US policy announcements ignore major trade commitments

Although in January Donald Trump summarised his objectives as “Buy American, hire American”, major policy priority summaries now almost ignore trade programmes.

Trump’s Address to Congress

Donald Trump’s February 28 Address to a joint session of the US Senate and House of Representatives outlined the issues he believed should dominate then immediate legislative programme.

The speech repeated his grievances about job losses since NAFTA was agreed and China joined the World Trade Organisation, and his belief in “free trade, but it also has to be fair trade”

It made no mention of what his administration’s policy would be towards NAFTA or China, or of a real philosophy for future trade deals – though the March 1^st 2017 US Trade Representative policy agenda summarised below fleshes this philosophy out.

Trump’s legislative priorities appear to be:

• Reforming healthcare, which he now concedes is a much more complicated problem than his campaign acknowledged
• Tax reform, targeting “massive tax relief for the middle class” and lower corporate taxes. His speech avoided any endorsement of the Republican party’s border tax proposals.
• Legislation that “produces a $1 trillion investment in the infrastructure of the United States financed through both public and private capital”, indicating an interest in UK or Canadian-style public-private investment programmes, which the US has surprisingly been slow to copy.
• Reforming immigration rules to create points-based priorities for migrants bringing defined skills
• A budget that “calls for one of the largest increases in national defence spending in American history.”

With these competing priorities, it is hard to see how the complexities of trade policy can get much legislative time this year.

US Trade Representative priorities

The Office of the US Trade Representative published its USTR AnnualReport2017 on March 1. It was only slightly less specific on programmes than Trump’s speech the previous evening.

The US Trade Representative is required to send the President its agenda by March 1 this year. Trump’s nominee, Robert Lighthizer, is unlikely to obtain Senate confirmation for some time, as his previous career requires a legal waiver. So staff at his office have said  “we intend to submit a more detailed report on the President’s Trade Policy Agenda after the Senate has confirmed a USTR, and that USTR has had a full opportunity to participate in developing such a report.”

But, acting under the direction of White House National Trade Council Director Peter Navarro and likely USTR general counsel Stephen Vaughn, office staff have outlined some general priorities.

• The Trump Administration should be more aggressive than its predecessors in dealing with “countries that refuse to open their markets”
• The US should be concerned with bilateral deals instead of multilateral agreements
• American trade objectives will be “best accomplished by renegotiating and revising trade deals when our goals are not being met.”
• The US will cease relying heavily on the World Trade Organization’s procedures for setting trade grievances and will “aggressively defend American sovereignty over matters of trade policy,”
• The Department of Commerce has the right to self-initiate investigations into other countries’ alleged abuses. Wilbur Ross pubicly expressed interest in using these powers during a confirmation hearing the previous month.

The agenda stresses that “at this time, the Trump Administration is not proposing legislation with respect to the objectives or priorities outlined in this statement.” It contains no indication of specific objectives in NAFTA renegotiation, its views on priorities or tactics on trade relations with China or its views on border taxes.

Short-term implications

It seems clear that the Administration wants to await Robert Lighthizer’s confirmation before turning its general aspirations into detailed plans on trade relations. This makes it unlikely there will be any serious actions initiated, especially on China, submitting NAFTA renegotiation objectives to Congress or clarifying the Administration’s views on border tax proposals, until April at the earliest. Since all three issues then need some Congressional involvement,  and there are now a number of competing priority proposals for Congressional time, no specific revised tariffs or regulations look likely in the first half of 2017.

But the USTR’s summary of the  President’s Trade Policy Agenda is clear in presenting a new philosophy: challenging the legitimacy of multinational deals that conflict with US policy. This general view of the world seems almost universal throughout the Trump administration, however much debate there may be among its members about the merits, say, of a strong or weak dollar, or of whether China’s policy on currency threatens the US economy more or less than the pervasive role of its State institutions.

That new worldview is likely to underpin almost all US trade policy – with almost immediate effect. But the USTR report is quite specific about one aspect of its short-term implications: “At this time, the Trump Administration is not proposing legislation with respect to the objectives or priorities outlined in this statement.”

Congress will not be debating laws about quitting the WTO.