Trump's new trade guru may actually be the adult in the room
The appointment this week of yet another protectionist to U.S. President-elect Donald Trump’s nascent economic team is being met with an unusual reaction on both sides of the aisle in Washington: a little relief, and a tiny glimmer of optimism.
Robert Lighthizer, a former Ronald Reagan administration official tapped by Trump to be the U.S. trade representative, will join a pair of free trade skeptics. Wilbur Ross, a Wall Street corporate raider, will coordinate trade policy as commerce secretary, while Peter Navarro, a China-bashing economist, will run a new National Trade Council. All three, like Trump, take aim at the free trade regime that has helped reshape the global economy in the last few decades, especially at what they see as China’s unfair gaming of the system to the detriment of the U.S. economy.
But Lighthizer, who will nominally be in charge of prickly negotiations with trading partners, stands out from Trump’s other picks. He has offered a more nuanced diagnosis of what ails America’s economy, and he has a track record of trying to fix what’s broken without starting a trade war. If one person could actually deliver on some of Trump’s promises to bring back American jobs and push back against countries that break the rules, former colleagues say, it’s Lighthizer.
“I think he’s a really good pick. He’s going to come in here and give Trump trade policies that are realistic [and] consistent with law,” William Krist, a former trade negotiator in the Jimmy Carter and Reagan administrations, told Foreign Policy.
Trump, breaking with decades of Republican orthodoxy, campaigned against free trade, slamming big trade pacts like NAFTA and the Trans-Pacific Partnership (TPP) and threatening to slap massive tariffs on imports from China and Mexico. By picking Navarro and Ross to run his trade team, he made clear that trade-bashing talk wasn’t just campaign rhetoric. Navarro blames unfair Chinese competition for 25 million Americans not being able to find decent-paying jobs; Ross made a fortune by using steep tariffs on Chinese steel to make his American mills more competitive.
In that vein, Lighthizer fits the bill. For years, he has criticized Republicans – like one-time presidential candidate Sen. John McCain, R-Ariz. – for their support of free trade pacts. A self-proclaimed Hamiltonian, Lighthizer harks back to the early days of the American republic, when steep import tariffs helped shield infant industries from cheaper foreign competition.
Unlike Navarro and Ross, though, Lighthizer makes a more nuanced critique of the ills of international trade and especially what he sees as China’s rule-breaking behavior since it joined the World Trade Organization (WTO) in 2001. And unlike the maverick economist Navarro, at least, he has tried to remedy them before from inside the U.S. government.
Lighthizer in the 1980s was in the trade representative’s office (USTR) during another heated U.S. trade competition with a rising Asian power – Japan. And he spent three decades defending U.S. companies from allegedly unfair competition at D.C. lobbying shop and powerhouse law firm Skadden, Arps, Slate, Meagher & Flom. Former colleagues say his nuts-and-bolts knowledge of how trade really works will set him apart from others in Trump’s economic team.
“I found him to be an incredibly good negotiator. He’s going to be the one who really knows trade law intimately,” said Krist, who worked with Lighthizer at USTR.
In the 1980s, as deputy trade representative focusing on industry, agriculture, investment, and trade policy, Lighthizer convinced Japan, South Korea, Mexico, and the United Kingdom to accept “voluntary restraint agreements” to limit the amount of cheap steel they could dump on the U.S. market, undercutting pricier U.S. steelmakers.
While at Skadden, Lighthizer served as lead counsel on a number of anti-dumping cases, including a 2015 case that found below-cost, cold-rolled steel from Brazil, China, India, Japan, Korea, Russia, and the U.K. harmed American producers.
When it comes to China, Lighthizer shares some of the vitriol common to Trump and Navarro but in a much more measured fashion. He blames Beijing for some of the job losses in U.S. manufacturing. And he has long been critical of what he calls Beijing’s “mercantilist” approach to business and trade, featuring a big role for state-owned firms, government subsidies, an artificially cheap currency that boosts exports, and repeated violations of WTO rules.
China, for example, hasn’t opened its own market to international competition the way it promised it would when it joined the WTO. The bilateral trade deficit has only grown since Washington and Beijing normalized trade relations. And Lighthizer has been critical of America’s ability to fight Beijing’s “systemic” noncompliance with WTO rules.
To fight back against those perceived cheats, Lighthizer hasn’t suggested the kinds of tariffs that enthuse Trump and Navarro and which have alarm bells ringing in Beijing. Rather, he proposes much more vigorous action by the U.S. trade representative to fight a host of Chinese abuses within the existing structure of the WTO. Intellectual property theft by Chinese firms, industrial subsidies, and quasi-legal import tariffs disguised as sales taxes are some abuses that Lighthizer says could be addressed with more “aggressive” legal action by U.S. trade officials.
“He certainly has useful experience pushing back on the gaming that takes place around dumping and currency manipulation,” said Jared Bernstein, a former adviser to Vice President Joe Biden, now at the Center on Budget and Policy Priorities. “I believe Lighthizer has the kind of chops” to target unfair trading practices in a measured way, he said.
Lighthizer could also help the Trump administration sell its trade policies to Congress, something that has proved tough for President Barack Obama’s administration, which struggled to overcome opposition on the Hill to TPP and its European counterpart, the Transatlantic Trade and Investment Partnership.
Charles Blum, a former assistant trade representative who worked with Lighthizer during the Reagan years, said he can do a better job selling trade deals to a skeptical audience. “Public diplomacy of the government, in particularly at USTR, has been abysmal,” Blum told FP. “We have not sold these deals to anyone who disagreed with them.”
Republicans on the Hill have largely kept quiet since Lighthizer was announced on Jan. 3. Sen. Orrin Hatch (R-Utah), the chair of the Senate Finance Committee and a backer of TPP, said only that he expects a “vigorous discussion” when Lighthizer comes before his panel.
Meanwhile, some rust-belt Democrats who share Trump’s concerns about the perils of free trade seem enthused by Lighthizer. Sen. Sherrod Brown, D-Ohio, said Lighthizer was capable of carrying out Trump’s policies, “including withdrawing from the Trans-Pacific Partnership, renegotiating NAFTA, and resetting the U.S.-China trade relationship.”
Even Sen. Elizabeth Warren, D-Mass., perhaps the most vocal critic of Trump’s economic policies among Democrats, appears ready to give Lighthizer a chance. “We need to dramatically reorient our trade policy so it helps working families, not giant multinational corporations. I plan to ask Mr. Lighthizer whether he shares that goal and has a plan for achieving it,” Warren said.
Lighthizer’s fight against trade violations doesn’t always go his way. His negotiated agreements to limit steel dumping, for instance, were eventually found to violate WTO rules. But he thinks some form of that playbook, combining negotiations with a more aggressive use of existing legal remedies, could be used to push back a lot more against Chinese abuses than the last two U.S. administrations have done.
As Trump’s economic team and his trade policies start to take shape, even Democrats seem appreciative that Lighthizer carries a scalpel, and not a sledgehammer, to fix what he views as the ills of trade.
He has “relevant experience and has shown some concerns in areas I share,” Bernstein said. “I’m not optimistic yet. I’m hoping to be optimistic later.”