144. Trade policy transitions, with Ambassador Susan Schwab

Episode Summary

Executive Summary: The episode examines how U.S. trade policy shifts during presidential transitions, using Susan Schwab’s experience moving from the Bush to Obama administrations to explain what outgoing and incoming teams do, how leverage changes, and what inherited disputes and deadlines shape early decisions. The discussion highlights personnel, policy papers, trade negotiations, WTO disputes, and the political reality that trade quickly becomes unavoidable for new administrations.

Main Topics: What transition teams do in trade policy (Priority: 5/5): Transition teams draft policy roadmaps, identify first-day/first-100-day priorities, and review budgets, personnel, and institutional issues before the new administration takes office. USTR staffing and confirmation politics (Priority: 5/5): Schwab explains USTR’s tiny, mostly career-staffed structure and why early political appointees like the chief of staff and general counsel matter before Senate-confirmed leadership arrives. Lessons from the Bush-to-Obama transition (Priority: 4/5): Schwab describes how the outgoing team tried to prepare the way for Ron Kirk, including signaling that Doha was stalled and helping advance pending agreements and negotiations. Inherited disputes as leverage (Priority: 5/5): Existing tariffs and WTO disputes are portrayed as both problems and negotiating tools, with the EU beef retaliation case used as a model for creating pressure and eventual resolution. Trade policy deadlines and constraints (Priority: 4/5): The episode stresses that trade promotion authority expiration and other deadlines force decisions quickly, shaping whether deals can realistically be concluded by a new administration. Trade as an unavoidable foreign policy issue (Priority: 5/5): Even if an incoming White House does not prioritize trade, foreign counterparts, summits, and Congress will keep bringing trade onto the agenda. What to watch in the Biden transition (Priority: 4/5): The hosts and Schwab discuss likely priorities: the choice of USTR, White House economic/national security staff, and whether trade becomes more intertwined with foreign policy and congressional action.

Key Arguments: Transition teams are not just symbolic; they produce policy papers, first-100-day plans, and assessments of personnel and institutional structure. Because USTR is small and mostly career-staffed, a few early appointees can strongly shape the handoff before Senate-confirmed officials arrive. Outgoing officials can help successors by clarifying which negotiations are dead ends and by setting up leverage in disputes that the next team can use. Tariffs left behind by an outgoing administration can be treated either as a problem to remove or as bargaining leverage to exploit. Trading partners may treat an outgoing administration as a lame duck if they expect a friendlier successor, but deadlines can also push them to deal quickly. Trade is not easily ignored: foreign leaders at G20/G7/ASEAN/APEC meetings will raise trade issues even if the White House wants to focus elsewhere. Congress remains a major variable because it can advance its own China-related legislation or shape the fate of trade agreements. A politically savvy USTR may be needed if the administration wants to convert inherited trade issues into actual policy wins.

Data Points: Political positions at USTR: about 10% - Schwab describes the share of political appointments at USTR as very small. Obama-era trade deals inherited: 3 free trade agreements - U.S.-Korea, U.S.-Colombia, and U.S.-Panama agreements were left for the incoming Obama administration. Deadline for trade promotion authority: July of next year - Used to explain why a trade deal would need to be submitted to Congress by April. Trade agreement submission timing: by April - Needed because TPA was set to expire in July, leaving a narrow window for congressional approval. Retaliation targets found in EU beef dispute: 26 out of 27 EU member states - Schwab’s team identified retaliation items to increase leverage in the hormone-treated beef dispute. Countries without retaliation target: 1 member state - The UK had no target because it had not advocated blocking U.S. beef. Dispute duration: about a decade - The hormone-treated beef dispute had been ongoing for close to ten years when they acted to unstick it.

Pivotal Quotes: "The tariffs are sitting there. So, you know, the incoming team can decide what they want to do with it." — Susan Schwab: On how an incoming administration might view inherited steel and China tariffs. "One, they're missing all of the things that the USTR and others inherit that are action-forcing events." — Susan Schwab: On what observers overlook about trade transitions and the inherited agenda. "Trade is not likely to be a priority. I think they're going to find that trade is going to come to them, even if they don't necessarily want to go to trade." — Susan Schwab: Her forecast for the Biden administration and the inevitability of trade issues.

Implications: Incoming administrations inherit both leverage and headaches: unresolved disputes, tariffs, and deadlines can force early action. For businesses and policymakers, trade policy may shift slowly, but it cannot be ignored once foreign partners, Congress, and summit diplomacy pull it onto the agenda.