Robert Lighthizer, who has served as Donald Trump’s USTR, has been a distinctive character and will probably be remembered long after he’s left office, for better or worse
Robert Lighthizer, who has served as Donald Trump’s USTR, has been a distinctive character and will probably be remembered long after he’s left office, for better or worse © Andrew Harnik/POOL/EPA-EFE/Shutterstock

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Hello from Washington, where after a prolonged and exhausting election (should we expect anything else from 2020 by now?) Donald Trump still refuses to concede to Joe Biden.

Ahead of the election, there was a lot of fear and anxiety over the possibility that a narrow Biden win in electoral college terms would give Trump more leeway to challenge the result as fraudulent. So far, the president’s court cases challenging the legitimacy of votes in certain states have not been successful. But that did not stop secretary of state Mike Pompeo, when asked about how the state department and intelligence communities were preparing for a transition, replying that he expected “a smooth transition to a second Trump administration”. 

While all of this Washington drama plays out, we have busied ourselves here at Trade Secrets by looking ahead to what the next four years of US trade policy might hold — the subject of our main piece. Our person in the news is Jason Miller (not the Trump aide), who has just been announced as the lead person on trade for the Biden transition team, while our chart of the day looks at how regulatory scrutiny of China’s dominant financial tech groups has hit shares.

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USTR is a tough job — who could take the reins?

And so we have it — a win for Joe Biden. The transition team is now in full swing, whether Donald Trump likes it or not, and we here at Trade Secrets are wondering — what next for US trade policy?

If you haven’t read it already, it’s worth starting by reading my colleague Alan Beattie’s Monday note, in which he reiterates: Biden won’t return to the globalism of Bill Clinton, but he will depart from the unpredictability of Donald Trump. And the first test will be dealing with the immediate crisis at the World Trade Organization

But before he even does that, he will need to decide who his trade frontman is. Trump’s trade tsar, Robert Lighthizer, has been a distinctive character and will probably be remembered long after he’s left office, for better or for worse. And as an aside, it will be worth watching his parting shots. Some Democrats are nervous about what he will want to do over the next two months, fearing he will set fire to diplomatic relations with Europe, and generally act according to principle unconstrained by practicality (ie, he can afford to annoy people and not have to deal with the fallout).

The early signs are that Lighthizer will not do that. On Monday, the EU slapped tariffs on US imports, including sugarcane molasses from Georgia and more US liquors and spirits, after being given the right to do so by the WTO. Lighthizer had threatened to counter with more tariffs, but on Monday evening the US trade representative did not respond with fire and fury (or with tariffs). His office signalled only “disappointment”. Pulling that punch is perhaps an early sign that Lighthizer will go easy for the next couple of months.

Democrats are now wondering aloud if the most important quality in a new trade representative might be the ability to pull off a good old-fashioned apology tour, with Brussels as the first stop. For that, the USTR need not have deep trade expertise, but be someone who could ameliorate, charm and reset the tone. USTRs haven’t always had to know much about trade — sometimes diplomats are appointed for the first few years, to be replaced by a more technocratic trade policy expert in the second term. 

The counterargument is that many important trading issues remain to be tackled, even if they aren’t the Biden administration’s top priority. For example, with the US and Europe working together, global trading rules can be reformed to help counter China’s practices.

Then there is the domestic political situation. There has been much talk about a big split on trade between progressives and moderates in the Democratic party. But this gap is smaller now than ever before.

The split was clearly seen in the Democratic primaries earlier this year, with differences between Biden and Bernie Sanders. The progressives, represented by Sanders, are generally sceptical of trade deals and think that US workers are harmed by corporations colluding with the administration to secure easier pathways to setting up manufacturing overseas. More centrist figures have seen trade deals and globalisation as a path to a broadly more prosperous world for all.

But free trade is not fashionable in US politics now and Biden has left that camp, although degrees of difference within the Democrat party remain. Progressives will want a USTR with ties to labour unions and a certain understanding of domestic economic inequality. Others see this as largely diplomatic and want a strong hand in national security for keeping China in check.

This is a hard job, and there are quite a few names associated with it.

Katherine Tai, the low-key chief trade counsel for the House ways and means committee, is one contender for the USTR role
Katherine Tai, the low-key chief trade counsel for the House ways and means committee, is one contender for the USTR role © Katherine Tai/Linkedin

Jimmy Gomez, the House representative from California, is well liked and, as a former union official, has strong connections to labour unions. He’s also credited with working hard to secure provisions in the US-Mexico-Canada agreement.

Stephanie Murphy, the House representative from Florida, is another name in the mix. Also on Capitol Hill is Katherine Tai, the low-key chief trade counsel for the House ways and means committee. Respected across the board by trade-minded Democrats, Tai has worked at the USTR department before and has China expertise. 

Outside Capitol Hill, the name that comes up most frequently is that of Mike Wessel, who sits on the board of the US China Economic and Security Review Commission. He has more business-oriented credentials, including a spot on the board of tyre manufacturer Goodyear, and his own consulting firm that works closely with the steel industry.

Jennifer Hillman, the Georgetown law professor and former World Trade Organization appellate body judge, is in the mix, as is former congressman Tom Perriello. Perriello has little trade experience, but spent a term on Capitol Hill as the House representative for Virginia in Barack Obama’s administration before losing his seat. In that time, he staked out a leftwing voting record and was backed by both Sanders and Elizabeth Warren when he later ran for governor of Virginia.

Whoever takes the top job will undoubtedly face the unenviable task of continuing the “America first” agenda that Trump started on trade — while not alienating US allies.

We’ll continue watching this space.

Charted waters

Chinese tech companies have lost almost $254bn in market value over two days as regulatory scrutiny of the country’s dominant financial technology groups following the unveiling of new antitrust rules for the sector sent stocks plunging. The tech-heavy ChiNext index in Shenzhen fell 2.9 per cent and Shanghai’s Star 50 index dropped 2.7 per cent on Wednesday after a top official with the China Banking and Insurance Regulatory Commission promised to look closely at fintech monopolies. The renewed antitrust attention on tech companies comes as the groups exert an increasingly comprehensive influence on daily life in China, where a fifth of the country’s consumer goods are now sold on Alibaba.

Market cap lost among Chinese tech groups since new antitrust regulations were announced ($bn)

Person in the news

Jason Miller, of the Brookings Institution, will help the incoming Biden administration assess trade policy
Jason Miller, of the Brookings Institution, will help the incoming Biden administration assess trade policy © Brookings Institute

Who is it?
Jason Miller, a senior fellow at the Brookings Institution.

Why is he in the news?
Miller worked on manufacturing policy for the Obama administration, and has been named the leader of a diverse board of advisers tasked with helping the incoming Biden administration assess trade policy and staff up the key agencies.

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