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Background Press Call by Senior Administration Officials on the United States-Mexico-Canada Agreement

September 30, 2018

Via Telephone

11:05 P.M. EDT

MS. DAVIS: Thank you, moderator. Good evening everyone. I'm Emily Davis, with the USTR Public and Media Affairs Office. Thank you for joining today's briefing call regarding trade.

This call is on background only. It is not on the record, so the contents of this call may be paraphrased or quoted with attribution to senior administration officials. Additionally, the contents of the call are embargoed until the conclusion of the call.

Here to provide the background briefing and answer questions are [senior administration officials]. So with this introduction, I'll first turn it over to my colleagues for opening remarks.

SENIOR ADMINISTRATION OFFICIAL: Well, good evening everyone. I am pleased to announce that the United States, Mexico, and Canada have agreed to text on a new agreement that will replace the North American Free Trade Agreement. This is a big win for the United States, for Mexico, and for Canada, and represents the fulfillment of one of the President's most important campaign promises.

The new agreement will include provisions in three areas that will become the template for the new Trump administration playbook for future trade deals. It includes a host of provisions that will rebalance our trade relationship with Mexico and Canada in ways that ultimately will be a benefit to all three countries; includes new and stronger rules of origin on automobiles, which will bring billions of dollars of production to the United States and throughout the region. It includes ambitious new market access provisions for our farmers and ranchers, including access to the Canadian dairy sector that is substantial and a big win for America's farmers.

We've also included the review and termination provision that we previously announced in our deal with Mexico, which will ensure that we never end up in this position again, with an agreement that is stale and outdated and unbalanced in a way that is not beneficial to the United States.

The second group of provisions are an ambitious host of new provisions that will strengthen trade in the modern economy; provisions on digital trade; groundbreaking intellectual properties that have never been in any trade agreement before; as well as a host of important disciplines and financial services in other areas which, to us, is always a competitive advantage.

The (inaudible) a host of new provisions to combat unfair trade practices in a number of areas -- currency manipulations; new disciplines on state-owned enterprises; as well as duty evasions, which will prevent free-riding from countries that do not trade with the U.S., Canada, and Mexico on free and open terms.

In short, we think that this is a fantastic agreement for the United States, but also for Canada and Mexico. It's a great win for the President and a validation of his strategy in the area of international trade.

SENIOR ADMINISTRATION OFFICIAL: And I -- this is [a senior administration official]. I just want to agree with everything my colleague said. The other point I want to make is, is that we think, from an OGC perspective, this is going to be one of the most important trade agreements we've ever had.

On the one hand, I think a lot of things that people need to appreciate about the review provision -- whereby the agreement comes up for review every six years -- this gives us a significant new form of leverage, in terms of encouraging people to come up to the mark and really fully comply with all of their obligations.

And I want to emphasize that this administration is committed to strong and effective enforcement of this agreement. Just like all of our other agreements, we will be watching very carefully to see and to make sure that all of the things that have been pledged and promised in the agreement do come about. And we will take all the actions that are available to us, both under this agreement and under U.S. law, if necessary, to make sure that that happens.

So these are not just going to be words on the paper. This is going to be real, and it's going to change people's lives, and it's going to make the U.S. economy stronger and better. And it's a great tribute to President Trump that we were able to get this type of commitment that my colleague was talking about. We are very, very, very excited about it over here, and we think it's going to be a great step forward for the whole North American region.

Q: It's Jake Schlesinger, with the Wall Street Journal. Thank you for the call and for taking the questions. Quick questions. One, what is the name of the new trade agreement? Two, what is your timing, sort of, for submitting it to Congress? And third, what, if anything, did you do to deal with autos -- 232 concerns that Congress -- I mean, that Canada may have had?

SENIOR ADMINISTRATION OFFICIAL: Well, it is the -- the name of the agreement is the "USMCA" -- the "United States-Mexico-Canada Agreement."

In terms of timing, we will make the text public tonight, if it was not already done so. That is consistent with the Trade Promotion Authority, which will allow the President, Prime Minister Trudeau, and President Peña Nieto to sign the agreement at the end of November. It will then be submitted to Congress after that for action at this point in the next Congress after the first of the year.

Regarding the 232, as you know, there's an ongoing investigation at the Department of Commerce on 232. And no decision, no report has been issued. The President hasn't made the decision on that. This is an issue, however, that we've discussed with Mexico and Canada, and have reached an accommodation with them, particularly in light of the changes that are going to be made on the rules of origin that will ensure that anything that is done in the 232 space will at least ensure that we have an accommodation with Canada and Mexico as to their existing auto production.

Q: Thanks for doing this. Two quick questions. One, I wanted to ask: Are there any changes to the TN visas, as regards to numbers or time limits? Also wanted to ask: A lot of farmers have been concerned about NAFTA, as well as, you know, tariffs in China. Is there any takeaway for those who have been concerned about some of these agreements and whether these agreements would come to fruition?

SENIOR ADMINISTRATION OFFICIAL: Well, I guess (inaudible) on the question of visas, we have retained existing NAFTA language on that, but not gone beyond it.

On the question of tariffs as they relate to agriculture -- and this is a great win for agriculture in a number of ways. We've secured greater market access, as I said, in particular, the Canadian dairy sector. We've also agreed on new rules on technical barriers to trade that will allow our farmers an easier time getting their goods to market in both Mexico and Canada.

We have a number of -- there are other things, obviously, going on in the trade world that relate to agriculture. And certain retaliatory tariffs that have been put in place on farmers -- we're working towards those issues.

And certainly the issues with China, as my colleague said, are longer-term, but this is a great step forward in our relationship with Mexico and Canada. As you know, last week, we announced the start of discussions with Japan. We have discussions going on with the European Union. So I think, overall, this is a trade strategy which is already yielding a lot of benefits to America's farmers, and we have a process in place to, you know, address their concerns about retaliatory tariffs and also to secure greater market access in the future.

Q: Hi, this is Blake Burman with Fox Business. Thanks for doing this tonight. I was hoping that you could get a little bit more specific on dairy, considering that appeared to be the hang-up coming down the wire. What concessions were exactly made, or what kind of extra access are farmers here -- or that are people in that industry here going to be able to take advantage of because of it?

And secondly, as well, what is the relationship right now between President Trump and Prime Minister Trudeau, now that these negotiations have been wrapped up? Thank you.

SENIOR ADMINISTRATION OFFICIAL: Well, on the dairy issue, we have -- as I said, we've got a great result for our dairy farmers. (Inaudible) President's key objectives in these negotiations -- it's really two parts. One is, Canada has agreed to eliminate the Class 7 milk pricing system, which was something which was very problematic to many of our dairy farmers in Wisconsin, New York, and other places.

We've agreed, really, to a whole new regime that will prevent the supply-management systems effects from being externalized outside of Canada, which was something that was a key priority for our dairy industry.

And, in addition to that, we've achieved levels of market access that are -- for at least from the perspective of the United States -- a better deal than what the prior administration negotiated in TPP.

SENIOR ADMINISTRATION OFFICIAL: Yeah, and as far as just our relationship in general, I would just say that this is obviously a great moment -- this is a great moment in our relationship with all three countries. It's going to put our trade relationship, and hopefully our overall relationships on a better and stronger footing going into the future.

Q: Hi there, Michael (Inaudible) at the Chronicle. I briefly just wanted to ask a brief question. So obviously, at the beginning of the call, it was said -- and I'm just trying to clarify -- that the call was off the record. But then the person stated that we were able to quote a senior White House official. Usually that would mean that it would be on background. So I just want to clarify, was it -- is it off the record, or is it on background?

MS. DAVIS: Thanks for the clarifying question. So the call is on background, which means that the contents are attributable to a senior administration official, either by quotation or by summary. It is not on the record; it is on background.

Q: Hi, this is Ylan, from CNBC. I have two questions for you guys. Thanks for doing this. The first is, can you go through any changes to Chapter 11 and the investor-state dispute settlement, both with Mexico and with Canada?

And secondly, can you talk a little bit about President Trump and what his level of involvement was during the final stage of negotiations?

SENIOR ADMINISTRATION OFFICIAL: Let me just say this, with respect to your second question, obviously we're just going to refer you to the White House for the involvement of President Trump.

But with respect to Chapter 11, the ISDS, basically we're going to be phasing out Chapter 11 with respect to Canada. It will be phasing out --

SENIOR ADMINISTRATION OFFICIAL: Yeah, let me just say, so we were actually -- the investment protections in Chapter 11 are going to continue to be available. But the substantive investment protections are available to everyone.

There is a question of investor-state dispute settlement; that is going to be phased out with regard to Canada. The United States and Mexico have agreed to a reformed model for ISDS, which will mean that all investors will have a limited form of ISDS, and there will be a full -- there's a full fleet of ISDS procedures currently available that will continue to be available to investors in a limited set of industries that face high fixed costs, high degree of political sensitivity, and where ISDS really could -- the lack of ISDS could put our companies at a competitive disadvantage. And those are the oil and gas sector, transportation, infrastructure, and telecom.

Q: Thank you. I have just one quick question. For those not versed in the nuance of policy, you had said that this new trade agreement will help the economy. Can you give us, in just a couple of sentences, some specific examples of how this will help the economy in the United States? Thank you.

SENIOR ADMINISTRATION OFFICIAL: Yeah, so I'll just start off on that. In the first place -- so, there's a number of examples: First of all, we're going to have stronger intellectual property provisions between all three countries which will encourage innovation and make it easier for U.S. companies to get the full benefit of the work that they do in the innovation areas.

Second of all, the new rules of origin, especially with respect to automobiles, will encourage more auto production and truck production here in the United States and throughout North America, and that should lead to better jobs here and around -- and throughout the region.

Third, we have new and stronger labor provisions, which will create a more level playing field between the U.S. and Mexico and Canada when it comes to labor issues, and therefore make it easier for our workers to be competitive and to have better, stronger, higher-wage jobs in the United States.

And then fourth, obviously there's been -- some people have been concerned about the future of NAFTA and the future of the North American Trade Agreement and whether or not that was going to continue. Now, obviously, (inaudible) of those concerns, they don't have to worry about that anymore.

So I think, on the whole, what you're going to have is a situation where the U.S. is now in a much stronger framework. It's a framework that encourages innovation, it encourages manufacturing, it encourages more and fair treatment for our workers, and it should lead to more investment and production in the United States.

And I'm glad you asked that question because people do need to understand that is why we do this -- the trade policy that we do. Everything we're doing here is designed to lead to higher incomes and higher wages and a higher standard of living for America. That's -- that is the point.

Q: Hi, Will (Inaudible) at the Wall Street Journal. Thanks for doing this. Just wondering about the fate of Chapter 19 dispute settlement for countervailing and anti-dumping tariffs. And also, in terms of state-to-state dispute settlement, whether that will be fully binding for disputes among the countries on labor or other provisions. Thanks.

SENIOR ADMINISTRATION OFFICIAL: You know, Chapter 19 and Chapter 20 are both -- I mean, they may be -- I think they're going to be renumbered, but there hasn't been any significant changes with respect to those chapters.

And like I said before, we do intend to strongly enforce all of our rights under this agreement, both -- particularly with respect to labor. And we are going to be very aggressive in that regard.

Q: Hi, thank you. Roberta Rampton with Reuters. I wanted to ask about aluminum and steel tariffs. And the Canadians have been very upset about them. Does the deal have any provisions or side letter, or deal with those in any respect? And just to follow up on the Chapter 19 question that you just answered, do you see this as a concession that the Chapter 19 is essentially staying the same?

SENIOR ADMINISTRATION OFFICIAL: Well, I guess I would say, with respect to the steel and aluminum, obviously that's a Commerce investigation. And ultimately, that's -- the short answer to your question is no, there's not any sort of agreement on that at this point. Obviously, there's been talk about potential discussions there, but that's on a completely separate track.

With regard to Chapter 19, in terms of whether or not we would regard it as a significant concession -- you know, obviously from our perspective, we think there's a lot of really, really great things in this agreement. And we're excited about those parts of it. And with respect to Chapter 19, we will continue to do everything we can under the -- to enforce our anti-dumping and countervailing duty laws as appropriate. And we do not think that Chapter 19 will prevent us from doing that.

Q: Yeah. This is Adam Behsudi from Politico. Thanks for doing the call. So will there be a process then for discussing the steel and aluminum tariffs with Canada? And what's the timeline then for -- I mean for some sort of agreement on that?

SENIOR ADMINISTRATION OFFICIAL: That really is on a separate track. And that's not -- we're not really in the best position to comment on that.

Q: Hi, Mercedes Stephenson with Global News in Canada. I'm wondering if you can talk about how big of a role the deadline played in coming to this agreement and how much pressure there was to try to get something done by midnight tonight?

SENIOR ADMINISTRATION OFFICIAL: Well, under TPA, as you know, we were supposed to post the text of the agreement tonight, and -- in order to have it signed by November the 30th. And so from our perspective, as I think the ambassador made clear many times, that was a very important date.

You know, I'm not really in a position to (inaudible), I'll defer to my colleague on whether or not he's in a position to say what effect it had on the negotiators.

SENIOR ADMINISTRATION OFFICIAL: Well, listen, I think it's helpful to have deadlines. But this was -- this deadline was real. It was something Ambassador Lighthizer was very clear about. And, you know, regardless of the role it played, we ended up in a good place that ultimately we think is a good deal for all three countries.

Q: Hi, this is Heather Steele with AFP. Two questions: First of all, why the deadline pressure? Why did the deal have to be signed by December 1st? Is that something the U.S. wanted? It was more of a Mexican pressure because the current -- the outgoing government wanted the credit?

And also, on the -- this deal versus what would have happened in TPP, can you talk a little bit about -- you mentioned, with dairy, it was better. But are there any other things that were sort of adopted from TPP or improved or -- you know, or whatever?

SENIOR ADMINISTRATION OFFICIAL: Yeah, I guess I would just say briefly, we believe this deal has stronger labor provisions than TPP. We believe it has stronger IP provisions than TPP. We believe it has stronger environmental provisions than TPP. It has much stricter rules of origin with respect to automotive. It has a new review provision that wasn't in TPP. I mean, it really is a completely different -- in our opinion, much more innovative agreement.

In terms of, you know, who signs the deal, it was always our understanding that, from the prospective of Mexico, it was important that President Peña Nieto signed the deal on behalf of Mexico. And you sort of have to talk to the folks in Mexico about --

SENIOR ADMINISTRATION OFFICIAL: But I think if you just look -- and this is not just (inaudible). If you just look on sort of the objective facts, I mean, on -- you know, by and large, the marketing exclusivity period for biologic drugs -- in TPP, it was five years, with some protections for three additional years. Here it's going to be a flat 10, which is a great thing for our pharmaceutical innovators.

In the area of digital trade, we've achieved a much stronger, more ambitious commitment on data localization, cross-border data flows, as we well as intermediate liability. And the ag outcome is also better, particularly with regard to dairy.

Q: Hi, good evening everyone. Thanks for doing this. Richard (Inaudible) here with Canadian Television. Hoping to circle back to dairy for a moment. In your opinion, would you consider that a deal breaker if Canada refused to open up its supply management system?

Second question, why the decision to sort of climb down from the cultural protection chapter that Canada was hoping to defend as well?

SENIOR ADMINISTRATION OFFICIAL: Well, if you're talking about -- you know, from our perspective, obviously we had stakeholders who were very concerned about having more access to the Canadian dairy market, which is potentially an enormously market for the United States.

And also we had stakeholders who were interested in, you know, having more competition with respect to Canada, in terms of IP and other type of areas. So those were, you know, issues that were significant to us from our prospective and I think we're ultimately quite satisfied with where that all ended up landing.

Q: Hi, thanks for doing the call. Heather Long from the Washington Post. Can you clarify if there is a side letter on the 232 auto tariffs? Some Canadian reports out of Ottawa are indicating that there is some sort of side agreement that would be about 40 to 50 percent higher than auto parts levels that are in place now. So I was wondering if you could just kind of clarify, if there an official letter -- official document?

And then on dairy, similarly, there's reports out of Ottawa that market access for foreign suppliers -- that was about 3.25 percent under TPP. So I'm wondering if, does the U.S. get a higher percentage of that? Thanks.

SENIOR ADMINISTRATION OFFICIAL: Well, I think on -- again, on the 232, I'll refer to my previous comments. We've reached that accommodation that if there -- again, and, you know, this is handled by the Department of Commerce. There's not a study yet. Once the study is out, the President will have to make a decision.

But we have worked out an accommodation with both Mexico and Canada that is going to be set forth in side letters that will be made public this evening, at least on our website.

And, you know, with regard to dairy, I'm not in a positon to comment on, sort of, the particulars -- on the particular markets, you know, share number that you gave there -- other than just to say that, you know, from our perspective, we think it's a good deal for our farmers. We think it is.

And then there are different components of this deal. There's not just the market access. There was also the Class 7 issue. And, you know, as a package, we think it's something that is good for our farmers. But at the same time, it was, you know, I think it was something that is a fair deal for Canada as well.

So I think it was a good -- certainly a good outcome for us. But I think it was a good outcome, especially when paired against other parts of the agreement where Canada achieved some of it's negotiating (inaudible).

Q: Hello?

SENIOR ADMINISTRATION OFFICIAL: Yes.

Q: Was there an exchange for the Chapter 19 to stay in place? Was that an exchange for the greater access to the dairy market?

SENIOR ADMINISTRATION OFFICIAL: You know, listen, this is all a -- I mean, these agreements are complicated patchworks. You know, nothing is agreed until everything is agreed. You know, I don't know; I think everyone looks at the agreement as a whole and, you know, thinks about all of the different provisions -- you know, individually and collectively. And that's as far as I'm going to -- that's as far as I'll go on that.

Q: Hi, it's Andrew Mayeda from Bloomberg. Thanks for doing the call. What information do you have one where you landed on procurement -- on government procurement? And secondly, I mean, I know you've already talked about this a bit, but any further details on -- you can provide on this accommodation with Canada and Mexico on the 232s would be appreciated. Thank you.

SENIOR ADMINISTRATION OFFICIAL: Yeah, I mean, sort of on the accommodation again -- I don't really have anything to add to that. Again, the text of these letters is something that we're going to be making public shortly.

On the procurements side, what we've done with Canada is we've agreed that we will deal with government procurement under the terms of the government procurement agreement. And with Mexico, we've negotiated a revision for the NAFTA 1.0 -- the NAFTA 1.0 government procurement chapter. And in particular we've changed some of the market access schedules in areas that were important to the United States.

Q: Hi, Emerald Robinson, One America News. Thank you so much for doing the call. My question is, the Mexican Economy Minister has suggested that September 20th was the cutoff date to reach a deal in order to write up everything and create the language. So I just want to ask you a little bit about the timeline -- this deal coming with Canada in the 11th hour and given the language out and pushing through the congressional approval process. Thank you.

SENIOR ADMINISTRATION OFFICIAL: Well, I guess I'm not sure, you know, what -- precisely what you're asking. I mean, in terms of -- I mean, we've got the text. What we were required to do under TPA is to post the text today, 60 days before the signature date. And that's what we've been able to do.

We've -- the fact of the matter is that these negotiations have been going on for a long time. And although, you know, there were a number of issue -- very important issues that were not resolved until quite recently. But the vast majority of the text has been -- was written well before -- certainly, well before this weekend. And I think the way that these things oftentimes are closed at the end of the day is that there is kind of an intense period to finish everything up.

And, you know, fortunately we were able to -- we were able to get it done. It took a lot of work by, you know, a lot for great people on -- in the negotiating teams of all three countries. And fortunately, we were successful.

MS. DAVIS: Thank you [senior administration officials] for your briefing today. And thanks everyone for you time and participation in this call.

Again, this has been a background briefing call with the content attributable to "senior administration officials." The embargo lifts at the end of this call. If you have further questions, please contact USTR's Public and Media Affairs Office at Media@USTR.EOP.GOV.

And a special thanks to our moderator. Have a good night everyone.

END 11:36 P.M. EDT

Donald J. Trump, Background Press Call by Senior Administration Officials on the United States-Mexico-Canada Agreement Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/351008

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