OMAHA (DTN) -- U.S. Trade Representative Robert Lighthizer told senators Tuesday it will take more time working with House Speaker Nancy Pelosi before the Trump administration can submit the U.S. Mexico Canada Agreement to Congress for ratification.
Lighthizer testified Tuesday to the Senate Finance Committee. Acknowledging the House needs to take leadership in ratifying the USMCA, Lighthizer said he has worked extensively with Pelosi, D-Calif., to address concerns over environmental and labor standards, as well as enforcement of the new trade deal. Pelosi "has been completely fair and above board," Lighthizer said.
"I think we're making progress in that and my hope is over the next couple of weeks we will make substantial progress," Lighthizer added.
On other topics, Lighthizer said he's unsure if tariffs will lead to Chinese trade reforms, but dialogue alone did not prove successful. The ambassador also acknowledged U.S. agriculture is losing market share in Japan because of other trade agreements, but trade talks with Japan are making progress.
"The biggest single issue that is troubling to me on that front in the short run particularly is the hit to our farmers because the Japanese have made agreements" with Canada and New Zealand under the Trans Pacific Partnership, as well as Japan's trade agreement with Europe, Lighthizer said.
He added, "We are in a position, thus, where we are treated worse than we were before relative to our strongest competition and that is an unacceptable situation for the United States from our point of view and we are in negotiations and making headway on that score."
As a sector of the economy, agriculture has been among the biggest supporters for getting the new trade deal completed. Last week, 950 groups signed on to a letter to congressional leaders calling on Congress to ratify the USMCA. Lighthizer said the new trade deal "is remarkably better" for agriculture, "even though agriculture did relatively well under the old NAFTA." Lighthizer cited wheat standards and dairy provisions affecting trade with Canada, as well as language on geographical indicators and rules on biotechnology, as all being beneficial to agriculture. Lighthizer added nearly everyone wanted to see changes related to dairy trade.
"What was I most lobbied on by members before we fixed it, I would say it was how they treat our dairy," Lighthizer said. "I had senators from all across the country very concerned about that."
Despite some Democrats saying USMCA doesn't make dramatic changes to the trade relationships with Canada and Mexico, Lighthizer said USMCA "is a truly great agreement" and his objective would be to get large bi-partisan support out of Congress. Lighthizer said the USMCA would be "significantly more enforceable than last agreements." Under USMCA, U.S. negotiators made obligations "very specific" on issues such as Mexican labor law.
Lighthizer did not have a specific timeframe for when USMCA would be submitted to Congress. The schedule set forth in law states that trade agreements must be introduced at least 30 days before Congress begins formal hearings and committee action. Thus, the window for Congress passing USMCA this summer is becoming smaller.
On a call with reporters Tuesday, Senate Finance Committee Chairman Charles Grassley, R-Iowa, also defended Pelosi on the trade deal, saying she has a lot of freshmen members who are not educated on the complexities of a trade deal.
"The Senate just has to wait on the House of Representatives," Grassley said.
Just before the hearing began, President Donald Trump tweeted he would meet with Chinese President Xi Jinping next week. "Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting," Trump tweeted.
Lighthizer said the U.S. is preparing to move ahead with more tariffs on Chinese goods. The USTR is holding hearings this week with businesses testifying on the impacts.
"We think we had an untenable situation with China, one [that] frankly should have been addressed a couple of decades ago," Lighthizer. He added, "Nothing less than the jobs of our children on the line."
Sen. Jon Cornyn, R-Texas, questioned the U.S. unilaterally trying to change Chinese trading practices. Cornyn brought up the Trans Pacific Partnership and said he thinks more work is needed with allies to put pressure on China
"When I think about the challenges of China, it seems to me that we need our friends and allies to work with us to counter China and get China in a better place," Cornyn said. "I frankly am going to be amazed if you are going to get them to make structural changes. I hope you are."
Lighthizer reiterated his view that TPP was a bad deal for the U.S. "It would end a lot of our manufacturing," he said. The ambassador added that he works a great deal with Japan and the European Union when it comes to the Chinese talks. "The fact is I deal with my allies quite a bit on this," Lighthizher said.
Lighthizer added, "I like where we are and I think joining the TPP would be a mistake."
Sen. John Thune, R-S.D., said one of the big concerns for farmers in his state is permanently losing market share, not just in Mexico and Canada, but also China and Japan, as trade deals stall while other countries complete them.
"A lot of other countries are going to leap frog the United States in building these free-trade networks and producers in my state and across the country are going to continue to lose market share," Thune said.
Grassley said he largely supports President Trump's trade agenda, but Grassley said he does not agree with using tariffs against trading partners, such as the threat of placing tariffs on Mexico over immigration.
"I fear that continuing to use tariffs this way will undermine our credibility with trading partners," Grassley said.
Lighthizer later said he thinks the relationship between Mexico and the U.S. will be better when the border is secure.
Under questioning from Sen. Bob Menendez, D-N.J., Lighthizer said he had not thought about different scenarios in which the president might threaten tariffs to extract a foreign policy initiative, but Lighthizer defended the president's ability to use such tools. "If you get to the point where you think it is a national security crisis, you do what you have to do," Lighthizer said.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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