COMMENTARY: A check on Trump’s trade agenda

Members of Congress have their own ideas on trade policy, as Trump’s bare bones team will find out    President Donald Trump has staked out aggressive positions on trade that would undo decades of U.S. policy under multiple administrations and potentially trigger economic retaliation from trade partners.
   But so far there has been little substance behind the shrill populist rhetoric.
   The U.S. Trade Representative’s Office recently released the administration’s 2017 trade policy agenda, as required by Congress, but it lacks a great deal of specificity, perhaps because the agency is being run by an acting official who’s real job is general counsel while the rest of the organization chart, above career bureaucrats, is mostly empty.
   The man nominated to head the agency, Robert Lighthizer, has seen his confirmation hung up in the Senate over questions about once lobbying for a foreign government. Meanwhile, Commerce Secretary Wilbur Ross is also home alone as lower-level political officials have yet to be nominated or confirmed.
   So, it will still be awhile before the Trump team is ready to renegotiate the North American Free Trade Agreement, strike up bilateral deals with other nations and launch actions against China and other countries through the World Trade Organization’s dispute settlement mechanism.
   Even then, the Trump administration will likely not get a free pass to take a wrecking ball to the multilateral trading system that has, on balance, greatly benefited the United States. That’s because Congress has begun to reassert itself in the trade arena during the past couple of years and many lawmakers favor open trade – as long as some imbalances can be corrected.
   Many Republican and Democrat members of Congress are eager to enter into trade agreements, as long as existing trade deals can be improved and enforcement ratcheted up so U.S. companies aren’t victimized by cheating.
   There is a fairly widespread feeling on Capitol Hill that the Trans-Pacific Partnership agreement, which was successfully demonized during the presidential election to the point that it was scuttled before it could be approved, should be reincarnated in one form or another. Republicans, who control both chambers of Congress, favored many substantive elements in TPP and would like to see them replicated if problems, such as currency manipulation and less ambiguous rules, can be addressed, according to people familiar with the inner workings of the Senate Finance and House Ways & Means committees.

TPP was essentially supposed to be a next-generation version of NAFTA since it would have included Canada and Mexico.

   And one place higher standards and safeguards could be implemented is NAFTA, which Trump says he wants to rip up if Mexico and Canada don’t agree to better terms for the United States. On Capitol Hill, as in Mexico City, Ottawa and the business community, there is a realization that NAFTA needs to be modernized to better align with 21st century business practices, but there’s little appetite to discard an agreement that has helped triple trilateral trade in the past 23 years.
   In fact, TPP was essentially supposed to be a next-generation version of NAFTA since it would have included Canada and Mexico.
   At the same time, it is clear that many TPP partners are willing to open their markets and agree to new rules that advance American interests. The Trump team has talked about striking up bilateral accords with some of those nations as a substitute for a multilateral accord, which doesn’t fit with its nationalist philosophy. But the United States will need to move quickly because the opportunity will diminish over time as other countries look to strike preferential trading arrangements with other nations. China, most alarmingly, is actively trying to fill the vacuum in the Asia-Pacific by trying to construct a regional deal with lower workplace, environmental, copyright and other standards than in TPP.
   Capitol Hill insiders also point out that the Trade Promotion Authority, enacted in 2015 to give then-President Obama the negotiating flexibility to complete TPP, remains in place and reserves for Congress the power to set negotiating guidelines for any new free trade talks. To ensure there is a unified government approach to trade negotiations, there should be bipartisan negotiations between congressional leaders and the White House, but the administration has shown a proclivity for unilateral action during its first six weeks.
   One area where Trump and both sides of the aisle in Congress see eye-to-eye is on the need for better enforcement of existing trade agreements. The government is already doing a better job in that regard with the enactment one year ago of the Trade Facilitation and Trade Enforcement Act, which granted U.S. Customs greater authority to launch investigations into anti-dumping and countervailing duty evasion schemes.

To ensure there is a unified government approach to trade negotiations, there should be bipartisan negotiations between congressional leaders and the White House, but the administration has shown a proclivity for unilateral action during its first six weeks.

   The hope on Capitol Hill is that the USTR will show greater political will to bring trade dispute cases to the World Trade Organization’s dispute settlement process because it is eroding popular trust in institutions.
   Previous USTRs have at times been reluctant to file suits for a variety of reasons: lack of resources; diplomatic considerations; or trouble acquiring evidence in some countries that don’t have transparent laws and regulations.
   The Trump administration has suggested the possibility of scrapping the WTO dispute settlement process for what it perceives as overreach, but the sense in Congress seems to be that the system needs fixing – and shouldn’t be abandoned.
   Trump may not like multilateral agreements, but many lawmakers want to conclude a Trade in Services Agreement (TISA) through the WTO because the U.S. economy is so heavily based on services and would benefit from better access to other markets. Interest is also high in reaching trade agreements with the European Union and the United Kingdom (post Brexit).
   There are several pieces of trade-related legislation that Congress is expected to consider this year, including a Miscellaneous Tariff Bill (MTB).
   MTBs eliminate or reduce duties on imported articles not otherwise available in the United States. To increase transparency and end the practice of manufacturers requesting special tariff treatment from their representative, Congress required manufacturers to petition the non-partisan International Trade Commission. The ITC is reviewing some 2,600 petitions and will recommend to Congress which products deserve an import preference.
   Another high priority is to renew the Generalized System of Preferences (GSP), which is set to expire at the end of the year.
   In other words, there are a lot of balls in the air, and not a lot of direction, prioritization, or manpower to watch them all.