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Two deals in pocket but no holiday cheer for U.S. trade chief Lighthizer

[December 20, 2019] By Andrea Shalal

WASHINGTON (Reuters) - U.S. Trade Representative Robert Lighthizer was looking forward to some holiday peace and quiet after wrapping up trade deals with the United States' most important trading partners - China, Mexico, and Canada - last week.

Instead, the long-standing member of President Donald Trump's inner circle who normally eschews public appearances found himself doing wall-to-wall interviews, scrambling to correct a misunderstanding with the Mexican government and taking heat from his fellow Republicans in Congress.

The conservative Wall Street Journal carried an opinion piece that said the Trump administration had bowed to "politically managed trade" in agreeing to Democratic demands to revamp the new U.S.-Mexico-Canada Agreement (USMCA), while former USTR officials and investment analysts panned the Phase 1 U.S.-China trade deal as falling far short of expectations.

Lighthizer, 72, is an anomaly in today's hyper-partisan Washington, a powerful member of Trump's White House who has won sometimes grudging praise from Democrats and Republicans, while keeping the ear and respect of the president throughout.

The USTR chief was "the most present person from this administration that I have seen in my three years in Congress," said U.S. Representative Jimmy Panetta, a Democrat. "He was all over the place, and I think that helped out quite a bit."

Richard Trumka, the president of the AFL-CIO labor union, whose support for USMCA was critical to ensuring congressional backing, called Lighthizer "an honorable man," adding, "I've worked with him for 35, 40 years, and we've always been able to work deals out because I know when he tells me something, it's good."

The USMCA, which will replace the North American Free Trade Agreement, and the China trade deal were two of Trump's top priorities, and landing them both in the same week was a public relations triumph.

But the efforts to reel in those deals took longer and proved harder than expected, and triggered further questions.

Critics say some of that is a byproduct of Lighthizer's tight-fisted negotiating style. Congressional sources and former U.S. government officials say he is always well-prepared, but can appear arrogant and unwilling to delegate.

Lighthizer is also prone to slamming down the phone in anger, Representative Richard Neal, the Democratic chairman of the U.S. House of Representatives Ways and Means Committee, told reporters last week.

LITTLE DAYLIGHT

Tasked with resetting the main U.S. trading relationships in the world to reflect the Trump administration's conviction that the United States has been taken advantage of for years, Lighthizer has taken to the job like a duck to water.

There is little daylight between Trump and the Georgetown University-educated Ohio native on the key planks of an "America First" policy that is aimed at rebalancing the global trading arena in favor of U.S. workers and companies.

Lighthizer, who was a deputy trade negotiator in the Reagan administration in the 1980s, honed his views during a lengthy career as a private international trade lawyer. Among his clients were U.S. steel companies struggling to compete against heavily subsidized imports from China.

He "understands the president better than most," and wants to significantly change the way trade is done, a veteran U.S. trade negotiator said on condition of anonymity.

Dismantling the World Trade Organization, moving away from multilateral trade agreements and using steel and aluminum tariffs to punish countries accused of hurting U.S. industry are policies Lighthizer accepts, the source said.

But it's his negotiating style as well as that of others in the Trump administration that has generated much criticism.

The Trump trade team often refuses to commit negotiations to paper while discussions are underway, according to multiple congressional sources, and Lighthizer, unlike his predecessors, has clamped down on background conversations with reporters.

That can lead to misunderstandings and confusion.

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U.S. Trade Representative Robert Lighthizer gestures as he speaks during a meeting at the Presidential Palace, in Mexico City, Mexico December 10, 2019. REUTERS/Carlos Jasso

For instance, Lighthizer insists the first phase of the U.S.-China trade deal is completely "done," but Beijing has not confirmed details released by U.S. officials, leaving markets and key affected industrial sectors befuddled.

It could be weeks before the 86-page agreement is translated into Chinese and further details are released.

Several Chinese officials this week said the wording of the deal remained a delicate issue and care was needed to ensure expressions used in text did not re-escalate tensions, raising concerns it could still unravel.

Jorge Guajardo, a former Mexican ambassador to China who is now a senior director at McLarty Associates, said both the dust-up with the Mexicans over U.S. plans to monitor changes to Mexican labor rules, and the delayed release of the text of the China deal raised questions about how Lighthizer operated.

"Both Mexico and China seem to have been caught off guard," Guajardo said. "It's troubling. It does indicate a bit of a pattern on the U.S. side of presenting different agreements than their parties think they agreed to."

Harry Broadman, a former senior USTR official, said there was no reason the Mexico issue should have spilled into public view. Announcing the trade deal with China before the text was translated was also unusual, he said.

"That is not the procedure usually followed in trade negotiations worldwide. Usually you speak after you have something in writing, and both sides release it," Broadman said.

An apologetic Lighthizer, speaking on Fox Business Network on Tuesday, said the Mexico situation was a "last-minute snag" and "a misunderstanding ... that was easily taken care of."

NEXT BATTLE

Lighthizer also came under fire from fellow Republicans for dropping a 10-year data protection provision for certain pharmaceuticals from USMCA.

U.S. Senator Pat Toomey, a Pennsylvania Republican and fierce USMCA critic, said on Thursday it was a major setback for a "very, very exciting new category of medicines" and would make it harder for U.S. drug makers to recoup heavy investment costs.

Lighthizer conceded on Fox Business Network it "was a step backwards" but said it was a needed compromise to ensure congressional support from the Democratic-controlled House.

Ultimately, Trump was the one who wanted to get the China deal done ahead of Dec. 15, when a new set of tariffs were due to kick in, said Christian Whiton, a fellow at the Center for the National Interest think tank in Washington and a member of Trump's transition team after the 2016 election.

At the end of the day, "Lighthizer is a lawyer and Trump is his client," Whiton said. Under pressure to get a deal done "it is entirely possible (Lighthizer) came back with something that is half-baked," he said.

Lighthizer, battling laryngitis, briefed reporters about the U.S.-China trade deal on Dec. 13. He conceded there was hard work ahead and that its success was up to China, adding that he had Trump's backing.

"The deal's done when the deal's done," he said. "I would walk away on a matter of significance absolutely a minute before (it's done), and the important thing is that everybody knows it. And I know the president would – so I don’t have to worry about that."

Already, he's gearing up for the next trade battle in Europe, over aircraft subsidies, digital tax plans and the Geneva-based WTO. "I live in a target-rich environment, so there's a lot to do," he quipped.

(Additional reporting by David Lawder, Heather Timmons and Jeff Mason; Editing by Heather Timmons and Paul Simao)

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