Lawmakers Press Trump Administration on Nafta Dispute Resolution--Update

02/07/18 06:31 PM EST
By William Mauldin 

WASHINGTON -- Lawmakers from both parties urged President Donald Trump's top negotiator in talks over the North American Free Trade Agreement to maintain dispute-resolution mechanisms that have been a central part of the 24-year-old pact.

The dispute-arbitration systems embedded in Nafta have been a flashpoint in the talks, where Mr. Trump's administration has questioned the mechanisms, saying they undermine U.S. sovereignty by allowing the parties to avoid the domestic courts. The lawmakers' lobbying adds to pressure on the administration to retain that component of the agreement.

Many Republicans want to retain, in particular, an arbitration mechanism known as investor-state dispute settlement, which lets companies challenge discriminatory treatment at the hands of a foreign government -- and win compensation.

In the talks, which began last August, the U.S. has proposed scaling back the systems, or allowing the U.S. to opt out of the system. Canada and Mexico have rejected that idea, saying they would prefer to remove the investor-state provision from the three-way Nafta agreement and form their own bilateral investor pact rather than remain a part of a system under Nafta in which different countries have different rights, according to people familiar with the talks.

Lawmakers from the House Ways and Means Committee who met with Robert Lighthizer, the U.S. trade representative, on Wednesday said the dispute-settlement systems are important to companies in their districts because it gives them a way to complain and get compensation for unfair treatment abroad, strengthening their position domestically and internationally. The committee oversees trade issues.

"I want to make sure we hold our trading partners accountable through strong, enforceable commitments with effective dispute settlement...because it creates U.S. jobs," said Rep. Kevin Brady (R., Texas), the committee's chairman. "People in my district and across the country are counting on us to get this right, which is why we all have to stay at the table."

The dispute-resolution issue is one of several that have concerned lawmakers who have companies or farms in their districts that have benefited from the export markets Nafta has created and want to preserve the beneficial parts of the trade pact.

Not all GOP lawmakers are complaining about Mr. Trump's approach to trade, and some agree that past trade agreements have ceded too much U.S. economic flexibility, while other Republican lawmakers in industrial areas blame trade with China and Mexico for moving U.S. jobs abroad.

"We've had it with jobs getting sent overseas and the cheating of foreign competitors like China," said Rep. Walter Jones (R., N.C.). "President Trump pledged to fix that, and the actions taken thus far have been encouraging."

The talks, which are scheduled to resume later this month in Mexico, are only beginning to tackle some of the most contentious issues, a pace that has worried some pro-Nafta lawmakers.

Rep. Sandy Levin (D., Mich.) said Mexico is "moving in the wrong direction" on the labor issue but added the administration "has disagreements with Canada."

Mr. Lighthizer declined to answer questions after leaving the meeting, and a spokeswoman for his office declined to comment. At the start of Nafta negotiations, Mr. Lighthizer said his preference was to preserve the three-nation structure of Nafta but that some issues could be negotiated bilaterally. The administration has generally backed one-on-one trade negotiations that it believes maximize U.S. leverage.

During the past year, Democratic lawmakers have expressed enthusiasm about the direction of trade under Mr. Trump, who has threatened to impose barriers at the border to block unfair trade imports.

The dispute-resolution debate, however, threatens that support, as Democrats want to make strengthened labor provisions in a renegotiated Nafta fully binding. On the eve of the latest round of Nafta talks last month in Montreal, more than 180 House Democrats pressed for stronger labor standards as a way of raising wages in Mexico.

Later Wednesday, GOP senators from the Finance Committee raised their concerns about Nafta and trade actions under consideration against China in a meeting with Mr. Trump and Mr. Lighthizer.

Sen. Pat Toomey (R., Pa.) said the investor-state dispute issue was part of the discussion. "I'm not in the same place as the president on trade, but I will say the president has been listening," he said.

A White House official said the president "appreciates hearing the perspectives of his friends on the Finance Committee and will continue to consult with them as he pursues a level playing field for all American workers and businesses."

Siobhan Hughes contributed to this article.

Write to William Mauldin at william.mauldin@wsj.com

 

(END) Dow Jones Newswires

February 07, 2018 18:31 ET (23:31 GMT)

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