Not ratifying NAFTA will be a ‘catastrophe,’ U.S. trade czar says, as U.S. works to lift metals tariffs

The United States is in the process of brokering an agreement with Canada and Mexico to lift steel and aluminum tariffs but “whether we’ll succeed or not I don’t know,” U.S. trade czar Robert Lighthizer told a key Congressional committee Wednesday.

In his first testimony before the Democrat-controlled House Ways and Means Committee, Lighthizer also said a failure to ratify the USMCA – U.S. President Donald Trump’s name for the deal to replace the North American Free Trade Agreement — would “be a catastrophe across the country.”

“If the Congress doesn’t see fit to pass that, then everything else is like a footnote… We can’t do trade deals,” he said.

The two issues — Section 232 tariffs and the ratification of the trilateral deal Trump considers his biggest victory on trade — have become increasingly intertwined after senior Canadian and American officials publicly cast doubt over whether Ottawa will approve the new NAFTA with the levies in place.

Though the revised NAFTA deal has been signed, it still requires ratification by lawmakers in Canada, Mexico and the U.S.

“I don’t know if we’re going to get there,” if the tariffs aren’t lifted, Transport Minister Marc Garneau told White House economic adviser Larry Kudlow on Sunday during a panel discussion in Washington.

Weeks earlier,U.S. Senator Chuck Grassleyof Iowa was even more blunt. Grassley, the chair of the finance committee responsible for guiding the deal to approval in the U.S. Senate, told reporters that Canada and Mexico would not ratify the deal with the tariffs in place.

If the Congress doesn’t see fit to pass (USMCA), then everything else is like a footnote… We can’t do trade deals,

Robert Lighthizer

Though the focus of Lighthizer’s testimony Wednesday was the United States’ ongoing trade talks with China, questioning also touched on the section 232 tariffs and the new trilateral trade deal between the United States, Canada and Mexico. U.S. president Donald Trump imposed the levies last May, prompting both Canada and Mexico to retaliate with billions in retaliatory tariffs targeting American steel, agricultural products and other goods.

Though Trump initially tied the tariffs to the successful renegotiation of NAFTA, they nevertheless remained in place after the deal was signed on Nov. 30.

“In addition to China, we need to continue to move forward with USMCA,” Representative Adrian Smith of Nebraska told Lighthizer. “We need to bring down the 232 tariffs on Canada and Mexico and eliminate the retaliation our producers continue to endure.”

C. Anna Moneymaker

Robert Lighthizer, U.S. trade representative, speaks during a House Ways and Means Committee hearing in Washington, D.C.

Anna Moneymaker/Bloomberg

The White House has been facing pressure to lift the tariffs from both Republican and Democrat politicians — particularly those from the farm states that have been subject to punishing retaliatory levies not just from Canada and Mexico but also China.

“On Canada and Mexico, in the context of maintaining the integrity of the steel and aluminum program, we want very much to work out an agreement with Canada and Mexico and we’re in the process of doing that, whether we’ll succeed or not I don’t know but it certainly is my hope that we’ll do that,” Lighthizer said.

As the battle over the tariffs carries on, the U.S. Commerce Department announced this week it will open a new anti-dumping probe into fabricated structural steel from Canada, China and Mexico. Based on a petition filed earlier this month by a U.S. steel trade group, the investigation will determine whether to seek duties of about 30 per cent for Canada and Mexico and 222 per cent for China in response to below-market price imports.

The Commerce Department alleges there are 44 subsidy programs for Canadian fabricated structural steel, including tax, grant, loan, export insurance, and equity programs. There are also 26 subsidy programs for China and 19 subsidy programs for Mexico, according to the agency.

Earlier this month, a Canadian steel industry group said it would strongly oppose a petition urging anti-dumping duty on certain steel imports from Canada.

The Canadian Institute of Steel Construction said the allegations by the U.S. group “that these products from Canada are unfairly traded and cause injury to U.S. producers of fabricated steel products are baseless.”

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With files from Thomson Reuters

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