During a June 19 hearing on the "2019 Trade Policy Agenda: Negotiations with China, Japan, The EU, And UK; New NAFTA/USMCA; U.S. Participation in the WTO; and Other Matters," House Ways and Means Committee Democrats expressed optimism over working with the Administration to ratify the United States-Mexico-Canada Agreement (USMCA) but asserted their commitment to stronger labor and environmental provisions. Committee Republicans argued that the USMCA is superior to NAFTA and a vote is overdue.

As he did before the Senate Finance Committee June 18, USTR Robert Lighthizer praised Speaker Nancy Pelosi (D-CA) for handling the USMCA process fairly and professionally, and said he is eager to work with the Trade Working Group the Speaker has established, led by Ways and Means Chairman Richard Neal (D-MA).

The trade hearing comes as Republicans push for a USMCA vote prior to the August congressional recess, President Trump is expected to meet with Chinese President Xi at the G-20 Leaders Summit in Japan June 28-29, and the President has dropped the threat of immigration-related tariffs on Mexico. Members of Congress remain concerned about the Administration's use of tariffs generally, including the potential for additional tariffs on Chinese imports.

In his opening statement, Chairman Neal committed to working with USTR on the USMCA: "The opportunity we have right now to improve the NAFTA is too important not to get right. We have a chance to set the American economy and American workers on a better course. We can ensure that labor standards are raised through this agreement, that protections for the environment are respected, and that affordable access to medicines is preserved — now and in the future. All of this is too important to rush."

Ranking Member Kevin Brady (R-TX) said in his statement: "USMCA truly is a 21st-century trade agreement, setting high standards in many crucial areas for America — agriculture, digital trade, customs barriers, and intellectual property — producing strong wins for American manufacturers, farmers, workers, and service businesses. Of course, agreements must be enforceable to hold our trading partners accountable. Establishing strong, effective, and timely processes to settle disputes ensures that America receives the full benefit of USMCA. Congress must approve this agreement as soon as possible to unlock these benefits."

During questioning, Chairman Neal said he is willing to work with Lighthizer on a path forward on the USMCA, but needs assurances that members will be given the space and time to work out complex issues. Lighthizer pushed back against the notion that the agreement is being rushed and said he is very eager to sit down with members and deciding "where the lines are and what can be done and what can't be done." Getting the agreement done sooner rather than later is in everyone's interest, he said.

Rep. Earl Blumenauer (D-OR), who chairs the Trade Subcommittee, said the tone of the USMCA negotiations is encouraging and he expects there are a variety of areas on which they are able to move forward. Lighthizer said he could work out labor and environmental provisions with members very quickly.

Rep. Bill Pascrell (D-NJ) called Lighthizer one of the best negotiators to represent United States and said, "You are not the problem, here is the problem: trust is key … " He said the Administration is trying to quickly move the USMCA and Democrats want to ensure the right deal is struck, with Congress "looking over every inch." He cited Lighthizer's comments to Senate Finance Committee Ranking Member Ron Wyden (D-OR) that he would do whatever it takes to satisfy members' labor and environmental concerns and asked whether that would require changing the text of the deal. Lighthizer said he doesn't think that will be necessary.

Ranking Member Brady asserted that the USMCA includes far-reaching chapters on labor, sought by Democrats for decades, that would transform the labor environment in Mexico. Lighthizer acknowledged what Mexico did was historic — approving legislation that will eliminate so-called "protection contracts" by ensuring secret ballot votes on labor union representation and collective bargaining agreements — and said the agreement will result in bold, strong labor reform. He later said he expects some monitoring over labor protections.

Democrats still seemed wary over labor issues. Rep. Linda Sanchez (D-CA) said affording secret ballot votes to workers does not mean labor concerns are going to "magically vanish," and while there is some reason for optimism over labor reform in Mexico, it is going to take years and significant resources and expertise. Rep. Brian Higgins (D-NY) specifically asked what is being done to reform labor and environmental conditions with regard to "maquiladoras." Lighthizer suggested there are protections in the USMCA that were not in NAFTA to address the situation regarding maquiladora companies, and workers will know what their benefits are.

Under questioning from Rep. Devin Nunes (R-CA), Lighthizer asserted that the agreement's agricultural chapter will provide access to US producers.

Republican members including Reps. Jackie Walorski (R-IN), and Darin LaHood (R-IL) said a vote on the USMCA is due or overdue. Rep. Tom Rice (R-SC) asserted that the USMCA is preferable to NAFTA and would pass the House if it got a vote today, but the question is when it will get a vote.

Tariffs

Chairman Neal asked Lighthizer about President Trump's threat of immigration-related tariffs on Mexico: whether the USTR was supportive, what is the legal and policy rationale, and whether the threat undermines or makes more complicated efforts to pass the USMCA. Lighthizer said he supports the move, sees no reason why that situation should make it more difficult to pass USMCA, and encouraged members not to lose sight of the fact that the situation was successfully resolved. " … [T]he crisis seems to have been averted, and we're moving in the right direction," he said.

Rep. Ron Kind (D-WI) thanked Lighthizer for his efforts that contributed to the lifting of steel and aluminum tariffs on Mexico and Canada. Kind said the President's trade war is having a real damaging effect on constituents, including lost dairy exports to China, and suggested greater consultation with members. Rep. Adrian Smith (R-NE) also expressed appreciation for the lifting of steel and aluminum tariffs.

Some Republicans commented that they do not like the tariffs on Chinese imports, and Ranking Member Brady asked about expectations for negotiations with China at the G20 and otherwise. Lighthizer said he expects to speak by phone and in person with his Chinese counterpart before President Trump is expected to meet with Chinese President Xi at the G-20 Leaders Summit. He said relations with China had been getting worse over at least the past two decades and the negotiations went on for months with good headway before the Chinese side decided they couldn't go forward.

Some members asked about the prospects for free trade agreements (FTA) with other nations. Rep. George Holding (R-NC) asked about an FTA with the UK given the possibility that Brexit may not preclude such an agreement with the United States. Rep. Kenny Marchant (R-TX) asked about the possibility of a trade agreement with Switzerland. Lighthizer said there are several countries for which FTA possibilities are being explored, including African and TPP countries, as well as Switzerland.

Testimony from the hearing is available here.

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