image

US-China trade war: All stories

‘Ideological soul mates’: how China sceptic Robert Lighthizer sold Donald Trump on a trade war

  • In mid-2017, Robert Lightizer delivered a history lesson to Donald Trump and his cabinet on US-China trade negotiations, and what he saw as decades of failure
  • The implications were clear – after plenty of talk, it was time for the US to get tough with China
PUBLISHED : Thursday, 27 December, 2018, 1:28am
UPDATED : Thursday, 27 December, 2018, 6:54am

This story is published in a content partnership with POLITICO. It was originally reported by Andrew Restuccia and Megan Cassella on politico.com on December 26, 2018.

Robert Lighthizer thought it was time for a history lesson.

It was mid-2017, and US President Donald Trump – who had campaigned on a vow to bully China into changing its trade practices – had so far taken little concrete action against the Asian power since taking office earlier that year.

So Lighthizer, the United States trade representative and a decades-long sceptic of Beijing, commandeered one of the White House’s weekly trade policy meetings, delivering a meticulous presentation to his colleagues about the decades-long failure of US policy toward Beijing.

Surrounded by cabinet secretaries and senior advisers to the president, Lighthizer stood at the end of a long table in the Roosevelt Room and ticked through the economic dialogues with the Chinese that past presidents hoped would fundamentally change the trade dynamic between the two economic superpowers – but ultimately, in his view, yielded little progress.

Then, a few weeks later, Lighthizer took the exact same message to Trump in the Oval Office.

Though Lighthizer didn’t outline a detailed policy proposal during his presentations, the implication was clear, according to a person with knowledge of the episode: after years of talk, the United States needed to take a much more aggressive approach to combating China’s trade practices, which he believed unfairly advantaged Chinese firms at the expense of American workers.

China’s makers stave off trade war job losses – but for how long?

The message resonated with a president who was already inclined to take a hard line on China, despite pleas for caution from some of his other advisers.

Trump signed an executive order late that summer giving Lighthizer the authority to “consider all available options” and explore ways to confront Beijing over its handling of technology and intellectual property.

And in January, Trump slapped the first in a series of hefty tariffs on China, launching a trade war that he vows will force the country to change its behaviour – but which has so far unsettled global markets, drawn condemnation from allies and harmed several bedrock American industries.

For Lighthizer, a veteran Washington trade lawyer who at 71 years old now oversees the president’s expansive trade ambitions, Trump’s decision to challenge China capped a career spent trying to convince Washington elites of Beijing’s underhanded economic intentions. And it cemented a bond with Trump that even prompted the president to briefly consider Lighthizer to be his next chief of staff.

Now, nearly a year and a half after he went to the White House to lay out his rationale for confronting Beijing, Lighthizer is in charge of executing it. Early this month, Trump tapped the trade representative to lead his administration’s latest – and most crucial – round of negotiations with China.

Failure could drive the two countries even deeper into a trade war, further destabilising the world economy and possibly rupturing ties between two superpowers already at odds over Beijing’s military activity in the South China Sea, its aggressive investment practices in developing countries and its alleged rampant theft of American intellectual property.

Politically, Trump has also made the negotiations with China one of his top policy priorities, meaning his 2020 re-election chances could hinge in part on the outcome of the Lighthizer-led discussions.

US-China trade war: a timeline from first tariffs to the 90-day truce

In other words, the stakes couldn’t be higher.

Despite their starkly different personalities and approaches, Trump and Lighthizer are – in the words of one former senior administration official – “ideological soul mates” on trade.

They are both deeply sceptical of multilateral institutions like the World Trade Organisation, favour bilateral agreements over massive trade deals and are eager to use punitive measures like tariffs and trade restrictions to get their way.

He knows there’s an audience of one and he never steps off script. Everything that he says is said knowing that Trump is watching
A Washington trade lawyer

But on a more personal level, the two men appear to have little in common. Lighthizer grew up in Ashtabula, Ohio, in the heart of the rust belt and a world away from Trump’s childhood home of New York City.

He’s an avid history buff and hunter, who keeps a replica of a Revolutionary War-era ship in his office and used to have a mounted elk head on the wall in his living room – a jarring contrast to Trump’s gold-plated apartments.

And Lighthizer has long been meticulous about health and fitness, at one point getting into the habit of drinking scalding cups of hot water in the mornings, rather than coffee or tea. Trump, meanwhile, rarely exercises and is known for eating fast food, swilling Diet Cokes and ordering his steaks well-done.

Still, Trump has grown to like and trust Lighthizer, according to White House officials. The president believes Lighthizer is an expert negotiator, a high compliment from a man who considers himself to be the ultimate deal maker and once wrote that he’d name himself trade representative if he ever became president.

“You’ve got the art of the deal – and with him you’ve got the art of the trade deal,” said Larry Kudlow, Trump’s top White House economic adviser, of Lighthizer.

Trump tends to favour people who fall neatly into archetypes. He often describes favoured advisers as “straight out of central casting.” Lighthizer, White House officials noted, looks the part of a grizzled veteran of trade negotiations and that’s helped him win Trump’s trust.

As he faces mounting outside criticism for his trade policies, the president has started privately referencing the 1888 presidential election, in which tariffs became a decisive issue, according to an administration official.

When Democratic President Grover Cleveland called for lowering tariffs, his challenger, Republican Benjamin Harrison, pounced, arguing that maintaining high tariffs was the key to economic prosperity. In the end, Cleveland lost the presidency.

Forget the Thucydides Trap – a ‘rising’ China has no desire to go to war with the US

The episode has become a parable for Trump that bolsters his position that tariffs are a political winner. While it’s unclear who put the 1888 presidential election on Trump’s radar, some in the White House suspect it was the history-loving Lighthizer, who has long touted the utility of tariffs.

Unlike other Trump advisers, Lighthizer has largely avoided getting drawn into the behind-the-scenes fights that so often spill into public view in this administration. Current and former administration officials said he has worked to stay on Trump’s good side.

He is deeply sceptical of reporters and avoids doing interviews unless the White House encourages him to do them. A USTR spokesman did not respond to repeated requests for an interview with Lighthizer for this story.

“He knows there’s an audience of one and he never steps off script. Everything that he says is said knowing that Trump is watching,” said a Washington trade lawyer, who declined to speak on the record because he didn’t want to anger Lighthizer.

Lighthizer can also be short-tempered, and he’s been known to lose his patience during negotiations, throwing out arcane references to trade law to outsmart his opponents. One former White House official described him as a “grumpy old man”.

Still, his success in renegotiating America’s three-country trade deal with Mexico and Canada, as well as revising a trade deal with South Korea, has won him allies in the administration, even among the many officials who disagree with him. That sets him apart from White House trade adviser Peter Navarro, whose policy stances align with Lighthizer’s but who has clashed with senior aides.

“Even those who disagree with his substantive approach respect Bob’s deep legal knowledge and unwavering professionalism,” said former White House staff secretary Rob Porter, who oversaw the administration’s internal trade discussions until he resigned earlier this year.

The renegotiation of the new US-Mexico-Canada deal, formerly known as Nafta, was among Lighthizer’s first tests as trade representative, and Trump wanted it done as soon as possible.

In more than a year of talks with Canada and Mexico, Lighthizer combined a “my way or the highway” attitude with a thorough understanding of policy minutiae that he used to win concessions from his counterparts, according to people familiar with the intense negotiations.

How the arrest of Huawei’s Meng Wanzhou may mark the start of the great China-US technology decoupling

At one point this spring, as negotiators were racing to conclude talks before a late May deadline they ultimately missed, Lighthizer began to grow visibly frustrated with what he viewed as a lack of flexibility from the other countries.

Mexico had prepared a document with a series of bullet points offering ideas for changes to make to the chapter at hand, and Lighthizer, unsatisfied with the ideas presented, responded during the next session with a typed-up, bulleted list of his own.

If your conclusion is that China taking over all of our technology and the future of our children is a stupid fight, then you are right, we should capitulate
Robert Lightizer

But instead of fresh ideas, typed next to each bullet point were the same words: “This is not a proposal.”

“It was very funny in a dark, dry way,” said a former high-ranking official involved in the Nafta talks, who was present at the meeting. “He was like a small kid that just played a prank on someone, and it worked.”

While Lighthizer did cinch the deal, some critics have said the revised Nafta amounts to little more than a slight update of the original accord – not an overhauled agreement as the Trump administration has portrayed it.

Given the current financial crisis and the widespread belief that the 21st century will belong to China, is free trade really making global markets more efficient?
Robert Lightizer

Lighthizer’s tough negotiating style, and his focus on protecting America’s core industries from foreign imports, has long been well-known in Washington, where he went to college and law school and spent his four-decade career before joining the Trump administration.

As a young lawyer, Lighthizer worked for the Senate Finance Committee before joining the Reagan administration as a deputy US trade representative, where he helped negotiate “voluntary restraint” agreements with trading partners to limit US imports of cars, semiconductors and other goods.

He then spent years as a lawyer at the firm Skadden, Arps, Slate, Meagher & Flom, largely focused on defending the US steel industry from subsidisation by foreign countries, including China, and illegal dumping.

That background has prompted some criticism of Lighthizer and his allies from detractors who say they have acted too brashly to help the steel industry at the expense of US businesses and the broader American economy – particularly as they imposed tariffs on metals imports that prompted widespread retaliation from countries across the globe.

In recent years, Lighthizer was winding down his career, spending more time with his three grandchildren and at his condo in Palm Beach, Florida – which sits just a few miles from Trump’s Mar-a-Lago club – when he was approached by Dan DiMicco, a long-time friend and former steel industry executive who was working on Trump’s transition team.

DiMicco initially convinced Lighthizer to help with the transition. Then he later recommended Lighthizer for the USTR job, casting him as a world-class negotiator who could help the president fulfil his campaign promises.

Lighthizer appeared to be already familiar with, and supportive of, Trump’s trade views. In 2011, he penned an op-ed for the Washington Times defending Trump – who was toying with the idea of a presidential campaign – against what he believed was unfair criticism that the reality show star was “liberal on trade.” He argued instead that trade-restrictive policies and toughness toward China were inherently conservative ideas.

“Given the current financial crisis and the widespread belief that the 21st century will belong to China, is free trade really making global markets more efficient?” he wrote, presenting a challenge to traditional Republican free-trade orthodoxy. “If Mr Trump’s potential campaign does nothing more than force a real debate on those questions, it will have done a service to both the Republican Party and the country.”

Lighthizer’s views make him arguably the most protectionist trade representative in recent memory. His predecessors focused largely on pushing for open markets and fewer trade barriers, not more. Often, these negotiations served more of a geopolitical purpose than an economic one.

“Bob is an outlier,” said former Florida Representative James Bacchus, the former chairman of the World Trade Organisation’s highest court, the Appellate Body. Bacchus has strongly criticised Lighthizer’s policies, including his recent decision to block the appointment of new judges to the WTO.

But Lighthizer has been unapologetic about his views, even writing a New York Times op-ed years ago on “the venerable history of protectionism.” He has defended his position as the only way to protect America’s future, and he, like his boss, often says that short-term pain felt by farmers and manufacturers will be worth the long-term payoff.

“If your conclusion is that China taking over all of our technology and the future of our children is a stupid fight, then you are right, we should capitulate,” Lighthizer told lawmakers earlier this year, when they criticised the administration’s trade policies for the pain they have caused export-dependent industries. “My view is that's how we got where we are. I don't think it's a stupid fight.”

As point-man on the China talks, Lighthizer is taking over a role previously held by Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, neither of whom managed to convince Beijing into making the type of sweeping structural changes that the US has long wanted, including commitments from Beijing to buy more US products, fewer restrictions on American firms entering the Chinese market and a reduction in the pilfering of American trade secrets.

The high-pressure job comes with huge risks – and if Lighthizer fails, his relationship with Trump could go down the tubes. But people close to Lighthizer say he believes he has little to lose, in part because his current job is likely the last one of his career.

“He isn’t looking to move up the ladder after this job,” one White House official said.

And if he succeeds, he has the opportunity to end his career having fulfilled a primary goal he has held since he started it.

When he sat before the Senate Finance Committee as part of a confirmation hearing for his first appointment to the USTR office in 1983, Lighthizer was instructed by then-Senator Max Baucus, a Democrat from Montana, to be sure never to forget to put America’s interests first, a prophetic echo of the philosophy that has come to define Trump’s presidency.

“If at any time it appears that I lose consciousness of the fact that I am there representing this committee and this country, I hope that someone points it out to me,” responded Lighthizer, then 35 years old.

“I don’t expect to fall into that trap.”

https://www.politico.com/story/2018/12/26/trump-lighthizer-china-trade-war-1075221