President Donald Trump has packed his administration with retired businessmen struggling to adjust to the ways of Washington, family members juggling policy portfolios they have no background in, and aides willing to anonymously savage each other, and the president, in the press.
[Zeeshan Aleem | December 12, 2017 | Vox]
Then there’s US Trade Rep. Robert Lighthizer.
As America’s top trade official, Lighthizer has emerged as a surprisingly effective and powerful player in the administration’s internal debates and policy-making on issues ranging from the future of NAFTA to America’s economic rivalry with China.
Lighthizer, 70, is responsible for overseeing the policies that define how the US buys and sells trillions of dollars of goods and services around the world. He brings two key qualities to the job: He shares the president’s skepticism of free trade, and he has decades of experience operating in Washington.
Like Trump, Lighthizer sees China as a potentially existential threat to the American economy, believes the US is the victim of unfair free trade agreements that favor other countries, and thinks the US should consider using aggressive tools like slapping punishing taxes on imports to protect American industries and workers.
The two men also overlap in terms of persona and style. Lighthizer is known as a foul-mouthed and entertaining speaker and has been an ambitious dealmaker since he was in his 30s. According to guests who have visited Lighthizer’s home, a life-size portrait of him adorns his walls.
But unlike Trump — and many of the president’s top officials — Lighthizer has a firm sense of what he’s trying to get done and has the policy chops to back it up.
A career trade lawyer and former US deputy trade representative under Reagan, Lighthizer is spearheading the Trump administration’s aggressive NAFTA renegotiations, which have included proposals that favor US automakers over Canadian and Mexican ones. He’s roiling the World Trade Organization by blocking the appointment of appellate judges, weakening the body’s ability to resolve international trade clashes. And he’s launched probes into China’s trade investigations that could spark the ire of Beijing — and potentially trigger a trade war.
Trump has a short attention span and has shown a willingness to abandon some of his more edgy campaign promises, like labeling China a currency manipulator. But Lighthizer is different — he has an eye for details, stamina as a bargainer, and convictions that have remained fairly consistent for decades.
With Lighthizer at the wheel, Trump may wind up implementing the extreme positions on trade that he talked about as a candidate but largely hasn’t delivered on as president yet. He may, in other words, be one of the most powerful Trump administration officials that you’ve never heard of.
Lighthizer has had a long and successful career in the trade world. In the early ’80s, he served as the top lawyer on the Senate Finance Committee, which has purview over international trade policy. He then served as the deputy trade representative during Ronald Reagan’s first term.
Lighthizer’s work as a negotiator with other countries on trade deals took place in a world very different from the one that exists today. The WTO hadn’t been formed yet, so global trade laws were a lot looser and there was no central authority that countries could turn to for settling disagreements. When countries butted heads, they often sorted out issues by turning to diplomacy instead of law, explains Todd Tucker, a trade scholar at the left-leaning Roosevelt Institute.
The key thing to know about Lighthizer’s tenure was that he worked on negotiating a lot of deals known as “voluntary export restraints.” Using the threat of punishing tariffs, the US would persuade foreign countries to “voluntarily” curb exports to the US that threatened highly valued US industries with competition.
Lighthizer helped negotiate those agreements for the steel industry with more than a dozen countries under Reagan, most notably Japan, according to Caroline Freund, a senior fellow at the pro-free trade Peterson Institute for International Economics. It’s a process that taught him that the US can be successful in the trade world by being confrontational and taking advantage of how much foreign countries value access to the US market.
Lighthizer was only in his 30s at the time, and he quickly formed a reputation as a sharp and fierce negotiator who prefers to tackle issues himself instead of delegating tasks to aides. He also had an eye for abrasive political theater. Once during negotiations with the Japanese over steel, he folded their proposal document into a paper airplane and sent it sailing at the Japanese negotiators, according to the Globe and Mail.
All of this experience makes Lighthizer a different brand of conservative than most of the modern Republican Party. He thinks that using protectionist measures — having the government protect domestic industries by threatening to block exports — is not only practical but entirely consistent with conservatism. In an op-ed in the New York Times in 2008, Lighthizer praised Reagan’s government interventions in trade as a mark of “pragmatism” and contrasted it with the “utopian dreams” of free trade advocates.
After leaving the Reagan administration, he became a prominent trade lawyer in Washington, and has persistently advocated for US steel and other industries besieged by foreign competition.
To recap: Lighthizer hails from an era of “might makes right” in the trade world; he’s a brash and successful negotiator; and he’s a dyed-in-the-wool free trade skeptic who believes in using hard-hitting measures to protect domestic industries.
Now that he’s America’s top trade official, that vision is contributing to a big change in the way the US does business with the rest of the world. He brings a “fair trade,” not free trade, attitude to trade relationships and agreements. He believes the US should make its own rules when the current ones don’t suit its interests — and pursuing that requires a willingness to see once-stable trade relationships endure a bit of chaos, and even unravel.
Lighthizer has already made a big splash during ongoing talks between the US, Canada, and Mexico intended to renegotiate the terms of NAFTA. During the fourth round of talks in October, in particular, Lighthizer rolled out a number of proposals that shocked Canada and Mexico with how US-centric and disruptive to free trade norms they were.
The proposals include adding a sunset clause that would require the countries to vote every five years on whether to stay in NAFTA, a provision that experts say they’ve never seen in a modern agreement and would throw business ties across the region into chaos.
The US also proposed rules that would give US manufacturers a big leg up over Canadian and Mexican ones by requiring more of the car parts made in North America to be made in the US than in the other two countries.
And American negotiators have proposed gutting special tribunals that Canada and Mexico consider vital to their legal power in pushing back against some of the US’s more aggressive protectionist moves.
Canada and Mexico considered the proposals nonstarters. “We have seen proposals that would turn back the clock on 23 years of predictability, openness, and collaboration under NAFTA,” said Chrystia Freeland, Canada’s foreign minister, during a press conference concluding the round of talks on October 17. At the same press conference, Mexico’s Secretary of the Economy Ildefonso Guajardo Villarreal warned that “we all have limits.”
Lighthizer, meanwhile, told reporters at that presser rather breezily that he was “surprised and disappointed” by their resistance.
Since then, talks have not progressed meaningfully, and the timetable for settling on a new agreement has been extended through 2018.
“The core US premise in the NAFTA renegotiation is radically at odds with how traditionalists view trade negotiations — the historical approach is to see them as mutually beneficial,” Edward Alden, a trade expert at the Council on Foreign Relations, told me. “But Lighthizer’s goal is to rebalance the agreement to favor the US more and Mexico and Canada less.”
The big question is how much Lighthizer really wants to stick to the most extreme proposals he’s laid out or whether he’s bluffing and expecting more modest compromises.
The stakes are incredibly high. Trump has repeatedly threatened to pull out of NAFTA if the three countries can’t find an agreement that works for the US. In other words, Lighthizer’s pugnacious style could potentially help lay the foundation for NAFTA falling apart entirely.
Lighthizer hasn’t taken any drastic steps against China quite yet. But given the investigations he’s initiated and his harsh rhetoric about Beijing, it’s potentially the most explosive policy issue in his hands.
The biggest potential case Lighthizer is overseeing is a “Section 301” investigation of China’s intellectual property practices. China forces many foreign businesses to hand over their most prized technology in exchange for access to its market, a practice that many analysts consider to be a huge threat to the future of US growth.
Under Section 301, a statute of the Trade Act of 1974, the US can punish countries for unfair market practices like the forced transfer of technology from US businesses. That punishment can come in the form of tariffs (border taxes) or by blocking access to the US market.
Washington has used it with great success in the past, prying open, for example, Japan’s once impenetrable semiconductor market in the 1980s. But the policy has barely been used in decades, since the WTO’s creation in 1995 rendered unilateral actions like 301 legally questionable. If the new investigation results in economic punishments against China, it will set a bold precedent in the global trade arena.
It could take months for the Section 301 investigation to conclude and for Lighthizer to come up with a policy prescription for what Trump should do. But if he recommends some kind of harsh measure in the form of tariffs or investment restrictions, analysts say Beijing is going to view it as an assault on the heart of its economy and is unlikely to respond by turning the other cheek.
“The Chinese will retaliate,” Claude Barfield, a trade scholar at the American Enterprise Institute, a conservative think tank, told me. That could potentially be the opening shot in a trade war between the US and China, where both countries strike at each other’s economies with tariffs.
Trade wars between China and the US could cause the prices of various Chinese goods sold in the US, like toys, furniture, and shoes, to become more expensive and cause a plunge in US exports like agricultural goods to China.
So far this year, the US and China have had fairly amicable relations and no major economic conflicts. But as Lighthizer continues his investigations, that could change. His diagnosis that the US needs to find a creative way to rein in China seems to be widely shared, but his strategy for getting there is far more forceful and risky than any plan Washington has had in many years.
A lot of the policies Lighthizer has his hands on can be wonky and lack the kind of dramatic punch that, say, an immigration ban or a big border wall has. But they’re no less important.
In Lighthizer, Trump has found somebody who could help reshape the US’s economic relationships with its friends and enemies across the globe, and along the way create new precedents for how other countries might do so as well. The question is how high a price the US may have to pay if global powers decide to do the same thing for themselves.