Commerce nominee Ross says top priority is renegotiating NAFTA

The Washington Post

Billionaire investor Wilbur Ross singled out changes to the nation's free trade agreement with Mexico and Canada on Wednesday as "the first thing" he would address if confirmed to lead the Commerce Department in President-elect Donald Trump's administration.

Speaking before the Senate Commerce Committee, Ross argued that the United States should open its economic borders to countries that "play by the rules." But those that do not, he said, "should be punished - severely."

"I am not anti-trade. I am pro trade," Ross said. "But I am pro sensible trade, not pro trade that is to the disadvantage of the American worker and the American manufacturing community."

Several of Trump's Cabinet nominees are facing potentially bruising confirmation battles. Rep. Tom Price, R-Ga., who is under consideration to lead the Department of Health and Human Services, has been embroiled in controversy over his ownership of healthcare stocks while crafting legislation that could have affected those businesses. Rep. Mick Mulvaney, the nominee to lead the White House budget office, failed to pay more than $15,000 in taxes in the early 2000s related to a worker hired to help care for his newborn triplets, according to federal disclosures.

Cabinet nominees must undergo routine vetting and disclose their financial holdings as part of their confirmation process. During Wednesday's hearing, Ross acknowledged that one of his household employees recently was not able to provide proof of legal residency. Ross said the person had presented a valid Social Security card and driver's license at the time of hiring in 2009. A Commerce committee aide said the employee said the only driver's license the employee could recently produce had expired.

 

On Wednesday, Ross said the employee has been fired. He also said he paid all taxes required under that person's employment.

Still, Ross appeared to face an easy path to confirmation, with lawmakers from both sides of the aisle praising his testimony Wednesday. Commerce Chairman Sen. John Thune, R-S.D., called Ross's stance on trade "reassuring" even though it broke with Republican's free-trade orthodoxy. Ranking Democrat Sen. Bill Nelson of Florida said Ross's answers were "detailed" and "non-evasive" and called the hearing "a piece of cake."

Trump made renegotiating trade agreements a centerpiece of his presidential campaign, tapping into the frustration of many middle-class workers who have felt left behind by globalization. Since his election, Trump has already begun wielding the power of the bully pulpit, repeatedly calling for a border tax on U.S. companies that offshore jobs and sell their products back home.

He has taken to task individual companies such as Ford, General Motors and Toyota for investing in Mexico, sending their stock prices plummeting. But he has touted new U.S. jobs created by telecom giant Sprint and pharmaceutical maker Bayer AG.

Ross was a close adviser to Trump during the election campaign, and he is slated to take the leading role in setting trade policy in the new administration. Trump has named economist Peter Navarro to head a new manufacturing council within the White House and picked trade veteran Robert Lighthizer as U.S. trade representative, in charge of negotiating agreements.

On the campaign trail, Trump called for a blanket 35 percent tax on Mexican imports and a 45 percent tariff on goods from China. In a recent interview with the German newspaper Bild, he also suggested imposing a 35 percent tax on German cars sold in the United States.

"When you start out with the adverse party understanding that he or she is going to have to make concessions, that's a pretty good background to begin" negotiations, Ross said Wednesday.

It is unclear if those measures are part of the border tax that Trump has pushed, and international trade experts say they are likely a violation of long-standing treaties. In a recent Wall Street Journal interview, Trump criticized a tax plan by House Republicans intended to discourage imports known as "border adjustment."

Ross indicated Wednesday that tariffs were an essential component of U.S. trade policy. However, he acknowledged that protectionist measures implemented during the Great Depression only served to deepen the nation's economic distress. "I think tariffs play a role both as a negotiating tool and to punish offenders that don't play by the rules," he said.

Trump's top trade advisers have also raised concerns about China's growing power in the world economy. Navarro has been particularly dire in his warnings, writing a book entitled "Death By China."

Ross, who collects Chinese art and has extensive business interests in the country, sounded a stern but less strident tone in his testimony Wednesday. He said companies manipulate their currencies as a strategy for "attacking" the American economy, though he did not mention Trump's pledge to label China a currency manipulator on the president-elect's first day in office.

"China is the most protectionist country of very large countries," Ross said.

Ross amassed his fortune by investing in the industries that were hit hardest by the forces of globalization -- including steel, coal and textile. He recently announced he would step down down from his position on the board of directors at ArcelorMittal, the world's largest steel producer, in advance of his confirmation. According to Bloomberg, Ross's financial disclosures revealed assets of more than $330 million, with his net worth estimated at $2.9 billion.

During his testimony, Ross said he would be "scrupulous in recusal" to prevent any conflicts of interest with his vast business empire. But he said his wide-ranging investments also provided him insight into the minutiae of trade law and said his companies have been the victims of unfair practices.

On Wednesday, he called for tougher enforcement of U.S. trade laws, arguing that countries often delay cases by failing to provide paperwork and that billions of dollars in penalties go uncollected. That hard-line stance has helped him win support from the United Steelworkers, which had backed former secretary of state Hillary Clinton during the election.

Ross's testimony was briefly interrupted by protesters criticizing him for his early support of the sweeping trade agreement with Asia known as the Trans-Pacific Partnership, one of President Barack Obama's signature achievements. The deal has since become politically toxic, and Trump has vowed to pull out of the agreement once in office.

Ross said Wednesday that he changed his mind after analyzing the details of the agreement, raising concerns about what he said were lax requirements on auto parts manufacturing. "I came across some things that I felt were not consistent with things that had been advertised," he said.

Ross also highlighted proposals to encourage domestic growth, including spending on infrastructure. During the campaign, Ross and Navarro suggested a $137 billion tax credit that they said could spur $1 trillion in private-sector spending on infrastructure projects with a regular revenue stream, such as toll roads. That proposal was widely panned by economists as unrealistic, but Ross defended it on Wednesday.

Ross said the tax credits should be one of several efforts by the federal government to boost infrastructure spending. Several top Republican lawmakers have questioned the need for additional government spending, however, and Ross did not propose a way to pay for those proposals.

"The infrastructure needs of this country are so monumental that we need any available source of capital in order to meet it on a timely basis," he said.

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