To testify on President Trumps trade policy agenda. Mr. Light hawaiier thank y mr. Light hawaiihizer, thank yo joining us. This ambassador is a former u. S. Trade representative under president reagan. Is an experienced trade negotiator. You understand the u. S. Leadership and participation in a rulesbased trading system is essential to our nations 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, weve expanded Economic Freedom so that our business e our workers and consumers can thrive. Through strict enforcement of the rules we created in our leadership and the world trade organization, weve held our competitors accountable and through our steadfast commitment through the principles of free enterprise, open markets and rulesbased 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 chinas influence is growing every day. Its urgent that we take charge on trade in the asia pacific so that we dont lose ground to china. After all, it strengthened americas leadership in Global Commerce. Its not enough to simply buy American Products and services and 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. Weve created american jobs and 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 make sure 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 and intellectual property, Stateowned Enterprises customs barriers, among others following the negotiating objectives congress set forth in tpa, and as youve committed to us during earlier consultations, mr. Amd, this must be accomplished in a mapper that retains current benefits in a seamless way that doesnt disrupt the current trade or millions of american jobs at stake. With the commitment to the strong negotiating objectives and deliberate timetable stake. With the commitment to the strong negotiating objectives and deliberate timetable established by tpa, im confident we can Work Together to deliver a highquality 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. Im particularly interested in ttip once the European Union can conclude an ambitious and comprehensive once that they can conclude ambitious and comprehensive deal. Also, im interested in trade agreements with japan and the United Kingdom when it can come to the table as well as the trade and Services Agreement and the environmental goods agreement and we plan to renew gsp and move quickly on the miscellaneous tariff bill to help u. S. Exporters. Im encouraged to see the president s dedication to strict enforcement of trade rules and the president has taken important steps by putting into 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 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 americas trade deficit, we welcome the president s efforts to examine the issue and there are factors behind the trade deficit and some maybe related to trade and many are not. For example, the dollars status of the worlds reserve currency is a significant factor. Examining the trade balance as black or white conceals whats really going on. Many exports from say, mexico, reflect tremendous u. S. Value added through research, development, design, intellectual property and 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, weve reduced and even eliminated trade deficits and manufacturing, agriculture and services. In many cases, weve even turned deficits into surpluses. While the first instinct may be to reduce imports, history shows that the most successful approach is not protectionism, it is breaking open new markets to americanmade goods and services. We have some of the best businesses, workers and products in the world, if we can reach these customers on a playing level field, america will usually come out on top, thats the recommendation i offer as the administration considers whether it restricts 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 through 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 costs and proved to the partners that were not reliable. Done indiscriminately, we send protection signal to those looking for an excuse to do the same. You will encourage others to restrict our exports even in unrelated sectors and it hurts the growth of jobs and paychecks here at home. Im going to work with the administration to identify a remedy thats balanced, effective and protects our National Security and economic interests. America must continue to set the standards of Global Commerce with 96 of the worlds customers located outside of the United States, we cannot afford to sit on the sidelines or worse, lead the world in abandoning the very rules that have served us so well. Ambassador lighthizer, were eager to work with you and President Trump on a progrowth 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. I now yield to distinguished Ranking Member mr. Neil for the purposes of an Opening Statement. Thank you, mr. Chairman. Ambassador lighthizer, i want to welcome you on behalf of the democrats and todays hearing is the opportunity are if us to hear from you about the 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 and executive memos, section 232 National Security reviews on steel and aluminum imports, canada dairy, mexican sugar and u. S. China and the 100day plan and the issue of currency manipulation. What weve been missing in this overall vision as well as the specifics behind all of it is activity. One of the administrations trade policy goals and what priorities are you trying to serve and how are you going to do it and i hope this morning you can provide us with some answers. On a range of issues theres 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 on 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. A report has still not been submitted to this congress. So i hope you will clarify the administrations position on a full range of trade issues today, from specific objectives of the nafta rewrite to the administrations position on negotiating ttip and an environmental goods agreement, how the administration will address currency manipulation, to the administrations 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. Thank you. Without object the members Opening Statement will be made a part of the record. Todays sole witness is ambassador robert e. Lighthizer. The committee has received your written statement. It will be made part of the formal hearing record. You have five minutes to deliver your oral remarks. Ambassador lighthizer, welcome and you may begin when youre ready. Thank you, mr. Chairman. Chairman brady ambassador, can you check that microphone just to make sure weve got it on . There we go. Is it better now . Yes, sir. Chairman brady, Ranking Member neil, 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 usgr 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 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. Weve been active on the International Front with trips to the a. P. E. C. Ministers meeting in hanoi, a meeting of the oecd in paris and the wto mini ministerial. At all of these meetings as well as the numerous bilateral meetings here in washington ive 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 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 the strong enforcement agenda. Three, opening markets for u. S. Exports and four, lowering the nations 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 90day period of consultations with the public and congress. This means that the nafta negotiating rounds can begin as soon as august 16th, and we intend to move very quickly. In the meantime, ustr is talking to stakeholders, your staffs and the public to help us develop policy outcomes for the negotiations. We have put out a request for comments and we vefed more than 12,000 responses and weve scheduled hearings for june 27, 28 and 29. During the 90day period well continue to working closely with congress to develop and define the negotiating objectives, as in the interest of a transparent process and as required by the tpa, we will be publishing a detailed summary of objectives on july 17th. 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 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 in 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 nations 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 Macro Economic 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 and global trade. Thank you, mr. Ambassador. Its five minutes and it always goes fast. We will thanks for your testimony and we will now proceed to the question and answer session. Let me lead off. I want to the ask two very basic questions about freedom and leadership. My view is that free trade is Economic Freedom. Its the freedom to buy and sell and compete around the world with as little government interference as possible. Its the 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, its 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 americans Economic Freedom to trade or ultimately restrict it . The Trump Administration wants to expand Economic Freedom and wants to expand trade and we 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 doesnt 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 that leads to market efficiency, more Economic Freedom and globally more wealth. Thank you, ambassador. That really steps into leadership. I think the view of many of us is that if america doesnt lead with free and fair trade will grow weaker and the foreign competitors will grow stronger and factories and farmers and Technology Companies and local businesses will be priced out and shut down around the world. My state of texas was made for trade. Americas made for trade and thats nowhere more important than in the asiapacific region. Its imperative we continue to communicate through the trading partners in the rest of the world were not abandoning the asiapacific region even though were no longer part of tpp. This is one of the reasons why along with Ranking Member neil and the colleague, introduced a resolution last month expressing our strong support with other a. P. E. C. Countries. So in the area of leadership especially in that region, at the end of the day do you see americas trade values and standards prevailing in that region or do you see chinas trade values and standards prevailing in that region . I certainly believe that americas trade values will prevail. I would say in this issue of engagement, i was on the job four days when the president sent me off to hanoi to go to the a. P. E. C. Meeting. I remember, blearyeyed, Walking Around 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 youre making, that we have to be engaged and these people have to know that were coming, that were going to do business and were going to sell American Products and well do Bilateral 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 chinas, thats 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 i ask is how do we how do we prove that . We have to take on china when they do things that are inconsistent with our values and 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 its 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 1. 1 at least billion tons of steel capacity and we cant produce 100 million tons. So what we look at, a, i think, we will prevail. B, i think we have to prevail, not just for our good, but for the good of the world. The question that i always have and 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. Ambassador, thanks for your thoughtful answers. Thank you, mr. Chairman. Mr. Ambassador, i am very interested in ttip negotiations which we discussed in my office when you paid a visit, and as we look at the negotiations between the United States and the eu, im hoping you can give us an update on the plan and there are 500 Million Consumers in europe and 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 juxtaposed 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 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 ttip. I do think its got an awful lot of potential for americas east coast if done correctly. And the second question, you perhaps just answered 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. It seems to be inconsistent with the president s promise to keep jobs here in america and with fords 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 were trying, i think, to discover, perhaps, with your comments today is this suggests that for some reason were focusing more on china than we are on nafta. First of all, on ttip, we certainly agree that thats an important negotiation for a variety of reasons, it stalled when it kid, and this was not a good year to start because of many reasons. It was difficult to make compromises and to make an agreement. The final one of those elections is september and its in germany, and then after that, we will talk to them, and i have certainly met with the trade commissioner, commissioner maul malstrum. And we talked to her about bilateral issues and cooperating issues and im not here to make any announcement about it and it is something that we certainly realize the importance of. On the issue of ford moving a plant and i saw in the paper from mexico to china, i agree with you. I think that is troubling. We dont have an Administration Position that ive sat in on and talked about at this point, but with the ustr, i find that troubling and i want to look and see what the incentives there are. It doesnt necessarily make sense to me. And it makes sense to ford or they wouldnt be doing it, but its incumbent upon us to look at the incentives and figure out exactly why that happened and if it happened for reasons that are not economic reasons, then i think the administration should take action. In terms of the relationship to the ford move, i guess im reminded of a quote in the back of profiles in courage, where the when you sort of take your little quips and he says that a congressman once wrote in the 30ik that one of the problems with being elected in congress and this was in response to a constituent letter, is that i get letters from people like you, who say i ran for Congress Based on reforesting the sahara nevada mountains and ive been in office six months, and i havent got it done. Sorry. Cant help, or Something Like that. Its probably early to say that the president s policy are response to ford doing whatever it is, thats its doing. But i think its something that we have to look at. We have to look at incentives and it is as troubling to me as it was to you. Mr. Ambassador, i hope you would inform the committee of the position as promptly as you can on that issue. Of those cars being manufactured in china. I hope you can inform the committee promptly on the position on that issue on those cars being manufactured in china. I appreciate that question, and i will use that as a mandate to develop a position and report it to you. Thank you, mr. Ambassador. Thank you, mr. Chairman. Mr. Nunes, you are recognized. Thank you, mr. Chairman. Ambassador, i have three topics i want to cover with you. Ill try to get through three of them quick here. The first is nafta. I think were all for looking at ways to improve nafta, however, as you know, with all negotiated trade, with every action becomes a reaction, or could be a reaction from our allies and partners, trading partners. 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 can take on our u. S. Farmers, and so i know youre aware of this, but i wanted to just get your thoughts on ensuring that we protect agriculture in these upcoming negotiations on nafta. Congressman, thats very important. Ive testified on this before and i realize there have been winners and there have been losers in the nafta process as its developed over 23 years since the negotiation themselves began. Agriculture has been a winner. I would say even with that i would drop a footnote and say although we do have a 4. 7 billion deficit, even in agriculture but its not for the kind of products that you were thinking about. And its very important that we do no harm. So our very high priority would be making sure that we do not disrupt our sales in Agricultural Products to either canada or mexico. But presumably youre mostly thinking about mexico. And thats a problem. Its a legitimate worry and something were very worried about and very concerned about. Canada can do more to open up their trading practices for our Agricultural Products. If i could, i would like to move to india. I think you and i share, the administration shares the goal of enhancing our partnership with india, the Worlds Largest democracy. Theyve made a lot of growth over the years, but theyve 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 that i want to make sure, just to maybe bring to your attention in case youre not aware of it and maybe you can come back to us for the record. But specifically with almonds and other types of walnuts and pistachios, there continues to be problems with moving those problems to india. Im not going to ask you to be an expert on specific products but if you can come back to us and report on indias different potential problems that theyre creating with these trade practices, id appreciate it. 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. Great. Its clearly something that were concerned about and part of my response always is, look at with the size of the trade surplus you have with the United States, you ought to be looking for things to buy to get the trade deficit down and thats one of the ways were trying to help america export. Thank you, ambassador. I appreciate that comment. Finally, i want to i want to just explore a little bit and theres 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 find it hard to believe in the long run how were going to be competitive if everything that we export to most of our trading partners has anywhere from a 15 to 25 v. A. T. Put on top of those products and of course anything that we import doesnt pay the v. A. T. In their country. And im not asking you to weigh into whether or not you support or oppose these border adjustments, im interested in your thoughts on how we can fix these discrepancies with these countries that border adjust . Thank you, congressman. I have from too time to time written an op ed on the subject. It is troubling to me. First of all, im not the treasury secretary, mercifully, so i dont have to worry about negotiating a tax deal, and i i dont envy any member of the committee who has that as we go forward, but i do agree that that valueadd tax create an unfair advantage. And there has been a clear my fwrags from income taxes to valueadded taxes precisely for that reason. So i dont agree with people who say it doesnt make any difference. I think that it does make a difference. That isnt to say im endorsing any particular solution, but im 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. Its a major issue. Thank you, my time has expired. Thank you so much. Mr. Levine, youre recognized. Welcome. Nafta became involved in controversy mainly because of the lack of edge forcible labor and environmental provisions. The auto sector is a major source of the trade deficit, so let me 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. , its 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 of what are paid in the big three, and the president called mexican factories sweat shops. And thats further evidence that autoworker wages in mexico went down 20 though productivity went up 80 . And sweat shops, thats correct, because workers in the Auto Industry in mexico cannot form unions. They are sham outfits. Let me ask you three questions, if i might, relating to it. First, do you believe 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 u. S. 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 requiring mexico to change its laws and practices relating to labor rights as a way to create and safeguard jobs in the u. S. , and number three, i take it on this youre the lead person in the administration, though that isnt 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, since i did. Thank you, congressman. First of all, do i believe mexican labor laws are having a negative effect on the u. S. . Yes, i believe that. I believe if were going to get the deficit down and were 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 that the Mexican Government itself understands that theres a problem. I think theyre taking steps which is a good sign, but im not suggesting that. We need to talk further about that. But keep going. Go ahead. With respect to what our specific proposals are, were still in the process of talking to stake holders and the congress and were interested in peoples views. We do believe you have to have basic core standards and we believe that they have to be enforceable just like every agreement in the provision has to be enforceable. Do i believe there should be a commitment and improved before a vote . No. I dont. I think were going to put together an agreement. Were going to come forward. It will be the best agreement we can have and in the final analysis the United States congress will rule on whether its a sufficiently good agreement and i dont think there will be preexisting conditions like this. Okay, unless practice has shown the 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 changed 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 it. And time has shown with colombia and other countries that if you dont have that standard, you chase enforcement everywhere. So were going to be very emphatic about that. Thank you. Thank you, ambassador for being here. I know that you know that the volume, the complexity and 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 is the number one trading partner and agriculture is the 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 Gave the department of commerce new authority to address market distortions and the production of foreign merchandise and the 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 in this case, with the republic of korea, who continue to dump these products into our country . Yes. Thank you. I certainly appreciate that. The other issue the chairman mentioned that i want to comment on is the ongoing section 232, investigation on National Security implications on steel and aluminum imports and i again want to alaud and say i appreciate the administrations commitment to americas security and ensuring a level Playing Field with our trading partners. However, ive heard of 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 acts taken against them. Are you at all concerned about the potential for retaliation by our trading partners and the effect it would have on domestic manufacturers . 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 we could 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 cant deal with it just at the border with china because its not that kind of of a problem. Theyre sending it anywhere in the world. And as you said in your first question, theyre sending it to korea who is sending it to us in the form of octg. So its a huge problem. Given that problem its 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 thats quite significant. Now, there is the response, one, of retaliation, were always worried about retaliation. But if we dont defend ourselves because of a fear of retaliation, then we are just going to be the residual of what nobody else wants. So we cant 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 dont disagree with that at all. The argument that while other people will use their National Security exemption for ways that are really hidden protectionism, thats also a concern, something we have to think about. But im 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 markets. So im kind of less persuaded by that argument but i think its a legitimate argument, something that we have to be concerned about. I do have an obligation to all americans when i see something thats very bad going on. We have a kind of a contract with all of our workers and all of our farmers that we are going to defend america or free trade doesnt mean anything. I think every member of this committee agrees with that and this is one of the tools that is legitimate to look at and to use in that context. I certainly appreciate your work and expertise on this issue. And i just would hope that you and your team would clearly review the chairmans 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. Thank you. Thank you. Thank you, mr. Chairman and thank you, ambassador. You have been a personal, longtime 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 claim violations. Yesterday at the finance committee, you testified concerning your concerns about isds. Youre 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 and our major manufacturers said that, quote, isds provisions in nafta and the nisds provision in nafta is unnecessary. Do you agree with them . Im sorry . Do you agree without reading it, do you agree that isds is unnecessary in 1 2 da . I think isds is something that we have to discuss and be informed more by the members so i wont 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 make sure those people are treated fairly. On the other hand, as you suggest, congressman, i am troubled by the sovereignty issue. Im troubled by the fact that anyone anyone can overrule the United States 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 we want to work through. Want to work through. Certainly, 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 they think has failed us. And the second area, and you say in your testimony that you expect significant action including, for example, selfinitiated litigation in defense of u. S. Workers. While thats good, its a fairly low bar 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, nineyear action with reference to guatemala labor, with a finding apparently that it was not a manner affecting trade. I believe that the failure to effectively enforce our environmental and working condition provisions is one of the reasons many of us did not have confidence in the tpp and 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, to 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 me view labor, concerning the fact that they were effectively denying improved wages and conditions in peru. And also in peru on the environmental provision that about 90 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 the obligations under the foreign annex and why there have been no audits of producers and exporters and ill submit others on the pending Enforcement Actions on which we really see no effective enforcement. Finally, youve got 500 advisers on when members of congress be able to see the specific language that ustr proposes to mexico and canada on nafta changes . Well, i, 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. Were going to follow the tpa to the letter. I realize it in the past there have been issues about whether or not the congress has had adequate access to texts, and i think im in agreement with the chairman. We have a plan, and i expect to follow that plan and make that text available and i expect the chairman to instantly tell me when i havent followed the plan. Can you disclose what the plan is . We are in discussions with the Ranking Member on this important issue and we agree with you about the access to text. So thank you, ambassador. I let you run a little long there. Chairman of the trade subcommittee, you are recognized. 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 thats true of washington state. Apple growers export onethird of their crop each year. State Services Exports over 26 billion a year and the jobs in washington supported by exports over 90 depend on manufacturers selling their worldclass 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 im an old Law Enforcement, career Law Enforcement retired. I get the enforcement piece, but theres always community outreach. In my view, tpp countries are now left hanging, and frankly, i was disappointed but encouraged that the president wants to go Bilateral Agreements. Im on board with that and ready to go. As you know, weve had a chance to visit, but i think there has to be an aggressive, energetic outreach to these countries and in my and my question is beyond canada and mexico, which countries, regions and or sectors are priorities for Trump Administration . Whats the next step after nafta . 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 protrade. Secondly, that we as you say our object sieve 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 apple growers and others. In terms of what specific countries we would go to, there are a lot that are on the table. Obviously, theres ttip which has been mentioned. Theres 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 peoples opinion is japan and thats something that we have to think about now. But youre in communication with those tpp countries . We are and ive met with several of them, and there are a variety of issues in various places and the japanese, my guess, are not ready to do a Bilateral Agreement with the United States, but these things are all developing. Were in discussions. After nafta, you are still considering ttip and japan or uk. The uk is another option. So these are things, but i do think theres a lot of pressure to move into the direction with the tpp would have filled a gap and to go in there. And my instinct is that members of Congress Also would feel comfortable if we started doing that. And there are a lot of reasons in that direction. And the other thing is that it does take two to tango. An we have to develop this. I want to be engaged with you on that, and im sure other members of the committee do. How do you see the Bilateral Agreements to create the High Standards throughout the world and thats been touched on by a couple of members and just to my personal experience with one country mr. Teaberry mentioned, south korea, and asking the question, after the korean agreement was finalized what was their opinion as far as the impact it had on china . And 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. So again, emphasizing the need to reach out to those countries, the tpp countries and 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 in the world . I dont want to suggest that were going to have a Bilateral Agreement at this time with japan. Thats something that were looking at and that sort of thing, but i certainly agree with the chairmans basic point at the very beginning which you have also endorsed which is that the United States moves in. We have an agreement thats a High Standards agreement in many cases on a bilateral base bey sis, you have a higher standard. And that may not have a particular problem, and a good example of that would be currency, if youre negotiating with someone that isnt a currency manipulator, its easier to get to a High Standard on currency and then set the standard. 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. I completely endorse him. Thank you, mr. Thompson, youre recognized. Thank you, mr. Chairman. Mr. Ambassador, thank you very much for being here. The priorities for trade policy must be to support and help create Good American jobs and grow the economy and 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. In 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 and those other countries. And i would ask similarly, do poor environmental rules equal a subsidy to producers in other countries . Let me say first of all that i think low labor standards are an unfair advantage to someone with whom were dealing, whether its technically a subsidy, and it is not something that im addressing right now here in this case, so i dont want there to be any misunderstanding and the same thing is true with respect to the environment, but i think it is, i look at it the other way and i think it is wrong in the way we think about these things to have some things be a legitimate, competitive advantage. And to me, environmental pollution shouldnt be its not a legitimate competitive advantage in this way we analyze trade because at a level were all really free traders, we all have the same objective. The question is how do we get there . I look at it the other way around. I think it is not a legitimate, competitive advantage to have very low environmental standards. Thats why im troubled by it. And i think the same thing is also true with respect to labor standards. Id certainly know in my business if i didnt have to Pay Attention in regulations and rules and particularly with the 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. The u. S. Wine exporters continue to face highly burdensome trade barriers in canada. British columbia has a discriminatory Grocery Store program that prohibits American Wine from being sold on the same shelves as domestic wine, given the bc producers an enormous competitive advantage. In january of 2017 the ustr requested wto dispute settlement consultations with canada on this matter, but the consultations failed to bring about any grocery access for American Winemakers. Given canadas 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 to dispute the Settlement Panel . First of all, i am aware of this problem and i agree with the sentiment of this question, whether we go to the panel stage is something thats under review right now. You can take from my general attitude they am very proenforcement. The only caveat, i would add is this something youre better off dealing with in a nafta negotiation. I think we have to think about that. The stake holders have to think about it. The members have to think about it. And i have to be informed by all of you. But its a very serious problem and the kind of problem that ought to be brought to a panel in my opinion. But we have to think whether this belongs in a nafta. But its a major problem and its an extraordinary problem for those people who are affected, those producers and theres no justification for it. In modernizing nafta is this something this elimination of this discriminatory practice as a possibility . Certainly something were going to raise and deal with one way or the other. 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 . Im minus seven seconds. You are. Im afraid well have to come back to you on that question. Thank you, mr. Buchanan. Youre recognized. Thank you, mr. Chairman. I want to thank the ambassador. We look forward to work with you going forward. Just a couple of points from florida. We have 14 points and trade is a big opportunity for us. But i believe im a free trader but i think trade needs to be a win win. I am concerned especially with the bigger countries with large trade imbalances. Its something we need to look at. Im sure you will. But i think we have been played over the years. And thats something we can talk about further going forward. I wanted to drill down a little bit on 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. But a lot of people feel because of some of the techniques, the antidumping and other things that are going into florida its cost us 1 to 3 billion in terms of floridas opportunities down there and a lot of jobs. And i wanted to get your thoughts if thats on your radar, something youre looking at. Mexico is a Good Neighbor but we want to make sure its fair. I would say that i completely agree with you. Im familiar with the issue. Im not as familiar, obviously, as you are. I talked to the governor about it who raised this issue a lot. When i say that we have a trade deficit in agriculture with mexico what were talking sabt the problem you raised. With respect to Everything Else we have a surplus. I think it is a something that we have to work on. Id be happy to work with you on. Its something we have to be talking about in the nafta context and there are issues of whether there is unfair trade involved here. There is a lot of things we have to consider. I realize its become an acute problem and its really something i want to engage on. Well, id appreciate the opportunity to work with you going forward. I wanted to talk mr. Neil brought this up about ttip. It seems to me and i have had an opportunity to travel in europe. It makes a lot of sense. We have a lot of same shared values. When you look at labor rates its competitive. Comparable sized markets in terms of the eu. And i know with the last administration and i met with several folks in your office a couple years ago there has been a lot of work product and effort thats been done. What is your sense of where that is at today . Or are we going to move forward with a Bilateral Agreement on every country individually which would take a long time to get anything done. But i wanted to get your comments on it. First of all its something that the president has spoken on. He mentioned it during his meeting with chancellor merkel some months ago. Its something were looking at. Were reviewing all of these agreements. I dont want to prejudge it. But there is a lot of momentum behind it and a lot of reasons to do it. There are a lot of problems or we wouldnt be talking about at this point. Its in the group of things were going to review, agreements we are in the process of reviewing and decide building to allocate our resources. But as i say if it was so close to being done we wouldnt have to worry about it. Let me just throw this out. Ive watched being in congress ten years ive watched trying to get agreements done it takes it seems like forever. So when you go at it just in a bilateral basis and there is reasons to the some countries that way. There has been a lot of work product in terms of the eu, it makes sense to see if we could do something in a big way that would impact. I know there are a lot of issues with individual countries in europe but id be interested in you guys being open minded to that as a possible. Thank you. And we are. Its under review and i could make an argument if i had to its a Bilateral Agreement. So thank you. And i yield back. Thank you. Mr. Lewis, youre recognized. Thank you, mr. Chairman, 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, the issues of human rights, labor rights captioning performed by vitac