Katherine Tai is no longer the U.S. Trade Representative, but I missed this podcast interview that took place while she was still in office, so I'm going to submit this blog post about her trade policy views a few days late. I only have two brief comments, and they are both positive.
First, she talks about non-discrimination standards, with big tech in the background:
The risk that you have when you are so closely aligned with the biggest companies is that you lose sight of the fact that, for example, at my office, which is the Office of the U.S. Trade Representative, the job is to represent the interests of the entire U.S. economy, not just of the biggest companies.
Now, what I’m trying to get towards is we’ve had a tradition of defending the interests of the biggest American companies and engaging with foreign governments and our trading partners to make sure that our companies are not discriminated against. Those are some of the founding principles of the trading system is fairness, that you don’t discriminate between your companies and your trading partners’ companies, and you don’t discriminate as between companies from one trading partner versus another.
One of the challenges that we have had in recent years is the growth of some U.S.-based companies to become so powerful and so dominant, not just here in the United States, but in the global marketplace, that efforts to regulate those companies or those sectors start to run into this dynamic where if they are foreign companies attempting to regulate, that they could appear to be discriminatory because these companies are almost all exclusively U.S. based.
And so, that’s been actually quite a large part of the conversation here over the course of the last couple of years, especially in light of, for example, the tech sector, where European attempts to regulate, they might have discriminatory overtones, or they might not. But attempts to regulate at all, because the affected companies tend to be only U.S. companies, we here at USTR have had to build in additional levels of examination, analysis from a governmental perspective to try to engage with our trading partners and to really try to suss out, are the governmental measures, that our companies are complaining about, are they actually discriminatory and therefore something we need to really push back on from a trade discipline perspective? Or are they instead legitimate attempts to regulate that we need to make room to have conversations about and we can’t just assume are discriminatory because the affected companies happen to all be U.S.-based?
So, this has been one of the most interesting aspects of the way we’ve been evolving the perspective here at USTR, which has really put us in conversation with our competition authorities to create that space to say that not every foreign government regulatory measure is necessarily discriminatory when you look at the dynamic in the domestic and the international marketplace, where you have a set of dominant players that happen to be U.S. based.
She has mentioned this issue before. I'm sympathetic to what I think her view is here, which is that we should look beyond just disparate impact when accusing other governments of discrimination (we wouldn't want a disparate impact standard applied to us either). My sense is that her view will not be carried over to the new administration, but we'll see how things play out.
Second, she raises an issue related to the role national security is playing in economic policy discussions:
So, one of the ways of understanding the China challenge from an economic, and maybe even a national security perspective, is to understand that with the backing of the state, that many of these Chinese economic players present as monopolies and monopolistic challenges.
When we turn that mirror around on ourselves — and I think that this was really the thrust of your question. It just took me a really long time to establish the first part. The first part of the landscape I wanted to cover is that for us, I think, one of the challenges that we have, that we should continue to work on understanding and figuring out from a policy perspective, is the degree to which American companies, companies that look like American state champions, are infused into the perspectives of our government and especially the national security establishment.
So, in a way, the question that I am posing from this chair that I occupy at USTR is when it comes to national security and U.S. companies, U.S. champions, are we reflecting kind of the other side of the coin, which is not companies that are difficult to compete with because they have the backing of the government, but instead companies that are difficult to compete with because they are driving governmental positions and governmental perspectives.
So, we’ve got a state capitalism challenge in China. You’ve got companies that are susceptible to direction and control by the government. My question here, for us, is the degree to which our government national security establishment may or may not be captured by industry interests. And I think that is a question that I have had for a long time. But I think that is a question that will be called into even sharper relief going forward these next couple of years.
If I'm reading her correctly, she is saying we should be wary of the private sector using national security arguments to drive government policy in a direction that benefits it financially. In my view, this has been a long-standing problem, and she may be right that it could intensify.