During the June 18 Senate Finance Committee hearing on "The President's 2019 Trade Policy Agenda and the United States-Mexico-Canada Agreement" (USMCA) with USTR Robert Lighthizer, senators of both parties expressed concern about the Administration's use of tariffs, Republican members lauded the (USMCA) as superior over NAFTA, and Democratic members insisted the deal include stronger enforcement standards.

Chairman Chuck Grassley (R-IA), who was previously very vocal in encouraging the Administration to lift steel and aluminum tariffs on Mexico and Canada, said that while he shares the Administration's concerns over unfair trading practices, he doesn't agree that tariffs should be the tool used to achieve every trade policy goal. He also said the nation should not squander the opportunity to update NAFTA, which he said has been critical to the success of farmers and businesses.

Similarly, Ranking Member Ron Wyden (D-OR) said that while China has been "stealing our intellectual property and undercutting American jobs for way too long," the situation must be handled differently because the next escalation in tariffs on Chinese imports will directly raise the cost of everyday goods in America.

During questioning, Chairman Grassley said congressional implementation of the USMCA should provide certainty to parties involved, including not having to question whether the relationship will be threatened as a means to an unrelated end. The Chairman also referenced using Section 301 to enforce labor and environment commitments under the USMCA and sought assurance that all USMCA commitments will be enforceable, which Lighthizer provided.

Ranking Member Wyden asked whether the Administration's "trade war tariffs" could impact college students purchasing technology and other supplies ahead of the next school year, and asked how the public impact of trade tensions are being considered by the Administration. Lighthizer said the next batch of tariffs would affect products like laptops and cell phones, but, at a higher level, the tariffs reflect the feeling that China is stealing intellectual property, that the problem has festered for too long, and that the dynamic threatens the future jobs of those US college students. Wyden further asked about trade enforcement and mentioned his proposal with Senator Sherrod Brown (D-OH).

Under questioning from Senator John Cornyn (R-TX) regarding the USMCA, Lighthizer said House Speaker Nancy Pelosi (D-CA) has been "completely fair, and above board and, I think, constructive," and referenced the Trade Working Group she has assembled. Cornyn further asked whether it would be wise to revisit the Trans-Pacific Partnership (TPP) in an effort to confront China, which may be more effective than a unilateral approach. Lighthizer said he thinks the TPP is a bad agreement, including with regard to provisions on automobiles and currency, and that the President's approach of unilateral negotiations is preferable.

Senator Maria Cantwell (D-WA) said she agreed with Cornyn regarding China, saying when you can get other nations to support the US on something like IP, it could be helpful. Both she and Senator Ben Cardin (D-MD) raised the issue of enforcement provisions regarding the USMCA, with Cardin saying Senators are pleased to see Mexico change labor laws but don't think they can make it a reality without help from the United States, and underscoring that enforcement is a major issue that needs to be dealt with. Lighthizer said Mexico has already made commitments regarding collective bargaining agreements, and that the Administration is also interested in having enforceable provisions.

Senator Robert Menendez (D-NJ) also expressed interest in enforcement provisions, and frustration with regard to the immigration-related tariffs the President threatened on Mexico.

Under questioning from Senator Rob Portman (R-OH), Lighthizer asserted that the USMCA includes enforceable environmental and labor standards, contains provisions related to digital trade and the Internet not included in NAFTA, and improvements for the agricultural and automotive industries. Similar to Portman, Senator James Lankford (R-OK) said USMCA is a much better deal than NAFTA, and asked about the effect on auto exports: parts, supplies, materials, and finished products that we produce in North America and then ship to different countries. Lighthizer said the auto sector is among the biggest beneficiaries of the USMCA and that automobiles shipped outside of North America will have higher US content and more production in the United States.

Like her Democratic colleagues, Senator Catherine Cortez Masto (D-NV) raised the issue of enforcement provisions and the Wyden-Brown proposals. Lighthizer said he is not endorsing any proposal specifically but he will work Senators Wyden and Brown, and other members.

Testimony is available here.

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