Lighthizer Works to Convince House Democrats He's on Their Side

Trade Subcommittee Chairman Rep. Earl Blumenauer, D-Ore., a longtime environmental advocate, told him he agreed that some of the environmental provisions in the new NAFTA are an improvement over those in the Trans-Pacific Partnership, and noted that Lighthizer's enforcement action on Peruvian logging earlier this year is exactly what they want to see for the new NAFTA.

Blumenauer, one of nine members of a working group that is tasked with identifying changes to the pact needed for Democratic approval, was told by Lighthizer that he doesn't need "weeks and weeks" to arrive at those agreements with the working groups.

On labor and on the environment, the USTR said, he thinks it all can be worked out in a half-day each. "I’m not on the other side," he said. "I’m on the same side."

Also, Rep. Mike Thompson, D-Calif., another working group member, implied he thought the deal would be ratified in September. The date came up when Thompson pressed Lighthizer to make sure that British Columbia follows through with its rules about where U.S. wines will be stocked in grocery stores. (Thompson represents the Napa Valley.) Lighthizer said they don't have to comply until after ratification.

Lighthizer and Thompson -- Thompson is working specifically on language on labor rights in the deal -- talked about how the labor provisions might be refined during the June 19 hearing. Lighthizer said that organized labor will have a role to identify problems at Mexican facilities, and he said, "I expect to have a level of monitoring down there." But he added, "I don’t think we should start with the proposition the leadership in Mexico does not want to enforce it."

Lighthizer built his "same side" bona fides with Democrats on the committee when he was reminded that Democrats felt betrayed by the fact that NAFTA advocates said Mexican wages would converge, and that they didn't, so companies moved South to take advantage of cheaper labor. He agreed that is exactly what happened and this renegotiated deal aims to stop it.

When Rep. Dave Schweikert, R-Ariz., asked what he should tell businesses that are complaining about the ways that investor-state dispute settlement has been scaled back in Mexico, Lighthizer said it's very simple -- if businesses value the high quality of the U.S. legal system, they can invest here instead of in Mexico. "So the response is don't invest in Mexico, invest here," Schweikert replied.

Lighthizer argued with that characterization, saying they're not trying to discourage companies from investing in Mexico. But after Schweikert continued to say the foundation of the rollback of ISDS is an effort to discourage investment in Mexico, Lighthizer ultimately said, "We made a decision not to subsidize people not to outsource their businesses to Mexico."

That change was one long-sought by NAFTA opponents on the left.

One of those opponents, Rep. Lloyd Doggett, D-Texas, told Lighthizer that he shares the USTR's desire to see an early approval of the new NAFTA. But Doggett told Lighthizer that when he talked to a huge NAFTA supporter from the San Antonio Chamber of Commerce, that man told him that ratification means nothing if the administration can levy tariffs on Mexico for non-trade reasons, or shift CBP staff away from ports of entry. The fact that the administration threatened tariffs on all Mexican imports undermines the effort to round up votes for ratification, he said.

New Democrat Rep. Don Beyer, D-Va., also told Lighthizer that the threat of tariffs on Mexican imports over immigration was a major problem for business certainty -- and business certainty was the main reason the International Trade Commission said there would be a positive economic impact from ratification. Beyer asked if there is anything in the trade pact that would constrain the president from imposing tariffs on Mexico for reasons other than trade. Lighthizer said no. He also defended the threat, and said, "it worked out so I don’t know why people are so upset."

Beyer said, "What’s the point of having a new NAFTA" if the president can just impose tariffs on Mexican goods after it's ratified?

Lighthizer said he agrees completely that the country needs certainty in its trading relationship with Canada and Mexico.

"The best way to get certainty is to pass this thing as soon as possible," he said.