Lighthizer Fires Back at Critics on NAFTA 2.0
U.S. Trade Representative Robert Lighthizer fired back at critics who say the auto rules of origin will make North American cars less competitive for export beyond the NAFTA countries and that the labor-friendly changes to the pact will not be enough to garner substantial Democratic votes. Lighthizer, who was speaking on Laura Ingraham's political talk radio show on Oct. 2, said: "The people who say we shouldn't have renegotiated this thing are just engaging in self-deception. We were witnessing literally the loss of our automobile industry, parts and companies to Mexico and other places."
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Lighthizer said because of loopholes, the current rule of origin of 62.5 percent was really more like 50 percent, and that increasing the North American content will be good for all three countries. "The person who is going to lose on this is China," he said. He also said it's ridiculous that some say companies will shift more work to Asia because complying with the rules be so expensive.
"All the major auto companies, General Motors, Ford, FCA, which used to be Chrysler, Honda and Toyota have all said 'This is fine.' They can work with this," Lighthizer said. "They've all said it's going to move more jobs back to America but that's not a bad thing, it's a good thing. They've all said this is workable, they've all endorsed it."
While the American Automotive Policy Council, which represents the Big Three, did call the U.S.-Mexico-Canada Agreement "workable," Honda and Toyota have made no statements on the auto rules of origin. The Association of Global Automakers -- the group that represents those companies along with Mercedes, BMW, Kia and other foreign automakers who assemble cars in the U.S. -- was critical of the changes.
"Canada's decision to join the United States and Mexico in a new North American Free Trade Agreement (NAFTA) is an important step, but it does not alter the fact that the cost and complexity of complying with the new auto rules will pose serious challenges for U.S. automakers," Global Automakers CEO John Bozzella said.
An Oct. 1 editorial published online by The Wall Street Journal said: "Trade Rep Robert Lighthizer has been telling Mr. Trump he has roped in Democrats by co-opting Big Labor with the new wage and union mandates. But note that even the United Auto Workers said Monday they are withholding judgment. Only a handful of House Democrats voted to give Barack Obama trade-promotion authority. Would Nancy Pelosi really give Mr. Trump a political trade victory?"
Lighthizer scoffed at the logic that if the House of Representatives has a change in party control next year, that would make his job more difficult to get ratification. He said if his team had negotiated a deal designed only to appeal to Republican demands, it would make sense. But he said you can't criticize him for making changes that appeal to labor and then argue that a Democratic majority is dangerous for ratification.
"You'll find a few Republicans who will probably oppose it because they don't like the fact that we're going to bring manufacturing back, and they think that outsourcing is not a problem. There are some Democrats that'll oppose in part because it's just something the President wants and they're against that, or because they think it doesn't go far enough. But I think the vast majority of fair-minded members in both parties will support this."
Welles Orr, who was assistant USTR for congressional affairs during the George H.W. Bush administration and a NAFTA negotiator, said this deal is an improvement on the original NAFTA -- though he's skeptical that the rules of origin will lead to a renaissance in U.S. auto manufacturing jobs.
"I think the unions are going to take their time and ultimately be supportive of it," he told International Trade Today. If that happens, then it would be harder for Democrats to oppose it, he believes. But, he said, it's too early to say a majority of Democrats would vote yes. "But I think it’s enough that Democrats will have to take a pause and say, 'It’s an improvement on things that matter to me.'" At the same time, he said, in a majority-Democrat House, "You’d have to be relying on a good chunk of the Democratic caucus to support it, and why would they do that for Trump?"