First Time Ever: US Trade Ambassador Stiff-Arms the Swamp

October 24, 2017

by Michael Stumo, CEO of CPA

We have never seen this before. The US Trade Representative, Robert Lighthizer, is being brutally direct with free trade zombies in Congress and the multinational import lobby - i.e. the swamp - in charting a new pro-American direction on trade. Voters sought a change in trade policy when electing President Trump, but Congress has not changed. Neither have the special interests. Lighthizer faced a conundrum. He had to choose.

The unspoken rule in the Washington swamp is that anybody talking about trade must say phrases like “grow export opportunities,” “increase two-way trade,” and “lower tariff barriers.” This shows that you are part of the club. Everybody nods and agrees. It is the conventional wisdom—these things must simply be true and good because everybody says them.

The swamp aggressively enforces its dogma. Heretics who refuse to follow their data-free theology are dismissed, attacked, ignored, or heckled.  

But Trade Ambassador Lighthizer does not say these soothing “I’m with you” phrases. He told House Ways & Means Committee members last week that he was working to please “an audience of one”—President Trump—and not Congress as he plods on to reshape the future of American trade policy. Lighthizer apparently feels the president has his back. 

The House Ways & Means Committee has never rejected a trade agreement. The Republicans on the committee all voted to give Fast Track Trade Authority to President Obama. They are upset that Ambassador Lighthizer is proposing big changes in NAFTA negotiations. Those changes include sunsetting the deal after five years so a new approval vote is needed, limiting international tribunals that let foreign corporations sue the US for unlimited sums of alleged damages, tightening rules of origin to increase US manufacturing content in NAFTA products, and strengthening other protections for American producers. 

Committee members told reporters that they are “concerned”, which is government-speak for “freaked out.” This was only the latest of a series of meetings and hearings called by the Committee, as well as public statements issued by the Committee, to head off any changes in trade policy.

Certainly Lighthizer could capitulate to the Ways & Means Committee which must approve a newly negotiated NAFTA before it goes to the House floor. Everyone does it.   

Former trade ambassador Michael Froman, a free trade zombie from Citigroup, focused his same-old-same-old trade negotiation efforts on pleasing the House Ways and Means and Senate Finance Committees. Obama had Froman’s back.  Candidate Obama, who campaigned on “Hope and Change,” became the “Keep on Offshoring Jobs” president.  

But instead of capitulating, Lighthizer said his first stop for approval is President Trump. That is the only audience that matters right now. We have not seen this movie before. 

The multinational import lobby is “alarmed.” 

This special interest lobby is made up of the US Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable.  Fake farm and ranch groups are also part of the import lobby because they are funded or controlled by multinational meatpackers owned by Brazilians (JBS), Chinese (Smithfield Foods) and, yes, even Americans (Cargill) who do not allow pro-farmer policy to be advocated if it interferes with low priced imports. They are used to getting their way.

The import lobby is institutionalized in the trade negotiations process through statutorily created Industry Trade Advisory Committees (ITACs). A 1974 law created these committees to provide private sector input and advice to government officials negotiating trade deals. But the ITACs have been transformed into an institutionalized crony capitalist influence within the government. Their influence is on the wane now.

So the special interests are holding press conferences, calling reporters, donating to favored congressmen, and holding joint lobby days on Capitol Hill to frustrate the Trump Administration’s efforts. Last week, they visited 260 offices on Capitol Hill to whine that they are no longer getting their way.

Mexico and Canada are pleased with the swamp’s diligent efforts, because they also oppose efforts to increase American production and jobs. 

President Trump made some mistakes in appointing officials who possess a globalist mindset and who oppose his America First trade agenda. But Ambassador Lighthizer was not one of those mistakes. He is exhibiting courage seldom seen among high-ranking White House officials as he looks to to chart a new course for the American economy. Thankfully, Lighthizer is  pressing an agenda to help benefit the whole country, not just the special interests. And that’s an encouraging sign when it comes to confronting the Swamp. 

Michael Stumo is the CEO of the Coalition for a Prosperous America.

Showing 4 reactions

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  • James Crawford

    I agree with your comments and would add:

    All the while Froman was promoting the deal not only was the rest of the Administration supporting him but mainstream American macroeconomists were also cheering him on. The kool aid you have to drink to join that profession is a bitter ideological brew served on top of the corpses of our working class. Everyone of them should be tarred, feathered, and exported.
  • Mark Sanguinetti
    For the United States this so called trade agreement under Barack Obama was primarily promoted by his chosen U.S. Trade Representative Michael Froman. Michael Froman primarily promoted the Trans-Pacific Partnership in the United States by mentioning increased U.S. exports that he says this agreement will result in. While doing this he deceptively or ignorantly ignored our nations high amount of imports. He has tried to get people to ignore how trade between nations is calculated with exports minus imports equaling the trade balance of a nation. For trade between nations this is the equivalent of a fourth grade math student when taking an exam ignoring the minus signs (-) and only looking at the plus (+) signs. Could that student get a good passing grade? No and only if the teacher also ignored the minus (-) sign in writing the test.

    For accounting this is the equivalent of a student or an accountant when doing a company balance sheet only doing the calculations for company assets, for example, cash, accounts receivable, goods or inventory, land and buildings, while leaving out the company liabilities, which are the accounts payable and loans. As a result of this likely deliberate ignorance the U.S. has had trade deficits of over 350 billion dollars every year since the year 2000 with no planned remedy. Only plans for getting people to ignore these calculations. As a result of this our nation has bought the goods of other nations, for example China, while a large amount of our U.S. assets, such as real estate, commodities like gold and silver, federal government bonds and corporate stocks and bonds have been and are being purchased by foreign investors. And to clarify, U.S. federal government bonds are considered assets for the purchasers, but for the United States government they are liabilities or legal debt.

    Should any person representing their country as a trade representative when writing or talking about trade only mention exports and other related words such as exported, export, exporting, etc., and never mention import and its related words? As an example an article by Michael Froman published on May 10, 2015 in the San Francisco Chronicle newspaper has twelve usages of export and related words, with seven additional export usages in a chart as part of the article. There are zero usages of import and its related words. Shouldn’t a trade representative when writing about trade, be concerned with the trade balance of their nation? Balance of trade is the largest component of a country’s balance of payments. It is the difference between a country’s imports and its exports. A country has a trade deficit if it imports more than it exports. The opposite scenario is a trade surplus. Froman never mentions our high U.S. imports, which lose real wealth creating United States production and also lose higher paying jobs for the majority of U.S. employees with less tax revenue flowing into the United States treasury.
  • James Crawford
    The fact of the matter is that in the name of Free Trade that the economics profession has sought to marginalize the economic voice of the electorate. Their success, unfortunately, created a void in our political discourse that Trumpism is filling with the rantings of Neo-Nazis, racists, misogynists, fear of immigrants, and an abdication of our country’s role in international affairs.

    So, whether the CPA likes it or not, it now finds itself on the same team as this miserable cast of humanity.

    Is there no price too high for the CPA to pay for the services its macroeconomists provide?

    The CPA prides itself on the merits of its criticism, but it is unable to develop a coherent theory of governance too offer up in place of the Swamp.

    Good luck with that.
  • James Crawford
    Now that Bannon is going after Swamp Republicans in the next election cycle, wouldn’t it be nice if the new crop of candidates came out in favor of balancing our trade deficit by defending specific industries located in their regions?

    If you read the NYT article about the Rexnord bearing plant, it is clear that what motivates blue collar voters best is concrete proposals to save their jobs & plants and industries.

    Why does the CPA exclusively support macroeconomists dedicated to preventing the “Shannons” of this country from having a voice and casting a vote that matters to them?

    What is it about sitting on your ass all day theorizing about an imaginary macroeconomy that makes you so much wiser than the people whose walk of life you know nothing about?

    Why does the CPA bother with its fly-ins to lobby the legislature when the last thing its economic theorists want is an empowered legislature?

    What does it say about the CPA’s self-righteous indignation about Free Trade dogma, when its own macroeconomists believe the self same dogma when it comes to the merits of the political processes of our democracy?

    You want to get something done, you bring knowledge and power together in a productive working relationship; rather than fear the political process and seek to use knowledge to subjugate it.