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Trump poised to weaken trade agency

President-elect Donald Trump threw out a lot of big names during the campaign when asked who he would get to negotiate trade deals for the United States, including billionaire Wall Street investors Carl Icahn and Henry Kravis and the former chairman of General Electric, Jack Welch.

But as he homes in on who will run the small agency actually in charge of trade negotiations, some of the people in contention lack major star power.

Transition officials said on Tuesday the president-elect is considering Jovita Carranza, a former deputy administrator in the Small Business Administration and a member of Trump’s Hispanic Advisory Council, to head the Office of U.S. Trade Representative. Other contenders for the job include a former deputy in the agency and a couple of investment company executives who’ve previously served in government.

That’s a sign that the position will play second fiddle to Commerce Secretary-designate Wilbur Ross, a billionaire businessman, who “will ultimately direct much of the administration’s trade policy at the direction of President-elect Trump,” transition team spokesman Jason Miller said Tuesday. And it’s another indication that whoever fills the USTR slot could have one of the most difficult jobs in Washington, tasked with unwinding a lot of the work the agency has done over the past eight years, but with little real authority to craft policy.

Trump has already made it clear that he wants to dump an agreement — the Trans-Pacific Partnership — that the agency spent more than five years negotiating at President Barack Obama’s behest. He’s also trashed the work of a previous generation of U.S. trade negotiators by threatening to jettison NAFTA unless Mexico and Canada agree to renegotiate it on terms more to his liking.

In an ominous sign for USTR’s 250 or so employees, Trump used some of his harshest language during the campaign when he talked about the U.S. government officials responsible for negotiating past trade agreements, calling them “losers” and “political hacks.”

As Trump nears a decision on USTR, at least one CEO appears to be on the short list. That’s Dan DiMicco, who ran Nucor Corp., a major steel company, for more than a decade before retiring in 2013 and then signed up as a trade adviser for Trump’s presidential campaign. DiMicco, like Trump, has called for a tougher approach to trade, especially with China.

Another contender is Robert Lighthizer, a former deputy trade representative who has represented U.S. Steel Corp. in a number of anti-dumping cases against China and other suppliers. He met with Trump on Monday and wrote an op-ed lauding the president-elect’s tough approach to trade way back in 2011.

Two other potential candidates include Wayne Berman, a senior executive at the Blackstone Group and a Republican mega-donor who served in the Commerce Department in the 1980s, and David McCormick, president of Bridgewater Associates, who was undersecretary of Treasury for international affairs during the administration of George W. Bush.

Carranza met with Trump at his Mar-a-Lago estate in Florida on Tuesday. While she has business experience as a vice president at UPS before joining SBA, her conversation with the president-elect came after he was criticized for not yet picking any Hispanics for his Cabinet.

Talk that the nominee might have to play second fiddle to the commerce secretary could make the position less attractive to some applicants, said Greg Mastel, a senior international tax and trade adviser at Kelley Drye.

But it remains to be seen what that means in practice, Mastel said, noting the secretary of commerce, as well as the secretary of Treasury and secretary of state, all have some influence over trade policy in any administration.

“That’s just sort of normal intra-administration politics, I think,” Mastel said. “There have been a number of commerce secretaries who have played an important role [in trade policy]. And they always play some role.”

This isn’t the first time there’s been talk of demoting USTR. The same issues arose at the start of the administration of George W. Bush, when there was talk of putting the commerce secretary in charge of trade negotiations and stripping USTR of its Cabinet rank.

Ultimately, that plan fell by the wayside for the same reason that Congress created the agency in 1962 and put it in the executive office of the president, trade experts said.

When trade negotiations were done by the State Department, many in Congress and the business community believed that America’s trade interests often took a backseat to foreign policy concerns. At the same time, the agriculture and labor communities were worried their issues would be ignored if the Commerce Department was in charge of trade talks, “so the USTR became the chief negotiator for the president,” said Alan Wolff, a former deputy trade representative who is now chairman of the National Foreign Trade Council, a business group.

Trump transition officials said the exact relationship between the Commerce Department and the USTR is still being worked out, but they indicated some changes are likely.

“Obviously, there are certain guidelines and statutory issues, but then also certain things where the administration can come in and put their own footprint on how exactly the relationship will work,” Miller said, while emphasizing that USTR will remain an independent agency and will still be performing all the functions that the U.S. trade representative normally would do.

Some former trade officials said the agency has proven its ability to adapt to changing circumstances. Obama, for example, had little interest in new trade agreements when he was elected in 2008 — an abrupt change from the administration of Bush, who negotiated a string of trade deals. USTR survived those fallow years and experienced a major comeback in terms of its negotiating agenda during Obama’s second term.

“USTR is above all a nimble institution,” said Bruce Hirsh, a former negotiator who helped craft the TPP pact and other trade deals. “Every eight years they have to manage a transition and they have to earn the trust of the new people coming in. But they’ve always succeeded in that.”

Meanwhile, any attempt to demote USTR could trigger an early fight between Trump and the two congressional committees that created the agency and have jurisdiction over tax and trade policy.

“Tell [Senate Finance Chairman] Orrin Hatch and [House Ways and Means Chairman] Kevin Brady that they’re no longer in the trade business,” Wolff said. “I don’t think they’d find that very amusing.”

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