Transcript of US Trade Representative Robert Lighthizer's speech at the Center for Strategic and International Studies on September 18th.
Thank you, Senator. Ambassador Hill, Senator Brock, friends – there’s probably some out here – distinguished guests. First when I was asked to do this, and asked by Senator Brock, I – it’s not one of those things you can say no to. So I’m happy to say yes. But one of the things that I was reminded of was very early on when we worked together – so I’m going from the staff director of the Senate Finance Committee to work for Ambassador Brock, who I always called Senator Brock. And we’re taking our first trip together. And I’m a newly minted ambassador and proud of myself, of course. And we’re – in those days, you used to have to fly from here to New York and then to Paris. So we’re going on a trip to Paris.
And on the – on the first leg of the trip I’m sitting next to the Senator and I said – I thought, I know I’m missing something. What could it be? Well, it was my passport. (Laughter.) So I’m an ambassador, flying with my boss, who’s an ambassador, who’s in the Cabinet, and I don’t have any passport. So I sort of – about halfway through, I leaned over and I said – I said: Senator, I think I forgot something. And I said, yeah, my passport. And he was cool. He said, no, not a problem.
So we get off. He makes a couple of calls. I fly to Paris with him, they let us right through. Somebody brings my passport the next day. And I come by and talk to Carol Browning, CB, who was his secretary at the time. I said, I feel like such a jerk. I forgot – you know, what an idiot. But he was really cool about it. And she said, yeah, he was cool. He’s forgotten his three times. (Laughter.) Literally – that’s literally a true story. It’s one of those things that you kind of remember when it happens to you. Hopefully, it won’t happen to you. Now, I have people who tell me, do you have your passport, Bob? I say, I have my passport.
I have been blessed in my life by having some great mentors. And none greater than Senator Dole and Senator Brock. Everyone knows my affection for Senator Dole. And I have an equal affection for Senator Brock. He’s been a great friend and a great teacher. He was – and this extraordinary career. You almost don’t know which title – other than governor, I don’t there’s a title that I know of that you haven’t had, legitimately. So, but something people don’t generally know is that he is a bit of an insurgent. He kind of challenges orthodoxy. When he was – when he ran for Congress, and then – and succeeded, of course, and then ran for the Senate and succeeded there, he ran more as an insurgent. He was not part of the establishment. He was – I think of it as a little bit like a 1960s or ’70s tea party guy. It’s literally true. That’s what he did. He took on the – kind of the Baker machine and beat it. And then at the – at the RNC, he – at some point you can go through the details, but there were a number of things that were controversial, not the least of which was going to Detroit for a national convention, which was thought of as probably not the most hospitable place, but it turned out to be a great success.
At USTR, he also did a great job of balancing our international obligations and moving the trade system forward, but also defending American industry. So we end up with the Reagan trade policy, which is insisting that we get fair treatment on motorcycles, and steel – and especially steel – and semiconductors, and automobiles. So – and I might say, my own view is that the reason the Japanese companies originally moved to the United States was because of Senator Brock and what he – and the policy of President Ronald Reagan and Senator Brock, and the policy they put in place. So when I do things that are kind of challenging the orthodoxy, you know where it’s coming from. It’s coming from my mentor. And he should get all the blame. (Laughter.) Because I developed that –
MR. : (Off mic.)
AMB. LIGHTHIZER: People who know me know I’m a bit of a contrarian myself.
So let me just make a few points, and then sit down and take some questions. Of course, these are very interesting times for trade. For decades, support for what we call free trade has been eroding among the electorate. There has been a growing feeling that the system that has developed in recent years is not quite fair to American workers and manufacturing, and that we need to change. In 2016, both major political parties ran candidates who to one degree or another were trade skeptics.
On the Democratic side, of course we had Senator Sanders, who campaigned hard on this issue and from that perspective. Their ultimate candidate, Secretary Clinton, did not espouse the trade views of her husband, or for that matter her boss when she was secretary of state. She professed some degree of trade skepticism.
On our side, the views of President Trump are well known. While some politicians can be accused of changing to populist positions to get votes, this cannot be said of the president. If you go back 10, 20, 30 years, or even longer, you see a remarkable consistency. He has been a critic – he has been critical of the prevailing U.S. trade policy of so-called free trade deals and of their effects on workers. So we will have change in trade policy.
Let’s talk briefly about our philosophy. I know that many sincerely believe that the prevailing world trade policy has been great for America and that those who complain are often people who are victims of economic progress. These analysts think that the whole problem is one of getting the correct message through – really not a policy direction issue but a failure to communicate. They believe that the voters are ill-informed, or in some cases perhaps ignorant. If they only really understood, they would support these trade agreements, the WTO, and all the rest.
Most of you know that I am not in that group. I agree with the president. I believe that Americans can compete successfully with anyone in the world, if the conditions are fair – not of course in all sectors, but in most. I believe, like many of you, that removing market distortions, encouraging fair competition, and letting markets determine economic outcomes leads to greater efficiency and a larger production of wealth both here and abroad. I’m sure that most here also agree that many markets are not free or fair. Governments try to determine outcomes through subsidies, closing markets, regulatory restrictions, and multiple similar strategies. The real policy difference, I submit, is not over whether we want efficient markets, but how do we get them.
What is the best thing to do in the face of market distortions to arrive at free and fair competition? I believe – and I think the president believes – that we must be proactive, the years of talking about these problems has not worked, and that we must use all instruments we have to make it expensive to engage in non-economic behavior, and to convince our trading partners to treat our workers, farmers, and ranchers fairly. We must demand reciprocity in home and in international markets. So expect change, expect new approaches, and expect action.
Second, the president believes – and I agree – that trade deficits matter. One can argue that too much emphasis can be put on specific bilateral deficits, but I think it is reasonable to ask, when faced with decades of large deficits globally and with most countries in the world, whether the rules of trade are causing part of the problem.
Now, I agree that tax rates, regulations, and other macroeconomic factors have a large part in forming these numbers, and the president is tackling these issues. But I submit the rules of trade also matter, and that they can determine outcomes
In a simple example, how can one argue that it makes little difference when we have a 2 ½ percent tariff on automobiles and other developed countries have a 10 percent tariff, that it is inconsequential when these same countries border-adjust their taxes and we do not, or that it is unimportant when some countries continuously undervalue their currencies? Is it fair for us to pay higher tariff to export the same product than they pay to sell it here?
Third, I believe that there is one challenge on the current scene that is substantially more difficult than those faced in the past, and that is China. The sheer scale of their coordinated efforts to develop their economy, to subsidize, to create national champions, to force technology transfer, and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented.
Unfortunately, the World Trade Organization is not equipped to deal with this problem. The WTO and its predecessor, the General Agreement on Tariffs and Trade, were not designed to successfully manage mercantilism on this scale. We must find other ways to defend our companies, workers, farmers, and indeed our economic system. We must find new ways to ensure that a market-based economy prevails.
Fourth, we are looking at all of our trade agreements to determine if they are working to our benefit. The basic notion in a free-trade agreement is that one grants preferential treatment to a trading partner in return for an approximately equal amount of preferential treatment in their market. The object is to increase efficiency and to create wealth. It is reasonable to ask after a period of time whether what we received and what we paid were roughly equivalent. One measure of that is change in trade deficits. Where there the numbers and other factors indicate a disequilibrium, one should renegotiate.
So we had an election. No one really ran on maintaining the status quo in trade. President Trump won. We have a different philosophy, and there will be change. I look forward to working with many of you in this room on these issues as things develop, and to returning from time to time to talk about progress as we move forward. I look forward to answering your questions. (Applause.)