USTR Opens Door to Delays for Many Allies on Steel Tariffs, Says NAFTA Coming Together
The U.S. Trade Representative Robert Lighthizer is talking with South Korea, Australia, Argentina and the European Union about exemptions from Section 232 tariffs on aluminum and steel, and is going to begin talking to Brazil soon. He expects all those negotiations to come to a conclusion by the end of April, he told the House Ways and Means Committee. Lighthizer, who testified for more than three hours March 21, said it's ultimately up to the president but he believes it makes sense for tariffs not to apply to countries while they are in negotiations. He acknowledged that Brazil imports U.S. coal to make steel slabs, and then U.S. mills use those slabs and finish the steel. He said the agency will take that into consideration, but added, "That isn't to say, they will be successful in getting an exclusion." He also said Korea is a particular problem in the steel sector.
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While Lighthizer was testifying, EU Commissioner for Trade Cecilia Malmström and Commerce Secretary Wilbur Ross put out a joint communique. "We have agreed to launch immediately a process of discussion with President Trump and the Trump Administration on trade issues of common concern, including steel and aluminum, with a view to identifying mutually acceptable outcomes as rapidly as possible."
Most of the questions from House Ways and Means Committee members were about NAFTA, with many Republicans emphasizing how important retaining the investor-state dispute settlement provisions is to them. Lighthizer held firm, reiterating his position that ISDS is a government encouragement to outsource manufacturing to Mexico. But with regard to rules of origin, another unconventional proposal from the U.S., Lighthizer said, "I think we're finally starting to converge."
Two Republicans who represent states with strong auto manufacturing -- Rep. Mike Bishop of Michigan and Rep. Diane Black of Tennessee -- told him they don't like that he's pushing U.S.-specific rules of origin and higher North American rules of origin when the auto industry is saying it's unworkable. To Black, Lighthizer said that Nissan's factory in Mexico will likely have to start paying the 2.5 percent tariff on cars under a new regime, but that the rules would not affect Tennessee jobs at Nissan, because those cars are produced for the domestic market, and therefore are not subject to duties, no matter how much foreign content they contain. "When they go around talking about this, they conflate these two things," he said. He reassured Bishop that his NAFTA team had just gone to Detroit, and that the end result of the rules rewrite should be more auto jobs returning to America.
While Republicans were unhappy on Lighthizer's unyielding stance on ISDS and the NAFTA sunset clause, Democrats may have been more satisfied with his responses on Mexico labor standards. House Democrats argue that low wages, not ISDS, is the major reason for outsourcing decisions, and that unions that are not independent are part of the reason Mexican wages have not risen even as industrialization has spread. Lighthizer agreed that Mexico has not lived up to its obligations on labor in NAFTA, and said getting a secret ballot vote for union representation in Mexico is important to him.
On the U.S.-Korea Free Trade Agreement, Lighthizer told the committee, "I think we're down to the last few issues." He identified issues of implementation on lifting tariffs on auto and other products and on how South Korea supports its currency. "My hope is this comes to a conclusion quickly," he said.