Lighthizer Defends Tariffs, Questions GSP Value, Says Future Exclusion Renewals Will Terminate in 2020

Lighthizer was unsympathetic to questions from members about the burden of tariffs under Section 301, coming from both very pro-trade members, like Rep. Stephanie Murphy, D-Fla., and protectionist champions, like Rep. Mike Kelly, R-Pa. Kelly, who told Lighthizer he wants broader Section 232 coverage of grain-oriented steel for a firm in his district, also complained that Steelite, a flatware importer, has not been able to get an exclusion from Section 301.

Lighthizer did not have an answer to why Steelite was denied, but explained that his office is disinclined to renew exclusions for companies that received them. “If you have a year or two years to make a change, then you should have made the change,” he said, to import from another country.

He also rejected the idea, suggested by the European Union, that countries should eliminate their tariffs on medical goods. He told Rep. Suzan DelBene, D-Wash., “I’m not in favor of reducing tariffs on the things we need, I’d be far more in favor of increasing tariffs on the things we need” to fight a future pandemic, he said, because that would drive production to the U.S.

Several members told Lighthizer they support a renewal of the Generalized System of Preferences benefits program, including Ranking Member Kevin Brady. The Texas Republican also said he wants a renewal of the Miscellaneous Tariff Bill and the preference for the Caribbean basin and Haiti.

Rep. Jackie Walorski, R-Ind., told Lighthizer that an RV manufacturer in her district has to pay millions a year in tariffs for Indonesian plywood when the program expires, and she asked him if he supports its renewal. He said he hadn't talked to the president about GSP, and said “the administration has not formally taken a position on that.”

Lighthizer said GSP “has benefits, but needs changes,” and added that it had recently come to his attention that some GSP recipients have free trade deals with Europe. He gave South Africa as an example, where U.S. poultry, he said, faces “a very high duty ... and Europe can sell it with no duty at all.”

“That strikes me as completely crazy,” he said, and he wants to see if the GSP law prevents that, or if it doesn't, he'd like to look at “how the law should be changed.”

Several members of Congress expressed concerns that a Kenya free trade agreement -- negotiations are expected to start on one this year -- would replace another unilateral preferences program, the African Growth and Opportunity Act, or AGOA. Lighthizer said it wouldn't, but also said AGOA is good for some countries, but not for others, and suggested that “large” African countries should give some market access via a free trade deal rather than have unilateral benefits.

Lighthizer dismissed a British goal of reaching a free trade deal before the November election. He said given the timeline of fast track, it would be impossible to have a vote on a deal in 2020, and he said while it's possible a handshake agreement could be reached by early November, “That would be a very, very, very, quick time -- I think that’s unlikely that that happens.”

“The U.K., we will have agricultural problems in that agreement, I can tell you, [as] they tend to be in the [sanitary/phytosanitary (SPS)] area,” he said, adding that Europeans tend to think that American food is unsafe. “I think it's thinly veiled protectionism,” he said.

Trade Subcommittee Chairman Earl Blumenauer, D-Ore., challenged Lighthizer on that issue, saying it's reasonable to have questions about American livestock methods. “Maybe we should be asking about our production practices that requires us to rinse chickens in chlorine in the first place,” he said. “Should we really export our weak standards to another country that has legitimate policy concerns?”

Lighthizer responded that it's the majority view in Congress that U.S. farming practices are safe and that other countries should not be allowed to bar certain imports under SPS rules that are not science-based.

Few questions were directed to the USTR on the World Trade Organization, though he was asked a few times about what he'll look for in a new director-general, and how to solve the appellate body problem. The U.S. has killed the dispute settlement system's appellate body.

“If I see any whiff of any anti-Americanism in any of the person’s past practices, I would certainly be willing to veto,” Lighthizer said of his views on a director general. With regard to the appellate body, he said, “I don’t feel any compulsion to have it ever come back into effect.” He said the non-binding dispute settlement system under the General Agreement on Tariffs and Trade was adequate.

Lighthizer was asked repeatedly about partial trade agreements he'd reached with China, and with Japan. He heartily defended the China phase one deal, and said that if it weren't for the COVID-19 pandemic, phase two negotiations with Japan would already have started. He said those talks probably won't begin for a few months.