U.S. Trade Representative Robert Lighthizer was grilled repeatedly on current agricultural trade issues during a March 12 Senate Finance Committee hearing ostensibly focused on the future of the World Trade Organization (WTO).
Concerning current negotiations designed to bring about structural reforms in China’s trade and intellectual property practices, Lighthizer declined to speculate on when talks will conclude. But he did report he and USTR are working continuously and exchanging draft proposals and language with counterparts in China. Lighthizer, as he did during a previous hearing before the House Ways and Means Committee, maintained that if a final agreement is reached, it would be very detailed and specific, and could be up to 120 pages long.
Without setting a specific timeline, he said an agreement either will be achieved or a decision made to end the talks in the near term. “The president will tell me when time is up, or China will,” Lighthizer told the committee, which is chaired by Sen. Chuck Grassley, R-Iowa.
Concerning agricultural trade, Lighthizer said he recognized the decline in farm income and that retaliation from U.S. trading partners against the Trump administration’s imposition of Section 232 “national security” tariffs has had an additional negative impact on farmers. But he reiterated that no segment of the U.S. economy would benefit more from a comprehensive trade agreement with China than U.S. agriculture.
Sen. Pat Roberts, R-Kan., questioned Lighthizer on sanitary and phytosanitary (SPS) measures that other countries use to discriminate against U.S. agricultural products. In response, Lighthizer likened SPS issues to “peeling an onion,” dealing with one at a time. Many of the discussions with China focus on these SPS issues, he said.
Roberts, a Finance Committee member who also chairs the Senate Agriculture Committee, also urged Lighthizer to pursue bilateral or even multilateral trade agreements given U.S withdrawal from the Trans-Pacific Partnership (TPP), especially given the failure of the WTO’s ministerial conferences to resolve SPS challenges.
Lighthizer again defended the administration’s decision to pull out of TPP and said of the 11 countries included in TPP, the United States already had free trade agreements with six. “If we can get an agreement with Japan, that will go a long way as the same effect of TPP,” he said.
Sen. Steve Daines, R-Mont., said although he supports what the administration is attempting to achieve with China, farmers and ranchers in his state are anxious and want to see results. He noted Montana ships significant quantities of its wheat and beef overseas, with Japan being a major market, and that TPP offered an opportunity for significant tariff reductions. “Results we’re seeing at the moment are losing market share,” Daines said, adding that barley producers were in his office recently to complain about lost contracts with Japanese customers.
Lighthizer said access to the Japanese market is a “real problem,” and accomplishing a trade deal with Japan is a high priority for the Trump administration. However, he warned that it will take time to finalize an entire trade agreement with Japan, although pre-negotiations have begun.
Many senators also expressed support for U.S. efforts to join with the European Union and Japan to apply pressure on China’s structural trade and economic practices that disadvantage multiple countries. “Partnerships such as this one are critical to showing China that the United States is not the only country complaining,” Grassley said.
Lighthizer also was asked about when the administration would lift the Section 232 steel and aluminum tariffs imposed on Canada and Mexico, to which he responded that the administration is in ongoing discussions with the two countries to “find a way out of that dilemma for them and for us.”
Concerning upcoming trade talks with the EU, Lighthizer said thus far, the Europeans have persistently refused to allow the negotiations to include agriculture. Lighthizer noted he had met with the EU trade commissioner last week and termed discussions on agriculture a “stalemate” because he recognizes Congress won’t consider any trade agreement with the EU unless agriculture is included.
Concerning the WTO, Lighthizer testified that the administration “wants an effective international trading system” and that the WTO is a “valuable institution that offers many opportunities for the United States to advance our interests on trade.” But he was highly critical of the WTO’s deficiencies, citing the following:
- The WTO negotiating process has “largely broken down,” with no new significant multilateral market-access agreements negotiated during the 24 years of its existence.
- Failure to reduce tariffs, primarily in nations that self-identify themselves to be “developing” economies. As examples, he cited the 3.4 percent average bound tariff rate for all goods in the United States compared to 31.4 percent in Brazil, 37.1 percent in Indonesia and 48.5 percent in India. He also cited the developing country self-designations of “some of the world’s largest and richest economies, including China, India, Turkey and South Korea,” which “make a mockery of special and differential treatment (that) also makes it difficult if not impossible for (WTO) members” to pursue new market-opening trade agreements.
- The failure of “too many WTO members” – including China and India – to comply with their current trading obligations, such as providing regular notifications of subsidy programs and other information.
- A dispute settlement process that is being misused to create new obligations to which the United States never agreed. “Over the last quarter century…, the United States has become the chief target of litigation at the WTO, and we have lost the overwhelming majority of cases brought against us…,” Lighthizer testified. “The WTO has treated the world’s freest and most open economy as the world’s greatest outlaw.”
In each of these areas, Lighthizer said, the administration is “working diligently” within the WTO to negotiate new rules.