Following their departure from the european union. This is 45 minutes. Good morning everybody, we are delighted to have you here. I wonderful way to start a monday. We are lucky to have ambassador today. Iser with us because some any people went to be here and everybody has questions, we will do that with cards. We were to make sure we dont get too many questions. When you have a card or question filled out, we have runners that will come and pick it up for you. We will make sure we get the best of the questions onto the table. I am responsible for everybody here. If something happens, i will ask you to follow my instructions. I will first take care of the ambassador, but i will come back for you, i promise. [laughter] we will follow the exit doors, they go down the street, take two lefthand turns, and go across to the national geographic. I will order ice cream and we will celebrate our survival. Dont worry about it, but follow my instructions if i have to ask you to do something. Introduceompetent to the u. S. Trade representative,ut i have two who are especially one who is a close personal friend. That is bill brock. Thesenator, the chairman of national committee. One of the things he is most interested in and proud of is having been u. S. Trade representative. It was through his office that he was able to enlist ambassador lighthizer to join us. Bill, will you come up and make the introduction . [applause] brock good morning. I want to remind john that there are two true other ambassadors here who can join him. I was privileged to hold this a long time ago. I used to lvove it and i did love it. Used to sayhat i can doonomic stability more than all of the countries put together. The strength of this company in economic terms is the source of to strength, in addition what i think is our moral strength. We were able to open a lot of doors, particularly in the area of services and intellectual property, investments. We were doing some Free Trade Agreements with israel and canada. Field, youe in that work with congress or doesnt get done. Whad a terrific relationship ith wright benson, bob dole. I had a terrific opportunity to work with the staff director and chief counsel from the senate of those committees, that was bob lighthizer. Was given the opportunity by president reagan , itecome the deputy ustr was a combination of people who worked together. I was comfortable with that. The thing that made me about this nomination of bob this year was that having worked with him, i learned what an extraordinarily andlligent, thoughtful caring person that he is. When he was working with us, i had watched him do dozens of bilaterals. Having him with that background, that experience, the senate ustr leaves me with considerable comfort that he knows the rules and he knows how the rules work. That is important in todays world. There has to be some pattern. Tradeou talk about world , or the different sections of trade policy, understanding them is an incredibly important part of the job of the u. S. Trade rep. It is with a grea deal of presse that i want to introduce somebody for whom i have a lot of respect, bob lighthizer. Amdr. Lighthizer thank you senator. When i was first asked to do this by senator brock, it is not one of those things that you can say no to. Yes, but one say of the things i was reminded of is some a very early on, when we worked together and going from the staff director to the Senate Finance committee to work for ambassador brock, whom i always called senator, we are taking our first trip together. I am proud of myself. In those days, we used to have to fly from new york and in and to paris. Trip, first leg of the im sitting next to him and i say, i know i am missing something, what could it be . It was my passport. I am an ambassador flying with my boss and i dont have a passport. About halfway through i leaned senator, isaid, think i forgot something, and my passport, he was cool command he said not a problem. We had often he makes a couple of calls. I fly to paris with him, they let us through, some of it brings my passport the next day and i talked to Carol Browning and i said, i felt like such a jerk. He was really cool about it. She said, yeah, he was cool. He has forgotten his three times. That is literally a true story. That is one of those things that you remember what happens to you. Now i have people who tell me, do you have your passport . Been blessed in my life by having some great men to mentors. And none greater than senator dole and senator brock. A great friend and a great teacher, an extraordinary career. You almost dont know what title that you have not had, legitimately. Something people generally dont know is he is a bit of a insurgent. He challenges orthodoxy. When he ran for congress and the senate, he ran more as a an insurgent. I think of it as a little bit like the 1960s or 70s tea party guy. He took on the big machine and beat it, and then at the rnc, at some point, you can go through the details, but there were a number of things that were controversial, not the least of which was going to detroit for the national convention. At ustr, he did a great job of balancing our International Obligations and moving the trade system forward but also defending american industry. We end up reagan trade policy which is insisting that we get fair treatment on motorcycles and steel, especially steel and semiconductors and automobiles my own view is the reason these Japanese Companies originally moved to the United States was because of senator brock and policy they put in place. What i do things that are challenging the orthodoxy, you know where it is coming from. It is coming from my mentor, and he should get all the blame. People who know me know that im a bit of a contrarian. Let me just make a few points and then take some questions. Of course, these are very Interesting Times for trade. For decades, support for what we call free trade has been eroding among the electorate. There has been a growing feeling that the system that has developed in recent years is not quite fair to American Workers and manufacturing and that we need to change. In 2016, both major parties ran candidates who, to one degree or another, were trade skeptics. On the democratic side, we had senator sanders, who campaigned hard on this issue. Their ultimate candidate, secretary clinton, who did not espouse the trade views of her husband or for that matter, her boss when she was secretary of state. She professed some degree of trade skepticism. On our side, the views of President Trump are wellknown. Politicians can be accused of changing to populist positions, to get votes, this cannot be said of the president. If you go back 20 or 30 years, you see a remarkable consistency. He has been critical of the prevailing u. S. Trade policy, of socalled free trade deals and their effects on workers. We will have change in trade policy. Lets talk about our philosophy. I know that many sincerely believe that the prevailing world trade policy has been great for america, and that those who complain are people who are victims of economic progress. These analysts think of the whole problem is one of getting the correct message through. Not a policy direction issue, but a failure to communicate. They believe that the voters are illinformed or in some cases perhaps ignorant. If they only understood, they would support these trade agreements and all the rest. Most of you know that i am not in that group. I agree with the president , and i believe that americans can compete successfully with anyone in the world if the conditions are fair, not in all sectors but in most. I believe, like many of you, that removing market distortions, encouraging fair competition, and letting markets determine economic outcomes leads to greater efficiency and a larger production of wealth both here and abroad. Im sure most also agree that many markets are not free or fair. Governments try to determine outcomes through subsidies, closing markets, regulatory restrictions and multiple similar strategies. The real policy different i i submit, is not over whether we want efficient markets, but how do we get them. What is the best thing to do in the face of market distortions, to arrive at free and fair competition . I believe and the president believes that we must be proactive. The years of talking about these problems has not worked, and we must use all instruments we have to make it expensive to engage in noneconomic behavior and to convince our trading partners to treat our workers, farmers and ranchers fairly. We must demand reciprocity in home and in international markets. Expect change, new approaches, and expect action. Second, the president believes and i agree, that trade deficits matter. One can argue that too much emphasis can be put on specific bilateral deficits, but i think it is reasonable to ask when faced with decades of large deficits, globally and with most countries in the world, whether the rules of trade are causing part of the problem. I agree that tax rates, regulations and other macroeconomic factors have a large part in forming these numbers. The president is tackling these issues, but i submit the rules of trade also matter and that they can determine outcomes. In a simple example, how can one argue that it makes little difference when we have a 2. 5 tariff on automobiles and other developed countries have a 10 tariff . That it is inconsequential when these same countries order borderadjust their taxes and we do not, or that it is unimportant when some countries undervalue their currencies. Is it fair for us to pay higher tariffs to export the same product that they pay to sell here . I believe there is one challenge on the current scene. It is substantially more difficult than those based in the past, and that is china. The sheer scale of the coordinated efforts to subsidize, create national champions, the force Technology Transfer and to distort markets in china and throughout the world is a threat to the World Trading system that is unprecedented. Unfortunately, the wto is not equipped to deal with this problem. The wto and its predecessor, the general agreement on tariffs and trade, were not designed to successfully manage mercantilism on this scale. We must find other ways to defend our companies, workers, farmers and our economic system. We must find new ways to ensure that a marketbased economy prevails. Fourth, we are looking at all of our trade agreements to determine if they are working to our benefit. The basic notion in a Free Trade Agreement is that one grants preferential treatment to a trading partner in return for an approximately equal amount of preferential treatment in their market. The object is to increase efficiency and create wealth. It is reasonable to ask after a period of time whether what we received and what we paid are roughly equivalent. One measure is change in trade deficits. Where the numbers and other factors indicate a disequilibrium, one should renegotiate. We had election. No one really ran on maintaining the status quo in trade. President trump won. We have a different philosophy, and there will be change. I look forward to working with many of you in this room on these issues, as things develop and to returning from time to time, to talk about progress as we move forward. I look forward to answering your questions. [applause] good morning and let me add my welcome to all of you in the auditorium and online. I am the Senior Advisor and we are delighted to have you here. This is without question, the largest, most interesting crowd i have seen, which says to me it would be a good career move to do more with senator brock. Amb. Lighthizer it did work for me. Scott the ambassador has given us an amount of time to interact with questions. Because of the large crowd and the short time, i would ask each of you, if you have a question, write it on a card and pass it to the center aisle. Get it to the outside. Staff will pick it up and we look at the questions up here. I will put my reading glasses on and let you know there is some preferential treatment given to readable print. I gave senator brock the first question. He had a question about trade agreements. It struck he and others as unusual that given businesses prefer to have a stable, predictable environment and certainly in tax law and regulation, most businesses asked for a stable period of time under which to operate. How does the provision of a son sunset provision work . What can you tell us about it as a tool . Rep. Lighthizer first of all, i am not going to talk about any provisions that may be in this in context of the nafta agreement, i will have to opt to answer that privately. Scott lets ask a broader question. You were in office during the reagan administration. Between now and then, a lot of changes in trade policy. As you take office after an absence in private practice, what is the most important changes to the u. S. Economy and the most important changes to trade policy that affect your day . Amb lighthizer in the first place, the whole economy is totally different. When i was working for senator brock, i dont think we had cell phones. So when we got off the plane in new york, you had to find a place to put a quarter in and make a phone call. There was no digital economy. The economy was very different. The other thing that i would say is that we were focused on a mercantilist policy from japan that we had to worry about and i think now, it is on a scale, multiples of that with china. Interestingly, i have the japanese come in and meet with me, and they say we have to do something about this mercantilism from china. They are very worried about it. That is the principal challenge we face, is how do we deal with china in a Global Trading system. How do we deal with china in a system where we want market efficiency to dictate . There are other challenges we have. Trade agreements we dont think have worked out in our interest, we have to create rules that work well for services and the digital economy. The biggest challenge we face right now, the biggest difference between now and those days was the appearance of china. Scott let me follow with a question on the trunk trade policy for asia. Asia. Mp trade policy for since the reagan era, there has been a key focus. A key focus on a rising asia. Soon after bush number 1 bush number one, you would say it was the Clinton Administration focused on china in the wto. The bush 43 administration did trade agreements with singapore, australia, key allies. The Obama Administration worked a lot on the transpacific partnership. What is your thought about the trump policy toward a rising asia . Amb. Lighthizer in the first place, we prefer bilateral trade agreements to multilateral trade agreements. The working assumption is that if you have a 18 trillion economy, you can do better at negotiating, individually. Not only can you negotiate better agreements, and you can enforce them, more easily because usually in a multilateral agreement, it is difficult to enforce the agreements because you are disrupting too many things. The policy will be to engage the countries in that region on bilateral agreements. We have to determine when we are going to do it and what will the be. This administration wants to stay very much engaged in asia, and we expect to do that. Scott while we are the subject of bilateral, they one has gotten a lot of attention since Prime Minister may visited the white house, is it possible for a United States u. K. Bilateral agreement . Obviously, the u. K. Has to work out some aspects of their article 50. What are your views on the bilateral with the u. K. . How do you expect that to play out . Amb. Lighthizer i have met with dr. Fox and talked about these issues at the appropriate time at the appropriate time, i think the United States will enter in agreement with the u. K. I think they will come to an agreement that is beneficial to both parties. That is probably a year or two off. Even the deadline when it is going to happen is not clear, but we have had meetings. We talked about how we will proceed. It is something that is on the horizon, that the governments have spoken about. At the appropriate time, we will have a negotiation and im sure it will be a successful one. Scott lets turn to the multilateral system. There is a conference coming up in buenos aires. What is on the u. S. Agenda for the minesterial conference . What does the Trump Administration lan to do with the ongoing negotiations, such as the Trading Services agreement . Amb. Lighthizer trying to make some decision as to which ones we think are in our interests, which ones we want to pursue. Ustr is doing a study on that and hopefully it will come out in another month or so. Our view is it is unlikely that is going to lead to any negotiated outcomes. There are a number of areas where we would be willing to engage. Hopefully we will end up with a good conference, one that we decide what the upcoming agenda will be and there will be an agreement on that. Clearly, services are important for the United States. We have a 250 million trade surplus. That is a very important part of what we want to encourage. American companies could be much bigger if we had better roles and if we didnt have countries blocking u. S. Exports and services. That is a major thing for us. I have had a lot of executives talking to us and they have a myriad of problems, trying to move around. Trying to sell their services around the world. Scott to continue with the wto, the United States has raised some objections to the way bodies are formed and that process. Can you tell us about what the u. S. Is trying to accomplish in terms of changing the body . Amb. Lighthizer there are a number of issues on which there is a pretty broad agreement that the wto dispute settlement understanding is deficient. There are transparency issues, issues with the staff. A whole variety of issues that we have a problem with. I think there is a general agreement that there are problems. Beyond that, the United States sees numerous examples where the process has diminished what we bargained for. There have been a lot of cases where in my opinion, it is really indefensible. We have tax laws that have been struck down. Weve had other provisions where the wto took the position that they were going to strike down something that should not have happened. What we have tended to see is as americans look