Capital Conversations: Amb. Robert Lighthizer, United States Trade Representative
Practice Groups Teleforum
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On December 14, 2020, the Federalist Society hosted an online teleforum with Ambassador Robert Lighthizer, United States Trade Representative. Ambassador Lighthizer discussed judicial activism at the Appellate Body of the World Trade Organization.
- Hon. Robert Lighthizer, 18th United States Trade Representative
- Moderator: Hon. Dean Reuter, Vice President, General Counsel and Director of Practice Groups, The Federalist Society
As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speakers.
Dean Reuter: Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at fedsoc.org.
Dean Reuter: Welcome to a Special Capital Conversations edition of the practice group's teleforum conference call and Zoom meeting as today, December 14th, 2020, we welcome a special guest to Capital Conversations, U.S. Trade Representative Robert E. Lighthizer. I'm Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. We're pleased to welcome the Ambassador today.
Please remember that all expressions of opinion are those of the expert on today's call. Also, this meeting is being recorded for use as a podcast and other uses in the future and will likely be transcribed.
We're very pleased, as I mentioned, to welcome Ambassador Robert E. Lighthizer. He was sworn in as the eighteenth U.S. Trade Representative in May 2017. The Ambassador, with years of prior experience, brings a history of tough U.S. trade enforcement and a record of standing up for American workers, farmers, manufacturers, and businessmen in an area -- in an era, I should say, in which that seems increasingly important.
Before serving as USTR, he was in private practice at Skadden, Arps for 30 years, gaining a reputation there as an advocate for "America First" trade policies. Before joining Skadden, he was a Deputy U.S. Trade Rep during the Reagan administration, where he negotiated over two dozen bilateral international agreements. And prior to that, he was Chief of Staff in the United States Senate Committee on Finance for Chairman Bob Dole.
We're so pleased to welcome him here today for a bit of a fireside chat. Thirty-nine degrees today and cold rain in Washington, D.C., so it's a good day for a fireside chat, I would say. Ambassador, welcome. I think we're ready to start. Get us started with some thoughts on the subject near and dear to the hearts of many Federalist Society members, judicial activism, but in this case, a particular view on the appellate body, the World Trade Organization. Ambassador Lighthizer.
Amb. Robert Lighthizer: Great. Well thank you very much, Dean. It's a pleasure to be here. I've been an admirer of The Federalist Society for many, many years. Indeed, I sort of wish we had such a thing when I went through law school. There's always been a gap. There's always been a need. The kind of liberal bent on -- in law schools has only increased. But trust me, even in my day, it was very evident and very much there. And I'm grateful as an American for the work of the Society. I think it's never had more impact than it has here in these last four years. And you should take pride, obviously, in that, but also in the fact that you've made a lot of enemies, which is some indication of doing good, as far as I'm concerned. So thank you for having me here.
I'd like to bring the attention, really, of members to what I think is quite a substantial problem in the international trade space. And it's one that overlaps with, I think, The Federalist Society's thoughts and mission. When I think of the Society, I think of, obviously, the Constitution. I think of activist judges, and sovereignty, and accountability, rule of law, and this is reasonably the hallmarks. And you've got a lot of young and probably now not-so-young lawyers who think about these in the context of the Society.
But I think there's a part of it that they also ought to focus on that they probably haven't. And that's because they're really not international trade lawyers, or don't worry about international trade. But international trade is really as important to the United States as any of these other areas where judicial activism and the federal judiciary has created such a problem.
If you think about our communities, our communities are really defined by their jobs. And a lot of the breakdown in the community has been a breakdown of international trade, and of jobs going overseas, and all the kinds of things that grow out of that. So there is an area of activism in this area where the United States really is losing its rights and taking on unnegotiated obligations. And what I'm talking about is the dispute settlement process at the WTO.
So let's think for a second about the WTO. The WTO was started in -- as the GATT originally in 1947, and it grew up with a dispute settlement process, which was a little bit arbitration. You'd have like a three person arbitration and they would decide cases, and then people would try to negotiate their way out.
In 1995, during the Clinton administration, the decision was made that, well, we really ought to have a second level of -- we ought to have binding negotiations, and we ought to have a second level, a so-called appellate body. And there was some controversy about this. I can remember, even at that time, I personally thought it was a mistake. And it's sort of grown to be even a bigger problem than I would have thought.
So what they did is they said, "Look, we just want to have a simple check on panels that might have gone astray in some grave way." And that sounds -- for those people that are not really familiar with how bureaucracies react over time, that sounds like an innocuous, harmless sort of thing. So they said, "We'll just have the appellate body to look at these cases for 90 days. And they'll just decide whether there's a legal issue or not. And we'll just give these people terms."
And what we've seen is what you can imagine. We've seen that this quick review has become a years-long litigation. It's involved hundred-page opinions. It's involved delving into fact as well as law. It's incredibly -- the terms, themselves, these people -- these appellate body members came to the conclusion that they should be able to extend their own terms, at least if they're working on a case. So if your term is up, Dean, on Wednesday, I assign you a case on Tuesday, you keep working on that.
And it's funny because they get -- they're paid on piecemeal. They're literally paid depending on how many days they put in. There's no real checks, no real balance. It's just a classic example of an international situation getting out of control, of a bureaucracy getting out of control.
So what you have in the WTO is you have a series of negotiations, eight of them from 1947 until 1995 when we then created the WTO; have not been any negotiations since then. So you had eight of these negotiations that went on. And they were all heated, went on for years, and then very precise contracts. Think of it like in your model of Constitution, but very precise contracts were written.
And what we've seen over the last several years is the appellate body believing this was sort of a living document. They would create jurisprudence. They would say what the rules ought to be. So you'd have a negotiation, for example, where you would precisely decide not to include some particular element in the negotiation.
Well, as a result of litigation, the appellate body may decide that, well, that's something that should have been resolved, and they'll made decisions in that. And I'll go through some of the details of all this as we go along. But what we've had now is a group of seven people who created a jurisprudence, if you will, a common law of trade. And they decided what the obligations ought to be and very often ignored the actual text, much in the way Federalist Society members would think of a textual analysis of a statute or of a situation.
So they basically have decided what they should do. They found some word here or there and then created a new obligation. And the results of this, I would suggest, although there hasn't been studies done to prove it, have been very substantial loss of jobs and of negotiating wins by the United States. So that's basically what I would like to say.
I'll give you an example or two. First, the United States, as you can imagine, has the biggest economy in the world, the most open economy in the world, an enormous, I would say, even unsustainable trade deficit with the world of maybe $800 billion. But yet, it's been sued by far more than any other country. In fact, it's been sued about the same amount as the next three most sued people at the WTO, just as the most open economy in the world. And in almost every single case where we were sued, we lost something, and usually something substantial. And I'll go through a little bit of that.
We have, it is true, brought more cases than other countries also. The gap is not as big, but it's substantial. But in those cases, almost without exception — there are a couple you could argue — but almost without exception, we got nothing that was of any consequence, nothing that really changed the nature of trade, that helped workers in factories or in services jobs sell more product overseas and have a better life.
So what I'm suggesting is we have a bad institution, I believe. It is one that is doing something it was not supposed to do. It has very little benefit to the United States to balance out what I consider to be a substantial harm from a variety of these cases, and I'll go through them a little bit for you.
So if you say, "What have we, in fact, lost?" A lot of the cases we've lost have involved our trade laws. And so one of the negotiations — and I don't want to bore everyone who's not a trade lawyer — but one of the areas we negotiated was, for example, anti-subsidy provisions that you can have in your own domestic law.
Repeatedly, those cases, when they're decided by U.S. courts and by the Department of Commerce and the United States Trade Commission have been overturned by the appellate body; interesting, usually not by the panels but by the appellate body who doesn't like trade laws. And they make up language. They actually cite to themselves rather than the text, if you can imagine, in their own 100-some page decisions. And the result has been that our trade laws, in many cases, are far, far less effective at protecting our workers from unfair trade.
They struck down provisions in the appropriations area. For example, there was something called the Byrd Amendment, where if you won a case, the company or the industry that was the victim could get some, or in some cases, all of the money that was collected. They struck that down. And they said, "Well, that really wasn't negotiated." But the point isn't that it wasn't negotiated. The point is that it was permitted because everything that wasn't clearly negotiated should be permitted.
They struck down tax provisions, if you can imagine, finding some word or some text here or there. They struck down country of origin labeling where you want to say, "Made in the U.S." or "beef is from the United States." They struck that down on some pretense or another. And I could go on, and on, and on. There are a lot of very, very strong cases. We have been sued so much across the board.
And if you say now, "But don't we win most of the cases we bring?" First of all, I would say I don't like judicial activism, whether it's on my side or it's not. That has to be our premise. And you start off -- in many ways we think of the Constitution as a contract. In this case, this is a contract. It's a specific contract that the United States -- every single word has been negotiated. And we even put in provisions like in the trade area. If there's any question, there'll be deference given to the country that brings the case, and even that has been sort of brushed aside.
But let me give you an idea. If you went to someone who likes this thing -- and I might say as a matter of fact, the United States has been blocking new appellate body members from being able to take office for the last several years. We now have none. And since about a year on, we haven't had three. So there has not been an effective appellate body. And I would say during that year and two or three months, or a little over a year, no one has missed it. It has had no effect on trade. It has had really no institutional effect at all. So the thing is gone now.
I say all this because somebody could bring it back very quickly by just agreeing to a bunch of these members. So it's gone now. The Trump administration has gotten rid of it. But it's like one of these creatures that you have to literally put a wooden stake in to actually have it stop.
So let's look at some of the cases. Here's one of the big cases. If you were arguing the other side, you'd say, "Well, we won a case against the European Union for subsidizing to the tune of billions of dollars," Airbus, in detriment to Boeing. That litigation is a classic. So it's a 15-year litigation, up and down. The final analysis was we won a small part of what we really should have won. The European Union has done nothing, not changed any of their programs at all.
We finally, after 15 years, got the authority to put in place some countervailing -- you would think of them as maybe some remedy to take back some of the trade loss that we had. And we're in the process right now of trying to do some kind of negotiation. And it turns out that we're not making much headway, largely because in the final analysis, Europe likes to subsidize airplanes. And that's another good example to tell for people to understand how this works.
There is no real payback in these litigations. So if you violated the rules, you litigate for 15 years. At the end of the day, you have 15 more years of subsidies. And there's no consequence to that. It's a kind of a nutty way to sort of enforce anything, anyway. And so the Airbus case is a classic. It's 15 years that we really have gotten absolutely nothing out of it.
There was a case called beef hormones where the Europeans were keeping certain amount of American beef out. That was a case that was brought in 1996. And it's one that the United States won the case. It's kind of popped along here and there. Every now and then, we get some kind of a small concession. But guess what? After all those years, Europe is still stopping U.S. beef from coming in that has hormones. I could go on and on.
There are some that are actually comical. We won a case on certain barriers to poultry that they have in India, which was trumpeted as a great victory. And then we turned around and saw they still have 100 percent tariffs, so we're not selling anymore poultry in India. It's having no real effect.
There's another example. We brought a case where China was stopping rare earths from being exported to the United States. And we won that case, and China got rid of the offending regulation. And guess what? Still doesn't sell, except when it wants to. It has had no real effect. And I could go on, and on, and on.
There are some, like involving electronic payments in China, where we won the case, got no concessions at all, and then, ultimately, got a remedy as part of our Phase One, our famous -- President Trump's famous Phase One deal with China. But I don't want to spend too much time on this. These are the various cases.
The wins -- there's occasionally one where you could argue it had some small impact. There was one involving industrial subsidies in China for certain demonstration areas that they had to get rid of. But it didn't really have any effect -- they had to get rid of the program, but it really didn't have any effect on trade, very small part of their industrial policy. So what we have seen is a bureaucracy kind of growing out of control, injuring the United States, in no way increasing trade with the United States or anywhere else in the world. And probably as bad, really shifting the focus of the WTO from negotiations, which is what it should be, to litigation.
So we've had no trade negotiations of any significance. We had something on trade facilitation, but that was really not as significant. We've had no tariff or similar kinds of negotiations literally since 1994. So it's become, basically, a litigation forum with a bunch of judges, appellate body members who are really not accountable. They're as often political people.
I guess the final point I'd make, there's nothing, really, the way this system works, you can do about it, except what we did, which is to say, "Just don't agree to new people," because in a democratic system, what you would expect is you could -- if the Supreme Court made a mistake, you would go to the Congress. You could find a way to correct the situation.
In this case, there isn't any such thing. Now, some people would say, "Just don't implement it," their decisions, but if you don't, then other people can take back other concessions that they've made. So it's almost like there's nothing you can do about it other than what we did, which is to say, "Just get rid of it."
So there's a lot to talk about. My real purposes is I think that so many of your conservative members would be offended by this if they knew about it. I want it to be on their radar screen. I want them to think about it. We don't need an appellate body like this. We don't need jurisprudence made by bureaucrats. We need -- you negotiate a text, you live up to the text, just like any other contract, and just like the statute and the way your members approach it. And this is as significant as the activist judges in the federal context, and I think we have to think about it that way.
So anyway, let me stop there and take your questions and other people's questions, Dean.
Dean Reuter: Well, thank you, Ambassador, for those remarks. You certainly have put a lot on the table, and I've got a ton of questions myself. One question I have, Ambassador, with regard to what you said already, and that is your characterization of the WTO as an activist body that views things as a living sort of document. Is there a consensus on that characterization in the international community? In other words, do other countries agree with that characterization? Do they encourage that, or would they push back against that characterization?
And then I'd love to hear you talk more about the path forward. You mentioned one possibility is just not staffing the appellate body, which seems to be working. But is there a more permanent or straightforward sort of solution to this problem?
Amb. Robert Lighthizer: So I would say, first of all, it's not -- so if you think of the appellate body, there's an appellate body and then there's the staff. We've gotten rid of the staff, for sure. But we've also gotten rid of the members. It just -- the thing doesn't exist right now. So I would say that.
On this notion, is there agreement that the appellate body has created jurisprudence, I'd say there's a growing agreement on that. Now, keep in mind with respect to most countries, they're just using it as a way to litigate against the United States. So that wouldn't be a negative thing from their point of view. In other words, judicial activism isn't a big deal if you're one of the ones who wants the judge to be active.
But I think there's a growing belief, understanding, that they are creating new obligations and getting rid of or reducing benefits. So I think there is a growing view of that. The United States in the Trump administration has led the way on this issue, but there's been a lot of criticism of the appellate body before us. You go way, way back, there has been rather constant criticism in Republican and Democratic administrations. And the first people, really, to push back against a nominee for the appellate body was actually the Obama administration. Early on in the Obama administration, they ended up letting an appellate body member go forward to fully staff the appellate body.
So there is a long-held belief in the United States that it's not functioning well. And there's a growing belief internationally that it's not growing well -- I mean that it's not going well. And the thing that I want to add to this debate is not just that they're doing something wrong, but also that there's almost no upside for the United States.
The United States really has gotten nothing out of this except in some very, very small situations. We bring cases and nothing happens. And what's tended to happen is people have brought different kinds of cases against us. If you can imagine, we've been sued many times more than China, sort of hard to believe. The Europeans have sued us much more, and the Canadians have sued us much more than they've sued the Chinese. So it's kind of a crazy notion that's going on.
But there's no -- it is both bad, what they're doing, but there's no real upside for us. There's a notion out there among people that don't really study this that somehow, "Well, you bring a lot of cases, and you win them, too." We bring a lot of case. We win something, but almost never has anything that you or that the members would say, "Oh, that's good for American workers. That's good for American wealth generation." Almost no example of that.
Dean Reuter: It's interesting. In your comments, you sort of fashion this as an appeal to Federalist Society members who are sensitive about the living Constitution, critics of it. I think your appeal is even broader, obviously, than Federalist Society members, to include a lot of people who might still put stock in a living Constitution, but when it comes to treaties and contracts and statutes, be more rigorous with the notions that text ought to be interpreted according to its own terms.
Amb. Robert Lighthizer: That's a good point. This is unambiguously a contract. It was not meant to be something that ties society together. This is just the United States saying, "We'll do X if you do Y."
Dean Reuter: Yeah, it seems to me that there's very, very little room for creative interpretation in that sort of document. And I think you get a lot of consensus around that.
You mentioned China. And I've been interested in China for years. And that seems to be a focal point of the President and trade policy. I'm wondering if you could spend a few minutes talking about the difference between President Trump's trade policy, in your views, and prior administrations.
And one thing really sticks out to me, and you mentioned subsidies. I'm not an expert in this area, but it feels to me that government subsidies from one side, from one business, is something to be avoided, or at least controlled and considered in whether or not there's a level playing field in trade. How do you figure that -- how do you account for that when you're dealing with a government that has wholly owned or essentially wholly owned enterprises? How do you even begin to talk about subsidies and fair trade?
Amb. Robert Lighthizer: So there's a bunch of questions, both stated and implicit, let's say, both stated and implicit.
I would say, first of all, how was Trump's trade policy different? I have had a very similar kind of a trade philosophy to the President for years, and years, and years. And we sort of incubated separately. He was a better megaphone than I did, but it's something that I've written and talked about for a number of years.
So I would say the two most significant things about the President's trade policy — and it really has been wholly different from its predecessors — I would say two things about that. One, this President believes that the objective of trade policy should be making life better for working people. That seems sort of obvious, except it's been the opposite of what we've seen for the last several years. Until now, really for decades, the objective was corporate efficiency, globalism, trying to make, I guess, and stated the best way from their point of view, trying to make consumer items cheaper, as if the fact that your t-shirt is a couple dollars cheaper, or your television is $30 cheaper, is somehow in and of itself a good.
And the result of that has been a lot of offshoring, a lot of disproportion between -- a lot of inequity in terms of distribution of resources in the United States. And what this President has said is, "No, the objective has got to be what's going to make lives better for working people? What's going to make communities stronger?" That's why, to me, I always say this is a conservative -- the Democrats, by the way, agree with me on a lot of these issues, but except for what I'm going to say now. They don't think it's a conservative policy.
But I think what we're trying to do is conserve, in the Burkean sense, conserve the kinds of values and communities that is what really made America strong. So that's been our objective. And you've seen it played out in the NAFTA renegotiation in the United States-Mexico-Canada agreement. You've seen a wholly different approach on there. You've seen a wholly different approach on the generalized system of tariffs and trade, and just how we've approached a whole variety of these things.
The President's view is we have to have a trade system that makes lives better for working people, and that means, in many cases, manufacturing jobs. Let's remember that maybe 60 percent of American workforce doesn't have a college degree. And those people, those people need to have good well-paying jobs. I always say that our trade policy is designed to have children be proud of their parents and parents be hopeful for their children so that we keep our communities together. And that really is what this trade policy is about. And the President's willing to take some heat about it.
And you'll get some inefficiency. Now, total inefficiency or swinging one way or the other obviously is not a good deal either. You'd become uncompetitive. But you've got to decide in any economic policy, indeed in any government policy, what's your ultimate objective? And for this President, the ultimate objective is communities for working people. That's what makes America strong. So that's the number one thing I'd say really distinguishes him from his predecessors. He's far less corporatist, far less globalist, and far more America first, take care of our communities, take care of our workers.
What some would say, the people who have been in the past, if they were a Democrat who was a globalist — and there were plenty of them, Ted Kennedy and all kinds of them who had that point of view — what they would say is, at the end of the day, "Let's take money from taxes and redistribute it to the people that we've hurt through our trade policy." That's what they would do. And they had freight adjustment assistance and a whole lot of other programs that are similar.
What some Republicans who are globalists would say is, "Well, let's retrain the auto worker so that he designs software. Or let's have him go back and get educated, take care of himself." So you have these two -- you have a singular, like a globalist trade approach, and then two different ways of dealing with the fallout, the unfortunate fact that a lot of people are not treated very fairly.
The President's view is, "No, let's start out so we don't create these people. We don't create a situation where these people are hurt like that." So that's the first big thing, the basic direction that you've seen in the President's policy. I think it has become and will become the absolute mainstream view among Republicans and, in many ways, among Democrats also. So I think it's something in which there's no going back. And you see a lot of our very best people. We have a lot of really good -- I always say, we have a great bench right now in the Republican party. Just a really -- we had a great President and a terrific bench that he's kind of brought along. And almost to a woman or man, they buy this idea now. It's a real credit to the President.
The second thing he's done, more than anything else, is what you just alluded to now, and that is that he's brought to people's attention the fact that we have a problem with China. And that is also something on which there is now more or less mainstream agreement among Democrats and Republicans. And I don't want to be partisan on this. There were a number of Democrats who were quite good at seeing this issue early on, also. But this President saw it in a way no one else did.
I would say right now, in our lifetime, the real tension is between two different systems. And there's a lot of lanes in these systems. There's the military, the geopolitical, there's the economic and the trade, which I'm involved with. And we have to -- the cybertheft, there's a lot of things going on in our relationship.
China wants to be number one in the world, and the United States wants to be number one in the world, and that creates a tension. And they have a very different system. They have a system that uses all the power of the government to help industry. Now, that -- you can see the pluses and the minuses to that too. Our view, yours and mine and I think most of the people who are watching and The Federalist Society members, would be the government is an inefficient allocator of resources and, therefore, that's a failed system. We'll see about that. But there are two very, very different systems, and that's the challenge.
In my lane, I have got to change the rules, which right now are very, very much in favor of China, create new rules that work for both of us and that certainly help America. We are the biggest economy in the world. We have the smartest -- we have the most innovative people. We have very hardworking people.
And so if somebody asked me, "What's the President's real contribution to this area, this very important area?" And for him, it's been a really, really important area of his presidency. His contribution is redirecting trade policy towards working people and awakening people to the fact that we have to deal with China.
And what he did is he challenged them on technology theft, and failure to protect intellectual property, and using the government to unfairly take advantage of our economy. Remember, we had a trade deficit that went from fairly small numbers in the Clinton administration to gigantic numbers by the end of Obama and early into ours because you can't turn these things around without a lot of notice. He challenged them. He put tariffs in place. After many, many meetings and a year and a half or two years of negotiations, we ended up with a Phase One deal, which is the beginning of having a more equitable relationship.
So these are the two things he's done. I'm very proud to have been a part of this policy. And I think that on both scores, it's going to be very, very difficult for people to turn this around. I think this is what Americans are going to do now, and going into the future, really expect.
Dean Reuter: Yeah, that's one of the things I want to give you a chance to say a little bit more about, and that's the future of U.S.-China relationships, and talk maybe a little bit about the Phase One trade deal. Thoughts on the Phase One trade deal and what that means for the road going forward?
Amb. Robert Lighthizer: I would say, first of all, let's realize, because we don't always get credit for it, we had a plan. The President had a plan from the beginning. This started, really, with him signing a directive to me in August 2017, really very early on in his presidency. And we have followed that plan. We have put out a couple of reports that I strongly recommend to people who want to get into this and care about it. We have our 301 Report on China and technology and the like, which is the basis for the tariffs we put in place. We tried to negotiate with China. And sometimes we had success, and sometimes we didn't.
We should keep in mind that when we say China, China's a lot of different things. So there are people in China who have a view that they want to get along with the United States. They want rules that work for both of us, and that they want a more -- not an open economy because that's foolishness, but a more open economy. And then there are others that go the other way and don't want to have a relationship with the United States. So it's a complicated situation we have over there.
But we had a bunch of negotiations that went on, and on, and on. We had an escalation of tariffs to the point that now we have tariffs on $370 billion worth of their products, really taking away the benefit of the technology theft and the unfair trade from them, in that respect.
So let's talk about the Phase One deal. It was signed in January of this year after more than two years of negotiations and difficulty. It's sort of hard to believe. It seems like it was a thousand years ago because we've had the intervention of this scourge. But it was just in January, less than a year ago. And what does it do? It makes structural changes. So it makes structural changes in technology transfer, in intellectual property theft, in financial services, in currency, in certain barriers to trade in the agriculture area. So a lot of real structural changes. Not enough, but a lot of structural changes. So that's one part of it.
Another part of it is we keep the tariffs in place, which is very, very significant in terms of the United States economy. And then a third part is they agreed to make certain purchases in a whole variety of areas, purchases which were designed to do two things. One, create customers for American farmers and workers, reduce the trade deficit, which we think is very significant, and create competition over there. So that's really what we had.
And the thing to remember is this is the first real agreement of its kind that's written down and that's fully enforceable. There's an actual enforcement mechanism. So it's an historic agreement. I'll give you an example, when I say written down. In 2015, the Obama administration had an agreement — you probably vaguely remember this — involving cybertheft with China.
So when I got in and we're starting to write up our agreement, I said, "Well, bring that agreement to me." I remember that when that was announced. "Bring it to me. I want to read it." They come back 24 hours later and say sheepishly, "Well, actually, there is no agreement. We had a press release, and they had a press release. There's no enforcement. No writing. No nothing." It's sort of hard to believe. You remember from your own recollection when that agreement was announced. There was no agreement. Was it a surprise it wasn't followed? There was literally no enforcement and no writing.
So this is a really significant -- we'll see how it plays out. Look, anyone who thinks that the difficulties between the United States and China in the trade area as well as in other areas has been resolved is crazy. This is something that's going to go on for a long, long time, both in the United States and China but also around the world. So it's a very, very significant thing that's going on. But this is an important first step, an historic first step. And I would say, in terms of their implementing their agreement in the structural stuff, they've done a pretty good job. The tariffs are still there, so that's 100 percent. And on the purchasing, it's spotty.
Now, in fairness, there has been this intervention, this economy-killing virus. But in the agriculture area, they've actually done about what they said. In some other areas, less so. And there's still time, so we'll see how all that plays out. But this was a really, really significant agreement, perhaps mostly because the President stood up to them, and stood up to the corporate interests that are on their side, and said, "No, we're going to fight for our model, our kind of capitalism, and the American workers, and, in fairness, the workers around the world who have this other view."
So it was a really, really big deal. The jury is still out. But it's indisputable that the President's the first person who's actually stood up and said, "No, this is not going on any longer."
Dean Reuter: Well, congratulations on getting a written agreement. We do have several questions from the audience. It looks like we're turning first to Daniel Ogden.
Daniel Ogden: That's right, sir. And thank you for doing a great job for the American people. I appreciate all the work you've done. I am curious as to what your view would be as to a Biden administration trade policy in general. And do you think that a lot of the things you put in place, particularly in regard to the views held by the WTO, whether that will continue? Obviously, I'm asking you to put on your prognosticator's hat here. But do you think the Biden administration will continue with the same approach towards China, same approach towards WTO, and some other areas? And maybe what that policy might be? Thank you.
Amb. Robert Lighthizer: Well, thank you, Daniel. That's a great question. And it won't surprise you to hear me say I honestly don't know. If you look at the Vice President's history on this subject, it's not one that's encouraging. I call the decision to let China into the WTO, the so-called "most favored nation," or permanent normal trade relation vote, the Uruguay Round vote, to coin the WTO and USMCA, as being the three cardinal sins from the point of the international trade for American workers. And the Vice President was on the other side of all of those.
Having said that, there clearly is a strong feeling now in the country and in the Democratic Party, I think, that we need a more worker-oriented policy and that we have to be hard on China. And there are a lot of people in there, a lot of people in labor and other people who supported him who agree with us, who think that we have the right approach.
So it's one of those things that remains to be seen. It'll be played out in his administration between him and Congress over a period of time. The corporate interests — and you've already seen it, the very large corporate interests, many of whom are very substantial contributors to the Democratic Party — those interests are already trying to unravel it. And you can get letters and all these kinds of things, and ads, and everything else. So there's a real effort to try to unravel it already, particularly on the side of China.
So we'll see. My hope is that they don't do it. My fear is that they will, more or less. So it's one of those things where the jury is still out. I could see it going either way. I know that we won't change. We're going to stand up for this position, regardless. It's not like we're going to go away. And a lot of the people in the Democratic Party agree with us on these fundamental issues.
Dean Reuter: Very good. We'll hear next from Juscelino Colares.
Juscelino Colares: Thank you, Dean. And thank you, Ambassador Lighthizer, for your tremendous work, the tremendous resiliency and base of your work the past three and a half years.
Corporate efficiency, globalism are generally ideas the United States has supported, and for good reason. We are the most liberalized economy. We have the most open markets. Yet, you and President Trump perceived, justifiably, that these trends in activism have also served to restrain the United States and therefore serve the interests of managed market economies like E.U. and Japan, as well as completely administered economies like China's.
You successfully renegotiated NAFTA and a number of other bilateral skinny agreements by relying on a number of statutory authorities, Section 232, 301, as pressure points on these other countries, yet at least 14 Republican senators want to get rid of these authorities. A willing Biden presidency is unlikely to veto changes to these statutes. What other leverage will be left for future U.S. Presidents who, like Trump, decide to renegotiate trade agreements if Congress gets rid of these authorities in an eventual Biden presidency? Thank you.
Amb. Robert Lighthizer: Well, yeah, thank you. I think that's an excellent question. I would say, first of all, the President has been very thoughtful about the way he's used the authority that we have now. And he's really, in many ways, created leverage by creatively using current statutes. And I know there are Republican senators who want to get rid of them. And there are certainly Democratic senators who wanted to get rid of them when President Trump was President.
My own hope is that there is no effective movement to do that. I think these leverage points are critical. 301 is absolutely essential to assuming that we have fair trade in the United States. 201, which is the safeguard action, basically protects workers in situations of enormous surges, and that's also important. The trade laws themselves are under assault in some areas. 232, which you allude to in which the President used to put in place steel and aluminum tariffs, are also under assault.
My hope is that the Congress does not make those changes. I'm inclined to think that they really won't at this point, but you can't be sure. And if you didn't have those leverage points, you would have -- literally, you'd be on sort of an autopilot towards the industrialization, more or less, in my opinion. And I find that very unhelpful. I think that the people that are the motivation behind a lot of this movement are people who are more interested in the global order and in corporate priorities than they are in working people.
And so I'm hopeful, not confident, but hopeful that the interest of the working people are going to prevail and that Democrats and Republicans on the thoughtful side of both parties are going to sit there and say, "No, we can't make these changes."
Dean Reuter: Let's turn next to Michael Maibach.
Michael Maibach: Hi, Bob?
Amb. Robert Lighthizer: Yes.
Michael Maibach: Mike Maibach. Good to see you again. I enjoyed our days together when I was at Intel Corporation. My question is, what's the status of the U.S.-U.K. Free Trade Agreement? Was there any consideration of adding them to the USMCA as a signature?
Amb. Robert Lighthizer: So as you say, we have a negotiation going on. I would say we have made some headway, not an enormous amount of headway. The notion of adding them to USMCA is tricky. In the first place, I have a view, myself, that the North American market is different, and that bringing ourselves together, for a whole lot of reasons, as a North American market is helpful, and spreading all over the whole world is less helpful.
There are some elements of it that would clearly be the same if we get an agreement with the U.K., and you know this very well. But a number of these elements are on which there's very little agreement, protection of intellectual property, financial services regulation, and the like. There's a lot of areas where we're very close with the U.K. There are some areas, and one of those would be agriculture, where they have a very closed system and, really, I think have the view that they can't really compete with us in a straightforward competition. So they have a lot barriers to trade and the like.
If you think about them entering in an agreement similar to USMCA, you have to ask yourself -- let's just take one very important innovation in the USMCA, and that's rules of origin in the automobile space. An enormous amount of our trade is automobiles. It just is a matter of fact.
And the notion in USMCA -- there were several notions, but one was we would require more of the car to be built in North America. And two, we'd require 40, or in the case of trucks, 45 percent of the car to be made with high wages; high wages, in my judgment at least, more or less being a proxy for "Made in the United States." It's hard to see how that model really plays out with the U.K. You'd have to make some kind of concessions because of the fact that we import an awful lot of cars from the U.K. We don't export very many.
But it's a negotiation I know that's important to the United States. It's clearly important to the United Kingdom. It's something that I expect to see continue, and we'll see how it plays out. There are still some big, big, big hurdles to that agreement. And those are some agriculture, but a variety of other things are substantial hurdles.
And also, I always had the view that you had to really know where the U.K. was with the European Union on Brexit before you actually could finish because the extent to which we have advantage in their market, to the extent to which that is offset by giving it to someone else, that affects the value of what we're getting in a negotiation.
So it's complicated. I do think that eventually there will be an agreement between the United States and the United Kingdom. My guess is that it's going to be a little different than USMCA. But I think it's important for both of us to get that done.
Dean Reuter: We've got a question submitted on the chat in writing. It takes you back sort of to your opening remarks, Ambassador, and I'll read it to you. "Is part of the reason China has been sued less frequently than the U.S. that the U.S. entered into more and more sophisticated international agreements that are subject to WTO and similar jurisdiction?" And then parenthetically, if China avoids agreements, they can't be sued based on them. So I'll give you a chance to respond to that.
Amb. Robert Lighthizer: Well, first of all, other agreements are not really in play here. I think I know what you're getting at. What you're getting at is when the United States is an original member of the GATT and then the WTO -- China joined in, really, 2001, and they had an accession agreement. And the accession agreement put certain limitations on which obligations they were taking. And that would make them less likely to be sued because they had fewer obligations. There is some element of that in what we're seeing. There are some obligations that they didn't take. But I would say that's not the primary reason.
I think the primary reason is, one, we are so open that everyone knows they can bring a case against us, and we're not going to give in, so they'll litigate against us. In the case of the Chinese, most people have the view that they won't do it anyway, so there's no particular reason to bring a case. Plus, they don't have a lot of trade with China -- I mean trade going into China. They have a lot of trade coming out of China, so they don't rub up against the rules. But I think, for the most part, people believe that it's going to be ineffective against China.
The kinds of things — and maybe this is what the question's really getting at — the kinds of things that China does, that is to say, this state version of capitalism, I would say state control of the economy, is something that really isn't covered by a lot of the WTO. And the result is that the WTO is kind of ineffective — I've made this point for years, and years, and years — at dealing this kind of an issue of state capitalism, of sort of massive state capitalism.
That's, to me, more or less, the reason that they have been sued less. People don't think they're going to get anything out of it. They're probably, in any case, a little but afraid of it. And then a lot of what they do is just outside of the purview of the WTO.
Dean Reuter: Well, very good, Ambassador. We've got about three or four minutes left. And before we adjourn, I do want to give you a chance to wrap up and see if you have any final thoughts before we adjourn.
Amb. Robert Lighthizer: Well, I guess my final thoughts are the same as my preliminary thoughts, and that is we have a lot of smart members in this Federalist Society. They care about these basic issues. They are, for the most part, I think, basic conservatives in the way that we're conservatives. And I hope that when they do their analysis and undertake the kinds of things that they criticize what's going on that they add to it this issue of the appellate body and the affect that seven people who really are unaccountable can have on our communities and our lives. And it's something that's not particularly important to trade.
It clearly has not been good for the United States. And I'd be very disappointed if we see the next administration roll over and just accept what was the situation before. That is to say, massive suits against the United States, basically losing all the cases, making changes in our laws, and getting very little out of it. You saw that in the case of the Obama administration, particularly at the end, they brought a bunch of cases. And it's now been several years, and I can tell you that, almost without exception, nothing happened with any of those cases. Not that they were foolish or bad cases. I don't mean to suggest that at all. It's just that nothing really happened.
There's another way to accomplish whatever it was that they wanted to accomplish, or you didn't win all the cases, or it was complicated. So there's far more at stake in the United States in having this system continue than there is any potential benefit. And then we put on top of that this whole notion of people not really reading the text and interpreting it but deciding what the jurisprudence should be.
So I want to welcome a bunch of the members to the fight. We need a lot of the young lawyers out there to have this be part of what they worry about.
Dean Reuter: Well, Ambassador, this is been very instructive. I certainly appreciate you joining us today. I'll give you my personal thanks, but thank you on behalf of The Federalist Society and its membership and its staff. We certainly appreciate it. It's been very entertaining and interesting.
I want to thank the audience as well for Zooming in, I guess, or calling in, as the case may be, and for your questions. A reminder to our audience to check the website, check your emails for upcoming teleforum conference calls, and other meetings. But until that next meeting, we are adjourned. Thank you very much, Ambassador, and thank you audience.
Amb. Robert Lighthizer: Thank you, Dean.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.