Leibowitz on Trade: The Confirmation Game

The confirmation game is a staple of policy in Washington. Occasionally, nominees are controversial at the outset and find tough sledding.  This time, a key example of this syndrome is Neera Tanden, nominee for the Director of the Office of Management and Budget. 

Katherine Tai is at the opposite end of the spectrum—respected, universally regarded as competent and professional, highly thought of by Senators on the Finance Committee, which has jurisdiction over the Office of the USTR (as well as Treasury).  Her confirmation hearing before the committee last week therefore was about the issues that committee members think are most important. The game, not to be overly critical, is for these Senators to voice their concerns and for the nominee to empathize with them but not say anything to limit their options once they take office after the full Senate confirms them. This ritual is easier for the nominee if she has broad support than if she is controversial.

Ms. Tai’s confirmation hearing largely conformed to this model. The questions ran the gamut of trade-related concerns. China was the issue that the most Senators raised, but other issues were widely discussed—including WTO reform, semiconductor trade and supply chains, agriculture exports, manufacturing policy, steel and aluminum “National Security” tariffs and many others. 

Ms. Tai indicated that China was at the top of the Biden administration’s agenda. China has not met the targets for purchase of U.S. goods in the “Phase One” deal negotiated at the end of 2019 with the Trump administration. More critically, a new approach to China appears to be in the works; but the details were not discussed in the hearing, in keeping with the rules of the “confirmation game.”  Ms. Tai handled several WTO cases against China’s trade practices during the Obama administration; that experience gave her key insights into the “opportunities and limitations in our existing [trade] toolbox.” While tariffs were imposed to retaliate against China’s practices that violated WTO rules, these remedies have not been enough to change China’s overall behavior.

WTO reform is more necessary than ever to preserve that international forum. Several Senators, including Rob Portman (R-Ohio), noted that the chief role of the WTO was as a forum for negotiation of rules governing trade in the 21^st Century. That has not come to fruition due to impasses between WTO member countries regarding trade remedies, environment, intellectual property and dispute settlement. Putting all this back on track will take the next four years and then some. In the confirmation hearing, no concrete plan of action emerged, consistent with the “confirmation game.”

Sectoral issues, including semiconductors, agriculture, the Boeing/Airbus commercial aircraft dispute (a struggle older than the WTO), steel and aluminum, fit neatly within the category of WTO reform topics. While the WTO has not yet found a way to handle these and a growing list of other conflicts, bilateral and regional agreements have taken the place of global negotiations. The U.S. has conducted negotiations with the United Kingdom, Japan, Kenya and other countries.  Whether those will be closed was not revealed, as one might expect—another example of the “confirmation game.”

Ms. Tai also commented on the steel and aluminum “national security” measures imposed by the Trump administration. She said that tariffs were “a legitimate tool in the trade toolbox,” suggesting that wholesale removal of these tariffs was not in the offing right away. But, perhaps significantly, she went on to say that global overcapacity in those industries indicated that “other policy solutions” were necessary. There can be no serious question that the unilateral Section 232 tariffs by the United States have not and will never fix the global overproduction of those metals.  What those “other policy solutions” might be was not discussed—another example of the “confirmation game,” which is a necessary feature of the policy-making process in present-day Washington.

In a comment that indicates commitment to address a specific problem, Ms. Tai said she knew about “many concerns” with product exclusions from steel and aluminum tariffs and quotas, which, she said, may be deficient in “transparency, predictability and due process” and that review of that system would be “very high on my radar.”  She committed to review the exclusion system, which is a major concern to steel traders and U.S. steel consumers.

The confirmation process will move on to written questions addressed to the nominee. A committee vote on the nomination will take place in March and the full Senate will probably vote on her nomination by early April.

USTR is at the center of trade policy formulation and implementation in any presidential administration. As in other aspects of our national life, progress on divisive issues has been disappointing, causing issues to pile up. Even “kicking the can down the road” has gotten more difficult. But with Katherine Tai, we know that a consummate professional of proven ability and wide support throughout the government will be a leader in developing practical solutions. She has played the “confirmation game” with skill.

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