Peter G. Mayberry10.09.17
Wilbur Ross, Secretary of Commerce and a member of President Trump’s White House Cabinet, sat for an open interview with James Hohmann of the Washington Post in early September and offered detailed descriptions of the administration’s goals and motivations on a host of issues of interest to the nonwovens industry. Nearly nine months into the Trump presidency, this is one of very few times where rhetoric took a backseat to clarity regarding issues such as NAFTA renegotiation, U.S. trade relations with China and other Asian trading partners, domestic workforce issues, and more.
According to his official bio, Ross, was sworn in as the 39th Secretary of Commerce on February 28, 2017, to serve as “the principal voice of business in the Trump Administration.” Secretary Ross has been active in investment banking and private equity arenas for more than 55 years and has restructured over $400 billion of assets for the: airline, apparel, auto parts, banking, beverage, chemical, credit card, electric utility, food service, furniture, gypsum, home-building, insurance, marine transport, mortgage origination and servicing, oil and gas, rail car manufacturing and leasing, real estate, restaurants, shipyards, steel, textiles and trucking industries.
Secretary Ross has been chairman or lead director of more than 100 companies operating in more than 20 different countries.
His official bio further notes that Secretary Ross is a graduate of Yale University and Harvard Business School (with distinction), that he served on the U.S.-Russia Investment Fund during the Clinton Administration, and was awarded a medal from President Kim Dae-jung for helping South Korea during its financial crisis. In November 2014, the Emperor of Japan awarded Secretary Ross the Order of the Rising Sun, Gold and Silver Star.
Midway through the interview, in a transcript provided by WaPo, Secretary Ross was asked about business relationships with the Trump Administration in general, including the nonwovens industry, and he replied “…business community morale is really good. The regulatory reliefs that have been granted by this administration have been extremely well-received. And the tax reform is something that they all view, and I agree, needs to be dealt with and needs to be dealt with urgently. We get tax reform through, make the taxes lower, get the money brought back from offshore, make U.S. rates for businesses competitive so the companies don’t have to be driven offshore. You know, our tax rates have been almost twice those of many other countries. There’s no reason to burden American industry like that.”
He concluded the point by noting, “So we want [America to be] a destination for people, not a place where they have to flee to go to some tax haven.”
With regard to NAFTA re-negotiation, WaPo’s Hohmann noted that two rounds of talks between the three NAFTA nations had already taken place and after the second session “…it seemed that there were still a lot of unresolved issues, such as expanding the use of U.S. made materials and automobiles. There are also some disputes over whether steps should be taken to raise salaries for Mexican workers. You came out in support of raising the minimum wage for workers in Mexico.”
Secretary Ross replied, “Well, you have to put it in perspective. There have only been two sessions so far. The original one in Washington, and then the one in Mexico City that just completed. The next one will be Ottawa in, I think, two weeks or so. In any big, complicated negotiation, and this is a complicated one, you’ve got something like 2500 pages to deal with. Of those 2500 pages, there are only a handful that are really key, but you’ve got to line through all of them. So the strategy and the negotiations will start with some of the easier things: get some of the textual issues out of the way; try to build some momentum so that you really have some momentum, a feeling of togetherness, as you move into the harder issues.”
He went on to say, “[So far] This is a total of 10 days is all, of negotiation. That’s not a lot. It took them, what, eight years to do an average trade treaty, so we’re trying to get done, more or less, by the end of the year, a whole revamp. So this is an unprecedented thing. And so is the pace. Having five consecutive days of negotiation, and then only recessing for a couple of weeks between, that’s unheard of. That’s a record-breaking pace.”
Secretary Ross indicated that NAFTA renegotiation could wither if deals aren’t done quickly: “Well [NAFTA re-negotiation] can’t drag on too long because of the political calendar. You have the Mexican presidential elections in mid-summer next year. You have Canadian providential elections around the same time. Our fast-track authority, the trade promotion authority, expires in July of next year. And then obviously, in November next year, we have the midterm elections. As you get closer to all of those political dates, the ability to get anything done will go down. So there’s no fine-line magic date, but more or less around the end of the year is probably where we’re going to need to know where we are.”
When asked about the possibility that the U.S. would withdraw from NAFTA all together, Secretary Ross replied:
[President Trump] has made clear if [the renegotiation process doesn’t work], he’s going to pull out. So that shouldn’t be a shock to anyone. And really, that’s the right thing. We need fixes to this deal. It has not worked the way that it was intended to. And not to pick particularly on Mexico, but as an illustration, pre-NAFTA, we routinely had four to $5 billion a year of trade surplus with Mexico. Now, what do you think the cumulative trade deficit with Mexico has been since NAFTA? One trillion dollars. Now, even by Washington standards, $1 trillion—I can barely pronounce it—$1 trillion is a big number. And I’m not saying it’s just Mexico’s fault. That’s not the point, but it’s a stark contrast. A trade agreement was supposed to benefit both sides. It was also supposed to raise the standard of living in Mexico. And until recently, they haven’t had a single increase in their minimum wage in years and years and years and years. And even now, it’s, what, a dollar or two a day. It’s not very good. So the prosperity has not been very well distributed down there.”
Switching to U.S./Asia relations, Secretary Ross, opened with China: “…our deficit with China, which depending how you measure it, is more or less a half-a-trillion dollars a year. And what is interesting, China, if you took the U.S. out of the equation, China has a net trading deficit with the rest of the world. Their trade surplus with us makes up for that deficit and leaves them with a net surplus. So in effect, we’re absorbing an awful lot of cumulative problems from elsewhere. That seems a bit of a heavy burden, and we’re working very hard to try to fix that.”
When asked about President Trump’s recent instructions that U.S. trade advisors draw up plans to withdraw from the Free Trade Agreement [FTA] that the U.S. has had with South Korea since March, 2012, and the fact that North Korea tested another bomb the next day, Secretary Ross replied, “You surely aren’t trying to blame [President Trump] for the hydrogen bomb.” Then, more seriously, the Secretary noted: “What I’m trying to point out is that there’s this issue with South Korea that is simultaneously going on at the same time North Korea continues to be bellicose and confrontational. There’s some concern in kind of the national security community that messing up our relationship with Seoul when we’re trying to counter Pyongyang is a bad idea….I don’t think it’s inherent in having someone as an important national defense partner that you also have to run a trade deficit with them.
“What has happened with Korus—which is the technical name for our agreement with South Korea – what’s happened with it is that our exports to South Korea have not gone up. They actually have arguably gone down a little bit. Whereas their exports to us, particularly of automobiles, have gone up a lot. And that’s why the trade deficit has gotten so big. So it’s very much bundled into one segment.”
Near the end of the interview there was a discussion about the upcoming 2020 Census that will be overseen by Secretary Ross’s Department and could have massive implications to the U.S. nonwovens industry. Census requirements included in the United States Constitution are used to apportion seats in the Electoral College and the U.S. House of Representatives which, in turn, determines Federal expenditures throughout the country. U.S. demographics have altered tremendously since the last Census was taken in 2010, and U.S. nonwovens manufacturers can expect big changes beginning 2022 or so based on Census results from the 2020 tally.
Secretary Ross – who worked as a Census taker during graduate school – pointed out that the once-a-decade challenge of taking the Census is also a huge jobs machine for temporary labor, noting: “…we have to hire 500,000 part-time workers, get them mobilized, get them out there, get them to do the chore of knocking on the doors of the people who didn’t respond to internet; didn’t respond to mail; didn’t respond to phone calls. So it’s not the world’s simplest task….and it’s a huge budget. Not trillions, but well into the billions.”
The interview concluded with a question to Secretary Ross about his experience transitioning from the world of private-sector management to public-sector management. He replied: “…the most heartening thing about it is Washington, as a place, is a very habitable community…. [and] the quality of people in the mid-ranks in the government. There are a lot of very, very dedicated people; very skilled people; very knowledgeable people… We have 47,000 employees in our group at Commerce.”
Earlier in the interview – in response to a question about the debt ceiling – Secretary Ross noted that “uncertainty” in the business sector results in less economic growth and expansion, at that we are currently in times of great uncertainty. His overall message in the interview, therefore, appears to be that things may seem uncertain right now, but U.S. trade and economic policy is tethered in reasoned logic and DOC is working to advance greater certainty to the business community as quickly as possible.
According to his official bio, Ross, was sworn in as the 39th Secretary of Commerce on February 28, 2017, to serve as “the principal voice of business in the Trump Administration.” Secretary Ross has been active in investment banking and private equity arenas for more than 55 years and has restructured over $400 billion of assets for the: airline, apparel, auto parts, banking, beverage, chemical, credit card, electric utility, food service, furniture, gypsum, home-building, insurance, marine transport, mortgage origination and servicing, oil and gas, rail car manufacturing and leasing, real estate, restaurants, shipyards, steel, textiles and trucking industries.
Secretary Ross has been chairman or lead director of more than 100 companies operating in more than 20 different countries.
His official bio further notes that Secretary Ross is a graduate of Yale University and Harvard Business School (with distinction), that he served on the U.S.-Russia Investment Fund during the Clinton Administration, and was awarded a medal from President Kim Dae-jung for helping South Korea during its financial crisis. In November 2014, the Emperor of Japan awarded Secretary Ross the Order of the Rising Sun, Gold and Silver Star.
Midway through the interview, in a transcript provided by WaPo, Secretary Ross was asked about business relationships with the Trump Administration in general, including the nonwovens industry, and he replied “…business community morale is really good. The regulatory reliefs that have been granted by this administration have been extremely well-received. And the tax reform is something that they all view, and I agree, needs to be dealt with and needs to be dealt with urgently. We get tax reform through, make the taxes lower, get the money brought back from offshore, make U.S. rates for businesses competitive so the companies don’t have to be driven offshore. You know, our tax rates have been almost twice those of many other countries. There’s no reason to burden American industry like that.”
He concluded the point by noting, “So we want [America to be] a destination for people, not a place where they have to flee to go to some tax haven.”
With regard to NAFTA re-negotiation, WaPo’s Hohmann noted that two rounds of talks between the three NAFTA nations had already taken place and after the second session “…it seemed that there were still a lot of unresolved issues, such as expanding the use of U.S. made materials and automobiles. There are also some disputes over whether steps should be taken to raise salaries for Mexican workers. You came out in support of raising the minimum wage for workers in Mexico.”
Secretary Ross replied, “Well, you have to put it in perspective. There have only been two sessions so far. The original one in Washington, and then the one in Mexico City that just completed. The next one will be Ottawa in, I think, two weeks or so. In any big, complicated negotiation, and this is a complicated one, you’ve got something like 2500 pages to deal with. Of those 2500 pages, there are only a handful that are really key, but you’ve got to line through all of them. So the strategy and the negotiations will start with some of the easier things: get some of the textual issues out of the way; try to build some momentum so that you really have some momentum, a feeling of togetherness, as you move into the harder issues.”
He went on to say, “[So far] This is a total of 10 days is all, of negotiation. That’s not a lot. It took them, what, eight years to do an average trade treaty, so we’re trying to get done, more or less, by the end of the year, a whole revamp. So this is an unprecedented thing. And so is the pace. Having five consecutive days of negotiation, and then only recessing for a couple of weeks between, that’s unheard of. That’s a record-breaking pace.”
Secretary Ross indicated that NAFTA renegotiation could wither if deals aren’t done quickly: “Well [NAFTA re-negotiation] can’t drag on too long because of the political calendar. You have the Mexican presidential elections in mid-summer next year. You have Canadian providential elections around the same time. Our fast-track authority, the trade promotion authority, expires in July of next year. And then obviously, in November next year, we have the midterm elections. As you get closer to all of those political dates, the ability to get anything done will go down. So there’s no fine-line magic date, but more or less around the end of the year is probably where we’re going to need to know where we are.”
When asked about the possibility that the U.S. would withdraw from NAFTA all together, Secretary Ross replied:
[President Trump] has made clear if [the renegotiation process doesn’t work], he’s going to pull out. So that shouldn’t be a shock to anyone. And really, that’s the right thing. We need fixes to this deal. It has not worked the way that it was intended to. And not to pick particularly on Mexico, but as an illustration, pre-NAFTA, we routinely had four to $5 billion a year of trade surplus with Mexico. Now, what do you think the cumulative trade deficit with Mexico has been since NAFTA? One trillion dollars. Now, even by Washington standards, $1 trillion—I can barely pronounce it—$1 trillion is a big number. And I’m not saying it’s just Mexico’s fault. That’s not the point, but it’s a stark contrast. A trade agreement was supposed to benefit both sides. It was also supposed to raise the standard of living in Mexico. And until recently, they haven’t had a single increase in their minimum wage in years and years and years and years. And even now, it’s, what, a dollar or two a day. It’s not very good. So the prosperity has not been very well distributed down there.”
Switching to U.S./Asia relations, Secretary Ross, opened with China: “…our deficit with China, which depending how you measure it, is more or less a half-a-trillion dollars a year. And what is interesting, China, if you took the U.S. out of the equation, China has a net trading deficit with the rest of the world. Their trade surplus with us makes up for that deficit and leaves them with a net surplus. So in effect, we’re absorbing an awful lot of cumulative problems from elsewhere. That seems a bit of a heavy burden, and we’re working very hard to try to fix that.”
When asked about President Trump’s recent instructions that U.S. trade advisors draw up plans to withdraw from the Free Trade Agreement [FTA] that the U.S. has had with South Korea since March, 2012, and the fact that North Korea tested another bomb the next day, Secretary Ross replied, “You surely aren’t trying to blame [President Trump] for the hydrogen bomb.” Then, more seriously, the Secretary noted: “What I’m trying to point out is that there’s this issue with South Korea that is simultaneously going on at the same time North Korea continues to be bellicose and confrontational. There’s some concern in kind of the national security community that messing up our relationship with Seoul when we’re trying to counter Pyongyang is a bad idea….I don’t think it’s inherent in having someone as an important national defense partner that you also have to run a trade deficit with them.
“What has happened with Korus—which is the technical name for our agreement with South Korea – what’s happened with it is that our exports to South Korea have not gone up. They actually have arguably gone down a little bit. Whereas their exports to us, particularly of automobiles, have gone up a lot. And that’s why the trade deficit has gotten so big. So it’s very much bundled into one segment.”
Near the end of the interview there was a discussion about the upcoming 2020 Census that will be overseen by Secretary Ross’s Department and could have massive implications to the U.S. nonwovens industry. Census requirements included in the United States Constitution are used to apportion seats in the Electoral College and the U.S. House of Representatives which, in turn, determines Federal expenditures throughout the country. U.S. demographics have altered tremendously since the last Census was taken in 2010, and U.S. nonwovens manufacturers can expect big changes beginning 2022 or so based on Census results from the 2020 tally.
Secretary Ross – who worked as a Census taker during graduate school – pointed out that the once-a-decade challenge of taking the Census is also a huge jobs machine for temporary labor, noting: “…we have to hire 500,000 part-time workers, get them mobilized, get them out there, get them to do the chore of knocking on the doors of the people who didn’t respond to internet; didn’t respond to mail; didn’t respond to phone calls. So it’s not the world’s simplest task….and it’s a huge budget. Not trillions, but well into the billions.”
The interview concluded with a question to Secretary Ross about his experience transitioning from the world of private-sector management to public-sector management. He replied: “…the most heartening thing about it is Washington, as a place, is a very habitable community…. [and] the quality of people in the mid-ranks in the government. There are a lot of very, very dedicated people; very skilled people; very knowledgeable people… We have 47,000 employees in our group at Commerce.”
Earlier in the interview – in response to a question about the debt ceiling – Secretary Ross noted that “uncertainty” in the business sector results in less economic growth and expansion, at that we are currently in times of great uncertainty. His overall message in the interview, therefore, appears to be that things may seem uncertain right now, but U.S. trade and economic policy is tethered in reasoned logic and DOC is working to advance greater certainty to the business community as quickly as possible.
