Tom Williams/Pool/Abaca/Sipa USA via AP Images
Rep. Jimmy Gomez (D-CA) during a House Oversight and Reform Committee hearing in August
For several presidencies, including those of Obama and Clinton, the U.S. trade representative has been keeper of the orthodoxy. U.S. policies ignored the fate of domestic manufacturing. Instead, they pursued a brand of globalism by and for multinational corporations, especially financial ones.
Biden’s USTR nominee will signal whether he is serious about rebuilding U.S. industry and jobs. In previous pieces, I’ve reported on the efforts of two of the ultraorthodox candidates, Jennifer Hillman and Miriam Sapiro, to get the position. That’s probably not going to happen—they are just too radioactive for much of the Democratic Party.
Two leading contenders are currently Katherine Tai, the lead trade counsel on the House Ways and Means Committee, and Rep. Jimmy Gomez of California.
Politico recently ran a valentine to Tai, headlined “Everyone Likes Katherine Tai,” which was heavily influenced by the office of Sen. Sherrod Brown.
Tai indeed gets along with progressives. But as a staffer ultimately responsible to Ways and Means Chairman Richie Neal, as corporate a Democrat as it gets, she is trusted by corporate types as well.
They other contender heavily promoting himself for the job is Rep. Jimmy Gomez. He was one of the negotiators in the revised NAFTA deal, known as USMCA. But other than that brief stint, Gomez has no background in trade.
Diversity politics will influence this pick. Gomez is Latino; Tai is Asian American. Biden has a Latino problem, not a problem with Asian Americans. If the political staff has a major role, Gomez is the more logical pick.
Of the two, however, Tai would be a lot better than Gomez, who would be at risk of being rolled by the corporate lobbies and their allies in the USTR bureaucracy.
Still better would be two progressives being promoted by the labor movement: Mike Wessel, a leading activist trade lawyer, and Thea Lee, president of the Economic Policy Institute. These now seem long shots.
That’s a pity. Trump’s trade policy got tough with China mainly at the level of belligerent rhetoric and scattershot tariffs, but not coupled with any kind of industrial policy. The Biden administration will either build on the new reality with a more coherent China and industrial-strategy policy—or try to restore the old trade regime. A Wessel or a Lee would focus on the former.
And USTR is only one of a suite of top positions that affect trade.
With Tony Blinken picked for secretary of state, the risk is that China becomes seen as more a national-security issue than an economic one. Blinken recently addressed a U.S. Chamber of Commerce event: “Trying to fully decouple, as some have suggested, from China … is unrealistic and ultimately counter-productive,” Blinken said. “It would be a mistake.”
This is of course a total straw man. What does it even mean? But Blinken was signaling a softer line on China generally. (Sullivan, who is generally close to Blinken, takes a somewhat tougher line on China and may be in the market for allies.)
It may well be that Blinken will try to make USTR less of a power position in its own right, and have it be more of an implementer, reporting to senior White House staff. Michael Froman, the ultimate corporate Democrat, had the top trade position on the White House staff under both Clinton and Obama, serving on both the National Security Council and the National Economic Council. That power post, if resurrected, would presumably be senior to USTR.
One of the legacies of the Clinton and Obama administrations is a paucity of progressives on the trade policy bench. There are hardly any people with progressive views on trade who served as deputies who are now credible to be promoted to more senior posts, since hardly any progressives got hired for trade jobs at all.
One of the legacies of the Clinton and Obama administrations is a paucity of progressives on the trade policy bench.
The other crucially important trade positions are at Treasury. The Treasury undersecretary for international affairs is the U.S. liaison with the IMF and the World Bank, is in charge of the Exchange Stabilization Fund, is often the key U.S. official on economic summits, and works very closely with USTR. It was in this post that the young Larry Summers and the young Lael Brainard first became power players.
If as we’ve reported, and as Biden himself has all but confirmed, Janet Yellen is appointed Treasury secretary, she will have a good deal of say over subcabinet posts in her department. But Yellen’s own views on trade are something of a mystery.
So the White House top staff job on trade becomes all the more important, as does deputy Treasury secretary and undersecretary/international. Is the bench totally bare?
Not quite totally bare. One Wall Streeter turned progressive who could do any of these top jobs is Gary Gensler, who mightily annoyed his former pals when he turned out to be a tough regulator as head of Obama’s Commodity Futures Trading Commission. He could serve as deputy Treasury secretary, U.S. trade rep, or undersecretary of the Treasury for international affairs.
Another person with the experience and knowledge of both trade and finance to do one of these jobs is Damon Silvers, the AFL-CIO’s senior strategist on all things financial. A third is Simon Johnson, former chief economist of the International Monetary Fund, who is part of the Biden transition.
Mike Wessel or Thea Lee could handle one of these other top trade jobs as well.
Will any of these progressives get any senior trade job, or will Biden listen to the usual suspects and revert to the trade orthodoxy? This will heavily influence whether Biden delivers on his promises to renew U.S. manufacturing and jobs.
