tv Sen. Toomey on USMCA Trade Agreement CSPAN December 19, 2019 5:14pm-6:14pm EST
wall street trader turned photojournalist, about the plight leaving on the margins of society n society in america. it was empty, and she was in the industrial part of hunt's point, and our intelligence kind of came right through and we spoke for about an hour, half an hour or so, and she told me her life which is just -- i'm a cliche of everything wrong that can happen to somebody, and one sennencteno describe you. she said that's what i am, a prostitute, a mother of six and a child of god. sunday night at 8:00 eastern on c-span's q & a.
earlier today senator pat toomey of pennsylvania spoke out against the u.s.-mexico-canada trade agreement at an event hosted by the american enterprise institute. following his remarks, senator toomey took questions from the audience. this is an hour. thanks for the kind introduction and thank you 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 a preesh everyboppreciate eve out, as well. i can, and one of the messages i get repeatedly from my staff, they like to take me aside, it
doesn't mean you can't give a short speech and i'll keep that advice in mind as i work through my remarks and look forward to the exchange with derek. so when i think of usmca, it's a starting point about nafta. why did the u.s. feel it was necessary to renegotiate nafta because that was the start of usmca. so was it that nafta was an unfair, unbalanced agreement or a lack of reciprocity or was it left that the tariffs left in nafta that they were too high and they were unacceptable obstacles to trade? no to aisle those questions. nafta is a free trade agreement and zero tariffs on 100% of
manufactured goods and no quotas, no obstacles and it me it's the epitome of a free and reciprocal trade agreement and since nafta was implemented, american exports to mexico are up over 500% exports to mexico have grown 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 and so now we have this whole digital sector. we have this whole sector that doesn't even exist. modernizing made sense and that's not the reason the administrati administration wanted to renegotiate nafta. despite the increase in our export, imports from mexico had grown even more and we have a trade deficit with mexico.
despite the fact that it's my view, and i think the view of most economists who have done a lot of work in the space that the trade deficit with a country like mexico is completely insignificant to the united states and despite that, that is not the view of the administration and so they set out to at least significantly diminish, if not eliminate the trade deficit with mexico and i would argue that's the central motivating fact and that's why there was bad outcomes and this 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 certainly going to cost us an opportunity to exchange goods with mexico and therein lies the heart of my objection. so let me walk through some of the specifics or at least the
way i think about the difference between usmca and nafta. you can look at it as two 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 and cross border data transfers and ip protection for software, data storage and localization is not mandated. so mostly, my understanding is that these items mostly now in the usmca is 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 terrible to get there and that's all fine. there's a very modest opening from some agricultural sector and market in canada and americans will probably be able to sell more dairy products and
our back of the envelope estimate is that's on the order of half of 1% of our dairy production. so not really large, but not a bad thing. so that's category 1, what i think of the constructive changes and modernizing features and category 2 is where i have objections and these are protectionist in nature and are designed to inhibit trade. so 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? we had a straightforward
limitation against quotas or tariffs and they decided that would be too obvious, and instead they create this dom mri kated, 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 the low cost of living and much lower wages. 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 north american automotive industry as a whole less competitive. it's an integrated supply chain so raising the cost of components from one source will 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 autoparts that come across our border if the tariffs which are the alternative to the higher minimum wage. one way or the other it will be a higher cost by design and probably on the margin, increases pressure to shift to automation or to just sourcing parts and cars and other countries altogether and that mean, i think, over time fewer american jobs in this space, not more, and that's one of the typical consequences of protectionist policy. so that's the auto sector. a second area that i find very troubling is there's an expiration date on this. we've never had an expiration date on a trade agreement or an investment agreement for the obvious reason that if you put an expiration date you introduce uncertainty about what the world looks like after that date.
in order to extend the expiration date which is 16 years from the date of enactment or the day of signing and it's about 16 years out, the three parties 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. and so if somebody is contemplating a cross-border investment they have to ask themselves, well, what is the trade environment going to look like? 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 objectionable is the virtual elimination of the investor state dispute settlement mechanism. so this is the mechanism by which -- let's be honest.
it's american investors who make use of this and it's american investors and it could be a multinational corporation headquartered in the united states and 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 a local court. that happens sometimes and every country in the world has some level of protectionist tendencies and in some places at some moments local and indigenous competitors will be able to influence the local adjudication process and the local courts and local 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 dispute settlement mechanism where we and our trading partners can have confidence that there will be a fair adjudication, and we almost always win. in fact, i think the record is
we've won every case that we've brought to an investor state dispute settlement mechanism. we have 50 bilateral trade agreements that have this mechanism. in march of last year, 22 republican senators sent a letter to the administration saying saying it is very important that you not water down the investor state dispute, and what happens? it's got it. in mexico, they cut it back so that there would only be five sectors that have access to the investor state dispute mechanism and that was under pressure from members of congress, frankly, and in canada, it's gone completely. it's gone, and there is no investor state dispute settlement mechanism in canada. so this probably makes 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 by some in the administration that's very misguided and it's sort of a classic protectionist view that it's a good idea to discourage, foreign and direct investment by american investors and introducing new risk whether it's by a sunset provision or whether it's elimination of a dispute adjudication mechanism. that's a good thing because, and this mistaken view of the world, if overseas investment are less attractive that money will then be invested in the united states instead. >> i think that completely misses the reality of the vast majority of american foreign and direct investment and most of which is made to serve local markets and undermining that doesn't make us richer. it doesn't create more opportunities. the companies i know in pennsylvania that have subsidiaries in other countries also have jobs in pennsylvania serving and relating to those
other -- those subsidiaries overseas and managerial financial services, planning, administration and all kinds of services, so i completely reject the notion that we ought to somehow encourage other investors from investing overseas. so letty moo get to two things that were late in the game because the provisions i just went through were early features of the agreement and two things that changed late in the game in my view made this agreement even worse. the first set were labor provisions and the way this began was with the u.s. negotiators agreeing to signing that we will 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 the factories and we didn't stop there, right? on previous trade agreements
we've historically taken the view implicitly that a country's labor law is their business and now we've made it our business and in the usmca we create this adjudicating body paid for by americans and the $45 million taxpayers to enforce mexican labor laws in mexico. why is that our responsibility? and not only that, but if you look at the details of this, the way it is designed. it's designed such that an accusation of the violation of the labor laws in mexico is presumptively deemed to have an adverse impact on trade and creates a process whereby, you guessed it, new tariffs and new obstacles to trade including embargoes from presumed to be offending factories can be imposed. . the head of the aflcio said and
i quote, for the first time there will be enforceable labor standards including a process that allows for inspections and facilities not living up to its obligations. there are on-site inspections and we'll have five americans living in mexico. this has not gone over very well with the mexican, by the way, and their job will be to do this enforcement. this agreement is reciprocal. it's fully reciprocal. our trade representatives 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 factory, 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 felt so strongly about this provision? it could be that they just have this passionate 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 that it serves their interest by forcing the unionization of these plants and you'll make them less productive and less efficient and they're less able to compete. i think there's more going on with that and there's a huge opportunity for mischief given that there are a lot of american companies that have subsidiaries in mexico ask nnd now there's a mechanism of accusing them of violating mexican labor laws and a process by which they can then be punished for having done so with these tariffs and embargoes and such. i think that leads to some bad developments. the last thing i want to mention in terms of the policy and provisions of the usmca is --
oh, and by the way, this category and 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, so i think that sheds a little light on how he thinks about it, and the last one is how he makes the agreement worse and that is he had negotiated ten years for biologics and at the insistence of speaker pelosi that goes to zero. in my view, this is a very, very exciting new category of medicines. biologics, really, some stunning, breathtaking therapies that are for illnesses that are very, very serious and ours is 12 years of protection to have the ability to recoup the massive investment in developing these new biologics in mexico and canada that goes to zero.
two other things i want to touch on briefly. one is the itc report and the international trade commission did a report in which they did an economic evaluation of this and some of my colleagues and supporters cite this as being really good for the economy. that's nonsense. so the data point that's often cite side 176,000 new jobs created by usmca. first of all, if you believe that that number is true, it's a trivial number. we have been cranking out 200,000 roughly new jobs and usmca will produce 176,000 new jobs over the next 72 months. so 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 those 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 it works out, but they acknowledge that they don't 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. it can't possibly be positive in my view and we don't understand the magnitude and there's been no one else done whatsoever on the provisions and the whole labor sector was written after the itc report was done and the concession on biologics was, likewise. also additional tightening and more restrictive rule of origin about steel and aluminum is in this, as well and the itc acknowledged in the report that the more strict 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 will diminish growth and jobs. so bottom line, i think it's very unlikely that this produces any net new jobs and 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 substance here. we have a cbo score that came out this week. you may have seen it. it's relatively new and the cbo comes to the conclusion that the labor rules and the minimum wage rules on auto production in mexico are -- they cannot be complied with and so they cannot be complied with and so the alternative under usmca with the autoparts that don't comply will be hit with the tariff. the cbo analysis is that that tariff will go into effect and of course, that's a tax on american consumers and it's about $3 billion. so on top of everything else,
usmca is a $3 billion tax increase and $3 billion is not an enormous number, but it is what it is. let me wrap up how i think about this and we took a free trade agreement and added some constructive features taken largely from tpp, but then we slapped an expiration date and we have costly new restrictions on the trading partner and we eliminated u.s. investors and we dropped the protection and the most innovative new medicines and we gave a big gift to organized labor in the process designed to allow protectionists to import further restrictions down the road and we'll get little or no extra economic growth out of it and maybe a modest tip. so it shouldn't be terribly surprising that speaker pelosi and other protectionists in congress were spike the football and the aflcio has endorsed this deal and it's been two decades since they have endorsed the
trade deal and here's my final thought. this is almost certainly going to pass probably by a big margin in both houses. i just want to stress that this should not be a template for future further agreements and 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 if you want to. you'll get tired and i would love for you to ask questions. 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 we could spend the next 20 minutes agreeing with them and i agree with you on most trade -- i
agree with you on the intent of key people in the administration with regard to usmca and i agree with you on intervening in mexican and other labor markets -- >> i have a feeling there's a but coming. >> that's dull. let's not talk about when we agree on. let's talk about what we might disagree on or partly on, and i'll start with a key element of this for you, and i'm not sure it is for me. 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 usmc awhile he was president if he won re-election. i don't find 16 years to be a problem. trade agreements change in 16 years. we should be evaluating almost every trade agreement after a while to see, as you mentioned correctly with digital trade. the situation has changed and there are new technologies and new trade patterns and new issues to come up and actually, i find a review period in 16
years to be an excellent kind of enforcement. don't start cheating because we will be looking at this 16 years later a lot better kind of enforcement than some of the other things that you mentioned which i would also object to so let me come back to you about the review mechanism and say 16 years isn't six years which is where it started and it's a reasonable amount of time and it creates uncertainty at the end of the cycle because the world changes and politics change in the participating countries and i prefer to have a review mechanism that's general rather than some of the enforcement mechanisms that you and i both have problems within the agreement. >> yeah. so i would disagree with that, and -- but the point about the fact that the world changes and you need to be able to reflect those changes and the trade agreement i think is a valid point. the way i think about it is you can always revisit a trade agreement any time you get the three parties together at any
day of the week and 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? what is the default setting. is the default setting that it all goes away unless and until you get all three to agree or is the default setting that will continue this, what i would hope would be a liberalized free trading environment and we'll make changes when we all agree on what those changes should be. i think it's a question of what is the better default setting to have. >> this is a bit of a nerdy question and do you read this particular -- i agree with that and that's the right way to have a review mechanism and do you think this particular one with regard to us, in ca is the default setting as to rip it up in the text or do we feel that the default setting because there is protectionist in the administration and the congress to support it and if they're still around it for 16 years and in other words, is it the agreement that's doing this
wrong or is it the political supporters of the agreement who are thinking about the review mechanism and the harmful fashion. >> i think it's both. >> think it's both. i think the administration have the protectionist direct and still hold republicans and i think that's part of the motivation is to create an opportunity to do that, but i think it's fundamental to have it in there. >> second question, i'm 100% with you on u.s. intervention on the u.s. labor markets. you know, my instinct about investor state dispute settlement is 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 have an enforcement of the agreement and you don't have a special clause for companies just like you don't have a
special clause that was added for usmca with this intervention into labor. so could you make -- i understand that we win the cases, and i completely agree with you, and i see it to the benefit of american companies to have this provision. i don't see it as a free trade provision. i see it as it's to our advantage provision and do you think you can make a pro-trade provision for this extra set of authority that has to do with protecting companies' illegal rights in foreign countries? >> so i get that argument, but you know, we have a -- we've got a global infrastructure in the united states and 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 to -- that part of which is designed to facilitate
commerce to adjudicate a dispute on a place that can't be relied on strikes me as a modest step and it's eminently fair. i don't think it's a system that's designed to stack the deck in our favor and rather to get a fair outcome and by the way, most foreigners that invest in the united states tend to feel like they'll get a fair shake in the u.s. federal court and so 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 from this taxpayer mechanism to enforce mexican labor law. . that's a creation to serve the u.s. organized labor. >> let me ask you a specific question. >> biologics 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 i realize that's a big thing to put aside, what do you think of the ip protection and the agreement. ip is the american competitive advantage and it is very important both in the agreements to have vip protection and i'm not trying to minimize biologics. that's a very controversial issue that you brought up. other than biologics, do you think the ip provisions are pretty good? >> yes. i haven't studied that as in-depth as other things because my sense is that's all movement in the right direction. i do think there should be strong, intellectual property protections and i do think the administration and the agreement does improve that. >> okay. let me ask you about, and i'm happy to talk more about the agreement itself and maybe we'll have more specific questions about the agreement and the key point that you made at the end and the beginning is you don't want this to be a temperate 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%. so going backward toward protectionism seems like a bad idea, but what if we extended usmca to countries that we don't have a free trade agreement with. what if we extended it to taiwan. >> i'm asking if we took the usmca template, but used it with countries where we don't have free trade agreements would you still see that as a step backward or forward? >> the question you're asking, is this what we have to settle for? >> right. >> i think we have a huge moment and a huge opportunity with the uk rid now. they need a free trade agreement with the united states. they need one with the european union as well, but they'll need one with the united states and so i kind of like the prospects for getting a really good one. i don't want to start with the
assumption that this is the best we can do. how many industries are we going to pick over well and impose some kind of restrictions whether it's a minimum wage proxy or other forms and are weigh going to have the expiration day which you may not object to, but i would, and the underlying principle of it. we've had administration officials come into a republican senators' lunch and make the argument that we're better off if we diminish the competitors and we're better off if we can find a way for production because that is a complete misunderstanding of the merits and benefits of trade. so let's not accept that premise, and use it to launch negotiations where we have big opportunities to have really good trade agreements. >> my second question is a question that i would try to duck. so i'm going to ask you because
i get to ask the questions in this particular case. let's say usmca is the template going forward, but you can change one provision. only one and we'll be negotiating with taiwan and you can say i want this one provision changed to a free trade provision. what's the provision? >> well, so i would interpret that question to mean, what do i find most objectionable and i would say that the treatment for the auto sector is the most disturbing part of it and the willful, systematic mechanism to take away the only advantage that they have to diminish their productivity to raise the cost of their products to american consumers and that just so goes to the heart of this and that to
me goes to the heart of trade, so that would be the last thing i would want to see replicated. >> whenever governments pick out sectors and decide is there favoritism or punishment or whatever that cut against people who support open marks so i'm with you. i do want to open it up to the audience, not that i don't have more question, but i want to follow up a little bit on that. one of the key elt ements to the treatment of the auto sector have to do with the origins which you're familiar with trade, but i'll just explain it, and it lafkly is a rule on how much has to come from inside the trade agreement versus how much can come from the outside of the trade agreement and there are advantages, which are more liberalizing and it means people have more incentive to join a trade agreement if it were going to expand.
on the auto side or generally, as you prefer, where do you see usmca's rules of origin? >> they've got tighter and i see an advantage to that if we're going to bring this to other countries who can also join, and there's also a disadvantage. do you see that as a minor issue? a big issue? >> i see that as completely new, right? this say multilateral, continental free trade agreement where previously we had rules of origin that pertained to requiring origins from one of these three countries. i take your point. you can argue both ways and there's merit to that and there are some opportunities to defeat the purpose of it if you don't have that, but this goes to a new level of the rule of origin and it makes it country specific within the three countries and they don't name countries. instead, they use the wage rate as the the proxy, but 40% of car parts have to be made in a country wi
country wages that pay over $15 an hour. that is meant to force the mexican autoparts makers to import from the united states and canada at least 40% of the content and that is completely arbitrary and it runs counter to the free trade agreement. >> i ask that question in particular because we may disagree on rules of origin, but we completely agree on that point. the idea for rules of origin is for them to be simple and easy to understand otherwise you have 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 would qualify for the trade agreement and you can have a reasonable debate as you can over many free trade issues where you can decide, oh, no, i think this is good for open trade or not, but there are some parts of this agreement that are interventionist and not meant to fr promote trade and they're meant to restrict it. i do have more question, but i would love to hear from the
audience. so, please, yeah, that center table is making me nervous. claude, barfield who is safer than these people right here. 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've 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 privy 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 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. so it's a minibus. it's several appropriations bills 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
tariffs 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 in fact 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. it says 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 i 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, in which there was no consultation and certainly no transparency qwhen 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? is your alternative 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, things can take years to
become effect which is well beyond the life cycle of this innovations. 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 our alternative and what's our 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 biologics. no, we went from twelve to ten to 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 really 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 innovation is 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 not have to 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 means people will say these trade agreements are a bad
agreement and they'll be right. i don't want to get hung up on biologics. the across the board ip issue is the law saying is 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, congressional quarterly. 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 bargaining. 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. and required that we up our
game, so 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 that the senator 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 quantity of goods from the united states that we buy from mexico. you can't combine those two which protectionists do which is to say wages are the key to trade and bilateral deficits means the other country is cheating. 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 of 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. lee fong, reporter with the intercept. senator, you've said repeatedly that you want a fair process as the impeachment moves to the senate. your -- >> senator, you have absolutely no obligation to answer this question. go ahead. >> it's a news question. as the senate moves forward, your leader senator mitch mcconnell has said that he's not going to be an impartial juror. he said that he's coordinating with the
president's lawyers. >> 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 ignored 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 presented to congress by the obama
administration. so 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 united auto workers local 1981 otherwise known as the national rider's union. 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. they 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 unilaterally if usmca is not passed, so 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 because 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 includes the implementing legislation of nafta, so i do know that there are some supporters who are significantly influenced by what they perceive as a risk that the underlying nafta could be abdicated. -- abrogated.