

years, the team at USTR has been engaged in the WTO dispute process regarding 

European Union subsidies for Airbus and EU claims of American subsidies for 

Boeing. On June 9, a WTO Compliance Panel rejected 28 of29 claims made by 

the European Union. Make no mistake; this was a big victory for the United 

States. I look forward to continuing the trend of defending American businesses 

against unfair claims from foreign nations. Further, we will not hesitate to file 

claims against nations that do not follow the mles. 
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33478A.008

During my first month in office, I have had several promising discussions with the 

Director General of the WTO, Roberto Azevedo, in order to express our priority 

to improve the functioning of the WTO. In Paris, I had lhe oppottunity to 

pat1icipate in candid discussions among pat1ies many of which showed the 

significant differences among members. I have begun to articulate my desires to 

seek reforms to the WTO dispute settlement system, and have made that clear to 

our partners. This is now a topic of serious discussion at the WTO. We expect to 

see meaningful changes in order to maintain the relevance of the system. Looking 

ahead to December, we are pursuing successful ministerial in Buenos Aires this 

December that reinvigorates the WfO. We do not advocate a meeting that seeks 

major deliverables or significant negotiated outcomes. 

Finally, we at USTR are committed to enhancing U.S. food and agricultural 

exports globally. Secretary Perdue and I will be working closely together to 

ensure that we are effective in achieving this goal. Thus far, USTR has made 

progress with respect to China, Argentina, and Vietnam, in addition to the 

ongoing work that USDA and USTR staff undertake every day to promote U.S. 

agriculture. We raised our concerns with Canadian officials and at the WTO on 

Canada's dairy pricing policy, and I engaged Vietnam to address concerns 
16 

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affecting U.S. exports of offal and use of certain veterinaty dmgs in beef and 

pork. I am moving forward with dispute resolution on China's trade-distorting 

tium support for com, wheat and rice with a panel fmmed and dispute 

proceedings ongoing. 

Again, it has been a very productive first month, and we hope to keep the 

momentum in realizing the President's trade agenda as we move further into the 

year. I look forward to working closely with Congress and in particular the House 

Committee on Ways and Means to work on the President's Trade Agenda to 

Make America Great Again. 
17 

Chairman BRADY. Thank you, Mr. Ambassador. 

That 5 minutes always goes fast. Thanks for your testimony. 

We will now proceed to the question-and-answer session. Let me 

lead off. I want to ask two very basic questions about freedom and 

leadership. 

My view is that free trade is economic freedom. It is a freedom 

to buy and sell and compete around the world with as little government interference as possible. It is a freedom that, if you and I 

build a better product, we should have the freedom to sell it 

throughout the world, and if someone else builds a better product, 

we should have the freedom to buy it for our family and for our 

business. It is really one of the greatest economic rights of every 

American. So, given the choice between more economic freedom and 

less, we should always choose more. So the question is, will the 

Trump Administration work to expand American’s economic freedom to trade or ultimately restrict it? 

Ambassador LIGHTHIZER. The Trump Administration wants to 

expand economic freedom, wants to expand trade, believes that we 

can reduce our trade deficits through sales. That certainly is our 

objective. Philosophically, I would say that the President believes 

in free trade. He doesn’t think that it exists right now, and the 

question becomes, what do you do to get there? So there are a variety of approaches. I think his approach is to aggressively go after 

people that are engaging in unfair trade and hope that leads to 

market efficiency, more economic freedom, and globally more 

wealth. 

Chairman BRADY. Thank you, Ambassador. 

That really steps into leadership. I think the view of many of us 

is, if America doesn’t lead in free and fair trade, we will grow 

weaker and our foreign competitors will grow stronger. Our factories and farmers, our technology companies, local businesses will 

be priced out and shut down around the world. My State of Texas 

is made for trade. America is made for trade. And that is nowhere 

more important than in the Asia-Pacific region. It is imperative we 

continue to communicate to our trading partners and the rest of 

the world we are not abandoning the Asia-Pacific region, even 

though we are no longer part of TPP. This is one of the reasons 

that I, along with Ranking Member Neal, Chairman Reichert, and 

our Senate colleagues introduced a resolution last month expressing our strong support for continued U.S. leadership engagement 

with other APEC countries. 

So, in the area of leadership, especially in that region, at the end 

of the day, do you see America’s trade values and standards prevailing in that region, or do you see China’s trade values and 

standards prevailing in that region? 

Ambassador LIGHTHIZER. I certainly believe that America’s 

trade values will prevail. I would say, this issue of engagement, I 

was on the job 4 days when the President sent me off to Hanoi to 

go to the APEC meeting. I remember walking around bleary-eyed 

trying to read briefing papers so that I could tell one country from 

another. But he did that because he wanted to make the point that 

you are making, that we have to be engaged. These people have to 

know that we are coming, that we are going to do business, that 

we are going to sell American products, that we are going to do biVerDate Sep 11 2014 09:24 Feb 22, 2019 Jkt 033478 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33478.XXX 33478
18 

lateral agreements, that pulling out of TPP was by no means pulling out of the Asia Pacific. In fact, to the contrary, the President’s 

view is that we can get better deals on a bilateral basis and engage. 

In terms of, overall, whose model works, ours or China’s? I mean, 

that is a very big, very serious question. My belief is that ours is 

the best and it will prevail. And I believe that a lot of the people 

in that part of the world are concerned about this question, but the 

question that I ask is, how do we prove that? We have to take on 

China when they do things that are inconsistent with our values, 

with the way we think the economy should develop and work. 

If you look at it objectively, you would say, for example, in an 

area like steel, they have now a huge steel industry. None of it is 

based on economics. And somebody in a country in Asia looking at 

that might think their system is succeeding and ours is failing. 

They have at least 1.1 billion tons of steel, a billion tons of steel 

capacity, and we can’t produce 100 million tons. 

So what we look at, A, I think we are going to prevail; B, I think 

we have to prevail not just for our own good but for the good of 

the world. The question that I always had and that I believe the 

President has is, what do we do to assure that? And that to me is 

taking on China whenever they do something that is inconsistent 

with not only our model but their obligations. I apologize for that 

being too long. 

Chairman BRADY. No, Ambassador, thanks for your thoughtful 

answers. 

And, Mr. Neal, you are recognized. 

Mr. NEAL. Thank you, Mr. Chairman. 

Mr. Ambassador, I am very interested in T–TIP negotiations, 

which we discussed in my office when you paid a visit. And as we 

look at the negotiations between the United States and EU, I am 

hoping that you can give us an update on the plan. There are 500 

million consumers in Europe. They have a very similar lifestyle to 

us, and one of the things that I also found very interesting was I 

actually suggested to President Obama early on that we juxtapose 

the two trade agreements, Europe and Asia, that we would have 

considered Europe first because I think it would have been much 

easier to accomplish, and given the fact that there were many prospects of actually doing that and now to find that the Administration, I think, needs to update us on what their plans are for T–TIP, 

I do think it has an awful lot of potential for America’s East Coast 

if done correctly. 

And the second question—and you perhaps can just answer 

both—we all read this week about Ford Motor Company deciding 

to build small cars not in Mexico but in China and importing those 

cars to the United States. That seems to be inconsistent with the 

President’s promise to keep jobs here in America. And with Ford’s 

decision, it also seems to indicate that now China, despite the 

President’s comments during the course of the campaign, is hastening a relationship with automobiles in China and what we are 

trying to, I think, discover perhaps with your comments today, does 

this suggest that for some reason we are focusing more on China 

than we are on NAFTA? 

19 

Ambassador LIGHTHIZER. Mr. Neal, first of all, on T–TIP, we 

certainly agree that is an important negotiation. For a variety of 

reasons, it stalled when it did, and this was not a very good year 

to get it started because of internal European reasons. They had 

a series of elections which made it difficult to make compromises 

and to really make an agreement. I guess the final one of those 

elections is September, and it is in Germany. And then, after that, 

I think we will talk to them. I have certainly met with the Trade 

Commissioner, Ms. Malmstrom, and I have talked to her about bilateral issues and cooperating issues, and I am not here to make 

any announcement about it, but it is something that we certainly 

realize the importance of. 

On the issue of Ford moving a plant, which I saw in the paper 

also, from Mexico to China, I agree with you. I think that is troubling. We don’t have an Administration position that I have sat in 

on and talked about at this point, but as the USTR, I find that very 

troubling. I want to look and see what the incentives there are. It 

doesn’t necessarily make sense to me. Obviously, it makes sense to 

Ford, or they wouldn’t be doing it. But I think it is incumbent upon 

us to sit back and look at all the incentives and just figure out exactly why that happened. And if it happened for reasons that are 

noneconomic reasons, then I think the Administration should take 

action. 

In terms of the President’s relationship to the Ford move, I guess 

I am reminded of a quote in the back of ‘‘Profiles in Courage’’ 

where—when he is sort of taking little quips, and he says that a 

Congressman once wrote in the thirties that one of the problems 

with being elected to Congress was that—this is in response to a 

constituent letter—he said: is that I get letters from people like you 

who say that I ran for Congress based on reforesting the Sierra Nevada Mountains; I have been in office 6 weeks, and I haven’t gotten 

it done. I am sorry; can’t help—or something like that. 

So I guess that is a long way of saying—I think it is probably 

early to say that the President’s policies are responsible for Ford 

doing whatever it is that it is doing, but I think it is something we 

have to look at. We have to look at incentives, and it was as troubling to me as it was to you. 

Mr. NEAL. I thank you, and, Mr. Ambassador, I hope that you 

might inform the Committee of the Administration’s position as 

promptly as you can on that issue. 

Ambassador LIGHTHIZER. I am sorry? 

Mr. NEAL. I hope that you can inform the Committee promptly 

on your position and the Administration’s position on that issue of 

those cars being manufactured in China. 

Ambassador LIGHTHIZER. I will undertake that, and I appreciate that question. And I will use that as a mandate to develop 

a position and report it to you. 

Mr. NEAL. Thank you, Mr. Ambassador. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Neal. 

Mr. Nunes, you are recognized. 

Mr. NUNES. Thank you, Mr. Chairman. 

Ambassador, I have three topics I want to cover with you and try 

to get through all three of them quickly here. The first is NAFTA. 

20 

I think we are all for looking at ways to improve NAFTA. However, 

as you know, with all negotiated trade, whatever action becomes a 

reaction, and so there could be a reaction from our allies and our 

partners, trading partners. With agriculture specifically, as you 

know the United States produces more food than we can consume, 

and I am worried about any type of retribution that either Mexico 

or Canada could take. Canada could take on our U.S. farmers. And 

so I know you are aware of this, but I wanted to just get your 

thoughts on ensuring that we protect agriculture in these upcoming 

negotiations on NAFTA. 

Ambassador LIGHTHIZER. Congressman, that is very important. I have testified on this before. We realize there have been 

winners, and there have been losers in the NAFTA process as it 

has developed over these 23 years, 25 years since the negotiations 

themselves began. Agriculture has been a winner. I would say, 

even with that, I would drop a footnote down and say that, although we do have a $4.7 billion deficit even in agriculture, it is 

not for the kind of products that you are thinking about, and it is 

very important that we do no harm. 

So our very high priority will be making sure that we do not disrupt our sales in agricultural products to either Canada or Mexico, 

but presumably you are mostly thinking about Mexico. And that is 

a problem. It is a legitimate worry. It is something we are worried 

about and very concerned about. 

Mr. NUNES. There is no question that Canada could do a lot 

more to open up their trading practices for our agricultural products. 

If I could, I would like to move to India. I know I think you and 

I share and the Administration share the goal of enhancing our 

partnership with India, the world’s largest democracy. They made 

a lot of growth over the years, but they have continued to have 

trading practices that make it hard for us to actually get to the 

table with each other. And one of those issues I want to make sure 

that maybe I can just bring to your attention in case you are not 

aware of it and maybe you can come back to us just for the record, 

but specifically with almonds and other types of walnuts and pistachios, there continues to be problems with moving those products 

to India, and I am not going to ask you to be an expert on specific 

products, but if you could come back to us with a report on India’s 

different potential problems that they are creating with these trade 

practices, I would appreciate it. 

Ambassador LIGHTHIZER. I will certainly do that. And with the 

Prime Minister coming to Washington, this is an opportune time to 

do that. I have raised the almond issue with the Indians—— 

Mr. NUNES. Great. 

Ambassador LIGHTHIZER [continuing]. So it is clearly something that we are concerned about, and part of my response always 

is, look, with the size of the trade surplus you have with the 

United States, you ought to be looking for things to buy to get that 

trade deficit down, and that is one of the ways we are trying to 

help America export. 

Mr. NUNES. Well, thank you, Ambassador. I appreciate that 

comment. 

21 

Finally, I want to just explore a little bit, there has been a lot 

of debate about whether or not our tax system needs to have a border adjustment. As you know, 150 countries around the world border adjust. And I just find it hard to believe in the long run how 

we are going to be competitive if everything that we export to most 

of our trading partners has anywhere from a 15 to 25 percent VAT 

put on top of those products, and then, of course, anything that we 

import doesn’t pay the VAT in their country. 

And I am not asking you to wade into whether or not you support or oppose border adjustment, but I would be interested in your 

thoughts as to how we can fix these discrepancies with these countries that border adjust. 

Ambassador LIGHTHIZER. Well, thank you, Congressman. I 

have from time to time written op-eds and the like on this subject. 

It is troubling to me. First of all, I am not the Treasury Secretary 

mercifully. So I don’t have to worry about negotiating a tax deal, 

and I don’t envy any Member of the Committee who has that ahead 

of them as we go forward. But I do agree that value-added tax creates an unfair advantage, and there has been a clear migration 

throughout the world from income taxes to value-added taxes precisely for that reason. 

So I don’t agree with people who say it doesn’t make any difference. I think that it does make a difference. So that isn’t to say 

I am endorsing any particular solution or anything like that, but 

I am sympathetic to the problem, and I think it has an impact on 

exports. I think it has an impact on manufacturing and competitiveness in America, so it is a major issue. 

Mr. NUNES. Thank you, Mr. Ambassador. My time has expired. 

The Chairman is going to gavel. Thank you so much. 

Chairman BRADY. Thank you, sir. 

Mr. Levin, you are recognized. 

Mr. LEVIN. Welcome. Hi. NAFTA became very much involved in 

controversy mainly because of the lack of enforceable labor and environmental provisions. The auto sector is a major source of the 

trade deficit. So let me just review a few facts and ask you some 

questions. 

In the last decade or two, the employment in the Mexican auto 

sector has gone up over 200,000 people, while in the U.S., it has 

dropped 90,000; really more than that if you go back over a decade. 

And in terms of competition, Mexican workers in the auto industry 

are paid 19 percent of what is paid in the big three, and the President called Mexican factories sweatshops. And that is further evidence that autoworker wages in Mexico went down 20 percent, 

though productivity went up 80 percent. And sweatshops, that is 

correct, because workers in the auto industry in Mexico cannot 

form unions. There are sham outfits. 

So let me ask you three questions, if I might, relating to it. First, 

do you agree that depressed wages in Mexico are leading to negative wage pressure and job loss in the United States? If so, can any 

renegotiation of NAFTA truly promote jobs here in the United 

States without addressing labor rights in Mexico? 

Two, with that in mind, can you tell us what specific proposals— 

specific proposals—the Administration is considering to require 

22 

Mexico to change its laws and practices relating to labor rights as 

a way to create and safeguard jobs in the United States? 

And, number three, I take it on this you are the lead person in 

the Administration, though that isn’t always clear, but I assume 

you will be and hope you will be: Will the Administration insist 

that Mexico bring its labor laws and practices into compliance with 

basic labor standards before Congress is asked to vote on a renegotiated NAFTA agreement? So fire away. 

Ambassador LIGHTHIZER. Yes. 

Mr. LEVIN. Since I did. 

Ambassador LIGHTHIZER. Thank you, Congressman. 

First of all, do I believe that Mexican labor laws are having a 

negative effect on the United States? Yes, I believe that. And I believe if we are going to get the deficit down, if we are going to have 

an appropriate agreement and one that will pass, it will have to 

have an effect on that. I do believe, though, that the Mexican government itself understands there is a problem, and I think they are 

taking steps, which is a good sign. But I am not suggesting—— 

Mr. LEVIN. You need to talk further about that, but keep going. 

Ambassador LIGHTHIZER. With respect to what our specific 

proposals are, we are still in the process of talking to stakeholders 

and the Congress, and we are interested in people’s views. We do 

believe you have to have basic ILO core standards, and we believe 

that they have to be enforceable just like we believe that every provision in the agreement has to be enforceable. Do I believe there 

should be a commitment and proof before a vote? No, I don’t. I 

think we are going to put together an agreement. We are going to 

come forward. It is going to be an aggressive agreement that we 

have, and in the final analysis, the U.S. Congress will rule on 

whether it is a sufficiently good agreement, and I don’t think there 

will be preconditions like this. 

Mr. LEVIN. Okay. I think, unless practice is showing that 

changes are made before we vote both in laws and practices, that 

essentially it will be difficult and should be difficult to pass 

NAFTA. We insisted with Peru that they change their laws and 

practices before we voted on it. May 10th was a major breakthrough, but unless it was made real before we voted it was impossible to vote for. And time has shown with Colombia and other 

countries that if you don’t have that standard, you are chasing enforcement everywhere. So we are going to be very emphatic about 

that. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Levin. 

Mr. Tiberi, you are recognized. 

Mr. TIBERI. Thank you, Ambassador, for being here. I know 

that you know that the volume, the complexity, the challenges of 

trade have only grown over the years. I want to associate myself 

with what Mr. Nunes said with respect to NAFTA and agriculture. 

In Ohio, my home State, Canada is our number one trading partner, and agriculture is our number one issue, number one job economic driver. 

But, Mr. Ambassador, I want to focus on our trade agreement 

with Korea. We have seen an influx of imports of oil country tubular goods, OCTG, from the Republic of Korea. In 2015, Congress 

23 

gave the Department of Commerce new authority to address market distortions in the production of foreign merchandise and to calculate dumping margins that more accurately account for the unfair pricing practices of foreign exports. 

Can you commit to this Committee that you will make it a priority of this Administration to engage with our trading partners, 

particularly in this case, Korea, the Republic of Korea, who continue to dump these products into our country? 

Ambassador LIGHTHIZER. Yes. 

Mr. TIBERI. Thank you. I certainly appreciate that. The other 

issue the Chairman mentioned that I want to comment on is our 

ongoing section 232 investigation on national security implications 

of steel and aluminum imports. And I again want to applaud and 

say I appreciate the Administration’s commitment to America’s security in ensuring a level playing field with our trading partners. 

However, I have heard from a number of employers in my district, 

manufacturers, about the potential that some of our trading partners could misuse national security justifications to have retaliatory and protectionist actions taken against them. Are you at all 

concerned about the potential for retaliation by some of our trading 

partners and the effect it would have on domestic manufacturers? 

Ambassador LIGHTHIZER. Yes, we are concerned, although we 

start with the proposition that we have a global extraordinary excess amount of capacity that is basically created by China and that 

we can talk about some other potential problems, but we have this 

1.1 or more billion tons, which I mentioned before, and the question becomes, how do you deal with that? You can’t deal with it just 

at the border with China because it is not that kind of a problem. 

It is sending it everywhere in the world. And as you said in your 

first question, they are sending it to Korea, who is then sending it 

to us in the form of OCTG. So it is a huge problem. 

Given that problem, it is reasonable to sit back and say, what are 

all of the possible tools we have? And one of the tools we have is 

232, because it does have a national security effect that is quite 

significant. 

Now, there is the response, one, of retaliation. We are always 

worried about retaliation, but if we don’t defend ourselves because 

of a fear of retaliation, then we are just going to be the residual 

of what nobody else wants. So we can’t let unfair trade go forward 

just for that reason, but it certainly is a reasonable thing to think 

about and try to control. So I don’t disagree with that at all. 

The argument that, well, other people will use their national security exemption for ways that are really hidden protectionism, 

that is also a concern, something we have to think about, but I am 

inclined to believe personally that, with respect to a lot of these 

countries, they will use every tool they have right now to defend 

their interests and to take advantage of our market. So I am kind 

of less persuaded by that argument, although I think it is a legitimate argument, something we have to be concerned about, but I 

think we do have an obligation to all Americans: When you see 

something that is very bad going on, we have kind of a contract 

with all of our workers and all of our farmers that we are going 

to defend America or free trade doesn’t mean anything. I think 

24 

every Member of this Committee agrees with that. And this is one 

of the tools that it is legitimate to look at and use in that context. 

Mr. TIBERI. I certainly appreciate your work, your expertise on 

this issue, and I just would hope that you and your team would 

clearly review the Chairman’s opening statement because I think 

it reflects on this side of the aisle some concern about the balance 

in this area. 

Thank you so much. 

Ambassador LIGHTHIZER. Thank you, Congressman. 

Chairman BRADY. Thank you, Mr. Tiberi. 

Mr. Doggett, you are recognized. 

Mr. DOGGETT. Thank you, Mr. Chairman. 

And thank you, Mr. Ambassador. 

You have been a personal long-time critic of WTO dispute panels 

overreaching and effectively declaring new obligations and undermining our democratic processes. Under NAFTA, the investor-state 

dispute settlement procedures with which you are very familiar, 

the ISDS, permit three private attorneys whose decisions are not 

subject to appeal to effectively create new obligations and commit 

unlimited amounts of taxpayer funds to foreign corporations for 

claimed violations. 

Yesterday, at the Finance Committee, you testified concerning 

your concerns about ISDS. You are aware that the National Association of Attorneys General, the National Conference of State Legislatures have objected to ISDS, that recently the American Automotive Policy Council, our major manufacturers said that ‘‘ISDS 

provisions in NAFTA—or an ISDS provision in NAFTA is unnecessary.’’ Do you agree with them? 

Ambassador LIGHTHIZER. I am sorry? 

Mr. DOGGETT. Do you agree—without reading it—do you agree 

that ISDS is unnecessary in NAFTA? 

Ambassador LIGHTHIZER. I think ISDS is something that we 

have to discuss and be informed of more by the Members. So I 

won’t take a final position right now. 

I would say this: It clearly is a balance. There is a legitimate interest in people who go overseas and invest, and the United States 

has an obligation to do what it can to make sure those people are 

treated fairly. 

On the other hand, as you suggest, Congressman, I am troubled 

by the sovereignty issue. I am troubled by the fact that anyone, 

anyone can overrule the U.S. Congress and the President of the 

United States when it has passed a law. That is troubling to me. 

So trying to balance those two things is something that I really 

want to kind of work through and be informed of—— 

Mr. DOGGETT. Certainly—— 

Ambassador LIGHTHIZER [continuing]. Members’ views. 

Mr. DOGGETT [continuing]. We do want to see our investors 

protected wherever they are, and Canada has a mature court system. There are a few more challenges in Mexico, but I hope you 

will be looking closely at a system that I think has failed us. 

And a second area, you say in your testimony—and I was pleased 

to hear it—that you expect significant action far beyond previous 

Administrations, including, for example, self-initiated litigation in 

defense of U.S. workers. While that is good, it is a fairly low bar, 

25 

since USTR under all previous Administrations I think has never 

successfully challenged a labor or environmental provision with 

any trading partner. And as you know, yesterday, the United 

States lost in its drug out lengthy 9-year action with reference to 

Guatemala labor with a finding apparently that it was not a matter affecting trade. I believe that the failure to effectively enforce 

our environmental and working condition provisions is one of the 

reasons many of us do not have confidence in the TPP or in other 

recent agreements, that the comments about labor and environment were really meaningless. 

Given the short time, I would just ask you to respond in writing 

as to whether you consider artificially suppressed wages to be a 

subsidy and whether these subsidies impact trade between countries? Tell us how this decision may affect the need for changes in 

the NAFTA agreement with reference to workers. 

Similarly, with Peru, there are both labor complaints on which 

there are provisions that have not been enforced, and I would ask 

you to respond concerning the complaint filed in 2015 on Peru 

labor concerning the fact that we are effectively denying improved 

wages and conditions in Peru, and also, in Peru, on the environmental provision, that about 90 percent of all timber leaving Peru 

was harvested illegally when we set up the agreement and it still 

is and if you believe that Peru is in compliance with its environmental obligations under the forest annex, and why there have 

been no audits of producers and exporters. 

And I will submit others concerning all the pending enforcement 

actions on which we see really no effective enforcement. 

Finally, you have 500 advisers on trade agreements, corporate 

advisers. When will the Members of Congress be able to see the 

specific language that USTR proposes to Mexico and Canada on 

NAFTA changes? 

Ambassador LIGHTHIZER. Well, in the first place, we will submit an answer in writing as you requested, Congressman. 

In terms of the language, we have an agreement with the Chairman. We expect to be very transparent. We are going to follow the 

TPA to the letter. I realize that, in the past, there have been issues 

about whether or not the Congress has had adequate access to text, 

and I think I am in agreement with the Chairman. We have a 

plan. I expect to follow that plan and make that text available, and 

I expect the Chairman to instantly tell me when I haven’t followed 

the plan, which, if it happens, will only be by accident. 

Mr. DOGGETT. Could you disclose what the plan is? 

Chairman BRADY. We are in discussions with the Ranking 

Member on this important issue. We agree with you, Mr. Doggett, 

about the access to text. 

So thank you, Ambassador. I let you run a little long there. 

So, Mr. Reichert, Chairman of the Trade Subcommittee, you are 

recognized. 

Mr. REICHERT. Thank you, Mr. Chairman. 

Welcome, Mr. Ambassador. 

Every Member on this panel will tell you that trade is critical to 

their home State, and I am here to tell you that is true of Washington State. Apple growers export one-third of their crop each 

year. State services exports over $26 billion a year, and of the jobs 

26 

in Washington that are supported by exports, over 90 percent depend on manufacturers selling their world class products across the 

globe. But Washington workers, farmers, and businesses cannot be 

left behind as other countries race to establish strong bilateral and 

regional agreements that carve us out. So, while we work to update 

NAFTA, we must begin to put other negotiations in the pipeline. 

So I am an old career law enforcement retired. I get the enforcement piece, but there is always community outreach. In my view, 

the TPP countries have now been left hanging. And, frankly, I was 

disappointed but encouraged that the President wants to go with 

bilateral agreements. I am on board with that and ready to go. As 

you know, we have had a chance to visit. But I think there has to 

be an aggressive, energetic outreach to these countries, and my 

question is, beyond Canada and Mexico, which countries, regions, 

and/or sectors are priorities for the Trump Administration? What’s 

the next step after NAFTA? 

Ambassador LIGHTHIZER. Thank you, Congressman. We are 

still in the process of developing those priorities and that list. First, 

I would say that the President is very pro-trade; second, that we, 

as you say, our objective is to have bilateral agreements and a series of them, and we think we can do that using model agreements 

and do it effectively and have agreements, which are better for 

American workers and American apple growers and others. 

In terms of what specific countries we would go to, there are a 

lot that are on the table. Obviously, there is T–TIP, which has been 

mentioned. There is a lot of people who believe that we have to go 

up to the TPP countries and start negotiating those, and, of course, 

foremost among those in some people’s opinion is Japan. So that 

is something we have to think about now. 

Mr. REICHERT. But you are in communication with those TPP 

countries? 

Ambassador LIGHTHIZER. We are. I have met with several of 

them and there are, you know, there are a variety of issues in various places, and, you know, the Japanese, my guess is right now 

are not ready to do a bilateral agreement with the United States, 

but these things are all developing. We are in discussions—— 

Mr. REICHERT. So, after NAFTA, you are still considering T– 

TIP or Japan or the U.K. 

Ambassador LIGHTHIZER. The U.K. is another option. So these 

are things—but I do think there is a lot of pressure to move in the 

direction where the TPP would have filled a gap and to go in 

there—and my instinct is that Members of Congress would also feel 

comfortable if we started doing that. So there are a lot of reasons 

to militate in that direction, but the other thing is it does take two 

to tango, so we have to kind of develop this. 

Mr. REICHERT. I want to be engaged with you on that. I am 

sure other Members of the Committee do. 

How do you see the bilateral agreements coming together to create the high standards throughout the world? That has been 

touched on by a couple of Members. And, you know, just my personal experience with one country—Mr. Tiberi mentioned South 

Korea. In my discussions with assembly men and women in South 

Korea, asking them the question, after the Korean agreement was 

finalized, what was their opinion as far as the impact it had on 

27 

China, I learned their first response was China should start to pay 

attention because high standards now are in the region and will be 

developing. Of course, back then, TPP was the thing that people 

were looking to. So that one agreement with Korea made an impact 

on that region. And so, again, emphasizing the need to reach out 

to those countries, TPP countries, strengthening that position of 

strong standards, how do you see a bilateral agreement with 

Japan, for example, or others strengthening that standard, our 

standards, throughout that region and the world? 

Ambassador LIGHTHIZER. Well, I would say, first of all, I don’t 

want to suggest that we are going to have a bilateral agreement 

at this time with Japan. That is something that they are looking 

at and we are looking at and all that sort of thing. 

Mr. REICHERT. Sure. 

Ambassador LIGHTHIZER. But I certainly agree with the Chairman’s basic point at the very beginning, which you have also endorsed, which is that the United States moves in; we have an 

agreement that is a high standards agreement. In many cases, on 

a bilateral basis, you can have higher standards because that country you are negotiating with may not have a particular problem in 

an area where you can get a high standard. A good example of that 

would be currency. If you are negotiating with someone who really 

isn’t a currency manipulator it is easier to get to a high standard 

on currency and then set the standard. So there are a lot of things 

that can be done like that, but I think having those kinds of agreements does push back against China, does change the standards, 

and does have people realizing the United States is engaged, and 

it has a ripple effect throughout the region. So I completely endorse 

them. 

Mr. REICHERT. Great point. 

Thank you, Mr. Chair. 

Chairman BRADY. Thank you. 

Mr. Thompson, you are recognized. 

Mr. THOMPSON. Thank you, Mr. Chairman. 

Mr. Ambassador, thank you very much for being here. The priorities for our trade policy must be to support and help create good 

American jobs, grow the economy, set basic standards for our partners to live up to, improve market access, and protect the labor 

rights and the environment. And I think that Congress has an important role in this, and I value the opportunity to work with you 

to make sure that this happens. And increasing exports and eliminating trade barriers can really be a win for our economy, provided 

that the playing field is level and everyone operates under a fair 

and basic set of rules and that those rules are enforced. 

So, in that regard, I want to associate myself with the ag comments that have been made by a couple of my colleagues on the 

dais. And I also want to associate myself with something that Mr. 

Doggett said when he asked if you thought that wages, suppressed 

wages in other countries are a subsidy to manufacturers in those 

other countries. And I would ask, similarly, do poor environmental 

rules equal a subsidy to producers in other countries? 

Ambassador LIGHTHIZER. Let me say, first of all, that I think 

low labor standards are an unfair advantage to someone with 

whom we are dealing. Whether it is technically a subsidy under the 

28 

countervailing duty laws is not something that I am addressing 

right now here in this case. So I don’t want there to be any misunderstanding. The same thing is true with respect to the environment. 

But I think it is—I look at it the other way. I think it is wrong 

in the Ricardian way we think about these things to have some 

things be a legitimate competitive advantage, and to me, environmental pollution shouldn’t be—it is not a legitimate competitive advantage in the way we analyze trade because, at a level, we are 

all really free traders. We all have the same objective. The question 

is, how do we get there? 

So I look at it the other way around. I think it is not a legitimate 

competitive advantage to have very low environmental standards. 

So that is why I am troubled by it, and I think the same thing is 

also true with respect to labor standards. 

Mr. THOMPSON. Well, I certainly know, in my business, if I 

didn’t have to pay attention to regulations and rules and particularly with environmental standards, I could make a lot more money 

than I do, and that would put me at a competitive advantage over 

someone who had to do that. 

U.S. wine exporters continue to face highly burdensome trade 

barriers in Canada. British Columbia has a very discriminatory 

grocery store program that prohibits American wine from being 

sold on the same shelves as domestic wine, giving the BC producers an enormous competitive advantage. 

In January of 2017, USTR requested WTO dispute settlement 

consultations with Canada on this matter, but the consultations 

failed to bring about any grocery access for American wine makers. 

Given Canada’s continued refusal to modify its discriminatory program in any way, will USTR now work to fully enforce U.S. rights 

under the WTO agreement and formally request a dispute settlement panel? 

Ambassador LIGHTHIZER. First of all, Congressman, I am, of 

course, very much aware of this problem. I completely agree with 

the sentiment of your question. Whether we go to the panel stage 

is something that is under review right now. You can take from my 

general attitude that I am very pro-enforcement. The only caveat 

I would add is, is this something you are better off dealing with 

in a NAFTA negotiation? So I think we have to think about that. 

The stakeholders have to think about it. The Members have to 

think about it. And I have to be informed by all of you. But it is 

a very serious problem. It is the kind of problem that ought to be 

brought to a panel, in my opinion, if it can’t otherwise be resolved. 

The only thing I would say is we have to think about whether 

this belongs in the NAFTA context, in which case it would make 

more sense to negotiate it and do it in a less kind of hostile way. 

But it is a major problem, and it is an extraordinary problem for 

those people who are affected, those producers, and there is no justification for it. 

Mr. THOMPSON. So, in modernizing NAFTA, is this something, 

this elimination of this discriminatory practice, we can see as a 

possibility? 

Ambassador LIGHTHIZER. It certainly is something that we are 

going to raise and deal with one way or the other. 

29 

Mr. THOMPSON. It was said that if TTP fails, that would give 

China an upper hand. How much time do you think we have to address that before they do, in fact, have an upper hand? 

Ambassador LIGHTHIZER. Do I have—I am minus 7 seconds. 

Chairman BRADY. You are, Mr. Ambassador. I am afraid we 

will have to come back to you on that question. 

Ambassador LIGHTHIZER. I am sorry, sir. 

Chairman BRADY. Thank you. 

Mr. Buchanan, you are recognized. 

Mr. BUCHANAN. Thank you, Mr. Chairman. 

I want to thank the Ambassador. I know all of us look forward 

to working with you going forward. Just a couple of points from 

Florida. We have 14 ports. One in five jobs in Florida are tied to 

trade. So trade is a big opportunity for us, but I believe—I am a 

free trader, but I think trade needs to be a win-win. I am concerned, especially with some of the bigger countries, with large 

trade imbalances. I think it is something we need to look at. I am 

sure you will. But I think, on some of our trade agreements over 

the years, we have been played. That is just my opinion, and that 

is something we can talk about further going forward. 

I want to drill down a little bit on a Florida issue in terms of 

NAFTA. We are the second largest State in terms of fruits and 

vegetables grown. We have pretty much the same growing season 

as Mexico. It is a $12 billion industry, but a lot of people feel, because of some of the techniques, the antidumping, and other things 

that are going on in Florida, it has cost us about $1 billion to $3 

billion in terms of Florida’s opportunities down there and a lot of 

jobs, and I just wanted to get your thoughts if that is on your 

radar, something you are looking at. Mexico is next to us, a good 

neighbor, but we want to make sure it’s fair. 

Ambassador LIGHTHIZER. Well, I would say that I completely 

agree with you. I am familiar with the issue. I am not as familiar, 

obviously, as you are. I have talked to the Governor about it who 

has raised this issue a lot. 

When I say we have a trade deficit in agriculture with Mexico, 

what we are talking about is the problem that you raise, because 

with respect to everything else, we have a surplus. 

So I think it is something that we have to work on, something 

I would be happy to work with you on. It is something that we 

ought to be talking about in the NAFTA context. And then there 

are issues of whether or not there is unfair trade involved here. 

There are a lot of things we have to consider. But I realize it is 

an acute problem, and it has become more and more acute. And it 

is really something that I want to engage on. 

Mr. BUCHANAN. Well, I would appreciate the opportunity to 

work with you going forward. 

I want to talk—Mr. Neal had brought this up about T–TIP. It 

sure seems to me that—and I have had the opportunity to travel 

in Europe, I have met with a lot of American businesses in Europe. 

It makes a lot of sense. We have a lot of same shared values. When 

you look at labor rates, a lot of it is fairly competitive, comparable 

sized markets in terms of the EU. 

And I know that the last Administration, because I met with several folks in your office back a couple of years ago, there has been 

30 

a lot of work product and a lot of effort that has been done. I know 

there are a lot of individual issues with various countries. 

What is your sense of where that is today? Is that something we 

can resurrect? Or do you just see that we are going to move forward on a bilateral agreement with every single country individually which would seem would take a long time to get anything 

done? But I wanted to get your comments on it. 

Ambassador LIGHTHIZER. Well, first of all, it is something that 

the President has spoken on. He mentioned it during his meeting 

with Chancellor Merkel some months ago. It is something we are 

looking at. We are reviewing all of these agreements. 

So I don’t want to prejudge it, but it is clearly something that 

I understand there is a lot of momentum behind. There are a lot 

of reasons to do it. On the other hand, it wasn’t accomplished, so 

there are obviously problems or it would have been done and we 

wouldn’t be talking about it at this point. 

It is in the group of things that we are going to review, agreements that we are in the process right now of reviewing to decide 

where to allocate our resources. There are a lot of arguments 

against it. But, as I say, if it was so close to being done, it would 

be done and we wouldn’t have to worry about it. Right now, it can’t 

be done because of—— 

Mr. BUCHANAN. Let me just throw this out. Being in Congress 

for 10 years, I have watched trying to get agreements done. It 

takes, seems like, forever. So when you go at it just on a bilateral 

basis, and there are probably reasons, strategically, to do some 

countries that way, but it seems like there has been a lot of work 

product in terms of the EU. Because of shared values, it makes 

some sense to see if there is not an opportunity to do something 

in a big way that would impact. And I know it is not easy because 

there are a lot of issues with individual countries in Europe, but 

I would be interested in you guys being open-minded to that as a 

possibility. 

Ambassador LIGHTHIZER. Thank you, sir. And we are. It is 

under review. And I could make an argument, if I had to, that it 

is a bilateral agreement. 

Mr. BUCHANAN. Well, thank you. And I yield back. 

Chairman BRADY. Thank you, Mr. Buchanan. 

Mr. Lewis, you are recognized. 

Mr. LEWIS. Thank you very much, Mr. Chairman. Thank you for 

holding this hearing today. 

Mr. Ambassador, thank you for being here. I would like for you 

to give me some idea when it comes to trade policy, what is your 

position on the issues of human rights, labor rights, protecting the 

environment? It is my belief that a trade policy should be a reflection of our own values. I would just like to hear you out. 

Ambassador LIGHTHIZER. Well, I think that is a very important point. I think it is not really fundamentally different than the 

point that the Chairman made. I mean, this is—we have a system. 

And we are proud of that system. And the system has created an 

enormous amount of good for not just Americans, but for people 

around the world. And we have an obligation to push that forward. 

31 

To be honest, personally, I view myself as worrying about the 

dollars-and-cents part of it. I am not worried the foreign policy part 

of it or the—— 

Mr. LEWIS. So are you suggesting, Mr. Ambassador, that we 

make money, we get the dollar, at any cost? 

Ambassador LIGHTHIZER. No. I think that—— 

Mr. LEWIS. But you said you are concerned about the dollar. 

Ambassador LIGHTHIZER. No, I don’t think that is right. In the 

first place, I don’t believe that at all. In the second place, I view 

my focus has to be on trade and economics. That is really what I 

am paid to do. That isn’t to say that the other things aren’t even 

more important, but my focus is. 

But where we overlap, Congressman, is I think labor and the environment are economic issues, and I approach them as economic 

issues. That is how I think of them. 

I think the United States—and many of the Members have said 

this—the United States, every businessman, every farmer, every 

worker has a right to get a fair shake in their own market. 

And we have to remember that. This is not just about exports. 

We have a right to have a fair—we have a contract with these people where we will pursue a certain economic policy which we all 

think is the right policy, which makes everybody richer. But part 

of that contract is that we will give them all a fair break. And that 

means fair competition in their own market and overseas. And part 

of that fair competition, in my judgement, are things like labor 

rights overseas and the environment. 

Now, that isn’t to say that I think you want to ratchet up or do 

any of those things. I am just saying there are certain minimum 

standards that are part of our system, and to fall below that is an 

economic advantage which I don’t think is a fair advantage. 

So I don’t disagree with your premise. I am just saying I am worrying about the economic side of it. I am worrying about workers 

and farmers making more money at the end of the day. And the 

other things are important, but they are not my focus. 

Mr. LEWIS. But you are not prepared to commit to me, this one 

Member, that our trade policy should be a reflection of our values 

as a country? We can’t say one thing at home and do something 

else abroad. 

Ambassador LIGHTHIZER. I think it should be a reflection of 

our values. 

Mr. LEWIS. Thank you very much. I yield back. 

Chairman BRADY. Thank you. Thank you, Mr. Lewis. 

Mr. Roskam, you are recognized. 

Mr. ROSKAM. Thank you, Mr. Chairman. 

Ambassador, thank you very much for your time today. 

Just to shift gears a little bit, one of the big priorities is our relationship with Israel historically. And back in the last Congress, we 

overwhelmingly passed into TPA one of the stated trade objectives 

of the United States is to push back against the BDS movement, 

the anti-Israel Boycott Divestment and Sanctions Movement. 

This is into a larger context. The former Ambassador from Israel 

to the United States, Michael Oren, wrote an op-ed in which, a few 

years ago, he made this point. He said the first wave of anti-Israeli 

activity was military, and we know how that turned out. The secVerDate Sep 11 2014 09:24 Feb 22, 2019 Jkt 033478 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33478.XXX 33478
32 

ond wave was terror movement against Israel. But the third wave 

is, in some ways, more insidious in that it is trying to take away 

Israel’s legitimacy and, therefore, just simply remove it from the 

world stage. 

So one of the tools that you have as the Trade Ambassador is the 

capacity to push back against that, particularly as it relates to European governmental actors. Can you just give us a sense of where 

that stands and how the Administration is adopting that TPA objective? 

Ambassador LIGHTHIZER. Well, right now we are not in negotiations with Europe. But we understand that’s an objective. And, 

indeed, I would say it is a threshold. It is more than an objective. 

I think that I shouldn’t speak for the Administration on matters of 

foreign policy, but on this one I think it is so clear. The Administration very strongly agrees with that sentiment. 

And we think that these boycotts and divestitures and the like 

are very dangerous. They are not just dangerous for Israel, they 

are dangerous as a precedent for the whole economic system. 

So, personally, I am very sympathetic. I believe the President is 

very sympathetic. And that will be a very important objective when 

we get to the point that we are talking to Europe about T–TIP or 

other agreements. 

Mr. ROSKAM. Very good. Thank you. I yield back. 

Chairman BRADY. Thank you. 

Mr. Larson, you are recognized. 

Mr. LARSON. Thank you, Mr. Chairman. 

And thank you, Ambassador. 

In my State of Connecticut we have a great deal of exports. In 

fact, nearly 6,000 companies in Connecticut are involved in exporting. Nearly 90 percent of them are small businesses. That is why 

we believe it is critical to ensure our businesses and our workers 

maintain their economic and competitive position in the international markets. 

I know you understand this thoroughly. I know you also understand that many American workers feel that the international 

trade has eroded the middle-class wages and led to job loss, as you 

can hear in some of the sentiments and the questions that a number of our Members are asking. 

So that means that enforcement of labor and environmental provisions in our existing agreements and insisting on strong protections in any future agreements is essential. I know you understand 

that. 

But what I have, and there is not enough time for me, but I want 

to pose six questions with the permission of the Chair. If I could 

pose the questions and then have them answered in writing, because I don’t believe the Ambassador, it would be fair to him. But 

at least he will get the gist, and then we can further correspond 

beyond the Committee, and I won’t supersede the time that I have 

been allotted. 

The first is, with regard to NAFTA, how do you plan to seek 

greater access to the Canadian and Mexican procurement markets 

while protecting our own Buy American priorities? These seem to 

be in conflict. And so what specific changes will you seek to the 

33 

government procurement chapter of NAFTA? That would be question number one. 

What kind of enhancements with regard to NAFTA, with respect 

to intellectual property protection, is the Administration contemplating in the NAFTA rewrite? 

Third, what is your plan when it comes to the enforcement of 

labor and environmental provisions in our future FTAs? 

The fourth has to do with currency that a number of people have 

discussed and you have raised here. What is the Administration’s 

intention with respect to seeking the inclusion of currency rules in 

its trade agreements? You have already elaborated on standards 

and the need for those. And, again, I would appreciate if you could 

respond to that. 

Further, in that regard, do you support including strong and enforceable disciplines in NAFTA and other trade agreements? 

And, finally, Mr. Ambassador, we are very concerned about the 

issue that was raised when the President said that he might terminate the U.S.-Korea Free Trade Agreement. What are the Administration’s plans with respect to the U.S.-Korea Free Trade Agreement? And if you could answer that, that would be great. 

Ambassador LIGHTHIZER. So I am going to put six in the 

record and answer the last one? 

Mr. LARSON. Yes. 

Ambassador LIGHTHIZER. We are looking at all of our trade 

agreements. And the KORUS is one of them that we are looking 

at very closely. There have been winners and there have been losers. I would be less than candid if I didn’t say it is troubling to me 

the direction the trade deficit has gone with respect to that agreement. It has had a negative effect on the U.S. trade balance. 

Having said that, it is just in the group that we are looking at. 

There are no plans to drop out of KORUS at this point. It is just 

something that we are talking to the Koreans about. 

In fact, I have a meeting today or tomorrow with the Koreans on 

these issues. We have a variety of thorny issues, issues that we 

think are costing us exports, and those things are all we are going 

to raise. 

And it fits in that category of things that I say, if you have a 

big trade surplus with the United States, you had better get rid of 

the barriers to our exports to you. And it fits into that category of 

things. And I am going right down the line, insisting with these 

people, that you can’t have barriers to trade and have a $20 or $30 

billion surplus to us. You had better get rid of the barriers and let 

us sell there, because we are not going to tolerate it anymore. 

But in terms of a plan right now to get out of KORUS, no, there 

is no such plan. But it is under review. It is seriously being looked 

at. And the President is troubled by the trade imbalance. 

Mr. LARSON. That is reassuring, certainly, to hear. I know a 

number of people over the recess will be traveling to Korea for a 

variety of purposes, not the least of which is national security. So 

I do think it is important that message be reinforced. 

And I couldn’t agree with you more in terms of the trade imbalance. So I commend you in that area, and also for the encouragement that we are not going to be dropping out of KORUS. 

Thank you. 

34 

Chairman BRADY. Thank you, Mr. Larson. You may have set a 

record for the number of questions stuffed into a 5-minute period. 

Thank you. 

Mr. Smith, you are recognized. 

Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman. 

And thank you, Ambassador, for your service and for sharing 

your time here today. 

I certainly want to associate my comments and concerns with my 

colleagues who have raised the issue of agriculture and NAFTA, 

and the progress that has been made with NAFTA. I know that 

producers across rural Nebraska certainly appreciate the gains 

that have been made. 

And I think you have heard from us numerous times. They call 

us the agriculture delegation here on the Committee. You have 

heard us mention and emphasize several times how important 

these issues are, agriculture issues, that we not undermine the successes that NAFTA has brought to U.S. agriculture. 

Shifting gears just a bit, thank you for the work that you and 

the President and others in the Administration have done on pressing China on a number of trade issues. This isn’t just a market access issue. For the biotech firms, the lack of approval for these 

products also forces U.S. producers to choose between the most current seed varieties or continuing to access—continuing access to 

China’s 1.3 billion consumers. And it is obviously a big deal. 

As agreed to under the U.S.-China 100-Day Plan, China’s National Biosafety Committee, or the NBC, recently met to review approval petitions for eight U.S. biotech products which have seen 

their approval for the Chinese market delayed by an average of 5 

years. That’s pretty astonishing. 

So following the Biosafety Committee meeting, the NBC meeting, 

the Chinese Ministry of Agriculture approved only two of the eight 

pending products. And so approval of only two of these eight, obviously, is disappointing, and I am concerned that China will not 

honor the spirit of the 100-Day Plan in approving the remaining 

six products. 

So I understand the NBC is set to meet again by the end of June, 

giving us the opportunity to have the other six products approved. 

What is USTR doing to ensure China follows through and approves the remaining six products before the conclusion of the 100- 

Day Plan? 

Ambassador LIGHTHIZER. Well, thank you, Congressman. 

First of all, I would say that there was some progress made in 

the 100-Day Plan, as you suggest, and this is one of the principal 

areas where there was progress. 

We are continuing to press China. We expect and will require 

that they, after they follow their process, very quickly approve all 

eight documents—I mean, all eight applications. This is important 

not just because of those, but because it actually delays U.S. farmers from implementing a lot of these high-tech techniques in the 

domestic market as well as internationally. 

So I can assure you that Secretary Ross is very focused on this, 

is making it very clear that this has to be done. We have been in 

contact with the Chinese as recently as the last couple of days on 

this. And my feeling is that, before long, we are going to have all 

35 

eight of them agreed to. That is what we expect. That is what we 

think was agreed to. And the Secretary, as I say, who actually had 

that negotiation at that time, is very focused on it. 

Mr. SMITH OF NEBRASKA. Thank you. I know that there is 

great opportunity in being good stewards of our natural resources 

with biotechnology. We have a great story to tell of how far we 

have come utilizing biotechnology, and I think it is very promising 

for the future. 

I was pleased to see the President’s budget did include a renewal 

of the GSP program, and this is very important. More specifically, 

the recent GSP reauthorization included language to also consider 

for duty-free access a variety of travel goods. The previous Administration did not provide the consideration for travel goods from all 

eligible countries as intended by the law, and instead only provided 

it to the least developed and AGOA nations. I appreciated Ambassador Froman’s basically delegating that, or deferring that, expansion to the current Administration. 

Could you give us an update on that effort in GSP and travel 

goods? 

Ambassador LIGHTHIZER. Yes. Well, I don’t necessarily appreciate him deferring it. But I say that just in jest. 

No, we are in the process of looking at it right now. We are very 

close. The documents are in front of me and I think you will see 

an outcome very soon. And my guess is you won’t be disappointed. 

Mr. SMITH OF NEBRASKA. Okay. Thank you. Again, thank 

you, Ambassador. 

And thank you, Mr. Chairman. 

Chairman BRADY. Thank you. 

Mr. Kind, you are recognized. 

Mr. KIND. Thank you, Mr. Chairman. 

Mr. Ambassador, thank you for being with us here today. 

Mr. Ambassador, I want to just make a couple of comments before I ask you a question more specifically involving the dairy issue 

we have with Canada and NAFTA renegotiation. 

But my first comment is I hope—and this is a good start today— 

that your approach in dealing with Congress is going to be extremely open, consultative, collaborative. I think it is going to be 

beneficial that whatever you go out and negotiate, you are going to 

have to come back here for our approval. And it is better for us to 

be on the takeoff, rather than trying to get us on the landing with 

these agreements, because we have to justify and explain this to 

our bosses back home too. 

And Secretary Froman, I think, set a very high standard as far 

as outreach and time he spent on the Hill getting feedback from 

us, and us getting feedback from him, in the course of negotiations. 

That also included language of what was being negotiated. 

Now, past USTR offices have been loath or reluctant to share 

language with us. If that occurs in the future, that is going to 

cause problems. I am just telling you right now. 

And with that in mind, I recently just sent you, as well as Secretary Perdue, a letter inviting you to come back with me to my 

home in Wisconsin to have a good meeting with our agriculture 

producers. I think you are going to find that getting out of the bubble of Washington can be extremely helpful, just going out into the 

36 

countryside and listening to people and getting feedback from 

them. We had a great farm visit with Secretary Froman a couple 

of years ago where he got a lot of good input from agriculture producers in my large agricultural area. 

So I hope you seriously consider the invitation and possibly find 

time to come to meet in the Midwest and have that conversation 

with folks back home. 

In regard to NAFTA, I may be in the minority on this side of the 

dais, or even within my own party, but I happen to believe our 

withdrawal from the Trans-Pacific Partnership trade agreement 

will go down as one of the great strategic mistakes that we made 

in the 21st century—unless you and this Administration figure out 

a way to get us back into the game, into the fastest-growing economic market on the globe, the Pacific Rim area. 

Because right now a tremendous vacuum has been created. 

These countries were looking to us for leadership and they didn’t 

find it. We turned our back on them. And that vacuum will be more 

than willing to be filled by China. And if we have to operate from 

the outside looking in, trying to compete with China’s rules, that 

will be a race to the bottom, and that will not help us or our people 

economically in this country. 

And with TPP in mind, I hope—and we have talked to Secretary 

Ross about this—it seems to me, just logically, a good place to start 

with NAFTA renegotiation is to look to what Mexico and Canada 

has already agreed to under TPP, the elevation of standards that 

were included in the agreement, the reduction of tariff and non-tariff barriers that they had agreed to. And if you have ideas on how 

to improve upon that, let’s go. Let’s do it. 

But if I see slippage in those standards from what they had already agreed to under TPP, that is going to be a problem from my 

perspective too. We can’t be going backward now on something that 

was already agreed to with Canada and Mexico. 

And, you know, a lot of people think NAFTA renegotiation means 

mainly with Mexico. We also have problems with Canada. And one 

is the dairy issue right now with the Class 6 and Class 7 pricing 

system with ultrafiltered milk, something that wasn’t addressed 

with NAFTA but which many, if not all, of our dairy producers 

right now feel that they are being treated in an unfair and discriminatory manner. 

So I am hoping that you have a plan for moving forward to try 

to resolve this so that we level the playing field and it is a twoway street when it comes to the exchange of products, but especially the issue we are having with Canada right now with dairy. 

And I’d be interested to hear if you have been thinking about this 

at all, if you have some type of plan to move forward on, and hopefully look forward to some additional meetings where we could talk 

a little bit more in detail about what we feel needs to be done dealing with Canada and renegotiation. 

Ambassador LIGHTHIZER. Great. Thank you, Congressman. 

First of all, I do believe that this is a partnership. And we don’t 

want to bring an agreement back here that doesn’t pass, implementing a bill that doesn’t pass. So that makes no sense. So we 

want to be involved. I completely agree. 

37 

Senator Dole used to always say the same thing: If you want me 

on the plane when it lands, put me on it when you take off. And 

I always thought that was good advice. 

In the second place, I have some background on the Hill, and I 

understand the importance of Congress. And, to be candid, I enjoy 

working with Congress. So that is number one. 

Number two, with respect to TPP, the President didn’t pull out 

of the Asia-Pacific area. He pulled out of TPP. He is very much— 

he wants to be engaged. And I think we are going to do a better 

job. It is not going to happen in a week or two. 

And there are also questions I always had when I talked to people about—TPP was going to pass anyway. There are questions as 

to whether or not that was ever—whether that train was ever 

going to—whether that, I guess, with your analogy, whether that 

plane was ever going to leave the airport. 

Having said that, the final thing I would say on—because I am 

so clock conscious here—is that on the issue of Canadian dairy, yes, 

we are very much involved in that. We care very much. You ask, 

do we have a plan? I have, like, this thick of options. So it is something we are focused on for a whole variety of reasons. 

Mr. KIND. Great. I would love to stay in touch with you on that 

as we move forward. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Kind. 

Ms. Jenkins, you are recognized. 

Ms. JENKINS. Thank you, Mr. Chairman. 

Ambassador, thank you for being here to talk trade with us this 

morning. 

National security should, unquestionably, be a priority of any 

government. But I worry that using national security as a basis for 

trade restrictions in NAFTA or elsewhere could backfire if other 

countries do the same to us. In particular, food security for many 

countries is a vital component of national security. 

Along that vein, here at home wheat farmers in my eastern Kansas district are just finishing their wheat harvest, and the work 

continues to roll north and west across the State. Many Kansas 

farmers will then ultimately look to foreign markets, here in North 

America or abroad, to sell their products in the coming months. 

What argument would you make to a country that tries to restrict its imports of U.S. wheat or other products for food security 

reasons? 

Ambassador LIGHTHIZER. Well, in the first place, as I said before, it is a legitimate argument: Should you use national security 

in the case of steel? I believe it is a legitimate argument. I, however, think that it is a legitimate use of the statute if the President 

decides to go in that direction. Steel, aluminum, these are national 

security issues, in my opinion. 

Now, there is always the argument: Are you worried about somebody else using it? Yes, I am worried about somebody else using 

it. But they have to have a legitimate reason also. They can’t just 

willy-nilly use it or we would challenge them. And my guess is that 

any country that thought they had a legitimate reason to use national security would, in fact, use it whether we use it or not. That 

is my own personal belief. 

38 

I don’t see how someone could preclude Kansas wheat based on 

national security of a food need basis. That doesn’t strike me as a 

legitimate argument. If it certainly happened, we would have to decide what makes sense in our judgment. And I can assure you that 

the President will look at this very, very hard. And his—the reaction will be the same as we are going to have with respect to any 

time we take an action on trade at all, there is always the possibility of somebody retaliating against us. It even happens when you 

do something in anti-dumping or countervailing duty or all the normal things. 

There is always a possibility of retaliation. And the question you 

have is, what are you going to do in response? And that is something that we are thinking about. But if we get unfair retaliation 

against us, I would expect the President to react very strongly. I 

would expect him to take the position that we won’t tolerate that. 

Ms. JENKINS. Okay. Great. Thanks. 

About 50 percent of all U.S.-grown wheat is exported, making 

trade incredibly important to a wheat State like Kansas. Mexico, 

for example, was the largest export market for U.S. wheat last 

year, made possible by the benefits of NAFTA. In fact, according 

to the National Association of Wheat Growers and the U.S. Wheat 

Associates, Mexico imported 3.1 million metric tons of wheat in the 

2016–2017 marketing year. 

In the views of many of my constituents, NAFTA has been overwhelmingly successful. I do agree, however, there is room for updating in this agreement, which is more than 20 years old, to include strong and enforceable SPS rules based on sound science, like 

those that were negotiated under the TPP. Kansas farmers and 

ranchers are also looking beyond NAFTA to future trade deals for 

additional markets. 

What are your views on how NAFTA renegotiation can serve as 

a blueprint for securing those future trade deals, which would 

mean the inclusion of strong SPS provisions that will help the Kansas producers gain new market access? 

Ambassador LIGHTHIZER. Well, SPS is something that needs 

updating, and it is an important objective. Generally, there are advantages in putting in model agreements in negotiation between 

Mexico, the United States, and Canada. Because we have a long 

history, we don’t have a lot of the—some of the outlier economic activity that you might have if you were negotiating with somebody 

else. For example, we don’t have massive state-owned enterprises 

in either place. 

So I think that NAFTA is, as you suggest, it is a great opportunity to put in place between the three countries very high-level 

provisions with respect to a variety of things. SPS is one of them. 

But there are also, other people have suggested currency. It was 

kind of a classic example of what you are talking about where 

there really aren’t currency problems between the United States, 

Mexico, and Canada, but that makes it a good opportunity for everyone to sit down and say, okay, let’s put together a model agreement here that ought to apply to everyone. 

So I look upon NAFTA as a real opportunity to create a model. 

And I believe that with respect to some of these things the Canadians and the Mexicans look upon it the same way. And then take 

39 

those provisions, with the additional legitimacy of being in the 

NAFTA and be able to use those in future negotiations. 

Ms. JENKINS. Thank you, Mr. Ambassador. We look forward to 

working with you. 

With that, Mr. Chairman, I yield back. 

Chairman BRADY. Thanks, Ms. Jenkins. 

Mr. Pascrell, you are recognized. 

Mr. PASCRELL. Good morning, Mr. Chairman. 

Chairman BRADY. Good morning. 

Mr. PASCRELL. Mr. Ambassador, congratulations on your confirmation. Good luck. You are going to need it. 

We have heard a lot of talk about what should be changed. I 

have to say that in various meetings with the U.S. Trade Representative and Department of Commerce, White House officials, I 

and many of my colleagues find ourselves confused by the inconsistency from this Administration when it comes to trade. We need 

some very basic questions answered. So I am going to get into the 

questions. 

But I want to associate myself with the words of Mr. Buchanan 

concerning the difference between the bilateral agreements and regional agreements. I think he is on target. I think it would be foolish simply to deal in those bilateral agreements. This is a different 

world, and we need to understand that. 

And I would like to associate myself also with Mr. Larson’s comments on the relationship between our trade agreements and stagnant wages in the United States and the ability to create new jobs. 

There is a lot of data coming out on this. Trade affects things in 

our own country, and we need to take a look at the labor market 

to understand it fully. 

Now, the President called NAFTA a disaster, and all I am hearing so far is tweaking the edges. If it is a disaster, and I am looking at, at least, 22 speeches that he made during the campaign 

where he riled up people, riled up people, about the trade agreements. 

Now, I voted against many of those trade agreements. So one 

would think we are on the same side. We are not. We are not. 

In the Administration’s notice to Congress of an attempt to renegotiate NAFTA, your office failed to provide us with specific negotiating objectives or detailed descriptions of what you would like 

to see changed. Many American manufacturing companies have 

moved to Mexico, for instance, because of the much lower labor 

costs across the border. Mexican manufacturing workers make only 

20 cents on the dollar that we make. And they have yet to comply 

with minimum internationally recognized labor standards. 

So today, when Mr. Levin asked about implementing reforms 

prior to renegotiation, you would not commit to demanding labor 

improvements in Mexico. And you did the same thing yesterday 

when you were questioned by the good Senator from Ohio. 

Now, I am disappointed you did not respond. So how will you ensure Mexico—how will you ensure that Mexico enforces labor provisions in a new NAFTA, now that we are going to abandon this disaster, if they have failed to meet basic internationally recognized 

labor standards? 

40 

Before you answer that question, I want to remind you, I did 

submit to you the principles of trade which we are having as our 

standards. I want to know what your standards are. 

Thank you, Mr. Ambassador. 

Ambassador LIGHTHIZER. We expect to negotiate an agreement 

that has enforceable labor standards. And we expect them to be 

consistent with the agreement that the Committee had with the 

Bush Administration on May 10, 2007. We expect them to be enforceable. And I look forward to working with the Members of the 

Committee to make sure that happens. 

In spite of the disagreements that you articulated, I think that 

with respect to labor standards, my guess is we are not that far 

apart. 

Chairman BRADY. All time has expired. Thank you, Mr. Pascrell. 

Mr. PASCRELL. Mr. Chairman, I will submit the other questions 

to the Ambassador with your approval. 

Chairman BRADY. Without objection. 

Mr. PASCRELL. Thank you. 

Chairman BRADY. Thank you. 

So we will now move to two-to-one questioning to balance out the 

rest of the hearing. 

Mr. Paulsen, you are recognized. 

Mr. PAULSEN. Mr. Ambassador, the movement of data around 

the world is essential for businesses of all types here in the 21st 

century. From automobiles, to airplanes, to agricultural, and different apps, access to data around the globe is paramount in importance for businesses of all sizes in order to compete in a global 

economy. So data flows today have increased, they have grown by 

45 times since 2005, and they are expected to grow by another 9 

times by 2020. 

However, as you know, currently there are no enforceable trade 

rules specifically protecting data flows, which leaves American companies vulnerable to digital manipulation by foreign governments. 

And such efforts include data localization, forced technology, or 

source code transfers, and other pernicious efforts that undermine 

competition from U.S. companies. 

And both you and Secretary Ross have voiced public support for 

enforceable digital trade rules in your confirmation hearings as 

well as more recently. So does the Administration view inclusion of 

digital trade rules as a top priority for a NAFTA modernization 

and other future trade agreements? 

Ambassador LIGHTHIZER. Absolutely. 

Mr. PAULSEN. That is good to hear. 

And, Ambassador, you have also mentioned that you have notified Congress of the intent to initiate negotiations with Mexico and 

Canada regarding NAFTA. Given that NAFTA modernization will 

set that precedent also for future negotiations with other countries 

and other agreements, it is a tremendous opportunity to help break 

down barriers to digital trade and allow U.S. companies to compete 

in North America. 

Can you share with us, or the Committee, any information about 

Mexico and Canada’s views on digital trade heading into those negotiations? 

41 

Ambassador LIGHTHIZER. I have not had discussions with Mexico or Canada with respect to this issue. We expect to have a digital chapter, as you suggest. We expect it to be a very high-level 

agreement. 

I will have discussions with them. But I have to be careful, because we are not allowed to begin negotiations until we go through 

the TPA process, which we take as a very important commitment. 

Having said that, I guess I would be very surprised if both of 

them didn’t agree fundamentally that we need this. Neither one of 

them are in the group of countries that are, as you suggest, trying 

to create new industries by using tactics like forced transfer of 

technology, like data localization rules. 

So I am optimistic that we will be able to put together a good 

chapter. But I certainly take it from our point of view that it would 

be very difficult to pass a NAFTA-implementing bill that doesn’t 

have a very high standard digital chapter. 

Mr. PAULSEN. Good. That is good to hear. 

Let me just shift gears real quick. You know, the United States, 

and my home State of Minnesota, is a leader in medical device innovation and growing exports in that area that create a lot of really good jobs here at home and then help improve healthcare outcomes around the world. And other countries now are increasingly 

taking very extreme and misguided measures to control healthcare 

costs. 

As an example, in India, we are seeing severe price controls that 

disproportionately affect American medical device manufacturers, 

putting them at a competitive disadvantage. India has also rejected 

requests by U.S. medical device manufacturers to withdraw affected products from the market and then has announced its intention to impose price controls on additional categories of medical devices. 

And then another example would be in Italy where only U.S. 

publicly traded companies are required to account for expected revenue losses related to a yet-to-be-implemented and highly controversial payback law that would require companies to pay back 

to the government any medical device spending in excess of an arbitrary predetermined level of spending. 

These are policies that hurt American companies and deter these 

companies from introducing new, innovative technologies in these 

markets, which ultimately means patients are going to have less 

access to these products. 

So can you just share a little bit, how will the Administration 

work with India or other foreign governments to ensure that our 

companies are not being driven out of the market by arbitrary price 

caps or spending measures that make it impossible for innovative 

companies to compete? 

Ambassador LIGHTHIZER. Thank you, Congressman. 

I have met with a group of medical device executives and have 

heard the horror stories. And that really is what they are. This is 

an issue that we are raising with India, and we are going to use 

the Prime Minister’s visit as a launching pad to make sure that 

this gets proper attention. 

42 

So everything you say, we completely agree with. All we can do 

at this point is raise the issues with them, show the unfairness of 

them. 

And this, to me, fits into the category also of things that if you 

have a big trade surplus with the United States, you should not be 

doing things like this to the United States. They should be trying 

to encourage imports from the United States. 

And their problem is even bigger because this is another example, the medical device area, is another example where China is 

now going to move in, has it on their Made in China 2025 list of 

industries that they want to become world class in. 

So this is an industry that I think we really do have to focus on. 

And we met with them and we expect to put together an action 

plan. 

Mr. PAULSEN. Thank you, Ambassador. 

Chairman BRADY. Thank you, Mr. Paulsen. 

Mr. Marchant, you are recognized. 

Mr. MARCHANT. Thank you, Mr. Chairman. 

Thank you, Ambassador, for being here today. 

I have a couple of questions and issues I want to bring to you 

about the negotiations of NAFTA and how they may affect my district in Texas. 

My district is the DFW Airport. The DFW Airport is the center 

of my congressional district. The airport has an astonishing value 

that it adds to our economy of $37 billion a year. The Metroplex 

area that encompasses my congressional district is generating 

nearly half a trillion dollars in the GDP, and the DFW Airport is 

the driving force behind much of that growth. Most people in Texas 

say that the airport really is the economic generator for the whole 

State. 

Just recently, the mayors of Fort Worth and Dallas and a delegation traveled to Toronto. And their main concern was that both 

parties, both those in Toronto and Dallas-Fort Worth, are uneasy 

about the upcoming negotiations, and they want to make sure that 

these relationships they have developed over the past few decades 

are going to last. 

So I would like to know what steps the Administration is taking 

to make sure that the areas of the country that experienced economic growth as a benefit of NAFTA won’t be harmed or see a 

downtick in the results of the modernization. 

Ambassador LIGHTHIZER. Thank you, Congressman. 

First of all, we are very much aware of how important that airport is to the State of Texas. And we are also aware, as the Chairman points out, that Texas is the number one exporting State in 

the country, at this point, as I understand it. 

So our objective is to have more trade, not less trade. And our 

objective is to, first of all, do no harm. We expect that as a result 

of this the United States will have more sales and we hope that 

there is more trade. But, clearly, with respect to the provisions 

where NAFTA has been successful, we want to secure that going 

forward. 

Mr. MARCHANT. Thank you. 

Lastly, I would like to bring up a letter that was sent to you by 

our two Senators on June 8th. And, basically, the letter states that 

43 

NAFTA has played a key role in all North American energy markets, such as oil and natural gas, and that the NAFTA agreement 

allows the United States to maximize the benefit of being the 

world’s largest energy producer. 

As the Administration moves forward, I would like to echo the 

sentiments of this letter and ask for your opinion on the free flow 

of energy products, including electricity, oil, and natural gas, across 

the United States and Mexico and Canadian borders. 

Ambassador LIGHTHIZER. Yes. I agree with you. We think 

that—Senator Cornyn of course is on the Finance Committee, 

where I testified yesterday, and this did come up. 

We support the free flow of energy across the borders. We think 

it is one of the advantages we have as a North American market. 

Mr. MARCHANT. And you don’t think that any of the NAFTA 

negotiations that we contemplate will have any effect on that free 

flow? 

Ambassador LIGHTHIZER. Well, I am not privy, obviously, to 

what the other people want to do. We think it has been a success. 

We hope it fits in the category of ‘‘do no harm,’’ and we hope that 

everyone agrees with that, although, there are complications in this 

area, as you know. 

Mr. MARCHANT. Thank you, Mr. Ambassador. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Marchant. 

Following the practice of the Gibbons rule, Ms. Sewell, you are 

recognized. 

Oh, Ms. DelBene, you are recognized. 

Ms. DELBENE. Thank you, Mr. Chair. 

Thank you, Mr. Ambassador, for being here with us today. 

First, we talked a little bit about digital trade, and digital trade 

is critically important. We have 3 million Americans who are employed in the Internet sector, and it has helped the United States 

achieve a trade surplus, a $159 billion trade surplus. So this is a 

very, very important issue. 

In order to build on this—and I know you mentioned that digital 

trade would be a priority in any NAFTA renegotiation—how will 

you ensure that digital trade is prioritized within your office with 

appropriate levels at the agency? 

Ambassador LIGHTHIZER. Well, first of all, as I went through 

my confirmation process, and in meeting with Members of the 

Ways and Means Committee, digital trade, after agriculture probably, is the number one thing that is raised. And it is self-evident 

that it is very, very important to the U.S. economy, and it is an 

area where we have a real competitive advantage. So it is important. 

We have at USTR a position that was created just last year, it 

has not yet been filled, for an Intellectual Property Innovation Ambassador who is a negotiator, who is responsible for that area. We 

are in the process right now of filling that spot. And that will be 

someone who will, along with a few other things, focus very much 

on exactly this area. 

So we do understand how important it is, and we think it is an 

important way to get our trade deficit down, which is a primary objective of the President. 

44 

Ms. DELBENE. Thank you. I urge you to fill that position quickly. That is important. 

Ambassador LIGHTHIZER. Are you available between now—you 

are probably booked. 

Ms. DELBENE. I also wanted to talk to you a little bit about 

cloud computing and some of the issues we are seeing with China. 

Various Chinese regulations are making it difficult, or even impossible, for U.S. technology companies to operate in China, possibly 

in violation of WTO commitments. 

Specifically, I am concerned with China’s proposed draft regulations, that when combined with existing Chinese law would require 

U.S. cloud providers to transfer valuable intellectual property and 

effectively hand over control of their businesses to Chinese companies in order to operate. 

Global cloud services totaled more than $100 billion in 2016 and 

has a very strong presence in my district and in my State. So it 

is very critical that the U.S.-China Comprehensive Economic Dialogue’s 100-Day Plan includes a commitment by China to resolve 

this problem. 

And so I wanted to hear from you. Are you aware of this issue? 

And can you talk about any progress that the Administration is 

making toward addressing this issue? 

Ambassador LIGHTHIZER. Well, yes, Congresswoman, I am 

aware of the issue. It is an extremely important issue. And it, to 

me, when I read about it, is another example of a country being 

a mercantilist and basically having an industrial policy. 

They see an industry or sector that has value, that is high technology, that has a huge growth potential that affects not just its 

own sector, but every sector, right, because it is this linkage that 

is so important. And then they try to get themselves in the position 

where they take over, first within their own country, and then way 

beyond that. And it is exactly the same pattern that we see everywhere. They limit. You have to have a partner before you can go 

in. 

Anyone who hasn’t followed this issue, it is worth looking at. It 

is a prototype of exactly how they have gotten to where they are 

in a whole bunch of industries for noneconomic reasons. None of 

this has anything to do with the economy. 

So it is an extremely important issue. It is something that I am 

focused on, that the Secretary of Commerce is focused on, and others in the Administration are focused on. And we are raising our 

complaints with the Chinese, and we are looking at all of our options. So we are aware of the issue. We realize how important it 

is, and we are engaged on it. 

Ms. DELBENE. Thank you. 

You know, the fact that China has these regulations is particularly really offensive given the fact that Chinese cloud computing 

companies don’t face these types of restrictions when they operate 

in the United States. 

Ambassador LIGHTHIZER. I mean, this is an extremely important point. There is no reciprocity at all. And it is something that 

if we can take care of it through current law, we should do. And 

if we can’t, the Congress should look at it, in my judgment. 

45 

Ms. DELBENE. One quick point which will be for the record, because we don’t have time. I want to make sure you are aware of 

some of the concerns and questions we have heard about the Covered Agreement with respect to the EU. And so I will submit a 

question for the record, and I would appreciate your feedback on 

that. 

Thank you. 

Chairman BRADY. Thank you, Ms. DelBene. 

Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. 

I want to welcome you, Ambassador, from one Buckeye to another. My district, Mr. Ambassador, starts in northeast Ohio. So it 

is in northeast Ohio. It starts in Cuyahoga County and then rolls 

all the way down into Wayne County. Because of that, Wayne 

County, actually, is one of the largest dairy-producing districts in 

the State. 

The Ohio dairy sector relies significantly on exports. I am particularly interested in the potential to make good use of our engagement with Canada to tackle both the excessive tariffs our industry still faces there, and just as importantly, the non-tariff policies Canada has been using to distort trade. 

Canada’s new Class 6 and 7 pricing tools seem designed to let 

Canada have its cake and eat it too at our expense. The programs 

are a concern not only to companies exporting to Canada, but also 

those exporting protein products around the world, since the Canadian programs are designed to undercut our sales on both fronts. 

How do we tackle both the problems facing us now with Canada 

on dairy and find a way forward to establish more open and dependable trading conditions with them on dairy? 

Ambassador LIGHTHIZER. Well, first of all, if you had said Ashtabula County, I would have paid more attention. 

But seriously, we are very much aware of this issue. I have 

talked to Minister Freeland in Canada about it. And as you say, 

the way to think about it is exactly the way you put it. This is not 

just about exports from the United States to Canada. This is about 

exports from the United States to everywhere, because they have 

created such a, really as a byproduct, such a volume of dried skim 

milk that they can knock us out of markets everywhere. 

So it is way beyond just a problem with Canada. It is something 

that we are engaged on, and that we have heard from not only 

Members from Ohio, but obviously Members from Wisconsin and 

from all over the place. And it is something that we want to deal 

with in the context of NAFTA. Our agriculture people at USTR are 

engaged and they have a variety of options that we are looking at 

right now. 

Mr. RENACCI. Thank you. 

Mr. Ambassador, I am an avid motorcycle rider. I learned this 

past week that Vice President Pence is also an avid motorcycle 

rider. But on the EU–U.S. beef hormone trade dispute issue, motorcycles are on the approved list for a 100 percent import tariff, specifically 51cc to 500cc. If this import tariff goes into effect, it would 

do economic harm to motorcycle dealerships and facilities in the 

State of Ohio and seriously impact domestic consumers. 

46 

My question to you is, a number of us here in the Congress have 

expressed our concern over the import tariff proposal on motorcycles and how harmful it would be on our constituents. As the 

USTR has done in the past, would you withdraw motorcycles from 

the approved import tariff list in the EU–U.S. beef hormone trade 

dispute? 

Ambassador LIGHTHIZER. Well, my hope is that we are going 

to negotiate our way out of this. That is our objective. I realize 

there are a variety of products that are on the potential list and 

nothing has been happening to anybody at this point. 

I know that the motorcycle industry, the motorcycle riders, have 

been very activated on this. I am sympathetic to their position. But 

right now we are just hoping to negotiate it out. I am not taking 

anything off of the list at this point. I think that would be counterproductive to the negotiation. 

Mr. RENACCI. I would hope we take a good look at this. 

Again, I want to thank you, Mr. Chairman, for allowing me to 

participate in this hearing. And I yield back. 

Chairman BRADY. Thank you. 

Mr. Meehan, you are recognized. 

Mr. MEEHAN. Thank you, Mr. Chairman. 

And thank you, Ambassador, for being here today. 

Many of the themes get repetitive by the time you get down to 

this point of the aisle. But I want to attach myself to the comments 

that have been made by a couple of my colleagues with regard to 

the importance of the free flow of data and the effort that we are 

putting forth with the recognition that what you do here with 

NAFTA may also have some influence with regard to bilateral 

agreements that you intend to reach with other countries. 

As we are looking at Europe and other places, the questions of 

privacy demands and others in the European sector create a genuine concern for the free flow of data. 

So you did say that you were looking toward putting the highestlevel people in your organization as focused on those questions. 

May I inquire, the position that you are looking for with the IP 

Ambassador, is that something that requires Senate approval or is 

that within your own bailiwick? 

Ambassador LIGHTHIZER. It requires a Senate approval. 

Mr. MEEHAN. So this is part of a problem. I hope my colleagues 

on the other side who are concerned about this issue would be 

weighing in with their colleagues in the Senate to assure that we 

would have this kind of support for that very, very important position. 

But I thank you for your emphasis on that and hope in lieu of 

that appointment you will still look to assure that there are seniorlevel people working on those negotiations. 

Another issue which I know you are well aware of but which continues to have great significance has been the patent protection for 

innovation that takes place in the United States in the biopharma 

area. There are questions about data protection for biologic and 

other kinds of drugs. 

This has certainly been a part of TPP negotiations in the past 

and was not really resolved in a way that was as clear in TPP negotiations, with the Five Plus Three being about the best, notwithVerDate Sep 11 2014 09:24 Feb 22, 2019 Jkt 033478 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33478.XXX 33478
47 

standing many representations by the Trade Rep that they were 

looking for the 12 years of patent protection that are enjoyed here 

in the United States. 

Currently, as best as I can understand, Canada does not recognize 12 years of protections for the biologics, and Mexico is ambiguous at this point in time. 

Is it your intention to try to work in that space to maximize the 

protections for biologics? 

Ambassador LIGHTHIZER. Yes, absolutely. 

Mr. MEEHAN. We would be grateful for your continuing commitment to that. 

And can you address for me, as well, what you might be able to 

do with regard to mechanisms for patent disputes where they may 

arise in the context of that space? 

Ambassador LIGHTHIZER. Well, this is another area where we 

want to have discussions and where NAFTA will—the whole protection of intellectual property will be a major issue in this negotiation, not just in the biologic area, but in the dispute area. 

There have been, for those Members who aren’t aware, there 

have been a number of cases in Canada where we think, unfairly, 

people have lost their patent protection, and this is something that 

we are going to focus on. 

We understand the issue. We think it is a significant issue. And 

it is a surprise to a lot of Members who don’t focus on it like you 

do that this is something that would go on in Canada. 

Mr. MEEHAN. Well, I thank you. I thank you for your attention 

to those important issues. 

And, Mr. Chairman, I yield back. 

Chairman BRADY. Thank you, Mr. Meehan. 

Dr. Davis, you are recognized. 

Mr. DAVIS. Thank you, Mr. Chairman. 

And welcome, Mr. Ambassador. 

I live in Chicago, Illinois, and my hometown has the largest concentration of companies that process sugar-contained products 

made in our country. They are currently, though, paying 75 percent 

more for sugar than their competitors who can buy on the world 

market. 

In the TPP partnership agreement negotiations, a consensus was 

reached without significant dissent in the United States to increase 

the sugar export quotas for Australia and Canada. What my constituents would like to know is, are these legacy negotiations regarding additional access for the U.S. sugar market going to be on 

the table during the renegotiation of NAFTA with Canada and 

Mexico? 

Ambassador LIGHTHIZER. Well, we have, with respect to Mexico, we have an agreement that was entered into, a suspension 

agreement that was entered into, and it seems unlikely that is 

going to change in the context of NAFTA. Certainly, with respect 

to Mexico and Canada, if it is something that Members care about, 

we will be informed by what the Members’ views are on it, and we 

will certainly take note of the fact that you are concerned about it. 

The biggest sugar issue we have right now is with Mexico and our 

chances in the context of that litigation, of the Title 7 litigation, is 

48 

that we have a suspension agreement, and I think we will probably 

end up resolving that issue through the negotiation. 

Mr. DAVIS. I serve as Cochair of something called the Sugar 

Caucus, and, of course, Chicago used to be known as the candy capital of America. Our Members are expressing serious concern about 

the continuing domestic rise in sugar price, which has actually 

caused already a number of our companies and corporations and 

entities to move or relocate out of the country or to look elsewhere 

to purchase their sugar because they use huge amounts of it. Some 

of the candy and other things they make are mostly sugar. 

Could you share with us the Administration’s concerns relative 

to this continuing rise in domestic sugar prices for these businesses? 

Ambassador LIGHTHIZER. Well, Congressman, I don’t have any 

views on that issue. It is more of an agricultural issue from my 

point of view. I am concerned about the trade aspects of it, and will 

certainly want to engage with the Committee on that, but the domestic price of sugar is out of my purview. I am not unsympathetic 

to the points you make, but I have this whole world of things that 

are probably impossible to do, and if I add domestic agricultural 

prices to it, then I will go from a small chance to zero chance, so 

I think I have to sort of stay in the realm of trade. 

Mr. DAVIS. We would urge you to add this trade issue. Any time 

we continue to lose jobs that we can’t replace, that becomes for me 

a trade issue, as well as an agriculture issue, and so we would just 

urge you to take a real serious look at this issue and this problem. 

I thank you so much for being here, and I yield back the balance 

of my time. 

Chairman BRADY. Thank you, Dr. Davis. Ms. Noem, you are 

recognized. 

Ms. NOEM. Thank you, Mr. Chairman, and thank you, Ambassador, for being with us today. I know you are busy working on 

NAFTA renegotiations and modernization and new trade opportunities for us and this country, but I also want to thank you for your 

work with Secretary Ross and the Commerce Department on allowing U.S. beef back into China. That is huge for my State of South 

Dakota and our cattle producers and access to the $2.5 billion market is welcome news for all of us. 

What concerns me about the deal is that our beef is going to 

have a tough time getting back up to that 70 percent import market share that American beef producers enjoyed previously. Australia, one of our top competitors in the region, has negotiated a 

free trade agreement with China to completely reduce tariffs on 

their beef by 2024. So as we work to modernize NAFTA, other 

countries are working on free trade agreements, and we are losing 

market share in foreign economies. 

So what is your plan to ensure that American agricultural exports are going to be on a level playing field in foreign markets, 

so we won’t continue to see our market share reduction in other 

countries, and also getting there quickly before those other countries are able to snatch up that market share before we get other 

agreements completed? 

Ambassador LIGHTHIZER. Well, first of all, we are very pleased 

with what was accomplished with respect to beef in the China 100- 

49 

Day Plan. And we think there are lots of other restrictions that we 

can eliminate with respect to all agricultural products in China. 

Many times the United States has the best and the cheapest product, and there is some reason, there is some impediment to the importation, and that was a classic example in the beef case, and in 

many cases, also poultry. There are a whole variety of these kinds 

of issues. So the first thing we have to do is remove impediments 

to trade, to U.S. trade. U.S. agriculture, as you know far better 

than I do, is the best, it is the most competitive, and it is the 

cheapest, and if we have a level playing field, we will do fine. 

I think it is extremely unlikely that we are going to end up with 

a free trade negotiation with China for a whole variety of reasons 

that I would be, you know, happy to sit down and talk about, but 

we do have a lot of leverage with China in terms of them removing 

impediments and granting access to U.S. agricultural products, 

U.S. beef particularly. I mean, the reality is that they have a $350 

billion surplus with us. You get a certain amount of leverage with 

that if you are willing to use it. And it fits into the category of the 

people who can’t have that kind of a—I mean, in the history of the 

world, there has never been anything that was so imbalanced as 

that, and that gives us a certain amount of leverage. So continuing 

to push on those issues is important. 

In addition, there is a lot of talk about other FTAs, bilateral 

FTAs. One of the ones that the beef producers always talk about, 

of course, is Japan. So we have discussions with the Japanese. We 

are not necessarily, at this point, moving in the direction of an 

FTA, because they are probably not ready to talk and neither are 

we, but we have a structure that is under the Vice-President where 

we are engaging in an economic dialogue. We are talking about a 

variety of issues, these kinds of issues, and it is the kind of thing 

that, at some point, may lead to an FTA, which I know is very important to agriculture. 

The final thing that I would say on this issue is Japan has had a $60- or $70 billion trade surplus with the United States since I 

was at USTR 30 years ago, and I have taken the position that on 

these kinds of areas, at least on a temporary basis, the Japanese 

ought to be making unilateral concessions. The reality is that it is 

in their interest, it is not like you are pushing out Japanese production, in that case, you would be pushing out another competitor’s production. 

So I think that is something that we ought to look at. They ought 

to be letting our beef in at least on a temporary basis, just as an 

effort to get their trade deficit down and to show good faith in moving forward in developing a closer relationship. 

Ms. NOEM. I think any reassurance you can continuously give 

that we are not just focused on a seamless negotiation of NAFTA, 

that we are continuing to focus on China, we are continuing to 

focus on Japan, that there are many of these—I know that—our 

number one industry in South Dakota is agriculture. I am a lifelong farmer and rancher, and was a cattle producer for decades, so 

I know that market share is incredibly important, and they see 

other countries being aggressive and like reassurances that we are 

not unilaterally focused on renegotiating NAFTA, that we are continuing to push those other areas. 

50 

And so, I appreciate your work on all of that, and also just will 

mention—I know I am out of time—but geographical indicators in 

the European Union as well is an issue on which I will talk with 

you later, but thank you for your time, and with that, I yield back. 

Chairman BRADY. Thank you, Ms. Noem. 

Mr. Holding, you are recognized. 

Mr. HOLDING. Thank you, Mr. Chairman. Mr. Ambassador, 

first, I would like to thank you and your very able staff for the assistance you have provided and continue to provide to our sweet potato farmers as they face an issue in the EU, a pending issue that 

could greatly harm their ability to export. North Carolina makes 

great sweet potatoes, and we wouldn’t want to deprive the world 

of their great taste and benefits. 

Touching on some other issues, as you can imagine, and I know 

that you know, a lot of Members of Congress are looking forward 

to a bilateral agreement with the United Kingdom. I watched the 

press reports from the meeting that Secretary Ross had with Secretary Liam Fox earlier this week, and out of that meeting they announced that as early as July they will begin a preliminary scoping 

for a U.S.-U.K. trade agreement. 

So I would ask you to explain what preliminary scoping means? 

You know, what does the working group consist of? Do you have 

the lead in this? Is Commerce taking the lead in this? And then 

additionally, regarding TPA, will TPA procedures be followed in 

this preliminary scoping, including a consultation with Congress 

during the scoping process? 

Ambassador LIGHTHIZER. Well, thank you, Congressman. Yes, 

as you say, Secretary of State Fox was in town last week. We met 

with him, also. USTR negotiates agreements like this, so while Secretary Ross will be very much involved, USTR will be the hub of 

this negotiation. 

The first thing we have to remember is that the U.K. really can’t 

do anything for a while. They have another several months, probably until the early part, I guess, maybe the middle of 2019 before 

they can actually get out of the EU, and then they would be eligible. There are a variety of things you can do that aren’t really a 

trade negotiation that we can both agree on, things like licensing 

and this kind of thing, and I think there is an effort to try to talk 

about and do that in the meantime, to discuss the issues. As we 

get closer to the time that they can actually act, then we would 

start going through the process that you allude to. 

But I think at the right time, the U.K. would like to have an 

agreement with the United States, and I believe that the United 

States wants to have an agreement there, also, so it is an important activity. It is something that has its own timeframe because 

of their situation, which is kind of controlling in this case, but we 

have begun talks about matters of mutual interest, and they are, 

for us, a natural partner. 

Mr. HOLDING. Well, I agree with you, and as you engage in 

your preliminary scoping, Members of Congress who are engaged 

on this are engaging with our counterparts in the Parliament to 

talk about what the agreement would entail and get an idea of 

where potential sticking points might be, you know, certain—we 

will always have adverse interests in some regard. 

51 

Staying on the topic of the U.K., you know, I would urge you, as 

you look toward 232 investigations, that you recognize the very 

unique relationship, the special relationship we have with the 

United Kingdom, particularly in the regard of national security between our two countries, and take that into account, and, perhaps, 

consider exempting countries like the United Kingdom, perhaps 

there is no other country like the United Kingdom regarding our 

special relationship and national security when you decide what actions you are going to take vis-a`-vis 232. 

Lastly, ISDS has been touched on numerous times today. ISDS 

and the carve-out of tobacco from ISDS and the TPP was an absolute fatal flaw, and I would encourage you, as you look at trade 

agreements, and look at ISDS and whether that is appropriate in 

various trade agreements, that you commit to not carving out any 

sector of our economy from ISDS. As you and I have talked about 

before, you always have to be mindful of getting to 218 on a trade 

agreement. And any carve-out of tobacco from ISDS or really, any 

other privilege and benefit of a trade agreement would be fairly 

fatal to arriving to 218. So thank you. 

Chairman BRADY. Thank you, Mr. Holding. 

Mr. Smith, you are recognized. 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. Thank 

you, Mr. Lighthizer, for being here. The folks in southeast and 

south central Missouri definitely agree with President Trump and 

yourself that we believe our trade deals need to put American 

workers and American farmers and ranchers and American families first. I think that is extremely important. 

In the last two decades since NAFTA was signed, a lot has 

changed in our economy. When you talk with the folks that I represent, they associate NAFTA with job losses. They know someone 

who has lost a factory job making shoes or bicycles, and even clothing, in southeast Missouri. It is incredibly important that NAFTA 

be updated and modernized, and we need to do it in such a way 

that puts American workers, businesses, farmers, and consumers 

first. 

While the full promise of American manufacturing was not realized under NAFTA, American agriculture saw significant gains in 

the market access, and this must be preserved. The district I represent is the most diversified agriculture district outside of California. Every August, I do a 2-week farm tour visiting all 30 counties promoting the diversity and all the different aspects of our district. And in Missouri, we are the fourth largest rice producing 

State in the country. And all of that rice is produced in just the 

five counties in the Bootheel of Missouri, which is my entire congressional district. 

NAFTA is responsible for making Mexico and Canada the largest 

market for Missouri rice, with 87 percent of our exports going to 

those two countries. Mr. Lighthizer, Missouri farmers want to 

maintain the market access that they currently have in agriculture 

trade with Mexico and Canada. Any disruption of trade with Mexico and Canada is a concern of our farmers and our ranchers. What 

will your approach be in the renegotiations to be sure that no new 

barriers to U.S. agriculture trade are established under NAFTA? 

52 

Ambassador LIGHTHIZER. Well, we certainly intend in this negotiation to do no harm to the agriculture sector. Our objective is 

to modernize, to put in place the things that have to be put in 

place, to correct such things as rules of origin and the like that 

have become outdated and have led really to a very large trade deficit. But we clearly will not be part of a negotiation where there 

are new barriers to agriculture that come up for sure. 

Mr. SMITH OF MISSOURI. I appreciate that statement. The 

task that you have at hand is not an easy one, but I stand with 

you and the White House and this Committee to make sure that 

we get the best agreement and the best deal for the American citizens. Thank you. 

Ambassador LIGHTHIZER. Thank you. 

Chairman BRADY. Thank you. Mrs. Black, you are recognized. 

Mrs. BLACK. Thank you, Mr. Chairman, and, again, welcome, 

Ambassador. We are delighted to have you here today and look forward to working with you in the future. I want to talk about one 

of the issues that are affecting some of the good people, and also 

companies, back in my State, and that is the lack of fairness in 

selling across the Mexican and Canadian borders where there is a 

very low-dollar value and shipments, the de minimis shipment 

threshold. Basically, it was set aside as a low-dollar shipping— 

shipments for faster and easier processing in and out of countries, 

but at this point in time, since it has been years since that agreement was made, we really are in a situation where there is an unfairness. 

For instance, in the United States, the de minimis shipment level is $800, but when you look at Mexico, it is less than $50. And when 

you look at Canada, it is $15. And so there is a real unequal treatment, and actually a real cost to some of those folks that are doing 

business, such as FedEx, and FedEx has thousands of workers and 

employees in my home State of Tennessee that potentially are affected by this, as well as individuals. And so I would like to know 

from you if that is something you are looking at, and that you 

think we can find some resolution and some equality in, for both 

individuals and also companies in this area. 

Ambassador LIGHTHIZER. Yes, thank you, Congresswoman. 

First of all, yes, that is something that we are looking at that we 

take very seriously. It is one of those issues where you think you 

know something about trade and then you look at this issue and 

you think how is it even possible this could be happening? And it 

is a real burden to everybody who shifts back and forth, probably 

more in Canada, but even as you say, quite a bit going back to 

Mexico. 

So it is a very large problem. It is the kind of thing that fits into 

the category of reciprocity where you say to yourself how is it possible that we could—in some ways, it could be so much easier to 

ship it here than it is to ship to those two countries. So we are 

going to look at it. And I hope there is a resolution that is satisfactory to your constituents. It is clearly a priority. It seems like the 

kind of thing that would be easy enough to fix. It can’t be in anyone’s interest, just, if I may, a management point of view, to have 

these tiny little thresholds. It has to be a burden on them, I would 

think, and I hope it is not done intentionally, I hope it is just a 

53 

question of something that has just built up over time, but it is 

something we are going to look at and we are going to focus on. 

Mrs. BLACK. Well, I appreciate that, because my understanding 

is these thresholds were set many, many years ago when things 

were different as far as the way in which shipment was done, the 

cost of products and so on, and so this seems to be something that 

has been around for a while and needs to be revisited, and the 

sooner the better for both individuals and for companies on the cost 

that is borne by this inequity. 

The second item I want to talk to you about is one that has come 

to my attention most recently, and it is the issue of the U.S.-EU 

covered agreement on insurance. And it actually came to my attention by a couple of different sources. One was the Tennessee Farm 

Bureau in my State, which is a very large industry and does a lot 

of business around the country, around the world, as well. And 

then I also heard from the Tennessee Insurance Commission, and 

our own commissioner, Julie McPeak, who is the commissioner of 

insurance in Tennessee, who was here a couple of weeks ago testifying before the Senate. And so this agreement that was put into 

place, and I understand it was pretty much rushed through by the 

previous Administration in their closing days to change the way 

that insurance products are treated across borders, has not seemed 

to be in the best interest of those here in the United States, and 

probably the biggest part of this is there is just not clarity, and 

there are a lot of questions about what these agreements mean. 

And so I wanted to know if that is something you are aware of, 

and that you are looking at getting some clarity for the insurance— 

for those who do insurance. 

Ambassador LIGHTHIZER. Yes, thank you, Congresswoman. I 

am very much aware of the issue. It is something that the Secretary of Treasury and I have to come to grips with here in the nottoo-distant future, and, in fact, have meetings scheduled very soon 

for he and I to sit down and discuss this issue. So it is a good time 

to have your view on it. 

Mrs. BLACK. Well, I appreciate that. I think since the President 

is really very adamant about America First, that we need to make 

sure we are not, in some way, putting our companies and our folks 

here in the United States behind other countries with a lack of 

clarity and making sure that there is an equality and treatment 

there, as well. 

Thank you, and I yield back. 

Chairman BRADY. Thank you. Mr. Rice, you are recognized. 

Mr. RICE. Thank you, Mr. Chairman, and thank you, Ambassador Lighthizer, for being here and your patience in waiting for 

21⁄2 hours to allow me to ask you a few questions. 

I think that I am very much aligned with the Administration. 

Mr. Trump says, ‘‘Make America Great Again,’’ I say make America 

competitive again. And two of the things that give me the most 

hope, most optimism about this Administration are your appointment, and the appointment of Mr. Ross. So I am really excited 

about fair and free trade. 

I appreciate your focus on the steel industry. I have already had 

one steel mill in Georgetown, South Carolina close during my 4 

years here. During my 4 years here, I have had a constant stream 

54 

of apparently legitimate complaints about abusive trade practices, 

particularly from China. So I have Nucor Steel still in my district, 

I have a company called Metglas in Conway who has lost employees because of these unfair trade practices, and I very much appreciate your focus on that. 

But I want to talk about something more fundamental. And that 

is what Mr. Nunes broached earlier, that being the fact that 140 

other countries, including every one of our significant trading partners, have adopted border adjustment taxes generally through the 

value-added tax system. 

And I know this hearing is about trade, but we have heard how 

so many factors enter into fair trade earlier today, whether it be 

employment practices, environmental practices, taxes, and others. 

So what I am particularly curious about is in negotiating these 

trade agreements, how can you ensure that we achieve fair trade, 

trade where American companies and American workers can compete on a level playing field? How can you ensure that when other 

countries are applying border adjustment taxes on our products 

when they hit their shores, and we are not doing the same things 

to them? How can you, when you renegotiate NAFTA, account for 

the fact that Mexico has a 16 percent border adjustment through 

a VAT, and we don’t have the same offsetting tax, and, therefore, 

American workers and American companies are at a huge disadvantage? 

Ambassador LIGHTHIZER. Well, thank you, Congressman. First 

of all, I have spent a lot of time thinking about this issue, and I 

think that this equilibrium between direct and indirect taxes is a 

serious problem. Now, there are a lot of different ways to deal with 

that, and so I am not in a position where I want to say what is 

the best way. And, in addition, I am not paid to worry about taxes. 

I am pretty worried about other things. 

Mr. RICE. I agree, and I understand that you are not paid to 

worry about taxes, and this is a trade hearing, but don’t taxes have 

a very direct impact on trade? 

Ambassador LIGHTHIZER. Absolutely. Taxes have a direct effect 

on competitiveness, and competitiveness is what trade is all about. 

At its core, trade is about competitiveness, so taxes are a huge 

issue. In terms of direct or indirect taxes, I think there is a real 

problem, but when I do my negotiations, I take those systems the 

way they are, and people make their own judgments for their own 

societal reasons as to whether or not they want to have valueadded taxes or income taxes or how they want to structure all that, 

but I am not blind to the fact that it does make a difference in the 

real world. 

The most important thing, I think, is to get taxes down and to 

do all the other things that we need to do to become competitive. 

And in the area of taxes, there are a lot of different options, and 

as I noted, there has been a tendency on behalf of most countries 

really—or at least many countries, would probably be more accurate—to move from income taxes to an indirect tax system. 

Mr. RICE. There has been that tendency, and would you speculate that tendency was due, in some part, to the fact that it makes 

them more competitive with respect to manufacturing and importing and exporting? 

55 

Ambassador LIGHTHIZER. Well, my guess is that they do it for 

a variety of reasons, and probably that is one. In respect to some 

issues, and this is something that has always been of concern to 

Republicans with respect to a value-added tax; I think to some extent, people go to it because they think it is easier to raise taxes, 

and there are a lot of people who are conservative Republicans who 

have the view that one of the principle reasons—that is an overstatement, but one reason that Europe has gone the way they have 

gone is because it has been too easy to raise taxes. So these are 

not totally—I mean, there are a lot of things to sort of think about 

in this discussion. 

Mr. RICE. And this issue on competitiveness of American products, it doesn’t just apply to manufacturing, it applies to agriculture, as well, doesn’t it? 

Ambassador LIGHTHIZER. Absolutely correct. 

Mr. RICE. Thank you, sir. 

Chairman BRADY. Thank you, Mr. Rice. Mrs. Walorski, you are 

recognized. 

Mrs. WALORSKI. Thank you, Mr. Chairman. Ambassador, it is 

good to see you. Thanks for hanging in with us, and I just wanted 

to thank you. I am from the State of Indiana, and I want to thank 

you for indulging me when you first came in today and talking and 

chatting about this Section 232 that we have talked a little bit 

about, but I am more than concerned about the impact on aluminum and the aluminum industry as it pertains to my district in 

northern Indiana and my State. I would just ask that, you know, 

to consider the anxiety from my constituents about the prospect of 

tariffs and quotas on imports that they depend on to make RVs, 

trailers, and all sorts of other products. I have already been contacted by some of these manufacturers, and they are already being 

impacted by price differences, and they are very, very uncertain as 

to what is going to happen as am I, and I appreciate your willingness to look into it. 

But could you convey to the President, to Secretary Ross, my request that they conduct these investigations and decisions that 

they are making thoughtfully, thoroughly, transparently, to determine what the impact of action might be for American companies 

and to avoid any type of quick action that would hurt these companies, could you just convey that information? 

Ambassador LIGHTHIZER. Yes, I will. I would be happy to do 

that. 

Mrs. WALORSKI. And then I just want to associate my remarks 

with previous remarks of Representative Paulsen about this issue 

in India. And our issue is the same type of thing, and it goes along 

with the medical device industry, and what we are seeing already, 

and, again, in Indiana, we are full of medical device manufacturers, 

so they are worried about the sudden and drastic nature of cuts, 

what it means to the products already being sold there, and products they may want to sell in India in the future. 

Myself and Mr. Kind, previously who spoke, sent a letter with 16 

of our colleagues to the Indian Ambassador voicing our strong concerns, and I am happy to provide that letter to you. My question 

for you is, what else can we do on Capitol Hill to help you with 

these issues with the medical devices? We are looking specifically 

56 

at stents, and some of the prohibitions, and just some of the things 

you referred to earlier, but is there anything else we can do to help 

you besides sending letters to their Ambassador? 

Ambassador LIGHTHIZER. Well, first of all, the issue is a very 

serious one. Second, I have met with the manufacturers, and they 

are in a position where they literally are forced to sell something 

they don’t want to sell way below the price of manufacturing it. I 

mean, it is like you can’t even understand it. I think it is something that we are taking seriously, we are focusing on, and just the 

more pressure Congress can put, the better, to be honest with you. 

Mrs. WALORSKI. Specifically to the Ambassador? Or does it 

need to go in any other direction? 

Ambassador LIGHTHIZER. Well, it is probably better if I don’t 

talk about that in a public session. This may be one of those things 

that we have to go into executive session to talk about. No, I am 

kidding about that. The Prime Minister of India is coming to town 

to meet with the President. 

Mrs. WALORSKI. Right. 

Ambassador LIGHTHIZER. So there are a lot of opportunities 

where they are looking at irritants, and this is clearly a major, 

major irritant, and it is important that they know that because we 

have pressed them. Now from their point of view, you know, they 

have a different take on this. 

Mrs. WALORSKI. Sure. Oh, yeah. 

Ambassador LIGHTHIZER. And we press them and our arguments are stronger when they are backed up by the U.S. Congress. 

I mean, it is just that simple. I mean, the power in Washington is 

right in front of me, so. 

Mrs. WALORSKI. Okay. I appreciate that. And then a final issue 

I want to discuss, one I raised with you previously, and that is 

Canada’s Promise Utility Doctrine. It has resulted in 28 pharmaceutical patents being partially or completely invalidated, which is 

going to be a big priority for us in any NAFTA update. Do you have 

any comment on those protections and that doctrine? 

Ambassador LIGHTHIZER. Well, arguments too, but the result 

is you end up losing. 

Chairman BRADY. Ambassador, could you move a little closer to 

that microphone? 

Ambassador LIGHTHIZER. I am sorry. You end up losing patents because of abuse, and then somebody makes a generic drug 

out of the same product and starts selling it, so it is a serious problem, and it is clearly something that we are going to work on, and 

it is going to be part of this negotiation. 

Mrs. WALORSKI. I appreciate it. And can you just give me the 

bottom line, 20 seconds, as you see the Section 232 as it pertains 

to steel and aluminum? I am particularly interested in the aluminum part. 

Ambassador LIGHTHIZER. Well, I mean, I think you are going 

to see decisions on both of them fairly soon. I think the view in the 

Administration is that we have, you know, a very serious issue. 

The President has asked us to look at these things. They had hearings on one before. They have hearings on the other today, and the 

President wants action. He is worried about what is happening in 

57 

those industries, and the President wants action. So to the extent 

you have concerns about effects, it is certainly timely. 

Mrs. WALORSKI. I appreciate that. I yield back. Thanks, Mr. 

Chairman. 

Chairman BRADY. Thank you. Mr. Curbelo, you are recognized. 

Mr. CURBELO. Thank you, Mr. Chairman, and thank you, Ambassador Lighthizer, for your presence here today. 

One issue I wanted to bring up is the effect trade agreements 

have on the farmers of my south Florida district. Many people not 

from south Florida might be surprised to know that Miami-Dade 

County is one of the largest ag producing counties in the State. 

Most people think about our beaches, and we are very proud of 

those, but we also have a very robust ag industry in south Florida. 

We have avocados, mangos, tomatoes and many other specialty 

crops which can be grown year-round. So as we renegotiate 

NAFTA, which I support, I am concerned with how the deal will 

affect our farmers across the country. 

We know a lot of farmers have benefited greatly from NAFTA; 

however, the story is a little bit different in south Dade. I try to 

spend as much time as I can with these farmers, and they have 

many issues that they are concerned about, immigration, taxes, but 

NAFTA is certainly a major one. Specialty crops like tomatoes, 

squash, eggplants, strawberries, pretty much anything that is 

hand-picked, faces a significant disadvantage when it comes to 

Mexican competition. Mexico has a similar climate, and for a whole 

host of reasons, can unfairly compete against many of my constituents. 

Ambassador, I have raised this issue multiple times as NAFTA 

is being renegotiated for the fair treatment of south Dade, especially these specialty crops and the farmers who grow them. I have 

mentioned this to you and your staff, Secretary Ross, and Mr. 

Navarro. This issue is of critical importance to the south Dade 

farming community. Can you discuss what we might be able to 

achieve through this NAFTA renegotiation to put these south Florida farmers on a level playing field with Mexico moving forward? 

Ambassador LIGHTHIZER. Well, first of all, we appreciate your 

input and those of other Members from Florida on this issue. We 

realize how important it is. As I said before, when we talk about 

how important agriculture is and the agricultural sales to Mexico, 

and they are extremely important, we, overall, have a trade deficit 

in agriculture with Mexico, and it is entirely because of the speciality crops, the fruits and vegetables that you are talking about. 

And there are a whole lot of additional elements of the seasonality 

and the perishability. There are just a lot of things that make it 

a very complicated issue, and I assure you, it is something that we 

are going to focus on in this negotiation and hopefully, we are 

going to get an outcome that is going to satisfy the producers in 

your district and in all of Florida. 

But it is a major problem, and you are right, it is the one— 

maybe not the one, but it is a major outlier in the whole agriculture story with respect to NAFTA, it is something that I think 

we have to be cognizant of and try to work on, so we very much 

appreciate your involvement on the issue. 

58 

Mr. CURBELO. And I appreciate your commitment, and we will 

continue working with you and with your office and other Administration officials to try to make as much progress as possible. 

Another issue I would like to briefly touch on is the Transatlantic Trade and Investment Partnership. Earlier this month, I 

joined members of the T–TIP caucus, including seven Members of 

the Ways and Means Committee, in sending a letter to your office 

in support of continued T–TIP negotiations. 

Can you talk about the positive benefits T–TIP could have for 

our economy, especially with the inclusion of a dedicated chapter 

in the agreement identifying the importance of small- and mediumsized enterprises? 

Ambassador LIGHTHIZER. Well, we have an ongoing reevaluation of all of our trade agreements and all of our ongoing negotiations right now at USTR. And we are looking at the benefits and 

the drawbacks of the trade-offs that we see. But I think that T– 

TIP is an area where there are a lot of very positive reasons to go 

forward with that. It, of course, requires two people to be involved 

in a negotiation and for a variety of reasons, largely the electoral 

process, the European Union is not in a position to be negotiating 

at this point. The last election, I think, that they have this year 

is in September in Germany, and then I think at that point, they 

will start focusing on this. But then they have Brexit to focus on. 

So they have a lot of things they have to look at, too, and we also 

have priorities. 

But clearly, this is a very likely potential agreement, and it was 

entered into because an awful lot of people saw benefit to it. So as 

we go through this process, I think we will make an analysis, we 

will look at the pluses and minuses, and the views of the seven 

members of the caucus, of the Ways and Means Committee, will be 

very important to us, as I should say will all Members. 

Mr. CURBELO. Thank you. Thank you, Mr. Ambassador. 

Chairman BRADY. Thank you. Mr. Schweikert, you are recognized for the final question. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. And I think last 

and least, or however the saying goes, trying not to repeat any of 

the questions, and when you are last, a lot of them have been used 

up, but first off, just conceptually, I have a great appreciation for 

how complex your world is. You know, you have this area of authority, but everything from currencies, to local national regulations, to technology, to infrastructure, I mean, everything ends up 

affecting ultimately—how trade ultimately works. 

I do have a couple of odds and ends for you. Being from Arizona, 

we are one of the States that if you actually look at the baseline 

data, NAFTA has actually helped our State’s economy. But as you 

move toward modernization, can I beg of you to have someone on 

the team fixate on just Customs technology, the ability to have 

those vegetables move across the border efficiently, the ability to 

say we are going to embrace a common platform for technology, 

and I don’t care if it is based in a distributive ledger where you 

have GPS tags or RFIDs, but the ability to say how do you maximize the efficiency of those cross-border transactions and the movement of the Customs? 

59 

Ambassador LIGHTHIZER. Thank you. That is such an important question, and we have sort of touched on it in various ways 

because we talk about de minimis, there is a lot of different things, 

but one of the things that we are going to focus on in trade facilitation is just—and I think that the Mexicans and the Canadians will 

be in agreement on this—just how do we make whatever you decide your policy is once you have set it, it has to be easier to move 

product and data across the border. So, you know, this is important. Efficiency is clearly our objective. Facilitating trade is our objective. There will be technical problems, of course, but as a matter 

of direction, I can’t imagine that the three of us would have a disagreement on that. 

Mr. SCHWEIKERT. With this great opportunity with technology 

now, and the ability to track a truck, a lorry, down to certification 

at the dock to the movement to the backbone that actually is hackproof. I am just, I embrace that technology. 

And the second thing, and this one may be slightly more conceptual, but as you are working on the drafting, how do you design 

something that is partially future proof if, you know, this is substantially the driver of much of the U.S. innovation and technology, 

what happens when, you know, that hand-held super computer is 

my transmission of making purchasing decisions, or paying my fees 

or moving money back and forth, that the agreement be robust 

enough to understand everything from, you know, the way we 

transmit data to where we house the data, to the encryption of 

such data. It is that sort of digital trade world that we are very 

good at that would also make the relationships with our trading 

partners more efficient. 

Ambassador LIGHTHIZER. Well, I think this has to be a focus. 

My guess is we will probably miss the mark because nobody really 

knows what is going to happen, and it is always unpredictable, but 

hopefully we won’t miss it by as much as the people who did it 23 

years ago. We will have the benefit of all that learning. 

Mr. SCHWEIKERT. And, Mr. Ambassador, that is one of the 

great difficulties, and trust me, I am part of a body where sometimes we commit the sin of thinking we know what the future looks 

like. And so how do you design at least language that as technology 

improvements move, you know, the movement of whether it be a 

cryptocurrency, whether it be documents of value, documents of 

certification, documents of ownership, that the way you have written the agreement, there aren’t these great gaps that we have to 

wait 25 years for the next major negotiation to fill? 

Ambassador LIGHTHIZER. Well, this is so important, and hopefully, we are focusing on it enough, we will certainly try to, and 

then we have to build in processes, I think, within the agreement 

that allow you to make amendments when you—without actually 

going back through the whole process when there is sort of a huge 

directional change. But this is something that we are cognizant of, 

and we, perhaps, haven’t thought enough about it, but certainly 

will, and we want to work with the Congress to do it. 

Mr. SCHWEIKERT. And the last thing, trans-shipments, something that actually may be a product made in Asia, comes through 

a Mexican port, brought up, I am hoping, actually, the same movement toward the identifications and technology that can actually 

60 

deal with what are products that are actually part of the NAFTA 

agreement and what are just those who are passing through? And 

with that, I yield back, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Schweikert. I would like to 

thank Ambassador Lighthizer for appearing before us today. Please 

be advised that in addition to questions you received here, Members have 2 weeks to submit written questions to be answered later 

in writing. Those questions and your answers will be made part of 

the formal hearing record. Mr. Ambassador, we look forward to 

working with you on trade and expanding economic freedom, and 

with that the Committee stands adjourned. 

[Whereupon, at 12:48 p.m., the Committee was adjourned.] 

[Questions for the Record follow:] 

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Questions from Trade Subcommittee Cha irman Reichert 

1) Korea Tt·ade Agt·eement 

There is always the opporlunity for improvemen/, but I am proud ro have championed passage of 

the U.S.-Korea Ft·ee Trade Agreement. Just five years after the KORUS trade agreement enrered 

into force, exporrs of poraro products ro Korea fiwn my home state have increased by 80% and 

demand for Washington's cherries has risen by 200%. These benefirs cannot be overlooked. 

Given rhe Presidenr's comment on June 30 concerning KORUS, as well as yourfollow-up feller 

to the Korean government, do I have your commirment to consulr with Congress concerning any 

discussions with Korea under the auspices of the KORUS Joim Commillee? 

Answer: l11e Administration is engaging witb Korea to address a range of serious trade concerns. 

Through this engagement, we seek to ensure that Korea lives up to its obligations so that all U.S. 

exporters are treated fairly, as well as to address broad concerns with our trade imbalance. We 

will consult with yon and your colleagues. 

2) Aircraft Subsidies 

As you know, Boeing builds the vasr majority of its commercial jers in my home stare of 

Washington. I was pleased to see recently that a World Trade Organization (WTO) panel 

rejecred 28 out o/29 of the European Union's claims rharthe Uniled Slates provides WTOinconsisrent subsidies to Boeing. This decision made clearlharrhe U.S. complies with 1he rules, 

blll the EU does not. In fact, the EU has not remedied the billions of dollars rhey have provided 

in illegal subsidies 10 Airbus, including rhe additional illegal subsidies for the development of 

Airbus' latesrjer/iner model, the A-350. 

I urge you to press the Europeans to comply with rhe rulings against it and not ignore irs 

inrernationaltrade obligarions. 

Can you advise the Commillee on how the WTO displlle over aircraft subsidies fits inro the 

Adminisrrarion 's enforcement agenda? 

Answer: As noted in USTR's repott to the Committee pursuant to section 601 of the Trade 

Facilitation and Enforcement Act o£2015, USTR is committed to strong enforcement of U.S. 

trading rights under the WTO as well as bilateral and regional trade agreements. Enforcement 

actions tmdertaken by USTR are designed to increase our economic growth, promote job 

creation in the United States, promote reciprocity with our trading partners, strengthen our 

manufacturing base and our ability to defend ourselves, and expand our manufacturing, 

agricultural, and services industry exports. EU aircraft subsidies have been an important U.S. 

concern for decades, as they have enabled Airbus to expand its market share at the expense of 

U.S. producers and American workers. USTR intends to pursue this dispute until we have 

achieved our objective of eliminating WTO-inconsistent subsidies to large civil aircraft and 

finaUy achieve a level playing field in this critical sector. 

3) Trade in Set·vices 
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There has been a lol of emphasis by !he Administralion on !he need lo address the manufacturing 

sec/Orlhrough NAFTA negolialions. I also have heard you lalk aboullhe imparlance of 

mainlaining markel access for agricul!ure. Bul I have no/ heard much about the Administration's 

plans for services ·I he sector accounting for 80 percent of the U.S. economy. Given that the 

Uniled Slates enjoys a lrade smplus wilh both Canada and Mexico for lrade in sel~ ices, I want 

10 make sure !hat an overemphasis on reducing !he trade deficil in goods could resull in 

lill'owing 1he baby 0111 wilh !he ba1hwa1er -or in !his case, !he forges/ sec/or of !he U.S. economy. 

Can you please lei/us what your top priorities are for services in !he NAFTA negotialions? 

Answer: The U.S. services sector is a key driver of the U.S. economy, accounting last year for 80 

percent of U.S. private sector gross domestic product and 34 percent of total U.S. exports. 

Securing open markets for U.S. services exports and reducing services trade barriers is a key 

objective for the Administration's trade agenda. Our services trade priority in the NAFT A 

negotiations is to update and strengthen the NAFT A across the full range of services sectors, 

including areas of core U.S. strength such as financial services, delivery services, 

telecommunications, and the Intemet sector. Because digital trade now affects trade in all 

sectors, a key clement of these negotiations will be to update the NAFT A to include state-of-theart rules to help ensure that digital trade continues to flourish. 

4) AGOA Used Clothing Dispute 

/understand thai USTR has initiated an Afi'ican Growlh and Opportunity Acl (AGOA) oul of 

cycle review for lhree countries in Easl Africa in response to concerns abow restriclions on 

exporls of"used clolhing and foo/wear"from 1he United Stales. I applaud your e.f!or/s to remove 

trade barriers thai harm U.S. exporlers and ensure compliance wilh A GOA. Al l he same lime, I 

urge you 10 consider also 1he many U.S. jobs - including in my dislrict -dependent on the abilily 

ojlhese countries to eJ.port clo!hing 10 the Uniled States under AGOA as well as our trade 

relalionships with these coun/l'ies. I ask you to please consult closely with my office and 

Members of !his Commillee. Could I have yom· assurance of 1ha1? 

Answer: Trade enforcement, which includes ensuring that our AGOA partners adhere to 

AGOA's e ligibility requirements, is a top Administration priority. USTR consulted with 

Congress prior to initiating the out-of-cycle review. Before taking any action on this matter, I 

will consult with Congress, including you and other Committee Members. 

S) Vietnam 

Our economic ties wilh Vietnam are of crilical imparlance 10 Washington s 1echnology 

companies, specialty crop producers, and footwear and apparel companies. As you consider 

pursuing policies 10 liberalize /rade and inveslmenl wilh Vielnam, I ask thai you also focus on 

the role of stale-owned ente1prises (SOE) in !he porl lerminal induslly. Specifically, I am 

hearing concems aboul lim ita/ions on inveslmenls in join/ ventures when an SOE is unable to 

meet ilsfinancial oblig01ions as well as limilations on invesunen/s in companies responsible for 

handling lransshipment comainers. 1 hope you can work wilh me and my staff on lhese issues. 
63 

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What are yaur goals and pria1·ities with respect to liberalizing trade and investment with 

Vietnam? Are these issues you intend to raise with your Vietnamese counterparts? 

Answer: I agree with you on the importance of deepening our relationship and addressing 

outstanding trade issues with Vietnam. Since taking office, the Trump Administration has been 

working to do both. In May, Vietnamese Prime Minister Phuc visited Washington to meet with 

President Trump and discuss ways to strengthen our trade ties and address unfair practices that 

have contributed to our $32 billion trade deficit. We have followed up on these discussions, 

including through meetings under our Trade and Investment Framework (TIFA), where we have 

pressed Vietnam to address issues related to goods, agriculture, and state-owned enterprises 

(SOEs). As we consider additional agenda items and possible new initiatives to further our 

work, I welcome your input and looking forward to working with you and your staff. 
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Questions from Ranking Membe1· Neal 

1) TPA Con sultation Guidelines 

TPA requires the Administration to issue specific guidelines f01· its consultations with Congress 

in the C0111·se of a rrade negotiation. The Obama Administration issued a set of guidelines on 

October 27, 20/5. To my knowledge, this Administration has not yet indicated whether it intends 

to follow the consultation guidelines for trade negotiations that were developed in 2015, nor 

whether it plans to develop new or revised guidelines that would address the shortcomings of the 

earlier guidelines. Is the Administration committed to following the 2015 guidelines in all trade 

negotiations currently pending? is the Administration planning to develop new or revised 

guidelines? if the Administration is planning to develop new or revised guidelines, does the 

Administration intend to work with the Commillee on a bipat·tisan basis to do so? 

Answer: TI1is Administration is commined to following the guidelines for consultations with 

Congress for trade agreement negotiations that were developed in 20 15. Indeed, as we embark 

on NAFTA negotiations, we have been and will continue to follow those guidelines. 

2) Consultations with Congress 

As you know, consultations between the AdminisTration and Congress are criricalnot just 

because ofTPA 's rules but prim01·ily because of the awhority that the Constitlllion assigns to 

Congress in mailers of trade and international commerce. So f01; !here has been a lack of 

consultation between the Adminisn·ation and Congress on trade matters. For example, Executive 

Orders and Memos have been drafted, signed, and issued on numerous important trade topics 

that Members of Congress first learned about from the press. This is not how ExecutiveCongressional consultations on trade are supposed to work. What are you doing, as the U.S. 

Trade Representative and the statutorily designated principal spokesman of the President on 

internalional trade, to address these problems? 

Answer: As the United States Trade Representative, I place great importance on the both the 

history of the agency's relationship with Congress and its requirements under statute. In my tlrst 

interactions with the Ways and Means Cotmnittee, I committed to follow the letter and intent of 

TPA, and I very much hold that commitment today. As the USTR, I have made it a habit of 

personally calling the Chainnan and Ranking Member, or in some circumstances their senior 

staff, to deliver news on upcoming actions, and it is my intent to continue personally relaying 

important messages in this way. 

3) U.S.-U.K. T1·ade Agreement Discussions 

In addition, last week on June 29, Members of Congress first learned through press reports !hal, 

according to U.K. Trade Minister Liam Fox, "actual discussions" between the Administration 

and the U.K. regarding a U.S.-U.K. trade agreemem are planned to take place on July 24. What 

is the Adminislration planning to discuss with Minister Fox on July 24? What is the limeline that 

the Administration contemplates for pursuing /rade negotiations with !he U.K.? 
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Answer: On July 24-25, I hosted UK lntemational Trade Secretary, Dr. Liam Fox, for the first 

meeting of U.S.-UK Trade and Investment Working Group. The Working Group will help to 

provide commercial continuity for U.S. and UK businesses as the UK leaves the EU, explore 

ways to strengthen U.S.-UK trade and investment ties ahead of the exit, and begin to lay the 

groundwork for our fi.tture trade relationship, including exploring the possibility of a U.S.-UK 

trade agreement. Prior to these meetings, we briefed staff of the Senate Finance and House 

Ways and Means trade subcoJllDlittees. The first meeting was made up of representatives from 

severa.l U.S. and UK govemment agencies. We expect to continue to have regular meetings of 

the Working Group going forward. 

4) KORUS "Re-Negotiation" 

Also last week on June 30, Members of Congress first/earned that the Administration is ''renegotiating" the U.S.-Korea trade agreement (KORUS) through remarks made by the President 

before his bilateral meeting with South Korean President Moon. What specific changes is the 

Administration seeking to make to KORUS? What is the timeline that the Administration 

contemplates for pursuing trade re-negotiation with Korea? Does the Administration intend to 

comply with the consultation and transparency requirements ofTPA in any renegotiation of 

KORUS? 

Answer: Following the U.S.-Korea Summit, I requested a special session of the Joint Committee 

under the KORUS Agreement to consider matters affecting the operation of the Agreement, 

including possible amendments and modifications. Through this first step, the Administration 

looks to review progress on implementation, resolve market access concerns, and address our 

significant trade imbalance. We expect to meet with Korea in the very near tenn. We will 

consult with Congress .. 

S) Re-Negotiations of Other Trade Agreements 

In May, the Administration has submilled to Congress forma/ wrilten no/ice, under TPA, ofils 

intention to re-negotiate NAFTA. In add ilion, in June, !he President s1a1ed publicly that the 

Administration is "re-negotiating" KORUS. Apart from NAFTA and KORUS, does 1he 

Administration also intend to re-negotiate or "modernize" those agreements? Will it mafler 

whether !he United States currently has a trade deficit or trade swplus with the trade agreement 

partner? 

Answer: As President Trump has repeatedly stated, the Administration is reviewing all of our 

trading relationships and detenniuing which deals do not serve the interests of the American 

people. Therefore, President Trump intends to pursue an aggressive strategy of renegotiating 

failing agreements and negotiating new ones when appropriate. As you mentioned, the President 

began the process of renegotiating NAFTA quickly after taking office. At his instruction, USTR 

has also called for the first ever KORUS Joint Committee special session, where we will 

consider matters affecting the operation of the Agreement, including possible amendments and 
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modific.ations. In addition, in July, I welcomed British Trade Minister Liam Fox to D.C. where 

we began a bilatera l dialogue which may also lay the groundwork for a potential FT A with the 

United Kingdom once they leave the European Union. 

6) Trade Deficit Report 

On March 31, the President issued an &·ecllfive memo instructing USTR and the Commerce 

Department to prepare a report on significant trade deficits and identifY the trading partners 

with which the United States had a significam goods trade deficit in 2016. The report was due at 

the end of June but, as of the date this question was submitted, has not yet been issued. What is 

the stams of this report? What role has USTR played in developing this report? 

Answer: USTR is working closely with the Department of Commerce and several other agencies 

on this report. At the appropriate time, it will be provided to the President. 

7) Trade Deficits and Trade Agreements 

I also understand ji-om public reports that you see the NAFTA and other U.S. trade agreements 

as potential tools for re-setting the U.S trade balance with fi·ade agreement partners. Does this 

apply to goods trade only or services trade also? What types of trade agreement provisions are 

you contemplating for achieving this type of result? Is USTR planning to negotiate provisions in 

trade agreements that would encourage or compel a parmer count1y to import more fi·om the 

United States than it exports? 

Answer: The Trump Administration is focused on reducing America's significant, persistent 

trade deticits. This applies to both goods and services, where appropriate. One way to pursue 

deficit elimination is to update old agreements which no longer reflect the 21 •• century economy. 

With respect to the NAFT A, this includes updating older provisions like the labor and 

envirorunent chapters by bringing them into the text oftbe agreement and subjecting them to 

dispute settlement, this will help level the playing field for our workers and industries. It also 

includes the addition of chapters which had not yet been conceived when NAFTA was originally 

negotiated. Given that digital trade now affects trade in all sectors, a key element of these 

negotiations will be to update the NAFTA to include state-of-the-art rules to help ensure that 

digital trade continues to flourish. This chapter will seek to ensure the free flow of data within 

the NAFT A region and to prevent policies which require certain infrastntcture to be localized in 

order to provide a service. 

However, a deficit reduction strategy also includes updating older rules which have facilitated 

the offshoring of American industry over time. As the Administration's Summary of Objectives 

for the NAFTA Renegotiation outlined, USTR will be pursuing new rules in the NAFT A 

negotiations to protect American workers from industries which offshore due to goverrunent 

incentives, subsidies and other non-economic benefits. These provisions are critical to leveling 

the playing field for American workers. 
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8) Trade Violations Repo1·t 

On April 29, the President issued an Executive Memo instructing USTR and the Commerce 

Department ro "conduct pe1jormance reviews" of violations by or her countries of U.S. rrade 

agreements, invesrment agreements, WTO rules, or preference programs. The reviews are due 

wirhin 180 days oft he issuance of the memorandum - i.e., by the end of October. USTR and 

Commerce are also insrrucred to "as appropriate, take eve1y appropriare and lawful acrion ro 

address violations ofrrade law, abuses of trade law, or insrances of unfair rreatment." Whar is 

the status of rhese reviews? Whar is the sta/iis of any reporrs detailing rhe ourcome ofrhese 

reviews? What actions will rhe Adminisrration consider taking once the review is concluded and 

a repol'l on trade violations is issued? What are rhe oplions rhat you would consider ro remedy 

the types of violations that this review may find? 

Answer: USTR and the Department of Commerc-e are continuing work on the analysis and 

drafting of this report. USTR received over I 00 public comments through a federal register 

notice requesting comments. USTR staff is CutTently reviewing those comments and 

detennining how to best reflect in the report the public input we received. It is premature at this 

time to comment on which enforcement specific mechanisms may be utilized, but the 

Administration will consider using a ll available tools as appropriate. USTR and Commerce will 

ensure the report is delivered to the President by the deadline set out in the executive order. 

9) Labo•· and Environment Enforcement 

As you know, rhe May I 0 Agreement of2007 resulted in the inco1poration of strong and 

enforceable labor and environmental provisions in U.S. trade agreemenrs (as well as orher 

provisions addressing access to medicines, investment righrs, and government procuremenl). In 

rhe pasr I 0 years, there have been virtually no acrions raken to enforce I hose "May I 0" 

provisions, despite clear evidence suggesting rhat eel iain of our trading partners are not -and in 

some cases have never been - in compliance with those commitments. The one labor enforcement 

action that has been pursued, under rhe CAFTA-DR Agreement (which pre-dated the May 10 

Agreemenr), resulted in a recently published panel report that has been ve1y discouraging. The 

genera/lack of enforcement and the lack of successful enforcement of these provisions in our 

FTAs is eroding confidence in these commitments. What specific sreps do you intend to take to 

more vigorously enforce the labor and environmental provisions of om· FTAs? 

Answer: I am committed to vigorously enforcing our trade agreements, including the labor and 

environmental obligations in those agreements. USTR strongly disagrees with some of the 

interpretations developed by the panel in the Guatemala labor dispute, and we recall that no FT A 

panel can set "precedent" for future panels. I am currently wJdertaking a comprehensive review 

of all of our trade agreements, and I look forward to consulting closely with you and your 

colleagues, as well as our stakeholders, on specific steps we can take to ensure that our FT A 

partners are living up to their obligations and are subject to enforcement action when they do not. 
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10) NAFfA Re-Negotiation: ITA Dispute Settlement 

Does the Administration intend to seek to retain the general state-to-stale displlle selllement 

mechanism in the re-negotiated NAFTA? Does the Administration have specific concerns with 

any aspects of this mechanism? If so, please identifY. Does the Administration intend to make 

any changes or updates to this mechanism? If so, which ones? For each change or update, 

please explain how The change or update would address the specific concern identified in your 

response to (b). 

Answer: TI1e Administration is looking at all options to ensure that our FT A partners live up to 

their obligations. I look forward to consulting closely with you and your colleagues on this 

issue. 

11) NAFf A Re-Negotiation: Govemment Procut·ement· 

The Administration's draft NAFTA notification from March suggested that it would seek through 

a re-negotiation ofNAFTA, increased access to the Canadian and Mexican procurement markets 

while denying access to the U.S. procurement market. What are the Administration's objectives 

with respect to government procurement and "Buy American" in the NAFTA re-negotiation? 

Does the Administration intend to continue or discontinue the longstanding U.S. policy of 

seeking access to h·ading partners' govemmenr procurement markets on a reciprocal basis? 

Answer: As identified in the Summary of Objectives for the NAFT A Renegotiation, the 

Administration has specified tbe following as objectives for the government procurement 

chapter. We will work closely with Congress and stakeholders in fommlating specilic 

approaches to achieve these objectives: 

• Increase opportunities for U.S. fmns to sell U.S. products and services into the NAFT A 

countries. 

• Establish fair, transparent, predictable, and non-discriminatory rules to govern 

government procurement in the NAFT A countries, including rules mirroring existing 

U.S. government procurement practices such as: 

o Publishing information on government procurement opportunities in a timely 

manner; 

o Ensuring sufficient time for suppliers to obtain tender documentation and submit 

bids; 

o Ensuring that procurement will be handled under fair procedures; 

o Ensuring that contracts will be awarded based solely on the evaluation criteria 

specifie-d in the notices and tender documentation; and 

o Providing impartial administraiive or judicial review authority to review 

challenges or complaints. 

• Exclude sub-federal coverage (state and local governments) from the commitments being 

negotiated. Keep in place domestic preferential purchasing programs such as: 

o Preference programs for small businesses, women and minority owned businesses 

(which includes Native Americans), service-disabled veterans, and distressed 

areas; 
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33478A.018

o "Buy America" requirements on Federal assistance to state and local projects, 

transportation services, food assistance, and tarm support; and 

o Key Department of Defense procurement. 

• Maintain broad exceptions for government procurement regarding: 

o National security; 

o Measures necessary to protect public morals, order, or safety; 

o Protecting human, animal, or plant life or health; and 

o Protecii11g intellectual property. 

• Maintai.n ability to provide for labor, environmental, and other criteria to be included in 

contracting requirements. 

12) U.S.-China 100 Day Plan on Tt·ade 

The prelimina1y resulrs ofrhe U.S -China "100 Day Plan" on rrade were announced on May II 

and consisted primarily of a number of commitmenrs thar China had already made or was 

already working on delivering. The announcement also stated that/he Administration would be 

wor!..ing on a number of other trade issues with China for the remainder of the 100 days. There 

has been ve1y lillie consultation with Congress on this dialogue. 

What or her issues are being discussed be/l.Veen !he Administration and China in this 100 Day 

dialogue on trade? 

How were the issues placed on the 100 Day agenda decided? 

The Chail?nan and Ranl.ing Member of the Ways and Means Commillee, together wirh the 

Chairman and Ranking Member of the Senate Finance Commillee, sen! a feller to rhe Presidenr 

in April specifying several priorities ro address with China, including: (/) marker disrol iing 

behavior harming American manufacturers; (2) weak IP protecrion harming American 

innovators; (3) Barriers to exports and market distorting policies compromising American 

farmers and rural communities; (4) currency and exchange rate policies; and (5) Retaliato1y 

policies and nonlransparenl legal regimes. Please e:tplain how the Administration is addressing 

in rhe I 00 Day agenda each of the specific priOI·iries idenrified by Congress. If a priority is nor 

being addressed in !he I 00 Day agenda, please explain why it has been omit red. 

Answer: The I 00 Day Action Plan was conducted under the U.S.-China Comprehensive 

Economic Dialogue (CEO), which is chaired on the U.S. side by the Secretaries of Commerce 

and Treasury. Based on an interagency input process, including from USTR, a set ofU.S. issues 

were proposed for the 100 Day Action Plan as well as for the July 19,2017 CEO meeting. 

During these engagements, my colleagues and I pressed China to address priority issues, 

including the ones which you identified. However, to address these challenges we cannot rely 

solely on dialogue. Enforcement will be a key component of our strategy to achieve 

Administration and Congressional goals as we work to ensure that China plays by the rules and 

treats U.S. companies fairly. 
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13) U.S.-Cbina Compt·ebensive Economic Dialogue 2017 

On May 11 the Administration also announced that the first meeting of the U.S.-China 

Comprehensive Economic Dialogue will be held in the United Stares in the summer of 2017. 

What will USTR's role be in this dialogue? Will issues that were nor included in the 100 Day 

Plan agenda be addressed in this dialogue? Will the dialogue address, for example: {1) China's 

over-capacity in steel and aluminum production; (2) draft measures currently under 

consideration that would restrict the ability of U.S. cloud sen1ice providers to access China's 

market and operate in China without handing over the control of their business to Chinese 

companies; or (3) China's use of national security reviews to impose localization requirements 

on companies and force the transfer of trade secrets and other intellectual property? 

Answer: The Secretaries of Treasury and Commerce are the official chairs of the U.S.-China 

Comprehensive Economic Dialogue (CEO). I participated in the CEO plenary session with my 

Cabinet colleagues. I can confirm that the issues you identified - excess capacity, restrictions on 

cloud computing, and technology localization including forced technology transfer - remain top 

trade priorities for this Administration and that we pressed China at the CEO to address these 

challenges. However, to address these challenges we cannot rely solely on dialogue. 

Enforcement will be a key component of our strategy as we work to ensure that China plays by 

the rules and treats U.S. companies fairly. 

14) Electronic Payment Set·vices in Vietnam 

Vietnam's Prime Minister recently visited Washington. / understand that, during the visit, you 

raised with your Vietnamese cormte1parts concems regarding a number of policies, including 

electronic payment services (EPS) regulations being advanced by the State Bank of Vietnam 

(SBV) that will require onshore payment processing and provide an unfair competitive 

advantage over U.S. EPS companies in favor of a state-owned payments company in which the 

SB V itself owns a majority share. As you1.:now, this November, Vietnam will be hosting the 

APEC Economic Leaders' Meeting. To advancefi'ee and fair trade and to ensure Vietnam li1·es 

up to its trade and economic reform commitments, what steps do you plan to take to address 

unfair barriers to Vietnam's marker, including with respect to EPS, in the lead up to the 

Economic Leaders' Meeting in November? 

Answer: ll1e visit of the Vietnamese Prime Minister provided an important opportunity to raise a 

number of priority trade bilateral issues, including electronic payment services. During the visit, 

we pressed Vietnam to address our concerns regarding the circular issued by the State Bank of 

Vietnam (SBV), which would require U.S. suppliers of electronic payment senrices to route 

transactions through a gateway in which the SBV is a majority shareholder. We made clear the 

priority we place on fmding a mutually-satisfactory resolution to this issue as soon as possible 

and arc working closely with U.S. stakeholders on this issue. My staff held follow-up meetings 

in June and July in Hanoi on this issue, and will be traveling to Hanoi again in August for further 

meetings, where we will seek Vietnam's agreement to delay inlplementation of its measure to 

give the United States and Vietnam additional time to resolve this issue. During my meeting with 

the Vietnamese Trade Minister in September, I will be stressing the importance of resolving 
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bilateral trade issues, including electronic payment services, before tbe APEC Leaders Meeting 

in November. 

15) U.S.-EU Coven •d Agreement 

I understand your office is reviewing the U.S.-EU Covered Agreement, which was concluded in 

Janumy 2017, but is not yet signed. A number of U.S. stakeholders, including State Insurance 

Commissioners, the Nalianal Governor's Association, and the National Conference of Insurance 

Legisla/ars, have concerns about/he Covered Agreement, including whether it will require farreaching changes to the cw-rent Slate system of insurance regulation. 

The former Federal Insurance Direclor, Mike McRaith, who led negotiations of the Covered 

Agreement, has repeatedly commilled in Congressional testimony that the Agreement will no1 

require far-reaching changes to the State-based system of insurance regulation. For example, 

former Director McRailh commilled that Art. 4(h) of !he Agreemenl requires nothing more than 

the Nalional Association of Insurance Commissions (NAIC) and the S1a1es finish 1heir existing 

work on a group capital calculation (GCC), and that the States have flexibility under 1he 

Agreement 10 develop a GCC based on !he U.S. approach to regula/ion (which is entity-based 

regulation, focused on policyholder pralection). These assurances are helpji1l, but are not 

binding an the European Union. 

In April, the NAIC sent your office and the Treaswy Departmenl specific concerns, including 

with respect to requirements for a group capital calculation, and requested that USTR and 

Treaswy ablain bilateral clarification of key concerns prior to signing the agreemenl. Such 

bilateral clarifications through an exchange of lellers are routinely included in trade 

agreements. For example, the United States and Australia formally exchanged lellers under the 

U.S.-Austra/ia FTA to clarify what Australia was required to change in its laws to comply with 

provisions in the FTA. 

Do you intend to pursue bilateral clarifications prior/a signing, and if so, in what areas? 

Answer: In tbe last six months, USTR and Treasury bave undertaken a series of meetings with 

interested stakeholders and members and staff in the Congress to gather detailed feedback on the 

U.S.-EU Covered Agreement. Following careful consideration of this feedback, the 

Administration alltlounced in July that it intends to sign tbe Covered Agreement. Tbe 

Administration has also announced plan.s to issue a U.S. policy statement on implementation.. 

We believe that this Agreement will be an important step in making U.S. companies more 

competitive in domestic and foreign markets and making regulations etlicient, effective, and 

appropriately tailored. This Agreement will benefit the U.S. economy and consumers by 

affirming the U.S. state-based system of insurance regulation, providing regulatory certainty, and 

increasing growth opportunities for U.S. insurers. 
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Questions from Trade Subcommittee Ranking Membe•· PasCJ"ell 

1) Negotiating Objectives 

The President has called NAFTA a "disaster." Bw in the Adminish·ation's noTice to Congress of 

intent to renegotiate, your office failed 10 provide us wilh specific negolialing objeclives or 

detailed descriptions of what you would like to see changed. NAFTA must include labor and 

environmental provisions at/east as strong as the May 1 0'1

' Agreement language. Strengthening 

the bargaining power and wages of Mexican workers is essential to keeping jobs here in the US 

as well as lifting the living slandards wilhin Mexico. Ambassador Ligl11hize1; is Mexican labor 

standards and livable wages a lop issue for this administralion? Can you tell us the top two or 

three issues in NAFTA you see as a "disaster" and how, specifically, you would like them to 

change? As a follow up, how would these changes bring jobs and higher wages to the United 

Slates? 

Answer: Among our top priorities for the NAFTA, are improvements that create incentives to 

increase manufacturing in the United States, lower our trade deficit, and improve exports 

opportunities for U.S. producers and workers. We intend to pursue these goals throughout the 

Agreement, including by re-thinking mles of origin and bringing strong labor and environment 

provisions into the core of the Agreement and subjecting them to the same dispute settlement 

mechanisms as other provisions in the Agreement. 

With respect to labor specifically, I agree that this is a serious issue that we must address. Lower 

labor standards in Mexico, including wage issues, affect American workers and businesses. I am 

committed to ensuring that NAFT A and other trade agreements strengthen our trading partners' 

labor standards and meet the negotiating objectives that Congress has set out in TP A. 111e 

Administration is undertaking a comprehensive review of U.S. trade policy to detennine how 

best to ensure strong labor commitments for future trade negotiations, beginning with NAFT A. 

will work with you and other Members of Congress as we update and improve the NAFT A, as 

part of our examination of all aspects of the U.S. trade relationship with Mexico. 

2) Intellectua l P•·ope•·ty 

Intellecmal property and innovation help drive producTivity, employment, and economic growth, 

particularly for industries like the U.S. biophannaceutica/ induslly, which supporls 

approximately four million U.S. jobs -and almost 500,000 in New Jersey alone. in your view, 

how does the monitoring and enforcement of trade agreements impact the growth oflP-imensive 

industries such as the biopharmaceutical sector? Does the Administration intend to seek 

modifications to the intellectual propeny rules ofNAFTA, and if so, how? 

Answer: Monitoring and enforcement of trade agreements is an important element of supporting 

the growth of U.S. IP-intensive industries, including the biophannaceutical sector. The 

Administration will seek high standards throughout the IP Chapter in the NAFTA renegotiation, 

including standards of protection similar to those in U.S. law. We will be seeking an outcome 

that reflects our trade priorities with respect to Canada and Mexico, including solutions to new 
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and long-standing trade challenges in intellectual property protection and enforcement. I look 

fonvard to working closely with you on these issues. 

3) Digital Trade 

The U.S. is a leader in digilal services, due 10 !he emergence of !he interne/ and rise of crossborder data flows. Da10 flows have grown by 45 times since 2005, and will have grown by 

another nine times by 2020, and data flows -praclically none>.:is/enl jus/ 15 years ago -now hold 

more economic value !han global goods trade. How will1rade negotialions ensure !hal digilal 

services are no!lefl behind, including when if comes 10 issues of forced data localizalion, the 

lransfer of priva/e keys, and forcing U.S companies 10 hand over !heir software source code? 

Answer: The Administration recognizes the importance of the digital economy to American jobs, 

prosperity and security, as well as U.S companies' unique competitive advantages in this area. 

for example, every year in the last fifteen years, the United States achieved a substantial surplus 

for trade in ICT -enabled and potentially ICT -enabled services, with that trade surplus exceeding 

$100 billion mmually in each of the last six years. Trade mles must work to maiotai.n and 

advance U.S. strengths in digital trade. I fully intend to use our policy tools, including through 

the upcoming NAfTA renegotiation, to advance those goals. The Summary of Objectives for the 

NAFTA Renegotiation issued on July 17 identified key provisions that we will be seeking to 

advance, including in specific areas that you identitied. 

In China, !he governmenl has proposed forcing American companies lo transfer lheirlechnology 

and to surrender !heir brand and opera ling control1o do business in China. Can you commenl 

on how 1he US Govern men! is addressing !his, including 1hrough any upda1es you can provide 

about a second tranche of deliverablesfrom !he 100 day plan? 

Answer: for many years, China has failed to address a wide-range of policies and practices that 

hann U.S. companies, including forced technology transfer and surrender of brand and operating 

control to do business in China. During the recent CEO discussions in Washington, I personally 

pressed the Chinese to end these policies and practices, but to address these chaUenges, we 

carmot rely solely on dialogue. I can assure you that considering all appropriate enforcement 

tools will be a key component of our strategy as we work to ensure that China plays by the rules 

and treats U.S. companies fairly. 

4) Content and Copyright Protections 

The polenlia/ of the online marke1place has been res/mined by !he ram pam !heft of creative 

con/en! online, impac/ing U.S. workers !hat work in the crealive indus/ly. Wilh estimales 

showing !hal one quar/er of !he world's Interne/ bandwid!h is dedicaled lo copyrighl 

infringemem, NAFTA mus/ be modernized to e.f!eclively deal with online copyright/heft. How do 

you foresee addressing !his issue in a renegolia!ed NAFTA ? 

Answer: The Adm.inistration will se,ek high standards throughout the lP Chapter in the NAFTA 

renegotiation, including with respect to the protection and enforcement of copyright and related 
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rights. We will seek copyright protections that facilitate legitimate digital trade, including 

protections similar to those in U.S. law, and we will continue our intensive work combating 

digital piracy in fore ign markets. 

S) Ongoing Negotiations 

I am also concemed thai the Adminislralion has no1 outlined a position on several major 

agreemenls thai were in the works under Presidenl Obama. Could you give me a yay or nay on 

whe1her I he Adminislralion plans 10 conlinue negotialions on the following: I - TTIP (wilh 

Europe), 2 -TISA (!'he Trade in Sen ,ices Agreemenl), 3 -U.S. -China Bila1erai inves1mem Trea1y 

(BIT), 4 -Environmental Goods Agreemenl (EGA)? 

Answer: At this point, it is premature to make a definitive statement as to the status of those 

negotiations. On April 29, the President instntcted USTR and the Department of Commerce, in 

consultation with other agencies, to conduct a comprehensive review of our current agreements 

and countries in which the United States ntns a significant trade deficit. This review includes 

China and the European Un.ion. By the deadline of July 31, USTR bad received over I 00 public 

comments related to this review and my staff is currently examining the input that we received. 

At the appropriate time, USTR will determine whether it is in the national interest to continue 

these negotiations. 

6) U.S.-Kos·ea Free Trade Agreement 

The Presidenl has lhrealened lo wilhdraw fi'om the WTO and fi'om the US-Korea Free Trade 

Agreement (KORUS). Does the President have any intention of pulling out of either? 

Answer: At this juncture, the Administration is taking the step of calling a special session of the 

Joint Committee under the U.S.-Korea Free Trade Agreement (KORUS) to consider matters 

affecting the operation of the Agreement, including possible amendments and modifications. 

Through tills work, we will review progress on implementation, resolve market access concerns, 

and address our significant trade imbalance with Korea. 

Regarding the WTO, I intend to ensure that the United States' participation in the WTO is 

working to advance our national economic interests. This includes, in particular, an assurance 

that other WTO Members are fully in1plementing their WTO obligations. Some aspects of the 

WTO's functions clearly need attention - interpretive overreaching by the Appellate Body is a 

prime example. 

7) Role of USTR 

Prior to your confirmation, we had several meelings with Commerce Secret01y and others within 

the Administration. Now that you have been confirmed, what do you envision as y our role and 

USTR's role in leading trade negotiations and leading the Adminislration 's tmde policy? 

Answer: As USTR, my statutorily mandated responsibility is to be the President's principal 

trade advisor and lead trade negotiator for the United States. I intend to fulfill that role. 
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However, as USTR bas always done, and where required by statute, I wiU continue to work 

closely with all members of the President's cabinet, Congress, and the Trade Advisory 

Committees in order to develop a balanced trade policy that furthers the priorities of the 

President and the American people. 

8) Air carrier subsidies 

Several governmenls in 1he Middle East subsidize their domestic airlines, yel compe1e with 

unsubsidized U.S. carriers, in viola lion of the Open Skies agreemems. This praclice has impacts 

thai can be felt in cilies across America. Would you consider a loan which has no requirememlo 

be paid back a subsidy? If a business has one shareholder and that individual is related to 

someone with decision making authoriry for a government, would you consider a loan made by 

the shareholder to the business for which he is the only shareholder a subsidy? 

If a business were to purchase a jirtures contract or other similarjinancial instmmentto mitigate 

risk and was unable to fir/jill his responsibility bw a family member in a posirion of aulhority 

wilhin a sovereign nalion paid it for 1he business, would lhis be considered a subsidy under WTO 

definitions? 

Answer: Under the WTO Agreement on Subsidies and Countervailing Measures (SCM 

Agreement), a subsidy is defined as a "financial contribution" by a government or public body 

that provides a "benefit." A fmancial contribution can take many ditTerent fom1s, such as a loan 

or a grant. A "benefit" is conferred if the financial contribution was provided on terms that are 

more advantageous than those that would have been available to the recipient on the market. A 

government loan that does not have to be repaid is clearly a subsidy given that such a loan could 

not be obtained on the market. It should be noted however, that the SCM Agreement is only 

applicable to goods, and not services, such as air transportation. Moreover, we would note that 

air traftic rights arc not covered by the WTO General Agreement on Trade in Services. 

9) Labo•· enforcement 

The failure to provide Congress and of her stakeholders with confidence that our lrading 

parlners will live up to labor commilments in ji·ee trade agreemems is one of the key reasons 

why new agreements have become so conn·oversial. II is incumbent tha11his Adminislralion 

significanlly ramp up its labor enforcemenl e.lforls. In particu/01; I'm imeresled 10 know who! the 

AdminislrOiion's approach will be to coumries where pefilions alleging labor viola/ions have 

already been filed. In I he case of Honduras, a monitoring and aclion plan is already in place. Is 

Honduras living up to the commitments and limelines in thai plan? Who/ is !he Adminislration 's 

plan for ensuring compliance wilh 1he moniloring and aclion plan? 

In the case of Colombia, consis1en1ly ranked as one of 1he worsl counlries in the world workers, 

the previous Admin is/ration raised "significanl concerns" about labor practices and se1 an 

Oc10ber deadline 10 assess any progress. Does the Administration plan 10 abide by !his timeline? 

How does the Adminislration plan to address Colombia's failure 10 salisfy its labor obliga1ions? 
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In the case of Peru, rhe previous Administration's deadline to assess pt·ogress recently passed. 

Does !his Adminisrration nor in rend ro abide by rhe previous Adminisrrarion's rime/ine? Whar 

does rhe Administration plan ro do to address chronic enforcement and shorr-rerm conrracr 

issues in Pem? 

Answer: Enforcement is a key aspect of our trade agenda and the Administration is working to 

ensure that trade partners comply with the labor obligations in our trade agreements. USTR 

works closely with the U.S. Departments of Labor and State, as well as other agencies, to 

monitor labor practices in trade partner countries and enforce the labor provisions of trade 

agreements. As part of this work, the Administration is committed to ensuring that Honduras, 

Colombia, and Peru address the concerns raised i11 the context of public submissions U11der the 

respective trade agreements with those countries. USTR and Department of Labor officials 

recently travelled to Honduras and Peru to engage with govemment officials on their initiatives 

to address concerns, including new legislation on labor inspections in Honduras, and an increase 

in resources for labor inspections in Peru. In addition, Labor Secretary Acosta and I recently had 

separate meetings with our respective counterparts from Colombia, and our teams will continue 

efforts in all of these countries. We look forward to consulting closely with you and your 

colleagues on these important issues in the fun1re. 

10) Cross-Border TI'Ucking 

NAFTA required parries to provide narionaltreahnenr to cross-border long-haul trucking 

services. As applied to the Mexican n·uckingjleer, this provision has been opposed by indus fly 

groups, environmental groups, consumer networks, and labor organizalions. 

These groups have ciled a range of concerns on !his issue, including the polenlial failure of 

Mexican-domiciled lmcks to meet U.S. safety standards, vehicle emissions from Mexicantmcks 

lined up ar !he border crossings, differences in commercial driving licensing, medical 

certifica/ion, and drug tesring, and !he polential negative impac/ on !he jobs and wages of U.S. 

truck-drivers. How do you plan to address this issue in the NAFTA renegotiation? Do you plan 

to go to the negotiating table with a proposal to revoke rhe national treatment provision for 

cross-border long-haultmcking? Do you plan to tell Mexican negotiators that !he United Stares 

will not, for example, trade away highway safety? 

Answer: In response to our Federal Register Notice and at our public hearing on NAFTA 

renegotiation, we received input from all perspectives on this issue I intend to work closely with 

Congress and stakeholders on how best to deal with this issue. 
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Questions from Rep. J ohnson 

1) Section 232 IJJVestigations 

Mr. Lighihizer, the folks over a1 the Commerce Departmenl are invesligaling lrade in steel and 

aluminum to look at po1ential national security impacts of imports of these goods. As you know, 

1hese types of investigations are ve1y rarely used and it is even more rare to impose tariffs in 

these cases. Wilh that in mind, what do youlhink the odds are that foreign nations may take 

re1aliat01y trade ac1ions if U.S. tariffs are imposed on steel or aluminum? 

Answer: Secretary Ross initiated these investigations under section 232 of the Trade Expansion 

Act of 1962 (section 232). The Secretary will report the findings of the investigations to the 

President after the investigations are concluded. 

Since the initiation of these investigations on steel and aluminum on April 20 and 27, 

respectively, Secretary Ross and his investigators have consulted extensively with the public. 

Secretary Ross issued official notices notifying the public of the investigations and public 

hearings and soliciting public comments. Close to 200 written comments were submitted on the 

steel investigation and about 80 comments submitted on the aluminum investigation. 

While some foreign countries have noted they would consider retal.iation if the U.S. were to 

impose trade restrictions under section 232 to adjust imports, in the absence of a section 232 

decision, I cannot engage in speculation about the results of the investigations, much less about 

whether foreign countries are serious about retaliation. 

2) Section 232 Investigations 

Mr. Lighthizer, as you know, many U.S. industries rely on imports of prim01y aluminum and 

tinplate steel from importanl U.S. militOJy and trade allies. W'hat steps will the Administration 

take to ensure that a tariff or other actions won't be levied in such a way 1hat could ultimately 

harm U.S. industries? 

Answer: The Department of Commerce is conducting these investigations. As required by the 

section 232 statute, Secretary Ross is consulting with the Department of Defense. However, 

absent a section 232 decision, I cannot engage in speculation about the results of the 

investigations. 

3) Section 232 Investigations 

Mr. Lighlhizer, I am concerned !hal tariffs on aluminum could actually harm American jobs and 

raise costs for the consumers of canned food and beverages. Has your office modeled the 

downstream impac1 to American workers if a tariff was put on imported primmy aluminum or 

cansheet? In your view, how would tariffs specifically impact those in the agricuii/Jral, food, can 

manufacturing, beer and soft drink production indus fl y? 
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Answer: The current global overcapacity situation in the steel and aluminwn industry is having a 

detrimental impact on U.S. workers and industries. At the core of this issue is China's nonmarket economy system, which is creating global oversupply and excess capacity in these and 

other sectors. 

To address this serious problem, the Administration is working to address both the root causes 

and manifestations of the problem and is evaluating every appropriate tool in our arsenal. And 

we are c.ommitted to working closely with other countries, even countries that may have 

objections to the Section 232 investigations into the impact of steel and aluminum imports on the 

U.S. national security. There is no shortage of countries that want to work with the United States 

to address the excess capacity issue. Indeed, at the July 7-8, 2017 Hamburg Summit, G-20 

Leaders committed to take necessary actions to find solutions to the challenge of excess capacity. 

The G-20 Leaders called for removal of market-distorting subsidies and urged Global Fonun 

members to rapidly develop concrete policy solutions as a basis for tangible and swift policy 

action, to be included in a report to the Leaders by November 2017. We are also continuing to 

engage bilaterally with China, including througl1 the Comprehensive Economic Dialogue that 

was held in Washington on July 19, 20 17.To the extent your question relates to Commerce's 

investigations under section 232, however, I cannot engage in speculation about the results of 

those investigations, as neither bas yet c.oncluded. 

Q uestions from Rep. Lewis 

1) Inter-Agency Collaboration Regarding Labo•· and Human Rights 

An important component of enforcing The U.S -Colombia Free Trade AgreemenT is based upon 

The U.S Trade Representative effecTively and consisTently coordinating with the Department of 

Labor's Bureau of International Labor Affairs (fLAB); the Department of State's Race, Ethnicity, 

and Social Inclusion Unit (RESIU) and Bureau of Democracy, Human Rig/us, and Labor (DRL); 

the Department of Justice; and other appropriate agencies. 

Under your leadership, how will USTR coordinate with RESIU and /LAB To realize the promises 

of this FTA in protecting, upholding, and improving /ab01; human, and civil rights, and the rule 

of law in Colombia? 

Answer: USTR works closely with the U.S. Departments of Labor and State, as well as other 

agencies, to monitor labor practices in trade partner countries, and to document any potential 

breaches ofFTA obligations as necessary. When DOL receives a public submission regarding 

labor concerns under a trade agreement, as they did in the case of a Colombia submission in 

2016, the Bureau of International Labor Affairs (lLAB), in coordination with USTR and State, is 

responsible for reviewing, reporting on the issues raised, and participating in dialogues with the 

country in question to address the issues. Since February, the Administration has engaged closely 

with Colombian officials on their efforts to address labor concerns, and we look forward to 

consulting closely witb you and your colleagues on Colombia issues in the ntture. 

2) Buenaventura, Choco, a nd Labor· Rights 
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For many years, Members of Congress warned of the grave working and living conditions in 

Buenaventura, a key Colombian port city, and in Afro-Colombian and Indigenous communities 

along Colombia's Pacific Coast. Please explain how USTR will work with the Colombian 

Minislly of Labor, the United Nations Office of the High Commissioner for Human Rights 

(OHCHR}, the Colombia Ombudsman, the Colombian Inspector General, and civil society to 

ensure that the June · 4, 2017 agreement to improve labor and living standards are fully 

implemented? 

Answer: I am aware of the situation at Colombia's Buenavell!ura port, and the recent agreement 

to address the concerns of workers in that region. USTR is coordinating with the U.S. 

Departments of Labor and State to monitor developments, and we will consult with you and key 

stakeholders here and in Colombia, including with relevant Colombian government officials, as 

implementation of the Jnnc agreement continues. 

3) Colombian Human Rights Pr otections 

Threats and violence against social rights activists continue 10 be concerning, and the impunity 

rates remain alanningly high In certain cases, activists requested, were denied, or delayed 

protective measures, and then murdered. Unfortunately, for those who work on Colombia 

policy, this is along-standing concern. How will USTR work with Colombian authorities to 

ensure that/ow enforcement officials and the National Protection Unit provide timely and 

1h01·ough responses and services to threatened and endangered social (e.g. Labor, human rights, 

religious, Afro- Colombian, Indigenous, and women) rights activists and journalists? 

Answer: USTR will continue to work with the Departments of Labor and State on the issue of 

threats and violence against labor union leaders and other civil society advocates. Lower labor 

standards in other countries, including impunity for acts of violence and threats, affect American 

workers and businesses. I am aware that Colombia made commitments regarding the National 

Protection Unit in the context of the Labor Action Plan, and that the number of union members 

requesting protection has decreased significantly. The Administration will continue to closely 

monitor this important situation and consult with you and key stakeholders on this issue. 

4) Status of the Colombia n Action Pla n Related to Labo•· Rights 

Last year marked the jive-year annivers01y of the Colombian Labor Action Plan. Tactics to 

deter and repress labor rights in Colombia continue to evolve and 1hrive. What specific 

resources and strategies will be applied to make progress on the improvement of labor rights in 

Colombia and the realization oft he Labor Action Plan's promises? 

Answer: FTA partners should be held to their obligations; lower labor standards in other 

countries affect American workers. I am aware of the Labor Action Plan and the Department of 

Labor report on labor issues in Colombia. I am committed to ensuring that compliance and 

enforcement of trade laws are priorities, and tbe Administration will continue to engage closely 

with Colombia to ensure that it lives up to its obligations. As part of this engagement, Labor 

Secretary Acosta and I recently had separate meetings with our respective counterparts from 

Colombia to discuss these issues, and our teams will continue these efforts. 
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5) Tra de, Equity, and Peace 

Last yea/; Colombia made significant progress in ending the longest civil conflict in the Western 

Hemisphere. Much work remains to implement and expand the Colombian peace agreement. 

Unfortunately, the U.S.-Colombia Free Trade Agreeme/11 (FTA) may exacerbate pre-existing, 

socio-economic conditions, which are significant barriers to sustainable peace. Will USTR take 

action to ensure that/he U.S. -Colombia FT A complements and does no/undermine ongoing 

peace efforts -especially regarding working conditions, civil society consultations, and affected 

agrarian and rural communities? 

Answer: The United States- Colombia Trade Promotion Agreement (CTPA) has contributed to 

economic growth, transparency and rule of law, and labor and envirornnental protection in 

Colombia since it entered into force five years ago. The Colombian government has cited export 

diversification as an important outcome of the CTPA, for example. According to the Colombian 

govemment export promotion agency Procolombia, I ,292 companies exported to the United 

States for the first time under the CTPA, and Colombia has introduced 850 new products to the 

world market during this period - in sectors such as manufacnaring, agroindustry, and clothing -

of which nearly half were exported to the United States. It is my tmderstanding that Colombia 

sees the CTPA as important in creating new economic opportunities as the integration proc.ess of 

the Peace Accord advances. I am committed to ensuring compliance with our trade agreements 

by our trading partners, as well as to working closely with the Department of State and other 

agencies to ensure that the CTPA and the peace process in Colombia are mutually supporting. I 

look forward to consulting closely with you and your colleagues on these important issues in the 

full.1re. 

6) May lOth Standat·d in U.S. Tt·adc Policy 

The 2007 Bipartisan Agreeme/11 on Trade Policy frequently referred to as the "May I (J11 

agreement'~ included key advancemems on labor, environment, access to medicines, government 

procurement, investment, and pon security standards, and worker education initiatives. Many 

were encouraged by the May 1Oth effort, which resulted in broader support for the U.S. Free 

Trade Agreements with Peru and Panama. Do you consider the May J(J11 standards to be 

integral in achieving bipartisan support oft he U.S. Trade Policy Agenda? 

Answer: I am aware of the importance of the May IO'b agreement on U.S. trade policy and how 

that agreement is reflected in the Bipartisan Trade Priorities and Accountability Act of2015. l 

am committed to ensuring that our trade agreements strengthen our trading partners' labor and 

environmental standards and meet the negotiating objectives that Congress has set out in TPA. 

The Administration is undertaking a comprehensive review of U.S. trade policy to detem1ine 

how best to ensure strong labor conunitments for future trade negotiations, begilllling with 

NAFT A. I will work with you and other Members of Congress as we update and improve 

NAFT A, as part of our examination of all aspects of the U.S. trade relationship with Mexic.o. 

7) La bot· and Environmental Enfot·cement 
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One of the challenges of U.S. h·ade policy is the need for sh·ong enforcement. During your 

Senate confirmation hearing, you pledged to work closely with Members of Congress and other 

stakeholders on enforcement and fulfilling labor obligations. What steps will you take to make 

progress in not only including meaningful labor and environmental standards in U.S. trade 

policy and agreements but also enforcing these standards in a regular and consist em manner? 

Answer: I am committed to ensuring that our trade agreements strengthen our trading partners' 

labor and environmental standards and meet the negotiating objectives that Congt·ess has set out 

in TPA. h1 c<>nsultation with Congress, the Administration will seek to modernize these 

obligations, including by incorporating high standard labor and environment provisions into the 

core of the agreement rather than in a side agreement as is currently the case with the NAFTA, 

and ensuring that the obligations are subj ect to the same dispute settlement mechanisms and 

trade sanctions as the rest of the agreement. I look forward to working closely with you, other 

Members of Congress, and stakeholders as we develop our proposals. Enforcement is also a key 

aspect of our trade agenda and the Administration is working to ensure that trade partners 

comply with the labor and environmental obligations in our trade agreements. I am currently 

undertaking a comprebensi ve review of all of our trade agreements, and I look forward to 

consulting closely with you and your colleagues, as well as our stakeholders, on specific steps 

we can take to ensure that our FT A partners are living up to their obligations and are subject to 

enforcement action when they do not. 

8) Global Overcapacity Investigations 

I recently joined many of my Democratic colleagues in expressing srrong concerns about the 

lack of congressional discussion with rhe Committees ofjurisdicrion regarding the 

adminisrration's 232 investigation of steel and aluminum. 

While this decision and authority lies within the Department of Commerce, the apparent 

departure from rransparency and consultarion srandards on trade mailers is concerning. 

How does Commerce's invesrigalion affect USTR's straregy in addressing overcapacity 

challenges? 

Answer: The current global overcapacity situation in the steel and aluminum industry is having a 

detrimental impact on U.S. workers and industries. At the core of Ibis issue is China's nonmarket economy system, which is creating global oversupply and excess capacity in these and 

other sectors. 

To address this serious problem, the Administration is working to address both the root causes 

and manifestations of the problem and is evaluating every appropriate tool in our arsenal. And 

we are committed to working closely with other countries, even countries that may have 

objections to the Section 232 investigations into the impact of steel and aluminum imports on the 

U.S. national security. There is no shortage of countries that want to work with tbe United States 

to address the excess capacity issue. Indeed, at the July 7-8, 2017 Hamburg Summit, G-20 

Leaders committed to take necessary actions to find solutions to the challenge of excess capacity. 
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The G-20 Leaders called for removal of market-distorting subsidies and urged Global Forum 

members to rapidly develop concrete policy solutions as a basis for tangible and swift policy 

action, to be included in a report to the Leaders by November 20 17. We are also continuing to 

engage bilaterally with China, including through the Comprehensive Economic Dialogue that 

was held in Washington on July 19,2017. 

We will continue to explore aU appropriate means to dea.l with the problem of excess capacity. 

9) May lOth Standard and Guatemala 

In your view, wha1 impact did the decision by lhe CAFTA-DR panel in the Guatemala labor 

dispute have on the May 10'" standard? 

Answer: The Administration wants strong, enforceable trade agreements that work for American 

people, and USTR will continue to require that all of its trading partners maintain high labor 

practices to help level the playing field for American workers. I am committed to ensuring that 

our trade agreements strengthen our trading partners' labor standards and meet the negotiating 

objectives that Congress bas set out in TP A, which are enshrined in the labor standards set out in 

the May 10 bipartisan Congressional agreement. We strongly disagree with some of the 

interpretations developed by the CAFTA-DR panel, including with respect to whether 

Guatemala's failure to enforce its own laws relating to internationally recognized labor rights affected 

trade. We a lso recall that no FT A panel can set "precedent" for future panels. We look forward 

to consulting closely with you and your colleagues on these important issues in the future. 

10) Bangladesh and Labor Rights 

In response to the collapse of Rona Plaza in 2013, the Obama Administration suspended 

preferences for Bangladesh under rhe Generalized System of Preferences (GSP) program in 

2013. Thereaftel; the Obama Adminish·arion developed an action plan for rhe Bangladeshi 

government/a improve prorecrions of workers' rights and safery in Bangladesh. Unfommarely, 

the Bangladeshi government not only made minimal progress, bill also appears ro be backsliding 

in cerrain key areas. Whar srrategies will you use ro ensure that the Bangladeshi government 

makes significant and substantive improvements to its enforcement and protection of 

internationally recognized labor rights? 

Answer: USTR, and in close coordination with the Departments of Labor and State, will 

continue discussions with the Govenunent of Bangladesh on the implementation of the GSP 

action plan, mostly re·cently during meetings of the bilateral Trade and Investment Cooperation 

Forum Agreement (TICF A) in Dhaka in May. The Administration is also coordinating closely 

with international partners through the Sustainability Compact for Bangladesh, an agreement 

between the Government of Bangladesh and the United States, the European Union, Canada, and 

the International Labor Organization (ILO), to improve labor rights and worker safety in the 

garment sector in Bangladesh. Similar to the bilateral GSP Action Plan, the Compact identifies a 

number of specific goals, including the protection of the right of workers to fonn and join 

unions, as well as ensuring adequate building iJJSpections and safety protocols. !11 addition, the 

Administration has engaged the Government of Bangladesh through the ILO. At a recent high-
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level ILO meeting, the Govemment of Bangladesh made a series of detailed commitments that--

if implemented -- would address a number oflong-standing concerns. The Administration will 

continue to closely monitor these developments and urge critical reforms to Bangladeshi labor 

law and practices to improve respect for labor rights and worker safety. 
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Questions ft·om Rep. Nunes 

1) Canada 

US. and California wine exporters continue to face burdensome trade barriers in Canada. 

British Columbia's discriminatOJy groce1y store program prohibits American wine from being 

sold on the same shelves as domestic wine, giving Canadian wine producers a significant 

competitive advantage. Given Canada's continued refusal to modify its discriminato1y program, 

will USTR consider a formal request of dispwe selllement? 

Answer: Policies restricting sales of U.S. wine in Canada are a major problem. USTR has held 

consultations with Canada under WTO dispute resolution procedures on British Columbia 

regulations. I am consulting with my staff' on the most effective next steps to address those 

regulations, as well as other measures in Canada that may be banning our wine exports. Whether 

we go to a dispute settlement panel or address these measures in the NAFT A negotiations, I will 

work to get this problem resolved for U.S. wine makers. 

2) Dairy 

USDA projects that over the next ten years, US milk production will grow by 23%, or 

approximately 48 billion pounds. Today, we are exporting 15%, or 30 billion pounds, of our 

total production. Due to rising production, there is a growing need for additional export 

opportunities, especially over the next decade. Free trade agreements that open markets and 

lower trade barriers are crucial to the growth of US daily exports. More than 95% of our 

potential customers live ow side the United States, which means that expanding access 10 

international marke1s is essenlialfor our economic fulure and success. The Asia-Pacific region 

is one of several markets that will be critical to future export opportunities, and has the potential 

to support increased production and American jobs. Our competilors in the European Union, 

New Zealand and Australia are already negotiating with key e>.pon markets in the Asia-Pacific 

region. Has USTR priorilized which countries if imends to begin bilateral negoliations with and 

detelmined when these bilateral negotiations will begin? 

Answer: President Trump sees increasing trade with countries in the Asia Pacific as a priority. 

Sinc-e the beginning of the Administration, we have met with counterparts across the region both 

bilaterally and at APEC and other economic fora to communicate this message and to set the 

stage for new trade initiatives with these countries. We recognize the importance of moving 

forward expeditiously, and for that reason have already begun an economic dialogue with Japan, 

initiated a plan for engagement with China, and hosted numerous Asian leaders and Cabinet 

ministers in Washington in the past few months to discuss our existing trade relationsl1ips and 

how we might further deepen them. We are currently considering next steps, including potential 

bilateral deals with Asia-Pacific trading partners, and I look forward to input from you and your 

colleagues as we work to develop our strategy. 

3. A) NAFTA 

Government procurement chapters by !heir ve1y design are fair because they require reciprocal 

h·eatment between the parties. I have heard from a number of American companies thai they do 
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extremely well in competing for government procurement conlracts in Mexico. Are you planning 

on presen•ing the NAFTA procurement chapter that has been so successful for U. S. exporters 

and service providers? 

Answer: Yes, the Administration does plan on including a government procurement chapter in 

the re-negotiated NAFTA Agreement. The specific outcomes the Administration is seeking to 

achieve in the government procurement chapter are identified in the Summary ofObjeetives for 

the NAFT A Renegotiation. We wiU work closely with Congress and stakeholders in formulating 

specific approaches to achieve these objectives. 

3. B) Cotton and Textiles 

NAFTA has been a success for the U.S. colton indus fly. Through !he development of an 

inregrated regional plarform for lextife and apparel produclion, NAFTA helps ensure reliable 

~porr marke1s for U.S. couon producers and streng1hens rhe competiriveness of U.S. t~· ife 

mamrjacrurers. Of course, NAFTA is more !han rwo decades old and there are improvemems in 

the lextile segmemlhat would help ensure its continued success. Can you explain how you are 

com miffed ro mainlaining ~porr marker access for !he U.S. couon induS fiJI and how you are 

working to further improve rhose provisions? 

Answer: The Administration is committed to maintaining export markets for agriculture 

producers and creating opportunities to expand exports, including for cotton and c.otton-based 

textiles. We are committed to doing no ham1, and our goal is to avoid tariffs being raised as a 

result of NAFT A renegotiation. 
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Questions ft·om Rep. Larson 

1) EU Shellfish Trade 

You may be aware that there has been a trade dispute between the European Union and the 

United States that has blocked the trade of molluscan shellflsh between the two trading partners 

for almost six years. The dispme centers around questions of whether our respective shellflsh 

sanitation programs m·e equivalent and these matters are regulated in the United States by the 

Food and Drug Adminish·ation. We understand that years of negotiations were successful in 

resolving all the teclmical issues in December of 2015. At that time the FDA told indus fly 

members that rulemaking would take abo111 a year, bill 18 months later the FDA, in a letter to 

members of Congress, now suggests the process may take another 6-9 months. While this is an 

issue that involves the FDA, the USTR has always worked closely with the FDA to address the 

EU ban on shellflsh exports. 

Is there any action the USTR can take to encourage the FDA to speed up its rulemaking process 

so that U.S. producers can regain access to lucrative European markets? The previous USTR 

identified this issue as a priority bilateral trade issue in T-TJP negotiations. Does the USTR still 

view removal of the EU ban on US shellflsh exports as a priority? Given the uncertain status of 

T-TIP negotiations, does the USTRfeelthat progress can be made on this issue outside ofTTiP? 

Answer: The removal of the EU ban on U.S. shellfish exports remains a priority for USTR. We 

intend to restore market access for our shelltlsh producers through bilateral engagement with the 

EU. We have conveyed the importance of completing this work to FDA, and will continue to 

encourage FDA to complete the required administrative steps expediently. 

2) NAFfA Government Procurement 

Canada and Mexico combined are the largest export market for Connecticut so I have great 

interest in how NAFTA renegotiations movefonvard. However, the administration seems a bit 

inconsistent in its government procurement objectives. On the one hand, it talks about 

e:.panding our marker access in Canada and Mexico. On the other hand, there is talk of 

implementing strong "Buy America" policies. How does the USTR plan to seek greater access to 

the Canadian and Me:.·ican procurement markets while protecting our own "Buy America" 

priorities? And what specific changes will you seek to the government procurement chapter of 

NAFTA? 

Answer: NAFTA was negotiated decades ago and the government procurement chapter does not 

reflect current procurement practices, such as tbe extensive use of e-procurement technology. 

The NAFTA renegotiation provides a unique opportunity to modernize the procedural 

obligations in ways that help U.S. suppliers compete in both Mexico and Canada. Furthermore, 

the Administration will seek to protect obligations that are consistent with our domestic 

acquisition laws and work closely with U.S. industry to identify areas to enhance market access 

in both Mexico and Canada. 

3) NAFTA fP 
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What kind of enhancements to intellectual property rights protection is the administration 

contemplating in the NAFTA rewrite? 

Answer: The Administration will seek high standards throughout the !P Chapter in the NAFTA 

renegotiation, including standards of protection similar to those in U.S. law. We will be seeking 

an outcome that reflects our trade priorities with respect to Canada and Mexico, including 

solutions to new and long-standing trade challenges in intellectual property protection and 

enforcement. I look forward to working closely with you on these issues. 

4) May l Oth Labor & Environment 

As you know, we have just observed the I 0-year anniversOJy of the May I 0 Agreement, which 

incotporated for the first time strong and enforceable labor and environmental provisions in 

U.S. trade agreements. However, there have so far been no successful actions to enforce those 

provisions, despite clear indications by certain trading partners that/hey are not and in some 

cases have never been in compliance with those commitments. In commenting on the recent 

al/lcome of the Guatemala labor case, USTR reportedly stated that "President Trump is 

com milled to the strict enforcement of our trade agreements" and that the administration "will 

continue to hold accountable its tmding partners, including Guatemala, and require fair labor 

practices that help level the playing field for American workers." What is the USTR's plan when 

it comes to the enforcement of the labor and environmental provisions of our FT As? 

Answer: Enforcement is a key aspect of our trade agenda and the Administration is working to 

ensure that our trading partners comply with the labor and environmental obligations in our trade 

agreements. I am currently undertaking a comprehensive review of all of our trade agreements, 

and I look forward to consulting closely with you and your colleagues, as well as our 

stakeholders, on specific steps we can take to ensure that our FTA partners are living up to their 

obligations and are subj ect to enforcement action when they do not. In the Guatemala case, we 

strongly disagree with some of the intc1pretations developed by the panel, and note that no FTA 

panel can set "prec-edent" for future panels. We look forward to consulting closely with you and 

your colleagues on these important issues in the nature. 

S) Currency Provisions 

When other countries manipulate their currency, it gives them an unfair advantage and forces 

American companies and workers to compete on an uneven playing field. So faJ; howeve1; this 

Administration has given no indication that if intends to incmporate currency rules as a primmy 

objective in its trade negotiations, including in the re-negotiation of NAFTA. What are the 

Administration 's intentions with respect to seeking the inclusion of currency rules in its trade 

agreements? Does the USTR support including strong and enforceable disciplines in NAFTA and 

other trade agreements? 

Answer: Consistent with the principal negotiating objectives on unfair currency practices 

contained in the Bipartisan Congressional Trade Priorities and Accolllltability Act of2015, and 

as noted in our Summary of Objectives for the NAFTA Renegotiation, the Administration will 

be seeking to ensure that the NAFT A countries avoid manipulating exchange rates in order to 

prevent effective balance of payments adjustment or to gain an unfair competitive advantage. 

We are consulting with Treasury Department on how best to achieve this. 
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Questions f•·om Rep. J enkins 

1) Ag•·iculture Exports and National Secul"ity 

National security should unquestionably be the prio1·ity of any government, but 1 won)' that using 

national security as the basis for trade restrictions in NAFTA, or elsewhere, could backfire if 

other countries do the same to us. In particular, food security for many countries is a vital 

component of national security. Along that vein here at home, wheat farmers in my eastern 

Kansas district are just finishing up their wheat han•ests and the work continues to roll north 

and west across the State; many Kansas farmers will then ultimately look to foreign marketseither in North America o1· abroad-to sell their products in the coming months. What argument 

would you make to a COimfly that tries to restrict its imports of U.S. wheat or other products for 

food security reasons? 

Answer: While food security is au important issue, many nations around the world are unable to 

achieve pennanent food security by relying solely on domestic production. Robust markets and 

liberalized trade of agricultural products are the most efficient ways to promote and ensure 

sustainable food security at the domestic and intemationallevels. Furthermore, export 

restrictions and other impediments to trade undermine long-term food security by increasing 

global food prices and exacerbating price volatility, disrupting price signals to domestic markets, 

and dampening the supply response by domestic producers. 

2) NAFf A Renegotiation and Future FT As 

About 50 percent of all U.S.-grown wheat is ~'ported, making trade incredibly important to 

wheat farmers in my home State of Kansas. Mexico, for example, was the largest ~\port market 

for U.S. wheat last ye01; made possible by the benefits of NAFTA. In fact, according to the 

National Association of Wheat Growers and U.S. Wheat Associates, Mexico imported 3.1 million 

meh·ic Ions of wheat in the 201612017 marketing year. 

Therefore, in the views of many of my constituents, NAFTA has been overwhelmingly successful. 

1 do agree, however, that there is room for updating in this agreement, which is more than 20 

years old, to include strong and enforceable SPS rules based on sound science-/ike those that 

were negotiated under the TPP. Additionally, Kansas fanners and ranchers are also looking 

beyond NAFTA ro future trade deals for additional markers. What are your views on how NAFTA 

renegotiation can serve as blueprint for securing thosefil(ure trade deals-which would mean the 

inclusion of strong SPS provisions that will help Kanas producers gain access to new markets? 

Answer: The Administration is committed to maintaining the markets our farmers, ranchers, and 

food processing industries have and creating opportunities to expand exports. We are committed 

to doing no harm, and our goal is to avoid tariffs being raised as a result ofNAFT A 

renegotiation. 
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Unwarranted sanitary and phytosanitary (SPS) trade barriers, such as duplicative testing and 

unscientific regulations imposed on food and agricultural goods, are among the biggest 

challenges facing U.S. exporters offood and agricultural products. We intend to seek a 

modernized NAFTA that builds on and enhances the mles of the World Trade Organization's 

(WTO) SPS Agreement and provides enforc-eable SPS obligations with respect to science-based 

measures, good regulatory practice, import checks, equivalence, and regionalization. We will 

also seek provisions in the NAFTA to resolve expeditiously unwarranted barriers that block U.S. 

food and agricultural products, ensure that SPS measures are developed and implemented in a 

transparent, predictable, and non-discriminatory manner, and improve communication, 

consultation, and cooperation between govenm1ents. A modemized NAFT A gives us the 

opportunity to strengthen our SPS relationship with Canada and Mexico, and a successful 

outcome would provide the foundation for future agreements with other trading partners. 
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Questions from Rep. Crowlev 

1) Enforcement 

As you begin your tenure as USTR, do you consider !hat 1he fools and resources 1ha1 are 

available 10 you on 1rade enforcemenl, including funding and staffing, are sufficienl for !he 

aggressive pursuit of enfo1·cemen1 aclions thai you have supporled in the past? 

As you are aware, Congress authorized $15 million for a Trade Enforcemenl Trust Fund !hal is 

intended for USTR's use -above and beyond USTR's annual budge1-to enforce WTO and trade 

agreement commitments, monilor our trading partners' implementation of FTA obligations, 

support capacity building for developing countries to implement FTA obligations, and 10 

investigate and respond to pelilions for trade actions. Will you commilto using the funds 

Congress has made available to you and what are your lop priorities for USTR's enhanced trade 

enforcemenl efforts? Willi hose priorities include investigating and initialing enforcemenl 

aclions related to the labor and environ men/ provisions of exisling FTAs? 

Answer: The Administration will be pursuing an aggressive trade policy agenda and looks 

forward to serious bilateral engagement with our trading partners. As such, USTR will be 

simultaneously pushing forward with enforcement efforts to address unfair trading practices 

while pursuing a number of key bilateral trade agreements. Enforcement takes resources, like 

lawyers, analysts, researchers, and translators that enhance USTR capacity to intensify these 

efforts. For example, language and other specialized expertise is necessary to research issues 

with in1portant trading partners such as subsidies, local content restrictions, import licensing 

restrictions, and market access barriers. Legal resources also aid in enforcing U.S. trade laws by 

defending disputes brought against the United States. 

The Administration is also working to ensure that trade partners comply with the labor and 

environmental obligations in our trade agreements. I am currently undertaking a comprehensive 

review of all of our trade agreements, and l look forward to consulting closely with you and your 

colleagues, as well as our stakeholders, on specific steps we can take to ensure that our FTA 

partners are living up to their obligations and are subject to enforcement action when they do not. 

2) Canada 

The Canadian Radio-television and Telecommunicalions Commission (CRTC), Canada's 

broadcasting and telecommunications regulato1y agency, issued a decision in 2015 that was 

inconsislent wilh Canada's obligalions to provide prolections 10 U.S conle/11- providers, namely 

the NFL. Subsequen1/y, wilh bipartisan supporl, the previous Administration raised !his issue 

wilh senior Canadian officials and asked for a change. 

The United States also indicated that if was examining all of its options with respect to the CRTC 

decision. However, Canada's governme/71 did no/ change policy. What options does the new 

Adminislration plan to pursue 10 resolve this silllation so thai U.S. companies are treated 

equally? 
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Answer: USTR objected to the CRTC's decision preventing the NFL from fully monetizing the 

value of its programming in Canada to the same extent as other U.S. and Canadian programming, 

through control of advertising. We continue to look at options for addressing this problem. The 

United States is strongly committed to expanding access rights for U.S. services suppliers, and 

obtaining the strongest standard of protection for U.S. intellectual property rights holders in 

Canada, and believe that Canada must treat all rights holders fairly. 1l1is principle will be 

paramount in our engagement with Canada. 
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Questions from Rep. Marchant 

1) India's Trade Environment and Enforcement 

On Monday June 26, Prime Minister Modi visited President Trump at the White House for their 

first face-to-face meeting of the new administration. As outlined by the joint statementfollowing 

the meeting, both India and the United States agreed to "undertake a comprehensive review of 

trade relations" between the two countries. While this review is an important opportunity to 

spotlight the current imbalanced trading relationship, it should also support delivering concrete 

results that improve India's environmentjo1· doing business, including addressing trade barriers 

like high tariffs, forced localization policies, and a challenging environment/or intellectual 

property protection. How does the Administration intend to press for resolution of these 

concems, including by taking appropriate enforcement actions? 

Answer: India is one of the only major economies with which we have a significant trade deficit 

in goods and services, and our exporters continue to face a variety of challenges in the Indian 

market. While we have welcomed recent improvements in certain areas, they do not go far 

enough to provide meaningful market access in important sectors. President T nnnp and Prime 

Minister Modi stated their intention to undertake a "comprehensive review" of the bilateral trade 

relationship, and we will continue to press the Indian govemment to address these issues and 

implement reforms that will increase U.S. exports through the U.S.-India Trade Policy Forum 

(TPF). 

2) Where USTR Can Change Strategies re: India Tt·ade 

Despite frequent high-level bilateral engagement with India since 2014, india has failed to 

create significant positive oppol"llmities for U.S. workers, businesses, and farmers. It remains a 

tough place to do business, ranking last among G20 countries in the World Bank's Doing 

Business report, ond near the bollom of the U.S. Chamber of Commerce lnternationai !P index 

eve'J' year. One reason for the lack of progress seems clear: we do not have sufficient leverage 

in bilateral discussions. One area where we have had created leverage is at the WTO, winning 

cases on solar and poullly. Where can USTR and other agencies create leverage with the 

government of india? 

Answer: The United States has a significant trade deficit with India and we emphasized during 

Prime Minister Modi's recent visit that this dynamic must change. President Trump and Prime 

Minister Modi stated their intention to undertake a "comprehensive review" of the bilateral trade 

relationship, a process that will include an evaluation of issues through the U.S.-India Trade 

Policy Forum (TPF). We will also continue to explore any other additional areas of leverage to 

push India to make the changes needed to rebalance the bilateral trade relationship. 
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Questions from Rep. Higgins 

1) Aluminum 

On Jamta~y 12, 2017, the United States filed a request to the World Trade Organization (TVTO) 

for consultations to challenge China's illegal subsidization of its aluminum indushy. The 

consultation period has now passed, bw there appears to have been no movement. As you are 

aware, this case is great interest to Members on both sides of the aisle. What is the status of this 

case? Will the Administration commit to pursuing it in the interest of the U.S. aluminum 

indust1y, its workers, and communities that depend on it? 

The Chinese government has effectively reji1sed to negotiate regarding its use of illegal subsidies 

to create massive, globally distorting overcapacity in the aluminum indusfly. In addition to the 

WTO case, what plans do you have to address these destructive policies and China's 

unwillingness to remove them? 

The U.S. aluminum indusfly is being hollowed out by unfair trade practices, potentially leaving 

our armed forces unable to procure metal domestically for national defense applications. is the 

Administration prepared to implement a sufficient response under the Section 232 investigation 

of aluminum products? 

Any response under Section 232 must only be part of a comprehensive solmion to the threat to 

the U.S aluminum indusny. Is it safe to assume that the Section 2 32 investigation is only one 

part of a broader sh·ategy, including the WTO case filed in Jamta~y and any other necessGiy 

action, especially action targeting illegal Chinese subsidies? 

Answer: TI1e Administration is reviewing all appropriate options to deal with market distorting 

practices in the Chinese aluminum industry. At the core of this issue is China's non-market 

economy system, which is creating global oversupply and excess capacity in this and other 

sectors. We are now vigorously defending our right to apply a non-market economy 

methodology to imports from China against China's challenge in the WTO. We are committed 

to effective action to address unfairly traded aluminum through strong enforcement of U.S. 

AD/CVD laws, bilateral and multilateral engagement, and enforcement of our rights under trade 

agreements, as appropriate. 

2) Steel 

We appreciate your work on subsidized Chinese steel. The we/1-documemed subsidies received 

by the Middle East air carriers have already impacted US workers. Will you encourage your 

Administmtion colleagues to e.rercise our rights under our agreements with the United Arab 

£mira res and Qatar to stop the subsidies? 

Answer: The Department of State and the Department ofT ransportation, as the negotiators of 

our air transport agreements, have the lead on this issue. However, USTR has been actively 

participating in an on-going interagency review of the issue by the new Administration. As part 
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of this review, the Administration has met with key stakeholders holding diverse views and is 

currently evaluating appropriate next steps. 

3) Jnfrastructur·e 

There is a long his101y of cooperalion be/Ween the United Stales and Canada on infrastruc/Ure 

planning, parlicularly lhrough I he development and mainlenance of cross- border infrastruclllre 

(l·oads, bridges, land por/s of en fl y generally). Will I he adminislralion commit 10 a robusi and 

renewed commilmenl 10 cross border infrastruc/llre as a part of a renegoliated Norlh American 

Free Trade Agreement (NAFTA)? 

Answer: The United States and Canada will continue to rely on a strong common infrastructure 

in order to facilitate trade throughout the region. 
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Questions from Rep. Reed 

1) CuJTency Manipulation 

Ambassador Lighthizer, I was among members of this Committee and Congress to secure 

language in the Trade Promotion Authority and the customs legislation signed into law in the 

last Congress. I believe we have an opportunity to continue to act on currency issues through 

NAFTA negotiations and set the stage for future trade negotiations. Do you believe that gelling 

agreement from Canada and Mexico on enforceable ways to combat currency manipulation will 

improve the United States' negotiating position for future agreements? Are you interested in 

pursuing enforceable provisions on currency manipulation within renegotiation of NAFTA? 

Answer: Consistent witb tbe principal negotiating objectives on unfair currency practices 

contained in tbe Bipartisan Congressional Trade Priorities and Accountability Act of2015, and 

as noted in our Summary of Objectives for the NAFT A Renegotiation, the Administration will 

be seeking to ensure that the NAFT A countries avoid manipulating exchange rates in order to 

prevent effective balance of payments adjustment or to gain an unfair competitive advantage. 

We are consulting with Treasury Department on bow best to achieve this. 
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Questions from Rep. DelBene 

1) U.S.-EU Cove•·ed Agreement 

I want to ask you abo/11 next steps on the Covered Agreement between the European Union and 

United States that was negotiated by the last administration. My understanding is that Insurance 

commissioners, governors, and stale legislatures have responsibilities to implement significant 

portions oft he agreement and if they don't, the agreement could fall apart because its provisions 

are cross-conditional. Governors and insurance commissioners including my own home state 

insurance commissioner have raised concerns with several ambiguities in the agreement and are 

concerned that if they are not clarified ahead of time with the European Union, they will have 

changed laws and regulations only to find out that the EU does not have a similar inte1pretation 

a few years down the road. This would essentially put us back to square one. The NAJC has 

submilled a few areas that they would like to see clarified with the European Union prior to the 

agreement being signed. What are your next steps with the agreement, and do you plan to seek 

such clarifications requested by the state insurance commissioners, who are responsible for 

implementing it? 

Answer: In the last six months, USTR and Treasury have undertaken a series of meetings with 

interested stakeholders and members and staff in the Congress to gather detailed feedback on the 

U.S.-EU Covered Agreement. Following carentl c.onsideration of this feedback, the 

Administration allllounced in July that it intends to sig11 the Covered Agreement. The 

Administration bas also announced plans to issue a U.S. policy statement on inlplementation. 

We believe that this Agreement will be an important step in making U.S. companies more 

competitive in domestic and foreign markets and making regulations efficient, effective and 

appropriately tailored. This Agreement will benefit the U.S. economy and consumers by 

affmning the U.S. state-based system of insurance regulation, providing regulatory certainty, and 

increasing growth opportunities for U.S. insurers. 

2) Intellectual Prope•·ty 

The Administration has already signaled an ambitious trade agenda, which has the potentia/to 

significantly strengthen economic growth. But in order to continue accelerating the pace af 

innovation in ow· economy, ow· trading partners must all play by the same rules with respect/a 

market access and protecting intellectual propel iy. How can the United States use new and 

existing trade agreements to ensure U.S. businesses benefit [t-om strong intellecwal propel iy 

protections and greater access to global markets? 

Answer: The Administration intends to leverage all trade tools at our disposal to counteract any 

efforts by our trading partners to w1fairly disadvantage U.S. IF-intensive industries. In 

renegotiations and new negoti ations, we will seek strong IP provisions that address both new and 

long-standing trade challenges in lP protection and enforcement. We must hold other 

govemments accountable when they initiate policies or take actions that undermine the ability of 

right holders to fairly use and profit from their intellectual property. Direct bilatera l engagement 

is essential to resolving unfair trade practices. We must also vigorously monitor our trading 

partners' compliance with their bilateral and multilateral commitments, and we will take 

enforcement actions when appropriate. 
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Questions from Rep. Holding 

1) ISDS 

One problem with I he TPP was thai/he Obama Adminisn·ation insisted on including within 1he 

agreement a COI"Ve-out from ISDS for one product, one legal export, for the first time eve1·. Do I 

hm•e your commilmentnotto agree 10 such cm"Ve-outs? 

Answer: I acknowledge your concern regarding the diCferential treatment of measures relating to 

a major U.S. agricultural export in the context ofTPP investor-state provisions. I look forward to 

consulting with the Congress on this issue in the context of the NAFTA negotiations and other 

negotiations going forward, with a view to ensuring that our agricultural exports, as well as other 

goods and services exports, are treated fairly. 

2) Intellectual Pr·op erty 

The Administration has already signaled an ambitious trade agenda, which has the potential to 

significantly strengthen economic growth. But in order to continue accelerating the pace of 

innovation in our economy, ow· trading partners must all play by the same rules wilh respect to 

market access and protecting intellectual property. How can the United States use new and 

existing trade agreements to ensure U.S. businesses benefit from strong intellectual propel iy 

protections and greater access to global markets? 

Answer: The Administration intends to leverage all trade tools at our disposal to counteract any 

efforts by our trading partners to unfairly disadvantage U.S. IP-intensive industries. h1 

renegotiations and new negotiations, we will seek strong lP provisions that address both new and 

long-standing trade challenges in IP protection and enforcement. We must hold other 

goverrunents accountable when they initiate policies or take actions that undermine the ability of 

right holders to fairly use and profit from their intellectual property. Direct bilateral engagement 

is essential to resolving unfair trade practices. We must also vigorously monitor our trading 

partners' compliance with their bilateral and multilateral commitments, and we will take 

enforcement actions when appropriate. 

3) Poulh·y 

The opening of the Chinese market for beef was a great success. What is the timeframe for 

gelling U. S. poulfly back into China and what is USTR's current involvement? 

Answer: Secretary Perdue and h.is team at USDA have been the primary interlocutors on 

negotiating the animal health terms for exporting U.S. poultry into China since its suspension in 

January 2015. USTR coordinates closely with USDA on these efforts and provides relevant 

guidance, especially given the prolonged impact the poultry ban has had on trade. I understand 

that a Chinese technical team visited the United States in July to visit U.S. poultry fanns and 

exchange infonnation with U.S. experts. We are awaiting the outcome of that visit, and are 

pressing China to re-open its market to U.S. poultry. 

USTR won a WTO dispute challenging China's antidumping and countervailing duties 

(AD/CVD) on imports of U.S. chicken "broiler products". When China issued a redetermination 
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that kept the duties in place, we filed a WTO compliance challenge against that redetennination. 

We are now waiting for the compliance panel to provide its report, and we will continue to press 

China to eliminate its AD/CVD duties on U.S. broilers. 

4) Subchapter 9802 

The U.S. rexrile induslly has seen e>.pon growth in recenl years. Unfortunately, there are built-in 

disincentives to using U.S.-made yarn and other texrile products in foreign-made finished goods. 

There is a provision -under Subchapter 9802 of the HTS -that allows the value of certain U.S. 

components to be deducted from the value of imported finished goods for customs valuation and 

duty assessment purposes. Currently only a few products are eligible for such trearment 

including sewing thread and narrow elastic fabric, while many other US components are eligible 

for the 9802 treallnent. Would you be willing to look info the possibility of expanding the range 

of U.S. producrs to include U.S. yarn that would be eligible for similar deduction from the value 

of imported goods? 

Answer: The requirements for U.S. components to be eligible for treatment under Subchapter 

9802 of the HIS are set out in U.S. law. If Members of Congress are interested in exploring 

legislation to change these requirements, USTR would be happy to engage in a dialogue on the 

implications of such changes for U.S. trade policy and for the U.S. textile industry. 
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Questions from Rep. Chu 

1) U.S. Film lndustt·y/China Film Ag•·eement 

As you know, !he U.S. film indust1y is a major cui/ural and economic force globally. I wan flO 

share with you just how many jobs the creative indus/1)1 creates and how much !hey drive our 

no lion's economy. Their work significantly conn·ibutes to the $1.1 trillion of economic ou1pu1 

that our copyright induslries are responsible for, and in 2015 supported around 5.5 million 

good-paying U.S. jobs. These industries are located througho1111he counny - Georgia, 

Louisiana, New York, Ohio, and California. They provide good jobs and contribute to the 

economy of so many states. 

l want to flag an issue of great impOI"Iance 10 independem film producers. The China Film 

agreement, which was originally signed in 2012, is subject to review this year. I am specifically 

concerned about opening up opportunities for new disll"ibutors to bring U.S. films to the Chinese 

marke1place. What steps will USTR rake as part of the review oflhe China Film agreement to 

ensure that the Chinese are compliant with the commitment made in 2012? 

Answer: Under the 2012 U.S.-China Memorandum of Understanding on films, the United States 

and China reached an alternative solution with regard to certain rulings relating to the 

importation and distribution of theatrical films in a WTO dispute that the United States won. 

Significantly more U.S. films have been imported and distributed in China since the signing of 

the MOU, and the revenue received by U.S. film producers has increased substantially. The 

United States will continue to work to ensure that China implements the 2012 MOU, and that 

China provides further meaningii.tl compensation for the United States in this area, as called for 

bytheMOU. 

2) Subsidies for Middle East Air Travel Can·iers 

Since 1992, !he U.S. govermnent has negotiated Open Skies agreements with over IOOforeign 

governmems that helped prom01e fair principles and conditions for airline market competilion. 

In some cases, open s!..ies tmffic rights have nor been used in ways thai honorfree market 

competition and, troublingly, U.S. inleresrs in fairness and openness in intemalional commerce. 

1 understand that Ambassador Lighthizer is familiar with the substantial subsidies that many air 

travel carriers based in Middle Eas1 countries receive. 1 want to encourage you to work with 

your colleagues at the State Department and Department of Transportation to address this issue 

immedialely. Swift aclion on this issue would go a long way toward improving enforceme/11 of 

our existing trade agreements and would pro1ecr American jobs from unfair imemational 

compelition. 

What do you envision as tile USTR's role in ensuringfaimess in this marke1? I hope you would 

keep this issue in mind as you consider n·ade negotiations with counh"ies that subsidize their 

airlines. 

Answer: The Department of State and the Department of Transportation, as the negotiators of 

our Open Skies agreements, have the lead on this issue. However, USTR has been actively 
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participating in an on-going interagency review of the issue by the new Administration. As part 

of this review, the Administration has met with key stakeholders and is currently evaluating 

appropriate next steps. 

3) U.S.-Canada WTO Wine Dispute 

During the commiuee's hearing, you told Rep. Thompson that you were aware of the WTO 

enforcement action thatfornler USTR Froman launched against Canada in Jamta1y 2017 

challenging British Columbia's (BC) regulations to permit/he sale of wine in groce1y stores. The 

new regulations gave stores the option of a "store-within-a-store" model or the option to buy a 

license to sell only BC wine on grocety store shelves. Under this option, wine sales must be 

conducted in a "wine store" that is physically separated from the groce1y store, has controlled 

access, and separate cash registers from the groce1y store's cash registers. The store-within-astore model is more onerous for store owners (md seems to discriminate against U.S. and other 

imponed wine by allowing only BC wine on shelves for consumers. 

Do you intend to support and continue the Janual)' 2017 WTO action against these regulaTions? 

In the context of NAFTA renegotiation, do you plan to consider issues like this one of your 

priorities when you enter discussions with Canada? 

Answer: Policies restricting sales of U.S. wine in Canada are a major problem. USTR has held 

consultations with Canada under WTO dispute resolution procedures on British Columbia 

re!,'l.llations. I am consulting with my staff on the most efl~ctive next steps to address those 

regulations, as well as other measures in Canada that may be harming our wine exports. 

\l.'hether we go to a dispute settlement panel or address these measures in the NAFT A 

negotiations, I wiJJ work to get this problem resolved for U.S. wine makers. 

4) Enforcement StJ·ategy for Labor and Envir·onment 

The May 10 Agreement inc01porated strong environmental and labor provisions imo U.S. trade 

agreemenls. Despite !he inclusion of language similar or identical to the May I 0 Agreement in 

many of our trade agreements, !here have so far been no significam aclions to enforce !hose 

provisions. I would like this Administration to articulate a concre/e approach 10 enforcement 

goingforward, no/jus/ verbal commitmems to do befler. This is importamfor the American 

economy and the American worke1·. 

Please succinclly lay out the Adminisfralion's slralegy Ia underlake meaning/it! enforcement of 

the labor and environmemal provisions of our trade agreements. 

Answer: Enforcement is a key aspect of our trade agenda and the Administration is working to 

ensure that trade partners comply with the labor and environmental obligations in our trade 

agreemeots. I am curreotly undertaking a comprehensive review of all of our trade agreements, 

and I look forward to consulting closely with you and your colleagues, as well as our 

stakeholders, on specific steps we can take to ensure that our FTA partners are living up to their 

obligations and are subject to enforcement action when they do not. 

S) Timing on NAFTA Labor and Envit·onmcnt Provisions 
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During your June 21 hearing before !he Senale Finance Commillee, you were asked by Senalor 

Sherrod Brown whelher you would ins is/ on beller labor slandards from Mexico before folks 

began on NAFTA renegolialion. You replied that if was unlikely we could get commilmen/s from 

Mexico before talks begin. I would like to follow up on !hat queslion. Will the Administration 

insislthat Canada and Mexico bring their laws and praclices info compliance with NAFTA 's 

environmenlal standards a/ leas/ before Congress is asked to vole on a renegotiated NAFTA? 

Answer: I am committed to ensuring that our trade agreements, including the NAFTA, 

strengthen our trading partners' labor and environmental standards and meet the negotiating 

objectives that Congress has set out in TPA. In consultation with Congress, the Administration 

will seck to modernize the labor and environmental obligations, including by inco1porating high 

standard labor and environment provisions into the core of the agreement, rather than in a side 

agreement, and ensuring that the obligations are subject to the same dispute settlement 

mechanisms and trade sanctions as the rest of the agreement. With respect to the implementation 

of the agreement, I note that TPA sets out procedural requirements that must be followed before 

Congress votes on an agreement and before the Administration puts an agreement into effect. We 

will adhere to these procedures as we update and improve the NAFT A. 

6) Investor-State Dispute Settlement Regime 

Please articulate your position on the Investor-S/ate Dispme Sell Iemen/, or ISDS, regime which 

provides those with offshore investments a special procedure for gelling their disputes with other 

coumries heard. What do you think is the best approach for managing inveslor risk when 

investments or even U.S. firms are moved offshore? If you want to maimain the ISDS, would you 

support major reforms 10 it, and if so what might those reforms be? 

Answer: I am mindful that seeking improved mecban.isms to resolve investor-stale disputes is a 

negotiating objective in TPA, and I understand the importance of ensuring that U.S. investors 

abroad are treated fairly. At the same time, I acknowledge some of the concerns that have been 

raised about ISDS, including with respect to U.S. sovereignty. I look forward to working with 

Members to achieve an appropriate balance on this issue. 
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Questions from Rep. J. Smitb 

1) Cbina and Cotton 

Col/on is an important commodity in my district. We exporr our conon all over the world. We 

support your work to secure refomrs fi·om China and open its market to U.S. companies, 

farmers, and wor·kers. China is the world largest consumer· of raw col/on, but it inhibits market 

access to U.S. coflon farmers through opaque and restrictive import regime. Our producers have 

developed successfiil relationships with Chinese buyers who want greater access to high quality 

U.S. coflon. But they need help convincing the Chinese government ro open up. China also 

massively subsidizes the production of manmade fibers, primarily polyester; that compete 

directly with raw cotton fiber. Due to their lack of transparency, we don't know the fill/ scope or 

exact nature re of these subsidies, bur we know they are extensive and we can see their impact on 

the global coflon marketplace. Mr. Lighthizer, Will you prioritize greater export access for U.S. 

cotton as a part of the 100- Day Action Plan and, goingfonvard, as a part of the new bilateral 

comprehensive economic dialogue? 

Answer: I am very concerned about China's support for its domestic cotton industry, which can 

take the fonn of subsidies, , or the undemtilized production capacity of manmade fibers. These 

policies can distort the global marketplace and Ullfairly disadvantage U.S. cotton farmers. While 

Treasury and Commerce are the U.S. chairs for the I 00 Day Action Plan and the Comprehensive 

Economic Dialogue, I can assure you that this remains a high priority for USTR and our bilateral 

engagement with China, and we continue to gather infomtation to better understand these 

policies and their impact on our cotton fanners. 

2) J apan and Agriculture 

Vice President Pence's recent trip to Japan involved discussions about the prospects of a 

bilateral/ trade agreement r. U.S. farmers and ranchers want a US-Japan trade agreement that 

will secure and improve upon the advances in the Trans Pacific Partnership (JPP) for beef, 

pork, rice, vegetables, fi"uirs and dairy product access. How will you meet these goals for 

agriculture in a US-Japan agreement? 

Answer: Under the leadership of the Vice President, the Administration is laying important 

groundwork under our economic dialogue with Japan, which includes trade as a key element. 

Advancing the interests of our farmers and ranchers in this important market is a critical 

component of our engagement with Japan. 

3) EU-U.S. Cove•·ed Agreement 

Mr. Lighthizer, When does the Administration anticipate making a decision about whether to 

sign the EU-U.S. "covered" agreement? Will there be any clarifications to the agreement before 

it is signed? 

Answer: In the last six months, USTR and Treasury have undertaken a series of meetings with 

interested stakeholders and members and staff in the Congress to gather detailed feedback on the 

U.S.-EU Covered Agreement. Following careful consideration ofthis feedback, the 
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Administration am1otmced in July that it intends to sign the Covered Agreement. The 

Administration has also announced plans to issue a U.S. policy statement on implementation. 

We believe that this Agreement will be an important step in making U.S. companies more 

competitive in domestic and foreign markets and making regulations efficient, effective and 

appropriately tailored. This Agreement will benefit the U.S. economy and consumers by 

afTifllling the U.S. state-based system of insurance regulation, providing regulatory certainty, and 

increasing growth opportunities for U.S. insurers. 
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Questions from Rep. Scbweike1·t 

1) Da ta loca lization resh·ictions 

The United States is a leader in digital services, due to the emergence oft he internet and 

dramatic rise of cross-border data flows. In respecting the importance of protecting digital fl·ade 

and data flows in future bilateral and multilateral fl·ade deals, it is vital for Congress to 

understand the Administration's position on data localization requirements and restrictions on 

data flows. I believe the prior Administration made a big mistake when if initially carved out 

financial services from/he ban on se1ver localizalion requiremen/s in the TPP negotiations. Will 

you commit to nego1iating strong provisions to prohibit server localization requirements and 

restrictions on data flows in all sectors, includingfinancial services? 

Answer: Yes. As the Administration stated explicitly in the Summary of Objectives for the 

NAFTA Renegotiation issued on July 17, we intend to pursue strong provisions to ensure that 

countries refrain from imposing measures in the financial services sector that restrict crossborder data flows or that require the use or installation of local computing facilities. 
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Questions from Rep. Rice 

1) Section 232 Steel Investigation 

Mr. Ambassador, let me again express my appreciaTion for this administration's focus on the 

U.S. steel indusoy and unfair trade practices used by Chinese sTeel manufacturers. U.S. steel 

manufacturers continue To struggle wiTh Chinese overcapacity, resulting in job loss and plant 

closures Throughout my distriei. 

With thaT said, I wan/to echo the concerns from some of my Ways and Means colleagues 

regarding Section 2 32 of the Trade Expansion AcT of 1962. I fear that the broad application of 

this authority could resulT in unchecked retaliation from other major trading partners and hmm 

American consumers. Accordingly, whaT other specific tools have been considered by this 

administration in combating these unfair trade practices? If the final recommendation is to 

utilize Section 232 to impose resTrictions on steel imports, how will the administration ensure 

that those import restrictions have The desired effect of reducing Chinese overcapacity withouT 

harming other sectors of our economy? 

Answer: As you know, the Department of Commerce is responsible for conducting section 232 

investigations under the Trade Expansion Act of 1962. Since Commerce has not concluded its 

investigations, it would be improper for me to comment on them. 

But I agree that the current global overcapacity situation in the steel industry is having a 

detrimental impact on U.S. workers and industries. At the core of this issue is China's nonmarket economy system, which is creating global oversupply and excess capacity in these and 

other sectors. 

To address this serious problem, the Administration is working to address both the root causes 

and manifestations of the problem and is evaluating every appropriate tool in our arsenal. This 

includes bilateral and plurilateral negotiations, and the use of the full range ofU.S. trade policies 

and statutory mechanisms to address injurious, unfair, and unreasonable practices, as 

appropriate. 

We are working with many countries to address the excess capacity issue. Indeed, at the July 7-8, 

2017 Hamburg Summit, G-20 Leaders conunitted to take necessary actions to fmd solutions to 

the challenge of excess capacity. The G-20 Leaders called for remova l of market-distorting 

subsidies and urged Global Forwn members to rapidly develop concrete policy solutions as a 

basis for tangible and swift policy action, to be included in a report to the Leaders by November 

2017. We are also continuing to engage bilaterally with China, including through the 

Comprehensive Economic Dialogue that was held in Washington on July 19, 2017. 

We will continue to work with industry and consult with Congress to explore all appropriate 

means to deal with the problem of excess capacity. 

2) Ongoing EU-US Dispute Regardi.ng US Beef Exports 

Ambassador Lighthize1; I was greatly encouraged by your comments at our June 2 2 hearing 

regarding the ongoing negotiations between the EU and USTR in resolving our displlle over U.S. 
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beef exports. I remain fully supportive of your efforts to ensure that the EU maintains 

compliance with its WTO obligations, and I want to thank you for your effolis in maintaining the 

objective of resolving this dispute through negotiating a beller deal with the EU. 

I remain concerned, however, that in the event an agreement cannot be reached that USTR will 

impose retaliato1y duties to products unrelated to this dispure that could cause undue harm to 

other U.S. companies, including potentia/loss of jobs to companies like Nestle Waters in my 

district. /understand that taking any specific good off the list of potential dillies would be 

counte1productive to the negotiation, but how will your office balance the levemge gained in 

imposing these retaliatmy duties and the potential for a disproportionate impact to U.S. 

companies? What factors will your office use in making this decision? 

Answer: Tbis is an important issue for the U.S. beef industry and my staff is engaged in 

discussions with the European Commission to seek a negotiated solution. The Trade Act of 1974, 

as amended, requires us to consult with representatives of the dome•stic industry concerne-d, and 

provide an opportunity for the presentation of views by interested parties. Nestle Waters 

testified at tbe bearing we held on tbis matter in February of2017, and also provided written 

comments. 

The Trade Act furtber provides the factors to be considered in making a determination on the 

beef industry's request to reinstate trade action. Tbey include the effectiveness of sucb an action, 

and of other actions that could be taken (including actions against other products), in achieving 

the objectives of section 30 l ; and the effects of such actions on the United States economy, 

including consumers. You can be assured that we will balance all relevant factors in making our 

detennination of the appropriate action to take. 
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Questions from Rep. Walo•·ski 

1) i\llisuse of International Bodies by the EU 

We are seeing an alarming trend in which some of our trading partners, such as the EU and 

others, misuse international bodies like the World lntelleclllal Property Organization and the 

World Health Organization, to pursue a discriminat01y agenda that benefits their e\ports. These 

non-trade organizations end up taking positions on trade issues contr01y to ours, and countries 

then use these actions to justify discriminating against U.S. exports. 

The prior Administration did not do enough to stop this dangerous activity. I believe that we 

must maintain an active membership in these organizations to help stop this behavior. Do you 

agree? What will you do to stop abuse of the mission of these organizations? 

Answer: The United States maintains membership and participates actively in the development 

ofWIPO and WHO policies, and those of other UN organizations, providing leadership across 

multiple international organizations while promoting U.S. interests. USTR engages in these 

organizations to ensure a fair and equitable playing field for U.S. exporters, protecting U.S. 

economic and trade interests, and ensuring that regulatory practices and J)Oiicies promoted by 

these multilateral organizations do not serve as an unnecessary trade barriers to U.S. exports. I 

am aware of the deep concerns regarding certain areas of work taking place in international 

organizations that run c-ontrary to U.S. interests, and I have sought ways to increase USTR's 

staff-level participation in these organizations in order to more actively engage on these types of 

international issues. In addition, when other countries attempt to misuse intemational 

organizations to promote policies that run counter to U.S. interests, or when national 

governments adopt discriminatory policies that hann U.S. exports, we will engage to resolve 

those issues in bilateral negotiations and in the World Trade Organization. 

2) Wo•·ld Health Organization and Dairy 

Dovetailing off the previous question, I am concerned in particular that last yem; the World 

Health Organization's Secretarial developed and rushed through a guidance that called for 

significant new restrictions and even prohibitions on the promotion and marketing ofmilk 

products for children up to age three. They provided no sound scientific evidence and conducted 

no analysis of its potential impact. Now, the WHO is incorrectly presenting the nonbinding 

guidance as a new i/1/ernational standard and is pressuring governments to impleme/11 it. In the 

US, the American Academy of Pediatrics recommends exclusive breastfeedingfor the first year 

of an infant's life and for children ages one and up to begin consuming other types of milk to aid 

in growth and development. These recommendations are based on a wealth of quality, scientific 

evidence. 

Recognizing that the Depanment of Health and Human Services, not USTR, is the lead 

interlocutor at the WHO, I sent Secret01y Price a leuer along with I 6 of my colleagues urging 

him to advocate against measures being taken by other counfi·ies to implement/his ill-advised, 

non-science-based guidance. However, since some of these measures may violate WTO 

obligations, I cc'd the office of the US Trade Representative as well. Have you entered into 
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dialogue with any tmding partners, such as Thailand or Hong Kong, that hove begun 

promulgating rules that may not be WTO compliant or other countries that are considering 

doing so, such as Indonesia? 

Answer: When trading partners propose non-science based measures that may harm U.S. 

exports, USTR engages actively to defend U.S. interests. Regarding the measures that you 

mention that may adversely impact U.S. dairy exporters, USTR has raised our concerns 

regarding specific measures proposed by trading partners in the World Trade Organization 

Committee on Teclmical Barriers to Trade. In addition to raising concerns in the WTO, we have 

also raised concerns bilaterally with countries that are considering restrictive measures that may 

prove to be problematic if implemented. 

3) The Netherlands and U.S. Veal Exports 

The United States banned veal imports from The Netherlands after the discove1y of Bovine 

Spongiform Encephalopathy (BS£) in 1997. Imports were cleared again las/ year. Howeve1; 

despite this clearance, numerous important safety concerns remain unresolved, which could 

leave American consumers at risk and damage the reputation of the broader induslly. In 

particular, The Netherlands allows its veal producers to use 50 veterin01y drugs that are not 

approved for use in the U.S. In fact, American veal producers using these drugs could face fines 

and even imprisonment. Unfonunately, the residue for many of these drugs is found in the 

animal's organs, which would not be part of a shipment that reaches the port of en fly. 

Additionally, American veal producers have specific practices in place to eliminate the passing 

of microbial pathogens to consumers and American veal packers have processes, interventions, 

and testing in place to prevent the spread of six Shiga toxin producing Escherichia coli (STEC) 

and E. coli OJ 57:H7 adulterants. Producers in The Netherlands do neither of these. 

I understand that USTR has initiated talks with the European Union regarding market access for 

U.S. beef e:>.ports and that unsuccessful talks could result in tariffs on EU beef imports. Veal was 

a part of the 1999 and 2009 lists of products subject to retalial01y tariffs and lwge USTR to 

include them on any list that may be the result of unsuccessful talks, especially given the 

unresolved issues detailed above. 

Answer: This is an important issue for the U.S. beef industry and my staff is engaged in 

discussions with the European Commission to seek a negotiated solution. The Trade Act of 1974, 

as amended, requires us to consult with representatives of the domestic industry concerned, and 

provide an opportunity for the presentation of views by interested parties. The American Veal 

Association testified at our hearing in Febmary of 2017, and also provided written comments. 

We will keep these comments in mind as we consider future steps. 
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33478A.058

Questions from Rep. Bishop 

1) Rules of Origin 

The U.S. Auto Indus fly has ve1y complex, integrated global supply chains thai have benefited 

greatly from NAFTA. NAFTA has helped U.S. autos compete notjust regionally, bill across the 

globe. I understand thai !he Adminislration has sugges!ed rules of origin as a potenlial area for 

negotimion in the NAFTA discussions. Wilh 62.5% Rules of Origin -which is already ve1y high -

the highest of any trade agreeme/11 anywhere -how do you plan to deal with rules of origin in 

NAFTA to ensure !hat the American Aulo lndus11y is no/ harmed? 

Answer: We are currently in the process of consulting with automakers, suppliers, labor, and 

others in the industry as well as reviewing comments from stakeholders. The automobile industry 

has changed significantly in the years since the NAFT A was negotiated, making the NAFT A out 

of date. Through such updates, we can reassert the importance of domestic manufacturing and 

workers in setting new rules in the context of our renegotiation, especially on automotive goods. 

2) Cura·ency Manipulation 

For1oo long, !he global marketplace has used currency manipulalion as a way to put Michigan 

businesses and auto manufacwrers at a disadvanlage. So in 2015, in order 10 ensure our 

workforce is able 10 compete on a more level playing field, Mr. Tiberi's customs enforcemenl bill 

was signed into law, which included strong provisions to address currency manipulation. By 

strenglhening enforcements against currency manipulalion we can expand our consumer base, 

creole and protect American jobs, and grow our economy here at home. Ambassador Ligh1hize1~ 

what is the administration's posilion on currency manipulalion? Can we have your commilment 

today that the administration will follow 1he mechanisms used 10 combo! currency manipulation 

ollflined in the cus1oms enforcememlaw? No! just in NAFTA, but inflllure n·ade agreements as 

well? 

Answer: Consistent with the principal negotiating objectives on unfair currency practices 

contained in the Bipartisan Congressional Trade Priorities and Accountability Act of2015, and 

as noted in our Summary of Obj ectives for the NAFTA Renegotiation, the Administration wi11 

be seeking to ensure that the NAIT A countries avoid manipulating exchange rates in order to 

prevent effective balance of payments adjustment or to gain an unfair competitive advantage. 

We are consulting with Treasury Department on how best to achieve this. 
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STATEMENT FOR THE RECORD 

SUBMITTED BY: 

THE ADV Al'IICED MEDICAL TECHNOLOGY ASSOCIATION (AdvaMed) 

HOUSE WAYS AND MEANS COMJ\IllTTEE 

HEARING ON THE U.S. TRADE POLICY 

AGENDA 

.nJNE 22, 2017 
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Introduction 

The Advanced Medical Technology Association (AdvaMed) appreciates the opportunity to 

provide comments on the U.S. trade policy agenda for 2017 to the House Ways and Means 

Conunittee. AdvaMed represents approximately 300 of the world's leading medical technology 

illllovators and manufacturers of medical devices, diagnostic products and medical information 

systems. AdvaMed members range from the smallest to the largest medical technology 

innovators and companies. AdvaMed is dedicated to the advancement of medical science, the 

improvement of patient care, and in particular to the contribution that high quality health care 

technology can make toward achieving those goals. 

The medical technology industry, an American success story, is one of the few remaining 

manufacturing sectors of the U.S. economy with a positive net balance ofrrade, although this 

positive balance fell from over $6.3 billion in 2013 to less than $1 billion in 2016. The people 

who work in the U.S. medical technology industry depend on trade to ensure security, growth, 

and new opportunities. In fact, medical teclmology industry salaries are nearly 30% higher than 

the average U.S. salary because the industry employs so many highly skilled workers in the areas 

of research and development, manufacturing, sales and management. The medical technology 

industry is responsible for nearly 2 million high-paying U.S. jobs - roughly 350,000 directly and 

1.6 million indirectly- and 9,800 manufacturing facilities across the 50 states. 

Medical technology accotmts for 3 percent of U.S. Gross Domestic Product. The United States 

exports over $50 billion worth of medical devices annually. AdvaMed members supply medical 

technology to a lmost every country in the world. Opening markets and ensuring a level playing 

field are essential to the fun1re growth of the U.S. medical technology industry. 

AdvaMed PolicY. Position 

AdvaMed continues to endorse policies that open foreign markets and enact fair and predictable 

rules. Over 60 percent of the global medical technology market is outside the United States. 

Opportunities are good for further sales growth in foreign markets due to aging populations and 

rising needs in the largest markets of Europe, Japan and China, as well as many emerging 

markets. U.S. companies rely on dynamic global supply chains to manufacture and deliver 

products to patients in these markets. These supply chains allow manufacturers to operate closer 

to customers, better manage geographic risks, and provide benefits to customers and 

shareholders alike in the form of greater operating efficiencies. 

Tite medical technology industry is facing increasing market access barriers in many foreign 

markets. Over the past decade, the U.S. trade surplus in medical technology has narrowed to 

about 2 percent. While this decline does not automatically mean other cotmtries are 

discriminating against U.S. products, trade policies in a number of cotmtries are having a 

detrimental effect on U.S. exports. 

AdvaMed supports the Administration's trade-opening initiatives. Our industry has consistently 

endorsed U.S. free trade agreements (FTAs), including NAFTA and KORUS, as well as trade 

expansion provisions negotiated in the World Trade Organization (WTO). The agreements 
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reached under what is now the WTO, dating to the General Agreement on Tariffs and Trade in 

1948, have provided the foundation for stable global trade rules. Each successive "round" of 

multilateral trade negotiations expanded coverage of those rules and enabled trade to flourish 

among nations. FT As have been built on those rules and substantially improved provisions 

benefitting U.S. industry - creating a more level playing field for countries in which the United 

States has FTAs. The United States needs more FTAs. 

Our industry continues to face a wide array of barriers in overseas markets. We endorse U.S. 

Government trade initiatives that open markets and would like to work with the Administration 

and Congress on provisions that can benefit our industry. We appreciate U.S. Government 

support for helping us overcome foreign trade barriers and urge the vigorous enforcement of 

trade agreements. Such barriers include: 

Localization: Governments impose requirements on companies to invest in their 

countries as a condition for market access. 

Regulatory: Governments use their approval procedures to delay or prevent foreign 

medical technology from gaining market access. 

Procurement: Governments increasingly purchase medical technology, using opaque 

procedures that artificially control prices driving out higher value innovative products 

or otherwise limit the ability of U.S. medical technology companies to competeoften preferring domestic products and sometimes even batming foreign products 

from being purchased. 

Other Measures: Governments impose a variety of other policies that impede market 

access, including local standards, burdensome customs clearance procedures, high 

import duties, artificial price ceilings, tmnecessary regulations, and arbitrary and 

discriminatory enforcement of anti-corruption or anti-monopoly laws. 

Millions of overseas patients are a live today because of U.S. medical technology. We support 

policies that remove trade barriers and allow us to continue to serve patients around the world. 

Country-specific Issues 

AdvaMed member companies provide life-saving and life-enhancing products to patients 

throughout the world. Each market offers a unique set of opportunities and challenges. In a 

number of significant markets, these companies are encountering obstacles that could reduce 

their future exports and/or inhibit their ability to expand. 

U.S. manufacturers with their advanced technologies can contribute to the Chinese goal of 

ensuring that patients can enjoy high quality and effective care, reducing costly complications 

and hospital readmissions. Especially as China faces an aging population, patients there would 

benefit from opening its market more for U.S. products, instead of erecting barriers and imposing 
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localization requirements. In addition, as Chinese industry seeks to move up the value chain, 

competition from U.S. fmns would help strengthen the domestic industry. 

The Chinese medical technology market is over $25 billion. China imports about 70% of its 

medical devices and imports are expected to continue to grow, having quadntpled in the past 

decade. More recently, the a.mual rate of growth, which reached a high of30% in 2010, is now 

in the single digits, the lowest since 2006. U.S. companies continue to be the leading suppliers of 

medical devices to China, with a 33.8% share of all medical device imports. Thus U.S. market 

share is approximately $5 billion of the total China medical device market. However, that 

statistic includes more than just U.S. domestic exports to China, which directly accounted for 

15% of China's market ($3.8 billion in 2016).' 

There are several important factors that should continue to make China a very attractive market. 

First, China's rapidly growing economy has generated a middle class the size of the U.S. 

population. This expansion has helped fuel a double-digit increase in demand for medical 

technology ($25 billion in 2015), with annual growth of approximately 15 percent expected 

through 2018. 

Second, the Chinese leadership has recognized the need for substantially improved healthcare. 

China's 13'h Five Yea.r Plan (FYP) established the promotion of inclusive development through 

improved healthcare and social security as one of its core goals. Under this plan, atmual 

healthcare expenditures are expected to rise 12 percent to nearly $900 billion by 2018. 

Third, healthcare demand is expected to continue surging as China's population ages rapidly and 

the disease burden shifts from infe.ctious to chronic diseases. These diseases are projected to 

double or triple among Chinese over 40 years of age by 20302

• 

As noted in the attached table, China is one of the few countries in which the U.S. medical 

technology industry bas a substantial trade deficit. We believe this situation will get worse unless 

specific Chinese policies are changed. 

An overarching industry concern is "Made in China 2025 - Medical Devices," which calls for 80 

percent of core components to be manufactured in China and 70 percent of county hospital highend medical equipment to come from domestic producers by 2025. This initiative also envisages 

the Chinese industry making substantial inroads in intemational markets for high-end medical 

devices- in essence, moving up the value chain. Some AdvatVI.ed members view "Made in China 

2025" as a serious threat to the U.S. medical technology industry. 

Reflecting "Made in China 2025" goals, government support for the domestic medical 

technology sector has become further entrenched in a number of policies released throughout 

2016. From the broad policy guidelines laid out in the 131h FYP down to sector-specific actions 

developed by the Ministry oflndustry and Information Teclmology (MilT), China Food and 

Drug Administration (CFDA) or National Health and Family Planning Commission (NHFPC), 

the govenunent is often favoring local technologies instead of allowing nonnal competition. 

1 U.S.ITC/Dataweb 2 hnp://www. wortdbank .orgfcontenlfdam/Wortdbauk/documeur/NCD _repon _ en.pdf 
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33478A.063

Localization is translating domestic products receiving relatively higher returns relative to costs 

than U.S. firms (with their much higher R&D expenditllres) and a tendency to promote local 

brands in tendering and procurement by encouraging hospitals to purchase domestic products. 

Policy support for domestic innovation was among the most prominent trends in China's medical 

device environment in 2016. Throughout the past year, multiple government departments rolled 

out programs aimed at Sllpporting domestic R&D capabilities. Specifically, public support 

appears to be prioritizing the development of domestic heavyweights in the following areas: 

digital diagnostic equipment, in-vitro diagnostics (IVD), implantable and medical imaging 

devices, and 3D printing. These medical devices are consistently spelled out as prioritized 

categories across a range of key policy plans released last year, including the Ministry of 

Industry and Information Technology's (MIIT) Guideline for/he Medical Jnduslly 

Developmenf (November 2016), the State Council's 13th FYP of Science and Technology 

Innovalion4 (July 2016) and the CFDA Prioritiz ed Evaluation Procedure for Medical Devicd 

(October 2016). 

Tirrough these initiatives, the Chinese govermnent aims to move the domestic industry up the 

value chain and create national champions that can compete internationally. However, behind 

this localization push also lies the government's nationalist agenda to reduce China's reliance on 

foreign technology. Although the primary focus is core technologies that directly affect the 

country's national security, such as IT, the localization drive extends to all social and economic 

sectors including healthcare. Notably, during a speech at a major science and technology 

conference in May 2016, President Xi blamed foreign companies' monopolies over patent 

medication and the reliance on imported high-end medical devices as a "main contributing 

factor" to China's growing healthcare costs.6 

The Administration should, as a first step, insist that China enforce previous collllllitments to not 

discriminate against U.S. medical technology firn1s. This will require, among other tllings, that 

Central Government agencies strengthen procurement oversight at the provincial level to ensure 

foreign finns are treated in a transparent, fair, equitable maUller. Effective non-discrimination 

enforcement would at least address the direct measures in " Made in China, 2025." We would 

also appreciate U.S. Government investigation into the extent and nature of Chinese subsidies in 

the medical device industry. 

China has also been implementing burdensome regulations that pose serious challenges to U.S. 

frrms - such as colllltry of origin requirements and redundant and/or scientifically llllllecessary 

clinical trials. Similarly, inve.s!lllent regulations are vague, including the defmition of"Chinese" 

investment. Thus, even if U.S. firms invest in China and try to become "local," Chinese agencies 

do not appear to consider them to be "Chinese" enough to receive favorable treatment. 

Most of China's regulatory policies were not explicitly created to discriminate against U.S. firms 

but have the effect of substantially in1pairing market access - especially for small and medium 

1 brtp://www.m.iitgov.co/n l l46295/n 1146592/n3917132/n4061 5 12/c5343399/conteur.bunl 

• brtp://www.most.gov.co!mostinfo/xinxifen1ei/gjkjgb/20 1608/120160810 _ 127174.bnn 

' 1mp://www.sda.gov.cnf\VSOlfCL0087f1 65582.hml1 6 brtp://news.xiuhuanetcomfpotilics/20 16-05/31fc_ tll8965169.1um 
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33478A.064

size enterprises. The two biggest obstacles are obtaining country-of-origin (COO) approval and 

conducting unnecessary clinical trials. The COO forces U.S.-based companies to obtain U.S. 

FDA approval first, even if the company does not intend to sell the product in the United States. 

The local clinical trial requirement requires U.S. companies to conduct and/or duplicate in-China 

clinical trials. Time to market delay can be several years and cost millions of dollars per device. 

Since the innovation cycle for medical devices is typically under two-years, companies may no 

longer manufacn1re that product by the time they receive Chinese approval. 

The most sensible approach would be for CFDA to accept foreign clinical trial data, in a manner 

consistent with intemational best practice - including that ofU.S. FDA and other regulatory 

agencies. In addition, China should abolish its COO regulation, which is unfair in that Chinese 

fim1s do not have to meet comparable requirements to enter their products in the United States. 

As part of China's wide-ranging standardization reform, CFDA released new draft Medical 

Device Standards Management Measures7

, encouraging the adoption of intemational best 

practices to develop and implement medical device standards. We applaud this effort. However, 

it remains an open question whether China will acmally follow intemational best practices and 

move away from its current top-down and rigid interpretation approach to standards. 

At the provincial level, Chinese officials continue to inlpose drastic price cutS in tenders that 

sometimes discriminate against high-valued U.S. products. Some provinces have issued plans 

which would require prioritized procurement of domestic medical technology and some 

provinces have already limited or even prevented foreign fim1s from bidding. In addition, 

provinces are driving prices to such low levels that U.S. medical device companies (which 

devote up to 18% of revenue to R&D) cmmot compete, as the value and quality of their products 

are not rewarded. U.S. fim1s are already withdrawing whole product ranges, and the effects of 

linliting winners will likely result in more lost oppormnities to compete. Introduction of 

innovative productS will become more difficult when tenders mandate price reductions without 

flexibility. 

Downward spiraling prices also squeeze margins in the distribution chain and run a risk of 

disrupting sustainability, causing uncertainties to the health system and industry alike. 

Dinlinishing margins may also erode industry's ability to invest in provider/patient support for 

optimal use and outcomes. This result could mean that only low-end Chinese manufacmrers 

survive, likely adversely effecting clinical outcomes, which increase healthcare expenditures 

over time. Chinese patients will not have access to innovative treatments. 

Most purchases of medical tecm10logy at the provincial/local levels do not appear to be 

"govemment procurement" as defined in the \~TfO. Such purchases are usually made by local 

authorities from distributors at one price and resold by hospitals to patients at a higher pricemaking the transaction a commercial, not governn1ent, exchange. 

1 lmp://www.sda.gov.cu!WSOIICL0779/ 165700.hnnl 
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The U.S. Government has strongly supported our opposition to discriminatory practices. For 

example, USTR-Commerce reached some of the strongest commitments in years with China 

during the 2016 Joint Commission on Commerce and Trade (JCCT) meetings to develop a 

unique device identification (UDI) system based largely on the system developed by U.S. FDA. 

This harmonized approach to UDI will help save our industry an estimated $ 1 billion in 

compliance costs8 and improve patient safety. 

Other positive outcomes from the 2016 JCCT include commitments by China's govermnentto: 

(I) require all local regions and agencies to de-link indigenous innovation policies from 

government procurement preferences; (2) strengthen government oversight of procurement 

activity; and (3) treat foreign products in a fair, equitable manner. CFDA is also working to 

implement a series of reforms aimed at reducing time to market. These successful outcomes for 

U.S. workers and Chinese patients alike reflect several years of focused and collaborative 

advocacy between the U.S. Government and AdvaMed. 

Despite years of effort, the JCCT bas made lin1ited progress on the major impediments to U.S. 

exports. As noted above, the COO and clinical trial requirements remain in place, with no 

healthcare-related justification for these provisions. Procurement is becoming more 

discrimiJlatory. Also, in1plementation of China's commitments bas proved challenging. 

Support through the new U.S. China Comprehensive Dialogue (CD) is critical to help our 

industry to continue to do business in China. We welcome the President's " 100 days" plan. 

Additionally, as part of the One-Year Action Plan, intensive work is needed among key officials, 

industry experts and other stakeholders to fommlate practical steps to resolve these trade 

barriers. 

Based on the direction from the CD leaders, we are hopeful that the U.S Governmellt will 

support the creation of a new medical device project team with all relevant US-China entities 

over the next 12 months (July 2017 - July 20 18) via regular meetings and other interactions as 

necessary to achievable meaningful solutions to these important issues. 

Japan is our single largest market outside the United States, with tota l annual expendintres on 

medical technology of about $35 billion. Its regulatory system was once considered to be the 

most burdensome in the world but has been improving as a result of a five-year "action program" 

adopted in 2009 and is expected to improve fitrther as a result of a follow-on "collaboration 

plan" and a new law providing separate (from phannaceuticals) mles for medical technology. 

TI1e U.S. medical technology industry enjoys a trade surplus with Japan. Also, we believe 

Japan's regulatory and payment policies do not explicitly discriminate against U.S. firms. 

Nevertheless, a critical concern for our industry is Japan's rein1bursement system. Every two 

years, Japan reduces prices of medical devices using a foreign average pricing (F AP) reference 

system - comparing Japanese prices to those in five other countries. This system does not 

8 based on quamitative work previously requested by tile AdvaMed Board 
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33478A.066

account for the much higher costs of doing business in Japan. The F AP system also only reduces 

rein1bursement rates- never reversing those cuts- even when caused by arbitrary and large 

fluctuations of currencies. We believe this system is not appropriate and should be eliminated. 

The impact of artificially reducing reimbursement rates is an implicit reduction is the value of 

U.S. exports below what they otherwise would be. That is, if the Japanese Government allowed 

market prices to prevail, instead of imposing cuts on the basis of foreign prices, U.S. exports 

would likely be hundreds of millions of dollars higher. 

Our industry has received consistently strong support from U.S. Government agenciesCoU11llerce, USTR, U.S. Embassy - to oppose Japan's FAP system and other arbitrary and 

harmful changes in Japan's reimbursement rules. These efforts have helped stave off even larger 

reimbursement cuts. The medical device industry supports the Administration's decision to 

establish a new fonnal trade dialogue with Japan, and we are hopeful this dialogue will allow for 

continued govenunent-industry discussion on medical device issues. We urge the Trump 

Administration to convince the Japanese Government that purchasing more, not less, medical 

technology would relieve the impact of its "hyper-aging" society and positively impact the 

overall trade balance between the U.S. and Japan. 

While a relatively small medical technology market of about $6 billion. U.S. companies have a 

large share of India's rapidly expanding usage. The United States has a substantial trade surplus 

with India in medical technology. India's population of 1.3 billion is also rapidly growing, and 

its middle class of200-300 million people is projected to triple by 2025. Given these dynamics 

and tremendous healthcare needs, under the right conditions, India's medical technology market 

could j ump to $50 billion by 2025. 

However, India's policies could significantly hinder the growth of U.S. exports. Most recently, 

the govemment of India (GOI) imposed a severe reduction and ceiling on the price of coronary 

stents and appears poised to add more medical devices to its list of products covered by price 

controls. Moreover, these price controls favor domestic producers by failing to differentiate their 

products from the newer advanced and higher quality U.S. products. At this stage, three major 

U.S. manufacturers applied to the GOI for pennission to withdraw some of their advanced 

coronary stents from the Indian market, as the low price ceiling was reducing their return to an 

unreasonably low level and in some cases requiring companies to sell below landed cost. The 

National Phannaceutical Pricing Authority has refused to allow two of the companies to 

withdraw from the market, requiring them to sell the aforementioned stents for at least next 6 

months before reapplying for withdrawal again. 

In addition to price controls as a barrier, the regulatory environment in India continues to be 

opaque and unpredictable with a select group of22 medical devices regulated as phannaceuticals 

under the 1948 Drugs and Cosmetics Act. For the past decade, AdvaMed has continued to work 

with the GOI to develop a distinct regulatory system specific to medical devices based on 

international standards. 1l1e Indian Parliament has failed to pass the necessary legislation. 
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The Modi Administration's "Make in India" initiative has potential to improve the business 

environmem for medical technology - for domestic and foreign fmns - given the government's 

laudable goals of seeking to attract investment, R&D, and manufacturing. However, this 

platform has also been used by parts of the government to justify protectionist measures such as 

import tariff hikes and preferential market access policies. In January 2016, the government 

announced a 50% hike in the main custom duty for medical devices, as well as the re-imposition 

of a secondary 4% duty on these products. This decision only serves to increase costs and puts 

India at odds with most other developing and developed countries that have eliminated or are 

reducing medical device import duties. On balance, "Make in India" has not encouraged U.S. 

medical technology firms to increase their presence in India. 

We appreciated the direct intervention of Secretary Ross with Commerce Secretary Teaotia and 

Foreign Secretary Jaishankar, as well as the US Charge in Delhi with the GO I. We recommend 

that senior Administration officials continue to engage with their counterparts in the Indian 

Government to press for sound regulatory policies and reasonable price systems. On the former, 

India should be urged to adopt internationally recognized regulations. On the laner, India should 

allow markets to ti.mction and avoid artificial restrictions on prices. Both sets of policies would 

benefit Indian industry and Indian patients. 

Korea is a top ten U.S. export market for medical technology. It is also one of the industry's 

most important Asian markets, with a size of more than $3 billion. 

During the past few years, the govennnent has implemented policies that have been detrimental 

to U.S. medical technology sales in Korea. These policies include: (I) periodic cuts in 

reimbursement rates with linle notice or even supporting rationale; (2) proposed a completely 

new payment system, which caused uncertainty and confi.tsion; and (3) periodic threats to impose 

burdensome regulatory requirements. In each case, advocacy by the U.S. Govenunent helped our 

industry mitigate the Korean's actions. 

Additionally, our companies face a lengthy and prolonged reimbursement process, especially for 

NHTA (new health technology assessments) related devices. NHTA approval is required if the 

new medical devices have a different indication or method to treatment from current procedure. 

For new innovative products, it takes at least 3 years to obtain reimbursement approval after the 

regulatory approval. Subsequent technologies that are similar to the innovator can launch their 

product as soon as the innovator technology sets the reimbursement level for the new 

technology. As a result, there is no benefit to being the first to launch innovative products in 

Korea. Being the first to market with innovative medical technology in Korea is thus time and 

resource consuming with little chance of success. In addition, the current reimbursement process 

offers little opportunity to seek premium reimbursement rates for products with proven 

iJJcremental advances based on clinical data. Tllis affects mainly U.S. or multinational 

companies, as we are the leaders in medical technology advances and itmovation. 

AdvaMed supports the Korea-U.S. FTA (KORUS FTA), as generally beneficial to our industry. 

TheFT A eliminated import tariffs on medical technology. In addition, KORUS has a chapter 
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that specifically addresses reimbursement issues for our industry - "transparency and procedural 

fairness" - and is designed to contribute to a more stable and predictable market. However, we 

believe this provision needs to be more effectively implemented and enforced. We recommend 

continued and robust engagement with the Korean government to ensure that regulatory and 

reimbursement policies are aligned with KORUS implementation provisions. 

The combined EU market for medical technology is about two-thirds the size of the U.S. market. 

The EU's regulatory system, based on private sector notified bodies, is considered the most 

efficient in the world at delivering safe medical technology to patients. Recent studies indicate 

that patients can have access to some innovative medical devices in the EU several years before 

patients in the United States. 

AdvaMed supports many of the improvements that are now being implemented by the EU 

authorities under the new regulations designed to strengthen notified bodies and enhance 

regulatory consistency across the EU. While the new EU regulatory system will impose 

additional burdens on medical technology finns, it appears to reflect a reasonable balance 

between adopting stronger and consistent regulations and avoiding overly-burdensome 

requirements that undem1ine efficient approval and patient access to innovative medical 

technology. However, implementation of this new system must be carefully watched. 

Each EU Member State maintains a separate reimbursement scheme, and the rewards for 

innovation can vary considerably by country. We remain concerned that major Member Stateslike France, Germany, and Italy - might pursue measures to cut prices without regard to fair 

assessment of total value or the clinical benefits of using advanced medical technology. 

For example, Italy implemented arbitrary price cuts and has passed a payback provision that, if 

implemented, would make medical technology manufacturers liable for a percentage of any 

health care overspend by local health care authorities. l11e Italian Law 125/15 published August 

7, 2015, and retroactively in force for all of2015, is intended to mimic what has been in place for 

pharmaceuticals since 2012. All medical device suppliers (manufacturers) would be required to 

"payback" each of the 21 Italian Regions a portion of expenditure spent by Regions in excess of 

4.4% of the National Health Fund (approx. €I lOB for 2015). Although Law 125/15 has passed, 

it has not yet been implemented because oflmcertainty about how to do so and also because our 

industry and its supporters have ra ised the Italian government's awareness of the controversy 

surrounding it. But because the law remains on the books, our companies are required by GAAP 

standards to accrue funds to prepare for any potential implementation. This means that they 

cannot use those funds for reinvestment in their businesses. We would welcome U.S. 

government's engagement with the Italian or EU authorities to ensure this law is amended to 

make sure the "payback" provision is not implemented and to provide our companies with the 

clarity they need to seU their products in Italy. 

lltere are examples troublesome policies in other EU Member States. For example, in the past, 

the U.K. made an attempt to implement ad hoc changes to its tendering system that would have 

severely limited product choice. Gennany's Federal Joint ColUJllittee recently considered strict 
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evidentiary measures to be applied to all Class Iffi and lli devices that would have delayed 

market access, but indusrry advocacy successfully defeated this proposal. 

As the U.K. prepares to leave the EU, we are also concerned that Brexit poses potential unique 

challenges for our industry, as both the U.K. and EU are important markets for our indusrry. We 

urge the Tnm1p Administration to remain engaged and prioritize maintaining a mutually 

beneficial economic and trading relationship with both markets. For example, we would like to 

ensure that no additional import tariffs are imposed on medical technology trade as a result of 

Brexit and that regulatory requirements remain as closely harmonized as possible. 

We are also encouraged by recent indications that the Trump Administration might be prepared 

to resume TTIP negotiations. For the medical indusrry, we have a particular interest in the 

regulatory cooperation and in the medical devices annex that was under negotiations. Some of 

the ideas discussed in the annex, such as single audit would lead to_significant cost savings for 

the indusrry (by avoiding double/unnecessary audits) and for the regulators. Another important 

issue that regulators worked on was the issue of Unique Device Identification (UDI) and 

interoperability of databases and harmonized template for regulated product data submission. 

Addressing some of these bilateral issues in the TTIP context or outside in another fomm_could 

result in gains for industry, regulators and patients, and in greater international cooperation on 

medical devices approval processes. 

With a population of 127 million people, Mexico bas emerged as the second largest medical 

equipment market in Latin An1erica, behind Brazil. The medical technology market is estin1ated 

to be $4.5 billion, and it contributes to 0.4% of Mexico's GDP. As a result ofNAFTA, the U.S. 

medical device industry has integrated Mexico into its supply chain, improving efficiency and 

mitigating costs. 

Mexican regulatory requirements, which were confusing until a tew years ago, have improved 

considerably under solid leadership at COFEPRIS, the Federal Collllllissiou for the Protection 

against Sanitary Risk, a division within the Mexican Ministry of Health (Secretaria de Salud) 

responsible for medical device and IVD oversight. The regulatory authority published several 

regulations in the past years that improved regulatory quality and timing. However. significant 

redundancy remains in the technology incorporation process, which results in patient access 

being hindered by the government's formulary system that substantially delays approval. 

Mexico's strict application ofNAFTA value-added content requirements to public hospital 

tenders for medical devices is also adversely impacting our companies' ability to sell product in 

Mexico. This is particularly problematic for companies that source multi-component products 

from a combination of different countries around the world, e.g., U.S., EU, Switzerland, etc. This 

procurement policy bas the potential to restrict patient and physician choice of medical devices, 

as well as to restrain competition thereby increasing costs. 
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.... 

Statement of the 

American Farm Bureau Federation 

Statement to the House Committee on Ways and Means regat·ding the 

hearing: 

U.S. Trade Policy Agenda 

JUNE 22, 2017 

Submitted By: 

The American Farm Bureau Federation 
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33478A.071

The American Farm Bureau Federation (Fam1 Bureau) offers the following statement for the 

record on the hearing: 'U.S. Trade Policy Agenda. Trade agreements have significantly 

contributed to the decades-long positive growth in trade by U.S. agriculture. Between 2003 and 

2016, U.S. agricultural exports to countries we have trade agreements with increased more than 

136 percent- from $24. 1 billion to $57 .I billion. 

Trade is critical to the livelihood of the U.S. agricultural sector because it spurs economic growth 

for our farmers, ranchers and their rural communities. Agriculture supports jobs in the food and 

agricul!ura l industries and beyond. The fact is 95 percent of the world's consumers live outside 

of the United States and over 20 percent of U.S. fam1 income is based on exports. Expanding 

opportunities for U.S. crop and livestock producers to access international markets will boost 

fann income in the United States, while preserving existing access is critical to maintaining fann 

income at current levels. U.S. agricultural exports amounted to $134 billion in 2016. Imports, 

critical for certain products, especially out of season produce, totaled $112 billion in 20 16. 

Existing trade agreements have proved successful in tearing down tariff and non-tariff trade 

barriers that hinder U.S. fanners' and ranchers' competitiveness and prevent us from taking 

advantage of consumer demand for high-quality U.S. food and agricultural products throughout 

the world. For consumers, trade agreements provide access to new varieties of food products and 

off-season supplies of fresh produce. 

One of the most talked about trade agreements, the North America Free Trade Agreement 

(NAFT A), has been overwhelmingly beneficial for farmers, ranchers and associated businesses 

all across the United States, Canada and Mexico for decades. While the sector as a whole has 

seen substantial benefit, there are some individual commodities that have faced challenges such 

as tomatoes and sugar with Mexico and a list of products with Canada. With NAFT A, overall, 

U.S. fanners and ranchers across the nation have benefited from an increase in ammal exports to 

Mexico and Canada from $8.9 billion in 1993 to $38 billion in2016. 

Despite these numerous benefits, there are reasons to update and reform NAFT A from 

agriculture's perspective. Some improvements at the commodity level arc detailed below; 

however there are some improvements that are sector-wide. Improvements that reduce redundant 

regulatory costs, expedite transit across borders and hasten the resolution of disputes between 

members would go a long way towards more efficient trade between NAFTA partners. The rules 

related to bioteclmology, sanitary and phytosa11itary measures and geographic indicators are ripe 

tor amendment in order to reflect the progress that has been made in these areas over the decades 

since N AFT A was enacted. 
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33478A.072

U.S. agricultural exports to Canada would grow if tariff barriers to dairy, poultry and eggs were 

reduced or eliminated. The current barriers to uhra-filtere.d milk exports to Canada need to be 

removed. 

Remedies for our produce growers need to be strengthened. A timely trade dispute resolution 

process should be added that takes into account the perishability, seasonality and regional 

production of horticultural products. Well-constructed seasonal TRQs could help maintain 

consistent supplies of fresh fruits and vegetables for consumers, while helping to prevent a flood 

of imported product, while U.S. production is at its seasonal peak. 

There are a number of longstanding SPS and TBT issues that exist in trade between NAFT A 

partners on specific products. This includes trade in fresh potatoes with Mexico and wine trade 

with certain provinces in Canada. The ongoing disputes over the classification ofU.S. wheat and 

the trade in softwood lumber with Canada are also a concern to many of our members. The 

process of modernizing NAFT A should be viewed as an opportunity to address these issues once 

and for all. 

Clearly there are several areas where the NAFT A agreement could be modernized to improve 

trade in agricultural goods, however, it is critical that the modernization effort should recognize 

and build upon the strong gains achieved by U.S. agriculture through the tariff eliminations, the 

recognition of equivalency of numerous regulatory issues, and the development of integrated 

supply chains that have arisen due to the agreement. 

Trade agreements also provide the highest standard of trade rules. allowing the United States to 

lead in setting the foundation to establish market-driven and science-based tenus of trade and 

dispute resolution that will directly benefit the U.S. food and agriculture industry. We support 

adding to NAFTA the SPS Chapter language from the TPP, which would strengthen the existing 

WTO SPS commitments. We strongly support the inclusion of a rapid response tool, which will 

he lp to resolve shipment-specific issues. Cooperative Technical Consultations (CTC) would 

allow agencies to fmd science-based solutions to SPS issues in a timely manner- most beneficial 

to perishable products. 

In addition to the TPP SPS text we recommend some additional, significant provisions that 

would ensure that the revised NAFTA agreement could be used as a model for future trade 

agreements the U.S. may enter. 

We support the inclusion of the TPP text on Geographical Indicators in order to preserve U.S. 

market access opportunities for common name products. Tite misuse of Gls is a constant and 

significant threat to maintaining and growing sales of high value U.S. products, in the United 

States, within the markets of our NAFTA pa.rtners, and in markets worldwide. 
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We support adding a new chapter on biotechnology to the NAFTA. Under a modemized 

NAFTA, US.BCA requests that the U.S. government: (I) enter a mutual recognition agreement 

on the safety detennination of biotech crops intended for food and feed, and (2) develop a 

consistent approach to managing low-level presence (LLP) of products that have undergone a 

complete safety assessment and are approved for use in a third country (ies) but not yet approved 

by a NAFTA member. 

We oppose erecting new barriers to agricultural trade in NAFT A, including adding mandatory 

country of origin labeling for beef and pork products. 

As an industry that is primarily made of price takers, however, it is critical to appreciate that 

variations in trade surplus/deficit in any particular year are impacted greatly by fluctuations in 

commodity prices, exchange rates and the existence of trade barriers to U.S. products. For 

example, the U.S. had a positive agricultural trade balance with Mexico, in 20 of the 23 years 

since NAFTA came into effect. Two, of the three years that the U.S. experienced a negative trade 

balance with Mexico occmTed in 2015 and 2016, largely as a result oflow commodity prices and 

a strong U.S. dollar. 

ForFY 2016: 

U.S. agricultural exports to Canada - $20.2 billion 

U.S. agricultura l imports from Canada -$21.6 billion 

U.S. agricultura l exports to Mexico- $17.9 billion 

U.S. agricultural imports from Mexico- $22.9 billion 

While the raw numbers are impressive, they only tell part of the story. Equally critical, is the fact 

that the agricultura l sectors of the member countries have become far more integrated, as is 

evidenced by rising trade in a wider range of agricultural products, substantial levels of crossborder investment, and important changes in consumption and production. 

Trade in goods consists of not only final conslllller products but also intem1ediate inputs and raw 

materials, as firms reorganize their activities around regional markets for both inputs and 

outputs, spurred in part by greater foreign direct investment (FDI). 

This integration enables agricultural producers and consumers in the region to benetit more fully 

from their relative strengths and to respond more efficiently to changing economic conditions. 

The creation of a larger, single market has given producers access to cheaper suppliers of inputs, 

which allows U.S. producers to be more price competitive domestically and abroad. 
125 

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U.S. agriculture depends upon a growing international economy that provides opportunities for 

fanners and ranchers to sell their products. Modernization ofNAFTA will expand market 

opportunities for U.S. agriculture. 

Fann Bureau supported the Trans Pacific Partnership (TPP) agreement due to the gains for U.S. 

agricult11ral exports from the lowering of tariff and non-tariff barriers with the TPP partner 

countries. The majority of the export gains were with Japan, due especially to the lowering of 

Japanese tariffs on beef, pork, dairy and other products. We encourage the discussions by the 

Administration with Japan towards a US-JAPAN trade agreement. 
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June 19, 2017 

The Honorable Kevin Brady 

THE 

BORDERPLEX 

ALLIANCE 

Chairman, House Committee on Ways and Means 

U.S. House of Representatives 

1102 Longworth HOB 

Washington, DC 20515 

Re: HEARING ON U.S. TRADE POLICY AGENDA; Specifically Negotiating Objectives Regarding 

Modernization of the North American Free Trade Agreement with Canada and Mexico 

Dear Chairman Brady: 

The financial ties that connect the USA with Mexico are symbiotic, not parasitic. Mexico is Texas' top 

trading partner with about $173 billion in trade a year. Trade with Mexico supports about 463,000 jobs 

and thousands of small businesses and manufacturers in Texas. 

Since 2011, New Mexico's trade w ith Mexico has quadrupled and now totals 1.7 billion. Additionally, 

27,000 jobs in the land of Enchantment are directly tied to trade with our Southern Neighbor. In New 

Mexico, electronics, processed food, transportation equipment, and computers are the major exports. 

We not only sell to each other, we build things together. Roughly 40 percent of all goods imported from 

Mexico consist of parts that originated in the United States. By comparison, only 4 percent of products 

imported from China have U.S. origin. 

For those of us who live, work and do business along the U.S.-Mexico border, we see the benefits of the 

North American Free Trade Agreement (NAFTA) and the U.S., Canada, Mexico economic bloc firsthand. 

We must acknowledge the benefits NAFTA has brought to states like Texas, New Mexico, and the nation 

as a whole. NAFTA supports 5 million jobs across the U.S.- and by one economist's estimate, it 

enriches the U.S. by $127 billion annually. Texas' exports to Mexico have grown by 354 percent since 

NAFTA, far outpacing export growth in other states and the nation as a whole. Texas also enjoys a $12 

billion trade surplus with Mexico. 

The Borderplex Alliance (Borderplex) appreciates the opportunity to provide comments on the 

object ives, positions, and potential impacts of the United States Trade Representative's ("USTR's") 

renegotiation of NAFTA. As such, our organization submits comments on behalf of the El Paso, Ciudad 

Juarez, and Las Cruces border region, as well as the 25 companies, $464 million in investment, and over 

4,780 jobs that Borderplex has brought to the region. 

THE BORDERPLEX ALLIANCE I CD. JUAAEZ • EL PASO • LAS CRUCES 

123 WeSI Mills, S\lite Ill, El Paso, TX 7990 I 

Phone: 91:..298-1000 • borde<plexalliance.org 
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33478A.076

THE 

BORDERPLEX 

ALLIANCE 

I. About The Borderplex Alliance 

The Borderplex Alliance is the first regional non-profit organization dedicated to binational economic 

development and prosperity in the North American Borderplex, which encompasses Ciudad Juarez, El 

Paso and southern New Mexico. As a gat eway for international trade and affairs, The Borderplex 

Alliance is the go-to entity for regional ideas, information and influence. We are supported by a coalition 

of business, community, and civic leaders, all with a shared vision-to bring new investments and jobs 

to the region and create a positive business climate t hat attracts people to work, live, and play. 

The Borderplex All iance provides development opportunities, advocacy, promotion, and support to 

businesses looking to expand their operations w ithin our region. We also work with a number of 

partner organizations, such as: 

• Bridge of Southern New Mexico 

• CONREDES 

• Desarrollo Econ6mico 

• Greater El Paso Chamber of Commerce 

• El Paso Hispanic Chamber of Commerce 

• Hunt Institute 

• Mesilla Valley Economic 

• Development Alliance 

• Rio Grande Council of Governments 

• Texas One 

• Wilson Center 

• Workforce Solutions Borderplex 

Most recently, we launched a partnership called "North America Works" with the Texas Business 

leadership Council and the Texas-Mexico Business Council, which is intended to mobilize business 

leaders across Texas to build consensus on what our state would like to see in a modernized NAFTA. 

II. How NAFTA is relevant to the Borderplex 

As one of the largest international markets in North America, with a population of more than 2.5 million, 

the North American Borderplex has unique economic advantages, backed by the varied assets of two 

countries and three states. The region is a top trade location for North America and the world, with 

THE BORDERPLEX ALLIANCE I CD. JUAREZ • EL PASO • LAS CRUCES 

123 West Mills, Suite Ill, El Paso, TX 79901 

Phont: 915-298-1000 • bocdeq>ltnlliance.ocg 
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33478A.077

THE 

BORDERPLEX 

ALLIANCE 

$48.1 billion of maquila exports, surpassing Tijuana, MX in foreign purchases from maquilas. We have 

the second busiest port of entry, which sees upwards of $66 billion of economic activity each year. 

Moreover, we are number one in border regions for university R&D expenditures, have the highest 

college student population by workforce per capita of any border region, the second largest 

manufacturing employment center on the U.S.-Mexico border, and one of the largest binational, 

bilingual communities in the world. 

Our region relies on industries that will be at the heart of much of t he NAFTA negotiations: 

Advanced logist ics 

Advanced manufact uring 

Business services and investment consulting 

Defense and Aerospace 

Tourism 

Life Sciences and Healthcare, including clinical testing, adaptive medical research and responsive 

bicultural product and media testing. 

NAFTA remains a potent economic engine not only for t hose of us who live and work on the border but 

the same is true for communities across our nation. It's been 23 years since NAFTA was ratified. In that 

time, trade with Mexico grew from about $150 billion to over $675 billion today. 

Approximately five million Americans owe their livelihood to U.S.-Mexico trade. There are more than 30 

U.S. States in which more than 50,000 jobs are directly tied to Mexican commerce. For example, 31 

percent of Michigan's overall trade is conducted with our southern neighbor, a percentage comparable 

to Texas and Arizona. 138,000 jobs in Michigan are reliant on Mexican trade. 

Ill. The Borderplex Alliance Comments on NAFTA Negotiations 

i. What Works 

1. General principles 

Our organization and key stakeholders firmly believe t hat NAFTA negotiations should be based on three 

core principles, wit hout question: 

a) Maintain NAFTA's three-party framework 

b) Do no harm, we must not disrupt the annual trade t hat crosses our borders because of 

NAFTA. Reverting to the high tariffs and other trade barriers that were in place before 

the agreement could risk millions of American jobs, not to mention increased prices in 

all industries for consumers. 

THE BORDERPLEX ALLIANCE I CD. JUAREZ • EL PASO • LAS CRUCES 

123 West Mills, Suite Ill, El Paso, TX 79901 

Phont: 91 5-298·1 000 • bocdeq>ltnlliance.ocg 
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THE 

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c) Encourage the integration of North America as a competitive economic block 

2. The Border 

There has been much debate in the U.S. regarding t he building of a wall, and a portrayal of the border as 

a dangerous, inhospitable region. Nothing could be further from the truth. First, there is already a 

physical and technological border wall along most of the border. It has worked, unauthorized crossings 

on the sout hern border are at an all-time low. The Borderplex area is one of the safest in the entire U.S. 

We should instead focus on how we help facilitate t he crossing of commerce and invest in border 

infrastructure. 

3. Importance of the Supply Chain 

In the current debate on trade, it is often lost that when it comes to Mexico and Canada, U.S. exports 

and import s aren't strictly neat. The three countries joined together to become a productive platform in 

order to be able to remain competitive with other regions throughout t he world. The Nort h American 

supply chain is t he result of NAFTA and of this goal, and this North America Supply chain should not be 

disrupted. Of every dollar in the value of an import from Mexico, $.40 is U.S. content t hat was previously 

exported to Mexico. 

4 . Rules of Origin 

In this vein, Rules of Origin is one area in particular in which we encourage the administration to do no 

harm. Our position is t hat there is a danger in touching something as important as the rules of origin. 

We would discourage the administrat ion from making any changes to the existing regimen of rules of 

origin and tariff structure that would disrupt the existing North American supply chain. 

The medical devices business makes a particularly revelatory case study of t he difficulties of untangling 

global trade. Along the Borderplex region, we have producers of medical devices and their suppliers. 

U.S. firms are the world's largest suppliers of medical equipment and part s, with increasing domestic 

product ion. Domestic production increased 20% from 1997 t o 2002, to $78.6 billion. Surgical and 

medical instrument production and supplies have grown a remarkable 22% and 27%, respectively, and 

make up 59% of the industry's production. 

NAFTA has transformed sprawling border towns to world class capitals of medical devices, many bearing 

the names of American-run companies: Medtronic, Hill-Rom, DJO Global and Greatbatch Medical. 

Nearly everyone in America who has a pacemaker - in fact, people all over the world - walks around 

with parts from the U.S.-Mexico border. 

THE BORDERPLEX ALLIANCEJ CD. JUAREZ • EL PASO • LAS CRUCES 

123 West Mills, Suite Ill, El P•so, TX 79!>01 

Phone: 91 5-298-1000 • bo<decpleullionce.o<g 
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THE 

BORDERPLEX 

ALLIANCE 

NAFTA also increased transparency in government procurement, which has benefited U.S. exporters of 

medical equipment to the growing public hospital sector in Mexico. Mexico is the leading supplier of 

medical devices, ahead of Ireland, Germany and China. Changes to rules of origin would not only 

potentially damage Mexico operations, it would hurt U.S. suppliers, many located in our region. In this 

industry, as in many others, the way to maintain U.S. manufacturing is to salvage our NAFTA supply 

chains. 

5. Trade Balance 

We understand that there is concern regarding the current trade deficit in goods with Mexico. While it 

is true that this deficit exists in goods, we note that the U.S. actually has a trade surplus of over $10 

billion in trade of services with Mexico. Additionally, U.S. firms had sales of services in Mexico of $45.9 

billion in 2014 (last data available}. The services sector is actually one with the higher paying, more 

stable jobs that we want for the American people. We should be looking at how we continue to expand 

U.S. competitive edge in that sector instead of looking back in time. 

6. Dispute settlement procedures 

The NAFTA dispute settlement procedures under Chapter 11, Chapter 19, and Chapter 20 have worked, 

and we encourage he administration to keep them as is. Under Chapter 11, investment disputes, the 35 

claims brought against Canada comprise 45 per cent of the total number of claims under NAFTA. That's 

significantly more than the 22 cases brought against Mexico, or the 20 brought against the U.S. 

Canada has lost or settled six claims paying a total of $170 million in damages, while Mexico has lost five 

cases and paid out $204 million. The U.S. meanwhile, has won 11 cases and has never lost a NAFTA 

investor-state case. 

In regards to the other two chapters, while the U.S. has the highest number of cases brought against it, 

it also exerts its rights through the mechanisms in Chapters 19 and 20 to keep the NAFTA partners 

accountable on antidumping and general trade obligations, giving the U.S. government or investors the 

options of dispute settlement mechanisms that do not involve Mexican or Canadian court s. 

ii. Areas for Modernization 

We firmly believe that the Trans Pacific Partnership Agreement (TPP) should be the point of departure in 

regards to the modernization of NAFTA. These re-negotiations should serve to update NAFTA to include 

industries and elements that reflect the 21" century economy. In general, we encourage the 

incorporation of stand-alone chapters into NAFTA on: 

THE BORDERPLEX AU..IANCEI CD. JUAREZ • EL PASO • LAS CRUCES 

123 West Mills, Suite Ill, El Paso, TX 79901 

Phont: 91 5-298·1 000 • bo<deq>le:Wliance.o<g 
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Energy 

THE 

BORDERPLEX 

ALLIANCE 

Customs Administration and Trade Facilitation 

Telecommunications 

E-commerce 

State-owned enterprises 

Labor standards 

Environment 

Small Business 

NAFTA worker authorization 

1. Energy 

Revising the Agreement to include a chapter on energy is a necessary starting point. Moreover, the 

energy sector should also be included in the NAFTA dispute settlement mechanisms, making them 

available to those in the sector (which is not currently the case). 

The United States is the leading producer of oil and natural gas in the world. North America is on the 

verge of achieving energy self-sufficiency as production surpasses consumption across canada, Mexico 

and the U.S. This global competitive advantage is the result of the open markets and free trade 

promulgated by NAFTA. Since the implementation of NAFTA, U.S. crude oil exports have increased 

dramatically, with Canada being our largest export market, and imports from Mexico spurring a U.S. 

advantage in refined products exported back into Mexico. Mexico and Canada also make up the number 

one and two export markets for U.S. natural gas, respectively. The U.S. now supplies 40% of Mexico's 

natural gas consumption demand. 

There is great opportunity in the energy sector for the NAFTA partnership, and while growing U.S. oil 

and gas export capacity is a large part of that, we should look to our energy partnership as an 

opportunity to also collaborate across the three countries in research and development of new 

technologies, manufacturing of materials needed for those technologies, energy infrastructure, and 

economic clusters around the energy sector. Beyond traditional sources of energy, renewables hold 

much promise and were a nascent sector in 1994. Solar, wind and geothermal trilateral accords should 

be pursued. A modernized North American energy grid should also be considered so that low energy 

costs to industry and consumers could place the region at a significant economic advantage over Asia, 

Europe and other parts of the world. 

The Borderplex Alliance urges USTR to focus NAFTA modernization efforts on enhancing the 

competitiveness of the North American energy market as a whole, such that all Parties benefit from 

continued free trade in this area. 

THE BORDERPLEX ALLIANCEJ CD. JUAREZ • EL PASO • LAS CRUCES 

123 \\'I' est .Mills, S\lite 111 , El ~s , TX 79901 

Phone: 91 5-298-1000 • bordecpl.xlllli2<>ee.org 
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THE 

BORDERPLEX 

ALLIANCE 

2. Customs Administration and Trade Facilitation 

While the U.S., Canada, and Mexico have made important strides to facilitate trade, such as the Single 

Window program, there remains much to be done to modernize the North American supply chains and 

regional trade bloc. 

U.S. exporters along the southern U.S. border continue to express concerns about Mexican customs 

administrative procedures, including insufficient prior notification of procedural changes, inconsistent 

interpretation of regulatory requirements at different border posts, and uneven enforcement of 

Mexican standards and labeling rules. Since 2011, numerous U.S. companies, in particular textile and 

apparel exporters, have reported concerns regarding verifications initiated by Mexico's tax authority, 

the Servicio de Administration Tributaria (SAT), with respect to the NAFTA origin of certain products 

imported from the United States. 

Also, in the second half of 2016, several U.S. companies expressed concerns about a draft SAT regulation 

that would impose new requirements on the customs entry process for low·value goods entering 

Mexico, especially on electronic commerce goods. Such companies expressed concern that these 

requirements, if enacted, might make it more difficult for companies to use Mexico's informal entry 

requirements and increase the time it takes to ship goods to Mexico. 

Customs procedures for express packages continue to be burdensome. U.S. exporters have highlighted 

the benefits of harmonizing the hours of customs operation on the U.S. and Mexican sides of the border, 

but they cite delays stemming from the lack of pre·clearance procedures at some of the border 

crossings. 

Therefore, we believe that NAFTA cannot be truly modernized without a stand-alone chapter on trade 

facilitation. While the cooperation in Customs has increased significantly between the three 

governments, the reality is that in practice Single Window is still not fully streamlined, and often does 

not work due to outdated technology. Moreover, we urge USTR to work for harmonization of Customs 

language and processes across the three countries. Borderplex would also encourage: greater Customs 

cooperation; advance rulings for goods; an intelligent, risk-based system (as opposed to random 

searches); response to requests for information and a speedy process to appeal Customs rulings; 

automated systems; pre-release of goods; and an expansion of the pre-inspection and pre-clearance 

processes geographically at more ports of entry, and substantively to include express shipments. 

We should work with our NAFTA partners to construct and rebuild physical and digital ports of entry, 

particularly along the U.S.·Mexico border. A fair-trade agreement will cut down on transportation time 

and lower operating costs, permitting companies to hire more employees at better wages. 

THE BORDERPLEX ALLIANCE I CD. JUAREZ • EL PASO • LAS CRUCES 

123 W<SI Mills, Suite Il l, El Paso, TX 7990 I 

Phone: 915-298-1000 • bocd<<pl<xallilloe<.ocg 
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33478A.082

3. Infrastructure 

THE 

BORDERPLEX 

ALLIANCE 

Infrastructure investments and improvements would not only speed the delivery of goods and diminish 

border crossing lines, but it would also ensure a more secure border. By combining technology and 

capital, perhaps through public-private partnerships, we could optimize processes which would make 

North America the most globally competitive region in the world. 

4. Environment 

Significant improvements can be made to the environmental side agreement in NAFTA. Many advances 

were made in the past two decades regarding water conservation, air pollution reduction, and diseaserelated environmental research. The best ideas incubated in universities, national labs, and small 

business could become commercialized while improving North America's quality of life. 

5. E-commerce 

E-commerce didn't exist in 1994, and the internet was in its infancy. It is time to examine how 

technological advances could positively affect job growth and ease commerce bottlenecks like endless 

border crossing lines and product shipment delays. Small businesses and start-ups could be assisted by 

lowering barriers associated withe-commerce. In this regard, we encourage implementing a chapter on 

e-commerce that includes definitions on electronic and digital products; online consumer protection; 

cybersecurity and protection of personal information; principles on the use of internet fore-commerce; 

cross-border transfer by electronic means; computer facilities; and cross-border cooperation on digital 

infrastructure and issues. 

6. labor and Immigration 

The Borderplex Alliance and our stakeholders also believe that it is time that labor issues across our 

region be revisited. First, we encourage the USTR to use this opportunity to incorporate the labor side 

agreement into the NAFTA text and address the labor challenges of the 21" century. 

We have to work from the mindset that as a region, we are economically integrated already. As such, it 

is smart and necessary to address immigration and labor flows in trilateral talks rather than pursuing the 

issue in a xenophobic vacuum. Security is a crucial matter that all three countries share. Why shouldn't 

all three nations seriously discuss mutual threats? Why not use technology to improve and expand the 

TN visa program to allow for an orderly and secure flow of labor? 

Our maquila industry relies heavily on thousands of executive and professional U.S. workers for the 

performance of highly specialized services such as sophisticated water treatment, HVAC monitoring in 

clean rooms and laboratory environments, and more, resulting in additional jobs and economic trade in 

our region. 

THE BORDERPLEX ALLIANCE! CD. JUAREZ • EL PASO • LAS CRUCES 

123 West Mills, Suite Ill, El P•so, TX 79901 

Phont: 915-298-1000 • bordecpl.x.uionce.org 
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THE 

BORDERPLEX 

ALLIANCE 

We cannot have trade in goods and services without the ability to transfer the financial and human 

capital that go along with that trade. Therefore, Borderplex recommends the USTR use this opportunity 

to amend 8 CFR Part 214, Sec. 214.6 to amend the requirement for a "professional" worker so that it 

may include all classes of workers, including low-skilled jobs that are already done by NAFTA partners, 

but after excessively onerous and impractical visa application processes. The reality is that the visa 

requirements for t he existing often used programs like Hl B and H28 or H2A do not meet the needs of 

the business community, particularly of those in agriculture, who have very specific seasons to get their 

work done. Moreover, the current legal framework does not respond to the reality that workers from 

NAFTA countries should not have to go through the same lengthy processes of individuals coming from 

countries with whom we do not have a trade relationship, nor the same geographical proximity. 

Opening up the TN visa to all sectors will not hurt U.S. jobs, it will merely help U.S. employers fill jobs 

legally and easily that do not attract U.S. workers. At the Borderplex, we believe a rising tide lifts all 

boats, and that is why we believe that increased training, education, and exposure across the three 

countries makes our region more competitive. 

For example, The Borderplex Alliance partners with regional public and private four-year and two-year 

institutions of higher education to ensure we are developing a highly skilled and talented workforce. 

Through our partnership with Workforce Solutions Borderplex, we are looking at ways to ensure we are 

meeting industry needs across the region. 

One example of best practices in this regard is CONREDES, an entity created by Borderplex to advance 

the interaction and planning between the community and the public and private sectors to establish 

relationships between the leaders of the manufacturing plants and universities in Ciudad Juarez and 

align their efforts around workforce development. Together, these academic and industry entities 

represent 88 percent of the student population in higher education and 30 percent of the 

manufacturing workforce in Ciudad Juarez. They work together to develop internship and externship 

opportunities within the manufacturing sector, curriculum aimed at skills development, and 

competitions that foster innovation and creativity. 

In conclusion, NAFTA 2.0 holds much promise. Certainly, there are other ideas to emerge as NAFTA 

renegotiation evolves. It's a unique occasion to be bold and visionary and create hope, opportunity, and 

jobs on our continent. The process won't be easy, but the results could be phenomenal. 

THE BORDERPLEX ALLIANCE I CD. JUAREZ • EL PASO • LAS CRUCES 

123 W•st ~!ills, Suite Ill, El Paso, TX 79!>01 

Phon•: 915-298-1000 • bo<deq>I•:Wiiance.o<g 
135 

f 


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THE 

BORDERPLEX 

ALLIANCE 

The Borderplex Alliance appreciates the opportunity to provide it s comments regarding NAFTA to the 

USTR and the Administration as it embarks on, what will no doubt be, a thoughtful and productive 

NAFTA reform effort. We remain at your disposal, please feel free to contact me should you have any 

questions. 

Sincerely, 

Jon Barela 

Chief Executive Officer 

The Borderplex Alliance 

THE BORDERPLEX ALLIANCE I CD. JUAREZ • EL PASO • LAS CRUCES 

123 \XIes1 Mills, Snit< Ill, E1 Paso, TX 79901 

Phoue: 91 5·298-1000 • bo<d"'J'Iexalli:u1e<.o<g 
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33478A.085

Comments for the Record 

United States House of Representatives 

Committee on \Vays and Means 

Hearing on U.S. T1·ade Policy Agenda 

llmrsday, June 22, 2017, 10:00 A.M. 

l l 00 Longworth House Office Building 

By Michael G. Bindner 

Center for Fiscal Equity 

Chairman Brady and Ranking Member Neal, thank you for the opportunity to submit these 

comments for the record to the Conm1ittee on the. As usual, we will preface our comments with 

our comprehensive four-part approach, which will provide context for our comments. 

A Value Added Tax 01 AT) to fund domestic military spending and domestic 

discretionary spending with a rate between 10% and 13%, which makes sure very 

American pays something. 

Personal inc.ome surtaxes on joint and widowed filers with net ammal incomes of 

$100,000 and single filers earning $50,000 per year to fund net interest payments, debt 

retirement and overseas and strategic military spending and other international spending, 

with graduated rates between 5% and 25%. 

Employee contributions to Old Age and Survivors Insurance (OASI) with a lower income 

cap, which allows for lower payment levels to wealthier retirees without making bend 

poi11ts more progressive. 

A VAT-like Net Business Receipts Tax (NBRT), which is essentially a subtraction VAT 

with additional tax expenditures for family support, health care and the private delivery 

of governmental services, to fund entitlement spending and replace income tax filing for 

most people (including people who file without paying), the corporate income tax, 

business tax filing through individual income taxes and the employer contribution to 

OASI, all payroll taxes for hospital insurance, disability insurance, unemployment 

insurance and survivors under age 60. 

Far be it from the Center to interfere with a dispute between the Committee and the White House 

over NAFT A. Such arguments are like those over immigration, where some business owners 

want employees to stay in the shadows and be abused, others want legal employees (though nonunion - repealing right to work laws would end illegal immigration because no one would hire 

an undocumented worker with union representation) and still other in the conservative camp 

sinlply hate the illegality or the eth.nicity oft he immigrants (speaking of the White House). 

The rea l similarity in the short tenn is that attacking unions for the past 30 years has taken its toll 

on the American worker in both inlmigration and trade. That has been facilitated by decreasing 

the top marginal income tax rates so that when savings are made to labor costs, the CEOs and 

stockholders actually benefit. When tax rates are high, the govenunent gets the cash so wages 

are not kept low nor unions busted. It is a bit late in the day for the Majority to show real 

concern for the American worker rather than the American capitalist or consumer. 
137 


33478A.086

Reversing the plight of the American worker will involve more than trade, but I doubt that the 

Majority has the will to break from the last 30 years of tax policy to make worker wages safe 

again from their bosses. Sorry for being such a scold, but the times require it. 

Some of our prior comments to the Trade Subcommittee from Jlllle of last year on our standard 

tax plan still apply, even though that hearing was on agricultural exports. Allow us to repeat 

them now: 

The main trade impact in our plan is the first point, the value added tax 01 AT). This is because 

(exported) products would shed the tax, i.e. the tax would be zero rated, at export. Whatever 

VAT congress sets is an export subsidy. Seen another way, to not put as much taxation into 

VAT as possible is to enact an unc-onstitutional export tax. 

The second point, the income and inheritance surtax, has no impact on exports. It is what people 

pay when they have successfully exported goods and their costs have been otherwise covered by 

the VAT and the Net Business Receipts Tax/Subtraction VAT. This VAT will nmd U.S. 

military deployments abroad, so it helps make exports safe but is not involved in trade policy 

other than in protecting the seas. 

The third point is about individual retirement savings. As long as such savu1gs are funded 

through a payroll tax and linked to income, rather than funded by a consumption tax and paid as 

an average, they will add a small amount to the export cost of products. 

The fourth bullet point is tricky. The NBRT/Subtraction VAT could be made either border 

adjustable, like the VAT, or be included in the price. This tax is designed to benefit the families 

of workers, either through government services or services provided by employers in lieu of tax. 

As such, it is really part of compensation. While we could mn all compensation through the 

public sector and make it all border adjustable, that would be a mockery of the concept. The tax 

is designed to pay for needed services. Not including the tax at the border means that services 

provided to employees, such as a much needed expanded child tax credit - would be forgone. 

To this we respond, absolutely not - Heaven forbid - over our dead bodies. Just no. 

The NBRT will have a huge impact on trade policy, probably much more than trade treaties, if 

one of the deductions from the tax is purchase of employer voting stock (in equal dollar amounts 

for each worker). Over a fairly short period of time, much of American industry, if not 

employee-owned outright (and there arc other policies to accelerate this, like ESOP conversion) 

will give workers enough of a share to greatly impact wages, management hiring and 

compensation and dealing with overseas subsidiaries and the supply chain - as well as impacting 

certain legal provisions that limit the fiduciary impact of management decision to improving 

short-term profitability (at least that is the excuse managers give for not privileging job 

retention). 

Employee-owners will fmd it in their own ulterest to give their overseas subsidiaries and their 

supply chain's employees the same deal that they get as far as employee-ownership plus an 

equivalent standard of living. The same pay is not necessary, currency markets will adjust once 

worker standards of living rise. 

2 
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33478A.087

Over time, this will change the economies of the nations we trade with, as working in employeeowned companies will become the market preference and force other finns to adopt similar 

policies (in much the same way that, even without a tax benefit for purchasing stock, employeeowned companies that become more democratic or even more socialistic, will force all other 

employers to adopt similar measures to compete for the best workers and professionals). 

In the long run, trade will no longer be an issue. lntemal company dynamics will replace the 

need for trade agreements as capitalists lose the ability to pit the interest of one nation's workers 

against the other's. This approach is also the most effective way to deal with the advance of 

robotics. If the workers own the robots, wages are swapped for profits with the profits going 

where they will enhance consumption without such devices as a guaranteed income. 

If Senator Sanders had been nominated and elected, this is the type of trade policy you might be 

talking about today. Although the staff at the Center supported the Senator, you can imagine 

some of us thought him too conservative in his approach to these issues, although we did agree 

with him on the $15 minimum wage. Economically, this would have had little impact on trade, 

as workers at this price point often generate much more in productivity than their wage returns to 

them. This is why the economy is slow, even with low wage foreign imports. Such labor 

markets are what Welfare Economics call monopsonistic (either full monopsony, oligopsony or 

monopsonistic competition - which high wage workers mostly face). Foreign wages are often 

less than the current minimum wage, however many jobs cannot be moved overseas. 

As we stated at the outset, the best protection for American workers and American consumer are 

higher marginal tax rates for the wealthy. This will also end the possibility of a future crisis 

where the U.S. Treasury cannot continue to roll over its debt into new borrowing. Japan sells its 

debt to its rich and under-taxes them. They have a huge Debt to GOP ratio, however they are a 

small nation. We cannot expect the same treatment from our world-wide network of creditors, 

an issue which is also very important for trade. Currently, we trade the security of our debt for 

consumer products. Theoretically, some of these funds should make workers who lose their jobs 

whole - so far it has not. This is another way that higher tax rates and collection (and we are 

nowhere near the top ofibe semi-fictitious Laffer Curve) hurt the American workforce. Raising 

taxes solves both problems, even though it is the last thing I would expect of the Majority. 

We make these comments because majorities change - either by deciding to do the right thing or 

losing to those who will, so we will keep providing comments, at least until invited to testify. 

Thank you for the opportunity to address the conunittee. We are, of course, available for direct 

testimony or to answer questions by members and staff. 

3 
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0. rnA Aexible Packaging r r'R. Association 

Coonecti>g. Advatlcing. l eading. 

July 6, 2017 

The Honorable Kevin Brady, Chairman 

U.S. House of Representatives 

Committee on Ways and Means 

1100 longwonh House Office Building 

Washington, DC 20003 

RE: June 22, 2017 Hearing on U.S. Trade Policy Agenda 

Dear Chairman Brady: 

185 Admiral Cochrane Drive 

Suite 105 Annapolis. MD 21401 

Tel (410) 694.0800 

Fax (410) 694.0900 

www.ftexpack.org 

Thank you for the opportunity to submit comments on the above referenced hearing. The Flexible Packaging 

A.ssociation (FPA) is the voice of U.S. manufacturers of flexible packaging and their suppliers. The Association's 

mission is connecting. advancing. and leading the flexible packaging industry. Flexible packaging represents over 

$30 billion in annual sales in the U.S., and is the second largest and fastest growing segment of the packaging 

industry. The industry employs over 80,000 workers in the United States. Flexible packaging is produced from 

paper, plastic, film, aluminum foil, or any combination of these materials, and includes bags, pouches, labels, 

liners, wraps, rollstock, and other flexible products. With respect to aluminum foil, this packaging includes 

everyday food and beverage products such as candy, salty snacks, yogur1, and beverages; as well as health and 

beauty items and pharmaceuticals, such as aspirin, shampoo, and shaving cream. Aluminum foil is also used by 

the flexible packaging industry for medical device packaging to ensure that the products packaged, such as 

absorbable sutures, human tissue, and artificial joints, maintain their efficacy at the time of use. Even packaging 

for pet food and treats uses this substrate to deliver fresh and healthy meals to a variety of animals. 

Introduction 

FPA is concerned over the potential trade policy agenda with respect to aluminum and specificalty aluminum 

foils. First, a Section 232 investigation has been initiated under the Trade Expansion Act of 1962, an obscure law 

that has rarely been invoked since it was enacted. When it has been Invoked, a total of 26 times, prior 

investigations have involved multiple hearings across the United States and have taken the full statutory period 

to determine what, if any, action should be taken. In fact, most prior investigations under Section 232 have not 

resulted in action by the President. FPA is concerned that the Aluminum investigation appears to be rushedwith witnesses allotted only five minutes each to testify at the hearing, and only one hearing scheduled. In 

addition, the time for submission of comments was shortened amid reports that the investigation would not be 

taking the statutorily allowed 270 days to repor1 to the President, but some faster, undisclosed timeline. Second, 

there is an open investigation at the International Trade Commission (lTC) of Chinese aluminum foil imports. This 

is based on a petition from The Aluminum Association, claiming that dumped and subsidized aluminum foil from 

China i.s causing or threatening injury to the domestic aluminum foil industry. This investigation is ongoing, with 

the preliminary hearing on March 30, 2017 and the preliminary report released on May 2, 2017. FPA believes this 

is the appropriate venue for where the debate on trade policy for aluminum foil should be pursued- not through 

a Section 232 action. 

FPA supports efforts to protect domestic manufacturing and ensure national security. However, any such efforts 

must consider the impact and consequences on all U.S. manufacturing industries. Accordingly, the scope of any 

trade actions must be limited to address the specific objectives. FPA is not aware of any impacts aluminum foil 
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33478A.089

imports for use in the packaging Industry has on U.S. national security. Thus, aluminum foil imports necessary for 

the packaging industry, and without application for national defense, should be excluded from consideration. In 

its investigation, the Administration is to consider a range of factors related to national security including the 

economy and the effects of foreign competition on the economic welfare of domestic industries, including 

impacts on employment. Any import restrictions on aluminum foil will have a significant negative impact on the 

flexible packaging industry and its employment in the U.S. Restrictions will impede packaging innovation and U.S. 

flexible packaging manufacturers' ability to compete with foreign companies that do not have similar restraints. 

Aluminum Foil in Flexible Packaging is a Critical Substrate 

U.S. end-users of aluminum foil are "converters; which coat, laminate, or print aluminum foil to make flexible 

packaging. As discussed above, flexible packaging is then used for a variety of purposes including food and 

beverage packaging, tobacco, pharmaceutical and medical device applications, as well as many others. Aluminum 

foil is a crucial component because it provides a superior moisture and oxygen barrier. This extends the shelf-life 

and ensures freshness of the products Inside the package. Because FPA members are producing packaging for 

food, beverage, and medical use, the qualification process is long and the material components are critical -

literally a matter of life and death in the case of medical packaging. Medical packaging, like food packaging, has to 

be sterile, but unlike food packaging, it will not have the telltale signs of spoilage. If the aluminum foil used for 

medical device packaging is defective, microbes can pass through the package, and there is nothing to alert the 

end-user that the supposedly sterile product, is in fact, not sterile. Shortened shelf life and spoilage of food and 

beverages may not mean life or death, but Increases the very real problem of food waste and adds to a drain on 

the economy. 

Aluminum foil provides a very real and necessary purpose in flexible packaging, and substitution of this substrate 

is not a viable option. As stated above, suppliers and converters of aluminum foil and flexible packaging go 

through rigorous vetting, both by U.S. regulatory agencies, such as the Federal Food and Drug Administration, as 

well as their customers. Suppliers must meet the needs of flexible packaging manufacturers and flexible 

packaging manufacturers must meet the needs of the consumer product companies. No other substrate provides 

equal barrier protection, and even if one did; changing a supplier or substituting a substrate is akin to changing a 

formula-the vetting process, which can easily take a year- if not two years or longer for pharmaceutical and 

medical packaging, would have to be started again. A good example is powdered infant formula. which is 

considered a pharmaceutical - the qualification process for any new supplier, let alone a new substrate, is long 

and rigorous and would take over two years. In short, flexible packaging manufacturers need a consistent, quality 

supply of aluminum foil to produce the products consumers use and rely on every day. 

pomestic production of Aluminum Foil Cannot Mee t the Needs of the U.S. Flexible Packaging !ndustrv 

Consistent quality of aluminum foil necessary to meet the needs of the flexible packaging industry is simply not 

available from domestic producers. In some cases, for fine gauge aluminum foil (below .0003"), it is simply not 

manufactured in the U.S. At the ITC's preliminary hearing on March 30, 2017, the staff found that domestic ultrathin foil production "may be limited or nonexistent.• Gauge is the primary product characteristic that drives 

purchasing decisions for the aluminum foil that converters use. For other gauges, quality issues with the domestic 

supply have driven flexible packaging manufacturers to source overseas, including from China. 

The conversion process can be summarized as unrolling large rolls of foil, often at high speeds, and coating, 

laminating, or printing on the foil. Quality Is essential to ensure that the process is optimized. Domestic aluminum 

foil has a history of poor unwinding, causing web breaks that result in expensive machine downtime, and in some 

cases missed deliveries or recalls. Sheet flatness is important because when baggy material goes through the 

rolls, a wrinkle is created. Flexible packaging manufacturers can try to correct for bagginess by putting more 

tension on the web and stretching the rest of the material. However, there is a point where so much tension is 
141 


33478A.090

applied that the material tears or the equipment is just not capable of applying the required tension. Domestic 

foil can also have residual rolling oil, which undermines bonding and ink adhesion, resulting in substandard 

finished products that will not be accepted by the customer. Other reasons for package rejection include baggy 

edges, mill splice tear-outs, sticky foil, wrinkles in the foil, oxidation {brown spots), and foil stingers, which are 

lines of punctures in the foil. Rejection rates reported by FPA members through the lTC investigation range from 

10% to 50%. This substandard product has a significant Impact on plant efficiency and productivity, as well as the 

finished product being produced. This translates into lost time, wages, and profits for the U.S. flexible packaging 

industry. 

Absence of Investment by the U.S. Aluminum lndustrv Lead to Lack of Competitiveness with Imports 

U.S. supply of foil is not available in the quantities and quality necessary for the U.S. flexible packaging industry 

because of strategic decisions U.S. aluminum foil producers made decades ago. Over the last many years, 

domestic producers of aluminum foil have retreated from the production of thin gauge foil, and some have exited 

the market altogether.ln some cases, they have exited while U.S. flexible packaging manufacturers were actively 

purchasing from them with little to no notice, leaving the flexible packaging industry with minimal time to find 

new sources. A lack of investment by the U.S. aluminum industry in the necessary capital to keep up with 

technological advances and not upgrading facilities so that they could produce a product of sufficient quantity 

and quality to meet the needs of U.S. customers, left the U.S. aluminum foil producers vulnerable to foreign 

competition. Chronic underinvestment, especially in machinery-with many U.S. mills tracing their last significant 

equipment purchase to the 1970s- has forced the domestic packaging industry to rely on imports to fill their 

needs. 

By contrast, Chinese and other non-U.S. mills have invested heavily in modern machinery to serve the needs of 

U.S. converters. These imports offer superior quality, product selection, and sufficient volume. Chinese producers 

of aluminum foil can produce the gauges that converters need at the level and quality that converters can trust. 

Ongoing investment in modern machinery and the latest techniques allows Chinese producer to roll follln widths 

that cannot be duplicated by the machinery in the U.S. Simply put, even if a robust domestic supply of aluminum 

foil was available, which it is not, the quality of the aluminum foil domestic flexible packaging manufacturers are 

able to get from China and other non-domestic suppliers far exceeds the quality of domestic aluminum foil. That 

quality standard is mission critical for domestic flexible packaging manufacturing. Underinvestment has been 

prevalent for years - the suggestion now, that unfairly priced imports are the cause, is specious at best. 

Since domestic producers made strategic decisions not to participate in the ultra-thin gauge aluminum foil market 

-they cannot now blame imports for filling a void left by their own actions. Failure to invest, and quality lapses, 

including gauge, width, and lack of appropriate alloys all contribute to the fact that the U.S. producers of 

aluminum foil are not able to serve the U.S. flexible packaging industry. 

Restrictions on Aluminum Foil Will Not Benefit the U.S. Aluminum Industry and Will Harm the U.S. Flexible 

Packaging Industry 

In the ITC's investigation of the Chinese imports, their report found that despite The Aluminum Association's 

arguments about economic harm by imports, domestic aluminum foil manufacturing jobs declined by only "137 

workers from 2014·2016." To put this number in perspective, flexible packaging manufacturing jobs in the U.S. 

exceed 80,000. The negative impact on American jobs of cutting off the supply of Chinese aluminum foil for 

flexible packaging manufacturing will far outweigh any job benefits that are envisioned by either the lTC or the 

Section 232 investigations. High tariffs or quotas will only lead to U.S. companies sourcing aluminum foil from 

other non-U.S. manufacturers. For example, there are several rolling mills that are currently supplying, or willing 

to supply, thin gauge foils to the U.S. from Europe and Korea. Since the domestic foil industry cannot meet the 
142 

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quantity or quality needs of U.S. flexible packaging manufacturers, the only option is to pay the increased costs of 

imports and pass these costs along the supply chain to the consumer. 

Other real possibilities will be Chinese and other non-U.S. suppliers of printed or otherwise converted aluminum 

foil products entering the U.S. market, since these products are not included in the actions. Increased import 

competition of finished flexible packaging would be immediate upon any restrictions of aluminum foil imports. 

The market is global for these packages, and since there is not a significant difference in freight costs between foil 

and packaging stock, there are ready entrants in Canada, Europe, and Asia. Lastly, U.S. companies may move 

flexible foil packaging production outside the U.S. altogether to avoid the higher costs and restrictions on the 

import of aluminum foil. There is simply no scenario where U.S. aluminum foil manufacturers benefit, and in most 

cases, U.S. flexible packaging jobs will be lost and consumer prioes will increase. 

FPA shares the same goal as domestic aluminum producers who want more American jobs and understands the 

importance of U.S. manufacturing to national security. The Administration should find ways to work together to 

improve our country's competitiveness. Everybody loses in unfair trade cases, especially the American consumer. 

The fTC's preliminary findings make it clear that its case is not going to result in any benefit to aluminum foil 

producers and the unintended consequences of including aluminum foil in any Section 232 remedy will be more 

damaging to the U.S. manufacturing industry and the economy than the benefits sought. 

Please do not hesitate to contact Alison Keane, President and CEO of FPA (akeane@flexpack.org) with questions 

or for more information. 

Alison Keane, Esq. 

President and CEO 

•• Submitted Electronically • • 
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33478A.092

~ft.- F reshP rod uce ~ ~ ASSOCIATION OF THE AMERICAS 

Gonzalo Avila 

Cb•ir••• 

Scott Vand~rvoct 

c•.;,.,. •• Bl•tt 

Man Mandel 

P•1t Ch••'r 

Bobby Asteneo 

Bobby Bennen 

Brian Bernauer 

Alejandro Caneloo 

J aime Chamberlain 

Chrio Cindi 

Ricardo Critantcs 

Sabrina Hallman 

Marlin Ley 

Emeolo Maldonado 

J ames Marlin 

Ben Monteverde, Jr. 

Jimmy Munpia 

JohnPandol 

Waller Ram 

Gerardo Ritz 

Rod Sbrap 

Terry Shannon 

Hector Suarez 

Leonardo Tarriba 

Lance Junameyer 

p,1iJ1111 

Roben Shuler 

Arlt-•• Lp,.,u•t•ti, 

Jes$if:a \V asserman 

;d;.,, •• JVp,.,11.14fliWI 

Jw1e 28, 20 17 

On behalf of The Fresh Produce Association of the Americas (FPAA), 

thank you for allowing us to provide comments for the record following 

Ambassador Robert Lighthizer's testimony to the Committee on June 22, 

2017. 

Founded in 1944, FPAA provides a powerful voice for positive trade at 

the US Southwest border, serving U.S. companies involved in distribution 

of fresh produce. 

We were very happy to hear Chainnan Brady voice his commitment to 

free trade. The general bipartisan support for the concept of free trade 

voiced by members throughout the hearing, as well as the majority of 

Committee Members praising the North American Free Trade Agreement 

(NAFT A) and its positive impact on U.S. food & agricultural trade, was 

also welcome. We would like to thank the Chairman for his first question 

to Amb. Lighthizer- "Does the President support free trade?" 

Where we have concern, is Amb. Lighthizer's response to this question, 

which was, "The President believes in free trade. He does not believe that 

it exists right now". While FPAA supports the positive goal of a 

modemization ofNAFTA and continued efl'orts to improve trade, we 

believe that NAFTA in particular is a model for how to construct a free 

trade agreement and demonstrates that free trade not only exists in North 

America, but that it has been a tremendous success for a II three 

signatories. 

It is important to remember that free trade is a two-way street. Since the 

adoption ofNAFT A, U.S. exports of grain, com, soybeans and other bulk 

conm10dities to Mexico have expanded and Mexican exports of produce 

such as tomatoes and avocados to the U.S. have grown at similar rates. 

This two-way trade is in accord with WTO mles on antidumping and 

other trade rules. If there were truly serious abuse of the system, we 

would see antidumping cases being brought by both sides between the US 

and Mexico. In fact, the trade is so robust because NAFTA reduc-ed 

barriers so that comparative advantage has worked to grow the overall pie 

for agriculture products for producers on both sides of the border. Imports 

of produce from Mexico have benefitted growers and consumers aljke--all 

over the U.S. fresh produce is available year-round at affordable prices 

due directly to the impact ofNAFT A. 

\\~'W\V ftesh.ftoJrunex.ic com illfo@fteshfrommex.ico.com 

PO Box 848 Nog>les, AZ 8.5648 Phone (520) 287-2707 Fax (520) 287-2948 
144 


33478A.093

~f~ F reshProduce ~ ~ ASSOCIATION OF THE AMERICAS 

This brings us to another concern that arose from Wednesday's hearing. Congressmen Vern 

Buchanan (R-FL) and Carlos Curbelo (R-FL) both raised concerns from Florida produce fam1ers 

that Mexico has an unfair advantage in the trade of specialty produce, such as tomatoes, under 

NAFTA, due to low labor costs in Mexico. They asserted that ihjs was contributing to an unfair 

advantage for Mexican fam1ers and asked Am b. Lighthizer to address this issue. 

We were alarmed by Amb. Ligbtbjzer's positive response to what we believe are misguided 

points. Amb. Lighthizer talked about an "agricultural trade deficit" with Mexico and asserted 

that the Trump administration must address this during the NAFTA negotiations. As you know, 

trade deficits on specific products are not in themselves evidence of a problem. For example, 

there is a US trade deficit for bananas, but this is not a problem. The reason is simply that the 

US does not grow enough bananas to meet US demand. It is the same for many produce items. 

US internal production does not meet US demand. For items such as apples, where the US has 

an excess in production, the apples are exported to Mexico. In the case ofNAFT A agriculture 

trade with Mexico, Mexico has the comparative advantage lor some specialty crops items, and 

the US bas the comparative advantage for other specialty crops items and most commodities like 

grains, soybeans, and com. 

In point of fact, the growers in Florida who complain bitterly about imports often misrepresent 

the cause of their problems. l11e facts show that inlports are not the main cause for issues they 

face. Florida, whjch is not particularly well suited to agricultural production, continually suffers 

from pest infestations, labor shortages, hurricanes and other weather events. TI1ey also suffer 

from a failure to innovate to better production methods. Trade is a two-way street. We hope the 

committee understands that just because a deficit exists in a certain area, the conclusion does not 

follow that free trade does not exist. Whlle we hope there is a way to address Florida's 

downward trend in sales, we caution that resorting to unfounded trade remedies runs the risk of: 

I) ruining the benefits ofNAFTA for all of us if there is a trade war; 2) straining our 

participation in WTO if and when a case is brought against the U.S.; and 3) helping the chances 

for a protectiorust government being elected in Mexico. 

In the Thursday, June 22"d, 2017 edition of the Washington Post, writer Ana Swanson raised the 

possibility of retaliatory tariffs against wheat by Europe if the Trump Admirustration placed 

tariffs on steel and aluminum. Indeed, agricultural products, the pride of U.S. exports, are 

usually the first targeted. Swanson writes: "'Any investigation that leads to new tariffs on 

imports c.ould spark retaliatory duties or tariffs on U.S. products,' said a spokesperson for a 

separate farm industry group, who spoke on condition of anonymity because of the sensitivity of 

upcoming North American Free Trade Agreement negotiations. ' As we 've seen hjstorically, 

agricultural products tend to be on the front line for retaliation.'" She went on to point out that 

exports from Florida arc especially vulnerable. 

As an example, when the Bush administration inlposed taritis on steel in 200 I, Florida citrus 

products were targets of tariffs themselves. Free trade does not mean the absence of trade 

deficits, especially in a globalized economy. It would be potentially disastrous to pursue any 

\Vww.f.reshfrommexico.com iJlfo@fteshftommexico.com 

PO Box 848 Nogales, AZ 85648 Phooe (520) 287-2707 F•x (520) 287-2948 
145 

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~f~ F reshProduce ~ ~ ASSOCIATION OF THE AMERICAS 

tariffs on Mexican produce in the absence of clear evidence that they were in violation of WTO 

obligations. 

FPAA encourages the Committee to resist efforts from a small production area in Florida for 

trade protection that is likely to lead to a trade war-- with huge bann to US exports leading to 

industry damage and jobs nationally. There may be other ways to assist Florida, but trade 

restrictions are not the answer. 

Thank you for the opportunity to comment. 

Lance Jungmeyer 

President 

Fresh Produce Association of the Americas 

\VW'\v.fteshfrommexico.com iJlfo@fte.sh.frommexi.co.com 

PO Box 848 Nogales, AZ 85648 Phone (520) 287-2707 Fax {520) 287 ·2948 
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33478A.095

NATIONAL 

PRODUCERS 

COUNCIL 

Written Testimony Of 

National Pork Producers Council 

On 

The U.S. Trade Policy Agenda 

House Committee on Ways and Means 

June 22, 2017 
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33478A.096

Introduction 

The National Pork Producers Council (NPPC) is an association of 43 state pork producer 

organizations that serves as the global voice for the nation's pork producers. The U.S. 

pork industry represents a significant value-added activity in the agricultural economy 

and the overall U.S. economy. Nationwide, more than 60,000 pork producers marketed 

more than 118 million hogs in 2016, and those animals provided total gross income of 

nearly $24 billion. Overall, an estimated $23 billion of personal income and $39 billion 

of gross national product are supported by the U.S. pork industry. 

Economists Daniel Otto, Lee Schulz and Mark Imern1an at Iowa State University 

estimate that the U.S. pork industry is directly responsible for tile creation of more than 

37,000 full-time equivalent pork producing jobs and generates about 128,000 jobs in the 

rest of agriculture. It is responsible for approximately 102,000 jobs in the manufacturing 

sector, mostly in the packing industry, and 65,000 jobs in professional services such as 

veterinarians, real estate agents and bankers. All told, the U.S. pork industry is 

responsible for nearly 550,000 mostly rw·al jobs in the United States. U.S. pork producers 

today provide 25 billion pounds of safe, wholesome and nutritious meat protein to 

consumers worldwide. 

Exports of pork continue to grow. New technologies have been adopted and productivity 

has been increased to maintain the U.S. pork industry's international competitiveness. Of 

course, the biggest driver of increased exports over the past tluee decades has been free 

trade agreements. 

U.S. pork exports have gone up by 1,550 percent in value and almost I ,300 percent in 

volume since 1989 - the year the United States began using bilateral and regional trade 

agreements to open foreign markets. Today, the U.S. pork industry exports more product 

to the 20 countries with which the United States has Jiee trade agreements than it does to 

the rest of nations of the world combined. 

In 2016, the United States exported nearly $6 billion of pork, which added more than $50 

to the price that producers received for each hog marketed, and those exports supported 

approximately 110,000 jobs in tile U.S. pork and allied industries. Net exports last year 

represented alnlost 26 percent ofU.S. pork production. 

Importance ofNAFfA and F1·ee Trade Agreements 

One of the most important trade deals for the U.S. pork industry has been the North 

American Free Trade Agreement (NAFf A), which includes the United States, Canada 

and Mexico. 

Although NAFfA is an old agreement, it has accomplished a great deal in its 23 years. 

Still, it has been overtaken by new, unanticipated forms of trade as well as new trade 

problems. It needs to be modernized. But there are enonnous risks associated with 

withdrawing from tile deal if efforts to negotiate a more modern agreement fail. 
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33478A.097

Many more U.S. jobs would be almost immediately lost than could possibly be created by 

high-protective tariffs, which inevitably would be imposed by all sides. The hardest hit 

would be the states with the strongest trade and investment ties to Mexico and Canada 

and sectors and companies that have developed supply chains in Mexico and Canada 

critical to their businesses. Especially hard hit would be American fanners and ranchers. 

(See the NPPC White Paper on the importance ofNAFTA to agriculture and other sectors 

of the economy, which is available at: http://nppc.org/whitepapernafta/.) 

Agricultural exports to Canada and Mexico, America's second and third largest foreign 

markets, totaled more than $38 billion in 2016, or 28 percent of all U.S. exports. Those 

exports generated more than $48 billion in additional business activity throughout the 

economy and accounted for some 306,000 jobs. 

Importantly, much of the growth in U.S. agricultural exports has occurred during the 

period the United States implemented new trade agreements. The U.S. agricultural sector, 

as the most efficient and competitive in the world, has benefi ted greatly from more open 

markets brought about by these agreements. The United States now export as much to its 

20 IT A partner countries as it does to the rest of the world, excluding China. While 

exports to at least some of these countries would have increased without the IT As, there 

is no doubt that FT As played a major role in the growth. In all cases, very high tariffs or 

other restrictive measures were negotiated away, allowing for freer access for U.S. 

products and, in many cases, preferential access over products (rom competitor countries. 

G rOl vtb ID o USA 0 0 •gn cu u1·a 0 It I E X'p OI"tS t 0 FTA t 0 coun raes 

FTA Date Entered Year Before 2016 Growth imo Force Agreemem 

Million Dollars Percent 

Canada FTAINAFTA 1/1/89 2,019 20,242 +903 

Mexico - NAFTA 1/1/94 3,618 17,850 +393 

Jordan 1/1/02 122 273 +124 

Singapore i/1/04 266 738 + 177 

Chile 1/1/04 144 848 +489 

Australia 1/1/05 410 I 292 +215 

El Salvador -CAFT A 3/1/06 239 560 + 134 

Honduras - CAFT A 4/1/06 249 649 + 161 

Nicaragua - CAFTA 4/1/06 125 218 +74 

Guatemala - CAFT A 7/ 1106 455 1,081 + 138 

Morocco 1/1/06 164 425 + 159 

Bahrain 8/1/06 15 65 +333 

Dominican Reo. 3/1/07 629 1,175 +87 

Costa Rica o CAFT A 1/1/09 608 701 + 15 

Oman 1/1/09 77 65 -16 

Peru 2/1/09 424 1,146 + 170 

South Korea 3115/ 12 6,976 6,202 · I I 

Colombia 5/12/12 868 2 377 + 174 

Panama 10/31/12 206 670 +225 

Source: USDA/F AS Global Trade Atlas 
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33478A.098

It is clear from the table that one of the most important trade agreements for agriculture is 

NAFTA. But no trade agreement is perfect. It is encouraging that eft'011s are underway, 

with Mexican and Canadian support, to negotiate needed improvements in tllis important 

deal. But it is vital that in doing so the United States does not backtrack on provisions 

that have made the two countries among America's top three markets in the world. 

Cost to the U.S. Pork lndustr of Withdrawing from NAFTA 

Mexican WTO tariff rates were substantially higher in the agricultural sector (45 percent 

bound and 15.6 percent applied) than U.S. WTO rates in agriculture (4.8 percent bound 

and 5.2 percent applied). It is clear which country's agriculture would suffer more from 

moving away from NAFT A tariffs - which are essentially zero in both directions - and 

back to WTO levels. 

With the productivity of U.S. agriculture growing faster than domestic demand, the U.S. 

food and agriculture industry - and the mral communities that depend on it - relies 

heavily on export markets to sustain prices and revenues. Dismpting U.S. agricultural 

exports to Mexico and Canada would have devastating consequences for U.S. fanners 

and for American processing and transportation industries and workers supported by 

these exports. 

In 2016, the United States exported more than 730,000 metric tons of pork and pork 

products, valued at $1.36 billion, to Mexico, making it the largest volume market and the 

second largest value market for U.S. pork exports. According to Iowa State University 

economist Dermot Hayes, U.S. pork exports to Mexico have created more than 9,000 

U.S. jobs. Canada is the U.S. pork indust1y's third largest market, taking almost $800 

million in pork in 2016. Together, the two countries account for more than 40 percent of 

total U.S. pork exports and about 15 percent of U.S. production. 

Hayes calculates that if Mexico were to place a 20 percent duty on U.S. pork - a likely 

response to a U.S. withdraw from NAFT A - and allowed EU and Canadian pork dutyfree access, the U.S. pork industry would eventually lose the entire market. In his 

assessment, Hayes also looked at the possibility of U.S. pork finding alternative markets 

and concluded the U.S. pork industry would be left with a net loss of about 600,000 tons, 

or 5 percent of total U.S. production. This would cause a 10 percent reduction in U.S. Iive 

hog market. At today's hog prices that is $14 per hog, Hayes concluded. Based on 118.3 

million hogs harvested in 2016, that's an aggregate loss to the pork industry of nearly 

$1.7 billion. 

A loss in exports to Mexico of that magnitude would be cataclysmic for the U.S. pork 

industry. Pork producers will support updating and improving NAFTA but only if duties 

on U.S. pork remain at zero and pork exports are not disrupted. 

The U.S. pork industly believes it is vital that U.S. negotiators, stakeholders and 

members of Congress have a full understanding ofNAFTA's benefits and the need to 

avoid putting those benefits at risk in this renegotiation process. ln the following section, 

NPPC recommends several ways that NAFf A can be improved and modemized, but the 
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first obligation is to ensure that in the renegotiation process the United States does not 

backtrack on NAFT A's existing market access commitments and obligations. 

Pro osals for Modernization of NAFTA in tbe Pork and Meat Sector 

WTO-Pius SPS Cha ter 

With tariffs and other border measures essentially eliminated among the United States, 

Mexico and Canada under NAFTA, the principal objective of negotiations to modernize 

the agreement to the benefit of the U.S. meat industry will be to remove unnecessary or 

spurious regulatory measures that impede trade among the three nations. Many of these 

are what are conunonly referred to as sanitary-phytosanitary (SPS) measures. 

A starting point for addressing such issues is the SPS chapter negotiated in the TransPacific Partnership Agreement (TPP). NPPC urges U.S. negotiators to model a new 

NAFTA SPS chapter on the TPP chapter. TPP improved the "Agreement on the 

Application of Sanitary and Phytosanitary Measures" adopted by members of the World 

Trade Organization (WTO) as part of the Uruguay Round of Multilateral Trade 

Agreements. TI1e WTO's SPS agreement should remain the foundation ofSPS policy 

globally, but it can be greatly improved. NPPC sees a modernized NAFT A with an SPS 

chapter based on the work done in TPP providing an improved regulatory environment 

for trade in food and agriculture among the three NAFTA members. 

It should include the following key objectives and principles, to the extent that either 

Canada or Mexico do not already accept and apply them: 

General 

The rules should provide assurance that U.S. trading partners use science and risk 

analysis as a foundation for SPS measures; that they use appropriate import check and 

restriction policies focused on direct threats to health and safety; that they avoid 

duplicative or mmecessary testing requirements where food already meets accepted 

international standards; and that they use transparent procedures for developing 

reg1ilations, including opportunities for public comment. 

Science and Risk Analysis 

The SPS chapter should establish mles for identifying and managing SPS risks while 

preserving the ability to maintain regulations that are not more trade restrictive than 

necessary and consistent with WTO principles. 

Transparency 

TI1e SPS chapter should include commitments to ensure that the public can comment on 

proposed measures and that producers understand the requirements they must meet in 

each country. 

lmport Checks 

The SPS chapter should commit NAFT A members to ensure that import checks for SPS 

requirements are based on the acn1al potential risk posed by the import. In addition, the 

chapter should require members to inform importers or exporters within seven days if a 
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shipment is being prohibited or restricted entry for a reason related to food safety or 

animal or plant health. 

Emergency Measures 

TI1e SPS chapter should enable NAFT A members to take the emergency measures they 

deem necessary to protect food safety and human, animal and plant health. To discourage 

the use of such measures simply as a way to block market access, it should require 

members to disclose the scientific basis for them. 

Certification 

TI1e SPS chapter should ensure that SPS certificates only require infonnation related to 

SPS issues. 

Equivalency and Regionalization 

The SPS chapter should improve the communications and information exchange between 

governments when a NAFf A member is considering equivalency or regionalization 

requests. This will improve the predictability and the scientific basis for the other 

countries' decisions. 

Food Safety Audits 

The SPS chapter should promote the use of audits to assess the adequacy of another 

cotmtry's food safety regulatory system, consistent with the U.S. approach. In addition, 

the chapter should establish a process of conununication among NAFTA members 

regarding the requirements, processes and procedures for conducting audits. 

Cooperative Technical Consultations (CTC) 

To help encourage the early and expeditious resolution ofSPS matters, the SPS chapter 

should establish a consultative mechanism under which relevant agencies wiU work to 

find science-based solutions to SPS issues that emerge between NAFT A countries. 

Dis ute Settlement 

Where the CTC mechanism does not resolve a matter, NAFT A members may use the 

agreement's dispute settlemenl mechanism to enforce most of the SPS commitments. 

However, to ensure that members have sufficient time to align their SPS procedures with 

the new NAFT A requirements, the application of dispute settlement should be phased in 

for certain provisions. Tile underlying WTO-based SPS obligations on which the 

commitments in this chapter are based also remain subject to WTO dispute settlement. 

S ecific Reg!!latory Issues in tl1e Meat and Livestock Sector to be Included 

USDA should publish the rule recognizing Mexico as free from Classical Swine 

Fever. USDA's Animal and Plant Health Inspection Service (APHIS) in early 2016 

concluded the risk ofCSF from pork imports from Mexico was negligible. A 

proposed rule to aUow pork imports from all Mexican states was drafted by APHIS 

but never was cleared by the last Administration for final review and publication. 

Given that APHIS has found negligible risk and that U.S. pork producers are 

dependent on export markets, USDA should expeditiously publish the rule. 

U.S. pork producers and live hog exporters are concerned tl1at the expot1 of live U.S. 

market hogs to Canada and Mexico may sometimes be encumbered by non-tariffbarriers. U.S. hog producers should have the ability to ship hogs north or south for 
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harvest into pork and pork products when market circumstances make such shipments 

beneficial. 

Food safety technology approvals in all three countries should be bannonized. Thjs 

should include hannonizing interventions and processing aids. 

True equivalence of meat safety systems should be implemented, to include: 

o Enhanced transparency on sampling (e.g., the rate of sampling, targeted 

pathogens, etc.) and on communication oftest results, namely the nature of the 

tests perfonned. 

o Changes in sampling plans. Reducing sampling lot sizes would prevent meat 

products from being destroyed. 

o Ins tiMe a Laboratory Sampling Pilot Project. This project would test a process 

lmder which shipments would continue to be sampled at the direction of the 

importing county's regulatory agency for laboratory analysis, but the collection of 

the product to be sampled would occur at the originating federally inspected 

establislunents, including cold storage establislunents. 

o Allow imported product designated (Labeled/Certified) intended for use in 

preparing "Artisan and other Fully-Cooked Ready to Eat (RTE) meat and food 

products" to move to federally inspected establislunents for further processing 

without border testing. 

The establislunent of a common "window" for an £-document transmission and 

communication system in the NAFT A region to facilitate review and clearance of 

meat shipments crossing conunon borders. 

o Including Canada and Mexico in the new electronic documentation system (called 

PHIS) that USDA is rolling out starting June 29 of this year would be a 

tremendous achievement. Since they are two of our largest protein trading 

partners, tills would be an inunense help. If successful, this system could 

eliminate the need for trucks to carry hard copy documents and greatly improve 

border-crossing times while also avoiding routine inspection issues. This would 

be a natural application given the daily volume of shipments and technological 

advancement of both countries 

Expansion of existing " trusted trader" programs to allow companies with facilities in 

multiple NAFTA countries with strong records of safety and reliability to reduce 

border inspection requirements when product remains under same-company control. 

Facilitating procedures on shipments from the United States to Mexico. The current 

transportation procedures create huge inefficiencies. If the United States could srup 

via railcar reefers, transportation costs could be lowered and efficiencies increased. 

Allowing federally inspected facilities to host onsite inspection house (1-House) 

operations, regardless of proximity to border. TI1is would pennit imported product to 

bypass inspection at the border and be federally inspected at the destination facility. 

Harmonizing approval of processed product ingredients. 

Establishing equivalency agreements for label clain1s and quality-related 

specifications for govenunent programs. 
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• Establishing equivalency and consistency in packaging material approvals, including 

labeling. 

Do Not Include CountJ 

The United States implemented a Country-of-Origin Labeling (COOL) law in March 

2009, requiring meat to be labeled with the country where the animal from which it was 

derived was bom, raised and hatvested. (The Jaw also applied to fish, fruits, vegetables, 

ginseng, peanuts, pecans and macadamia nuts.) 

Canada and Mexico brought cases against COOL to the World Trade Organization, 

wltich ruled that the Jaw violated U.S. intemational trade obligations, discriminating 

against Canadian and Mexican livestock sent to the United States to be fed out and 

processed. The WTO authorized Canada and Mexico to put retaliatory tariffs on U.S. 

goods going to those countries - the No. I and No. 2 U.S. export markets - setting the 

retaliation level at$! billion annually. 

The trade body asked the United States to comply with its international trade obligations 

under the WTO Agreement on Teclmical Barriers to Trade. 

Before Congress in December 20 I 5 repealed the COOL provisions for meat, Canada 

issued a preliminary retaliation list that included fresh pork and beef, bakery goods, rice, 

apples, wine, maple symp and furniture. And while Mexico didn' t have a list, in March 

2009 it put tariffs as high as 45 percent on $2.4 billion of U.S. products, including pork, 

from 43 states because of the refusal of the United States to implement a provision of 

NAFT A, allowing long-haul Mexican tmcks into the country. 

That 31-month retaliatory action was very costly to a numbet ofU.S. industries, with 

tariffs reducing the value of U.S. exports of prepared soups and broths, frozen potatoes 

and dog and cat tood, for example, by more than $ 1 00 million each. 

The modernization ofNAFT A must not include mandatory COOL, which the WTO 

found to be inconsistent with U.S. intemational trade obligations. The U.S. economy 

cannot afford to have its products restricted, through tariffs, to its two biggest export 

markets. 

Other T•·ade Priol"ities 

Abandon Transatlantic Trade and Investment Partnership QTIP) 

The European Union (EU) is one of the world's most protected markets from imported 

meat products, with elevated levels of tariff protection and a wide array of onerous and 

scientifically uJ1justifiable SPS and teclmical measures. Taken together, high tariffs 

combined with SPS barriers make shipping product to Europe difficult, if not impossible. 

The removal ofEU SPS barriers could be accomplished through a broad recognition by 

the EU of the equivalence of the U.S. animal health and meat inspection practices in 

ensuring product safety. However, the EU rejects technological innovation, even when 
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based on sound science. 1l1e EU, through its policies, practices and subservience to nongovernmental activist groups, rejects both new food technologies and competition from 

imports. 

Moreover, the EU's political approval process for trade agreements is seriously flawed, 

with veto power available to the smallest regions. (The Canada-EU FTA was nearly 

killed by tl1e Belgian region of Walloon.) In any future negotiation, the United States 

should insist on a binding "fast track" approval process by the EU Parliament, much like 

the United States has under Trade Promotion Authority. 

Failing assurances on that and on acceptance oftl1e equivalence of U.S. food safety 

practices, NPPC sees no value in wasting tax payer dollars on a fruitless TTIP negotiation 

with the EU. 

Focus on Asia-Pacific Region 

Rather tl1an waste time and etTort on TTlP, the U.S. pork industry suggests that the 

Trump administration focus its trade efforts on the fast-growing Asia-Pacific region, 

starting with bilateral negotiations witll Japan, the industry's top export market. 

An FTA with Japan would expand the overall size of the Japanese market and give 

Japanese consumers full access to internationally priced, high-quality pork. It would help 

preserve U.S. market share in the face of competition from third country suppliers that 

have FTAs with Japan or that are in the process of negotiating FTAs witll Japan, such as 

the European Union. Additionally, it would give the United States a major tariff 

advantage over countries that do not have an FT A with Japan. 

Vietnam is another priority for the U.S. pork industry. Domestic pork conswnption in the 

Southeast Asian nation is 2 million metric tons (MT) a year, bigger than South Korea and 

Mexico. 

Market prices for pork of commercial quality in Vietnam are substantially higher than 

they are in the United States, and small, inefficient backyard producers represent more 

than 60 percent of Vietnam's total pork production. 

When Vietnam acceded to the WTO in 2007, there were high hopes that it would become 

a major market for U.S. pork sales. It had agreed to reduce import duties on pork and had 

given the United States what appeared to be a valuable conunitment by recognizing the 

U.S. pork plant inspection and approval system as equivalent to its own. 

In 2008, U.S. pork exports to Vietnam hit a record of 17,477 MT. Since tl1en, however, 

U.S. pork sales to Vietnam have plummeted, with the country importing just 2,303 MT 

last year, representing less than .07 percent of its total pork consumption. 

An FTA with Vietnam must eliminate import barriers, including an \mscientific ban on 

white offal and a zero-tolerance policy on certain veterinary drugs, that prompted that 

precipitous decline. 
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Likewise, the Philippines is an important market for U.S. pork exports, with sales in 2016 

of37,220 MT, valued at $83 million. But U.S. pork sales could be much larger if the 

country would remove market access barriers that restrict exports. 

The Philippines maintains a reference price scheme that it uses to detennine import duties 

on shipments of frozen pork, beef and poultry. Under the scheme, many imported frozen 

pork cuts are assessed duties based on reference prices established by the government 

rather than declared import prices, which makes duties significantly higher. Philippine 

importers report that the reference price scheme has significantly suppressed demand for 

U.S. pork products, particularly for lower-priced cuts and pork offal. 

Additionally, the Philippines recently implemented new import penni! rules that require 

importers to obtain authorization for their pennits fi·om the Philippine Secretary of 

Agriculture, or his high-level designee. Such scrutiny is unwarranted in the case of 

legitimate meat imports from the United States, since the shipments already include a 

phytosanitary import certificate, an international health certificate and a pre-inspection 

certificate issued by the exporting country. 

The new import pemlit measure is just the latest in a long history of umvarranted actions, 

going back two decades, the Philippine government has taken to impede pork imports. 

The elimination of trade barriers through an Ff A would allow the United States to 

increase pork exports ro the Philippines. 

Conclusion 

Trade is vital to the continued success of the U.S. pork industry, which supports more 

than half a million jobs, mostly in mral America. 

Without maintaining NAFfA and other trade agreements and without negotiating new 

trade deals, the U.S. pork industry will lose in key markets much of the advantage that it 

now has over competitor nations. For the U.S. pork industry to continue expanding and to 

continue being the most efficient and competitive in tl1e world, it must increase its 

exports by eliminating tariff and non-tariff barriers, and that is accomplished through free 

trade agreements. 

Nick Giordano 

Vice President and Counsel, Global Government Affairs 

National Pork Producers Council 

122 C St., N.W. 

Suite 875 

Washington, D.C. 20001 

(202) 347-3600 
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TECH NET 

THE VOICE OF THE INNOVATION ECONOMY 

June 22, 2017 

The Honorable Kevin Brady 

Chairman 

House Ways and Means Committee 

1102 Longworth House Office Building 

Washington, D.C. 20515 

805 15th Street, NW, Suite 708, Washington, D.C. 20005 

Telephone 202.650.5100 I Fax 202.650.5118 

www.technet.org I @TechNetUpdate 

The Honorable Richard Neal 

Ranking Member 

House Ways and Means Committee 

1102 Longworth House Office Building 

Washington, D.C. 20515 

Dear Chairman Brady and Ranking Member Neal: 

On behalf of Tech Net and our 72 members, we appreciate your commitment to 

modernizing our nation's trade agreements to empower American innovators, 

entrepreneurs, and workers to seize all the economic opportunities of digital trade 

in the 21'1 century. As the House Ways and Means Committee holds a hearing 

today examining the "U.S. Trade Policy Agenda," TechNet reiterates our 

commitment to work with you, the committee's members, and the entire U.S. 

House of Representatives to enact U.S. trade policy that encourages job creation 

and establish clear digital trade rules. 

TechNet is the national, bipartisan network of innovation economy CEOs and senior 

executives. Our diverse membership includes the nation's leading technology 

companies in the fields of information technology, e·commerce, advanced energy, 

biotechnology, venture capital, and finance. 

Since the North American Free Trade Agreement (NAFTA) took effect 23 years ago, 

much has changed in our economy. As the breadth of our membership 

demonstrates, while technology used to be an industry, it is now the underpinning 

of every industry. Whereas floppy disks were the preferred mode of sharing 

information in 1994, data can now be stored, shared, and analyzed instantly 

through cloud computing platforms. 

The ubiquity of the internet has opened markets once out of reach to the local 

entrepreneur; torn down barriers to entry that prevented small businesses from 

growing past their communities; and facilitated the transfer of goods and services 

at speeds once unimaginable. For example, 79 percent of small businesses that 

use PayPal are exporters; female Airbnb hosts have earned more than $10 billion 

since the company's founding; and Facebook provides a platform for more than 70 

million businesses. Simply put, digital trade has exploded in the quarter-century 

since the U.S. entered into NAFTA. 

washington, D.C. • Silicon Valley • San Franc.iseo • Sacramento • Austin • Boston • Seattle • Albany • Tallahassee 
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TECH NET 

THE VOICE OF THE INNOVATION CCONOMY 

While American innovators and entrepreneurs have adapted to these new 

circumstances and capitalized, our trade policies have been slow to respond. 

We recognize the American economy cannot grow at its full potential without a 

thriving technology sector, just as the technology sector cannot succeed without 

the right federal policies in place. Chief among these federal policies are NAFTA 

and other trade agreements the U.S. negotiates and enters into, as well as proper 

enforcement of existing agreements. 

More specifically, we believe a thriving 21st century American technology sector 

requires the following trade policies: 

Reductions in tariff and non-tariff barriers to information and communications 

technology products, services, and investments. 

Protections for the free flow of data across borders, strong protections for 

intellectual property, and safe harbors against intermediary liability. 

Greater expansion of market access for trade in services, including those that 

are digitally delivered. 

Heightened attention to the need for global supply and value chains -

particularly important to global innovation - which often are disrupted by 

government imposition of localization requirements, including forced 

technology and investment conditions that discriminate against U.S. 

interests. 

Customs relief and open payment systems that support digital trade flows, 

particularly by Small and Medium Enterprises (SMEs). 

Given the importance of modernizing the information technology systems 

used by governments at all levels, it is important to preserve, if not 

strengthen, the strong provisions currently in NAFTA related to government 

procurement, which have enabled U.S. companies to gain nondiscriminatory 

access to Mexican and Canadian markets on a reciprocal basis. 

Between 2005 and 2014, cross-border data flows grew by 45 times, generating 

$2.8 trillion in economic value in 2014 - a greater impact on the world's GDP than 

the global trade in goods. 

As more people come online and look to American companies for our goods and 

services, it is imperative that the U.S. sets clear and enforceable rules to oversee 

digital trade. This requires improving existing agreements, including NAFTA, and 

negotiating new agreements with the strong digital trade policies noted above as 

guideposts. Failing to do so would prevent American workers, innovators, and 
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TECH NET 

THE VOICE OF THE INNOVATION CCONOMY 

businesses of all sizes from fully benefitting from this new era of digital trade and 

risk America's global economic leadership. 

At Tech Net, we represent a diverse group of 72 technology companies. They range 

in size from small or medium, to large and multinational; they operate across 

various sectors of the innovation economy; and they include young startups as well 

as iconic and more established American tech innovators. As you examine 

America's trade agenda and the ways it can be improved, we look forward to 

working with you to pursue policies that grow our nation's economy, create jobs 

and higher paychecks here at home, and bolster America's tech leadership in the 

world. 

Sincerely, 

Linda Moore 

President & CEO