As Donald Trump makes his first key White House appointments this week, it will be worth watching how the U.S. president-elect will approach another part of the White House — one that oversees a key issue that Trump amplified on the campaign trail: international trade. Last month, Trump said that he wanted to reorganize the handling of trade issues by consolidating authority in one place — in the Commerce Department. By creating a new “American desk” in that department, Trump said he would cure what he sees as past mismanagement of trade negotiations leading to deals that were not in America’s best interests.
“American trade policy is currently mismanaged by dozens of competing bureaucracies, spread across the Departments of Agriculture, Commerce, Labor, State, Treasury — all of these departments. So many departments,” Trump said in October.
Trump’s idea would effectively make the Commerce secretary the boss of U.S. trade negotiators, but it would also take authority over deals away from a cabinet level US Trade Representative, and as importantly, away from the Executive Office the President — something that will not work out well for Trump and other future presidents hoping to have greater influence over trade policy.
The way Washington handles trade issues today stems from former President John F. Kennedy’s desire to give trade policy a higher profile in U.S. policymaking. In 1962, he worked with Congress to establish a Special Trade Representative (STR – later re-named the U.S. Trade Representative, or USTR) in the Executive Office of the President. Trade negotiations had been the province of the State Department, but there was a feeling in Congress and the public that since the primary mission of the State Department was the conduct of foreign policy, if there was a choice between maintaining unruffled relations with a country and resolving a trade problem, the latter would suffer -- to the disadvantage of American commerce.
The STR was a very small office with a staff of only a few dozen, so to give it heft, Kennedy appointed a person of independent stature as his first STR, former Eisenhower Administration Secretary of State Christian Herter. The intent of creating the STR was for him to coordinate trade policy for the executive branch and to act as an honest broker to sort out the competing interests of the agencies that pressed their own interests. The STR was also to be the President’s personal representative in dealing with foreign countries, and was to engage in close consultations with Congress. This was critical because Congress has constitutional authority to implement trade agreements.
If Trump wants to have a strong say in trade policy, keeping the function close at hand is the best way to do this. That’s because the USTR is responsible to the President, providing one central place where trade policy and trade negotiations are combined— along with the President’s retaliatory authority. The President names the USTR and his deputies, subject to Senate confirmation, and they serve at his pleasure.
Trump’s other challenge is that two powerful Congressional committees already have oversight jurisdiction over trade – the Senate Finance Committee and the House Ways and Means Committee. These committees had a central role in creating the office of the USTR and see having a stand-alone trade negotiator in the White House as giving the nation’s trade negotiator greater clout due to being in the office of the President.
What’s more, handing the Commerce Department authority over trade negotiations could create more conflicts in Washington. For instance, agricultural groups may worry that a government agency like the Commerce Department focused on promoting manufacturing would give farm exports less of a priority with respect to foreign market access than it does for industrial products.
Under President-elect Trump’s proposal, the USTR would also be reporting to a Cabinet secretary. Since foreign governments have trade ministers, they will not see a sub-cabinet level official, a USTR within the Commerce Department, as their equal, putting the chief U.S. negotiator at a disadvantage in trying to cut deals. It would in their eyes be demoting the USTR.
There is a time-tested reason why trade policy coordination and negotiation were put in one place located in the White House. Changing this arrangement by eliminating a USTR in the Executive Office of the President can only undermine getting the strong deals that Mr. Trump seeks.
Alan Wm. Wolff serves as senior counsel at Dentons LLP and is chairman of the National Foreign Trade Council. He has served as a lead trade negotiator with the U.S. Trade Representative in both Republican and Democratic administrations.