The Contrarian

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Robert Lighthizer - U.S. Trade Representative

Senate Confirms The New U.S. Trade Representative

The Wall Street Journal had this article on the new person approved by the Senate for be in charge of negotiating trade issue with other countries. The worry is that he might cause an acceleration in international trade barriers.

We believe that the Trump administration uses tough talk as a negotiating position. We saw this with China. Talk tough at first, and then have a nice agreement in which no one gets hurt, but the US gets a much fairer deal than it had. Here is an excerpt of the WSJ article:

WASHINGTON—The Senate confirmed Robert Lighthizer to serve as U.S. trade representative, paving the way for the Trump administration to launch a renegotiation of the North American Free Trade Agreement and accelerate more broadly plans to reorient American trade policy.

While most of President Donald Trump’s nominees have cleared a divided Congress by narrow margins with mainly Republican support, Mr. Lighthizer on Thursday won significant backing from Democrats as well. That is a sign that, even as the opposition party battles the White House on much of its agenda, they are eager to work with Mr. Trump to beef up trade enforcement to curb imports and pry open foreign markets—and to craft policies aimed at curbing the U.S. trade deficit.

Oregon Sen. Ron Wyden, the top Democrat on the committee overseeing trade policy, took to the floor before the vote to express his support, saying “It is clear that Mr. Lighthizer not only understands how the global trading system works, but also how it sometimes breaks down….He understands the challenges that trade cheats pose for American workers and businesses.”

In contrast with many other Trump appointees who have had little prior experience in government, Mr. Lighthizer, 69 years old, is a Washington trade-policy veteran, having worked as a staffer for the Senate trade committee and as a deputy United States Trade Representative under President Ronald Reagan in the 1980s. In those roles he was a free-trade skeptic, and helped to negotiate trade agreements aimed at curbing Japanese imports.

“I would slash the ‘free’ out of free trade and say trade is an expedient,” he told The Wall Street Journal in a 1996 interview when he was serving as a campaign strategist for Republican presidential nominee Robert Dole.

One of his first acts will likely be to begin negotiations with Mexico and Canada to rewrite the 23-year-old Nafta, which Mr. Trump has branded “a disaster,” and which he has been eager to overhaul since taking office in January.

Beyond Nafta, Mr. Lighthizer is expected to help Mr. Trump flesh out the “America First” trade policy that was a main plank of his nationalist presidential campaign.

During his confirmation hearings in mid-March, Mr. Lighthizer said he would look for ways to take more aggressive action to confront China, and reiterated his longstanding skepticism about the ability of the World Trade Organization to handle Chinese trade practices in a manner he considers fair. Both Mr. Trump and Mr. Lighthizer have suggested rethinking American compliance with the WTO decisions, a threat that has unnerved many U.S. trading partners, as well as American free-trade advocates and multinationals.

Mr. Trump’s own administration has been torn by tensions between one-time business leaders, like former Goldman Sachs Group Inc. President Gary Cohn, who runs the White House National Economic Council, and trade hawks like economist Peter Navarro, who runs a newly created Office of Trade and Manufacturing Policy. Mr. Lighthizer is seen as helping tip the balance more toward the trade hard-liners like Mr. Navarro and Mr. Ross, though his longstanding expertise in trade policy is also expected to lead him to encourage taking a more aggressive stance in using existing rules, rather than blowing them up.

Mr. Lighthizer is the last of Mr. Trump’s cabinet-level appointments to win Senate confirmation. His nomination was held up for weeks because of congressional wrangling over his need for a special waiver to fill the slot, due to work he did three decades ago as a lobbyist for the Brazilian government during a trade dispute with U.S. industry. The waiver passed in late April, clearing the way for the Thursday vote.

Our view:  Trade is one of the most important issues, after tax cuts, for this administration. As President Trump has stated many times, it must be fair. China does not allow foreign companies to own more than 49% of a joint venture. Companies doing business in China must sign over their intellectual property rights to China, etc.

In the US there are no such restrictions. It has be a two way street. And the new Administration wants to accomplish that.