144. Trade policy transitions, with Ambassador Susan Schwab

Episode Summary

Executive Summary: The episode examines how U.S. trade policy changes across administrations, using Susan Schwab’s experience handing off from Bush to Obama to explain what outgoing officials can do to shape the next team’s agenda, leverage, and inherited disputes. The discussion highlights transition teams, unfinished negotiations, tariffs as bargaining chips, WTO and congressional pressures, and the likelihood that trade remains unavoidable even for an administration that wants to de-emphasize it.

Main Topics: How USTR transition teams work (Priority: 5/5): Schwab explains that incoming teams draft first-day/100-day/year-one policy papers, assess institutional and budget issues, and identify key personnel. She stresses that USTR’s small, mostly career-staffed structure makes early political appointments especially important. What an outgoing administration can leave behind (Priority: 5/5): Using the Bush-to-Obama handoff, Schwab describes deliberately setting up the next administration with clear conclusions on Doha, unresolved FTA issues, and a newly launched TPP to force early decisions. Tariffs and disputes as leverage during transition (Priority: 5/5): The episode argues that tariffs in place at the end of one administration can become bargaining leverage for the next. Schwab details how the U.S.-EU hormone-treated beef dispute was reset through a change in retaliation targets, giving the incoming team a path to resolve it. What Biden would inherit on trade (Priority: 4/5): The hosts and Schwab discuss likely inheritance items for a Biden team: existing tariffs, ongoing negotiations, WTO disputes, and unfinished market-opening talks such as fish subsidies and possible U.S.-UK and U.S.-Kenya deals. Timing, TPA, and congressional deadlines (Priority: 4/5): Schwab notes that transition timing matters because Trade Promotion Authority expiration creates hard deadlines; if TPA expires in July, deals likely need submission by April to preserve fast-track procedures. Trade won’t stay off the agenda (Priority: 4/5): Even if an incoming administration wants to make trade less central, foreign leaders and Congress will keep raising it. Schwab says trade and foreign policy are becoming more intertwined, especially in summit diplomacy and domestic China legislation. What to watch in personnel selection (Priority: 4/5): Schwab says the most consequential unknown is who becomes USTR and whether that person is a politically savvy operator or merely a symbolic choice. She also flags White House economic and security staff as early drivers of trade policy before agency confirmations are complete.

Key Arguments: Transition teams matter because they create policy papers, map first-day priorities, and identify institutional and personnel constraints that shape the incoming administration’s capacity. Outgoing officials should leave the next administration with clearer facts and leverage, not just unresolved problems; setting up deadlines can force decisions and help close disputes. Tariffs already in place are often more useful politically and diplomatically than threatened tariffs because they create constituencies that want resolution. Foreign partners may treat an outgoing administration as a lame duck if they expect a friendlier successor, but hard deadlines can also push deals before the transition fully bites. USTR’s small number of political appointments means early-confirmed or non-confirmed leadership matters; the agency needs senior people on day one. Trade will not disappear under a less trade-focused administration because foreign counterparts, summit meetings, and Congress will keep forcing trade issues onto the agenda. The biggest transition risks are action-forcing events that arrive regardless of the new team’s plans: inherited tariffs, WTO disputes, summit diplomacy, and congressional legislation.

Data Points: Political positions at USTR: About 10% - Schwab says most USTR positions are career staff and only a very small share are political appointees. Trade Promotion Authority expiration: July of next year - The hosts note that TPA would expire in July, affecting the timeline for any deal needing fast-track treatment. Implied submission deadline under TPA: April - Because TPA expires in July, a trade deal would realistically need to be submitted to Congress by April. Retaliation targets found: 26 out of 27 EU member states - In the hormone-treated beef dispute, the outgoing USTR team identified retaliation targets for nearly all EU members. Dispute duration: A decade - Schwab describes the hormone-treated beef fight as having lasted close to ten years before being unstuck. FTA deals inherited by Obama: 3 - Schwab says the outgoing Bush team left Korea, Colombia, and Panama FTAs for the next administration to handle. TPP negotiation deadline: 2 years - The Bush-era team set a two-year deadline for the Obama administration to decide whether to proceed with the Trans-Pacific Partnership.

Pivotal Quotes: "Trade negotiators are not classical economists." — Susan Schwab: Used to explain why negotiators may view tariffs as leverage rather than simply as distortions. "You need some senior positions at USTR who can show up and show up early." — Susan Schwab: Her argument against making the general counsel Senate-confirmed, emphasizing speed and continuity in transition. "I think that trade and foreign policy will become more enmeshed in the coming administration." — Susan Schwab: Her prediction that even a lower-priority trade agenda would still be pulled into broader diplomatic strategy.

Implications: For policymakers and trade watchers, transitions are less about starting from scratch than managing inherited tariffs, deadlines, and disputes. Personnel choices, TPA timing, and summit diplomacy will shape whether the next USTR can convert leverage into deals quickly.