93: US Trade Policy Before Trump, with Ambassador Michael Froman

Episode Summary

Executive Summary: The episode examines U.S. China trade policy through Mike Froman’s Obama-era experience, focusing on WTO enforcement, bilateral negotiations, and institutional reform. It argues that Obama-era frustrations with China resembled Trump-era concerns, but Obama relied more on legal, multilateral, and negotiated tools to pressure China and preserve the WTO system.

Main Topics: Obama-era enforcement against China: Froman explains how the administration prioritized WTO disputes that were economically large or systemically important, including agricultural subsidies, export-base subsidies, and aluminum overcapacity. China’s WTO accession and U.S. manufacturing concerns: The discussion links China’s 2001 WTO entry to increased investor confidence and manufacturing relocation to China, fueling long-running U.S. frustration over trade impacts. Limits of U.S. enforcement and industry cooperation: Froman stresses that enforcement cases often require industry data and cooperation, but firms fear retaliation and disclosure of proprietary information, making cases harder to build. Multilateral coordination and burden-sharing: The episode notes that the U.S. often carried the enforcement burden while other countries preferred to join rather than lead, though some cases were shared or initiated by others. Broader Obama strategy toward China beyond disputes: The administration paired WTO cases with the TPP, a bilateral investment treaty push, and multiple dialogue channels to encourage Chinese internal reform and align with reform-minded Chinese constituencies. WTO reform, Doha, and plurilateral negotiations: Froman argues Doha was unlikely to succeed and that the WTO should shift toward open plurilateral deals, stronger monitoring, and reform of dispute settlement rather than waiting for one grand round. Judicial overreach and Appellate Body controversy: He defends the Obama-era effort to influence Appellate Body appointments as a way to keep rulings within agreed WTO rules, not to undermine dispute settlement itself.

Key Arguments: The Obama administration focused on WTO cases that were either economically significant or structurally important to the trading system. China’s WTO accession facilitated investment and offshoring by increasing confidence that China-made goods would access the U.S. market. Effective enforcement against China requires detailed evidence, which often depends on hesitant U.S. industries. Other countries often expected the U.S. to lead on China enforcement, even when they shared concerns. The Obama administration used negotiations, not just litigation, because progress was likeliest when Chinese reform-minded domestic constituencies also had an interest. The Trump administration’s China policy is more forceful because global consensus on the China challenge is broader than it was during Obama’s term. The WTO’s future depends on open plurilateral agreements, tighter monitoring, and a repaired dispute-settlement system rather than a single comprehensive round. The U.S. objection to some Appellate Body behavior was about preserving the Uruguay Round bargain, not simply winning specific cases.

Data Points: WTO complaints against China: 43 - Total formal WTO complaints filed against China to date during the discussion. U.S. share of WTO disputes against China: 23 of 43 - The U.S. was the complainant in 23 of the 43 WTO disputes against China. Obama administration WTO disputes initiated: 14 - Froman says the Obama administration initiated 14 separate WTO disputes. Other countries’ WTO disputes over same period: 9 - Other countries launched 9 WTO disputes during the Obama administration. Export-base regulations identified: about 300 - The U.S. team had to piece together roughly 300 local/provincial regulations to prove a hidden Chinese subsidy program. Information Technology Agreement tariff cuts: about 200 product categories - A plurilateral WTO agreement eliminated tariffs on roughly 200 categories of IT products. Trade value covered by IT agreement: about $1 trillion - The IT agreement covered around one trillion dollars in trade.

Pivotal Quotes: "we tried to focus on ones that were either quantitatively very significant. And I think, for example, one of the cases we brought... had to do with agricultural subsidies" — Mike Froman: Describing how the Obama administration chose WTO cases against China. "we make most progress with China when we align ourselves with some constituency internal in China who also cares about that issue" — Mike Froman: Explaining the strategy behind negotiation and reform pressure. "I think if it has those three functions, negotiating, monitoring, and dispute settlement, I think negotiating, there's going to have to be a practical approach" — Mike Froman: Summarizing his view of the WTO’s future.

Implications: The episode suggests future trade policy toward China will rely on coalition-building, targeted enforcement, and WTO reform rather than unilateral pressure alone. For industry, it underscores the need for evidence-sharing and the risks of retaliation in trade disputes.