Senator Lankford Questions USTR Lighthizer on Improvements of USMCA over NAFTA

CLICK HERE to watch Lankford’s Q&A.

WASHINGTON, DC – Senator James Lankford (R-OK) today questioned US Trade Representative (USTR) Robert Lighthizer in a Senate Finance Committee hearing about the updates and improvements planned for North American trade as we move from the North American Free Trade Agreement (NAFTA) to the US Mexico-Canada Agreement (USMCA). 

Lankford asked USTR Lighthizer about how the USMCA will specifically affect automobile exports from North America, the benefits of USMCA versus NAFTA on the agricultural community, and updated digital trade protections in the USMCA as they compare to the Pacific Rim under the Trans-Pacific Partnership. In all of these areas, Lighthizer highlighted the benefits of moving away from NAFTA and toward the USMCA as it benefits American manufacturing, American wheat and dairy, and the further protection of digital trade items.

Lankford also continued to press USTR Lighthizer on the importance of renewing List 1 and 2 exclusions and the importance of rapidly working through exclusions for List 3. Lankford and Senator Chris Coons (D-DE) introduced the bipartisan, bicameral Import Tax Relief Act earlier this year, which would require the Executive Branch to create an exclusion process for List 3 (and any future list) of Chinese imports subject to Section 301 tariff imposition. The bill would exempt from tariff imposition those items for which there is no commercial access outside of China, items for which the tariff would increase the cost of living for low- and middle-income families in the US, and items that do not directly benefit from China’s non-market-based policies. Lankford and Coons led a letter to Lighthizer last week to urge him to continue to grant tariff exemptions to products that previously received an exclusion until the tariffs are completely lifted.

Excerpts

On the effect of USMCA (versus NAFTA) on US auto exports (Starts at 00:29)

Lankford: What do you see on the future of autos? And I know there’s been a lot of focus on trying to get auto manufacturing in North America, but I want to focus specifically on what the effect will be of the USMCA on auto exports outside of North America for parts, supplies, materials, finished products that we produce in North America and then ship in different countries that pick up. What do you think happens in that based in this agreement?

Lighthizer: So I would say—first of all, thank you for your comments—secondly, I think the auto sector is among the biggest beneficiaries of this agreement, and by the way, it’s one of the ones that lost the most because of NAFTA., so this is a huge—people who care about autos and auto projects—this is just a huge improvement…Outside of North America, the way it will principally affect is, you are seeing substantial new investment in North America in a whole variety of states, some in the northern tier, but a  lot of it in the southern tier of the country. All of those plants that will be needing the new NAFTA requirements, that is to say have higher US content and more production in the United States, all of those plants will be able to export more easily just through their own efficiency.

On the USMCA’s benefit to US agriculture (Starts at 02:20)

Lankford: So let me ask this: because NAFTA has worked pretty well on ag in particular, what does USMCA benefit the ag community on that’s different than NAFTA? That’s a greater benefit, just give me one or two examples.

Lighthizer: Well, one would be in the wheat area. We corrected the bad wheat labeling there. Number 2, they have up in Canada they have what’s called Class 7 and Class 6. They’ve had a devastating effect on our dairy provisions, and I would say what was I most lobbied on by Members before we fixed it.

On Section 301 exclusions (Starts at 03:58)

Lankford: Before I run out of time I want to mention it to you again how important the 301 exclusion process is to me, and I know you’re working on this and we talk about it often. But for those that have been through Lists 1 and 2, their exclusions are coming up. I would hope that there would be a way to be able to rapidly renew those exclusions that they already have for Lists 1 and 2, and for List 3 that’s happening to get through the exclusion process rapidly. Again, the first time, the first round, and going through it with Lists 1 and 2, took 8, 10 months on some products. This is a much larger list on List 3.

On USMCA’s digital trade protections as compared to those in the Trans-Pacific Partnership (Starts at 04:38)

Lankford: Let me ask you about the digital trade provisions, though, in the USMCA. The digital trade provisions, are they similar than what we’re seeing in the Pacific Rim and the TPP and what they’re already putting into place protecting customs duties on electronic products, source code protections, and such. Are those similar to the TPP provisions on what we’re putting in the USMCA just for digital trade?

Lighthizer: So I would say in every respect they are plussed-up over TPP.  They are a better agreement than TPP. Obviously there are no agreements in NAFTA, so we can dream about that, but under TPP we plussed it up in every case. And the reason we could do that in reality was because we had the benefit of TPP. So we used what was in there, we plussed it up, and used the leverage of these negotiations to get a better agreement.

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