Why America Is Taking A Back Seat To Chile In Trade Talks
This week, the trade ministers of a dozen Pacific Rim countries are gathering in Vina del Mar, Chile, to discuss their trade relations. It is an extraordinary meeting in several respects.
For one, a country the size of Chile with a population of about 18 million would not be expected to exercise global leadership to convene an international economic conference. Whereas Chile’s economy ranks 45th in the world with a GDP of about $277 billion, the the United States ranks number one with a GDP of about $17 trillion.
A second reason is that the purpose of the meeting is to discuss what the attendees should do, given that US President Donald Trump has essentially scrapped what would have been a landmark trade deal that would have bound most of these countries together (not including China, one of the invitees to this gathering) – the Trans Pacific Partnership (TPP).
A third reason why this meeting stands out is the timing. World trade ministers are meeting at a time when the Trump Administration has yet to have a new the U.S. Trade Representative (USTR), which by law is the chief negotiator for trade deals. The Senate is just beginning its confirmation process this week on nominee, Robert Lighthizer, who served as deputy USTR under President Ronald Reagan in the 1980s, but a Senate vote has been delayed due to a 24-year-old statute that bars anyone who ever represented a foreign government in a trade dispute or negotiation with the United States from serving as a USTR or Deputy USTR.
As reported by media, Lighthizer represented a China fan company and a Brazilian sugar interest during his time in private practice 30 years ago, both of which were tied to foreign governments in trade cases. The representation was in administrative proceedings before U.S. government agencies, and arguably the legal prohibition does not apply in these circumstances, as these matters were neither “a negotiation or dispute with the United States.”
The provision stalling Lighthizer’s confirmation is odd in that the U.S. legal system has as one of its most fundamental rights the right to representation by counsel. Had the legal prohibition applied to the presidency, it would have barred John Adams, who represented the British Soldiers who engaged in the Boston Massacre, from becoming America’s first vice president under George Washington and then the second U.S. president. This kind of statute applies to no other Cabinet official, not even to the Director of National Intelligence.
More broadly in Lighthizer’s case, perhaps out of caution to avoid any ambiguity, it has been determined that the Senate needs to vote on a waiver of the statutory ban. While there is no known objection to Lighthizer, the waiver would be an amendable bill, and this has opened up the possibility of holding the nomination hostage for unrelated matters – reportedly a provision to extend pension benefits for miners. And that is where things stand. Hostage it is, and the country has no chief negotiator.
Lighthizer will obviously miss out on this week’s gathering of trade ministers. It can be explained to the ministers attending that this is to be expected as the U.S. government changed hands less than two months ago. But that is not what is most troubling about what is likely to take place. What is truly dismaying is that the U.S. appears to be abdicating its role as a world leader, not by the level and influence of the person who is attending this conference, but by what she can possibly say.
Trump ran on a platform of America First. His chief strategist is an apostle of “economic nationalism”. The President’s 2017 Trade Policy Agenda released on March 1 contains little in the way of a positive path forward in dealing with other trading nations other than a preference for bilateral (two-country) agreements over multi-party agreements. This leaves very little of use that can be contributed by the American government’s representative to this group of a dozen countries. China has an answer. It is leading a sixteen-nation effort to build trading relations on conditions that are inferior to what the TPP offered and which will discriminate against American trade.
It is best to cling to the belief that the new U.S. Administration has not yet thought through its next steps in international trade policy, not that it has jettisoned responsibility for global economic leadership, a role that Franklin Roosevelt and every president since — without exception – has performed. It would be a shame to conclude that the United States has little to offer the rest of the world other than the limited and impractical idea of a series of bilateral negotiations.
The meeting this week in Chile may be a lost opportunity but there will be other chances for the Administration to do something more constructive. The World Trade Organization, with its 164 members, is holding its 11th Ministerial Conference in Buenos Aires in mid-December of this year. If anything positive is to result, history shows, the United States must be a major force behind it. All eyes will be on the U.S. representative.
Alan Wolff is a Senior Counsel with Dentons and Chairs the National Foreign Trade Council. He has served as a senior trade negotiator in both Republican and Democratic administrations.