President Donald Trump has nominated Wilbur Ross Jr. to be the next Secretary of Commerce, and Robert Lighthizer to be the next U.S. Trade Representative. As of this writing, both are still undergoing confirmation by the U.S. Senate (Mr. Ross was approved by a voice vote of the Senate Commerce, Science and Transportation Committee on January 24th and a vote before the full Senate is expected on February 27th; and Mr. Lighthizer’s hearing has not yet been scheduled). However, regardless of any potential issues with confirmation, the selection of Mr. Ross and Mr. Lighthizer for these two critical appointments provides some indications about future U.S. international trade policy under the Trump Administration.
Wilbur Ross Jr., 79, has primarily been known for investing in, and helping to turn around, troubled companies in industries such as coal, steel, auto parts, and textiles. In 2002, for example, Ross created International Steel Group (“ISG”) by combining several troubled steel companies that benefited from significant import tariffs imposed in the early 2000’s by the administration of President George W. Bush. Ross later sold ISG to Netherlands firm Mittal Steel (now ArcelorMittal). Ross is the founder of private equity firm WL Ross & Co., which was acquired by AMVESCAP PLC and combined with its direct private equity business, INVESCO Private Capital, in 2006. Ross continued to run the combined company after the transaction was completed and said at the time that it would help the company expand in places like China. A former Democrat, Ross is a longtime associate of President Trump, who appears to share some of the president’s concerns about the effects on U.S. workers and industry from international trade agreements.
Robert Lighthizer, 69, is a prominent international trade attorney who served as a deputy USTR under President Ronald Reagan. While at USTR Lighthizer was active in negotiating “voluntary restraint agreements” with several countries accused of dumping steel into the U.S. market (including Mexico, the European Union, South Korea, and Japan), which all agreed to restrict exports in order to avoid potentially getting hit with steep U.S. tariffs. Most recently Lighthizer was a partner at the law firm Skadden, Arps, Slate, Meagher and Flom and represented several large companies, such as U.S. Steel Corp., in trying to protect U.S. markets from claimed trade violations by foreign companies. Lighthizer has a reputation for being a pragmatist when it comes to the effects on U.S. business and workers from international trade agreements, and his nomination has received support from progressive groups like Public Citizen’s Global Trade Watch, along with other groups such as the National Association of Manufacturers and National Foreign Trade Council.
Role of U.S. Trade Representative
Traditionally USTR has taken the lead role in negotiating international trade deals, while the much larger U.S. Commerce Department, while providing support in negotiations, has focused more on handling enforcement actions including anti-dumping and anti-subsidy investigations. However, the Trump administration has indicated that the Commerce Department under Mr. Ross will be the lead agency for international trade policy. Together with Mr. Lighthizer at USTR and other Trump Administration officials and advisors (Peter Navarro to head a new National Trade Council; Jason Greenblatt who will generally be in charge of international negotiations; and Dan DiMicco, former CEO of steelmaker Nucor Corporation who has served as a senior trade policy advisor), it is likely that there will be significant changes in international trade policy from past Republican and Democrat administrations. In addition to the renegotiation of past trade deals such as NAFTA, the new administration will probably pursue significantly more enforcement cases to protect U.S. industry from foreign trade violations. Regarding new trade deals going forward, there will also likely be much more emphasis on negotiating bilateral agreements instead of the large multilateral trade agreements, such as TPP, that were favored by past administrations.