As you can see from some of my recent posts, it's very difficult to get inside Donald Trump's head on trade. He says things, and it seems he can't possibly mean them because they are so outlandish, but maybe he does, and who knows what to think?
But perhaps it's possible to get inside the heads of some of the people advising Trump on economic issues. Maybe we could get more clarity from them. Steve Moore of Heritage and Larry Kudlow of CNBC have been both described as Trump advisers, and they talked trade with Ben White of Politico at the GOP convention last week. Here are some excerpts from the transcript:
White: I want to just stick with trade for one second. I know you’ve said you disagree with the candidate on the issue and you’re trying to push him in a pro-free trade direction. But when he talks about these terrible trade deals, specifically TPP is a terrible trade deal and he would do it differently, we rarely hear specifically what would be different, how he would do it differently. Are there one or two things that could be changed in say TPP that would make it acceptable to Donald Trump the free trader?
00:28:57 Moore: I think it really is going to come down to these Asian countries respecting our property rights and our patents. And what we produce more and more of in the United States is intellectual property. Silicon Valley is producing intellectual property, software. And our drug companies, we’re creating world-class drugs and vaccines. We produce them at some time, correct me if I'm wrong about this guys, you’re great economists. We sometimes spend billions of investment dollars to produce these things. They’re high-class. We send them over to China. The first thing they do is figure out how to duplicate them and they produce them and they’re not paying us for it.
00:29:37 And how can we have our industries competitive if they’re stealing our technology? So that’s one example of the kind of thing that has to stop.
Now, everyone in the trade field will recognize that IP is an issue that the U.S. pushes constantly, and while there may be slight differences between administrations and parties, the approach is not that different. Maybe Trump would be more Orrin Hatch than Barack Obama on IP? If so, that's not much of a difference, in my view. So nothing radical here.
Here's more later, when Larry Kudlow joined the conversation:
00:44:08 White: No, no, no. I want to take advantage of your being here just to let you talk a little bit about—I know you’ve been working with the Trump campaign on trade and on trying to move them, nudge them towards a freer trade positions, you know, while recognizing that they are legitimate things he would like to do differently. Where are you in that process?
And what I really want to get at is when he says that the TPP is a disaster and should be changed, he never says what specifically should be changed. What is that thing? What are the trade deals we’ve done terribly that need to be done differently? And I know, I mean, you’re an ardent free trader.
00:44:40 Kudlow: I am. So is Steve. And, look, the TPP has a lot of things wrong with it. Not only the reduction of foreign tariff rates and non-tariff barriers, which in many ways is highly inadequate, in my view. But also there is decision-making processes by various commissions or whatever we call them, that will not be made by the United States.
White: Isn’t that true of every trade deal that we’ve ever signed?
Moore: That’s a problem. That’s a big problem.
White: So we need to get rid of NAFTA?
Moore: Well, more bilateral trade makes a lot more sense, in my opinion. But I don’t know; what do you think?
There are a few things here. First, Kudlow wants more reductions to foreign tariffs and non-tariff barriers. That should sound good to free traders, if it could be achieved (maybe in exchange for getting rid of additional U.S. trade barriers that were not covered by TPP).
There's also the issue of "decision-making processes by various commissions." Here, there seems to be confusion about how trade governance works. If people are afraid of global governance by a "TPP Commission," they just don't understand the system. The TPP Commission is described in Chapter 27: "The Parties hereby establish a Trans-Pacific Partnership Commission (Commission), composed of government representatives of each Party at the level of Ministers or senior officials. Each Party shall be responsible for the composition of its delegation." So, the U.S. will be on this Commission, and could block the 11 other countries from doing things it did not like, not that the other 11 would try anyway because that's not how these things work. (Beyond this Commission, there are also dispute settlement panels, of course, but if you want to enforce the rules, on IP and other issues, you kind of need those.) So here, some trade specialists probably just need to sit down with Kudlow and Moore and explain how trade governance, commissions, etc. work (or, often, do not work).
Finally, Moore says bilateral trade deals make more sense (Trump has been saying similar things). But why is that? 11 separate trade deals between the U.S. and the TPP countries -- there are already bilateral deals with some of them -- make more sense than one overall deal covering everyone? That one is kind of a mystery to me. I'm not sure what Moore means or what benefit he sees to bilateral deals.
Now more from Kudlow:
00:45:18 Kudlow: I think Steve is right. I mean, look, I had this conversation—I don’t know—a month ago on a radio interview and with Speaker Ryan about this, who is an ardent free trader. And they had just completed, I believe, this new customs enforcement bill. It hadn’t been—I believe with Senator Ron Wyden was—and, you know, in that bill, somewhat like current law but maybe better, the United States, under the aegis of WTO, nonetheless has the right to sit down with a trading partner and discuss broken rules. All right? And if the rules are broken and if promises are made and they’re broken again, which happens a lot in trade history, then the United States has the authority to enforce them, which might mean then, frankly, what the speaker said to me that day on the air, tiny targeted tariff penalties.
00:46:26 It’s not our first choice. I think Mr. Trump does not want to see a wall of tariffs. He’s kind of pushed that rhetoric aside in recent months. But President Reagan did it; I was there. I actually fought against it and lost. President Clinton did it. President George W. Bush did it. President Obama did it.
00:46:51 So we have to stand up for the interests of this country. And in many of these deals, those interests are ambiguous, they’re blurred, the decision-making process is ambiguous. And I think what Mr. Trump is just trying to say is, the United States is a large, sovereign country who intends to make decisions on these matters in the interests of the U.S., the U.S. economy, and the U.S. workforce.
00:47:23 Moore: And this was what Brexit was all about. Right? People want sovereignty; they don’t want international people at the World Trade Center or, you know, whatever, WTO to make the decision for us.
White: And this would—I also assume we’d have to rip up every trade deal we currently have.
00:47:35 Moore: No. Look, I’m not—personally, the one thing I kind of disagree with Donald Trump on is on NAFTA. I think NAFTA, for the most part, has been a—I don’t know if you agree or disagree, but I think NAFTA has been a very positive thing, especially for Mexico, and it’s really stabilized their economy, but.
00:47:48 Kudlow: I basically do too, by the way. And I think—look, I can’t predict the future on any of this stuff. Nobody sitting here can. But my sense is there are gradations of problems higher and lower. I mean, look, Ben, for Christ sakes, you look at what China does. I mean, it’s outrageous. Okay? And intellectual property rights, counterfeiting of goods, cyber hacking into our—
White: Although TPP is not a deal with China.
00:48:17 Kudlow: I understand. But I’m just saying, unfortunately, that’s the model. So you have to keep—look, I know a lot of free traders in Congress who are very unhappy with TPP, not in theory. In theory it’s good. And by the way, strategically it’s very good, in my opinion. But in terms of the specifics, practices and so forth, look, these boards, these international board—God help us from international boards. Okay? God help us in that. You know, I served—
00:48:48 Moore: That goes with this ludicrous, you know, climate change deal too. We should have—
White: We’re not going to get down the rabbit hole of climate change.
Moore: But that’s a big economic issue too.
Kudlow: I’m just saying Mr. Trump, without getting specific, he just will argue for the sovereignty of the United States and the interests of its businesses and workforce.
In this last part, both Moore and Kudlow both seem pretty pro-NAFTA and pro-free trade. The worry about "international boards" seems to parallel the earlier talk about "Commissions." Again, I think there is just some confusion here about how the system works.
So there you have it. Some high level Trump economic advisers have views on trade and trade agreements that seem mostly positive, with a couple areas where they could use guidance from trade specialists. But that doesn't help with the question of whether Trump will be listening to them.