U.S. Trade Representative Robert Lighthizer testifies before the Senate Finance Committee on March 22 in Washington. (Win McNamee/Getty Images)
U.S. Trade Representative Robert Lighthizer testifies before the Senate Finance Committee on March 22 in Washington. (Win McNamee/Getty Images)

Argument

You Live in Robert Lighthizer’s World Now

Trump might look like he's flailing on trade—but it's all going according to his trade czar's plan, which has been years in the making.

Last month, U.S. President Donald Trump’s trade representative, Robert Lighthizer, sat through two hours of grilling by Congress, fending off grievances about the Trump trade war’s effects on Alaskan salmon, Maine lobsters, and Delaware chickens. “Nobody is declaring war on Canada,” Lighthizer protested, even as he conceded that the use of Section 232 of the 1962 Trade Expansion Act to levy tariffs on steel and aluminum was premised indirectly on assessing that country as a national security threat. When pushed on whether he had this assessment vetted by the National Security Council, he demurred that doing so was the Commerce Department’s responsibility, not his own.

Lighthizer’s performance was consumed by such efforts to smooth the ruffled feathers of his congressional inquisitors. Mostly, this involved assuring lawmakers that progress has been made in negotiations with the European Union and trade partners such as Mexico and Canada, and dispelling the impression that new tariffs on China had “stirred up a hornet’s nest of problems in other parts of the world with trusted allies,” as one congressperson put it. And yet it would be a mistake to attribute Lighthizer’s obsequious performance to a lack of self-confidence. The trial lawyer known for having a life-sized portrait of himself in his home has never lacked for the latter. And unlike most others in the Trump administration, he has known what he wants to achieve, and how, from his first day in office.

The indications were there in his congressional testimony, in the way Lighthizer interspersed his defensive responses with declarations about his own philosophy on trade—one that he claimed to share with Trump. This philosophy of Lighthizerism deserves far closer attention than it has received, eclipsed as it has been by the approach of the director of Trump’s National Trade Council, Peter Navarro, which is flashier but ultimately less informed by policy experience. As a decades-long denizen of Washington, Lighthizer is more grounded but also less easy to place politically. Lighthizer’s is the economic philosophy most responsible for guiding the Trump administration, and he has ensured its influence for years, perhaps decades, to come.

Lighthizer’s work has culminated in the budding trade war with China, with the Trump administration poised, as of last week, to raise existing tariffs on Chinese products to 25 percent. But to call Lighthizer a “prophet of protectionism,” as some have, gives the false impression of an underlying drive for U.S. autarky, self-sufficiency, or withdrawal from global markets. Nothing could be further from the truth. Lighthizer speaks openly in favor of free trade, comparative advantage, and what he calls simply “economics.” “The basic philosophy that we have is that we want free trade without barriers,” Lighthizer explained to Congress at the July 26 hearing. He said that the Trump administration “wants to get to the position where the U.S. is competing with countries on a bilateral basis and on a no-barrier basis, and then let the United States, let pure economics make the decision.” (“I’ve heard of Ricardo,” Lighthizer snipped at Sen. John Kennedy (R-La.), who was straining to reassemble a parable about English cloth and Portuguese wine.)

Where Lighthizerism departs from standard free trade philosophy isn’t in its desired goals of open markets but in its commitment to using an openly politicized arsenal of weapons for achieving them. Since the formation of the General Agreement on Tariffs and Trade—the precursor to the World Trade Organization—in 1947, the dominant school of thought on international trade has favored multilateralism, or agreements between many nations where trade barriers sink collectively on the “most favored nation” principle. Lighthizerism scorns the multilateral approach in favor of bilateralism, or deals between two nations to lower barriers. Against the collective approach exemplified by the WTO agreement, which over 100 countries signed in Marrakech in 1994, he promotes a transactional one instead, proceeding deal by deal and case by case. “We’re not talking about a level playing field,” he said to Congress, “What we’re saying to the country is, ‘We’ll give you better access than the rest of the world, and you give us approximately an equal amount of better access.’”

To get to the endpoint of better access and lower barriers, Lighthizer sees little shame in the use of unilateral action. Executive orders, diplomatic pressure, and legal measures like the above-mentioned Section 232 are legitimate tools for unsettling existing arrangements and pushing partners to the negotiating table. Lighthizerism is no roadmap for retrenchment but a blueprint for recapturing what is seen as a lost edge for U.S. manufacturing on the world stage. It does not herald “the end of globalization” but a more aggressive phase of it. And far from shielding producers from the discipline of competition, Lighthizerism aims to deepen it.

We need to “make sure that market forces determine who survives and who doesn’t survive,” he explained to Congress. Paradoxical as it may seem, Lighthizerism sees trade wars as the road to freer trade. Yet even as the rhetoric cleaves closely to the end goal of open markets, Lighthizerism in practice reveals a deeper and arguably more consequential belief—that to beat what he calls the state capitalism of China in the market, the United States must emulate part of the style of its adversary and become a bit more state capitalist itself.

President Ronald Reagan and Prime Minister Zenko Suzuki of Japan begin talks in the Oval Office May 7, 1981, on a range topics, including the sensitive U. S.-Japanese trade relationship. (Bettmann/Getty Images)

Lighthizerism’s combination of sovereign action and free trade principles is no novelty. Nor is it quite the paradox it might seem. One could find its roots in the 19th century, when military expeditions opened markets for Western goods. Access to both Japan and China was achieved at the barrel of a cannon.

A more recent—and more directly relevant—analogue is the trade conflicts of the 1980s, which served as the crucible in which Lighthizerism was formed. Lighthizer’s career in economic policy began during this period, when U.S. policymakers routinely complained of trade deficits and the undercutting of U.S. manufacturing by distant competitors, and figures such as Walter Mondale predicted a dark future of Americans left only to “sweep up around the Japanese computers.” A native of Ohio born in 1947 who attended Georgetown University at the same time as eventual President Bill Clinton, Lighthizer served as a chief counsel for the Finance Committee under Sen. Bob Dole beginning in 1978 before being appointed a deputy U.S. trade representative in 1983, when he was in his mid-30s. He served as chair of the U.S.-Japan Investment Committee and helped lead negotiations over steel imports with Japan.

In this role, Lighthizer had a front-row seat for what the economist Jagdish Bhagwati calls the “aggressive unilateralism” used by the Reagan administration to combat new competition. The characteristic tool of this style of governing trade was Section 301 of the 1974 Trade Act, which allowed the United States to take retaliatory action against nations whose trade practices it deemed unfair or discriminatory. Rather than tariffs, the favored tool was the voluntary export restraint. While the primary targets were the rising East Asian economic powers of Japan, Taiwan, and South Korea, new special Section 301 measures introduced in 1988 were also used to threaten developing countries with retaliation if they failed to respect U.S. intellectual property provisions. Even as they broke with the (always fragile) consensus around multilateralism, such unilateral acts did serve specific U.S. interests, as the target countries often agreed to voluntarily restrict their exports to the United States to the advantage of local producers.

Bhagwati read President Ronald Reagan’s use of executive action on trade as a symptom of what he called “diminished giant syndrome,” where the United States lashed out in fear of its loss of industrial dominance. While he disapproved of the method, Bhagwati acknowledged that these actions often functioned in the interest of opening markets, because fear of being hit by the stick of unilateral action compelled smaller economies to negotiate and settle trade agreements with the United States. Bhagwati and the economist Douglas Irwin described the approach elsewhere as “the return of the reciprocitarians,” comparing it to the “fair traders” of the late 19th century in Britain who also hoped to use trade deals to open new markets. Some see the creation of the WTO itself as the product of a negotiation in which other nations were cowed by the threat of U.S. unilateralism.

Lighthizer returned to private law practice in 1985, and it’s easy to imagine the lessons he drew from his time in public office—namely, that aggressive unilateralism worked in international economics. Japan proved a pliant opponent—and one that, not incidentally, existed under the security umbrella of the United States, complete with a permanent military presence. Ever since, Lighthizer has worked to recode the Republican legacy on trade away from the model of multilateralism, which was indeed spearheaded by Democrats such as Cordell Hull, and toward the model represented by Reagan.

Along the way, Lighthizer’s own views have only hardened; the 1990s were an especially formative influence on Lighthizerism. In the mid-1990s, Lighthizer was the main economic advisor to Bob Dole in the run-up to his GOP presidential candidacy. Defending a challenge from their right against the staunch sovereigntist Pat Buchanan, Lighthizer and Dole supported U.S. membership in the WTO but also pushed the idea of a separate panel of U.S. judges to review adverse cases and back up the threat of a U.S. departure from the organization if it was not functioning to their pleasure. After the creation of the WTO, however, Lighthizer appeared to regret his decision. In 2000, he testified before Congress with fellow lawyer Alan Wolff that the organization’s power overreached and represented a dangerous ability to trump U.S. law while also being inadequate to correct other nation’s “unfair trading practices.” He effectively reversed his position from 1995 and sided retroactively with Buchanan against the WTO. After Trump’s inauguration, Lighthizer became the new U.S. trade representative, and Wolff became a deputy director-general of the WTO itself.

While Trump’s trade policy is sometimes compared to that of 1930s, an era of widespread fantasies of economic autarky, it is better understood (like so much about the current president) as a flashback to the 1980s. Lighthizer has been explicit about the comparison, even years before Trump’s campaign for president. In 2011, Lighthizer praised the reality television star’s “skepticism toward pure free-trade dogma” by appealing to his former boss. “The icon of modern conservatism, Ronald Reagan,” Lighthizer noted, “imposed quotas on imported steel, protected Harley-Davidson from Japanese competition, restrained import of semiconductors and automobiles, and took myriad similar steps to keep American industry strong.” The implication was clear: It was time to use the same playbook, with China playing the role of Japan.

Robert Lighthizer speaks with former Sen. Bob Dole (R-Kan.) during his confirmation hearing in the Senate Finance Committee on March 14. Lighthizer was Dole’s economic adviser during his 1996 campaign for president. (Bill Clark/CQ Roll Call/Getty Images)

The current crystallization of Lighthizerism can be seen as an attempt to restage the fight won against Japan and lost against the WTO. Many have observed correctly that U.S. discontent with the WTO is nothing new. The Obama administration had already blocked an appointment to the Dispute Settlement Board before Trump’s arrival. Voices including European Commissioner for Trade Cecilia Malmstrom and the Chinese themselves agree that the WTO should be reformed to account for the new reality of Chinese economic might and its eyebrow-raising record on protecting intellectual property rights.

What makes Lighthizerism distinctive is the way it frames the solution. It does not propose a remedy, as the Europeans, Canadians, and Mexicans do, in fine-tuning the multilateral rules. Rather, it suggests taking a page from the playbook of what it sees as its main adversary: Chinese state capitalism.

Lighthizer has been a vocal critic of the conventional wisdom about the democratizing influence of global trade that reigned from the mid-1990s until about a decade ago. In a 2010 testimony before Congress, he singled out Francis Fukuyama’s “end of history” argument for special contempt and noted that “U.S. policymakers had a profound confidence in the ultimate triumph of democracy and capitalism” after the Berlin Wall’s fall. “This confidence,” he said, “which can now be seen as hubris, encouraged many U.S. policymakers to believe that China would inevitably embrace democracy and capitalism.”

Lighthizer chided U.S. policymakers for assuming that “acceding to the WTO would cause China to become more and more Western in its behavior—almost as if it were merely a more exotic version of Canada.” The obstacle Lighthizer perceived was a cultural one. “China’s inability to comply,” he concluded, “appears to be the result of deep forces in Chinese life.”

In his testimony, Lighthizer referred to a contemporary piece by political analyst Ian Bremmer on the rise of state capitalism. In a 2009 Foreign Affairs article, Bremmer offered a shadow timeline for what has become known as the “rise of neoliberalism” since the 1970s. In Bremmer’s telling, the oil crisis early in that decade was a breakthrough moment for a trend toward the greater influence of states with intimate connections to corporate interests, with the state-owned oil companies of OPEC being the banner case. Whereas most historians would describe the decades that followed as a period when power tipped internationally from states to markets, Bremmer sees it differently. He argues that the economies such as India, Russia, Turkey, and Brazil that rose to prominence during the transformation of the global south and the post-communist world were united by an incomplete faith in the free market or the rule of law and a tendency to blur state and private interests. The rise of sovereign wealth funds in the early 2000s only deepened the fusion of public and private authority. The most important avatar of state capitalism was China, where the Chinese Communist Party used a high level of state ownership and support of private national champions to build up a domestic market to challenge traditional manufacturing superpowers.

The United States was the positive foil for Bremmer, the putative home of robust dedication to the rule of law and a healthy distance between public and corporate interests (the revolving door between Wall Street and Washington notwithstanding). Lighthizer appears to have taken Bremmer’s analysis very closely to heart and shares his concern that state capitalism offers an unfair edge in competition with those unwilling to emulate it. He has made regular reference to China’s state capitalism in his testimony before Congress as U.S. trade representative and emphasized its coherence. “They have a system, and their system is challenging our system,” he insisted in last month’s testimony. In September 2017, he called Chinese state capitalism “a threat to the world trading system that is unprecedented.”

The core of the Chinese threat is the loss of the U.S. edge in technology through what Lighthizer summarized in March as “forced technology transfer; of requiring licensing at less than economic value; of state capitalism, wherein they go in and buy technology in the United States in non-economic ways; and then, finally, of cybertheft.”

To confront the Chinese threat, the United States under Lighthizer has dusted off the toolkit from the Reagan years. A Section 301 investigation initiated in August 2017 was completed in March of this year, paving the way to the first round of tariffs at 25 percent on one set of Chinese imports and 10 percent on another. Just last month, Trump asked Lighthizer to look into more than doubling the 10 percent to 25 percent, a measure that could come into force next month. The Financial Times observes that the trade war with China is “only just beginning.”

What is Lighthizer’s game plan? The stated intention is to “protect our technology” by using the blunt instrument of tariffs until the Chinese changes its ways. “We want to get back to even,” he told Fox News Business in June, and “try to remove some of those structural barriers while at the same time opening up China.”

If Lighthizer’s goal is to counter the long-term vision of Made in China 2025 with a long-term plan to keep the U.S. edge in technology, he faces the crucial obstacle of time. This was highlighted in the most heated exchange of last month’s testimony, between Lighthizer and Democratic Sen. Brian Schatz of Hawaii, one of the youngest members of the Senate. “It seems to me we’re playing chicken with China,” Schatz observed, and “among [America’s disadvantages] are that they take a 50- or 100-year view. And we, because we’re a democracy, take a ‘every two years’ view.” The differing time horizon made the strategy of using tariffs to correct structural trade imbalances futile: “Why would you stare down a non-democracy?” Schatz asked, “How we have leverage in a situation where they have unending patience and we have almost none?”

This cut to the heart of Lighthizer’s philosophy—and it left him with no good response. He conceded the point later in the testimony when he said that the Chinese “do take a longer view, which by the way, I think is the right view. To the extent we can, we ought to be taking it. I realize we have a political system that makes it difficult, but nonetheless, the reality is an awful lot of our senior politicians do take a long view.” He added, “We’re going to have a problem with China that’s going to go on for years.”

Lighthizer’s mild Sinophobia manifests, as such intercultural attitudes often do, as a kind of China envy. It is only the apostrophized “senior politicians” (including, one presumes, Lighthizer himself) who are able to extend their time horizon as long as the Chinese. Lighthizer’s response also raised the question of whether his own philosophy is the opposite of state capitalism or a variety of it. Imposing tariffs by executive order performs the very detour around democratic decision-making that Lighthizer sees as the core of state capitalism and that, though injuring U.S. interests, has brought China tremendous wealth.

As a philosophy of economic governance, Lighthizerism, because it is structured around the idea of interstate competition, bends toward state capitalism. It reserves for government executives the sovereign right to decide when economic rules bind and when they do not. Democratic accountability is an impediment, from this perspective: an unfair disadvantage that the adversary does not share. A cynic might observe that Lighthizer’s flaw is taking one page from the book of state capitalism without going further and suppressing the cyclical process of democratic elections itself; this would solve Schatz’s “two years” problem and give the tariffs time to have their effect. But there is no sign that Lighthizer has any notion of going this far.

Even failing this last step, the rise of Lighthizerism suggests a new narrative of convergence—not to the hypothesized “end of history” that he so scorns, in which democracy and capitalism are imagined to flourish together harmoniously, but rather toward a globally minded state capitalism where aspects of the democratic process are routinely short-circuited in pursuit of a competitive edge. Whether this path will be taken might depend on the next round of that very confounding process of democracy in America’s midterm elections.

Quinn Slobodian is the author of Globalists: The End of Empire and the Birth of Neoliberalism.