USTR to Push for Increased Mexican, Canadian de Minimis Levels in NAFTA, Lighthizer Tells Senators
The Office of the U.S. Trade Representative will push for codifying prohibition of tariffs on e-commerce and for raising Mexico’s and Canada’s de minimis levels, USTR Robert Lighthizer told senators June 21. Canada has a de minimis threshold of $15 and Mexico has a $50 level, while the U.S. has an $800 de minimis level. “There are real differences in the three countries between the de minimis levels, and … the United States has what is clearly the most modern, the most enlightened” threshold, Lighthizer said during a Senate Finance Committee hearing exploring the Trump administration’s trade policy and USTR’s fiscal year 2018 budget request. “And that is something that I’m sure that we will pursue, and I hope that we would end up with a good result in this area.” Lighthizer added that the new NAFTA should add a digital trade chapter.
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The U.S. doesn’t have an “arbitrary deadline” for completing NAFTA talks, but is trying to finish talks by the end of the year. Furthermore, USTR intends to start negotiating NAFTA formally on Aug. 16, the earliest date that statutory process can begin under Trade Promotion Authority, Lighthizer said. “That’s very, very tight,” Lighthizer said. “If we find ourselves in a total stalemate and we can’t make any progress, then we’ll, in consultation with the [Finance and House Ways and Means] committees, decide what the next steps should be.”
Lighthizer said he’s prepared to negotiate until the U.S. gets a “high-standard agreement,” unless a stalemate occurs. “I’m not in a position where I’m going to commit to the status quo going on forever,” he said. “That’s not going to happen.” Senate Finance ranking member Ron Wyden, D-Ore., said that statement “hits the bottom line,” and strikes the proper balance between executive and congressional decision-making on trade matters. A “high-standard agreement” should produce more family-wage jobs, involve greater labor and environmental commitments, remove binational antidumping and countervailing duty dispute settlement provisions, and combat currency manipulation and market-distorting state-owned enterprises, he said.
Lighthizer also said Mexico and Canada have some “deficiencies” related to intellectual property rights, including with regard to patents, trademarks and copyrights. USTR’s 2017 Special 301 Report called out Canada and Mexico for ineffective border enforcement policies against counterfeit and pirated goods (see 1704280026). Lighthizer expressed his hope that NAFTA will be a “model agreement” in terms of IPR enforcement, underscoring the need for U.S., Mexican and Canadian IPR systems “that are not incompatible.” Lighthizer added that USTR is in the process of filling its IP negotiator position.
Sen. Bob Menendez, D-N.J., asked Lighthizer how an updated NAFTA would improve upon Trans-Pacific Partnership labor provisions. Lighthizer responded by saying that TPP included labor provisions primarily negotiated by the three NAFTA parties, language he said he hopes would be expanded upon in a new NAFTA. "Our view certainly is that it’s a huge benefit to the United States if there are higher labor standards in Mexico,” he said. Sen. Rob Portman, R-Ohio, added that NAFTA’s current labor standards don’t represent what the U.S. works to negotiate with trade partners in other trade agreements.
Sen. Sherrod Brown, D-Ohio, asked Lighthizer whether the U.S. would work to remove investor-state dispute settlement provisions from NAFTA. The Trump administration has a negotiating objective to “strengthen” ISDS, but there are “sovereignty issues” associated with that process, as “non-elected non-Americans” often make decisions under the NAFTA mechanism about whether U.S. law is invalid, Lighthizer said. “I find that offensive,” he said. “I would not commit that we’re going to get rid of ISDS.” Instead, the administration will engage with the congressional trade committees of jurisdiction regarding potentially rebalancing the process. “It just shouldn’t go to the place where foreign corporations can challenge U.S. environmental laws and consumer protection laws and other sovereignties,” Brown said.
In his testimony (here) prepared for the hearing, Lighthizer added that USTR is reviewing the “effectiveness” of U.S. trade agreements, and plans to present President Donald Trump with its findings in October. The administration remains focused on negotiating bilateral, as opposed to multilateral, trade agreements, particularly with TPP countries, Lighthizer said. However, despite several calls for a U.S.-Japan trade deal, the countries aren’t ready to negotiate a deal, he said. Japan could potentially speed up the process by giving some unilateral concessions for U.S. beef access into its market, Lighthizer said, adding that that would help the U.S. narrow its trade deficit with the nation.