tv Sen. Toomey on USMCA Trade Agreement CSPAN December 19, 2019 9:02am-10:03am EST
playbook of fairness on each side. their objective is to keep us divided. so it's hard for us to imagine that they're going to follow any process that does not extend the division of ukraine. >> thank you, mr. chairman. >> thank you very much. thank you to both of our witnesses. we appreciate your service to the country and appreciate your testimony here today. i'll be entering some supplemental materials into the record as well. the record will remain open until the close of business friday. the witnesses could respond rapidly to those, that would be greatly appreciated. with that, the committee is adjourned. and we're live this morning for remarks from pennsylvania republican senator pat toomey.
he's expected to discuss the u.s.-mexico-canada trade agreement known as usmca. this is hosted by the american enterprise institute just getting under way here live on c-span3. >> he has one of the authors of the 2017 tax cuts and jobs act. he's been a proponent of deregulation and an advocate for ending bureaucratic overreach. senator toomey, a strong defender of free trade will be laying out his thoughts on the current agreement today and after his presentation, he will be joined for a conversation with ai resident scholar dr. scissors. he has written extensively on the usmca and its impact on america's position in the world. please join me in welcoming senator toomey to the stage. [ applause ]
>> thanks, robert, for that kind introduction and most of all, thanks to you and aei for hosting this and giving me this chance to share my thoughts and have a conversation about what i think is an important topic. i appreciate everybody who came out this morning as well. i can tell you that i -- i take seriously the advice that i get from my staff and one of the messages i get repeatedly from my staff, they like to take me aside and say, remember, just because you can't give a good speech, doesn't mean you can't give a short speech. i'll try to keep that advice in mind and i look forward to the exchange with derrick. let's talk about usmca. i think when we talk about this it's worth having as a starting
point a question about nafta. why was it that the administration felt it was necessary to renegotiate nafta? because that obviously is the starting point for usmca. so was it that nafta was an unfair, imbalanced agreement? was it that the tariffs that were left in nafta are too high, that they were an unacceptable obstacle to trade? no to all of those questions. nafta is a free-trade agreement. zero tariffs on 100% of manufactured goods. zero tariffs on 97% of agricultural goods and no quotas, no obstacles. it's the epitome of a free, fair trade agreement. and since nafta was implemented american exports to mexico are up over 500%.
pennsylvania exports to mexico have grown right along with that, over 500%. i think you can make a case that since nafta was signed in 1993, a lot has changed in the economy since then. now we have this whole digital sector, we have this whole sector that just didn't even exist and so modernizing certainly made sense. but that's not the reason the administration wanted to renegotiate nafta. the reason, in my view, that the administration wanted to renegotiate nafta was because the increase in our exports, imports from mexico had grown even more and we have a trade deficit with mexico. a trade deficit with a country like mexico is completely insignificant economically to the united states, despite that, that is not the view of the administration. and so they set out to at least
significantly diminish and not eliminate the trade deficit with mexico. and that was the central motivating fact and that's why we have a lot of bad outcomes because it was the wrong intent in the first place. the actual purpose was to diminish trade with mexico and i'm afraid that that might happen. i don't think it's going to be severe. but on the margins it's going to cost us an opportunity to exchange goods with mexico and therein lies the heart of my objection. let me walk through some of the specifics or at least the way i think about the difference between usmca and nafta. i think that you could look at usmca as nafta with two categories of changes. first category i would consider the constructive, modernizing changes. they're mostly modest, i think. but they're not unimportant. it's about digital trade,
cross-border data transfers, ip protection for softwares, so mostly my understanding is that these items mostly now in usmca will be a codification of existing practices. that's all right. that's good. much of it was taken from tpp, so it wasn't terribly controversial or difficult to get there. and that's all fine. there's very, very modest opening of the -- some agriculture sector markets in canned, in particular, americans will be able to sell more dairy products. that's on the order of a half of 1% of our dairy production. not really large but not a bad thing. that's category one, what i think of the constructive changes. category two is where i have my
objections and these are changes that i think are protectionist in nature and are designed to inhibit trade. the first big category is the auto sector. as you may know, the source of the big majority of our trade deficit with mexico is in the auto sector and so unsurprisingly, that is the focus of really completely unprecedented provisions for a trade agreement. it's really the end of free trade in autos between the united states and mexico. let's be clear about that, right? what the administration could have done is they could have had a quota or tariff. i guess they decided that would be maybe too obvious. and instead they create this complicated but nevertheless onerous minimum wage requirement that is designed to force wages on mexican factories that are well above the prevailing rates
of wages because mexico is of course a developing country with a lower cost of living. this is designed to make mexican auto production less competitive and to raise the cost and the advocates for this agreement in the administration think that that is a good thing. i don't think it's a good thing. i think imposing this minimum wage that's much higher than prevailing wages will make the automotive industry as a whole less competitive. raising the cost of components from one source are going to tend to show up as higher costs in many cars that are produced in the country. it certainly means higher prices for consumers, let's be clear. this is a tax that american consumers will pay on autos and auto parts that come across our border, if the tariffs which are the alternative to the hire minimum wage, one way or another it's going to be a higher cost
by design. probably on the margin increases, pressure to shift to more automation or to just sourcing parts and cars in other countries all together. that means, i think, over time fewer american jobs in this space, not more. and that's one of the typical consequences of protectionist policies. the second area that i find very troubling is there's an expiration date on this. we've never had an expiration on a trade agreement for the reason that if you put an expiration date, you introduce uncertainly about what the world looks like after that date. in order to extend the expiration date which is 16 years from the date of signing, about 16 years out, the three parties have to simultaneously come together and agree to add as they've designed it six years at a time to the end of this.
that might happen, but it might not. if somebody is contemplating a cross border investment, they have to ask themselves, what's the trading environment going to look like when we no longer have a trading agreement that governors it. or at least we might not. so, again, it has to be detrimental to economic growth and trade across the border because we are needlessly injecting a new level of uncertainty in these rules. third category that i find on juksable is the elimination of the settle mechanism. it's american investors who make use of this and it is because american investors and it could be a multinational corporation headquartered in the united states, it could be a group of investors making a purchase in another country, it is sometimes the case that an american investor in a foreign country
doesn't get a fair adjudication in the court. that happens sometimes. every country in the world has some level of protectionist tendencies and some local competitors will be able to influence the courts, regulators to put the foreigner, in this case the american investor, at a competitive disadvantage. we know this is always a risk. and so we've created this investor state dispute settlement mechanism where we and our trading partners can have confidence that there will be a fair adjudication and we almost always win. i think the record is, we've won every case that we've brought to an investor state dispute settle mechanism. we have trade agreements that have this mechanism. in march of last year, 22
republican senators sent a letter to the administration saying it's important that you not water down this mechanism. and what happens? it's gutted. in mexico, they cut it back so that there would only be five sectors that have access to the investor state dispute settle mechanism and that was under pressure from members of congress, frankly. and in canada it's gone completely. so this probably making the canadians and mexicans quite happy. they don't have to deal with this. and i think it reflects an underlying view in the administration, at least by some in the administration, that's very misguided, it's a classic protectionist view that it's a good idea to discourage foreign direct investment by american investors and introducing new risk whether it's by a sunset
provision or elimination of a dispute adjudication mechanism, that's a good thing because -- and this mistaken view of the world -- if overseas investments are less attractive, that money will be invested in the united states instead. i think that completely misses the reality of the vast majority of american foreign direct evidence. most of which is made to serve local markets and undermining that doesn't make us richer, doesn't create more opportunities. the company i know in pennsylvania that have subsidiaries in other countries have jobs in pennsylvania serving and relating to those other -- those subsidiaries overseas, managerial, financial services, planning, administration, all kinds of services. so i completely reject the notion that we somehow ought to discourage american investors from investing overseas.
then let me get to the two things that changed late in the game. because the provisions i went through were early features of this agreement but two things that changed late in the game in my view made this agreement even worse. the first is the new set of labor provisions. and the way this began was with the u.s. negotiators agreeing that we're going to force mexico to adopt new labor laws and we did that. and mexico has passed these laws and they have to do with facilitating the unionization of their factories, generally. but we didn't stop there, right? and on previous trade agreements we've historically taken the view that a country's labor law is their business. now we've made it our business. and in the usmca we create this adjudicating body, paid for by americans, $45 million expense for american taxpayers to
enforce mexican labor laws in mexico. like why is that our responsibility? and not only that, but if you look at the details of this, the way it is designed, it is -- it's designed such that an accusation of a violation of these mexican labor laws in mexico is deemed to have an adverse impact on trade and creates a process whereby, you guessed it, new tariffs, new obstacles to trade, including embargoes from the presumed to be offending factories can be imposed. the he there will be a process that allows for the inception of factories and facility that is are not living up to their obligations. there is a mechanism for on-site inspections. we're going to have five americans living in mexico, and
their job is going to be to do this enforcement. here's the thing, this agreement is reciprocal. it's fully reciprocal. our trade agreement -- our trade representative says, don't worry, we've made sure that the mexicans can't send folks to inspect american factories. we'll see how that works out when that gets litigated because this is supposed to be a reciprocal agreement and it certainly allows americans to inspect mexican factories. and i think it's worth asking the question, why is it that organized labor felt so strongly about this provision? why is it that the openly protectionist members of congress felt so strongly about this provision? it could be that they just have this concern about the well-being of mexican workers i suppose. but it could be that it serves their own economic interest as well and specifically of course there's the obvious way by
forcing the unionization of these plants, you're going to make them less productive and efficient so they're less able to compete. but thing there's more going on than that. there's a huge opportunity for mischief given that there are a lot of american companies that have subsidiaries in mexico and now there's a mechanism to accuse them of violating mexican labor laws and a process by which they can then be punished for having done so with these terrors a tariffs and embargoes and such. last thing i want to mention in terms of the policy provisions of usmca is the -- by the way, this category, this whole labor title, this whole approach, is something that bob lighthizer, the u.s. trade rep, is very proud of. he says this makes the agreement better. i think that sheds a little light on how he thinks about
this. the last provision is one he acknowledges makes the agreement worse and he had negotiated ten years of intellectual property protection for bio logics and at the insistence of speaker pelosi, that goes to zero. bio logics some breathtaking therapies for illnesses that are very, very serious and our u.s. law is 12 years of protection to create the ability to recoup the massive investment in developing these bio logics. in mexico and canada that goes to zero. >> some of my colleagues have supporters of the agreement cite this as evidence that this is going to be good for the economy. it's nonsense.
the data point that's most cited is 176,000 new jobs created by usmca. well, first, if you believe that that number is true, it's a trivial number, right? we have been cranking out 200,000 new jobs a month in this country. usmca, according to this data point, is going to produce 176,000 new jobs over the next 72 months. it's extremely small in scale if you even believe it to be true and i don't. the report, their argument that the trade restriction policies will diminish economic growth and cost us jobs but it will be offset by the added certainty of having codified the practices and digital trade that i referred to at the beginning. all right, maybe that's how that works out. but they acknowledge that they don't even attempt to quantify the adverse impact of the sunset
clause because they don't know how to do it. we know that's got to be negative. we don't know exactly the magnitude and there's been no analysis done whatsoever on these new provisions, the whole labor sector was written after the itc report was done and the concession on bio logics was likewise. also additional tightening and more restrictive rule of origin about steel and aluminum is in this as well. and the more stricter you make the country's specific rules of origin, the more you diminish growth. we don't have a quantification of this, but directionally we know it's going to diminish growth and jobs. bottom line, i think it's very unlikely that this produces any net new jobs and i think most likely it's probably -- it's very small, but probably a net negative to economic growth relative to where we are today.
last point on the substance here. we have a cbo score that came out this week, you may have seen it. it's relatively new. and cbo comes to the conclusion that the labor rules -- i should say the minimum wage rules on auto production in mexico are -- they cannot be complied with. they won't be complied with. and so the alternative under usmca is that autos and auto parts that don't comply will be hit with a tariff. the cbo analysis is that tariff will go into effect and of course that's a tax on american consumers and it's about $3 billion. on top of everything else, usmca is a $3 billion tax increase. it's not an norms number, but it is what it is. let me wrap up how i think about this. the way i look at this is we took a free-trade agreement and
added some constructive features taken largely from tpp but we slapped on an expiration date, we eliminated the dispute settle mechanism for u.s. investors, we dropped the intelligence protection and we allow protectionists to impose further restrictions down the road. we get little or no extra economic growth out of it, maybe a modest hit. it shouldn't be surprising that speaker pelosi, a lifetime protectionist and other protectionists in congress are spiking the football. it's been two decades since they have endorsed a trade deal and here's my final thought. this is almost certainly going to pass by a big margin in both houses. i just want to stress that this should not be a template for further future agreements. this should not be the way we approach trade in the future. we should not be looking to
restrict trade. we should be looking to expand trade. thank you very much. [ applause ] >> this would be a great time for the 20-some people who are standing up to sit down now. i also notice that i'm to the left of senator toomey as i'm sitting here which is definitely not true. but we could -- thank you for your remarks. and i could agree with them. we could spend the next 20 minutes agreeing with them. i agree with you on most trade -- the general approach to trade. i agree with you on intervening in other -- >> i got a feeling there's a but coming. >> that's dull. let's not talk about what we agree on, let's talk about what
we might disagree partly on. and i'll start with a key element of this for you and i'm not sure it is for me. as you probably know, the administration, the president originally wanted a much shorter review period. he wanted a review period in his second term so he could have the option of bailing out of usmca while he was still president if he won re-election. i don't find 16 years to be a problem. we should be evaluating almost every trade agreement after a while to see, as you mentioned correctly with digital trade, the situation has changed. there are new technologies, new trade patterns, new issues to come up. and i find a review period of 16 years to be an excellent kind of enforcement. don't start cheating because we will be looking at this 16 years later. let me come back at you about the review mechanism and say, 16 years isn't six years, which is
where we started. it's a reasonable amount of time. yeah, it creates some uncertainty at the end of the cycle, but there's going to be uncertainty anyway, the world changes, the politics changes in the participating countries and i prefer to have a review mechanism that's general rather than some of the enforcement mechanisms that i know that you and i both have problems with in the agreement. >> i would agrdisagree with tha. the point about the fact that the world changes and you need to be able to reflect those changes in a trade agreement i think is a valid point. the way i think about it is you can always revisit a trade agreement anytime you get the three parties together at any day of the week, any year, you can revisit it for really any reason if you have a collective will to do so. the question for me is what's the presumption? is the default setting that it all goes away unless and until you get all three to agree or is the default setting that we'll
continue this -- what i would hope would be a free trading environment and we'll make changes when we all agree on what those changes should be. i think it's a question on what's the better default setting to have. >> do you read the -- this particular -- i agree with that. i think that's the right way to have a review mechanism. but do you think this particular one is the default setting is to rip it up in the text or do we feel like the default setting is to rip it up because there are people who support it. if they're still around in 16 years, their hope is to rip it up. is the agreement that's doing this wrong or the political supporters of the agreement who are thinking about the review mechanism in a harmful fashion? >> i think it's both. i think it's both. yeah, i think the administration would have taken this in an even more protectionist direction if
they thought they could and still hold republicans. so i think that's part of their motivation is to create an opportunity to do that. but i think it's both. it's fundamentally a mistake to have it in there. >> second question, i'm 100% with you on u.s. intervention in the foreign labor markets. my instinct is that that's u.s. intervention into foreign judiciaries. when i think of free trade, i don't think of giving extra protection to multinationals. you don't have a special clause for companies just like you don't have a special clause as was added to usmca for all this intervention into labor. could you make -- i understand that we win the cases. i agree with you and i can see it being -- to the benefit of american companies to have this provision. i don't really see it as a free trade provision. i see it as a -- it's to our
advantage provision. do you think you can make a pro-trade provision for this extra set of authorities? >> so i get that argument. but, you know, we have a -- we've got a global infrastructure in the united states. we have a state department that sets up shop in every single country around the world. we patrol the oceans and keep the sea lanes open with very expensive navy. we do things outside of our borders that -- part of which is designed to help facilitate commerce. creating a mechanism to adjudicate a dispute in a place that can't be relied on necessarily to do it fairly strikes me as a modest step. it's eminently fair. i don't think it's a system that's designed to stack the deck in our favor, but rather to get a fair outcome.
and, by the way, most foreigners investing in the united states tend to feel like they'll get a fair shake in a u.s. federal court and they don't opt for the isds mechanism as often as we might. i think it's a very reasonable provision and i think of it differently of this taxpayer mechanism to enforce labor law. that's -- i think that's a creation to serve the u.s. organized labor. >> let me ask you a specific question. bio logics are an important issue because it's a growing industry and it could be very important to the american economy. but putting that aside, and that's a big thing to put aside, what do you think of the ip protection in the agreement? ip is an area of american advantage. it's important in this agreement and future agreements to have good ip protection. i'm not trying to minimize buy
logics. >> i haven't studied that inasmuch depth as i've looked at some of the other things because that's all movement in the right direction. i do think there should be strong intellectual property protections and i think that the administration -- this agreement does improve that. >> let me ask you about -- i'm happy to talk more about the agreement itself and maybe we'll have more specific questions about the agreement, but a key point that you made at the end and the beginning is you don't want this to be a template. and i have two questions about that. one of them is, look, we have a template with canada and mexico already that was working well. i agree with you 100%. going backwards towards protectionism, and that template seems like a bad idea, what if we extended usmca to the united kingdom, taiwan, we already
agree that we can do better. but i'm asking if we took the usmca template which is partly a step backwards with regards to nafta but used it for countries where we don't have free-trade agreements, would you see that as a step back ward or forward? >> the question you're asking is, is this what we have to settle for, right? >> right. >> i think we have a huge moment, a huge opportunity with the uk. right now they need a free-trade agreement with the united states. they need one with the european union as well. they're going to need one with the united states. i kind of like the prospects for getting a really good one. i wouldn't want to start with the assumption that this is the best we can do. how many industries are we going to pick over there and impose some kind of restrictions whether it's a minimum wage proxy or other forms and are we going to have the expiration date which you may not object to but i would and the underlying principle of it.
we've had administration officials come in to a republican senator's lunch and make the argument that we're better off if we diminish the competitiveness of our neighbors and other countries, we're better off if we can find ways to raise their cost of productions then because they can't compete with us. that's a complete misunderstanding of the merits and benefits of trade. let's not accept that premise and use it to launch negotiations with countries like japan and the uk where we have good opportunities to have really good trade agreements. >> my second question is a question that i would try to duck. i'm going to ask you because i get to ask the questions. let's say that usmca is the template going forward but you can change one provision, only one. it's the template you're stuck with it. we're going to be negotiating with britain, taiwan, whoever we're going to be negotiating with, and you can pull -- you
can say, i want this provision changed to a free-trade provision, what's the provision? >> so i will interpret that question to mean what do i find most objectionable. and i would say the treatment of the auto sector is the most disturbing part of it. the mechanism to take away the only competitive advantage one of our neighboring countries has to diminish their productivity, to raise the cost of their products to american consumers, that goes to the heart of this. that to me goes to the heart of trade more than the expiration date does, more than the investor state dispute settlement mechanism. if i had to pick one thing, it would be that. >> i certainly -- whenever governments pick out sectors and
decide they deserve favoritism or punishment, or whatever, that cuts against people who support open markets. i'm with you. i want to open it up to the audience, not that i don't have more questions, but i want to follow up a little bit on that. one of the key elements of the treatment of the auto sector has to do with rules of origin. i'll explain it, it basically is a rule on how much has to come from inside the trade agreement versus how much can come from outside the trade agreement. there are advantages to loose rules of origin and there are advantages to tight rules of origin. it seems thmore people can join it. where do you see usmca's rules of origin. they got tighter. i see an advantage so that if we're going to bring this to other countries who can join. but there's also a disadvantage. do you see that as a minor issue, a big issue? >> i see that as a smaller issue
than what is completely new in the rules of origin which is country-specific rules of origin. this is a multilateral free-trade agreement where we had rules of origin that pertained to requiring the origins from one of these three countries. i take your point. you can argue both ways. there's some merit to that and opportunities to defeat the purpose of it if you don't have that. but this goes to a new level of rule of origin. they don't name countries. instead they use the wage rate as the proxy. but 40% of car parts have to be made in a country with wages that pay over $16 an hour. that is meant to force the mexico auto and auto part makers to import from the united states and canada 40% of the content and that's unnecessary and it runs counter to the idea of a continental free-trade
agreement. >> and i'll say it before i open for questions, i ask that question because we may disagree on rules of origin but we agree on that point. the idea of rules of origin is for them to be simple and easy to understand, otherwise you get a situation where you don't have a trade agreement because you don't know where you can make the product and under what rules it will qualify for the trade agreement. you can have a reasonable debate as you can over many free trade issues where you can decide, oh, no, i think this is got for open trade or not. but there are some parts of this agreement that are interventionist and are not meant to promote trade. they're meant to restrict it. i have more questions but i would love to hear from the audience. so please -- i got that center -- that center table is making me very nervous. my colleague who is safer than these people right here. >> i want to switch to politics. assuming for the moment that the
president is not re-elected, what will be the stance of the republican party in 2021 and after, do you think? is trumpism there permanently? will the republicans revert to a more free-trade, free-market position? where do you think the party is going to be post trump? >> it's a great question and it's something that many of us are wondering and frankly trying to influence. there has been a republican consensus for free trade for a long time but it's not universal among republicans. there's always been some dissent among republican voters about the merits of free trade, but the consensus has been in its favor. the question had an opening caveat that's an very, very important one. that is, the outcome of the
election. i think that's a huge impact on the direction that the party takes. a re-election will be seen as a validation and a political validation of all of the president's positions and on domestic policy, most of which i agree with. the tax reform was very constructive, the roll back of excessive regulation has been constructive, the judicial appointments have terrific. i agree with the president on trade as a general matter. i don't know the answer, i guess is the short answer. i don't know. but certainly if the president's re-elected, that's -- it's going to be a serious question about the republican commitment to trade. >> i'm going to ask for more questions. we have 20 more minutes. let me follow up on that and a more pointed fashion which is my role, i ask the nastier version
of the question. the democrats are likely to win the house. it's not just the presidency. and i agree with you, speaker pelosi is a committed, long-time protectionist. she's a protectionist. when do you think -- you're fighting -- and that's what we do, we fight for causes that may not win for some years. it's not just president trump. when do you think we're going to get a more pro-trade orientation? do you see that three years from now or more like eight? and i don't mean to be depressing because it's depressing for a lot of people in this room. even if republicans go back to a more pro-trade position, democrats are likely to control the house. >> that's a problem, no doubt about it.
the way we've passed free trade agreements has been very narrowly in the house with mostly republican support and very few democrats. but then with a big vote in the senate and with the president supporting it, whether it's a democrat or republican. we always had pro-trade presidents. this is the first least pro-trade president since -- i don't know, a hundred years maybe. interestingly because american politics is so partisan and polarized support for trade is much higher among democrats than its ever been because democrats see president trump as anti-trade, and so trade must be good. maybe this is an opportunity to speak to some democrats and to bring them on board but i think one of the fundamental challenges that we have is trade is one of those things where the benefits are dispersed and the dislocations and the costs are
concentrated, right? if we have a free-trade agreement with another country and they have a competitive advantage in a particular industry and an american factory closes, that's an acute problem for everybody who works at that factory. it's on the front page of the paper in that community for an extended period of time. everybody is aware of this really adverse outcome. and maybe every american gets to save a hundred bucks or 1,000 bucks a year from lower costs and more choices. and on a net basis, that has a much bigger positive, economic impact, but how do you point to it? how do you illustrate it? how do you demonstrate it? how do you prove it? it's one of the challenges that we have. >> editorial comment, people may not be aware, but with all of the discussion of how nafta caused factories to close, u.s. manufacturing production rose. i'm saying that it rose five
years after nafta and we have a lot of people around the country saying this factory closed in our neighborhood. >> and it's resulted in a modest manufacturing recession and job loss in manufacturing. it was supposed to be the exact opposite. the fact is, protectionism doesn't work well. >> please identify yourself. >> thank you. so you spoken a lot this morning about how this agreement shouldn't be a model for the future and i think i agree with you. i definitely agree with you. can you speak about what this means for the future of authorities and then the second part of the question is, the current authority represents much of what occurred during the may 10th agreement and how that moved the needle from less protectionist trade agreements to more. do you think this new agreement with democrats could be the next
may 10th agreement? well, here's my -- one of my big concerns on the process because you're going to the process of how we adopt them. we're in the process of violating the process. tpa is pretty clear about some things and one of them is that the administration is obligated when they have finalized an agreement to submit a draft of the implementing legislation. and let's keep in mind, i think we lose sight of this sometimes in congress, this is our responsibility. the constitution is very unambiguous about this. it assigns the responsibility to congress and we've delegated this to the executive and we've delegated it to the point to where we let them draft the law. isn't that what we're supposed to be doing? and then within tpa, the
contemplation is they sent us the draft once they have a completed agreement, they have to give us 30 days for us to manifest our concerns, right? and that is usually has taken the form of a mock markup where we don't actually mark up the legislation but we vote on amendments that would change the legislation. and the point of that exercise is that that's supposed to then inform the administration which is exercising a dell galted authority and they're supposed to come back and give us the final agreement which is subject to an up or down vote. none of that is happening. none of that is happening. they reached their agreement and the house is going to vote today. when did they reach their agreement? last week. the house is going to vote today and we're going to be stuck in the senate with that. this i think is the big process problem. we are dramatically undermining tpa in a way that further diminishes congress's already
limited ability to influence legislation which is entirely our purview. so i would make the argument that given the violation of process, the trade -- the legislation that comes over from the house shouldn't enjoy a pri privileged status in the senate because it arises only in compliance with the tpa. i don't know how that gets resolved and i don't know that it matters so much because i think they have more than 60 votes for it. even if they can't use tpa, they'll be able to pass it. but i'm really concerned about undermining -- just not following the law here and undermining a really important process and principle. >> i agree with that 100%. i'll add to it that if something goes wrong as perceived by u.s. politics, anyone can decide that we're going to hear from
protectionists that we didn't follow tpa, even though it was protectionists who didn't want to follow tpa. when you move away from process you open yourself up to criticism when there's a grievance about the agreement. and so for those of us who are protrade who want more trade agreements and i support usmca, this is still a draw back because it's going to be turned against trade later can and we're just talking about when and how. here. go ahead. right here. yes. >> thank you. non-nafta question. you have a policy writer right now to get the section 232 car report out in the open. can you explain a little bit more about that and whether that particular provision would hold up any type of enactment from the president?
>> i doubt it will block the bill. this is a reference to a provision that i put in one of the bills, i think it's the defense -- no, it's the other one. right. cjs which is rolled up with defense, right? we've got two what we call minibuses. it's not a full omni. it's a minibus. it's rolled up into a package and here's the thing, existing law before a president can impose the tariffs requires that there be an investigation, a study to determine whether or not there is a threat to american national security, right? that's the criteria the administration has to meet in order to justify imposing tariffing under section 232. the commerce department did this analysis with respect to automobiles, the law requires that it be published and disclosed. the commerce department has refused to disclose it. they've told us that they've
come to the conclusion that volkswagens and audis and bmws are a threat to american national security but they refuse to show us how they've come to that conclusion and how they document it. in fairness to them, the the law that requires the disclosure doesn't put a date on it. you have to disclose it, but it doesn't say by when. their answer has been, oh, we'll get to that. so what i did is put in a provision that says 30 days from the enactment of this bill, you have to disclose the report. so i don't think that's going to stop this omnibus appropriation bill from passing and from being signed into law. and so i think within 30 days we're likely to see this. and it should shed some light on the thought process that went into that conclusion. >> usmca question? yes, thank you. >> hi, senator. bill morley. absolute appreciate your engagement on the issue and appreciate your comments on bilogics on the tpa process,
certainly no transparency when you go into a room with nine people and renegotiate the deal. my question is if you're looking towards the future and you're looking for protection for biologics and some of the exciting new technologies in medicines as you put it, what are your alternatives if you're not going to stand up for those agreements and that ip in a trade agreement? the alternative the wto where there's no effective appellate mechanism? where the president opposes the wto. and even if you have a functioning wto, it can take years to become effect. is it a section 301 process under u.s. law? look how effective that is with respect to china. we have a tariff war. have we done anything on ip? when the administration announced some of the early provisions of this in may of what they were looking at to do an ip, they were talking about taking a step back there on biologics. so what's the alternative and the effective protection?
and what are we saying to the rest of the world and the future ftas if the administration is saying this wasn't a bad deal on it because we're silent on biologic. we went from zero additional years of protection. what are we saying and what can we expect? thank you. >> i think the question kind of answers itself, right? >> shockingly. >> no, this is a problem. right? but the problem we have is that the consensus on the democratic side of the aisle is that u.s. law should be zero also. so if that's your starting point, we're miles apart. i'm kind of shocked that's where they are. but that is where they are. you know, this is very disturbing. i don't have an answer for this. this is part of why i thought it was important to have it in the agreement. >> i'll just say, i don't like picking out bilogics. i don't like picking on any sub sector in any case, but it's the core american advantage.
and the arguments over should the world come all the way up to the u.s. standard, is the u.s. standard perfect? that misses the point of free trade agreements. the world is way below u.s. standards. we can bring them up toward us and not bring them to our level and settle what the exact right level is and we'd be benefitting the united states. and if we don't protect innovation in our trade agreements, we're giving away most of the benefit which means ultimately the american people will say what is the point of this. right? we're not going to get gains out of it if we don't protect our comparative advantage. which people will say these trade agreements are a bad agreement. and they're right. i don't want to get hung up on biologics. the across the board ip issue is the law saying it's harming the united states and these trade agreements. and that's something we should be fighting going forward. this side of the room. sir, go ahead. wait for the mic, please. and please identify yourself. >> yes. senator, my name is mark
bosheti. you live in allentown and down the street from you there's a mack truck plant that's a uaw plant. the heavy truck business faces a lot of competitive pressure. that's just the modern world. the workers there fear low wage competition from mexico in part because effectively mexican workers have no collective bargaining rights. i think you recognized yourself when you were talking about an investor state dispute settlement that sometimes in other countries the court processes and other processes don't really work the way they do in the united states. what would you say to workers in that mack truck plant who fear the fact that mexican workers work at much, much lower wages and effectively have no real opportunity to bargain with the company over wages because something bad could happen? thank you. >> yeah, well, first of all, i think that the level of wages is
probably more a function of the economic status of the country than it is the presence of collective bargaining. this -- mexico is a developing country. it's a low cost of living. it is going to have low wages. regardless of whether you have collective bargains. collective bargaining might increase wages. i acknowledge that. but, hey. we have been able to compete. remember, we were told that when we -- when japanese cars started coming to america, it was the end of american auto production. well, not really. what american auto companies figured out how to do was to compete with a really tough new competitor that came in. we became more productive and we were more responsive to consumers. i don't accept the premise that we can't compete because mexico has lower wages. >> i'll just add the inconsistency of the bilateral deficit argument focused on
before, if the key thing about our partners is the level of wages and mexico has much lower wages, we can't expect mexicans to buy the same amount of goods from the united states that we buy from mexico. you can't combine those two which protectionists do which say wages are the key to trade. no. i mean, mexico is not going to buy the same quantity and value of goods from the united states and we're going to buy from mexico. there's going to be a bilateral deficit. one of the reasons is mexican wages are low. because they're a developing economy. if you want to focus on wages, you can't focus on deficits. yet those are the two corner stones of many protectionist arguments. that we can't compete with countries with low wages and then we run these trade deficits because they're cheating. we run trade deficits with most these countries because they're poor. and they cannot buy the same goods that we can. we're very lucky in the united states to have so much consumer buying power. more questions. yes, go ahead, sir.
we have a couple more minutes. please keep your questions brief. >> hi. reporting with the intercept. senator, you've said repeatedly you want a fair process as the impeachment moves to the senate. your -- >> senator, you have no obligation to answer this question. go ahead. >> it's a news question. as the senate moves forward, mitch mcconnell has said that he's not going to be an impartial juror. he said that he's coordinating -- >> ask the question, please. >> how do you expect a fair process of leadership making these types of remarks? >> and again, if you want to move on, i'd be happy to. >> yeah. i've talked about this a lot. i'd like to focus on trade here this morning. >> please, please. you know, it's a trade event. talk about china if you want to. there's plenty of things to talk
about on trade. any more questions? go ahead, doug. i understand that. and -- i have a number of people the entire time. but i'm glad you think you're important. please, move on. yes. >> doug palmer. politico. this may seem like an obvious -- the answer may seem obvious, but i mean, you're up here making sort of the standard -- what i think would be a standard republican critique of this agreement if it were shown to congress by the obama administration. why are you the only republican speaking out and making this critique? >> i think you'd have to ask my colleagues that. >> okay. ma'am, if you have a trade question, i'll be happy to take it. okay, please.
>> okay. my name's jo freeman. i am a member of the you nated auto workers 1981. what i want to know is why you didn't mention the u.s. chamber of commerce and its position on this whole agreement, what it tried to change, and what it failed. >> the u.s. chamber of commerce i think has endorsed the agreement. i'm not -- there's a lot of provisions that probably would agree with much of my critique of the individual items that i've objected to. but on balance, they've advocated for it. i'm not going to say anything -- i'm not going to attribute this to the chamber of commerce. but i will say i know for a fact there are supporters of the usmca whose support is rooted in a concern the underlying nafta could be destroyed in the absence of the usmca. the president has said he will withdraw from nafta if usmca is
not passed. it's not shocking that some think that's an alternative. i don't think that's the way we ought to look at this. i don't think the president has the legal authority to withdraw from nafta. nafta was implemented through laws that were passed by congress and signed by a president. and no president can unilaterally withdraw any law and that include the legislation of nafta. so i do know that there are some supporters who are significantly influenced by what they ser soo -- perceive as a risk that the underlying nafta could be abdicated. >> thank you for that excellent question and all the good questions on usmca and trade. we are done. it's 9:59. i would ask everyone sit and let the senator walk out first. this is washington and the u.s. senator is, in fact, more important than everyone else in the room. >> that's not true. [ applause ]
c-span.org. type aei in the search box at the top of the home page. senator toomey's remarks focusing on the usmca trade agreement. you should know the u.s. house has the usmca on the agenda today. debate expected later this morning and a final passage vote expected around 1:15 eastern. you can watch that live on our companion network c-span. the senate has indicated that if the usmca passes the house, they will take it up in the new year for ratification. usmca may also be a topic at today's briefing with nancy pelosi. and certainly yesterday's impeachment vote. she holds her weekly briefing with reporters today at 10:45 eastern here on c-span3. expect more on impeachment with kevin mccarthy. he holds his weekly news conference at 11:30 eastern and we'll have that live for you here on c-span3 as well.