Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Jason Kelly on Bloomberg Radio. So our next guest was
Speaker 1: a former Assistant Secretary for Manufacturing and Services in the
Speaker 1: US Department of Commerce in the International Trade Mission administration.
Speaker 1: That was during the Obama administration. She's got some thoughts
Speaker 1: and how the presidential election will impact future trade agreements.
Speaker 1: We have a lot to talk to her about on
Speaker 1: this Monday. Nicole Lamb Hall is a managing director at Kroll.
Speaker 1: She's fellow at Duff and Phelps Institute UM and she
Speaker 1: joins us on the phone in Washington, d C. Nicole,
Speaker 1: it is nice to have you here with us. Welcome
Speaker 1: to Bloomberg. Well, thank you. Carol's great to be with you.
Speaker 1: You know, it's funny we kid Jason and I kind
Speaker 1: of laugh a little bit about Oh yeah, it's as
Speaker 1: a presidential election year, because in any other year, that
Speaker 1: is what every conversation would probably revolve around, and yet
Speaker 1: this year is unlike any other. Talk to us though
Speaker 1: about from your perspective, what you're seeing, what you're thinking
Speaker 1: about when it comes to the up coming election and
Speaker 1: when it comes to trade. Sure, well, I really believe,
Speaker 1: and and this is something that we talk to our
Speaker 1: clients with the Definite Self Institute about all the time.
Speaker 1: It's just really the differences around kind of a choice
Speaker 1: between a unilateral and a multilateral approach to trade. Uh.
Speaker 1: It seems clear to me that the Trump doctrine is
Speaker 1: kind of a go at a loan approach that isolates
Speaker 1: and sometimes alienates the US from our allies and and
Speaker 1: in some ways embraces what I would say our market
Speaker 1: distorative tools such as tear offfs and quotas for purchases
Speaker 1: of of US goods and services. And by contrast, and
Speaker 1: multilateral approach to trades, these collaborative action with our allies
Speaker 1: and and and in working together hopes to maybe you know,
Speaker 1: nudge uh countries that don't want to play by the
Speaker 1: same rules towards playing by those rules. And so I
Speaker 1: think that that's what the that's what's being set up
Speaker 1: now in the presidential election as it relates to trade,
Speaker 1: is just those different kind of approach, those different approaches.
Speaker 1: And so Nicole, I guess one of the big questions
Speaker 1: is if there is a change over, if you do
Speaker 1: have a Biden administration, how easy is it to get
Speaker 1: back to a multilateral world. Since we've been in this
Speaker 1: bilateral or unilateral world now for three and a half years, Well,
Speaker 1: it's going to be very challenging, Jason, I can tell
Speaker 1: you because it's it's really there has been a sea change.
Speaker 1: There have been some norms, that is that have obviously
Speaker 1: changed since the Trump administration came into into office, and
Speaker 1: so I think it's it's going to take us a
Speaker 1: while to get back to the point where we can
Speaker 1: be viewed as leaders in the as a leader in
Speaker 1: the multilateral approach. I don't think it will happen overnight,
Speaker 1: but I think it's necessary, particularly when you look at
Speaker 1: what's happened as it relates to US China trade. I mean,
Speaker 1: I think that that in and of itself illustrates kind
Speaker 1: of the perils of going it alone. Um. I think that,
Speaker 1: you know, the global businesses, like our clients with Deaf
Speaker 1: and Phelps and Corole are really caught in the balance now,
Speaker 1: kind of in the cross hair, so to speak, of
Speaker 1: the U. S. China trade tensions that that have been
Speaker 1: largely brought about. I think, even though they existed prior
Speaker 1: to President Trump coming into the office into office, I
Speaker 1: think they have created been exacerbated by this going alone approach. Well,
Speaker 1: and it's interesting because I feel like Nicole, the US
Speaker 1: isn't alone in kind of looking inward, and I feel
Speaker 1: like we've seen, you know, some of this around the world.
Speaker 1: And I do wonder though increasingly you mentioned China, if
Speaker 1: we are getting ready to kind of divide the world
Speaker 1: into China and the countries that want to work with
Speaker 1: China and the US and the countries that want to
Speaker 1: work with the US. Well, I think there's a danger
Speaker 1: of that, and I think that is bad, particularly for
Speaker 1: global businesses like our clients has the world. You know,
Speaker 1: what what we do know now is that global supply
Speaker 1: chains our our reality. They aren't going that's not going
Speaker 1: to change. We have globalization, and we have to learn
Speaker 1: to work together within this sphere, with multinational UH companies
Speaker 1: that are both in the US and in other countries
Speaker 1: around the world, to find a way to um, you know,
Speaker 1: create some normalcy around what global trading rules should be UM.
Speaker 1: I think what what I worry about is, and I
Speaker 1: recognize that there is a little bit of nationalism that
Speaker 1: we're seeing around the world. I worry that some of
Speaker 1: the progress that we've made with trade agreements kind of
Speaker 1: moving away from care ofs and looking more broadly at
Speaker 1: policies like environmental protections and labor protections. I'm afraid that
Speaker 1: we're moving away from that and we're going to get
Speaker 1: to a point where the global economy and global businesses
Speaker 1: will suffer. And so Nicole, when we look at the
Speaker 1: headlines to a and over the weekend and going into
Speaker 1: the weekend and we see something like the action around TikTok,
Speaker 1: you know, part of this is about an area that
Speaker 1: you are very familiar with, which is foreign ownership. You know,
Speaker 1: you've done a lot of work, uh, I believe on
Speaker 1: SCIPHIUS and you know that looks at it's the committee
Speaker 1: for our listeners, It's Committee on Foreign Investment in the US.
Speaker 1: An incredibly important sort of piece of the puzzle here
Speaker 1: when you think about that element and how it relates
Speaker 1: to global trade and how it relates to the relationship
Speaker 1: among superpowers. What do you think about right now? Well,
Speaker 1: what I worry about is that SIPIUS is used and
Speaker 1: and other similar committees or entities around the world are
Speaker 1: used not for what they were intended to be used
Speaker 1: as is to protect national security, but are used as
Speaker 1: tools and trade craft. Um, I think that you know,
Speaker 1: the as I look at the TikTok transaction, and this
Speaker 1: is you know, consistent with my experience when I was
Speaker 1: on the committee, when I was in the Obama administration.
Speaker 1: It is really centered, it seems to me, on national
Speaker 1: security concerns around data privacy of U. S citizens, And
Speaker 1: so I think that it's it's probably right on the
Speaker 1: mark um, but it does create to the tensions. I mean,
Speaker 1: we have a trifecta tensions with China around trade, technology,
Speaker 1: and geopolitics, so it certainly falls into the kind of
Speaker 1: the technology tensions. But I think that you know, data
Speaker 1: privacy is a real concern. And while you know, when
Speaker 1: you look at the legislation that updated the SCIFIST process
Speaker 1: and it's focus on protecting p i I or personally
Speaker 1: identifiable information of US citizens, that was always an issue
Speaker 1: even when I was on SCIFISTS, But now with the
Speaker 1: legislation being updated, it's really coming into into full focus.
Speaker 1: And it's a it's a legitimate issue. But if scythist
Speaker 1: is used as a tool of trade craft, then you know,
Speaker 1: it kind of loses its bite, I think, and I
Speaker 1: think we want to avoid that and so, so help me.
Speaker 1: This is a really important point now. I want to
Speaker 1: make sure that I understand it, Nicole, which is what
Speaker 1: what is the role or what mechanism should be used
Speaker 1: in this case when it relates to something like TikTok
Speaker 1: If there are indeed, and I think there's some questions
Speaker 1: out there as to whether there are you know, real
Speaker 1: concerns about data privacy. If there are those concerns, how
Speaker 1: should this be essentially investigated or ultimately litigated. What's the mechanism?
Speaker 1: What's the right mechanism? Well, I think Scipias certainly is
Speaker 1: the right mechanism, especially because this transaction was not reviewed
Speaker 1: by Sippius when it was done initially. And Siffius does
Speaker 1: have the ability to look at cases and transactions that
Speaker 1: we're not they're called non notified transactions Jason, And there's
Speaker 1: no statute of limitations on you know, how long before
Speaker 1: Scippius can look at this. Uh, you know, they have
Speaker 1: the ability to open up any transaction that threatens national security.
Speaker 1: So I think it's the right um, the right forum
Speaker 1: for it. So civit so sorry to interrupt you. So
Speaker 1: Ciffius is the right forum. But basically the administration or
Speaker 1: the president coming in and being like you're done or
Speaker 1: you're done. You know at a date certain is maybe
Speaker 1: not the right thing. Well, you know, SCIFFIUS has typically
Speaker 1: been a process that's been confidential. You know, it's it's
Speaker 1: a highly um because it's a national security focused review process.
Speaker 1: It's it's usually not something that you read about in
Speaker 1: the media as much as we have in the last
Speaker 1: few days. So I'm a little bit concerned about that
Speaker 1: because that's a that's a change in norms. But I
Speaker 1: do believe that CIFFIUS is the right venue for for
Speaker 1: these issues to be resolved. And if indeed the intelligence
Speaker 1: reports show that there is a data privacy risk for U.
Speaker 1: S citizens, then it's the right decision for SIFFIUS to
Speaker 1: be reviewing this and should possibly cause it cause of
Speaker 1: investment here. What do you hear, Nicole, from some of
Speaker 1: your clients that you guys work with, I mean you
Speaker 1: work with you know more than half of I believe
Speaker 1: the SMP five hundred companies, I mean household companies that
Speaker 1: certainly our listeners know of. I'm curious what they see
Speaker 1: as the trade environment going forward, especially if there is
Speaker 1: a second term under Donald Trump, or whether there's a
Speaker 1: change in the White House, do they have a preference, Well,
Speaker 1: you know, it's it's it's it's a very good question, Carol.
Speaker 1: And what I'd say is our clients with the devil
Speaker 1: Fels Institute really want certainty even if the news isn't great,
Speaker 1: even if it's not ideal. The ping pong approach or
Speaker 1: the seesaw approach of you know, teariffs or x at
Speaker 1: X level one day, you know another level another day,
Speaker 1: they're on the table, they're off the table. That really
Speaker 1: interferes with the ability of global businesses to do long
Speaker 1: term business planning. So I think that certainly if President
Speaker 1: Trump is reelected, we'll see more of the same, a
Speaker 1: continuation of kind of the unilateral approach to trade negotiations.
Speaker 1: I mean, the President has been very clear that he
Speaker 1: does not favor multilateral negotiations. He'd rather do bilateral negotiations,
Speaker 1: So I can I anticipate that that will continue in
Speaker 1: a Biden administration. I think we will see more of
Speaker 1: what I described earlier as a multilateral approach, which really
Speaker 1: gets to or speaks to working with our allies so
Speaker 1: that we have a little bit more of a united
Speaker 1: front and maybe more sway with China. So if you
Speaker 1: think about the t PP, the Trans Spacific Partnership Effort,
Speaker 1: you know that was designed to work with our allies
Speaker 1: to create an alternative to the approach that that China
Speaker 1: was taken and taking as it related to trade, and
Speaker 1: I could see with a Biden administration and moved towards
Speaker 1: something more like that. Nicole, I wanted to ask you
Speaker 1: about COVID Night Team because obviously that complicated, to say
Speaker 1: the least, the relationship between US and China. And it's
Speaker 1: hard to sort of tease out the threads necessarily, or
Speaker 1: it takes a little work to tease out the threads
Speaker 1: of what is a trade tension, what is a health tension,
Speaker 1: what is a political tension, what is an economic tension?
Speaker 1: In some ways they're all wrapped up together. What were
Speaker 1: the implications of the world and the US specifically, and
Speaker 1: I guess China on the front end of dealing with
Speaker 1: COVID nineteen and how that affected kind of the equation here. Well,
Speaker 1: it certainly has complicated the equation because, as I mentioned,
Speaker 1: the trifecta earlier earlier of trade, technology and geopolitics. When
Speaker 1: you sprinkle, you know kind of the impact of the
Speaker 1: origins and handling of COVID nineteen. Uh, it really complicates
Speaker 1: further the U. S. China relationship. And I can tell
Speaker 1: you that the impact that we've seen with our clients
Speaker 1: is that you know, they they if they didn't understand
Speaker 1: the need for this before, they now know that they
Speaker 1: really have to diversify their supply chains. We have seen
Speaker 1: a lot of tension in the supply chains around the
Speaker 1: world as a result of COVID nineteen. You know, China
Speaker 1: has been just kind of the center of much of
Speaker 1: manufacturing activity, particularly in supply chains, and it's it's just
Speaker 1: I think it's been a wake up call that that
Speaker 1: companies really need to be looking around the corner even
Speaker 1: more around what could happen if the center, you know,
Speaker 1: if they if they have too much of an investment
Speaker 1: in one area of the world and their supply chains,
Speaker 1: what that can mean for their businesses overall. China has
Speaker 1: been though so important to call, as you well know,
Speaker 1: to the supply chain. Are people are companies? Is it
Speaker 1: is it more of okay, we need to you know,
Speaker 1: spread out our supply chains. Is it also that we
Speaker 1: need to reduce our exposure to China? I think it's
Speaker 1: a little bit of both because certainly what China, China
Speaker 1: has an advantaged because they've really been successful at at
Speaker 1: creating the value as it relates to the supply chains,
Speaker 1: particularly with manufacturing companies who are global. That's been a
Speaker 1: great base h for um for such companies and they've
Speaker 1: perfected that craft. And certainly there are other countries that
Speaker 1: can benefit from some of the shifts, like Vietnam and
Speaker 1: and even India, but they aren't at the same level
Speaker 1: as China in terms of their maturity in the supply chains.
Speaker 1: So I think that what companies are doing is, you know,
Speaker 1: they know and recognize that they need to remain in China,
Speaker 1: but they're beginning to build in other areas as well
Speaker 1: to try to hedge their bets a bit. And some
Speaker 1: of that may even involve where it's appropriate economically restoring
Speaker 1: to the US. You know, one of the other political issues,
Speaker 1: political and trade and economic issues has been you know,
Speaker 1: right here on this continent, Nicole, and I know you're
Speaker 1: familiar with this as well, very familiar, which is the
Speaker 1: U s m c A, the re cut of NAFTA.
Speaker 1: What did that tell us about the state of trade
Speaker 1: as it relates to you know, our neighbors to the
Speaker 1: north and South Canada, Mexico. Well, I think that's what's
Speaker 1: really important to recognize today is that regions are competing,
Speaker 1: not just countries, and so it's important to have a
Speaker 1: strong North American trade agreement for our region to be successful.
Speaker 1: It benefits the US, China and Mexico. So I think that,
Speaker 1: you know, it's it's been important and important development. It
Speaker 1: did modernize NaSTA. In fact, the irony Jason is it
Speaker 1: was modeled after the TPP that the Obama administrations put forward.
Speaker 1: A lot of the provisions that are there are are
Speaker 1: very much along the lines of what I talked about
Speaker 1: in terms of focuses on labor and environmental concerns. So,
Speaker 1: you know, I think it's very positive that the that
Speaker 1: the North American region is able to be competitive with
Speaker 1: the rest of the world. So so much of this
Speaker 1: whether we're talking about US China, whether we're talking about
Speaker 1: U S. M c A, or as Carol Master likes
Speaker 1: to called Usmica because you know, we just love acronyms.
Speaker 1: She doesn't actually I just teach out that other do that. Um.
Speaker 1: But you know, when I think about this through a
Speaker 1: political lens, Nicole. So much of it comes back to,
Speaker 1: especially in a presidential election year, two jobs, and that's
Speaker 1: the way it's framed. That's the way it's framed on
Speaker 1: both sides of the equation. You know. I was listening
Speaker 1: to the I'm sort of showing a little my podcast
Speaker 1: listening here. I was traveling this weekend with my son,
Speaker 1: and we listened to the Joe Rogan interview with Bernie
Speaker 1: Sanders from like way back in the Day, which are
Speaker 1: from a year or so ago, which is interesting to
Speaker 1: listen to because there's obviously no talk of a pandemic.
Speaker 1: But one of the things that Bernie Sanders on the
Speaker 1: far left talks about is the same thing that you
Speaker 1: hear from President Trump about, you know, offshoring jobs and
Speaker 1: taking care of American workers. And that's the political lens
Speaker 1: that we that so many people see this through. How
Speaker 1: does this fit in and how does it get magnified
Speaker 1: the jobs question when it comes to trade because we're
Speaker 1: in a presidential year. You know, it's a a question, Jason,
Speaker 1: and I don't know that I have the perfect answer,
Speaker 1: but but what I would say is that the positive
Speaker 1: of the U S m c A is that you know,
Speaker 1: there's there was a lot of focus on UM the
Speaker 1: content in the region US content UH, ensuring that the
Speaker 1: levels were higher in terms of being able to take
Speaker 1: advantage of the of the most favorite nation status, so
Speaker 1: to speak, within the within the region having a certain
Speaker 1: level a higher level of US content and goods and
Speaker 1: services than existed under NaSTA. And and that's good for jobs.
Speaker 1: I mean, it's good for American jobs, you know, especially
Speaker 1: when you look at an industry like the automotive industry,
Speaker 1: where products at various stages of completion are going back
Speaker 1: and forth brought across both the northern border and the
Speaker 1: southern border daily several times. That's good for jobs. I
Speaker 1: think though, what I will say is in a political
Speaker 1: year like we have now, you know, trade is a
Speaker 1: very convenient boogeyman. And I think that you know, often
Speaker 1: both parties use use it to to varying degrees. Um,
Speaker 1: if we look at the facts, you know, I think
Speaker 1: that that they bear out that increases and exports and
Speaker 1: if we look at it even between you know, Canada,
Speaker 1: the US and Mexico create jobs and support jobs, sustained jobs.
Speaker 1: And when you think about that, and you think about
Speaker 1: the North America competing with the rest of the world
Speaker 1: and and exporting to the rest of the world. That
Speaker 1: is also good for American jobs. So it's it's a
Speaker 1: tough it's a tough thing, but it's it's something that
Speaker 1: is certainly in an election year, does get elevated in
Speaker 1: the way you suggest it, Nicole, while we have you
Speaker 1: and I am curious because since you have such a
Speaker 1: great direct line into you know, many of the nations
Speaker 1: and worlds kind of big companies, I am curious, um
Speaker 1: how nervous they are about the second half of the year.
Speaker 1: You know here they are looking at, you know, potentially
Speaker 1: a change in the White House or continuation of the
Speaker 1: current administration. And then we also have the virus and
Speaker 1: the impact that that is having on many many businesses,
Speaker 1: on workers, on the economy. I'm just curious about what
Speaker 1: you're hearing from them on that front. Yes, well, I
Speaker 1: thank you, Carol. The the question is is a good one,
Speaker 1: and it really varies by industry. As as we're seeing.
Speaker 1: I mean, you know, our clients and travel and tourism
Speaker 1: are very nervous. The COVID virus not being under control
Speaker 1: has really hurt them, uh, financially and and there's really
Speaker 1: at this point we don't know where the bottom is,
Speaker 1: and so there is concerned about that uncertainty. Uh, the
Speaker 1: uncertainty around you know, consumer purchasing patterns ways on our
Speaker 1: clients minds. Um, supply chain continues to be you know,
Speaker 1: stability of the supply chain continues to be a concern.
Speaker 1: And then when and those of the things that no
Speaker 1: one can control, you know, President controump Trump can't control those,
Speaker 1: a President Biden wouldn't be able to control those. All
Speaker 1: we can do is try to manage this by I
Speaker 1: ris um. The uncertainty around the change in administration and
Speaker 1: policy direction, I think is is common at this juncture
Speaker 1: in our political calendar. Um. I think our clients you know,
Speaker 1: want to know, you know, kind of where the regulatory
Speaker 1: direction will be depending on who wins the White House.
Speaker 1: With President Trump, I assume it's more of the same
Speaker 1: and they do too. But you know, there's still so
Speaker 1: much uncertainty given many of the changes in norms that
Speaker 1: existed and allowed multinational companies based in the US and
Speaker 1: otherwise to make do the long term business planning that
Speaker 1: they are accustomed to doing. So what's the biggest challenge
Speaker 1: if if we do see a Biden administration, this sort
Speaker 1: of goes back to where we started at the beginning, Nicole,
Speaker 1: Just to wrap up our conversation here, if there is
Speaker 1: a Biden administration, what's the single biggest challenge when it
Speaker 1: comes to trated What's the first thing you would advise
Speaker 1: a Biden administration to do to potentially change the direction
Speaker 1: of where we are, especially when it comes to getting
Speaker 1: to a multilateral world, a more multilateral world. Well, the
Speaker 1: first thing that I would have uh advise the President
Speaker 1: Biden to do, and this is even broader than trade,
Speaker 1: it has happens to really relate to US foreign policy
Speaker 1: generally is outreached to our allies and and and and
Speaker 1: reassuring our allies that the United States is interested in
Speaker 1: a multilateral approach to trade. I mean, if you look
Speaker 1: at it, Jason, I mean we've been waring with some
Speaker 1: of our traditional allies in Europe over trade. They don't
Speaker 1: know what box we're coming out of, you know, and
Speaker 1: not to mention China and the rest of Asia. So
Speaker 1: I think the first thing that the that the President
Speaker 1: Biden would need to do is really try to get
Speaker 1: back to level two levels set the leadership that the
Speaker 1: United States has had in the areas of foreign policy
Speaker 1: and trade that have really been altered to a point
Speaker 1: where they're they're kind of, in my view, unrecognizable, and
Speaker 1: they aren't recognizable to our our allies and to global businesses.
Speaker 1: I think we need to kind of go back to
Speaker 1: the center and then go from there. I think that
Speaker 1: would be the best thing to do. Interesting, all right, Well, uh,
Speaker 1: we know a lot of people are going to be
Speaker 1: focused on this, especially over the next few months. We
Speaker 1: really appreciate that overview, and you spending so much time
Speaker 1: with us. Nicole lamb Hale, she's a fellow at the
Speaker 1: Deaf and Phelps Institute, also former Sister Secretary of Commerce
Speaker 1: for Manufacturing and Services in the Obama administration. She joined
Speaker 1: us on the phone from the nation's capital. Carroll, some
Speaker 1: really good context, I mean, and important to think about
Speaker 1: these issues. I feel like we get so caught up
Speaker 1: in a lot of the politics. This is just some
Speaker 1: good old fashioned policy, Shawn don in somewhere. It's like
Speaker 1: they just had a twenty five minute conversation about It's
Speaker 1: reality check, right, because we do spend so much time
Speaker 1: talking about the virus, and understandably so, it impacts, you know,
Speaker 1: all of the industries that we touch upon. But at
Speaker 1: the same time, she's got clients who are very much
Speaker 1: thinking about the trade environment, right and going back to that,
Speaker 1: that's a core thing in terms of you know, how
Speaker 1: they construct their business or develop longer term strategies, whether
Speaker 1: it's reassessing or you know, redesigning their supply chain. So, um,
Speaker 1: a really deep die when it comes to trade, loved,
Speaker 1: and it's all connected. It's all connected, the politics, the
Speaker 1: economics of it. And I mean, when was the last
Speaker 1: time we talked about your favorite trade agreement US MACA
Speaker 1: back back, back on the agenda