The trade policy pecking order

Lightizer moves closer to confirmation as USTR, but what influence will that agency have under Trump?    The Senate Finance Committee this week cleared the way for Robert Lighthizer to be confirmed as the next U.S. Trade Representative after weeks of delay over procedural and partisan issues.
   The move sets the stage for the Trump administration to start fully advancing its vision of having an America First trade policy that is heavy on enforcement, new tactics to open foreign markets and renegotiating existing trade treaties. The Republican-controlled committee voted 26-0 to recommend Lighthizer’s nomination to the full Senate after unanimously approving a waiver making him eligible to hold the position.
   The waiver is expected to be attached to a continuing resolution that Congress must pass by the end of the week to fund the government for the remainder of the fiscal year and prevent a government shutdown. With the waiver in place, the full Senate can vote to confirm Lighthizer next week.
   Lighthizer is an experienced trade attorney and partner at Skadden Arps who represented companies, mainly in the steel industry, that sought U.S. government relief from alleged unfair trade practices by foreign competitors. In the early 1980s he was chief of staff on the Senate Finance Committee and served as the deputy U.S. Trade Representative during the Reagan administration.
   “Tough trade enforcement requires commitment, and a long term strategy to keep American workers from losing out,” Ron Wyden, the committee’s ranking Democrat, said in remarks before the vote. “So the next USTR needs to be a crusader for American jobs and economic growth. That means stepping up trade enforcement, including with respect to labor and the environment, and guaranteeing that there’s follow-through instead of just tough talk or tweets. It means working to pry open markets to red, white and blue manufactured goods, digital goods and services — whether those markets are in the Asia-Pacific, Europe, or North America.
   “Through my discussions with Mr. Lighthizer, both in private and in public, I believe he has the capability to meet these challenges.”
   President Trump nominated Lighthizer Jan. 2, but committee investigators discovered he represented the Brazilian government 30 years ago in a trade dispute with U.S. ethanol producers, potentially disqualifying him from becoming the top U.S. trade official. Under a law passed in the 1990s, no one who has represented a foreign government in a trade dispute or negotiations against the United States can be U.S. Trade Representative.
   Republicans questioned whether a waiver is legally necessary because the U.S. government was not involved in the private sector case over ethanol and his work on the matter pre-dated the statute. Nonetheless, Democrats held firm on the waiver as leverage to get Republican agreement on extending healthcare benefits, which are due to expire at the end of the month, for 23,000 retired coal miners and their dependents. In 2015, the government bailed out miners’ unfunded union health and pension plans. Democrats appear to have assurances that Republicans will agree to a permanent health care fix and agreed to allow the waiver to proceed.

Ross has been the public face of the administration so far on trade policy to the point that some wondered if he would drive Trump’s trade policy, relegating the USTR to a factotum charged with carrying out technical matters on trade.

   Trump Trade Pecking Order. Lighthizer’s confirmation will enable the Trump administration to get moving on a host of trade policies that have stagnated so far, most notably starting negotiations on a revised North American Free Trade Agreement.
   There has been considerable speculation about what role the USTR will have in a Trump administration with two other power centers in the White House: Commerce Secretary Wilbur Ross and Peter Navarro, who heads the National Trade Council.
   Ross is a billionaire investor and businessman who is clearly respected by the President and has his ear. Ross has been the public face of the administration so far on trade policy to the point that some wondered if he would drive Trump’s trade policy, relegating the USTR to a factotum charged with carrying out technical matters on trade.
   Navarro is a former professor at the University of California at Irvine who has advocated protectionist measures, especially against China, and helped shape Trump’s stump speeches during the campaign during which he lambasted trade deals for causing an outflow of manufacturing jobs to low-wage countries.
   The National Trade Council is a new office in the White House focused on trade and industrial policy. But Navarro’s influence in recent weeks appears to have waned as centrists such as Trump’s son-in-law Jared Kushner and Gary Cohn, the chief economic advisor to President Trump and a former president at investment bank Goldman Sachs, appear to have won an internal power struggle against officials with more nationalist leanings, such as Chief Strategist Stephen Bannon and Navarro.
   Navarro does not appear to have won many fans on the Finance Committee, either. During Lighthizer’s confirmation hearing, a couple Republican senators derided some of Navarro’s ideas on trade.
   The White House last month sent its initial outline of negotiating positions it wants to take on NAFTA and officials such as Ross have held informal discussions with key congressional committees to coordinate on U.S. priorities for NAFTA talks with Mexico and Canada.

   Senate values USTR. But leaders of the Senate Finance and House Ways & Means Committee made it clear that they will only deal on a substantive basis with the USTR, which has statutory authority to develop, coordinate and implement U.S. international trade policy, serve as the principal trade advisor to the President, and lead international trade negotiations.
   The coordination function includes gathering input from the State Department, Labor Department and Environmental Protection Agency when negotiating trade deals.

Lawmakers strongly believe that the USTR is the only institution with the mandate, expertise and resources to manage trade policy, according to congressional insiders who are not allowed to speak for attribution.

   “Congress has vested executive power in the USTR,” said Scott Miller, senior advisor for international trade at the Center for Strategic and International Studies. “So they are perfectly clear on who they think runs trade.”
   Under the law, the USTR is accountable not only to the President, but also to Congress. And lawmakers strongly believe that the USTR is the only institution with the mandate, expertise and resources to manage trade policy, according to congressional insiders who are not allowed to speak for attribution.
   “Many of the specific issues being negotiated have jurisdiction in other agencies of government, but somebody has to pull it together, organize the texts, prepare the implementing legislation,” Rufus Yerxa, president of the National Foreign Trade Council and a former deputy USTR, said in an interview. “It’s a combination of being a trade negotiator and trade policy coordinator.”
   Ross will continue to have a large role setting trade policy, as well as implementing enforcement actions against countries accused of cheating on trade.
   During his confirmation hearing in March, Lighthizer said he expects to work cooperatively with Ross, Navarro, and Cohn to develop trade policy, with the USTR playing its traditional role of sorting out the various influences into a unified administration policy.
   “I think Lighthizer will retain the control as the supreme negotiator, but Ross will be heavily engaged, perhaps in a way we haven’t seen a Commerce secretary before,” said Welles Orr, senior international trade advisor at Miller & Chevalier, a Washington, D.C., trade law firm that also represents clients on trade issues before the government.
   Lighthizer has an opportunity to make the USTR even more relevant to companies engaged in international commerce, said Doreen Edelman, co-chair of the global business team at Baker Donelson, which provides legal and government affairs services for clients.
   “The USTR can be a very powerful organization to get the kind of things done that Trump wants,” she said. “But even Obama didn’t really use the USTR in the way it was used in the past. A lot of trade personnel in industry and the USTR were disappointed. A company can go in there and meet with these policymakers and they will take the issue to their counterparts in other countries and try and resolve it. So there are tools in its toolbox that it can use.”
   Sen. Maria Cantwell, D-Wash., and Wyden said they would change their confirmation vote on the floor to “no” if Lighthizer does not distance himself from President Trump’s position on the Export-Import Bank by then.
   Trump bashed the export credit agency during the campaign as an example of establishment politicians doling out favors to multinational corporations at taxpayer expense, but then seemed to reverse course in a recent Wall Street Journal interview in which he said the Bank was important for small businesses too. Then he nominated as president of the Ex-Im Bank a former congressman who tried to eliminate the independent agency while in Congress, raising concerns that the Bank’s work could be undermined from the inside.