Former USTRs Talk Tariffs, Trade Agreements and Politics

Most of the former U.S. trade representatives on a panel at the Center for Strategic and International Studies agreed that a multilateral approach with China would have been better than tariffs, that the World Trade Organization could have been used to good effect, and that the Trans-Pacific Partnership would have made a difference. But Susan Schwab, who was a USTR during the George W. Bush administration, disagreed with much of that conventional wisdom. "From 2005 onward, we were seeing bad behavior and backtracking on the part of China, and we tried to get China's attention on a whole lot of issues that the current administration is talking about ... and we weren't able to get their attention. And we weren't able to get Europe and Japan to help us even though quietly Europe and Japan were talking about this.

"And guess what? This administration has gotten their attention. I don't like tariffs, I'm an economist. ... Anyone who pretends the imposition of tariffs isn't harming the economy is fooling themselves," she said. But, she said, maybe it's a negotiating tactic. "If they are left in place all we've done is hurt ourselves. If they ultimately are leverage, let's see what they do with it."

"Whether it's part of a strategy we'll find out," she said on the Sept. 17 panel that featured six of the nine living past USTRs. "Maybe the outcome will be a change in behavior that will be good for the world...."

The former USTRs also examined Trump's preference for bilateral free trade agreements over multilateral deals. William Brock, a USTR under Ronald Reagan, said, "Bilateral means we can use our muscle, our heft to impose on someone else. The ability to impose our will is going to create a disaster" in the world trading system. Carla Hills, who served under George H.W. Bush, said she thinks multilateral deals are easier to find wins in, because a country may offer a concession to a different country in the deal that also benefits the U.S., but the U.S. doesn't have to give anything up for it.

Charlene Barshefsky, a USTR during the Bill Clinton administration, said trade negotiators use every tool. But she said the better question to address than multilateral vs. bilateral is: "'What's the vision?' You have to have a conceptual framework and reasons why the direction you want to go in is the right direction for the U.S." Barshefsky said she thinks Trump's vision on trade is misguided, because as other countries are accelerating free trade agreements, "we're busy re-litigating NAFTA and imposing steel and aluminum tariffs a la the 1960s, 1970s, 1980s, etc."

Moderator Bill Reinsch of CSIS asked the panelists what they think of efforts to change the Section 232 law to constrain the president's ability to unilaterally impose tariffs and also asked if those bills have a chance of passage. Ron Kirk, a USTR under Barack Obama, said, "I have no reason to believe this Congress is going to stand up to this president any more than they've done on anything else." Still, he said, "I do think it would be good to add some clarity about the president's ability to unilaterally withdraw from agreements," since no one seems to know if Trump can withdraw from NAFTA.

Other USTRs had mixed feelings about the bills. Mickey Kantor, a former USTR under Clinton, noted that a shift in power to the executive branch on trade happened in the aftermath of the Smoot-Hawley tariffs. "You've got to be careful what you wish for, the unintended consequences could be quite difficult," he said.

Brock said he thinks the administration's assertion that Canada is a national security threat is ludicrous, and he does worry about the way Section 232 allows the president to do whatever he wants. But, he said, "I do think Congress is utterly incapable of conducting trade policy."

One of the questions from the audience asked the USTRs which country was most challenging for them to negotiate with. Schwab said India and South Africa, and Brock said, "if it was challenging it would be India, if it was obnoxious it would be France." But several said it's domestic audiences that are the toughest, either in the administration or on Capitol Hill. "South Korea, that was just brutal, but nothing compared with going before the fair trade caucus in Congress," Kirk said.