Biden Needs to Consult New Lighthizer Trade Book

As President Joe Biden heads to California to meet with Indo-Pacific leaders on Wednesday, his administration is scrambling to shore up support for a new Asia trade pact that even some Democrats have expressed reservations about. With tensions between the U.S. and China continuing to escalate, former United States Trade Representative Robert Lighthizer’s recently published book, No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers, has proven both prophetic and instructive.

There is a saying that high office attracts two types: those who want to be someone and those who want to do something. It is clear from Lighthizer’s career that he falls into the latter category.

After graduating from Georgetown Law School, landing a job with the late Senator Robert Dole, then Chairman of the Senate Finance Committee, and then serving as Deputy U.S. Trade Representative under President Ronald Reagan, Lighthizer would have found it easy to parlay those connections into a series of lobbying roles selling the benefits of free trade and deregulation. That was the path so many others in Washington, D.C. traveled at the time, and in the decades since.

That is not the route Lighthizer took. Never forgetting his upbringing in Ashtabula, Ohio, just outside of Cleveland, Lighthizer went into politics because he wanted to do something. That something was, in his telling, to fight to protect America and American workers from the policies which had devastated cities like Ashtabula across the Rust Belt.

Starting in 1985, Lighthizer spent much of his life fighting a campaign to make America’s leaders actually put America first when it came to trade.

Lighthizer was not a protectionist by instinct. He felt trade was important. But trade had to be fair. America’s leaders, by abandoning efforts to ensure that the globalized system was fair, had not only abandoned America’s interests, but undermined the healthy global economy they purported to champion.

Lighthizer’s new book is in one sense a memoir. But it differs from typical memoirs by former senior officials and politicians in the same way that Lighthizer differed from so many of his contemporaries and colleagues.

Political memoirs in general are first and foremost about the author. In Lighthizer’s book, the biographical segments fill in needed context, nothing more. He explains how he came to Washington and what roles he held, but the purpose is not to chronicle the story of Bob Lighthizer.

Rather, it is to explain why he came to the conclusions he did about international trade, and why the reader should adopt them. Unlike many former officials, he is presumably not interested in selling himself for future office or business endeavors. At 75, it’s clear from the text that his interest is in his country. To the extent he is concerned with a personal legacy, it is to persuade others to continue the work he started, rather than in assuming maximum credit for his achievements.

Lighthizer’s tale, then, is not about himself, but about America – and how America’s elites and leaders let down their country by failing to understand that free trade requires an even playing field that never existed anywhere in the real world.

Lighthizer devotes ample space to chronicling the history of how America’s ruling class went wrong. Instead of using America’s economic weight and geopolitical leverage to enforce a playing field where everyone could benefit from international trade and globalization, U.S. leaders acted increasingly as cheerleaders for greater globalization and international commerce in general, rather than the interests of the United States in particular. In fact, they seem to have assumed that increased cross-border trade was a positive in and of itself and were repeatedly willing to sacrifice America’s own position and interests to increase trade volume globally.

Outsourcing, the decline of America’s manufacturing sector, and persistent trade deficits were not the natural consequence of competitive advantage or free trade. Nor were they solely the fault of other countries abusing the system by subsidizing their domestic markets, exploiting loopholes in American laws, and exploiting institutions like the World Trade Organization (WTO). Those things were only possible because for two generations American leaders allowed or even encouraged that behavior, right down to creating new loopholes foreign nations could exploit.

As recently as 2016, Lighthizer notes, a Republican Congress passed and Barack Obama signed a bill allowing up to $800 in goods to be brought into the United States duty free, effectively allowing Amazon and Chinese sellers (by shipping goods directly to consumers from China) to flood the U.S. market without tariffs, oversight for drugs like fentanyl, or even paying the taxes American competitors had to pay.

Lighthizer has been called a protectionist, but he challenges the premise of protectionism. Along with a brief biography, his book contains an abbreviated history of trade. Lighthizer makes the case that free trade requires reciprocity.

As he explains, in the 19th century, the United Kingdom, which was the first to industrialize and dominate the oceans, was a major advocate of free trade, because it would allow British products to be dumped abroad, undercutting less advanced local competitors. In turn, the United States and Germany heavily protected their markets, allowing for the creation of industrial economies which eventually overtook Britain’s.

What Lighthizer stresses, however, was that it was not merely the decision of the United States and Germany to protect their economies that aided them in overcoming the British lead. The British persistence in continuing to push free trade on ideological grounds, even in the face of lack of reciprocity not just by competitors such as Germany and America, but even barriers erected by London’s own dominions such as Canada, left British manufacturers at a disadvantage.

Lighthizer grasps an element of the traditional story on trade that is often missed: the predominant power in the global economy might well benefit from free trade, but if it pursues free trade as an end in and of itself, rather than using its predominant position to force others to open their markets, it will soon see its predominance fell. The United Kingdom chose to lower its own trade barriers rather than use them to bargain for access to the German and American markets. It was overtaken by both.

For Lighthizer, the years since the Second World War, but especially since the 1990s, have seen the United States repeat the errors of the British Empire. Until he 1940s, the U.S. generally tried to insist on parity. If the U.S. was going to lower its tariffs on goods from a country to 12 percent, it would expect that country to do the same. After the Second World War, the U.S. increasingly abandoned a policy of maximizing its advantage in bilateral negotiations in favor of making unilateral concessions on tariffs without requiring reciprocal action.

Initially, this had a legitimate geopolitical purpose, as Lighthizer concedes. Faced with the prospect of Communist aggression, and an Asia and Europe devastated by war, the United States was more concerned with strengthening the economies of Europe and Japan than it was with profiting from them. The American economic position was so overwhelming, and the economic position of the rest of the world so weak, that the concessions seemed to pose little economic threat to the United States, while a hardline stance might lead allies to slip into communism.

This policy was a geopolitical success. By the 1970s, Europe had rebuilt itself into a prosperous, politically stable continent whose prosperity undermined Soviet power in the Eastern bloc, while Japan had if anything become an economic challenger to the U.S. At the same time, South Korea, which had been the poorer, agriculture-dependent twin of industrial North Korea in the 1950s, was now a manufacturing powerhouse, largely through government support of Chaebols, or firms backed by Seoul with subsidies and protectionist policies.

Arguably, the policy had been sufficiently successful that it could have justified a pivot to more equal trading relations. This appears to have been the intention of those who framed the 1962 Trade Expansion Act, which created the office of the U.S. Trade Representative (USTR) and tasked it with promoting “open and non-discriminatory trading in the free world; and to prevent communist economic penetration.”

The problem arose with the latter clause of this mission. While the USTR was charged with challenging “closed and discriminatory” trading practices in the “free world,” how were they to balance the priorities when their counterparts warned that opening their markets might pave the way for communist infiltration?

Lighthizer, as Deputy Trade Representative under Ronald Reagan, tried to prioritize the former mission, to create “non-discriminatory trading,” when it came to partners such as Japan. Japan was so successful that the idea that they might fall to communism if they were unable to dump Toyotas or Nintendo products in U.S. stores tariff free was laughable.

When it came to Europe and Canada, however, Lighthizer encountered an obstructive tactic that would become familiar to U.S. officials throughout the Obama administration. Those countries accepted the fact that, in principle, their trading practices are unfair, but maintained that abandoning those policies would cause them domestic difficulties which would undermine other American interests. In other words, America’s allies convinced credulous American leaders that unfair trade which disadvantaged the American economy and American workers was actually in America’s best interest.

For decades, until Lighthizer and Trump put their foot down in 2018, Canadian governments insisted that allowing U.S. dairy products into Canada would provoke Quebec to secede, and then expanded the argument to justify any protectionist measure Ottawa wished to take. European leaders became masters of presenting their prosperous welfare states as on the verge of collapse in the face of a never-ending series of threats that ostensibly would lead even the most minimal U.S. pressure to risk causing the collapse of the American-led free world.

In the 1980s, the Europeans argued that they need to buy off socialists who wished to adopt a neutral approach to the Cold War. In the 1990s, Europe insisted it needed more favorable trade policies for the re-integration of Eastern Europe. In the 2010s, Angela Merkel convinced Barack Obama that if Germany was not allowed to work with Chinese telecom providers, her chancellorship might be swept away in a populist backlash.

These arguments are still used today. The Biden administration abandoned a 17-year case against the European Union’s subsidization of Airbus, which has undermined Boeing’s position in the global market and cost tens of thousands of American jobs, because of the need to “repair” trans-Atlantic relations. This is to say nothing of a situation, which Lighthizer notes has lasted for decades, in which the European Union’s average tariffs on American goods have been set at 11 percent while America’s tariffs on European goods have averaged 2.5 percent.

The problem, as Lighthizer notes, is not primarily about an ideological belief in free trade. Almost everyone, including Lighthizer and Trump, favor some form of “free trade.” Nor is it that advocates of free trade such as Barack Obama, or even Bill Clinton, did not acknowledge that free trade does not exist, and that the barriers which exist under the institutions the U.S. has pushed for disadvantage Americans in numerous ways.

Rather, the problem is that American leaders have concluded that U.S. geopolitical interests are more important than American economic interests, sometimes justified on the basis that American political hegemony rebounds to the benefit of Americans economically, and therefore is worth paying for in the form of steadily more disadvantageous trade policies.

This would be bad enough if it manifested in a willingness to indulge the parochial interests of Canadian, European, and South Korean parochial interests. What has made it catastrophic has been that the geopolitical premise has turned out to be false.

In Part II of this review, I will Lighthizer’s telling of how he and Trump sought to correct that grave error after decades of economic pain inflicted on the American middle class.

Walter Samuel is the pseudonym of a prolific international affairs writer and academic. He has worked in Washington as well as in London and Asia, and holds a Doctorate in International History.