Conversation with Former USTRs

This transcript is from a CSIS event hosted on May 12, 2025. Watch the full video here.

John J. Hamre: Welcome, everybody. My name is John Hamre. I’m delighted to have everybody here. I remember the days when we’d have a trade conference and we’d – we could host it in one of the small seminar rooms, you know, but nothing like today. I mean, now we’ve had the biggest news possible, and it’s really nice that the Treasury secretary would make news for our conference today. I mean, we got a lot to talk about.

And I think that it has transformed – you know, the trade agenda has been transformed by the president. It’s now front and center. And we all have a lot to learn. I know I do. I try to spend a couple hours a day getting up to speed, and I realized how little I know. And that’s why this conference is going to be so valuable because we have six of the most remarkable trade intellects in town that are going to be here with us and give us all some elucidation. And I want to say thank you all for taking the time to be with us. I can hardly wait to hear what you’re going to say. (Laughs.)

So, Bill, let me turn to you. Bill Reinsch, who is the Scholl chair here, and he’s the moderator, he’s going to get us going. Bill, turn to you.

William Alan Reinsch: Well, thank you very much. And welcome, everybody. Ironically, we’re a couple minutes late because everybody was in the backroom listening to the president, who was talking about many things but one of them was one of our topics tonight, which is – or, this morning – which is China.

I had not planned lengthy introductions for them. You know all of them. They all have had distinguished careers of their own. And I realized if I had to introduce each one with their resume, it would take 20 minutes and we don’t have 20 minutes. So I’ll just introduce them as Carla Hills, Mike Froman, Susan Schwab, Charlene Barshefsky, and Rob Portman, all former USTRs in both Republican and Democratic administrations. And we’re delighted that you came back. CSIS has been doing this for – on and off for at least 20 years, and I think the last time was probably 2022 or 2023 so it’s been a while. And we skipped the election cycle deliberately, but it’s nice to have them back. And there’s certainly no shortage of things to comment about.

I had a plan – (laughter) – and, as with a lot of things with this administration, reality gets in the way of the plan. The plan was to start with the big picture and then drill down from there. But I think, given the events of actually this morning – three a.m. our time it turns out, nine a.m. Geneva time, the press conference about China – I think maybe we can start – let’s start with a couple minutes on China and get your quick take on that. And I’m going to ask Ambassador Schwab to start because she’s read the fine print. There actually is a fact sheet out as of, what, an hour ago, maybe, and a joint statement. So could you start us off a little bit with what you think happened and what you think of it, and then we’ll – (laughter) – then we’ll let the – then everybody else will chime in?

Susan Schwab: Well, I would say that I discovered that everything that I had heard on the radio and television up to the time USTR put out their statement this morning was somewhat off. Thank you, USTR, for putting out a statement. USTR’s statement, I’m sure you all – I mean, this crowd is so inside the Beltway in so many ways that it’s sort of add 30 percent – add the 10 percent reciprocal tariff and the 20 percent fentanyl tariff on top of what was in effect on April 2nd – the morning of April 2nd, or in essence what was in effect April 8 and 9 but what was announced the afternoon of April 2nd, and that’s kind of what you have. No change in IEEPA, Section 301, or Section 232, which is just such a weedy way to start this. (Laughter.)

And on the Chinese side – and on the Chinese side, they’re also at the – at that 10 percent, quote, “reciprocal” level. And it looks like you had a group of adults go to Geneva this weekend and try to figure out how to make some – at least for 90 days some sense of what has happened and how they move forward, because shooting yourself in the foot just is not a great – is not a great approach to trade policy.

Mr. Reinsch: Charlene?

Charlene Barshefsky: So I don’t pay all that much attention to what the particular tariff rate is – we were talking about this back there – because it’ll change 10,000 times between now and 90 days from now, and it’ll go up, and it’ll go down, and China will commit some infraction or the U.S. will commit some infraction, and it’s like scrambling eggs and unscrambling, scrambling again, so on and so forth. I think it’s good that both sides climbed down from the ledge, particularly good that the U.S. climbed down. I think both recognized time to get back to managing the relationship as opposed to trying to transform the relationship, which will be claimed but will not happen in that way and certainly not on any durable basis. And most of all, I think it’s good that the two sides recognize that they each have interests that actually do overlap, one of which is not to decouple.

Let me make one comment about that. Bob Davis came out with a great book. They interviewed administration officials dealing with China starting with George H.W. – so the father – and all the way through, including Trump 1, and the consistent theme amid all of these presidents was, first of all, to engage with China. The expectations differed as administrations went on, but they all engaged with China. They all tried to describe the China relationship in a word or a little kind of cute phrase – not so cute, you know, “enemy,” “competitor,” a “managed competitor,” a “hot competitor,” a “rival,” an “adversary.” Each used a different word and kind of geared policy toward that word, which in every case was unfortunate because it narrowed policy choices in doing that and you lose the nuance. They each felt trading with China was important and vital for the U.S. interest. They were all against decoupling, all of them. And they all focused on derisking, which is to say protecting national security. It was just very interesting to see this kind of consistency through every administration whatever the press releases were. There was a consistent series of themes, and it’s good to keep that in mind as we go through this 90-day period.

(As an aside.) Hey, Ron.

Carla Hills: How you doing?

Ronald Kirk: I’m good.

Mr. Reinsch: Better late than never. Ambassador Kirk has joined the group.

Who else wants to comment? Let’s talk bigger picture about China. Are we – is this going to accomplish anything? What should we be trying to do? Rob?

Rob Portman: I thought Susan’s comment was interesting saying the adults showed up in Geneva and on both sides, and I think that’s true. I think Secretary Bessent and Jamieson Greer, who all of us know – our successor – you know, they’re thoughtful people. They’re trying to get to the right solution. To Charlene’s point, Secretary Bessent actually said we determined we should not decouple. He didn’t make the second statement, which I think he would as well, which is but we need to derisk on certain strategic sectors. And I think you’re right there’s sort of a consensus about that.

One thing I will say is, Bill, to all of us who are here, we all dealt with China, and most of us made an agreement of one kind or another. For me it was a textile agreement, which Susan will remember as deputy when I was there. Very tough negotiators and very frustrating. And if Hank Paulson were here – I hate to speak for Hank, but I’ll channel him a little bit; you know, he’s been very interested in the relationship and encouraging us to stay engage – but he’s also frustrated with some of the commercial, whether it’s IP theft or whether it’s subsidies, and sort of the stubbornness of trying different ways, including sending a product to a third country and then have that product come outside of the tariffs that were rightfully, you know, in place because of a countervailing duty or antidumping case.

So it’s not easy to deal with China, and so I agree with Charlene the devil’s in the details. We’ll see what happens over the next 90 days – (laughs) – because they’ve very clever and they will try to figure out ways to continue to have this great U.S. market for them. And I applaud Secretary Bessent and Jamieson Greer for taking the lemons and making some lemonade because I didn’t think, frankly, they would get as far as they have. And we’ll see, again; the jury’s still out in terms of the next 90 days. But I think it’s important we have a relationship, Bill, but important that we also protect our strategic interests. And particularly post-COVID, we have the sense that the supply chain does need to be, you know, derisked.

Mr. Reinsch: Mike, you want to say anything?

Michael Froman: Well, I agree with what’s been said. I think – I think it’s good that the two parties are really trying to now manage the relationship and climb down from what was, I think, a very strict, high period of escalation where I think both sides – China saw that its exports were falling off a cliff, and the U.S. saw that shelves could be empty and small businesses were beginning to close because they couldn’t get access to important inputs that they couldn’t immediately replace here in the United States, and that was beginning to have an effect.

I think the challenge is the continued uncertainty around where we’re going. So we have 90 days. I fully expect there will be a significant inflow of imports as people try to build up inventory to avoid what might happen after the 90 days, to make sure there are toys on the shelves for Christmas and inputs as much as possible into the manufacturing processes.

Mr. Reinsch: Which is exactly what happened in January, February, and March.

Amb. Froman: I think that – I think that’s right. But if you’re a business right now, you don’t know, OK, what is the supply chain that I’m going to be able to rely on going forward. And so you’ll make a number of short-term decisions, but you may not make the decision yet to invest in rebuilding your supply chain in the United States because the 30 (percent) could go to 10 (percent) or the 30 (percent) could go back up to 50 (percent) or a hundred (percent) down the road. And so the sooner there’s clarity around this, I think, the better for everybody, including for the president, who has laid out his objectives of trying to reindustrialize the United States, trying to incentivize more production in the U.S. And I think for that to happen there’s got to be some degree of clarity over what the tariff regime is likely to be, at least for the medium term. And medium term is more than 90 days; it’s probably several years that it takes companies to really think about making that kind of capital investment in production or in reorienting their – reorienting their supply chains.

Mr. Reinsch: OK. Let’s –

Amb. Schwab: Can I just add one thing?

Mr. Reinsch: Please. Sure.

Amb. Schwab: I assume one of us would say this, but I think it needs to be said, which is the challenges that we have with China have not gone away. And what was agreed over the weekend does not address them. So, I mean, that was sort of implied by Mike’s comment, but I think we have to put that on the table. So –

Mr. Reinsch: The – please.

Amb. Kirk: Can I add one thing?

Mr. Reinsch: Well, both of you. We can go to both of you.

Amb. Kirk: Forgive me for being late, but as we’ve said over there this is horrible for the country but it’s been good for business with clients.

Amb. Schwab: (Laughs.) No.

Amb. Kirk: But to me, I do think we have to broaden the conversation. I know we’re focusing on trade, but the ambassador’s point is real. The challenges with China are real. They are long term. And I don’t think we can approach this singularly from a trade standpoint. If we’re going to be in the reality of a(n) economic cold war with China, this is not the time to be disinvesting in American higher education, and particularly in research and advancement areas, uninviting the most talented young people from around the world. I think that has – the conversation has to be broadened, that that’s always been a part of our magic sauce, is our investment, decoupling of higher education, research, the best talent from all around the world giving us that competitive advantage.

Amb. Barshefsky: I agree with that.

Amb. Schwab: Yeah. Totally.

Mr. Reinsch: Carla?

Amb. Hills: Well, I agree with what has just been said. What has occurred, in my view, is a small – very small step forward in trying to reduce the uncertainty that has created turmoil in our markets and an uncertainty among our businesses. As you could see from the stock markets this morning, the fact that it was reported that the tariffs had been lowered, the stock market went up 1,000 points. And that doesn’t tell you that you have a beautiful blueprint for the future – not at all – but it does suggest that maybe the two parties could sit down and, as you have said, Ron, the – make another step forward, and then another step forward. We have to give more attention to the fact that we live in a big global market and we cannot isolate ourselves, either as an economic proposition but, in my view, as a security proposition.

Mr. Reinsch: OK. Let’s – we’ll come back to China because you can’t – we can’t have a conversation without it; it pervades everything. But let’s return to the script and go back to the big picture for a minute. Collectively, you all have a range of experience that covers more than 35 years, multiple administrations, both parties. And all of them, really, I think were in the era of globalization – of increasing trade, increasing trade liberalization, increasing global market integration. So I guess combining a couple questions: One, what are the biggest changes you’ve seen during that period? And is the era that you all served in over, and have we moved into a different era? Who wants to be brave? Senator?

Amb. Portman: Well, three thoughts.

One, trade continues to be very robust. (Laughs.) You know, if you look at the data, despite what I will say second, you know, globalization is here and it’s here to stay. And the United States has not increased our trade as much as the rest of the world has as a percent of our GDP, but the data – I checked it again this morning just to be sure I’m not missing something – I mean, people are trading, and goods and services are moving across borders at historic levels.

Second, I think with regard to the United States and most of the European countries, and perhaps less so in the rest of the world, but there is a movement toward more populism and more nationalism, I would say. So it’s not just populism, but it’s a sense of America first or Europe first or – you know, it’s Italy first or whatever. So that’s a reality, Bill, and I think that’s something that has led to less liberalization and even some pullback on liberalization. But it really hasn’t slowed down trade.

Third thing I’d mention is that the United States, you know, we had a pretty good record of conducting trade agreements that lowered tariff barriers on both sides, and we have 20 such agreements. It comprises about 10 percent of global GDP. And I checked the numbers again this morning: Yes, we send 47.9 percent of our exports to that 10 percent of the world. Now, Canada and Mexico make a big part of it – make up a big part of it, but the point is it actually works to reduce barriers by having these agreements.

And I’d love to hear from my colleagues on this, but I think we’ve just gotten away from that. And we seem to be focused a lot on putting the leverage in place, with regard to these higher tariffs. Again, I think it looks like it’s working with China relative to where we were a couple of days ago. But the real solution, not for China at this point but for other countries around the world – I think of Japan, I think of what we just started down the road with the U.K. on, I think of the EU, is free trade agreements. They actually work for us – in the interests of our workers, our farmers, our service providers. So I think globalization is here, and it’s here to stay. And the question is, how is it structured?

Amb. Barshefsky: Can I make a comment, or you go ahead.

Amb. Froman: No, please.

Amb. Barshefsky: So I think the biggest change for me, without question, is the actions – are the actions of China and the U.S. So here you have the two hegemonic powers. China is a supply chain manufacturing hegemon. The U.S. is a financial hegemon. And both are economic disruptors. Both are coercive powers now. I wouldn’t have said this about the United States a year ago. Both are coercive powers. Both bully. Both want a different world order. They’re using the same tactics, but moving in opposite directions, with China propelling itself forward, broadening, diversifying relationships, becoming economically critically important in every single region of the world by a wide margin. And the U.S., using the same tactics that China is using, is extracting itself, retreating, moving backward, creating a series of vacuums into which China has inserted itself.

To what end? Where are we going? What’s the point? China knows where it’s going. It’s had a long-term plan. This has been articulated in every five-year plan for the last 40 years, 45 years. Where is the U.S. going with this? What is the place in the world we want? Second? I mean, is that really right? Maybe it is. But the only point is, there’s no anchoring of anything we’re doing in a policy outcome – a distinct policy outcome for ourselves. And more than that, we are, I think we could probably all agree, destroying the very system we helped to create, which has been so enormously positive for the United States.

Amb. Froman: I’m going to jump in there, because I agree and slightly disagree with – I thought I would make it interesting now.

Amb. Barshefsky: Yeah, yeah. (Laughter.)

Amb. Froman: With Charlene. Look, I think – I think one thing we’ve seen over the years is that China – the multilateral trading system that, as Charlene said, we did so much to put in place, really was not well-suited for a country as big and as well integrated as China, that was following a different set of rules. And all of us in our various ways, as the senator said, negotiated with China to try and get them to change their behavior. You know, we would lecture them about don’t be protectionist, don’t restrict foreign investment, don’t engage in industrial policy and subsidization that could distort world trade. And I’d say, with some humility, that we’ve all been, you know, only modestly successful, I think, at influencing Chinese behavior.

As a result, I think rather than China becoming more like us, which was the expectation, we have become more like them. And we’re now engaged in protectionism, in restrictions on foreign investment, and in industrial policy. And to Charlene’s point, I think the question is, can we do it as well as they do it? My guess is probably not. That we don’t have as much of a consensus, for example, around industrial policy, and the capacity to mobilize state resources behind one sector after another the way that China does, or the discipline that they have around that. So are we now competing on their set of rules, as opposed to them competing on our set of rules?

And I think it does raise real questions about the future of the multilateral trading system, because if you have the two largest economies in the world basically following their own set of rules, what’s left to the rest of the multilateral trading system? Will the rest of the countries of the world maintain it amongst themselves, but without 50 percent of the global economy, or 40 percent of the global economy? Or will they begin to fray at the edges as well, and begin to pursue their own set of actions – unilateral actions, their own set of rules as a result? And think that’s the inflection point that we’re in.

Mr. Reinsch: Anybody else?

Amb. Hills: Yeah, I would just –

Mr. Reinsch: Go ahead.

Amb. Hills: I agree with Mike, but I think it’s an opportunity that we have seen in our policies in the past and going forward. No question that we have become more like China than China has become like us in economic policy. But we backed out of the World Trade Organization. The World Trade Organization was set to create rules that the trading partners would agree to and follow. And we – really, we were the problem in backing off. Instead of taking a more aggressive stance in upgrading the rules and creating a mechanism for enforcing those rules, we said, no. We walk – we walked away from the World Trade Organization and destroyed its dispute settlement mechanism. Big problem, in my view.

And so what to do in getting back is not to adopt more policies that those who don’t believe in free and open trade have adopted, but rather to join hands with like-minded nations and to reinvigorate the World Trade Organization in the same fashion that we reinvigorated the General Agreement on Tariffs and Trade. It can be done, but it takes leadership. And if we fall back and adopt a policy of tit-for-tat tariffs, we will simply become much less influential, prosperous, and proud of our history.

Mr. Reinsch: Susan.

Amb. Schwab: So I’m assuming we’ll come back to the whole WTO issue, because some of –

Mr. Reinsch: It’s next, yes. (Laughter.)

Amb. Schwab: OK, good, because some of what Carla said I agree with it, and some I don’t. I’m going to put another big difference on the table during this – during the period of time where I think all of us have spent time in trade policy. And that is the functionality, or lack thereof, of U.S. trade policy and U.S. trade law. U.S. trade law was set up with some particular underlying assumptions, not the least of which was, starting in 1934, that the members of Congress needed protection from protectionist constituencies. Therefore, you delegated – we delegated to the president, who would always be more free trade oriented than the members of Congress, all sorts of authorities to raise barriers to trade. All that all that authority was delegated to the executive branch, away from the Congress that, under Article One Section Eight, actually owns that authority.

Meanwhile, the authority to negotiate market opening, Congress held that firmly in hand and would only jealously delegate it bits and pieces from time to time. Ergo, there is no authority right now, and has not been any authority for an extended period, to negotiate market-liberalizing agreements. So we may criticize the current administration for only using carrots, and that may be their – I mean, only using sticks, and that may be their instinct. But they don’t actually have any carrots, because Congress hasn’t delegated that authority.

Mr. Reinsch: Well –

Amb. Kirk: Let me – can I –

Mr. Reinsch: Please, go ahead.

Amb. Kirk: And I’m going to take this from the – and I agree with everything that’s said, particularly the senator, but with he and I having been elected, I’ll take it more to the political, and trying to ever be the optimist. At least the pain of this, and confusion of the last 90 days – and I’m saying this, you know, as the designated Democrat – at least right now everybody thinks – everybody, except for the guy at 1600 Pennsylvania – thinks tariff might not be such a good word. And you don’t often have Democrats out criticizing tariff policy, which they are now. And as challenging as labor can be on trade issues, those longshoremen now out in California understand the reality of this. Those machinists at Boeing understand the harm of this.

And so I will say, it has created an opening for a different conversation about what that trade policy ought to look like, that while tariffs may be bad but the idea of the U.S. having access to other markets is a great way to support those jobs here, which drives that populism that you’re talking about. Because if you can’t – I still would maintain, and we went through this, Mike – if we can’t explain trade to the average family in terms of how it not only benefits them in terms of reduced costs, but it contributes to employment of their kids, then we’re going to be on this wheel just spinning around.

And so I do think, for all the pain and confusion, this has created a political opportunity for a different conversation about how a smart trade policy can contribute to our growth and particularly in employment.

Mr. Reinsch: Well, let’s put – I’m going to postpone the WTO for a second, despite what I said a minute ago. Since Congress came up, I want to turn to Senator Portman, who’s the one of you who served in both the House and the Senate. Two of us were staff, but that doesn’t count. It’s being elected that counts. (Laughter.) And he also has to leave a few minutes early, so I want to turn to him and say, talk a little bit about how the role of Congress has changed, from your – in your – from your perspective. Since the time you were there, and since the time you were in USTR, and subsequently. Have they really surrendered their authority? And is that a good thing or a bad thing? (Laughter.) If it’s a bad thing, how do we get it back?

Amb. Portman: Yeah. I was thinking as I was driving over here today that Carla and those who have been around for a while seeing Republicans and Democrats take positions on trade might be a little surprised to see now it’s the Democrats saying, you know, tariffs are terrible. (Laughter.)

Amb. Hills: Unbelievable.

Amb. Portman: That was always our role. (Laughter.) So we’ve kind of turned upside down, haven’t we? But, yeah, I mean, Congress has very generously delegated its authority. And people say, oh my gosh, how can the president do all this? And my answer is, well, it’s because Congress let him, in this case, do all this. Because even under IEEPA, which is going to be litigated, there is tremendous power. Now, whether it’s enough to accommodate what he is doing under IEEPA is yet to be seen. And I think, frankly, that that might be a case where IEEPA has been misused.

Two-thirty-two, on the other hand, you know, we tried to pass legislation four or five years ago on 232. I had legislation. Pat Toomey had legislation. We couldn’t get Congress to move on it, including a lot of Democrats who thought, you know, they wanted President Biden to have some of that authority. So I think 232 is probably a pretty safe ground for them. And you see they’re moving a lot from the exclusion sort of type products – think of pharma and, well, steel and aluminum, certainly, cars, these are all now under 232 – aircraft, to the Boeing machinists. And so we’ll see what comes out of that.

They give 270 days to do an investigation and a report. They can do it in – you know, in two weeks, if they want to. And I think they might do some pretty quickly here. So I think, yes, there has been a significant delegation. And the president is taking advantage of that, as previous Presidents have. Is it good or bad, Bill? I mean, I think Congress’s fundamental role under Article One, which was talked about a minute ago, is essential to hold onto. And under TPA, you know, we have a way to streamline it and to make sure that we can get, you know, a quick result.

I wouldn’t say that President Biden and President Trump did not move forward with trade agreements because they didn’t have TPA, because they never requested TPA. And if they had requested trade promotion authority we could have had a serious debate. And I think it could have passed. Why do I say that? Because despite, you know, the previous 20 or 30 years of us passing, whether it was NAFTA or other – even CAFTA, by the narrowest of margins, USMCA was a broad bipartisan agreement. And so I think it showed that there is a possibility of getting Republicans and Democrats together.

Kind of to Ron’s point, we did a better job explaining why this is important to the American worker, and farmer, and service provider. So, you know, I think we need an administration that asks for the authority, and then, as I said earlier, you know, we send half of our exports to 10 percent of the world. And we also get a lot of economic liberalization through these trade agreements. They’re good. And I’m concerned we have moved away from that, particularly over the last five years.

Mr. Reinsch: Anyone else? OK. Let me – just footnote here. You mentioned IEEPA. And this is for the lawyers in the group, which I think is most of you. The president has used IEEPA for the April 2nd tariffs. You’re right that most of the sectoral ones are 232s. There are, at least as of last Friday, seven lawsuits pending on the IEEPA issue from various parties, various sources. Do you think – do you think he’s going to win? Or do you think that the courts are going to constrain the use of IEEPA in the way that the president is using it? Sort of a legal question, if anybody wants to.

Amb. Schwab: I plead non-lawyer. (Laughter.)

Amb. Barshefsky: Yeah, really. The most sensible one in the group.

Amb. Froman: I just play one on TV. (Laughter.)

Amb. Barshefsky: Yeah, exactly.

Amb. Kirk: So do I. (Laughs.)

Amb. Portman: I’m recovering, so.

Amb. Barshefsky: I think it’s hard – yeah, I think it’s very hard to know. It’s not a very well-written statute, in the sense that you could read it as unconstrained authority and very broad definitions of economic emergency. You could read it in an entirely different way, which is to say a more restrictive way. What really is an emergency in that sense? I think it’s kind of a toss-up, frankly.

Amb. Froman: I don’t want to relitigate the pains and troubles of trade promotion authority, having been, I guess, the last one to go through that process, with the senator. But I just would say, I think we need to move beyond thinking about traditional free trade agreements. Because whether – USMCA I think was an important moment of bipartisan consensus, but it also involved, to be frank, various parties in Congress giving up long-held views on issues that they had previously held up trade agreements over. So I think it was a particular alignment of politics there that made that made that possible.

I think we need to find other ways of engaging our allies and partners on international economic cooperation beyond just free trade agreements. Because we spend far too much blood on TPA, let alone actual trade agreements, at a time when we need – to Ron’s point, we have a special sauce here, which is the American innovative ecosystem. You know, the fact that we have great universities, still, R&D, risk capital, rule of law, deep capital markets. The fact that every entrepreneur in the world wants to build their company in the United States.

And we have not figured out yet how to make that a tool of our – in our toolbox of international economic cooperation. And you can imagine clubs of countries coming together to say, you get to participate in this amazing, innovative ecosystem if you work with us on this economic security issue, that economic security, that foreign policy issue. And turn what is a unique asset of the United States into a much more powerful tool.

Amb. Barshefsky: I think, if I could just say, I think that would be ideal. I don’t know if this administration is the administration that will take that same tack. But I do think that we may not want to do free trade agreements. We may not want to ask for TPA. And having been through a TPA fight, we didn’t call it TPA at the time – (laughs) – I would never want to do that again, ever. But the rest of the world is integrating. And we’re at a competitive disadvantage, period. And, no, I would just say, so we may be retreating or retracting. We may have our own special bilateral little whatever it is by country.

But the rest of the world is moving in a very different direction. Global demand will be moving in a different direction. And the accessibility to us on a competitive basis of the rest of that global demand is called into sharp question if we’re not sort of organizing our tradable economy in a way that ensures our competitiveness and in a way that ensures we continue to have access to the markets we want access to, on a nondiscriminatory basis. That’s not the direction we’re moving in at this point.

Amb. Portman: And, Charlene, just quickly, that’s the central point here, is that other countries are moving forward. And so there have been dozens of trade agreements in the last four or five years. And we’ve done none. Probably China has done dozens alone. They’re as deep as ours. To Mike’s point, I disagree with you in terms of giving up on this idea of, you know, Congress allowing the administration to negotiate agreements.

I agree with you that they don’t have to be traditional trade agreements. They don’t always have to be the gold standard, which is going to zero on everything, because that’s not likely to work. But I think there’s a way to do it and to get us back in the game, because we are losing market share. So if two countries have an agreement, a bilateral agreement or a multilateral agreement for that matter, and the United States is left out you see the trade deficit begin to increase. It’s increased about 40 percent in the last four years.

Mr. Reinsch: Ron.

Amb. Kirk: And, Charlene, I agree with you. We have no way of knowing what the courts are going to do on IEEPA. I mean, it is interesting, if you look at his funding, the lawsuits that so many of them are funded by the Koch brothers, clearly a conservative group. (Laughter.) I mean, but we don’t know.

My question, and, Rob, I’m curious from you, is to your point. Given – if any of us were in office during our time and they’d say, oh, we have an agreement, we would have had some agreement that would have come under some structure and with some input from the House and the Senate. Is the administration now essentially obviating the necessity for TPA? Because they’re just announcing that we’ve got agreements.

We take for granted – we don’t know what they’re going to look like. And we just get another executive order saying, we’ve agreed to this, we’ve agreed – is that going to be the template going forward? Will Congress rebel against that? Because there’s – I mean, I don’t know what structure we’re operating under now, other than, you know, whatever we – whatever comes out Truth Social at 2:30 in the morning. But is that the new template, the administration just goes out and does it?

Amb. Portman: Well, first, you raise a really interesting point, because, you know, where is the line between these agreements that are – tend to be bilateral, and a trade agreement? Trade agreements tend to be, as you know, comprehensive and deal with all the sectors, and they tend to provide a lot more benefit, in my view, to the United States, because you have more export markets. But this has always been true, Ron.

You think about it, you know, back to the days when 301 was first established by Dick Gephardt and probably Danforth was involved, with Susan and others. I mean, and people – and administrations after administration have used it. President Biden used it to continue the tariffs on China. So it’s always been out there. But you’re right, it’s accelerated and expanded. (Laughs.) But it still doesn’t do what – to Charlene’s point here about restructuring trade – it doesn’t give us that advantage that we need globally.

Amb. Froman: Well, a lot of the – broadly I think Congress has kept the authority to reduce tariffs below MFN, but not to raise tariffs. And they’ve given that to the executive. And so these executive orders, as long as you’re raising tariffs, seem to be well within their authority.

Mr. Reinsch: I want to give – Carla, you wanted to –

Amb. Hills: Right. Well, I would say that we may not be looking forward to traditional trade agreements. But keep in mind, as a country that is governed by rule of law as a general proposition, we need to have an agreement to deal with the issues that we have with other countries. And we’re not going to be able to be just the little country with two oceans on either side of us. We need to work with other countries. And the question is, how do we get to do that? And I was interested in just three weeks ago the Chicago Council on Global Affairs came out with a very detailed survey about how Americans feel about trade. And it’s dramatically changed from a low of 34 percent to a high of 58 percent in favor of trade, and the need for trade.

So that we have an avenue, I think, of trying to work on this to get some rules. There are a number of likeminded countries that want to return to the certainty of having rules that govern international commercial activities. There is no question that we are better off when we can work with other nations. If you look at the statistics of our former trade agreements and the opening of markets, whether it’s with Mexico or with Europe, they have shown that our GDP goes up and that the benefits flow. So it’s something that we need to work on.

And that probably means going local. Get out of Congress and go to the mayors and the locals to see that you continue to educate the view of Americans of the value of open markets with rules. And then, enforce those rules. Just having a rule doesn’t make it happen. You have to enforce those rules. And there, we have been woefully, in my view, negligent. So there is an avenue forward.

Mr. Reinsch: Sue.

Amb. Schwab: So I think there is a real potential there for the kind of unusual, or what we would now think of as nontraditional, trade agreements that we’ve been alluding to, that Rob’s talked about, that Mike was talking about. The more comprehensive kind of trade agreements, whether they’re bilateral – or we haven’t talked as much about plurilateral trade agreements – but I think, you know, the agreement among the likeminded, I think the potential clearly is there. The question is, where is the authority? This is the conversation we’re having.

And I would say the reactions that we’ve seen from our administration have not been in reaction to the IEEPA litigation. It’s been in reaction to the markets and small and medium-sized businesses saying, holy cow, look at what these tariffs are going to do to our economic wellbeing, and employment, and so on. So let me put on the table the thought that this administration could accomplish something truly historic and get whatever the successor to TPA is through Congress. In a way that, you know, call it a Nixon to China moment – God help us – but, you know, something that another Biden administration certainly could not have done, and other administrations probably could not have done.

But they could get, if they wanted, I would opine, authority to negotiate agreements that were broader and deeper, that had both carrots and stick opportunities. They might be defined differently than what we’re used to, but that would be an interesting challenge. And I would note, and this is, again, quite weedy, but I give the administration credit on the negotiations they’re doing right now. Some of you may be aware of this. Most of you probably aren’t and don’t care. But they are using the private sector advisory committee process for consulting as they’re going through these negotiations.

So these are the, you know, the private sector advisors that are both industry, labor, environmental groups, and so on. These are the cleared advisors. So they are using some of the processes that are in law –

Amb. Portland: Mmm hmm, U.K.

Amb. Schwab: For the U.K., or for – you know, for the ongoing negotiations. And I give them a lot of credit for tapping into that, because that private sector advisory committee process is, in a way, a bridge between the executive and legislative branches. It’s a way of getting input that is more in real time than, say, Federal Register notices. So I give them credit for trying to get input from unions, from private sector, you know, from businesses, from environmental groups, and so on.

Amb. Kirk: I’m having a hard time giving them credit for putting out a fire they started. (Laughter.)

Amb. Froman: The arsonists calling the fire department.

Amb. Schwab: Exactly.

Amb. Kirk: I mean, if they listened to any of these groups beforehand –

Amb. Schwab: OK, they’re doing it now. They’re doing it now.

Amb. Kirk: We never would have had 145 – this is – this isn’t anything we’ve learned from the second kick of a mule sort of territory. (Laughter.)

Amb. Froman: I think the discussion of authorities, I think, frankly, is a distraction. Because I think what we’ve seen over the past is that when the four leaders of Congress are behind an agreement, you can get it done.

Amb. Barshefsky: Exactly.

Amb. Froman: And when they’re not – I mean, Nancy Pelosi can stop an agreement that’s under fast track. USMCA can get done without fast track, and without paying any attention to TPA. And we saw in the battle over TPA that some of the most pro-trade members of Congress ultimately felt like they needed to vote against it, just because of the politics. And so I think it puts people in a very difficult position when you don’t have anything to vote for you can bring back for your constituents other than authority. I think it’s a big distraction.

Amb. Barshefsky: Exactly. I’ve argued – sorry – I’ve argued for many, many –

Amb. Portman: Mike, let’s at least try it.

Amb. Barshefsky: I’ve argued for many, many years that it’s much easier to get a trade agreement through when you can point to tangible benefit. When constituents come into their congressman or their senator to say, I need that agreement or I won’t be competitive any longer, and I’m going to close a factory of 1,500 jobs. That’s much more compelling than asking a congressman or senator to vote for a bill which presents a theoretical opportunity that there may be a trade agreement in the future, unspecified, with the following countries, unspecified, covering the following. That’s much more difficult.

Ms. Schwab: So, Rob, would you like to talk about what happens in the United States Senate when a bill like that comes to the floor, under House rule?

Amb. Froman: Well, like USMCA? Like USMCA?

Amb. Schwab: OK, but that was – that was –

Amb. Froman: Because that was outside TPA and got through with a bipartisan support in a timely fashion.

Amb. Barshefsky: Right.

Amb. Portman: Because that was a –

Ms. Schwab: That is a different – that was a different –

Amb. Froman: Well, that’s – my point is if when you’ve got the four leaders of Congress–

Ms. Schwab: Yes, and that raised barriers rather than lowering barriers, but that’s another conversation.

Amb. Kirk: But we can’t ignore – I mean, we keep going back to the rule of law. I mean, the overriding issue is does this administration believe in the rule of law? Because it’s not just trade that we withdraw. It’s everything. And do we believe in unilateralism? Because it’s trade. It’s the G-20. It’s NATO. It’s climate change. And so, I mean, we’re, you know, at risk of being this hardy band of, you know, trade believers – (laughs) – while the rest of the house is burning down. But, I mean, we’ve got to make, you know, the best of a horrible situation.

Mr. Reinsch: Well, let me pursue that – let me pursue that for a second. Because one of the characteristics of the agreements being negotiated now are, one, they violate the various agreements we’ve entered into, the 10 percent baseline tariffs –

Ms. Schwab: Details, details.

Mr. Reinsch: It rides roughshod over our FTA agreements, among other things. But the other thing that’s interesting is, if you look at the U.K. agreement, for example, these are all preferential deals. You know, the concessions the U.K. made is they made just to the United States. The concessions the United States made were just to the U.K. So has MFN disappeared? And do we care?

Amb. Kirk: Well, thank God. Hundreds of people are breathing a sigh of relief that their Rolls-Royce won’t go up by 45 percent. (Laughter.)

Mr. Reinsch: I’m not in that income level, so.

Amb. Kirk: Yeah. Neither are the majority of Americans. But thank God you can go get your Rolls.

Mr. Reinsch: You’re going to stand up for MFN aren’t you? (Laughter.)

Amb. Portman: I think the U.K. –

Amb. Hills: If we want to fix the system, we’ve got to educate our American people about how the path forward would make a difference. And that means go local. With all due respect to our Senate and our House, we have become polarized. And it’s too much of a vote based upon a fast survey of what the locals think. And so when we had difficulty in getting trade promotion authority in the Bush senior administration, we went to the mayors. We went to the governors. We went to those that know that agriculture is key to their constituents, or that the making of automobiles is key to their constituents. And they bubble up and affect what the views are in Washington. But we’ve slowed down in doing that. And I think that’s a big mistake.

Mr. Reinsch: Rob.

Amb. Portman: Well, I’m going to comment on a couple of these things. But, one, with regard to TPA, what’s enormously helpful, obviously, is you’re not nickel and diming the agreement with different amendments. So you’re told, this is an up or down vote. And I would just make the obvious point that in the wake of USMCA, what an opportunity. I mean, Mike’s right. We didn’t need TPA there because we had the votes. And, you know, instead of taking that opportunity, we retrenched. And that’s my point. In the last five years, we had an opportunity, I think, to establish many trade agreements that would enable us to be competitive. Instead, we got blocked out of countries because they cut agreements with other countries, other third countries. So I think that’s our opportunity going forward.

And to Mike’s point about the traditional trade agreement being difficult to accomplish, I actually agree with that. I think there can be some flexibility as to what a – what a trade agreement that is a U.S.-backed trade agreement looks like. We always have insisted, again, on our gold standard, everything goes to zero. That may not be appropriate, because in some strategic assets we care – we care a lot more. And other sectors we may care less. So I’m – my hope is that, as part of what comes out of this, is that we’re encouraging a more traditional, in a way, approach to trade, but also one that is consistent with what I think the Trump administration is trying to do, which is to lower trade deficits and actually increase our exports.

Mr. Reinsch: Mike.

Amb. Froman: You asked whether MFN was dead and whether we care. And I think my answer is, yes and no; that I think it is dead because – and I think we’ve gotten limited tolerance for free riders, and MFN has allowed – you know, this is an economically suboptimal outcome, by the way. We all know that MFN creates more efficiencies. But I think the reality is, is that there’s very little tolerance for giving countries that don’t participate themselves and don’t put their market access on the table the same access that we’re willing to pay the political price for granting ourselves. And I think, frankly, MFN has probably slowed down negotiations precisely for that reason. Countries have been less willing to engage in market-access negotiations knowing that they would have to give those benefits on a MFN basis. So I think, unfortunately or fortunately, while it may be a suboptimal outcome economically, it might be the most pragmatic solution going forward to proceed without MFN.

Mr. Reinsch: Carla?

Amb. Hills: Well, I don’t – I agree with you in the sense that what it does is push us toward plurilateral agreements with likeminded nations, and there we would have a reasonable – the nations that participate would agree to those rules and they could be enforced. The good thing about that is it sets a model.

You know, when we negotiated the North American Free Trade Agreement, it was to upgrade the General Agreement on Tariffs and Trade that only dealt with tariffs. And what the three countries did was to provide rules governing services, intellectual property, dispute settlement mechanism, and so forth. And within four months of when we signed off and it became an official agreement, the Uruguay Round that was to upgrade the General Agreement on Tariffs and Trade, the GATT, the ministers – 123 then – came back to the negotiating table and borrowed from the North American Free Trade Agreement the services provision, the intellectual property provision, this dispute settlement mechanism, et cetera. And so it set an example.

Were we to have a group of likeminded nations do a plurilateral agreement, and we would demonstrate – because we know that trade generates prosperity – that other nations would begin to perhaps either try to get aboard or to have their own plurilateral agreement – and we’re in the midst of a – I would say a technological revolution. We’ve had industrial revolutions before – you know, the agricultural revolution in the 18th century with the plows and the mechanics; the electrical revolution that made us move very swiftly and increased revenues; the computer revolution that was of the last century; and now we’re in the – we’ve moved that forward so it’s AI and what’s going to happen. So I think we do need to not give up, but to move forward with likeminded nations.

Mr. Reinsch: Well, let’s, as promised, come back to the WTO because I don’t want to let that go. And I guess the basic question is, is it – has it turned out to be – to meet expectations? It’s now 25 years – well more than 25 years; 30 years, right –

Amb. Kirk: Thirty years.

Mr. Reinsch: – from inception. Has it met expectations? Is it fit for purpose? And if not, we’ve already said leadership is necessary to fix it; can we be a little bit more specific than that?

Amb. Kirk: Well, I think you can start at the end because if – we all, I think, were humbled from our experience in the job when you look back and realize how much U.S. leadership matters. Not that everybody follows us, but typically whether it’s at the WTO, G-20, you name the institution, if the United States isn’t at the table making the case for whatever it is, rarely does it move forward. So I think the WTO got off to a great start, but as Ambassador Schwab noted with us crippling the dispute settlement and calling into question and the U.S. and China, it’s going to be very difficult for them to operate outside of that. And so I would start where you ended. Without the U.S. valuing it and making the case for it, it’s sort of stuck in the water, I think.

Amb. Hills: But if we were to have a plurilateral agreement of, say, 20 nations, and its prosperity was visible to the others outside, we could have the opportunity, perhaps, to upgrade the World Trade Organization in the same fashion in which we upgraded the GATT. But to start with 20, move to 40, others who want to capture the benefits.

Amb. Kirk: Yeah. But that doesn’t happen without us in making that happen.

Amb. Hills: Absolutely. We should be part of the leadership.

Amb. Portman: Well, you know, my hope was this panel could come out with certain common-ground points of view, and I think Carla’s onto one that’s really important, which is that if the WTO’s going to survive into the future it’s got to be plurilateral. It can’t work by consensus. You know, we all had this experience of being at the WTO, having an agreement, and thinking – the Environmental Goods Agreement. I mean, who could be against that? Well, China was because it didn’t include bicycles, as I recall. So – and there are – the Government Procurement Agreement’s an example of this. There have been examples in the past.

We’ve probably all talked to WTO executive directors about this. I’ve done that and they seemed open to it. But it just never quite happened. So I think that’s a great idea, and I think that would revive the WTO to say let’s find likeminded folks and not take on hitchhikers either. I mean, some people want to join, as Mike said earlier, but they don’t actually abide by the rule.

And then, second, they’ve got to enforce the subsidies code and, you know, deal with the non-market economies. Otherwise, you know, it really is meaningless. And that’s been a frustration, I think, in Republican and Democrat administrations.

So I think there’s a way forward. I don’t know about the dispute-settlement side, but that’s more difficult. But in terms of the negotiation side, I think it absolutely has a viable future if it does the likeminded approach. I don’t know if people agree or disagree.

Amb. Barshefsky: Yeah, I totally agree with it. It’s how we did the ITA, the Information Technology Agreement. It’s how we did the global telecom deal and the global financial services agreement and other agreements. We did it all plurilaterally. And that was during the WTO heyday when you couldn’t get anything done. So it – no, so I was just going to say you can take a plurilateral agreement and you open it up to people that might want to join if you want that, or you do a plurilateral agreement which is its own form of FTA. So if you have a plurilateral deal and it covers substantially all trade in a particular sector, you could make the argument that you’ve done your duty by WTO rules.

So the notion that you can sit in a room year after year after year with the same players, come to an agreement, and at the 11th hour one country says no and that stops the gears, this is – you can’t operate a global system this way. It’s –

Amb. Schwab: Yeah, I – oh, sorry. Sorry.

Amb. Barshefsky: No, you go ahead.

Amb. Schwab: No, no, no, I agree. I think – first of all, I think the WTO is critically important. If it didn’t exist, we’d have to invent it. We would not like the one that we start with a blank sheet of paper today.

I don’t think everything about the WTO is perfect. And you know, I am much happier with the bilateral free trade agreements I negotiated than having had to walk away from the Doha Round, because that wasn’t going to work because of blockers and, quite frankly, because it was about negotiating about negotiations, right? We – negotiating about formulas. When I got into the trade business, we were doing request-offer. And that goes to the point about, you know, knowing what you’re negotiating about, and all of a sudden you got a stake in it because you’re going to get lemons and I’m going to get limes, beef, whatever. And all of a sudden it’s real, and it’s real to your constituencies, and it’s real to your politicians.

So, you know, we managed to survive when the GATT existed and we didn’t have a totally failed Appellate Body. And you know, maybe at some point the EU will understand what the Appellate Body really should be doing. But in the meantime, all right, we manage without. And I think we should – I mean, I agree with everybody here; we need to be enforcing the bejesus out of our rights and we haven’t been doing it, certainly didn’t in the last four years, and have not been enforcing particularly subsidies, have not been enforcing things vis-à-vis China and nonmarket economies that we could have and should have been doing. And that would give people a lot more faith in the – in the system.

Mr. Reinsch: Mike.

Amb. Froman: I agree with Charlene and Carla’s points about open plurilateralism and getting likeminded coalitions of the ambitious together to set new standards, but we should recognize that is not the WTO. What we’re talking about is setting up a system outside the WTO.

Amb. Schwab: Parallel. Parallel.

Amb. Froman: And that – you know, if we look at the WTO’s functions to negotiated fully multilateral agreements, to report on and review kind of these trade policies, and to do dispute settlement, all three have ground to a halt. You know, the only fully multilateral agreement I think we have is the Trade Facilitation Agreement. Maybe there’s been another one since; I’m not sure. Countries aren’t reporting, China not reporting on their polices, among others. And dispute settlement, for all the reasons that we know, has ground – has ground to a halt. And so I think what we’re really talking about is creating a new system. Like, how do you have a rules – can you have rules without the traditional rules-based system, a multilateral system? And can you do it – build it up, as Carla said and Charlene alluded to, from 20 to 40 to 60 and build on that from there? But you can’t reform – once you’ve let the fox into the henhouse, you’re not going to be reforming the henhouse anymore.

Amb. Barshefsky: Yeah, no, exactly. I was –

Mr. Reinsch: Carla? Go ahead, Carla.

Amb. Hills: I would – I couldn’t agree more, but I do think the plurilateral agreement – if we had 20 nations that wanted to upgrade the World Trade Organization, we’re more likely. And we – our plurilateral agreement was blossoming and creating prosperity, believe me, that would make a difference both at home and abroad.

Amb. Froman: But to reform WTO we have to have China and India and –

Amb. Hills: But wait a minute. You got to wait and –

Amb. Froman: Cuba onboard.

Amb. Hills: China would want to come in if we were demonstrating the prosperity that flowed from a trade agreement. And you know, take China back to when they were trying to grow. Right now China’s fairly weak and having problems. So if we were showing strength today, it would make a lot of difference.

Amb. Schwab: So, Carla, I think I will be so bold as to suggest that my idea of a plurilateral may not include China. Depends on the –

Amb. Hills: Would be what?

Amb. Schwab: Would be perhaps not to include China. It depends –

Amb. Hills: Well, no, no, you wouldn’t necessarily have China in your plurilateral. This is the model, and you would grow the plurilateral from 20 to 40 to 60, and you would get the rules upgraded which right now the – we killed the World Trade Organization.

Amb. Schwab: No, we didn’t. No, we didn’t.

Amb. Hills: And it’s kind of silly for us to say that –

Amb. Schwab: No, we – no, we did not. No, we did not.

Amb. Hills: – we’re going to lead in renewing it because, frankly, I don’t think it has political support, and too often the parties want to – or, the people in the parties want to vote what the party is espousing rather than on the merits. So –

Amb. Schwab: So if I could say, Carla, I agree with you entirely about the importance of the WTO –

Amb. Hills: OK.

Amb. Schwab: – and the importance of reinvesting in the WTO. I also think the current director general is the right person to invest in because she gets how critically important it is and she understands the flaws and she understands the blockers –

Amb. Hills: I think she’s doing a great job.

Amb. Schwab: – and who the blockers are. But I will say that we aren’t the ones who killed the WTO. And I don’t know, you spent a little time on the Doha Round, too, and the problem was not the United States.

Mr. Reinsch: Let me just say – brief commercial here – several years ago a commission that actually Ambassador Barshefsky co-chaired, the Commission on Affirming American Leadership – and Matt Goodman in the audience will recall this – we recommended something that is very similar to what Ambassador Portman suggested –

Amb. Barshefsky: Exactly.

Mr. Reinsch: – which was a plurilateral approach: coalitions of the willing, countries that wanted to do more. So not a new idea, but we’re not quite there yet.

Amb. Barshefsky: No, and the idea behind the report that we issued then – which Matt will remember very, very well – was to essentially see if there was a way not only to keep trade flowing in an advantageous and economically growth-oriented manner, but also to see if there was a way to rebuild the WTO or a WTO idea from the ground up, starting with – at that time I think we posited democracies or something, which I wouldn’t do now. But starting with a coalition of the willing who share some of the same values, some of the same attributes, and from there seeing if you could build out. It was a very detailed report, which I commend to your attention.

So you’re right, these ideas aren’t new. And frankly, it wasn’t new when we did our report; we just fleshed it out more. But –

Amb. Portman: It may be timely, though.

Amb. Barshefsky: I – pardon?

Amb. Portman: Timely now.

Amb. Barshefsky: Yeah, it may be timely.

Mr. Reinsch: OK. Last comment, then I want to change the subject.

Amb. Kirk: Well, I’d still – just we have to go back to the point Senator Portman and I were making. If we can rebuild the case for why trade makes sense, then you can do all these other things. Whether you say that – you know – and you know, I was always fond of saying it’s never the right time to take a bad deal to Congress, but if you have a good deal we always find the political way. But it’s going to start with, first, taking advantage of this pain to help the American public understand our being connected to the world generally is better than not. Our having access to markets is better than not. And if we can do that, then we can go and have a debate about whether it’s plurilateralism or rebuilding the WTO. But we’ve got to have a political environment that gives Congress and our leaders the courage to say let’s go forward and do those things, and right now we don’t – we don’t have that.

Mr. Reinsch: Let me ask – let me turn to kind of a more contemporary, also philosophical question. Both the Biden and Trump administrations took or are taking the position that past trade policies, meaning the ones that you all pursued, were mistakes that either benefitted foreign countries – which is the Trump argument – or benefited big companies – which is the Biden argument – at the expense of workers. Are either of them right about that? Which one, or neither?

Amb. Barshefsky: So let me just – I’ll start because everyone’s going to answer –

Mr. Reinsch: They’re all criticizing your mistakes, so weigh in.

Amb. Barshefsky: Well, no, no, no, look, I think we can all stipulate that trade enhances economic growth in its broadest sense, right? Trade grows GDP. That’s, I think, indisputable. The issue of what you do with that growth, how that growth is allocated in an economy – who benefits, who doesn’t benefit – are a product of domestic policy choices, domestic policy. You want to incentivize manufacture? Growing our economy certainly doesn’t disincentivize it. The question is, take some of that growth and, through tax code changes, other domestic policy changes, permitting changes, create that industrial base. You want to benefit the top 1 percent? Take that economic growth, same mechanism, you take a look at the tax code, other revenue-based codes, and in that case you would allocate that excess growth to the top 1 percent. So trade does its job. Trade doesn’t do everything and it isn’t responsible for everything. So I object heartily to protectionists that believe trade is crippling. Domestic policy may be crippling, but not trade.

And I object to those who would say that trade is a mistake. You don’t want growth? OK, stop trading. (Laughter.) We see the effect already in the first round of Trump tariffs. What happened to the steel industry – the steel sector in the first round of Trump tariffs, right? Protection goes up. Productivity in the industry went down. Manufacturing did not increase. Job loss intensified because the protection for steel helped to crater downstream industries that use steel.

So trade has a narrow function, which is a growth-oriented function at sort of the macro level. It’s a GDP-level phenomenon.

Mr. Reinsch: Rob, take a moment to respond to that?

Amb. Portman: OK, I’m going to disagree.

Amb. Barshefsky: OK.

Amb. Portman: Being from a steel state, Ohio, I will say that the steel companies were very happy about that. The downstream users, as you say –

Amb. Barshefsky: Were not.

Amb. Portman: – which is most of the workers in the steel economy – were not – (laughs) – because their costs were higher. But there’s a view among, you know, Cleveland-Cliffs and, you know, some of the other companies in Ohio that it was actually quite beneficial to save them from some of the practices, particularly with China, with regard to steel, because they – you know, they aren’t playing fair, and they are creating much more supply than they – than the global demand, and therefore lowering costs and subsidizing it.

So my concern about what you laid out in terms of trade and its function and how it works kind of in the political world, as Ron and I are talking about, is the agreement itself also has to be a sound agreement. And that’s where – once the agreement is done, I couldn’t agree with you more, that’s where the domestic side kicks in, whether it’s tax incentives or whether it’s, you know, planning for research or certain sector-specific protections as we’ve done with semiconductors and the CHIPS Act.

But the agreement itself has to be fair. And this is where I think we have had a problem as a country, is that we were so hell-bent on growth and trade that we sometimes forgot the uneven application of those agreements. Not to go back to steel again, but you could say steel or you could say, you know, any other sector that had to deal with unfair trade. We didn’t enforce our trade laws enough, in my view. And I’m the author of the Leveling the Playing Field Act and the Level the Playing Field Act part two – (laughs) – which we haven’t gotten passed yet. But that dealt with transshipments, because this is something that was a reality and our trade laws didn’t cover it.

So I think we need to be smarter about having trade laws that actually deal with the real issues – again, this would be, as an example, putting tariffs on Chinese steel and having it end up going through Malaysia, or Korea, for that matter, and coming to the United States – and us not doing anything about it, and people losing their jobs as a result. So I think the trade agreement itself matters.

Amb. Barshefsky: I agree with you.

Amb. Portman: And I think – and then I think the enforcement side of it matters. And then I also think the domestic policy side can sort of fill in. Without that I don’t think you get the acceptance of trade that Ron and I were talking about.

Mr. Reinsch: Mike?

Amb. Froman: Look, just to build on this, I think – first of all, quick comment about your event. It’s kind of a remarkable event, that you’ve got such bipartisan representation here. We all like each other. We know each other, we respect each other. We disagree –

Amb. Barshefsky: Wait, who told you that? (Laughter.)

Amb. Froman: We disagree without being disagreeable. I mean, it’s a model, I think.

Amb. Hills: We don’t disagree.

Amb. Froman: We don’t disagree too much, perhaps.

And I think one thing we don’t disagree on – and I’ll go out on a limb here – I am convinced that every single one of us, when we were USTRs, when we were negotiating trade agreements, had front of mind that we were trying to open other markets –

Amb. Barshefsky: You bet.

Amb. Froman: – for the benefit of American workers and farmers and ranchers and small businesses –

Amb. Barshefsky: You bet.

Amb. Portman: Service providers.

Amb. Froman: – and service providers, and the like. That was our motivation. Whatever the critics say about us, in retrospect I know that that was our common motivation across the board.

And so little attention, I think as the senator said earlier, is being paid right now to exports. All the focus is on imports –

Amb. Barshefsky: Exactly right

Amb. Froman: – when we know that President Trump is right – there are more barriers to other countries traditionally than there have been to the United States, and that’s why we negotiated agreements, because we were disproportionately bring down barriers further than our barriers. We were going from 3 percent to zero (percent); they were going from 7 percent or much higher to zero (percent).

And so wherever you want to end up on a reciprocal basis, the idea was make it easier for American workers and farmers and ranchers and service providers and small businesses to export to the 96 percent of the consumers that live outside the United States. That was always the motivating factor across administration.

I also agree with Charlene. I think it’s been an abject failure of domestic policy from Republican and Democratic administrations that have not taken on the issue of how to deal with the people who are adversely affected by trade, because there are people who are adversely affected by trade. The benefits may have been broadly shared by consumers, by export-oriented industries, but in import-sensitive industries like steel, like autos, like any number of other sectors, there was adverse impact. And we never paid enough attention domestically, whether it was through place-based economic development strategies, real transition and lifelong education strategies or mechanisms for making sure that people could survive and thrive in a rapidly changing economy. And the reason I think this is so urgent, regardless of what happens with trade – I mean, the economists will tell us, 80 percent of dislocation in the U.S. was due to technology, not to trade. But you don’t get to vote on software packages, you get to vote on trade agreements. And so trade, and immigration to a certain degree, became the scapegoats for the kind of dislocation we were seeing in this country. And it did have an effect, and we never dealt with it adequately. And the reason why I think it’s so urgent is that what we’re seeing right now, with the potential application of artificial intelligence, is going to make trade look like child’s play –

Amb. Schwab: Exactly right.

Amb. Froman: – because the benefits, again, may be broadly shared, but the costs are going to broadly effective as well – broadly spread as well. And we’re not doing anything as a country to think about how do we make sure American workers are prepared for world in which there could be a fundamental change in the labor force.

Amb. Kirk: Mike, I would agree with you. Just one, because we do probably have 90 percent commodity, I would argue, at least we tried through trade adjustment assistance. You could say it wasn’t the right platform, but you’ve got to have bipartisan support for that.

I would make the case now, though, that – the broader case, while we’re focusing on trade – you’re never going to tackle that reeducation, that getting people ready, if we are at the same time – again, we’re withdrawing from the world, we’re destroying the underpinnings of our education system. The greatest investment we ever made in this country was in public education, and it wasn’t to turn everybody in to math and sciences, but it was to give everybody access at least to a good education so they could get a job. Our withdrawing from that now, destroying the Department of Education, going back, you know, arguable to states’ rights – (laughs) – whether it relates to women’s health or bodily autonomy or education – is not going to be good for us long term. And so we’ve got to have this discussion in the broader context.

Now, I do want to go back – and I keep – I know I’m the political one, but you asked, were Biden and Trump right about our past trade policy. I would agree with them that all of us learned what we could do better, but unfortunately – it wasn’t an argument about policy. It was how to get elected. And I’m not picking on – it’s an important – I wish I was you. As long as our presidential elections, no matter what we do, we end up on the week before saying what’s going to happen to Michigan, Pennsylvania, Ohio – those Rust Belt states where workers feel the most aggrieved – our political debate is going to be centered to how do you get those aggrieved workers, and that, in the Democratic Party, for years, has been being sort of blaming every job loss on trade, and we’re saying we’re going to do it better. And I would say uniquely under President Trump and Candidate Trump for the first time, you had the Republican Party moving that direction. And so whether the policy was right or wrong or not, we are now in a world, for the last four or five cycles, in order to be elected, you kind of had to be the most anti-trade candidate. And that’s I think where we are, and now that’s bled over into the policy discussions.

How we change that, I don’t know. You know, if we sat around and waited to see what’s going to happen in Texas and Montana and states that benefit from trade, you’ll probably have a very different analysis, but we don’t. So I don’t think we can ignore the political reality and just sort of operate as if we’re in a policy world.

But I do think trade has to be how we stay competitive, how we prepare ourselves for a world in which AI is a reality, has to include the discussion intelligently about how we invest in the education, the reeducation of the American public. And I could not disagree more with the path the administration is going down now.

Mr. Reinsch: Let’s – it’s time for audience questions. But let me ask each of you for a one-word answer, or maybe a two-word answer – and we’ll start with Senator Portman at the end, if you don’t mind. What’s the most difficult negotiation you had to undertake?

Amb. Portman: Oh gosh.

Mr. Reinsch: What was the most painful or – one that you had to undertake?

Amb. Portman: Well, I was joking with Susan about this earlier. We’ll go back to China, of course. And I was negotiating with Bo Xilai, who I believe is now in prison in China. I’m not yet in prison. (Laughter.) But – and – well, two aspects of it. One, we had some pretty heated exchanges, and, you know, he was a big guy and a little interested in kind of, you know, pushing the envelope – even, you know, getting in your face, kind of thing. And so we were in an elevator in London trying to negotiate this textile agreement, and the elevator is very small. It’s, you know, one of these historic hotels where they added the elevator after the fact, and so the elevator is about as big as this table, and there were four of this in this elevator, and it stops between floors. (Laughter.) And for quite a while we are sweating, and, you know – and someone said, that might be why you got the agreement done. Maybe so.

But he had the habit of calling me very late at night, and I stupidly would pick up the phone. He would call through the USTR I guess all-night, 24/7 line, and they would call and say, Minister Bo Xilai is on the line and needs to talk to you about a trade agreement. So I would get on. But it was – I learned something from it. You know, it was a great trick on his part to wake me up and say, now do you agree? (Laughter.) I was in a weakened state.

But we did find an agreement, and we ended up finding the agreement because after a lot of intransigence and tough negotiating, I realized that the private sector in China does have a voice, even though it’s a state-owned enterprise and was a state-owned trade association, which I’m sure you all dealt with in other contexts. They wanted an agreement. They wanted certainty, to the point earlier about – that Mike and others raised, that certainty is really what we need for investment. And so I went to them. I went around Bo Xilai, and he was not happy with that at all, but within 24 hours we had an agreement. So – you know, because he got pressure from his own private sector. That would be it.

Mr. Reinsch: Charlene, what was your toughest one, in a word?

Amb. Barshefsky: You know, for me the toughest ones are the annoying, very narrow, single-issue, passionate, demander kinds of questions, that were typically with Japan, because there was never – first of all, it’s not interesting, which is already a problem if you’re sitting in a room with someone hour after hour. Second of all, because it’s a single issue and the people on the other side that want it have to have it so desperately, there’s no diffusion of that pressure by the insertion of other issues, other parties, other voices, who are saying – in their country – who are saying, we don’t want you to do that – right – who are opposed to their own government’s view. It is just this constant pounding, haggling, and so on. I always made it a point – however late they wanted to stay, I always said, no, no, no, no, we should not go to sleep, we should stay, because I thought, uh-uh, if I have to put up with this, I’m going to make you pay. We’re not paying. (Laughter.)

Those were always the hardest – always hardest.

Mr. Reinsch: Susan, the hardest?

Amb. Froman: Yeah, less leverage.

Amb. Schwab: Doha Round, India-South Africa-China.

Mr. Reinsch: Mike?

Amb. Froman: One word?

Mr. Reinsch: Yes.

Amb. Froman: Congress. (Laughter.)

Mr. Reinsch: Carla?

Amb. Hills: Well, I agree.

Amb. Portman: They took it easy on you, Froman. (Laughter.)

Amb. Hills: Getting an agreement over the hill of getting it approved in Congress is clearly the toughest job for any trade representative.

Mr. Reinsch: Ron?

Amb. Kirk: All of them. (Laughter.) All of the above. Because everybody sees the United States as, you know, you’re the big United States; you don’t care; this little bit won’t hurt you. And to Susan’s part, I mean, all of them are difficult. Korea was a bear. All of them. They’re all difficult, but as – it goes back to leadership. If you have a president that wants it and a leader on the other side, you can move heaven and earth. And we did.

Amb. Hills: Absolutely.

Mr. Reinsch: OK. We have just a few minutes for questions. If you have a question, we have someone with a microphone coming around. Tell us who you are and ask your question, please. We don’t have time for speeches.

Q: Thank you. Is it on? OK, good. Thank you. Brian Pomper. Nice to see you all.

One thing we haven’t really talked about with the negotiations that are ongoing with reciprocal negotiations and with China are the non-tariff barriers that I think the administration is going to try to address as part of these negotiations. And in particular we were talking about modernizing agreements in a certain sense, and there’s one activity I think I’ve seen over the course of the last bunch of years, with respect to – I’ll call it harassment on the part of governments with businesses – U.S. businesses doing –

Mr. Reinsch: Let’s have a question, please.

Q: Yeah. Well, that’s my question, is, is it possible in the context of a trade agreement, or is it advisable, to try to have measures to address a non-tariff barrier along these lines to get at kind of this government harassment of U.S. businesses?

Amb. Portman: Bill? I think it’s a great question, and I think it goes to something we didn’t talk about, which we probably should have, which is that the Trump administration has a very different view of what’s trade and what’s, you know, peripheral to trade but can be included in a trade agreement. And they’re using the leverage of tariffs to accomplish things that are unrelated to trade, fentanyl being the obvious example. I mean, that’s a 20 percent tariff on China because of fentanyl, and, you know, sending the precursors to Mexico, and so on.

So yeah, I think, for those of you in the business community who have spent years with a frustrating argument with a foreign country that is part of the 60 or 70 countries we’re negotiating with now, you probably ought to mention, you know, to USTR or somebody else – you know, assuming you have a legitimate concern about how U.S. companies are being treated, it could well get wrapped in – that’s my sense –

Mr. Reinsch: Susan? And then we’ll go to the –

Amb. Portman: – where it normally wouldn’t be.

Amb. Schwab: Yeah. I mean, I think, Brian, you’re raising a really important issue. And there’s the individual barrier issue, and then there’s the companies on the ground and it’s getting harassed; it’s getting six visits a day by some authority, group of authorities, and so on. And the company itself is vulnerable because if you raise it then the company gets whacked even harder. I think those – you know, if you can use a trade association, you use the trade association. If you can’t use the trade association, clearly it has to be done quietly and it has to be done forcefully, and quite frankly it may be that at our end we have to quietly say, you continue doing this to X company – this coercive tactic – then here’s the kind of thing that we can do to these Chinese companies that are operating in the United States.

I don’t know how else to do it, but it’s really – it happens. It is really pernicious. It happens all the time, and it’s very hard to address because the U.S. company generally doesn’t go to the U.S. government because they don’t dare.

Mr. Reinsch: OK, we have a question here in the front row.

Q: My name is Tony Spadaro.

I am certain that the one thing this august group all agrees with is that trade negotiations are involved and take a long time. Now, as we sit here this morning, there are containerships that set sail loaded with back-to-school supplies and Christmas gifts, and companies are not giving future projections in their annual reports. So the question I would love to hear the opinions on is, what becomes of this unprecedented climate of uncertainty that we’re in now over the next three to 12 months?

Mr. Reinsch: Anybody brave enough to tackle that one?

Amb. Schwab: It doesn’t go away.

Amb. Barshefsky: No.

Amb. Schwab: It will continue in three-month increments – two-, three-month increments. I don’t know.

Amb. Froman: And I think the concern is, is that – you know, for those who have talked to companies, when there’s uncertainty, either as a consumer or as a company, you tend to sit on the sidelines, waiting. So you don’t deploy capital, you may hold back on purchases. And that then becomes a bit of a self-fulfilling prophecy around economic downturn. So it’s in the – in my view it’s in the president’s interest to create certainty – whatever it is. Then companies can make decisions, whether it makes sense to build or not to build or close down businesses or expand them. But in the absence of certainty, I think everyone just is in a wait-and-see mood.

Amb. Schwab: I should have added one other thing, which is, that is with the exception of certain sectors, right? One could argue that the sectors subject to 232 investigation – those may actually have closure and may stick longer. Those may be more, quote, “certain.”

Amb. Kirk: Well, it’s going to be whatever the president wants to become of it.

Amb. Hills: Yeah. Well –

Amb. Kirk: I don’t want to be flippant, but if he wants it to grow – because we all know. You don’t do negotiations in 90 days. But if they want to lower the temperature, we’ll lower the temperature. He wants to keep it there, we’ll be there.

Amb. Hills: Yeah, I agree.

Mr. Reinsch: Well, we’ve – go ahead.

Amb. Hills: I would say that the uncertainty of – if the president says, I’m going to have a pause on my tariffs, there may be some purchases to quick, get ahead of the problem. And it’s not knowing in an overall way what the rules are going to be in our own country that is impeding trade today.

Amb. Barshefsky: I mean, one of the complicating factors is that there’s no safe harbor, right? U.K. has a trade deficit with the U.S.; still gets whacked. Companies that have friendshored – getting whacked. Countries that have lower tariffs in the sector at issue than the U.S. has against them – getting whacked. (Laughs.) You have a free trade agreement with the United States – doesn’t matter. Right? Colombia, South Korea, and so on.

Amb. Kirk: Mexico, Canada.

Amb. Barshefsky: Mexico, yeah. Canada.

Amb. Schwab: Our best friends.

Amb. Barshefsky: You’re an ally? It doesn’t matter.

And so you have no safe harbor, which exacerbates the uncertainty because there’s no other country you can look at where you can say, that relationship will remain stable, and therefore I can plan with respect to that country or that subregion – I can plan. There is no planning. And you see this in quarterly reports every major company is issuing, talking about uncertainty.

Amb. Froman: There is an argument that, in this climate of uncertainty, the only certainty is that if you produce in the United States, you won’t be subject to tariffs, and that that should hopefully drive American companies to – or, all companies to move production here to the United States. That I think is what the administration is sort of betting on in this –

Amb. Barshefsky: But Mike, not if you don’t know the cost of your inputs.

Amb. Froman: Well, there – that is the challenge. And they’ll have to decide whether that’s a viable economic proposition, to produce in the United States.

Amb. Barshefsky: Yeah.

Amb. Froman: There’s been some interesting reporting lately of companies that have said, we’ll do a fully built-in-America product and let’s see how consumers react to it – there was an article just yesterday – and nobody bought it. And so – you know, because it’s 80 percent more expensive. And so, yeah, this is a real issue that we’ll have data over time to see whether this proposition works or not.

We’re in a – this is the middle of a grand experiment, and we’re going to learn a lot through this experiment as to the laws – whether the laws of economics can be overtaken by an executive order. (Laughter.)

Amb. Portman: Well, let me –

Mr. Reinsch: We’re over time.

Amb. Portman: Let me just add one point to add some balance to this panel. I think – I think Mike is correct that, you know, ultimately the objective here is to have more U.S. production in our manufacturing sector, and that’s happening. I mean, there are companies that are starting to do this. This will take some time, though. You know, there’s no company in America who is going to be able to create a new manufacturing facility within the space of two or three years, but they can expand their existing ones, and some are doing that successfully.

In terms of the certainty, let’s see. I mean, the U.K. agreement is something that I got very involved with over the last several years. I co-chaired the U.K. caucus. We were doing everything to try to get that last 40 percent, let’s say – maybe last 35 percent, even – and we couldn’t do it. And it sounds like they’ve done it, with regard to agriculture in particular, which was one of the big sticking points, as you may recall.

And so, you know, within 90 days that thing could be wrapped up, just because we’ve made so much progress already, you know, under the previous – first Trump administration. They got, again 60 (percent), 65 (percent), maybe even 70 percent of the way there. So on some – I think you will see some resolution, and this grand experiment that Mike talks about is just that. I mean, it is an experiment. We’ll see how it works – (laughs) – but it provides an enormous leverage to get China to the table to talk about some of these issues that all of us might have tried to get China to talk about unsuccessfully. It may result in something, you know, very positive for not just our country but for the global trading system. But, you know, there will be a period of uncertainty. As you say, it takes a while to negotiate those things normally. The U.K. may be an exception.

Mr. Reinsch: Well, I want to thank everyone for attending. I want – thank you to the panel who once again has demonstrated I think an extraordinary amount of thought and insight into a difficult policy process. I think it’s clear our country has been well served by their service in the past, and I’d appreciate your all giving them a thank you. (Applause.)

 (END.)