First on CNBC: CNBC Transcript: U.S. Commerce Secretary Wilbur Ross Speaks with CNBC’s Kelly Evans on “Closing Bell” Today
Following is the unofficial transcript of a FIRST ON CNBC interview with U.S. Secretary of Commerce Wilbur Ross and CNBC's Kelly Evans on "Closing Bell" (M-F, 3PM-5PM ET) today, Thursday, March 30th. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000606123 and http://video.cnbc.com/gallery/?video=3000606126.
All references must be sourced to CNBC.
KELLY EVANS: ALL RIGHT, THERE YOU HAVE IT. THERE'S THE UPDATE FROM STEVE HAVING HAD THOSE COMMENTS FROM BILL DUDLEY. ACCORDING TO A DRAFT PROPOSAL BROMH CIRCULATED IN CONGRESS BY THE U.S. TRADE REPRESENTATIVE, THE TRUMP ADMINISTRATION IS LIKELY TO SEE MODEST CHANGES TO THE NORTH AMERICAN FREE TRADE AGREEMENT KNOWN AS NAFTA. CNBC OBTAINED A COPY OF THE PROPOSAL, AND FOR MORE ON TRADE WE'RE JOINED NOW WE'RE IN A FIRST CNBC INTERVIEW WITH US COMMERCE SECRETARY WILBUR ROSS. MR. SECRETARY, WELCOME.
WILBUR ROSS: GOOD TO BE ON, KELLY.
EVANS: WE LOOKED AT THE LETTER ADDRESSING A NUMBER OF CHANGESTO B MADE TO NAFTA. IS THIS THE FINAL PROPOSAL FOR THE ADMINISTRATION?
ROSS: WHAT APPARENTLY YOU HAVE IS A LEAKED DRAFT OF A LETTER WE'VE SENT TO THE STAFF OF THE HOUSE WAYS AND MEANS COMMITTEE, AND THE SENATE FINANCE COMMITTEE. WE NEED THE PERMISSION OF THOSE TWO COMMITTEES TO SEND THE FORMAL LETTER, WHICH IS WHAT TRIGGERS THE 90-DAY PERIOD, AND WE'RE HOPEFUL THAT THAT WILL HAPPEN BEFORE THE SPRING RECESS.
EVANS: TODAY SPEAKING AT THE WHITE HOUSE SEAN SPICER CALLED IT NOT AN ACCURATE ASSESSMENT OD WHERE WE ARE TODAY. IS THAT THE CASE? BEFORE WE GO THROUGH WHAT'S IN HERE, THIS PRETTY MUCH REFLECTS YOUR CURRENT THINKING ON NAFTS ON THE CHANGES THAT WILL BE MADE, RIGHT?
ROSS: THERE'S NO CHANGE IN OUR THINKING. THIS LETTER SIMPLY DESCRIBES IN VERY BROAD OUTLINE THE TOPICS WE'LL DISCUSS, SO I DON'T THINK THERE'S ANY GREAT REASONS FOR YOU TO OVERTHINK IT.
EVANS: UNDERSTOOD. JUST SO EVERYBODY'S AWARE, THIS TALKS ABOUT TRADES AND GOODS, TRADES AND SERVICES, BUT ONE OF THE IMPORTANT THINGS IN HERE WHICH I WOULD LIKE YOU TO ELABORATE ON, IF YOU CAN, ARE THE RULES OF ORIGIN. IT SAYS WE'RE GOING TO SEEK RULES OF ORIGIN THAT ENSURES THAT NAFTA SUPPORTS PRODUCTION AND JOBS IN THE U.S. WHAT DOES THAT MEAN?
ROSS: WELL, FIRST OF ALL, WHAT RULES OF ORIGIN MEAN IS IN NAFTA, YOU GET THE BENEFIT OF NO TARIFF AMONG THE THREE COUNTRIES, MEXICO, U.S., AND CANADA, AS LONG AS IT'S PRODUCED THERE. HOWEVER, RULES OF ORIGIN ARE A LOOPHOLE THAT ALLOWS MATERIAL FROM OUTSIDE TO COME IN AND YET BE COUNTED AS THOUGH IT WAS NAFTA PRODUCED UP TO CERTAIN LIMITS. ONE OF THE MANY PROBLEMS WITH THE RULES OF ORIGINS IN NAFTA AS PRESENTLY DRAFTED IS THAT IN THE CASE OF SAY AUTOS, IT WENT SPECIFICALLY PART BY PART. NAFTA'S IN AN OLD AGREEMENT, AND MANY OF THOSE PARTS ARE NO LONGER EVEN USED IN CARS BECAUSE AUTOMOTIVE TECHNOLOGY HAS MOVED ON. SO LEAVE ASIDE THE QUESTION WHETHER THE PERCENTAGES WERE RIGHT. IT'S AN OBSOLETE PROVISION, AND IT'S ESSENTIALLY A BACK DOOR WAY FOR A NON NAFTA GOODS TO TAKE ADVANTAGE OF NAFTA.
EVANS: SO, IN OTHER WORDS, CHINA COULD TAKE ADVANTAGE OF THE RULES?
ROSS: CHINA OR ANY OTHER COUNTRY.
EVANS: AND DOES THIS RELATE AS WELL TO THE DUMPING, ANTI-DUMPING ANNOUNCMENTS MADE TODAY?
ROSS: WELL, THE ANTI-DUMPING CONSISTS OF DEALING WITH COUNTRIES THAT ARE ACTUALLY VIOLATING THE RULES. FOR EXAMPLE, IN TRADE, IN STEEL, WE NOW HAVE SOMETHING LIKE 187 CASES OF THESE KIND OF DUTIES AND ANTI-DUMPING OUTSTANDING. MORE THAN HALF OF THOSE INVOLVE CHINA.
EVANS: THE REASON TO SPEAK ABOUT THIS AS WELL AS ENFORCEMENT ISSUES THAT TIES NAFTA TOGETHER WITH ANTI-DUMPING AND OTHER TRADE MEASURES YOU MAY BE TAKING, ON THE ENFORCEMENT FRONT, ARE YOU LOOKING TO MAKE NAFTA A PLACE WHERE YOU CAN ACTUALLY GO AFTER PEOPLE WHO YOU THINK ARE VIOLATING THE TERMS? FOR EXAMPLE, THERE'S A PANEL RIGHT NOW THAT CAN BE USED TO ADJUDICATE THESE ISSUES, BUT, PERHAPS, THE U.S. HAS NOT GOTTEN A FAIR SHAKE FROM IT. WHAT ENFORCEMENT MEASURES WOULD YOU LIKE TO SEE GOING FORWARD?
ROSS: WELL, WE THINK THE RIGHT WAY TO NEGOTIATE DETAILS LIKE THAT IS IN THE CONFERENCE ROOM RATHER THAN IN THE PRESS ROOM, BUT IN GENERAL, IN TERMS OF ENFORCEMENT, THERE'S SEVERAL MEASURES WE'RE GOING TO BE TAKING THAT HAVE NOT BEEN CHARACTERISTIC OF PRIOR ADMINISTRATIONS. FIRST ONE IS SELF-INITIATION. COMMERCE HAS HAD THAT POWER FOR A LONG, LONG TIME, BUT ALMOST NEVER USES IT. THE REASON IT IS IMPORTANT IS THIS. WHEN WE WAIT FOR AN INDUSTRY TO BRING AN ACTION ITSELF, THE RULES ARE THE INDUSTRY MUST ORGANIZE ITSELF, CERTAIN PERCENTAGE OF THE WHOLE INDUSTRY MUST AGREE, AND THEN THEY HAVE TO DRAFT THE PAPERS, TAKE MONTHS TO SUBMIT THEM TO COMMERCE, TAKES MONTHS TO REVIEW THEM. THAT'S A SLOW, SLOW PROCESS. WHEN WE SELF-INITIATE, IT CUTS OUT ONE OF THE TWO STEPS, AND IT CUTS OUT ESPECIALLY THE NEED FOR THE INDUSTRY TO ORGANIZE ITSELF. IT DOES ANOTHER THING AS WELL, WHICH IS SOMETIMES COUNTRIES WANT TO TAKE REPRISALS AGAINST THE COMPANIES, THE U.S. COMPANIES THAT BRING THE ACTION. IF COMMERCE BRINGS THE ACTION, THERE'S NO REPRISAL THEY CAN TAKE AGAINST US, SO IT BECOMES A LITTLE OF A HEAT SHIELD FOR OUR CORPORATIONS.
EVANS: AND AS WE UNDERSTAND IT, THERE MAY BE SOME EXECUTIVE ORDERS ON THEIR WAY THAT WOULD ALSO IMPROVE THE ENFORCEMENT THAT YOU HAVE TODAY AT COMMERCE, SO, FOR EXAMPLE, IT COULD MAKE COMMERCE MORE POWERFUL BY GOING AFTER CHINA FOR BEING THE CURRENCY MANIPULATOR OPPOSED TO LABELING THEM AS BEING ONE. IS THAT A FAIR CHARACTERIZATION OF WHAT ELSE IS COMING DOWN THE PIPE?
ROSS: WELL, IT'S BEEN MY PRACTICE SINCE I WAS BACK IN THE PRIVATE SECTOR NOT TO COMMENT ON RUMORS. WE WILL BE HAPPY TO COMMENT ON FACT. WE'RE NOT GOING TO COMMENT ON RUMORS.
EVANS: UNDERSTOOD. ALL RIGHT. LET ME GO BACK TO THE LETTER, THEN, ON THE SECOND PAGE IT TALKS ABOUT HOW THERE'S THE DESIRE TO SEEK TO LEVEL THE PLAYING FIELD ON TAX TREATMENT. THIS SEEMS TO BE A KEY PART OF ALL OF THIS. IN OTHER WORDS, DOES THIS MEAN THAT IF MEXICO HAS A 16% VALUE ADDED TAX, WE'D IMPOSE ON THEM A BORDER ADJUSTMENT TAX OF 16%?
ROSS: NO. WHAT THAT SIMPLY DESCRIBES IS AN UNFAIRNESS THAT EXISTS, NOT JUST WITH MEXICO AND CANADA, BUT WITH MOST OF THE REST OF THE WORLD. MEXICO LIKE EUROPE, CHINA, JAPAN HAS A VALUE ADDED TAX. THAT'S THE TAX THAT IS REBATED ON EXPORTS. WE IN THE U.S. DO NOT HAVE A VALUE ADDED TAX, BUT THE WTO THREE TIMES HAS TURNED DOWN LEGISLATION THREE TIMES DRAFTED BY OUR CONGRESS TO PERCENT THE REBATE OF OUR EQUIVALENT, NAMELY CORPORATE INCOME TAXES ON OUR EXPORTS. IT'S TOTALLY UNFAIR TO LET OUR COMPETITORS GET A REBATE, SOMETIMES AS HIGH AS 20%, ON THEIR EXPORTS, AND, YET, WE CAN'T GET A REBATE OF OUR TAXES. THAT'S A PROBLEM THAT HAS TO BE SOLVED IN ONE WAY OR ANOTHER, AND WE WILL BE USING NAFTA AS A PARTIAL MEANS OF ADDRESSING THAT.
EVANS: AND HOW CAN YOU ACTUALLY GO ABOUT DOING THAT? WHAT WOULD BE THE MECHANISM FOR THAT TO WORK IF I'M A BIG U.S. COMPANY, CATERPILLAR, FOR EXAMPLE, AND I WANT THE SAME TREATMENT.
ROSS: WELL, THIS IS NOT MEANT TO DEAL JUST WITH INDIVIDUAL COMPANIES. IT'S MEANT TO DEAL WITH EVERYTHING GOING CROSS BORDERS. SO IT WOULD BE A NATION TO NATION SOLUTION, NOT A SOLUTION PARTICULAR TO ANY ONE INDIVIDUAL COMPANY.
EVANS: ALL RIGHT. YOU MENTIONED THERE HAS BEEN SOME FRUSTRATION WITH THE WTO. IS IT IMPORTANT? IS IT A PRIORITY FOR YOU THAT WE REMAIN A MEMBER OF THAT ORGANIZATION?
ROSS: WELL, WHAT'S IMPORTANT TO US IS THAT WE HAVE AN IMPARTIAL ARBITER OF TRADE DISPUTES AROUND THE WORLD TO THE DEGREE THAT THE WTO ACTS AS AN IMPARTIAL ARBITER, THAT'S FINE. BUT TO THE DEGREE THAT IT HAS RULES LIKE THIS RULE THAT I JUST DESCRIBED ABOUT INEQUITABLE TAX TREATMENT, WE HAVE A PROBLEM WITH IT. IN ONE WAY OR ANOTHER, WE NEED A RESOLUTION OF THE PROBLEM.
EVANS: AND TO GO BACK AND ZOOM OUT A LITTLE BIT ABOUT WHY YOU'RE PUTTING THIS LETTER FORWARD, THESE PROPOSED CHANGES FORWARD TO NAFTA, IS IT THE ADMINISTRATION'S GOAL THAT THIS SIMPLY BRINGS JOBS IN MANUFACTURING BACK TO THE UNITED STATES, AND THIS IS ONE AVENUE FOR DOING SO?
ROSS: WELL, THE REASON FOR THE LETTER IS WE ARE REQUIRED TO SUBMIT A SO-CALLED 90-DAY LETTER AS PART OF THE CONSULTATION PROCESS IN THE TRADE PROMOTION AGREEMENT. SO IT'S A LITTLE BIT UNFORTUNATE THAT SOMEBODY APPARENTLY IN THE CONGRESS LEAKED A DRAFT LETTER THAT HAD NOT YET BEEN APPROVED BY THE HOUSE WAYS AND MEANS COMMITTEE AND THE SENATE FINANCE COMMITTEE. THOSE ARE THE TWO GROUPS THAT HAVE TO AGREE TO OUR SUBMISSION OF THE 90-DAY LETTER. THAT'S WHAT I MENTIONED A LITTLE BIT EARLIER, WE'RE HOPEFUL TO HAVE DONE BEFORE THE SPRING RECESS.
EVANS: YOU SAID AS WELL THAT IT NEEDS TO ADDRESS 21STCENTURY ISSUES, AND ONE OBSERVER SAID, LOOK, THE TRANSPACIFIC PARTNERSHIP WAS A GREAT VENUE FOR DOING SO, FOR MAKING THOSE MODERNIZATIONS AND SOME OF THE LANGUAGE IN HERE KIND OF BORROWS FROM THAT. WOULD THE TPP ACTUALLY ACHIEVE SOME OF THESE OBJECTIVES WHEN WE TALK ABOUT TRADE DEALS WITH OTHER NATIONS? COULD THAT BE SALVAGED IN SOME WAY OR FORM?
ROSS: WELL, FIRST OF ALL, WE FEEL THAT ANY OF THE PROVISIONS IN TPP, THAT MEXICO AND CANADA ALREADY AGREED TO, SHOULD BE THE STARTING POINT. WE CERTAINLY DON'T INTEND TO LOSE GROUND FROM ANY PROVISIONS THEY'VE ALREADY AGREED. IF ANYTHING, OUR INTENTION IS TO PUSH THEM FURTHER.
EVANS: AND WHEN IT COMES TO NAFTA, THEN, THAT IS JUST – YOU'RE SAYING THAT WOULD JUST BE AN IMPORTANT PART OF INTRODUCING INTO THIS NEW LEGISLATION THE SAME KIND OF PROTECTIONS FOR DIGITAL PROPERTY, THAT SORT OF THING?
ROSS: WELL, AT LEAST. AT LEAST THE SAME, YES. TPP MADE SOME PROGRESS. WE THINK THERE'S A NEED AND ROOM FOR MORE PROGRESS.
EVANS: AND, MR. SECRETARY, I WANT TO ASK ABOUT THE TAX CUTS AT THIS POINT THAT ARE INCREDIBLY IMPORTANT, OBVIOUSLY, TO COMPANIES HERE. ONCE THE HEALTH CARE REPEAL AND REPLACE BILL FAILED, PEOPLE BECAME CONCERNED THAT THE REVENUE TO FUND A BIG TAX REFORM IS GONE NOW. HOW ARE WE GOING TO FILL THAT HOLE? AND WHAT PLANS DO YOU HAVE AT THIS POINT TO PUSH THROUGH TAX REFORM OVER THE SYSTEM?
ROSS: WELL, AT THIS STAGE, THE ADMINISTRATION IS IN A LISTENING MODE CONSULTING WITH MEMBERS OF THE CONGRESS AND CONSULTING WITH OTHER GROUPS TO GET A VIEW OF THEM AS TO THE KINDS OF REFORMS THAT MIGHT EVENTUALLY BE. BUT AS YOU KNOW, TAX LEGISLATION STARTS FROM THE HOUSE OF REPRESENTATIVES AND THEN GOES FORWARD. SO, THE INITIATION MOST LIKELY WOULD BE FROM THE WAYS AND MEANS COMMITTEE IN THE HOUSE.
EVANS: UNDERSTOOD. THOUGH, WHEN IT COMES TO NEGOTIATING WITH NAFTA, WOULDN'T THE INTRODUCTION OF A BORDER ADJUSTMENT TAX BECOME A KEY PIECE OF THIS IF, SUDDENLY, THEY ARE LOOKING AT MORE OF A HURDLE TO GET GOODS INTO THE COUNTRY?
ROSS: WELL, THE ADMINISTRATION HAS NOT AS OF YET TAKEN A POSITION ON THE BORDER ADJUSTABLE TAX. IT'S A VERY COMPLEX QUESTION THAT REQUIRES SOME VERY COMPLEX ANSWERS. SO WE'RE STUDYING IT VERY, VERY CAREFULLY. AND WE KNOW THAT ONE OF ITS PURPOSES IS TO FILL A HOLE THAT OTHERWISE WOULD EXIST IN THE TAX PROPOSALS. WE'RE TAKING IT VERY SERIOUSLY, BUT THE ADMINISTRATION HAS TAKE NO POSITION ON IT AS OF YET.
EVANS: ALL RIGHT. MR. SECRETARY, FINALLY BEFORE YOU GO, THIS THE FIRST TIME WE'RE SEEING YOU SINCE RACHEL MADDOW HAD THAT SPECIAL REPORT ON THE PRESIDENT'S TAX RETURNS, IN WHICH SHE CALLS YOU OUT AND SAYS YOU, "INEXPLICABLY ENDED UP THE MAJORITY SHAREHOLDER IN A CYPRUS BANK WITH ALL SORTS OF TIES TO VLADIMIR PUTIN AND A RUSSIAN OLIGARCH WHO ENDED UP STUFFING $60 MILLION INTO DONALD TRUMP'S WALLET." COULD YOU EXPLAIN YOUR INVOLVEMENT IN THIS SCENARIO SHE IS DESCRIBING?
ROSS: WELL, SHE DOESN'T HAVE ANY OF THE FACTS VERY ACCURATELY, SO I'M NOT GOING TO GET INTO A PUBLIC DEBATE WITH HER, BUT YOU OUGHT TO DO SOME FACT CHECKING. AND IF YOU'D LOOK AT THE RECENT NEW YORK TIMES ARTICLE, WHICH DID A VERY THOROUGH INVESTIGATIVE REPORT ON MY EFFORTS INVOLVING THE BANK OF CYPRESS, THOSE PEOPLE DID CHECK THEIR FACTS. AND IT CERTAINLY ISN'T THAT THE NEW YORK TIMES IS A GREAT SUPPORTER OF THE ADMINISTRATION. SO YOU CAN TAKE THEIR BENIGN TREATMENT OF ME AS BEING FACT BASED.
EVANS: UNDERSTOOD. WELL, THANK YOU SO MUCH FOR JOINING US. SO MANY COMPLEX ISSUES AND IMPORTANT CHANGES TAKING PLACE. APPRECIATE YOUR TIME THIS AFTERNOON.
ROSS: IT'S GOOD TO TALK WITH YOU.
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