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Hello from Washington, where Donald Trump is still refusing to admit Joe Biden after a long and exhausting election (should we expect anything else from 2020?).
Prior to the election, there was much fear and concern over the possibility that a narrow Biden win on electoral college would give Trump more leeway to question the outcome as fraudulent. So far, the president’s trials that have challenged the legitimacy of votes in certain states have not been successful. But that didn’t stop Secretary of State Mike Pompeo when asked how the State Department and intelligence services are preparing for a transition, saying he expected “a smooth transition to a second Trump administration”.
While this whole drama is unfolding in Washington, we at Trade Secrets have been preoccupied with looking ahead to what the next four years of US trade policy might bring – the Subject of our main piece. Our Person in the news is Jason Miller (not the Trump aide) who was just announced as a senior commercial officer for the Biden transition team during our Chart of the day investigates how government control of dominant Chinese financial technology companies hit stocks.
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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 in full swing now, whether Donald Trump likes it or not, and we here at Trade Secrets are wondering what happens to US trade policy.
If you haven’t read it already, it’s worth reading my colleague Alan Beattie’s Monday note first, in which he repeats: Biden will not return to Bill Clinton’s globalism, but he will deviate from Donald Trump’s unpredictability. And the first test will deal with the immediate crisis facing the World Trade Organization.
But before he even does that, he has to decide who his trading front man is. Trump’s trade tsar Robert Lighthizer was a distinctive character and will likely be remembered long after he leaves office, for better or for worse. That being said, it’s well worth seeing his goodbye shots. Some Democrats are nervous about what he wants to do in the next two months, fearing that he will set fire to diplomatic relations with Europe and generally act on a principle that is not constrained by practicality (i.e. he can afford to annoy people and not have to deal with the fallout).
The first signs are that Lighthizer won’t. On Monday, the EU introduced tariffs on US imports, including sugar cane molasses from Georgia and other US spirits and spirits, after being granted the right to do so by the WTO. Lighthizer had threatened to counter with more tariffs, but on Monday evening the U.S. sales agent didn’t respond with fire and fury (or tariffs). His office only signaled “disappointment”. Pulling that punch may be an early sign that Lighthizer will go easily for the next few months.
Democrats are now wondering aloud whether the most important quality of a new sales representative might be the ability to do a good old-fashioned apology tour with Brussels as the first stop. For this, the USTR does not have to have in-depth trading knowledge, but rather someone who can improve, charm and reset the tone. USTRs didn’t always need to know a lot about trade – sometimes diplomats are appointed in the early years, who are replaced by a more technocratic trade policy expert in the second term.
The counter-argument is that many important trade issues remain to be addressed, even if they are not the Biden government’s top priority. For example, if the US and Europe work together, global trade rules can be reformed to counter China’s practices.
Then there is the domestic political situation. Much has been said about a major trade divide between progressives and moderates in the Democratic Party. But that gap is now smaller than ever.
The split was evident in the Democratic primary elections earlier this year, with differences between Biden and Bernie Sanders. The progressives advocated by Sanders are generally skeptical of trade deals and believe that US workers are harmed by companies working with the government to find easier ways to set up production overseas. More and more centrist personalities have seen trade agreements and globalization as the way to a generally prosperous world for all.
But free trade is not in vogue in US politics right now, and Biden has left that camp, although there are still differences within the Democratic Party. Progressives want a CTR with union connections and some understanding of domestic economic inequality. Others see this as largely diplomatic and want a strong hand on national security to keep China in check.
This is a tough job that has some names associated with it.
Katherine Tai, the reluctant chief trade advisor to the House Way and Mean Committee, is a candidate for the USTR role © Katherine Tai / Linkedin
Jimmy GomezThe California House Representative is very popular and, as a former union representative, has strong union ties. He is also credited with working hard to secure provisions in the US-Mexico-Canada accord.
Stephanie Murphy, the representative of the house from Florida, is another name in the mix. Also on Capitol Hill is Katherine Tai, the reluctant Chief Trade Counsel for the House Middle and Middle Committee. Tai was fully respected by trade-minded Democrats. He previously worked in the USTR department and has China know-how.
Outside of Capitol Hill, the most common name is that of Mike Wesselwho sits on the board of directors of the US China Economic and Security Review Commission. He has more business-oriented credentials, including a seat on the board of the tire maker Goodyear and his own consultancy that works closely with the steel industry.
Jennifer HillmanThe Georgetown law professor and former World Trade Organization appellate judge is as much in the mix as the former congressman Tom Perriello. Perriello has little trading experience, but spent a term on Capitol Hill as the House of Representatives for Virginia in the Barack Obama administration before losing his seat. During that time, he staked a left-wing ballot report and was supported by both Sanders and Elizabeth Warren when he later ran for governor of Virginia.
Whoever takes on the top job will no doubt be faced with the unenviable task of continuing the “Trump first” agenda that Trump started in trade – without alienating US allies.
We will continue to observe this room.
Chinese tech companies lost nearly $ 254 billion in market value in two days as regulatory scrutiny of the country’s dominant financial tech companies tumbled after new antitrust rules were revealed in the sector. The tech-heavy ChiNext index in Shenzhen fell 2.9 percent on Wednesday and the Star 50 index in Shanghai fell 2.7 percent after a top Chinese banking and insurance regulator promised to examine fintech monopolies closely. The renewed antitrust attention to tech companies comes from the fact that the groups are wielding an increasingly widespread influence over daily life in China, where a fifth of the country’s consumer goods are now sold on Alibaba.
Person in the news
Jason Miller of the Brookings Institution will assist the new Biden administration in assessing trade policy. © Brookings Institute
Who is it?
Jason Miller, Senior Fellow at the Brookings Institution.
Why is he on the news?
Miller worked on manufacturing policy for the Obama administration and was appointed head of a diverse advisory body to assist the future Biden administration in assessing trade policy and appointing key agencies.
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Summit of trade secrets
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