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 appreciate everybody who came out, as well. I can, and one of the messages i get repeatedly from my staff, they like to take me aside, it doesnt mean you cant give a short speech and ill 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, its a starting point about nafta. Why did the administration feel it was necessary to renegotiate nafta because that was the start of usmca. So was it that nafta was an unfair, imbalanced 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 all those questions. Nafta is a Free Trade Agreement and zero tariffs on 100 of manufactured goods and no quotas, no obstacles, and it me its the epitome of a free and reciprocal trade agreement and since nafta was implemented, american exports to mexico are up over 500 . Pennsylvania 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 didnt even exist. Modernizing made sense and thats not the reason the administration wanted to renegotiate nafta. The reason was because 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 its 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 and significant 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, if not eliminate the trade deficit with mexico and i would argue thats the central motivating fact and thats why there was bad outcomes, because it was the wrong intent in the first place. The actual purpose was to diminish trade with mexico, and im afraid that that might happen. I dont think its going to be severe, but on the margins its 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 categories of changes. First category i would consider the constructive, modernizing changes. Theyre mostly modest, i think, but theyre not unimportant. Its 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. Thats all right. Thats good. Much of it was taken from tpp. So it wasnt terribly controversial or difficult to get there and thats all fine. Theres a very modest opening for some Agricultural Sector and market in canada and americans will probably be able to sell more dairy products. Our back of the envelope estimate is thats on the order of half of 1 of our dairy production. So not really large, but not a bad thing. So thats category 1, what i think of the constructive changes and modernizing features. 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. Its really the end of free trade in autos between the United States and mexico, lets be clear about that, right . What the administration could have done was at a straightforward limitation like quotas or tariffs and they decided that would be too obvious. Thisad they create 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 the low cost of living and much lower wages. This is designed to make mexican auto production less competitive, and to raise the cost. The advocates for this agreement in the administration think that that is a good thing. I dont think its a good thing. I think imposing this minimum wage thats much higher than prevailing wages will make the north American Automotive industry as a whole less competitive. Its 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, lets 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 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 more automation or to just sourcing parts and cars and in other countries altogether. That mean, i think, over time fewer american jobs in this space, not more, and thats one of the typical consequences of protectionist policy. So thats the auto sector. A second area that i find very troubling is theres an Expiration Date on this. Weve 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, its about 16 years out, the three parties to simultaneously come together and agree to add as theyve designed it, six years at a time to the end of this. That might happen, but it might not. So if somebody is contemplating a crossborder investment they have to ask themselves, well, what is the trade environment going to look like only have when we no longer have a trade agreement that governs 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 objectionable is the virtual elimination of the investor state dispute settlement mechanism. So this is the mechanism by which lets be honest. Its american investors who make use of this and its 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 doesnt 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, 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 weve 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 weve won every case that weve 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 . Its 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, its gone completely. Its gone. There is no investor state dispute settlement mechanism in canada. So this probably makes the canadians and mexicans quite happy. They dont have to deal with this, and i think it reflects an underlying view in the administration by some in the administration thats very misguided and its sort of a classic protectionist view that its a good idea to discourage Foreign Direct Investment by american investors and introducing new risk, whether its by a sunset provision or whether its elimination of a dispute adjudication mechanism. Thats a good thing because, and in 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 Direct Investment, most of which is made to serve local markets and undermining that doesnt make us richer. It doesnt 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. Managerial financial services, planning, administration and all kinds of services, so i completely reject the notion that we ought to somehow encourage american investors from investing overseas. Let me get to the two things that were late in the game because the provisions i just went through were early features of this agreement. 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. The way this began was with the u. S. Negotiators agreeing to force mexico to adopt new labor laws. We did that and mexico has passed these laws and they have to do with facilitating the unionization of their factories and we didnt stop there, right . On previous trade agreements weve historically taken the view, the simplicity that a , at least implicitly that a countrys labor law is their business and now weve 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, its 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 onsite inspections and we will have americans five 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. Here is the thing. This agreement is reciprocal. Its fully reciprocal. Our trade representatives says dont worry. Weve made sure that the mexicans cant send folks to inspect american factories. Well 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. I think its worth asking the question why is it that organized labor felt so strongly about this provision . Why is it that the openly protectionist numbers of congress felt so strongly about this provision . It could be that they just have this passionate concern about the wellbeing of mexican workers, i suppose. But it could be that it serves their own economic interest, as well. And specifically, of course, theres the obvious way that it serves their interest by forcing the unionization of these plants youll make them less productive , and less efficient and theyre less able to compete. I think theres more going on than that. I think theres a huge opportunity for mischief given that there are a lot of American Companies that have subsidiaries in mexico and now there is 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 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 shdeds a little light on how he thinks about this. The last provision i will mention is when he acknowledges make the agreement worth. 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,. Serious in our u. S. Law of 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 idc report. Itc report. 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. Thats nonsense. So the data point thats often cited is 176,000 new jobs created by usmca. First of all, if you believe that that number is true, its 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 its extremely small in scale, if you even believe it to be true, and i dont. 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 thats how it works out, but they acknowledge that they dont attempt to quantify the adverse impact of the sunset clause because they dont know how to do it. We know thats got to be negative. It cant possibly be positive in my view and we dont understand the magnitude and theres 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 countrys specific rules of origin the more you diminish growth. Directionally we dont have a quantification of this, but directionally we know it will diminish growth and jobs. So bottom line, i think its very unlikely that this produces any net new jobs and most likely its probably its 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. Its 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 wont be complied with and so the alternative under usmca with the autoparts that dont comply will be hit with the tariff. The cbo analysis is that that tariff will go into effect and of course, thats a tax on American Consumers and its 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. 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 eliminate the dispute mechanism for u. S. Investors we dropped , the protection and the most Innovative New medicines and we gave a big gift to organized labor in the form of a process designed to allow protectionists to import further restrictions down the road. Well get little or no extra Economic Growth out of it and maybe a modest hit. So it shouldnt be terribly surprising that Speaker Pelosi and other protectionists in congress were spiking the football and the aflcio has endorsed this deal and its been two decades since they have endorsed the trade deal and heres 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 further future agreements. They 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 20some people who are standing up to sit down if you want to. Otherwise youll get tired and i would love for you to ask questions. I also notice that im to the left of senator toomey as im sitting here which is definitely not true. Thank you for your remarks and agree we could spend the next 20 minutes agreeing with them. 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 foreign labor markets. I have a feeling theres a but coming. Thats dull. Lets not talk about when we agree on. Lets talk about what we might disagree on or partly on, and ill start with a key element of this for you, and im not sure it is for me. As you probably know, 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 a while he was president if he won reelection. I dont 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,