USTR Nominee Says Aerospace, Auto ROO in USMCA Need Retooling

"I think we need to look closely at the rules of origin to make sure that third countries, countries of concern are not inadvertently or deliberately benefiting from free riding on the agreement. I think we should look at the rules of origin for automobiles, aerospace, and other things -- and I think we need to look and see if we need to have any kind of restriction of, or value added, from foreign entities of concern, non-market economies, countries that benefit from unfair trading practices or subsidies and somehow get their content into goods that are going across the border." He said those exporters "benefit from the agreement without taking on any obligations."

In addition, he said he'll expect to resolve irritants in the trading relationship, like barriers to U.S. dairy exports and Mexican discrimination in investment in its energy sector, "for the political and economic sustainability of that agreement."

Greer, who was testifying in front of the Senate Finance Committee on Feb. 6, told them: "I am convinced that we have a relatively short window of time to restructure the international trading system to better serve U.S. interests."

The former chief of staff for USTR Robert Lighthizer faced some skepticism from some Democrats on the panel that he could negotiate new trade deals or improve existing ones, given the 25% threats that President Donald Trump wielded against three countries that have trade agreements with the U.S. -- Colombia, Mexico and Canada.

Sen. Tina Smith, D-Minn., told him, "What my fear is -- that the United States, with this kind of radical and chaotic trade policy, it's going to make us seem like an unreliable trade partner." She asked him how can he convince other countries to make concessions if the tariff liberalization they get in return could disappear "on a whim, on an issue that might be completely unrelated to trade."

He said all free trade agreements include "essential security" clauses that allow the benefits to be curtailed to serve one of the country's security needs. Smith was unconvinced, and said "for every action, there's a reaction as well," and that she expects there will be challenges in the future in trying to open up markets to American exports as a result.

"We’re always going to have international trade," Greer later told Sen. Michael Bennet, D-Colo. "We want it to be with countries that agree with us and are going to play by the rules."

Sen. Chuck Grassley, R-Iowa, asked Greer to clarify what his role would be in trade policy, and Greer said as it has always been -- the chief trade negotiator, Section 301 enforcement -- but he allowed, "The president himself is so focused on trade issues."

Grassley asked Greer to work on new FTAs so that commodity growers can find other customers besides China. "My guess is we’ll always trade with China, absent a conflagration, God forbid, but we do need to have diverse export markets for our exporters," Greer said. He said they'd be talking about which countries "would give us the most bang for our bucks" if they liberalize trade.

Cassidy complained to Greer that Indian imported shrimp is unfairly traded, and asked if he would commit "to slapping a tariff" on the product if shrimp advocates provide evidence of what they're alleging.

"There’s a process" for a Section 301 investigation, Greer replied. "If I prejudge them, I get in trouble with the courts." However, he said if trade remedies aren't working for shrimp imports, "we need to explore [Section] 301 or other tools."

Senators asked Greer several questions related to Section 232 investigations, even though those are run by the Commerce Department. The top Democrat on the committee, Sen. Ron Wyden, of Oregon, told Greer he's concerned that using tariffs to try to force reshoring of medicine production could lead to shortages rather than a revitalization of the sector.

Sen. Steve Daines, R-Mont., said the administration should know that when a 10% tariff on aluminum went on for all aluminum imports, the cost was passed on to heavy equipment manufacturers, and then those machines became more expensive for Montana farmers. He suggested trade remedies have made fertilizer more expensive, too.

Sen. James Lankford, R-Okla., acknowledged that Commerce handles trade remedies, but told Greer that the cost to bring a case is high, and the trade remedies don't always stop the dumping.

Greer, who said he represents domestic parties in antidumping and countervailing duty cases, said the administration will "look at the dumping laws and see if they can be improved and better serve American workers." He said they'll also see if there are other unfair trade practices "that maybe aren’t fully captured by dumping laws."

Sen. Elizabeth Warren, D-Mass., said she agreed with former USTR Lighthizer when he said the failings of U.S. trade policy can be blamed on "the political establishment, of both the Republican and Democratic parties, under the influence of multinational corporations and importers." She asked Greer if he agreed, and Greer said he did.

She pressed Greer to promise that exclusions wouldn't be granted to politically connected firms, and cited an academic study that found that Section 301 exclusions were more likely to be granted to companies that donated to congressional Republicans. He said he doesn't know if there will be any exclusions at all to tariffs in Trump's second term, but if there are, they will be transparent. He noted that in the Section 301 exclusion process, if an exclusion was granted, all importers received the benefit, not just the requester. (This was not true in steel and aluminum exclusions in the early years, though general exclusions were later granted).

Sen. Maggie Hassan, D-N.H., also asked that exclusions be accessible to small businesses, and Greer agreed he would set up a hotline for small businesses to help them understand how to apply, if an exclusion process was offered.

Hassan also complained that just the threat of 10% tariffs on Canadian oil exports led a home heating oil distributor in her state to add a 10% surcharge to bills. She noted that about 80% of New England’s fuel supply comes from Canada.

Greer replied, "How do we balance the cost of a life lost from fentanyl against other costs?"

Hassan replied sharply, "You do not have to talk to me about fentanyl." New Hampshire was an early state to suffer from opioid overdose deaths, and Hassan worked on the problem as governor before she became a senator. She told Greer that the state has made progress, and that progress was threatened by a freeze on grants to nonprofits that help the addicted.

"There are other ways to combat the security issues that you are talking about than to make people who are hardly making it through the winter to pay $100 more for each tank of oil," she said.

Several Republicans asked him to remember the benefits of liberalizing trade, with Sen. Tim Scott, R-S.C., telling Greer that his state exported about $36.4 billion worth of manufactured goods, supporting 112,000 jobs.

Greer replied, "When I look at some of our largest trading partners," the volume of trade is so large "because we import so much from them." He pointed to Vietnam, which he said had a $100 billion trade deficit (it actually grew to $123 billion in 2024 from a little more than $100 billion in 2023). "We have a lot of trading partners like this, that enjoy very substantial trade access to the United States, and we don’t enjoy reciprocal acces to go the other way. So I think, in short order, we will be approaching these countries to assess their unfair trade practices and why it is that they're able to have, able to maintain these huge trade imbalances over many years. It doesn’t make sense, when we have so many products that we’re competitive on, we should be able to ship overseas. I have to be able to go to these countries and explain to them that if they want to enjoy continued market access to the United States, we need to have better reciprocity.”

He said that there are two ways to reduce the deficit -- to erect barriers to exports, or to increase U.S. exports to that country. He said he wants to hear from industries and workers what market access they need, and where. "It's very important at an early stage to figure out exactly what we want from these other countries," he said. "This isn’t about muscling people or being a bully, this is about having fair and reciprocal access."

Sen. Todd Young, R-Ind., told Greer he just reintroduced a bill that would authorize negotiations for a sectoral agreement on critical minerals. He complained that the last administration was "consistently in a defensive crouch" when it came to trade.

"We need these, we don’t have them in the ground here; we need to trade in order to get access to them," Young said.

Greer agreed that the America First Trade memo suggests there could be sectoral FTAs, and he thinks rare earths and critical minerals are an area for that, but he cautioned that if a country has a $50 billion trade surplus with the U.S., and is asking for a reduction in U.S. tariffs for pickup trucks and cars in exchange for the critical minerals deal, that wouldn't be acceptable.