SEATTLE (Scrap Monster): Two of former U.S. President Donald Trump's top trade officials have taken opposite positions on Nippon Steel's acquisition of U.S. Steel, leaving many in Washington guessing which stance represents that of the Republican front-runner.
Wilbur Ross, Trump's commerce secretary, argued in a Wall Street Journal op-ed on Jan. 1 that opposition to the deal was driven by xenophobia and that there was "no real cause for concern."
Ross noted that Nippon Steel's $14.1 billion bid is almost double that forwarded by rival Cleveland-Cliffs. While the United Steelworkers union favored the American bid, Ross said, "Nippon's steelmaking is at least as advanced as U.S. Steel's, so technology export control isn't an issue."
He stressed that attacks by Washington politicians create unnecessary geopolitical tensions and that such friction -- not the acquisition itself -- could endanger American national security.
Meanwhile, Robert Lighthizer, the United States Trade Representative who led the trade war against China under Trump, strongly opposed the idea of a foreign player acquiring an American steelmaker, arguing that "there is no free trade in steel."
"It matters who owns American industry. It matters that we have these jobs and it matters that we have production," Lighthizer told Fox News in late December.
Lighthizer's focus is on the protection of assets. "Do you think you could put together a bunch of money and go buy Nippon Steel in Japan? There's not a chance in the world," he told host Larry Kudlow, also a former Trump aide. "You couldn't buy Baowu Steel from China. Countries don't let this happen."
Both Ross and Lighthizer were with Trump until the end of his administration, while some officials resigned after assault on the Capitol by Trump supporters on Jan. 6, 2021.
Ross gained the trust of Trump in the 1980s, when he was a senior managing director at Rothschild & Co., a financial advisory firm, representing investors in Trump's troubled casinos in Atlantic City. Ross convinced bondholders to strike a deal with Trump, allowing the future president to maintain control of the casinos.
Trump appointed Ross as his commerce secretary at 79 years old, making him the oldest person to become a cabinet minister for the first time.
Lighthizer is considered by many to be in line for a major role if Trump wins the presidential election in November. In the first administration, Lighthizer shaped trade policy and is vowing to be even harder on China. "They're an existential threat to our country," Lighthizer told Kudlow. "We need to be able to be a bigger, stronger, better economy than China and, for sure, we should be raising tariffs on them now and I'm confident we will do that in a new administration."
Kenneth Weinstein, the Japan chair at the conservative Washington think tank Hudson Institute, said there are four factions within the Republican Party on the U.S. Steel issue. First is the Ross faction, who Weinstein described as the "big chunk" of the party, including himself.
"It's those who say the deal makes sense. Behind closed doors, that's what a lot of people actually believe," Weinstein said.
Second is a group of Republicans who would have the interagency Committee on Foreign Investment in the United States (CFIUS) go through with a standard review to determine whether the deal undermines national security. This is similar to the position of the Biden administration, which has said that the deal deserves "serious scrutiny" in terms of its potential impact on national security and supply chain reliability.
"This is, in a way, ducking questions, both for political and geopolitical purposes, because the deal has to go through the CFIUS process anyway," said Weinstein, adding that he expects the Nippon Steel transaction to pass the full CFIUS process.
The third group consists of lawmakers such as Sen. Josh Hawley of Missouri and Sen. Marco Rubio of Florida who fear the deal could offer a backdoor for Nippon Steel to avoid tariffs in U.S. markets, Weinstein said.
The last group is Lighthizer and the team of trade officials he trained while in office -- "the biggest critics of the deal" -- who are pressing for matching the tough trading practices of other countries.
While both Ross and Lighthizer would have influence in a future Republican administration, "Lighthizer has a bigger footprint on the Trump team," Weinstein said.
The debate has caught the attention of many as the possibility of a second Trump administration looms larger. Trump holds a sizable lead among Republican candidates, and is ahead of President Joe Biden in many recent polls.
The debate also highlights the two major trends on trade among conservatives.
"This is an interesting microcosm of everything that's going on," said Jeffrey Kupfer, a former acting deputy secretary in the U.S. Energy Department in the administration of President George W. Bush.
"Many of us who grew up in the older Republican Party, the Bush party, have a general view of the importance of foreign investment, free and fair trade, cross border investment and business relationships," Kupfer said.
There is another trend that focuses on industrial policy and how to build secure supply chains, Kupfer said. But even for the "America first" crowd that supports Trump, opinions are not uniformly opposed to the Nippon Steel deal, Kupfer added.
"Even within the Trump view of looking at what's best for America, it's not so clear that this deal would violate those tenets," he said. "Having an investment from one of our strongest allies, having a company with substantial resources that will keep production operable and modernized and everything here in the U.S., is good for us."
Both The Washington Post and The Wall Street Journal have run editorials in favor of the deal.
Shihoko Goto, acting director for the Asia program at the Wilson Center, said the way The Wall Street Journal featured Ross's op-ed on Jan. 1, indicates that the former commerce secretary's position is the common stance in the Republican Party. "The question is whether Trump will actually implement such generally accepted theories," she added.
Courtesy: www.asia.nikkei.com
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