Presidential Oral Histories

Charlene Barshefsky Oral History, U.S. Trade Representative

About this Interview

Charlene Barshefsky discusses the North American Free Trade Agreement, Japan, China, World Trade Organization issues, and her relationship with Cabinet and other executive agencies.

Presidential Oral Histories |

Charlene Barshefsky Oral History, U.S. Trade Representative

Transcript

Riley

There are a couple of administrative things that we always do at the beginning. First, I want to reiterate the fundamental ground rule, which is that this interview is being conducted under a veil of confidentiality. Everybody at the table here has taken the pledge that nothing is going to be repeated outside the confines of the room. Again, we want to encourage you, therefore, to speak freely to history, recognizing that you’ll get a copy of the transcript and if you’ve reflected on something and feel like maybe you’d rather put a hold on it for a period of time, until after your demise, then that’s perfectly fine with us. We’d rather go ahead and get the straight story now than worry too much about getting something that would be immediately accessible. So we hope that you’ll feel comfortable speaking candidly.

The second thing is a voice identification so that the transcriber will be able to figure out who is saying what. Jill will also be recording the sequencing to aid in that. That’s the purpose of her note keeping. My voice will be easy for the transcriber today since I’m the only male at the table. I’m Russell Riley. I’m Associate Professor at the Miller Center and have been heading up the Clinton Presidential History Project. 

Barshefsky

Charlene Barshefsky, Senior International Partner, Wilmer Cutler Pickering Hale and Dorr [WilmerHale], and the subject of the interview.

Elliott

I’m Kim Elliott of the Institute for International Economics and the Center for Global Development.

Riley

I want to begin by asking a little bit about your own biography. You came to serve in a very senior position in a Democratic administration. Did you have Democratic roots in your family?

Barshefsky

I was born and raised in Chicago. [laughing]

Riley

Is that the answer? 

Barshefsky

That’s the answer. And my Democratic roots are very strong. But that really is not the way in which my service in the Clinton administration came about. I did not work on the Clinton campaign, had never met Bill Clinton, nor had I met his campaign manager, Mickey Kantor. I was a partner at Steptoe & Johnson, which is a large Washington law firm. I was in the trade field for many, many years and had built up a significant reputation in the field, both litigation and policy advice, as well as speeches, articles, monographs, testifying on Capitol Hill and so on. I was sitting at my desk in my office editing a brief. The phone rang. I picked it up. It was Mickey Kantor. This was the day after President Clinton announced that he would nominate Mickey to serve as USTR [United States Trade Representative]. 

I didn’t know Mickey Kantor, as I said. Mickey indicated that he called because he had heard a lot about me and wanted two things: one, to pick my brain about what he ought to be focusing on as USTR, since he did not have a trade background at all; and second, to encourage me to come into the administration. I told him on the phone that I was very flattered that he would call, and that I would be delighted to meet to discuss ideas about what I thought the direction of trade policy should be in the Clinton administration, but that I was not interested in coming into the administration. My children were young and I enjoyed my law practice, which was quite large. I thought it was important for him to know that on a going-in basis. 

We met the next day and spent about two hours together. In that meeting I outlined what I thought the purpose of trade and trade policy were—not only economic growth, but greater global integration, alliance building and America’s global positioning—and reiterated my own freer trade bent. In terms of specific initiatives, I told him that, of course, he would have to finish the NAFTA [North American Free Trade Agreement] and the Uruguay Round, but that, among other issues, his multilateral priorities should be China’s accession to the GATT [General Agreement on Tariffs and Trade]—forerunner of the WTO [World Trade Organization]—as well as Russia’s, if possible. These were the two big-ticket items that were outstanding on the multilateral front. And I thought China would slowly emerge—I’ll say parenthetically, the only mistake I made in the statement was use of the word slowly— as a global leader, and that the U.S. had no handle on China whatever, other than a relationship defined by disputes. China’s WTO accession, on the other hand, would be a foundational element for the U.S.-China relationship, as well as open a huge market for the U.S. and globally. 

I talked about high tech and the fact that trade agendas had typically not dealt with technology or hi-tech fields. I talked about the use of trade as an adjunct to peace, and so spent time discussing the Middle East as an area that was ripe for trade policy intervention. I talked about Asia and Africa. On and on. I felt I was giving a trade policy lecture, and probably spoke for 90% of the two hours. Bottom line—all substance, no small talk and quite productive.

Riley

Was Mickey known to you as somebody who had a background in trade policy himself?

Barshefsky

No. He made clear that he had no background. This was also clear from a quick skim of an article about him that appeared in the Washington Post. It was also quite clear, however, that this was a very bright guy, very fast on the uptake, and that once a policy direction was determined, he would go at it relentlessly. He was, in fact, a brilliant USTR.

The meeting ended and by the time I returned to my office, I learned that Mickey had called. We subsequently chatted. He said, Thank you so much. I’d like you to be my deputy. I said no. And he said, Don’t say no. Think about it. I thought about it for ten days, which in Washington is quite remarkable because these are truly prized jobs. But as I said, my children were young and my law practice was very good and much more controllable than being Deputy USTR. It was ultimately my husband and my kids who convinced me I ought to do it, my husband on the basis that it would be a great experience. He had served on Capitol Hill and in the [Jimmy] Carter White House, so he felt very strongly that I should accept.

Riley

Where had he been at the Carter White House?

Barshefsky

Domestic policy.

Riley

With Stuart Eizenstat?

Barshefsky

With Esther Peterson, actually. During the ten days, my older daughter asked whether I would be able to leave the job if I decided it was really not suited to me and I told her that I thought it would be difficult certainly early on, but yes, that these jobs are by their nature short-term. The younger daughter asked, Will you meet the President? And I said, Yes, I suspect so. And she said, Well, then you have to do it. So, out of the mouths of babes. 

I ultimately decided there wasn’t much downside and there was a whole lot of upside. And my husband, on a substantive level, kept emphasizing what a fabulous experience this would be. But ten days passed and I was still undecided. What then happened is a true story, on my life. 

Ed [Edward B. Cohen] and I were commuting down Connecticut Avenue on the morning of the tenth day, and I said to my husband, I am just in equipoise. I honestly can’t decide. I need a sign. A little white car in the next lane passed us. I could see his license plate, and it said G-O-4-I-T. I said to my husband, That’s it. That’s the sign. I got to the office, called Mickey and accepted. 

Riley

That wasn’t Mickey’s car, was it?

Barshefsky

[laughing] I never asked him. So I came to the job in a most unusual way; much more on the basis of substance than politics, and fortuitously so, in the sense that the USTR didn’t have a background in the field and wanted to know there was someone he chose with significant expertise. 

The other deputy, Rufus Yerxa, was already in place having served in the previous administration as the Geneva deputy. Rufus was just terrific—a guy I had known for many years, and with whom I knew I could work very well. Mickey kept Rufus on and brought him back to Washington.

The deputies split the world. Rufus was responsible for Europe and, at that time, helping Mickey finish NAFTA and the Uruguay Round. I was responsible for all of Asia and Latin America, and some functional areas like intellectual property rights, sectoral issues, and so on. The division was quite a clean one, which left Rufus to pursue what he needed to focus on and get done, and left me to pursue the other half of the world with a clear mind. 

Riley

Did you have discussions or negotiations internally about the divisions, or was that an established situation that you inherited from the [George H.W.] Bush administration that said there would be somebody who handled—

Barshefsky

There were really no discussions internally about the broad division, given historic practice in the agency and Rufus’ focus in the prior administration on the Uruguay Round. He and I merely sat down to divide the functional areas. 

With respect to NAFTA —an area that would ordinarily have fallen in my Latin America portfolio—the shift to Rufus was necessitated by the fact that I was recused from NAFTA, having represented the Mexican private sector in the talks while in private practice. Indeed, during my confirmation in the Senate, I undertook that recusal, expressly.

Riley

You mentioned that there was a third deputy in Geneva?

Barshefsky

There are three deputies, two in Washington and one in Geneva. Rufus moved from his Geneva position to Washington, with me. The new deputy in Geneva was the former Governor of Washington state, Booth Gardner. He was followed in the second term by Rita Hayes. The current deputy in Geneva is someone different, who is also very good. 

Riley

I want to go back and ask you a question about your own knowledge about the President’s commitments on trade. Your discussions with Mickey, as you described them, were largely his picking your brain about what was on the horizon in trade policy. But you’re being offered a position to work with a political figure who obviously has had to comment on trade. Did you have any specific thoughts about President Clinton’s commitments on trade? Were you comfortable with what you had heard coming out? Were you concerned in any way that this was a Democrat that you didn’t care for at that stage?

Barshefsky

No. I had followed Clinton’s campaign, of course, and a number of the speeches he had given during its course, particularly in 1992. I thought his trade rhetoric, in general, was very balanced, and tended toward the open trade side of the equation. Clinton himself, of course, was a compelling figure, if only for the sheer number of IQ points rattling around in that quite remarkable brain. I was comfortable with him in the sense that I thought my own views of trade and international economics would mesh quite well with his. I also believed that I could be a persuasive advocate in my own right. I was under no illusion that from time to time my views would have to be compromised, but on balance I felt quite comfortable.

Bear in mind also that the Vice President was Al Gore, who had quite a free trade record. To the extent Bill Clinton was going to turn to someone for advice, and to the extent that person was the Vice President, I felt reasonably comfortable where the conversation would lead. Mickey was also quite open to the issues, but again, it was early days and I suppose there was always the possibility that his views on policy would come to be rather more protectionist. Fortunately, I didn’t have to face that, because that didn’t happen. 

I also took comfort in the fact that—put aside NAFTA, which was politically controversial and the subject of discussion early-on in the administration—at a minimum, Mickey would have to finish the Uruguay Round. That would give him, as an early success, an agreement directed wholly toward further global trade liberalization. I thought this would inform his view of trade on a go-forward basis. 

Riley

So there was a built-in momentum in that direction?

Barshefsky

Correct. And a built-in bias in that direction. For anyone who is a negotiator, your early trade deals inform your views about subsequent deals, including goals and desirability.

Elliott

I was just going to ask if you could put trade policy in sort of—how it fits in Clinton’s broader economic policy and what priority it had overall in the administration, especially early on?

Barshefsky

Clinton’s slogan, as you’ll recall, was, It’s the economy, stupid. His view of the economy was not simply confined to the domestic economy as though it operated in isolation, but also a view of the international economy. Clinton, who has the uncanny ability to see extraordinary connections between things, saw immediately the connection between U.S. domestic economic health and our participation in a globalizing world. 

I think Clinton had a rather broad view. If you look at his earlier speeches, even on NAFTA, he spoke about trade as an instrument of domestic growth, global growth, stability, and alliance building, an adjunct to peace in the traditional vision of [Franklin Delano] Roosevelt and [Harry] Truman. These themes cropped up repeatedly in his speeches, and quite early in his campaign. His view was always that the U.S. would prosper in a vibrant global economy, and that a global economy that was stagnant or unavailable to U.S. participation, because, in part, of trade barriers, would hurt U.S. economic growth. 

Elliott

What about linking some more traditional—because it was controversial in the Democratic Party—linking some of the more traditional Democratic priorities in terms of domestic policies on safety nets and education, training—linking that more explicitly and—

Barshefsky

I think we have to be careful, when we think about the Democratic Party and its views on trade, not to put the cart before the horse. The Democratic Party had traditionally been pro-trade. Labor unions were pro-trade for a number of years. What turned the Democratic Party away from that stance was in part the emergence of strong competitors, like Japan and the Asian tigers, and the view that these countries had made substantial inroads into the U.S. market through unfair practices while keeping their own markets closed. U.S. job loss, factory closures and wage suppression were the result in the view of the Party. These fears were heightened, in a most profound way, by NAFTA. When Bill Clinton came in, NAFTA was hanging out there like a lead weight. Democrats were upset about the terms. The issues of labor and the environment loomed very large. The Bush administration hadn’t dealt with them appropriately, in the view of labor and the Democratic Party. And it was NAFTA that threw the party’s anti-trade sentiment into high gear. 

I always thought that if NAFTA had been an agreement not between the U.S., Canada, and Mexico, but between the U.S., Canada, and almost any other country not on our border, Congress would have been a bit more receptive to it. But Mexico was right on our border, immigration was a problem, low wages were a problem, perceived U.S. job loss was a problem, environmental degradation on the border was a problem—all very visible, and just too close. Access was too ready, and labor unions said, Not on our watch. The Democratic Party felt similarly. 

NAFTA was a very high-cost agreement. It was the right thing to do, without question, in my mind, but it was a high-cost agreement politically, leading to all sorts of follow-on consequences, including a Democratic Party which remains stuck in the shadow of NAFTA and hostile to trade agreements. NAFTA is most assuredly not the most relevant factor affecting U.S. competitiveness, or jobs or wages. But the rhetoric has never changed, even though China, India, Brazil and others are at center stage—not Mexico. NAFTA likely continues to be debated more as a proxy for larger questions about competition with developing countries, and the U.S.-Mexico relationship more generally, than in terms of its actual changes in trade policy.

In any event, the party’s anti-trade stance was solidified by NAFTA, and its response to trade agreements post-NAFTA was informed by that experience, including the eventual passage of NAFTA. 

Elliott

Was there ever any chance, do you think, that the President would have backed away? Or was he pretty committed to it from the beginning?

Barshefsky

I think there was a chance he would back away. He had a number of political advisors urging him to do so. But, I don’t see how you can repudiate your neighbor. I appreciated the political element, and that from a political point of view the agreement would be high-cost for a young President who didn’t know Washington, and visa versa. And, indeed, it turned out to be very costly, most particularly to the President’s relationship with the Democratic Party and its leaders, post-NAFTA. So certainly, the President thought about backing away, but ultimately, the broader internationalist tendency of some of his advisors, and his innate vision, led to the inevitable conclusion to press forward with NAFTA. 

Riley

So, given the nature of his campaign promise, he was not so locked in that there might not have been an out—

Barshefsky

I’ve never seen a campaign promise that ever locked a President in. You’ll recall the infamous Read my lips statement of George Bush, Sr. You do what you have to do to get elected, and then you do what you have to do to govern, and the two may be entirely different, unfortunate as that may be.

Riley

Okay. Refresh my memory. Effectively, the clock was ticking on NAFTA when he came in. Is that—

Barshefsky

It was ticking because of fast-track authority, which is to say, the limitation placed on the administration with respect to Congressional consideration of certain trade agreements. The ability of Congress to vote up or down on NAFTA with no amendments, was due to expire. If there were going to be a NAFTA implementing bill presented to the Congress in time, the negotiation had to conclude with respect to whatever add-on labor, environment and other provisions were needed to gain Congressional support. The bill implementing the NAFTA would then have to be drafted, vetted by the Congress and formally submitted for approval, all within a very tight time frame.

Riley

Right. And that becomes an important issue late in the first year because of questions of priorities, right? You’ve got a great deal of the President’s attention during the first seven or eight months devoted to the budget deal for August, and then the question is, where do we turn our attention to now?

Barshefsky

You had the budget deal, you had NAFTA, you had healthcare—there were a lot of big-ticket items. But because I was recused from NAFTA, I was not a party to the discussions prioritizing these issues. Mickey would have been involved. 

Riley

Okay. Kim, do you want to follow up with anything on that, or can I dial back a bit? If we want to come back to deal with any of these questions, we should certainly feel free to do so. But if that’s not your portfolio, tell us what the contours of your portfolio are when you come in. When do you first begin work?

Barshefsky

Well, I began work in March of 1993, before my confirmation. When you enter a government job at that level and not yet having been confirmed, you are something of a back-bencher. You need to maintain a low profile lest Congress think you are acting as though you have already been confirmed. That would lead to extremely unpleasant questions at the confirmation hearing. And so you’re quite careful in what you do. Although, at that juncture, you’re not formally a decision-maker, in practice your colleagues turn to you for your views. I certainly gave mine. 

Riley

Mickey had already been confirmed by that point?

Barshefsky

Yes. Mickey was confirmed. Confirmations of Cabinet happen pretty fast—by end of January, mid-February, right in that range. I came on board in March. One of the first things I did was to attend what was called a deputies meeting. The Deputies Group was made-up of the immediate sub-Cabinet, or the equivalent agency official who led on international economic issues: Deputy USTR, the Under Secretary of State, Deputy to the National Economic Council [NEC], which the President had created, Under Secretary of the Treasury, Under Secretary of Commerce, the Vice Chair of the Council of Economic Advisors and so on. 

Riley

Did these take place at the White House?

Barshefsky

The West Wing, typically, or in the Old Executive Office Building. The deputies group became the policy-making body on international economic issues, including trade policy, particularly for the first two years. It operated in a very robust fashion in part because neither Mickey nor Ron Brown had trade backgrounds and in part because the Democrats had been out of power for twelve years. There was a lot of Bush policy that had to be reviewed, rethought, reshaped. People at Cabinet level couldn’t possibly do that. They didn’t have the time, even if they had the background. 

There was an analogous deputies group on the national security and foreign policy side, co-chaired by State and the NSC [National Security Council]. So it was the deputies that did a full-scale review of economic, national security and foreign policy. This made some of the Cabinet members crazy, because they felt the deputies were making most of the key policy decisions for the administration. They were not entirely right, but pretty close in those early years. 

There was a view at the time, which I shared and which the President had spoken about in the campaign, that Japan was a problem—the trade imbalance, the closed nature of Japan’s economy, and the ineffectiveness of prior policy. Using that as an example—the deputies group discussed the issue ad nauseam. We agreed on an approach with respect to Japan that was called the Framework Agreement approach under which Japan would be committed to a series of market opening negotiations on a broad array of sectors in the Japanese economy. Subsequently, I and several others negotiated the Framework Agreement, and that became the template for a very robust Japan policy from the administration. That’s one example of the way in which the deputies operated.

So, policy was made by the deputies, but implemented largely by the agencies in charge. While a few of us did the Framework negotiations as part of the deputies group, the individual trade agreements under the framework were largely done by USTR, either alone or as head of an inter-agency team, as were all subsequent trade agreements. The deputies group was at its most robust in the first two years. After that, its relevance, while still important, declined somewhat. In part, all of us who had been deputies knew our jobs well. In part, we all knew each other’s strengths and weaknesses. In part, we all had our own views on policy and on what the agency we worked for needed to accomplish for the President. There was, I would say, a bit of a waning of influence of the deputies group after that first two years.

Riley

Is that also partly a function of having revisited and done what you wanted to do with respect to the policy preferences that you’d inherited?

Barshefsky

In part, yes, although many issues came up, of course, along the way. My own approach was to take issues to the deputies group, either because I thought they ought to know about them—not to seek advice—or the issue was one that would merit discussion, or perhaps implementation by another agency. Those first two years, especially—and I suspect this is true in every new administration—are very intense. And of course the relationships that were formed among the deputies continue to this day. 

Riley

Was Japan, then, the geographic area that you ended up spending most of your time on for that first couple of years?

Barshefsky

No. I started on China issues very early as well—first textile negotiations, then intellectual property negotiations. Korea came up early—auto negotiations, among others. Revitalizing APEC, the Asia Pacific Economic Cooperation forum, which encompassed all of the Asia-Pacific nations, was also an early priority for me. At the same time, I developed the template for the Free Trade Area of the Americas, and many other large initiatives and negotiations. Japan was the country that represented the greatest number of bilateral agreements in 1994-1995, but not the area on which I spent most of my time.

Riley

Okay. Did you have any conversations with the President himself about your job, or about policy? This is a question based partly out of my own interest, and partly out of your daughter’s question about whether you were going to see the President.

Barshefsky

The first time I met Bill Clinton was in the Oval Office to brief him on the Framework talks. The second time was in Tokyo in July of 1993. My kids know the date because I was pulled away from our Fourth of July holiday to go back to Tokyo to finish the talks. I was in Tokyo. We had been negotiating all day. There were a couple of things I wanted that we didn’t yet have and it was 1:30 in the morning, maybe 2:00 in the morning. 

Mickey, Warren Christopher, and I went up to the President’s suite at the hotel where we were all staying—the Okura. He was at the dining room table of his suite and he was dressed in khakis and a plaid shirt, looking reasonably rumpled. He was reading a newspaper when we walked in. He barely looked up. To the left was a book, open, facedown—Marcus Aurelius Meditations. To the right, the New York Times crossword puzzle with a pen.

Riley

I could have told you that was there—

Barshefsky

We walked in. He lowered the newspaper—he was wearing his reading glasses—looked up, and said to me, I’ve been waiting to see you, which took me somewhat aback. I said, Well, here I am. We sat around the table, and he looked at Warren Christopher and said, Chris? and Chris said, The negotiations over the Framework are at a very delicate phase and I thought Charlene should brief you and tell you what she needs. 

The President nodded and looked at me. The newspaper came up again covering his face. I remained silent and Chris motioned, [whispering] Go ahead. I thought, Well, all right. Mr. President, this is a complicated topic. We’re at a delicate point. There are a couple of trades I could make. I don’t want to have to make any of them, and so I want to lay out a plan of action. 

As I’m talking, the hand comes out from behind the newspaper, picks up the book, turns it over and he starts to read the book. About a minute goes by. The book gets put back down. The paper goes back up, he turns the page. A hand comes out to the right, and he fills in a word on the crossword puzzle. This is all true—I am not exaggerating. This is going on, and I’m thinking, I don’t care how smart this guy is, this is a completely disastrous briefing session. I finished what I needed to say, and the newspaper finally came down. 

He looked at me, and he said, I think we have an inconsistency between your briefing two weeks ago and where you are now. Let me see if I can spell it out. And he went through the briefing I had done several weeks earlier in the Oval perfectly. He also went through what I had just said and concluded that there might be an inconsistency in our approach. I explained why there wasn’t. He poked and prodded some with respect to a couple of other points I had made. He had caught the nuance in what I was saying, not only the words in the order in which I had said them. At the end, we agreed on the game plan and we were off and running. We concluded the Framework agreement the next day. 

I walked out of the room and Warren Christopher and Mickey both burst out laughing and said, Your expression went from astonishment, to disdain and despair in the beginning of the briefing, to amazement that he could multitask to this degree and miss nothing.

So, the first time I met the President was in the Oval for a briefing. Very formal. And the next time, a casual setting, in the suite in the hotel.

Riley

But your earliest interactions with him, and maybe this carries out—we don’t have to deal with this right now—were not on kind of broad discussion about where the administration ought to be going?

Barshefsky

No.

Riley

It was on very hard nuts and bolts of how you were approaching a particular negotiation.

Barshefsky

Well, yes and no. In other words, I was confirmed in June and immediately went to both Tokyo and Seoul. Prior to that and because I was already informally on-board, I worked as part of the deputies group on what our approach to Japan should be. The President had always been kept in the loop, of course, so that I knew when I briefed him he had already approved the policy that had been formulated in the deputies group. I didn’t fear that I’d go in and he’d say, What on earth is all of this about? or that he would say, This is not at all the course I want to follow. 

Riley

It was just a more general question. From the outside, one might anticipate that a President, having a high-level appointee, would have some discussion or dialogue at some point about, This is what I’m looking for. This is what I hope that we can accomplish.

Barshefsky

Not per se. But my views on policy were well known in Washington because of my visibility and my deep involvement in policy and legislative issues. When Mickey first called me, he did so, in large part, because of my broad reputation and my trade policy philosophy. It was that reputation that had landed me on the President’s list.

Riley

Okay. Maybe that happened with Mickey and then—

Barshefsky

Mickey also gave the President a detailed read-out of my views after Mickey and I first met. 

Riley

Okay.

Barshefsky

It’s funny to look back now. It never occurred to me that I would have had these conversations with the President so early on, because, until you’re Cabinet, your immediate boss is not the President. Your immediate is boss is your immediate boss—the Cabinet Secretary. Your boss might have had that discussion, you might be in the room for many of those discussions, but you would not necessarily have led it, directly with the President—especially so early on.

Elliott

I was going to ask—this is maybe two years later, the Japan auto case—whether there was a discussion—I’m sure there was a discussion at USTR, but whether Clinton was involved in any discussions on the systemic changes with the WTO and the dispute settlement system and whether he had expressed a view on the sanctions threat and how that related to our obligations under the WTO.

Barshefsky

Yes, the Japan auto case was a genuine morass. By the time the auto issue came about, I had reassigned Japan negotiations to the USTR General Counsel. I wanted to devote more time to China and many other issues, including the intersection of trade and technology, where I thought we had to really get a move on. 

I did shepherd the Japan retaliation process through the Deputies—that is, a consensus to retaliate against Japanese auto imports into the U.S. if a deal could not be reached. I thought we ought to be very aggressive on the issue. I mustered unanimous support in the group, including from people who ordinarily did not like the idea of retaliation. Ultimately a trade agreement was reached with Japan on autos and no retaliatory tariffs were ever imposed. 

Elliott

Was it expected that Japan would go to the WTO and bring it—

Barshefsky

Our view at the time was, Who cared? which is not the responsible view. But the problem was so difficult and, with respect to market access, the Japanese had been so obdurate, that my view was that if retaliation might force them to the table, we should do it, even if WTO inconsistent. If we did so, and if they took us to the WTO, it would take two or three years before the case was resolved. In the meantime, the damage to their vehicle sales in the U.S. would have been done. This was a case where, having failed to achieve an agreement for over two years from inception of the Framework because of Japan’s intransigence, more extreme measures were justified. I will say in general that that was the only instance with respect to a WTO member where I would have been comfortable retaliating even though it would have been WTO violative. Otherwise, I would have opposed retaliation and would have instead proposed taking the issue to WTO dispute settlement.

Elliott

The WTO had just started. Was there discussion of what the effect under this brand new institution would be?

Barshefsky

No, I don’t think so. In that regard, the WTO would have been fine. Japan would have brought the U.S. to dispute settlement, it would have won and the U.S. would have withdrawn the retaliatory duties. The WTO system would have been fine.

Elliott

Was the CEA [Council of Economic Advisors]—

Barshefsky

Yes.

Elliott

And they also—

Barshefsky

Everyone was in accord. I think everyone was tired of the runaround.

Elliott

Just so frustrated with Japan?

Barshefsky

Yes. 

Riley

Let me dial back to one question and then I’m going to insist we break for lunch, for my own comfort.

Barshefsky

And mine, too, yes.

Riley

You had been given the moniker Stonewall with respect to Japan early before these meetings. Where did this come from?

Barshefsky

Different people claim credit. The Japanese say that they gave me the name. Larry Summers is sure he did, and Roger Altman is sure he did. I think it was Larry. The first time we proposed the Framework agreement to Japan, the deputies sat on one side of the table, the Japanese on the other. There were seven of us: Joan Spero, Alan Blinder, Jeff Garten, Larry Summers, Roger Altman, Bo [W. Bowman] Cutter and me. 

The Japanese, who are very tough and very persistent, made a variety of statements about U.S. trade policy and U.S. authority with which I profoundly disagreed, as did some of the other deputies. People on our side made brief responses. My turn came to speak and I made a series of responses that were very fulsome, replete with examples and painfully direct. The other deputies all turned and looked at me, and I pretty much did most of the talking for the deputies from that point on. After that first meeting, Larry said, You are Stonewall Barshefsky. And I said, Just want to keep them on the straight and narrow. I hate sitting there listening to guff. That’s where it started. But then the Japanese claimed that they gave me the name. 

Riley

[laughing] The Japanese were involved somewhere in there.

Barshefsky

Undoubtedly.

Riley

Let’s take a lunch break and we’ll come back. I thought what we might do is, if you remember your first trip abroad, we’ll sort of get you to think a little bit about that, and then we can move from there.

[BREAK]
Riley

All right, we’re back on. Kim wanted to start out with another background question.

Elliott

I probably should know this, but I just don’t remember what your practice was before you came into the administration. I know you had some foreign clients, and you mentioned East Germany, but did you also represent U.S. exporters on what kinds of trade cases, and a little bit more on that?

Barshefsky

I had a practice that was about fifty-fifty, domestic and foreign. The practice covered trade litigation of every kind—dumping cases, countervailing duty [subsidy] cases —in the U.S. as well as in Europe, Australia, and other countries, including the use of their trade laws on behalf of U.S. subsidiaries operating in those countries. I litigated a number of Section 301 cases, safeguards cases, and the full range of trade actions and trade remedies. I also did a significant amount of trade policy work; I testified before Congress, advised a number of Congressional committees on trade bills, often from a disinterested perspective, but sometimes not. I would be called to the Hill on an informal basis on a variety of policy issues and thorny problems. I was very active in the ABA [American Bar Association], including Vice Chair of its International Section, and the D.C. Bar, and did an enormous amount of speaking and writing, everything from law review articles for Stanford or Georgetown, to op-ed pieces, to short monographs, things of that nature. 

It was a very broad practice for a lawyer, especially then, because at that time most lawyers did one specific type of trade litigation or another but not the waterfront. And few were interested in policy-related issues. Fewer still actually testified, wrote, spoke or lectured.

Elliott

Did you talk or write or take a position when it was being developed, on the Super 301? 

Barshefsky

No, not at the time. At the time it was being developed I shrugged, more or less. But as the head of an agency that had to carry out the function of the statute, the exercise became entirely worthless, perhaps not in the very beginning when the statute was new and posed a credible threat of retaliation, but after several years the statute had outlived its usefulness, particularly so with the advent of the WTO. Of course it was a Congressional mandate, under which the agency had to put out a yearly list of egregious trade violators whose actions could be subject to retaliation. But retaliation would have violated the WTO and harmed our negotiating agenda. The exercise just became sillier and sillier, counterproductive.

Elliott

Interesting.

Barshefsky

Yes.

Riley

And the list would have been—

Barshefsky

The list is of particularly egregious trade practices that give rise to potential retaliation by the United States. If you had an activist trade policy, which we did, and an aggressive negotiating agenda, which we did, and a robust enforcement policy, which we did, you did not need Super 301. Having to comply with the statutory mandate was, under those circumstances, counterproductive to the result you were seeking to achieve. Countries became more, not less intransigent. 

Riley

And is it also the case that—two other things come to mind. One is the level of arbitrariness, in terms of what gets on the list and what doesn’t. Or are there fairly clear boundaries?

Barshefsky

The general purpose of retaliation was ultimately to get the other side to move. As a result, retaliation lists typically included products that are politically and/or economically sensitive for the other side. If the target was France, the retaliation list might include French wine, for example. The only bound was the dollar amount of retaliation—which could not exceed the violation—or putting products on the list that were needed by the U.S. or U.S. industry.

There are some foreign government practices that are extremely destabilizing, highly protectionist and pernicious. Those typically stand in a category all their own. There are all sorts of other disputes - annoyances, irritants, nuisances- that do not rise to the level of egregious conduct. The difficulty with Super 301 is that egregious conduct ought to precipitate negotiation or litigation in the WTO or under other statutes. You don’t let these issues lie unaddressed. We certainly didn’t. The result was that, as the constellation of issues actually suitable for Super 301 dwindled, there was a mad agency scramble to come up with a list—any list—just to comply with the statutory mandate.

Riley

So it’s just an onerous reporting requirement.

Barshefsky

Yes. Apart from putting forward a list, you also had to indicate what you were going to do about the practices identified, which were already being handled, often in a quiet way. Public denunciation is remarkably counterproductive. When asked my view about the renewal of Super 301, I said I couldn’t imagine a less constructive course. 

Elliott

Did it actually become a negative? Did it make your negotiations more difficult? Or did it still have any kind of leverage at all?

Barshefsky

I didn’t use it for leverage. After the first few years, countries began to ignore Super 301 as it became clearer and clearer, particularly with the advent of the WTO, that the U.S. was quite loathe to impose retaliatory measures under it. At that point, the statute is largely a paper tiger. On the part of some countries, particularly developing countries, being on the list was of some concern to the extent it might impact inward investment flows. Even then, the leverage was quite limited.

Riley

One of the articles in the briefing book indicated that, before coming into the USTR’s office, you had not had a great deal of experience in Asia. Is that correct?

Barshefsky

I had no experience in Asia. I had never been to Asia before going into the administration. One of the elements that made me nervous about accepting Mickey’s offer was the amount of time I’d have to spend in Asia, given my family. Of course, as Deputy and then as USTR, I spent enormous amounts of time in Asia. Even now I’m in China almost once a month. I find Asia infinitely interesting, far more so than Europe or Latin America, even though I’ve likely spent equal amounts of time in both other regions of the world. 

My concern was not so much my unfamiliarity with Asia, per se. I obviously knew Asian trade issues. I knew the policy I wanted to pursue. I understood a lot of the dynamics in U.S.–Asia relations. And I came into the administration knowing how to advocate. Forcefully. My concern was not with the substance or whether I could do the job effectively. My concern was the travel commitment and the fact that I would have to spend a lot of time in Asia, which is a very long trip, away from the family. 

Riley

You say that you were not concerned about an education process in terms of developing a familiarity—my question is mostly one of culture and how one goes about getting up to speed to negotiate with people whose cultural differences are fairly pronounced from Western practices?

Barshefsky

I made a very conscious decision, having given the issue of culture a lot of thought. People’s perceptions or views about the countries with which I would be dealing might well be informative or interesting. But at the end of the day, nobody else was going to be in the room but me. I like forming my own opinions. And I don’t particularly like relying on other people’s perceptions in an area as fraught as trade. Of course you listen to the full range of expert views, receive State Department briefings and the like; some cultural sensitivities are important to understand, obviously. But, as a negotiator you have to develop a feel in your own gut for the other side. I was very selective in what I read—trying to avoid author bias—and careful about uncritically accepting the views of others. I formed opinions on the job. That, for me, was without question, the way to go. 

Of course, there are many data points that are critical to an negotiator’s success—from substantive preparation to understanding the external constraints, whether political, bureaucratic or personal, under which your counterpart operates. These constraints may also be of a historic or cultural nature, but often times not. For me, at the end of the day, negotiation was a process of discovery and adjustment. 

Perhaps for some people this would have been a completely unacceptable way to proceed. They would want to know everything there was to know about a particular culture and history. But if you’re a well-informed person, by and large you have enough to go on as you slowly form your own views. For me that was enough.

Riley

Do you recall, was there anything in particular that you’d read, or anybody in particular, maybe in the State Department, that had been especially useful for you as—or is it just a lot of shoe leather and time?

Barshefsky

It’s shoe leather and time, and reading various things selectively, as I said. There was an old article on negotiating with Japan, for example, which was interesting in that it pointed out that different countries have different ways of going about negotiation, and that Japan was the most consistent among countries in negotiating style. That was absolutely true, but not for the reasons stated in the article. Materials of this sort were useful, but never a substitute for forming my own opinions and negotiating style. 

Riley

There were a couple of early developments in the administration related to trade policy that I wanted to ask you about. These were mostly presidential. One was there was a February 1993 speech that the President made at American University that is sort of held up as a statement of his commitment to free trade. Do you remember having anything at all to do with the development of that speech or the ideas that went into it? 

Barshefsky

No, not at that juncture. Once I was on-board—March 1993—I would have had input into most, if not all, of his major speeches that had trade policy elements, or that needed to include trade policy elements.

Riley

Sure, fair enough. Something else in ’93—in May of ’93 an Executive Order on China linking MFN [Most Favored Nation] to human rights. Do you recall being involved in the discussions about whether that was an advisable thing to do or not? 

Barshefsky

I don’t believe I was involved in the original linkage. I certainly do remember when we walked away from the policy, having been involved in that. I remember the President being very dissatisfied with the advice he was getting on China with respect to the linkage of MFN—essentially normal trade relations—and human rights, and whether linkage was an effective or counterproductive policy. He felt compelled to do a lot of reading on his own, independently, to come up with the answer. 

Riley

Can you tell us more generally about that, rather than my picking out particular elements?

Barshefsky

What stands out in my mind is one particular meeting in the Situation Room. Different people were giving the President different pieces of advice, some talking about the importance of continuing linkage, others suggesting not. 

The President became very frustrated and said, You know, I’ve been hearing from some of you individually about this issue and I just don’t think we have our act together. So I’ve been doing a lot of reading by myself. Think about a country like Cuba or Haiti where you try and go in and foster human rights, even by aggressive acts. How successful have we been? Think about China, its size, its history. This is a completely nonsensical policy. It will produce no effect. If we can’t change Cuba, if we can’t change Haiti even with substantial intervention, we will certainly not change China through this policy. He said, If we can’t change these small countries, and these countries are pinpricks on a map— I’ll never forget that—pinpricks on a map —this is the way we’re going to change China? No. The way you change China is you engage with them, you bring them into the tent, and you help mold them to the extent you can. The way you change China is to give their people enough opportunity and enough exposure to the outside world that they begin to see there’s another way.

Riley

Do you know who the voices were that he was listening to, perhaps that he felt—who would have been the crucial actors in shaping the original policy that he ultimately found it necessary to back away from?

Barshefsky

I don’t know the answer entirely. Certainly the State Department was very insistent on linkage, because you had a very strong Human Rights Office in the State Department. Treasury would not have been on that side. USTR was not on that side.

Elliott

Was that John Shattuck at State?

Barshefsky

Yes. Shattuck had a very powerful voice on these issues. 

Riley

He’s feeling pressure from the Hill?

Barshefsky

The President was under a lot of pressure from the Democratic Caucus. And from his own political advisors. All of these issues came up in the context of very strained relations with the Democrats. Why do you want to strain them further? It was a courageous decision because this, as NAFTA, was a decision against the wishes of his party. Without question, he was right. He was absolutely right. 

Riley

Anything on that?

Elliott

Not at the moment.

Riley

I want to ask you about your relationships with a number of the executive agencies, or departments. I’ve just got a list here and I’ll go down them one by one. Commerce Department—a lot of interaction with Commerce, or not?

Barshefsky

A lot of interaction with Commerce. USTR and Commerce worked together well in those years, which was unusual because the two agencies had traditionally been at each other’s throats, each feeling the other was getting too much credit for things. But we worked things out, I think, on a reasonably equitable basis. There were, of course, occasional tensions, but by and large, relations were good, and productive. 

Riley

Was this true also in your Asian portfolio? Were there ever differences? For example, in China where their pressures for engagement and investment were—

Barshefsky

No, I think the agencies were always on board with my views on China trade policy, our negotiations with China, and that China ought to be in the WTO. There were occasional differences on the level of ambition for a particular negotiation, or on tactics. Sometimes I’d accept the suggestions of my colleagues, and often times not. It’s hard to make meaningful suggestions on goals once the issues are clearly spelled out and the drive is to open the market. Tactically, it’s very hard to make suggestions to someone in the course of a negotiation when you’re not in the room. It doesn’t stop me from trying to do that, and it shouldn’t stop anyone else. But often in the face of advice, you say to yourself, That’s not going to fly. Occasionally, you’d get advice and you’d think, That’s a great twist. I’m going to do that next time. But it’s rare. 

Riley

Okay. The Labor Department? Is there a natural—

Barshefsky

Not much, other than on the issue of labor rights in trade agreements. I would say the interaction was limited more to Cabinet meetings in general. Labor was not part of the deputies group. 

Riley

But Labor was not part of the deputies group because that was confined only to—

Barshefsky

The deputies were from the economic agencies. There was no friction with Labor. Bob Reich was often quite supportive of the trade agenda, as was Alexis Herman. It didn’t make their lives easier that we were very active on trade agreements. And it certainly didn’t make Bob Reich’s life easier that Bill Clinton supported NAFTA, although I think Reich may have as well. But friction between the agencies? Not really. There wasn’t enough interaction.

Elliott

Was there any explicit coordination on things like using TAA [Trade Adjustment Assistance] or was it just that you were so much on the same page that Labor was—I’m contrasting it to now, where you sort of feel like Bob Zoellick is pushing Labor to do things more actively on the TAA side, the adjustment side, labor programs, to help him out on the trade side. How was that interaction—

Barshefsky

It’s always been a little bit of a push and pull. With respect to TAA—worker adjustment assistance and retraining—the Clinton administration pursued a highly activist policy from the White House. The TAA issues are difficult not from a trade policy perspective, but from a budget perspective. It costs money to bulk up these programs. 

Elliott

So without it being explicitly linked, it just worked together?

Barshefsky

Correct.

Riley

Okay. State Department. Is that a big problem in terms of coordination?

Barshefsky

Well, I’ll give you two points of view on that. Warren Christopher was tremendous and had a great handle on economic issues and the importance of trade. He was active at different points in time on the trade agenda, whenever his input or heft was needed. Madeleine [Korbel Albright] was also exceptionally supportive of the trade agenda, and believed in a vigorous internationalist economic policy. So at Cabinet level, USTR received tremendous support. At mid-level in State you often have people who may well appreciate the importance of economics but who are always concerned, appropriately so, with foreign relations and with the fallout effects of a too aggressive approach on trade. And they are often far more concerned or sensitive than their bosses. That, from time to time, led to some frustration on our part. Under those circumstances, State might demand a more moderate position on trade, or a different position entirely. To be frank, I don’t feel there was ever any issue where State’s intervention led to a shift in negotiations. From time to time State’s intervention likely led to some change in tone — sometimes that was productive and sometimes not. But at the Warren Christopher–Madeleine Albright level, there was great appreciation for the role USTR played, and no attempt at second-guessing, interestingly enough.

Elliott

Following that I was going to ask—I don’t know if it’s on your list or not—about the NEC, the National Economic Council, and whether that was a useful innovation. Did you find it helpful—?

Barshefsky

I thought it was very useful, particularly when you’ve been out of power for twelve years. Imagine if there were no coordinating body on the economic side. What exactly would agencies be doing? There would have been the inevitable power grabs—agencies undertaking functions for which they were ill-equipped, but that looked sexy. There would have been less of a spirit of camaraderie among the agencies; at its simplest, people would have been less familiar one with one another, ultimately leading to greater friction overall. And without coordination, we would likely have ended up with policies that may well not have reflected the President’s views or satisfied his goals. Piecemeal attempts at policymaking are counterproductive, especially for a President who frankly has other things to do than moderate disputes among Cabinet officials. 

The NEC was an important innovation. It was, I think, essential, not only to the development of a coherent set of policies but also to the gelling of the team as a team.

Elliott

Was that mainly a coordinating function? Or did they do much policymaking?

Barshefsky

Both. In the first two years, I would say, they were as active in policymaking as the agencies. I don’t think more active, but as active. On the international side you had Bo Cutter, a very bright, talented person with a lot of ideas. He wanted to be involved, and appropriately so. But, after those first couple of years, a rhythm was established, and the NEC played more of a coordinating role among the agencies. Large policy issues still came before it, but these were fewer in number as time went on. I thought the NEC was a terrific innovation. 

Riley

And [Robert] Rubin is somebody who is embracing the same ideas that you had about open markets?

Barshefsky

Absolutely. Both Bob and I were the two hawks on Japan. In general, there was a meeting of the minds between what he wanted the NEC to accomplish, what he himself believed, and my own position and approach. These tended to mesh well, even if not in every instance. 

Riley

Were you seeing much of him during your period as deputy?

Barshefsky

A lot. I spent a lot of time with him, and an inordinate amount of time with Bo, as the NEC deputy. Similarly with Roger Altman, Larry Summers, Joan Spero, Alan Blinder, Jeff Garten, Sandy Berger and others. We were always hanging out together. 

Riley

Right. It’s not clear though why, because Rubin is a principal of this particular shop, why he might have been more prominently involved than—in a process that seems to be peopled by deputies. 

Barshefsky

He didn’t sit in on the deputies meetings as a routine matter. When he came he often deferred to his deputy, Bo Cutter. He shared something Mickey and Ron Brown had—confidence, and an extremely accessible personality. Bob never had any hesitation about walking in and sitting down. Or picking up the phone to call, even if it was not to someone at his level. Mickey and Ron were very similar in that regard. 

I always felt I knew where Rubin was, in part because he was very accessible. If you weren’t sure, you asked. If he wasn’t going to tell you, you knew. You didn’t have to surmise.

Riley

Yes, but it’s conceivable that people who are less secure in their positions in some way, or who have egos and are trying to protect their turfs—but you’re saying this is not—

Barshefsky

Rubin, Mickey, Ron Brown—these are pretty secure guys, all very successful in their own right and very well recognized. Look, everyone has their insecurities, no question about that. But in all three cases, whatever the insecurities might have been, they were not of the type to foreclose substantial interaction with, and reliance on, the people with whom they worked. 

Riley

And you never got the sense that—despite the fact that you’ve got these very powerful individuals from outside, that wasn’t an uncomfortable situation for you to have them as points of contact or looking into what you’re doing? The picture that you’re painting is one of a very collegial sort.

Barshefsky

Yes. Was it always collegial? No. From time to time, whether Japan policy or China policy, for example, I’d get under people’s skin; people would get under my skin. And sometimes you make decisions you know the group isn’t going to be happy with, but you just decide you’re going to do it your way, period. I would say the number of instances of that sort was remarkably few, given the strength of the personalities in the deputies group, and given the level of personal accomplishment of each. From the outside you might have thought that if you threw all of these high-powered folks in a room together, it would be a bloodbath. It was quite the opposite, surprisingly so. 

Roger, Joan, Larry—we often talked about this very issue. What was it that made it work? Maybe we all felt the power of a higher calling. We served the President. There’s one President. If he’s unhappy, you’ve failed, however many people were in the room. Perhaps there were feelings on all our parts that there was a lot to accomplish and the time is short. Four years is not a long time to turn the bureaucratic wheels. There was certainly a lot of personal affinity among the group. It helped that people generally liked each other. Some had preexisting relationships and that helped. I would say the number of times where frustrations ran deep, and there were some, paled in comparison to the amount of time spent and the number of decisions made. 

Riley

CIA [Central Intelligence Agency]?

Barshefsky

I had interaction at a number of points, but particularly with John Deutch when he was head of the CIA, whether on issues of non-proliferation and sanctions, or wherever there might have been a trade angle. And of course you spend time with the agency generally, in briefings and so on. I thought Deutch was tremendous. Great intellectual capacity and very thoughtful about the U.S. role in the world. 

He’s a very remarkable fellow. We were being honored at a dinner and I went up to give my acceptance speech. He had been sitting next to me at the dinner table. It was a big hall. At the dais I said, It’s wonderful to be here. It’s particularly wonderful to be here with John, whom I admire greatly. It is a little intimidating though. When most of us doodle, we doodle squiggly lines and boxes and circles and zigzags. John doodles quadratic equations. If you sat next to him in a meeting, or at a dinner, he always had a pencil in hand, writing out page after page of equations. He would pose a problem to himself and then solve it. 

Riley

He’s a chemistry professor, right?

Barshefsky

He’s quite remarkable. So, yes, I spent time with him and with the agency personnel who briefed me, many of whom were very good.

Riley

Do you recall any disputes in particular with the agency over any of your trade issues, where you were moving in a direction they felt was ill advised?

Barshefsky

No. 

Elliott

Any concern from either CIA or Pentagon on security aspects of integrating China in the world economy?

Barshefsky

No. 

Riley

You’ve mentioned Defense, and I guess we hadn’t talked about Defense before.

Barshefsky

I had more limited interaction with DOD beyond Cabinet meetings. On rare occasion an issue would crop up. For example, from time to time USTR would get involved in CFIUS [Committee on Foreign Investment in the United States] reviews, which had to do with inward foreign direct investment that gave rise to national security concerns. That’s a simplistic explanation but it will do. If a trade issue was implicated during that review process, USTR would become involved alongside the traditional CFIUS agencies, including DOD.

Riley

OMB [Office of Management and Budget]? Alice Rivlin there, or anybody else?

Barshefsky

Alice, and of course Frank [Franklin] Raines. OMB controls the White House budget process as you know. The fight with OMB was always much worse than the fight with Congress because every agency wanted money from OMB and a proposed budget to Congress that reflected those additional funds. But there’s only so much money. OMB conversations were always supplicant-to-donor conversations. Congressional conversations were always more positive. Congress had a long history of giving USTR more money than the White House requested.

Riley

But there were no policy overlaps in any way?

Barshefsky

No, very little.

Riley

I didn’t expect so, but I thought I would ask.

Elliott

Before we go on—how the broader policy—did you use the improvement in the U.S. fiscal situation? Was that useful in your negotiations? I guess at the end of the day it didn’t contribute much on the external side. The problem now is that internationally it’s a problem that the U.S. has a budget deficit, and that’s contributing toward trade problems—

Barshefsky

What helped in terms of U.S. international heft, which was very substantial when Clinton was President, was, number one, Clinton’s approval ratings abroad, which were in the 80 to 90 percent range. He was positively magnetic, and appreciated for his intellect and insight. Number two, the high tech boom. The U.S. looked like the whiz kid in class and everyone [I am exaggerating here] wanted to be like us. People were admiring of our economic growth and the innovative nature of our economy. Third, the fact that our fiscal house was being brought into order. This showed U.S. appreciation of the global view of our economic position and a certain resolve on the part of the President, his Cabinet and the Congress to put our house in order.

All of that helped with our international credibility, coupled with the fact that our growth helped the world to grow. We were the engine of global growth in the 1990s. It certainly wasn’t coming from Japan, and it certainly wasn’t coming from Europe. There was an appreciation for the U.S. role in that regard.

The trade deficit , on the other hand, had long been used—incorrectly—by Congress to demonstrate unfairness on the part of our trading partners. But as exports grew, particularly in the 1990s, and the U.S. economy was booming, the trade deficit, while still problematic politically, was not quite the obsessive focus it had been in the 1980s.

Riley

Finally, on my organizational list was the Council of Economic Advisors. 

Barshefsky

There was lots of interaction throughout the eight years. Laura Tyson, Alan Blinder, Martin Bailey and Joe Stiglitz were all very supportive. I spent a lot of time with each. Alan was in the original deputies group, so he went on all the Japan trips. Laura followed. Martin and Joe were very active. They were each so impressive. 

Riley

Was there a natural institutional affinity there? Or was it, again, because of the personalities that you—

Barshefsky

I think there is, by and large, a natural affinity. Folks on the CEA tend to be pro-trade. There may be differences around the margin, and certainly concern about dislocation caused not just by trade but by technology. But economists tend to be pro-trade, and that was true of CEA. Beyond that, each was generally interested in trade issues. The result was important input. These were people of such intellectual capability that there was always something interesting you learned in a meeting because they were there.

Elliott

You had probably given up the Japan portfolio, I guess, by the time Laura left, but was there any more pushback when it came to Alan, Joe, Martin, on the so-called revisionist Japan policies and the more—

Barshefsky

Not really.

Elliott

No?

Barshefsky

No, I don’t really recall it. Joe spent a lot of time concerned about U.S. relations with developing countries more than with the developed. By the time Martin came in, policy was set –a well-oiled machine - and the transition from Laura was a smooth one. 

Riley

Let me shift from inside the government context to some of your interactions beyond that, just to get a picture of—we’ll go through some of these thematic areas and then maybe go back and pick up the timeline and pick up some of the things that you were involved with at that point. I have a question about the nature and extent of your interaction with industrial interests and people in the corporate sector.

Barshefsky

A lot. 

Riley

There is a lot. And explain to us how that interaction works, what is it that advantages you in your position in dealing with these people?

Barshefsky

Trade issues arise because companies have problems. As USTR you need to get a handle on what’s blocking U.S. exports, investment, or U.S. effectiveness in a particular market. Who do you go to? You go to the people who are trying to export or invest. You say, What’s the problem? And they tell you. Or they come to you, and they say, We’ve got a great product. We have 30 percent market share in Europe, we have 40 percent market share in Latin America, we have 45 percent market share in a number of countries in Asia, and we can’t get into the Japanese market. Trade policy in the narrowest sense tries to resolve these individual sectoral disputes—apples, wheat, soybeans, autos, semi-conductors, telecom equipment, whatever the issue is—that necessarily arise from the inability of business to get into the market, or if in the market, an inability, because of discrimination, to make headway against local players. 

Trade issues are also a component of broader international policies. If you consider trade relations around the world and focus on centers of power and sources of economic growth, you would say, for example, We need a more robust policy with respect to the ASEAN [Association of Southeast Asian Nations] countries. If we want to formulate a pro-growth agenda with the ASEAN, what might the elements be? One element would be commercial. Another would be multilateral, to strengthen their participation in the global system. You might add a plurilateral dimension to policy— like APEC— or a U.S.-ASEAN trade agreement. It is critical to look at the constellation of issues in that relationship, including trade, competitiveness and bilateral and regional relations in general and then consider every vector that can be deployed to improve and strengthen the relationship and our odds. You then formulate your broader policy.

Apart from business, labor unions also have a voice in policy as do environmental groups. Trade policy is not just industry driven. But if you have a freer trade orientation, or want to improve U.S. export performance, you are going to spend a lot of time with business, and you’re going to spend a lot of time pushing markets open.

Riley

I saw a reference to something called the Advisory Committee for Trade Policy and Negotiations?

Barshefsky

This is yet another source of advice. There are statutory advisory committees created by Congress. Some are sectoral. They’re called ISACs: Industry-Sector Advisory Committees. There’s an ISAC on chemicals, an ISAC on steel—

Elliott

Textiles and footwear—

Barshefsky

—textiles and footwear, right. These are populated by business groups, although the membership has since been broadened a little. 

Elliott

I think there are environmentalists on the chemicals committee, for example.

Barshefsky

There is a higher-level group called the ACTPN. A-C-T-P-N—Advisory Committee for Trade, Policy and Negotiations. I always laugh about this because the P was inserted after the fact. The group used to be called A-C-T-N, Advisory Committee on Trade Negotiations, pronounced ACTIN. Someone had the bright idea to put in a reference to Policy, but to say the word ACT-pin is extremely awkward for those of us who always knew the group as ACTIN. As a result, it was always ACTIN to me. This always made me laugh, because one of the most wonderful books by P.G. Wodehouse—I laugh about this book every time I think of it – is called Leave it to Psmith. Psmith is spelled P-s-m-i-t-h, but the P is silent. So every time I thought about ACT-pin I would call it ACT-in, think of P. G. Wodehouse and Leave it to Psmith, and laugh to myself. 

Anyway, ACTPN is a rather select group, perhaps 25 members, give or take, and these are CEOs [chief executive officers], as well as a limited number of academics, labor or environmental leaders, perhaps, a theoretician or such. This would be a group that would meet periodically and with whom you could discuss broad issues of concern, and who often would give important feedback: That’s an important issue, but had you considered A, B, C, D? Or, Glad to see the administration is doing issue X. Might it be more appropriate to prioritize Q instead? This was a valuable source of input and outside information. 

Riley

And the membership was designated by the President or the Congressional—

Barshefsky

Yes, the President. It is actually difficult to get members to serve, because there are substantial financial disclosure requirements. 

Riley

And part of your responsibility was to nominate, to give the President names for—

Barshefsky

We and Commerce would suggest names. But the White House typically generated names from a number of sources. The frustrating part was to identify high caliber people who, when they learned of the disclosure requirements, would decline to serve. 

Riley

The next is a very broad question because it will relate to your period as deputy and then as USTR, but I want to hear about your relations with Capitol Hill. 

Barshefsky

I always had very good relations with the Hill and exceptionally good relations with Republicans.

Riley

So the book says.

Barshefsky

I also had very good relations with the Democrats, even though many in the Democratic caucus were cool to certain trade agreements. I’m a very direct person and a very tough negotiator. Reasonable but tough. The Hill applauded my tenacity. In fact, that toughness was the basis on which the House waived a statute that would otherwise have barred my appointment as USTR. If I told the Congress that I’d fight to get something, I would always do so, and nine times out of ten, I’d succeed. That was appreciated. It was also appreciated that the trade agenda was broad and, with respect to the Democrats, that many parts of the agenda were formulated to reflect Democratic priorities. Opening up high tech trade markets, opening up agricultural markets, negotiating agreements with countries like Vietnam—all were part of a robust trade policy approach, and not controversial. But in inaugurating FTAA [Free Trade Area of the Americas] negotiations, or free trade talks with Jordan, we included labor and environmental issues to ensure that Democrats would be somewhat more comfortable with the overall direction of policy. Democrats may have been tough, but relations were good nonetheless. 

Where the Democratic caucus and I simply disagreed, whether it be on issues related to Fast-Track, China, or other controversial issues, there was an appreciation by the caucus of my candor. I would defend our position, and they knew that, at the end of the day, if there were favorable changes I could make I would. But I would not jeopardize an otherwise strong agreement.

Riley

How much time did you spend?

Barshefsky

You’re on the Hill all the time.

Riley

Because they’re calling you, or because you need to call on them?

Barshefsky

Both. You stay in very close touch with the people you know you’re going to have to rely on repeatedly. And you build relationships with countless others. I was on the Hill all the time. 

Riley

Which were the committees of jurisdiction that you most had to deal with?

Barshefsky

The main committees, of course, were Ways and Means and Finance. But I dealt with a lot of committees. When we did our global telecom agreement, for example, I had to deal with a number of committees including one for which Ernest Hollings was ranking member. That was one of the most unpleasant conversations I’ve ever had. 

Riley

Would you care to recount any of this?

Barshefsky

He was concerned about the trade agreement we had negotiated to open global telecom markets, and insisted that we needed Congressional approval to enter into the agreement.

Elliott

Had we already passed our Telecom Act?

Barshefsky

Yes, but he was referencing fast-track. I disagreed with his view and made clear that we would not seek Congressional approval. This did not endear me to Mr. Hollings.

Riley

Who were the people on the Hill that you felt most comfortable with, that you dealt with on a—

Barshefsky

Most. I liked the Hill. Of course you dealt constantly with the chairmen and ranking members of the key committees and subcommittees, and the committee membership. But all of the members in Congress were important to virtually every trade vote—and that meant constant interaction.

Riley

I didn’t know whether there was anybody that stood out to you in retrospect as being particularly helpful, or—

Barshefsky

Lots of people. At one time or another, I’d say that most members that I dealt with were helpful on one issue or another. It’s hard to single out anyone in particular.

Elliott

If you could just say something about—I’m trying to remember the timing on when Bob Matsui switched from being one of the stronger pro-trade Democrats to being at least ambivalent and—

Barshefsky

He was strongly pro-trade during the Clinton years.

Elliott

Okay, so it was only after the change in the administration?

Barshefsky

Yes.

Elliott

But he—most Democrats voted against the ’98 Fast Track, just because it was purely regarded as a political vote, is that—

Barshefsky

In 1997 no one voted against it, because the White House withdrew the bill. 

Elliott

But when the Republicans insisted on the vote in ’98?

Barshefsky

That was neither here nor there. The Republicans proposed a bill they knew the White House did not want and that the Democratic Caucus would oppose. Political gamesmanship—nothing more. 

Elliott

That’s what I mean. It was purely political and it was—

Barshefsky

Yes, that was meaningless.

Elliott

Do you think it was mistake to pull it in ’97? Do you think it was—?

Barshefsky

No. I was relieved.

Elliott

It really wouldn’t have passed?

Barshefsky

I was afraid it might.

Elliott

Why do you say that?

Barshefsky

It was a terrible bill. I should say, it became a terrible bill. 

Elliott

There were so many iterations of it.

Barshefsky

It had become a bill I didn’t want to have to live with, imposing so much oversight and so many restrictions as to make it counterproductive to the trade agenda. And there were a number of equally pernicious amendments waiting in the wings which the administration couldn’t stop. I remember saying to my husband, Either I pray this bill fails, or we withdraw it, but it’s now a liability in terms of getting my job done. I got a call from Erskine Bowles in the middle of the night. The bill was going to be pulled. He thought we were three or four votes shy. I thanked him. I can’t tell you how relieved I was. 

Elliott

I’ll have to go back and look at it.

Barshefsky

I was relieved. It would have been an albatross. 

Elliott

You wouldn’t have been able to negotiate anything under it anyway. How did it compare, because the 2002 act that finally passed is much more loaded up with restrictions and requirements—

Barshefsky

This was far, far worse. It had become a terrible bill even before what were going to be a raft of amendments. It would have been almost impossible to negotiate anything on a fluid basis, or to retain credibility in negotiations, given how many times you would have had to stop and go back to Congress to get approval first. The evening the White House pulled the bill was one of extraordinary relief. I felt sorry that the votes weren’t there, as a general matter. You don’t ever want to start anything you aren’t going to win. But I was grateful when it was pulled. 

Elliott

Did that contribute—I remember at some point in those years after that when you started saying—I don’t remember if it was before or after you finished the China negotiation—that you just thought Fast Track was no longer useful.

Barshefsky

I still don’t think you need it. I said this starting in 1998 or 1999, and am still saying it.

Elliott

Was it sort of reaction to how bad—that you thought that kind of a bill was all you’d ever get out of Congress at that point?

Barshefsky

In part it was a reaction to that, and in part a feeling that the political cost of getting it was far in excess of the political cost of getting approval of an agreement that was concrete, tangible. Fast Track has always been a theoretical exercise: Trust me, I’m going to bring back an agreement you’re going to like, versus, coming to Congress with the Agreement in hand, Here’s an agreement for your district. Twelve hundred jobs will be created and your soybean farmers are going to be very happy. That’s not a hard vote to get. The theoretical vote is the hard vote to get.

Elliott

How did you think that you would get—I mean, the PNTR [Permanent Normal Trade Relations] was sort of like an up or down—we just had to give them PNTR. But a trade negotiation where you’ve got a complex package—in that environment, how did you think you would keep Congress from picking it apart?

Barshefsky

I just think you have to make the package sufficiently attractive, which we have to do anyway, that to take away one part means the demise of all of the positive parts that have their own supportive constituencies. 

Riley

Was there something about the pre-Clinton era that made getting Fast Track an easier proposition than the—

Barshefsky

It was always hard. For example, the fast track vote for the U.S.-Canada FTA almost failed in Committee, passing by only one vote. 

Elliott

Was that the ’88 bill? 

Barshefsky

Roughly. It’s always been difficult, in part because it’s a theoretical exercise. 

Riley

My question is predicated on the idea that there may have been some things about the Cold War and the willingness of Congress to defer to presidential leadership in that department—

Barshefsky

Agreed. Also, trade was not as rooted in the public consciousness as it is today. As trade has become more visible, as workers and unions began attributing job loss to trade, as the steel wars raged, for example—when a steel plant closes, those communities often don’t recover—as previously poorer or non-competitive countries began successfully exporting to the U.S., public perceptions of trade turned sharply negative . The notion that U.S. global participation was disadvantageous to U.S. workers began to take hold. 

Those feelings grew over time. The view was that the U.S. was being taken advantage of by Japan and other trading partners who were unfairly distorting our market and whose markets were, in turn, closed to the U.S., Those views were heightened during the late ’80s recession, slightly mitigated by a growing economy in the ’90s, but hammered by labor throughout the NAFTA debate and beyond. Even some Republicans were not immune to the rhetoric. That has made Fast Track very difficult. 

Riley

Is it, however, more complicated for you as a negotiator with your counterparts abroad to approach them without having that authority?

Barshefsky

I don’t think so. China’s WTO deal would have been meaningless to it without PNTR [Permanent Normal Trade Relations status]. It knew PNTR had to go to the Congress. We didn’t have Fast Track for that. China proceeded in any event to make extraordinary concessions that revamped its economy. Nor did we have Fast Track for the global telecom or financial services agreements. Yet, we completed those agreements, which were far larger economically than the whole of the Uruguay Round. I think this issue of countries not being willing to negotiate with us because we don’t have Fast Track has always been a canard. We’re the world’s single largest importer. You don’t want to do business with us? Okay. Go to Japan. Go to Europe. Go to Russia. The U.S. has extraordinary bargaining power with or without Fast Track. Countries also have an interest in having a relationship with the U.S. that goes beyond specific, individual commercial transactions and that speaks to a deeper, more stable, mutually beneficial relationship. Free trade agreements are an important route to that broader alliance relationship. Whether or not we have Fast Track doesn’t change that dynamic. 

There is another important point. The theory of fast track is that once a deal is done, it’s done. No changes can then be made. An up or down vote. No amendments. We had fast track for NAFTA. NAFTA was done – signed by the previous President. The Clinton administration nonetheless reopened the agreement at the behest of Democrats in Congress to handle labor and environmental issues—precisely the reopening that Fast Track had been sold as preventing. There is a lot of myth that surrounds Fast Track. From my own point of view, were I USTR I would not spend political capital trying to get it. The keys are substantial Congressional communications throughout the negotiating process, and bringing home a great agreement that garners strong industry support.

Riley

Tell us a little bit about—in your negotiations formally and informally abroad—about the perceptions of the American political system from these external actors. Do they have a very accurate picture of what goes on in this country?

Barshefsky

Europe, yes. Asian countries, often not. The Chinese leadership still does not fully appreciate that the Congress does not have to do what the President asks, and often will not do what the President asks. Policy disputes in the U.S. can be crippling. The Chinese do not understand this nor do they appreciate that ours reflects a fundamentally different political system and policy choices. There are other countries that have a similar misapprehension. 

Riley

A fundamentalist—

Barshefsky

A fundamental misunderstanding of our political system and of the power of the President.

Riley

Or the lack of power.

Barshefsky

Or the lack of power. There is often also quite a misunderstanding about the quality and independence of our judiciary. Perhaps this is defensiveness on the part of some countries, but in many, there is the view that the U.S. judicial system is as corrupt or rigged as theirs, or the notion that, It’s the powerful interests that win in your courts just like in our country. There is quite a bit of misunderstanding. 

On balance though, the level of sophistication about the U.S. system is much higher than one would expect. The degree to which foreign parties are informed about U.S. politics is much higher around the world than you would think. Still, many governments express skepticism that the U.S. system works the way we say it does. 

Riley

And a part of your process, or a part of your job was to educate them about the—

Barshefsky

Part of my job was saying things like, I have to have this because of the Congress. You want this agreement? I have to get Congressional buy-in. Or, I hate to ask you for this, but I’ve got five Congressmen breathing down my neck, and they control my budget. 

Elliott

On that, I mean, obviously that can give you leverage, and that’s probably what they were responding to— You’re only saying that because—

Barshefsky

I didn’t say it all that often, because I didn’t want to overuse the excuse. You can only do that so many times. For example, there are some countries whose negotiators think it’s an effective tactic to say at various points in a negotiation, I’ll lose my job if I agree to that. You hear it so many times that after a while you say, No problem. I’ll hire you. And you move on. You can only use these things so many times before they get a little stale. Of course, sometimes it actually has the virtue of being true —where you get a letter signed by 160 Congressmen demanding a particular outcome. 

Riley

Sure. But then that gives you hard evidence.

Barshefsky

Absolutely.

Riley

Or harder evidence. I suppose that the conspiracy-minded would still assume that you had generated that in order to—

Barshefsky

In any negotiation you look for every point of leverage you can find. Sometimes that Congressional bit adds to the leverage. And sometimes yes, you generate the outrage. Congressional demands are rarely, in their own right, enough to persuade your counterpart. But every now and then it will tip the negotiation just enough.

Riley

Did members ever travel with you?

Barshefsky

Not that often, but on occasion to larger meetings such as APEC [Asia Pacific Economic Cooperation forum] or Seattle. I always took the view that negotiations were between the U.S. administration and the foreign government, not between our Congresses, so I did not welcome Congressional members or other folks into negotiations unless they were part of the team on an ongoing basis and substantively engaged. 

Riley

Do you recall any instances where members might have been substantively involved on a regular basis?

Barshefsky

No, not in terms of a negotiation.

Riley

And do you recall any specific instances where you invited a member to make a phone call or make a contact—

Barshefsky

Of course. I asked members of Congress, for example, to pull in the Foreign Ambassador, or, if they had a personal relationship with the Foreign Minister or the Treasury Minister, to place a call or drop a line.

Riley

And it’s being done out of your shop, right?

Barshefsky

It would be done at my request: Congressman X, (or Senator X), I’m having a difficult time with this issue. It’s important in your district or in your state. I think that a call from you to Ambassador X might make a difference. Or, I know that you have a good relationship with Minister So-and-So. It would be very helpful if that Minister got a message from you, because that Minister will then take that message to his President.

Riley

Was there much interaction with legislative bodies in other countries? 

Barshefsky

Some. I would often see members of the Diet when in Japan. In Latin America I would often see members of Congress or Parliament. In China, I would see the head of the National People’s Congress, for example. You do this partly to hear other policy views - what the thinking is, what the perceptions are - and partly because these figures often rotate into the executive branch. It’s always educative and good to meet people who have different positions in government, whether legislative, judicial, or executive. Everyone has a slightly different perspective. Everyone sees the priorities slightly differently. Sometimes that gives you additional insight.

Riley

Kim, do you have anything on this issue?

Elliott

I don’t think so.

Riley

Okay. Press relations. Do you feel like you had good press relations for your years?

Barshefsky

Generally speaking, I had very good relations with the press. You get mad at reporters, certainly. They write a story you think is lousy. I don’t recall ever yelling at a reporter, but I’m sure I occasionally called a reporter or his editor to say, I was really aggravated at reading your story, not because you disagreed with our approach, but because you had the fundamentals completely wrong, and you should have called me and asked. But by and large, reporters did their job and I did mine, and you hoped ultimately they’d come out favorably, but you couldn’t be distracted by them.

Riley

Did you find a pretty good fundamental understanding of the issues that you were dealing with?

Barshefsky

On the part of some reporters, yes. On the part of other reporters, no. The mainline reporters, either from trade publications or from key national and regional newspapers were, by and large, very sophisticated. They were very good at fact gathering, had a lot of sources of information, which is sometimes an aggravation but that’s how it is, and I think generally did a good job. 

Some reporters are known for having a certain bias, and you know that going into an interview or reading an article. Others are just not up to the job, either because they don’t have a feel for the area, or because they’re just disinterested. They really wanted a foreign policy beat, or they really wanted some other beat, and they got stuck doing trade or international economic policy. 

Riley

Did you also have a kind of proactive press strategy? Did you invite reporters to travel with you, go with you on your trips? 

Barshefsky

I rarely had to invite reporters to go. Reporters were always there. For any big negotiation you’d have hundreds of reporters, including a lot of American press, both from head office as well as from the field. I would have spent more time with the press had it been necessary, but I’m pretty substance-driven, less hype-driven. I spent the amount of time with the press that I thought was appropriate and manageable, and given the broad, highly positive press we received, we likely found the right balance. 

Riley

Did you go on the Sunday morning programs ever? 

Barshefsky

Once in a while. I tended to do a lot of the regular news shows both here and abroad, the business shows and a lot of television, generally.

Riley

Did you find the foreign press easier or more difficult to deal with than the U.S. press?

Barshefsky

Somewhat easier, because there’s a certain degree of deference the foreign press will show to a foreign dignitary. On the other hand, all reporters are equally capable of asking very difficult questions, of being challenging. That is as true abroad as it is here, but there is the overlay of a slightly deferential bent when you are abroad. 

Riley

There was one other question that I had written down that I forgot to ask about the Hill relations. That is, for most of the people we talk with, the ’94 mid-term election is a pretty traumatic event and has great adverse impact on their work. Was that true of you? 

Barshefsky

Republicans were much more attuned to a pro-trade agenda than the Democrats, but their win created a range of problems. The morale side was very difficult, very traumatic. And even on the substantive side, the election posed a problem in that the Republicans—and I think the situation today is even quite a bit worse than it was then, but it was not good then— feeling their oats, came down fairly hard on the Democrats. 

The result was that, to further distinguish themselves from the Republicans, and to express ire at having been excluded from House decision-making under the new regime, some Democrats hardened their positions in a way they would not have, had they remained in power. And while, not exclusively so, that hardening was evident in the trade area. So while the 1994 Congress had a strong pro-trade Republican bent, the overall effect was negative, both on the basis of morale and on the basis of a hardened Democratic response. 

Riley

Had you, prior to the ’94 elections, spent much time with the minority party on the Hill?

Barshefsky

Always. I have always viewed trade as a non-partisan issue. It is an economic issue. It is impossible to pass trade agreements without both parties. We can talk about the composition of votes, but at the end of the day, votes are needed from both parties, even if one dominates the tally. I always took the position that I needed as much support as I could garner on the Hill from any and every quarter. And so I conducted myself, by and large, in as non-partisan a way as possible. 

Riley

At one point early on you had said that you had been partly encouraged by candidate Bill Clinton as a free trade person because of his choice for a vice-presidential nominee.

Barshefsky

I thought that Gore would have significant influence on the administration in general and with the President. Nowhere would that be more apparent than with respect to trade and security issues, because of his background and proclivity.

Riley

Okay, which leads to my next question, which is, were you confirmed in that? I know, in conversation with others, that the Vice President became very prominent in certain policy areas. The environment is one example. Reinventing government being another example. Is trade yet another example where the Vice President was—?

Barshefsky

Gore followed trade issues quite closely. When I was doing the first intellectual property rights agreement with the Chinese, which was a very hard-fought agreement, the Vice President was on Air Force Two. He wrote me a congratulatory note from the plane within minutes of learning that the deal had been concluded, having followed it closely. When we did the global telecom deal, many of the ideas we drew on came from a speech the Vice President had given the year before. I kept him quite informed of our progress and, in some instances, the tough spots we were in. One stands out in particular.

When I became Acting USTR, the U.S. was about to conclude a global telecom agreement, which had been negotiated by a deputy who had just left. My first order of business was to review the agreement. I had paid very little attention to the negotiation because it was largely Europe-focused and just shy of conclusion. I didn’t like the agreement at all. I didn’t like the level of commitments from Europe or the other countries. I didn’t like the scope of the agreement. I thought the number of countries was too small, the composition of the countries wasn’t right. So, in my first decision as Acting USTR, I rejected it. The foreign delegations were all informed that the U.S. would not move forward, a position supported by all of the U.S. telecom and equipment companies at my urging. My intent was to stop a bad deal from moving to conclusion and to formulate an alternative approach.

It was a terrible week. We walked away to tremendous criticism in foreign capitals and in the foreign press. We came back nine months later with a great agreement, to strong acclaim. But I had called the Vice President several times because I wanted him to know that we were going to walk away. I knew it was the eleventh hour, but it was a bad agreement. I knew that we could do significantly better if we reformulated it and thought through the issues in a different way. He supported my decision.

When we did Fast Track in 1997, Al Gore engaged many members of Congress, going through the reasons why it was important for the President to have the authority. He was very persuasive, and very direct and pointed in his remarks. Not a lot of fluff, right down to business, decisive and very impressive. 

Elliott

Whose idea was it to have him debate [Ross] Perot over the NAFTA?

Barshefsky

I don’t know. Whoever thought of it—kudos. That was brilliant.

Elliott

Yes, that was one of his more prominent roles.

Barshefsky

Brilliant. And of course, that’s where he got his reputation for being a fabulous debater. It came from that episode. He was just on the mark. 

Riley

Kim, do you have any questions about some of the specific agreements or issues areas that have been raised? I’ve been dominating the questioning here, and I know that in our prior conversations you had a fair number of questions about some of these specific agreements.

Elliott

Things the trade wonks want to know.

Riley

And that’s important for us to get on the record because there will be a lot of future trade wonks who will come back to the transcript and want to get into that. I could continue on my list, but I’m happy to take a pause in what I’m pursuing if you want to pick up and get at some of these things.

Elliott

One thing I have to ask, given your boss being Mr. Competitive-Liberalizationist—from your perspective, how you saw the sequencing at the end of ’93—the NAFTA ratification, the APEC meeting, and the role of those things—

Barshefsky

On Uruguay?

Elliott

I know you weren’t working directly on Uruguay, but—

Barshefsky

Yes, I think it was helpful. 

Elliott

But just, decisive? Helpful?

Barshefsky

I would be reluctant to say decisive. Mickey might have a different view, but I’d be reluctant to say decisive. Uruguay, I think, would have concluded in any event because countries needed it to conclude. But I do think NAFTA was helpful in moving it along. We have to be careful not to draw the wrong conclusion, which is to say that doing any and all agreements will always be similarly helpful in moving multilateral talks along. 

NAFTA was different in part because it was the first time the U.S. was perceived as trying to create an exclusive club, with its number one and number three trading partners. An agreement with Morocco or Bahrain would not have had the same relevance in that regard, nor would CAFTA. The NAFTA was a unique step. Was it an absolutely necessary bridge to the Uruguay Round? No, I don’t think so. But helpful? Yes. Replicable? That’s less clear, absent another agreement of the same economic and psychological heft. 

Elliott

The FTAA maybe?

Barshefsky

FTAA might have, had it been seriously in train at the time. 

Elliott

It was really NAFTA, not so much APEC, that—

Barshefsky

No, I don’t think it was APEC in that regard. APEC was critical to the Information Technology Agreement, which eliminated all tariffs on high technology products. I used APEC as the initial vehicle for the negotiation of that agreement, which I then expanded to other countries. 

The Uruguay Round would have concluded in any event, even absent NAFTA, because there is a point in any negotiation—and every negotiator will tell you this—where it’s just going to happen. It’s time. You put up that last final fight, brave front as it is, but it’s just going to happen. 

Elliott

The WTO—I think there were some concerns about the impingement on sovereignty. Net positive? Net negative? Or we’re still trying to—

Barshefsky

International agreements are often criticized by those who believe that sovereign rights will be diluted. But this is not the case. Membership in the WTO strengthens the US. The agreement is based on Western norms, as is the dispute settlement system. And the agreement projects Western values—the rule of contract and of law, transparency and due process. This strengthens the position of the U.S.

Elliott

Why don’t you go ahead, and I’ll look at my—

Riley

Yes. I want to go back to your appointments. Did you have any difficulty with your original confirmation? 

Barshefsky

Yes. During my confirmation as Deputy USTR, Don Riegle was on the Senate Finance Committee. He was very concerned about the revolving door – people coming into government to leverage their careers post-government—and wanted a range of assurances and ethical limitations on my service in excess of the normal rules. He was quite aggressive at the hearing.

Riley

Had you been prepared for this?

Barshefsky

No. I knew he was going to be a problem, but he was even more aggressive in the hearing than I had been led to believe.

Riley

Who worked with you? Somebody out of Congressional Relations in the White House? 

Barshefsky

No. USTR. He concluded a series of rather caustic remarks by asking if I would accept more severe ethical limitations on my actions than the norm. Senator [Daniel Patrick] Moynihan, who was Chairman, said something to the effect, Ms. Barshefsky, before you answer, be careful what you say. If you say yes, you will be under a different regime from everybody else. I was so grateful to him. The way I answered was to say that I was nominated for the job and I accepted that nomination, not to make my reputation on the back of the government, but because I already had a reputation. And that I was nominated for the job, not because I was not successful and wanted to be, but because I was already successful and well known. It was a quite dramatic moment in the hearing. 

Riley

You’re 42 years old at this time?

Barshefsky

Yes. And I was very angry, because the implication was that I would not adequately represent the interests of my country, only my own, which was an outrageous view. The hearing ended and Mr. Riegle wanted to see me. In private, I said perhaps I had been harsh at the hearing and I apologized if I was, but I thought that he had not been fair and that I deserved a chance to prove it. It took him a couple of days. He was very angry. I don’t remember now if he voted for me in Committee, but he didn’t block the nomination going forward, which was the only thing I cared about. 

Riley

I think there was only one dissenting vote on the floor.

Barshefsky

That was for USTR. That was the second confirmation hearing, which I’ll tell you about in a minute. But, years later, after the first hearing as Deputy, and after I was already USTR—I ran into Riegle who had since left the Congress. He came up to me—he’s really a very nice guy—and he said, Was I ever wrong about you. I’m so sorry for what I put you through. I just want you to know I’m really an admirer. That was completely lovely. 

As to my confirmation as USTR: Between 1993 and 1996 a statute was passed that provided that if you had ever represented a foreign government, you could not be USTR or Deputy USTR. As a lawyer, I had represented the Government of Canada in a very modest way. I was grandfathered in the legislation, because I was already serving as Deputy USTR when the bill passed. But I wasn’t grandfathered for the eventuality that I might one day become USTR. We had the anomalous situation where the statute, having grandfathered me as deputy, would deny me the job as USTR, even though I’d be becoming USTR because I had been deputy. The result was that for my confirmation in 1996, Congress had to waive the statute, which required not only a vote in the Senate, but a vote in the House. This never happens in the nomination process, which is based on Senate advise-and-consent, not Congressional advise-and-consent. 

The Senate confirmed my nomination and waived the statute. The House only needed to waive the statute, which it did six days later by unanimous consent. Subsequently, a week after that, the President signed the bill waiving the statute. I was then sworn in as USTR the next day. In the Senate, Wayne Allard from Colorado was the sole vote against my confirmation. He had been an original co-sponsor of the legislation with Bob Dole. Dole had since left the Congress, but Allard was still there. He said, I feel bad doing it, but I co-sponsored that piece of legislation. I can’t now vote to waive it. So he wouldn’t waive the statute or vote in favor of my confirmation. I understood that completely. After the confirmation, Tom Daschle sent me the vote tally, which is a long sheet of names with check marks, and at the bottom the total was 99–1. Tom wrote me a little note that said something to the effect that, I have no doubt Allard will move to the ‘yea’ column before too long. 

Riley

I was going to ask you about this, because you were in kind of an anomalous position—that the Senate had actually confirmed you before the House voted on the law, right?

Barshefsky

Yes. But both chambers had to waive the statute by majority vote—the Senate as well. Senator Lott, for example voted against the waiver, yet voted to confirm me. Wayne Allard, as I said, voted against the waiver and against confirmation. The Senate voted on both first because of its power to confirm nominees. Had I failed the confirmation vote, nothing would have gone to the House. 

Riley

But your confirmation, at least according to the timeline—we have the Senate confirming you by a vote of 99 to 1 on either the fifth or the sixth of March, and then the House granting you the waiver from the prohibition a week later.

Barshefsky

Yes, that is what happened. In other words, I was not USTR until I was confirmed, and the waiver was effective. The Senate confirmed and waived the statute. The House waived the statute only—it does not have the power of confirmation over Presidential nominees. To be in the job I had to wait for the House to follow the Senate, waive the statute, and for the President to sign the bill waiving the statute. Only then was I sworn in as USTR.

Riley

It’s a very curious set of circumstances.

Barshefsky

It was very curious. It was a crazy statute.

Elliott

What was the source of the statute? 

Barshefsky

This was zealousness on the part of Congress. I’m an absolute a believer in ethical behavior. But there was a burst of activity, concerned first about lobbyists who were representing foreign interests and not disclosing them, to anyone who had ever represented a foreign government, for any reason at any time, whether lobbyist or not. 

As the bill was being cleared, people came to realize that I would have to leave the deputy post unless I was grandfathered. Bob Dole, the bill’s sponsor, said This is crazy. We’ll grandfather her. All of the subsequent waiver machinations arose because the grandfather pertained to my role as deputy, not to a possible role as USTR. Of course, no one could have imagined that Ron Brown would be killed, that Mickey would move to Commerce and that I would be nominated as USTR.

Elliott

Still, the fact of having to grandfather you, you would have thought, would have given them a little pause as to whether this bill was really needed.

Barshefsky

Well, the problem was—

Elliott

Was it just USTR and deputy, or were there other Cabinet positions?

Barshefsky

Just USTR and deputy. I can’t even begin to imagine what the justification might have been. As I said to one Congressman, I know you sleep better at night knowing your USTR never represented a foreigner, but your Secretary of Defense may have. This is how hollow these exercises can become, with a result that can’t possibly be explained.

Riley

Exactly. Back to a couple of broader questions. Is it possible for you to say which of the countries you had to deal with were, for you, the most difficult to negotiate with, for whatever reason?

Barshefsky

Each country is different. And of course, within countries the personalities of the people you deal with are crucial. But generally speaking, the Japanese are very difficult to negotiate with because you need endless patience and endless persistence while, at the same time, overcoming the sheer boredom of a negotiation that never seems to end. 

Riley

They’re more inclined to draw things out than others?

Barshefsky

Very much so, often disagreeing when it would be in their interest to agree, because of a desire to be left alone. Even if resolution of an issue in a particular way might have been to their clear economic advantage, there was often great reluctance to move forward. The Japanese are incrementalists, at best. Perhaps this would be to our advantage, but we would rather not have to do any of this at all. The ethos is: avoid entirely, then procrastinate, and if movement is at all necessary for whatever reason, baby steps at best.

Riley

That goes back to, from your perspective, a kind of sense of a preference for cultural isolation?

Barshefsky

I think it goes back in part to the fact that Japan is an island nation, and in that sense, culturally isolated. Japan is also a wealthy nation and had become so on the basis of a closed market, and rapid export growth—a model it saw no reason to change. So Japan necessitated endless patience, fortitude, and a competitive spirit. My longest negotiating session was with the Japanese; fifty-one hours with one twenty minute break. At the end, we signed a major semiconductor market access agreement which was highly successful.

Elliott

It all sounds inconsistent with the gaiatsu theory, that they actually welcomed—or were there cases where—

Barshefsky

Oh, they do, but they make you pay for it.

Elliott

So there are some cases where they would like to change, but they—

Barshefsky

Yes, and they want outside pressure, but let’s recognize, change in Japan is defined in increments.

Elliott

Glacial.

Barshefsky

Gaiatsu is important (gaiatsu being outside foreign pressure) in many instances, but negotiations nonetheless drag on, and, in any event, the pace of change in Japan is painfully slow. At the other extreme—Brazil. Very clever, adept. Facile. Much more so than the Japanese. Quite stubborn, but charming. The Chinese? Practical. At the end of the day, highly practical, pragmatic, surprisingly non-ideological. 

Riley

And not long and drawn out?

Barshefsky

Long and drawn out, but you can chip away at it on a pretty methodical basis by being pragmatic and persistent. Substantial patience and a lot of fortitude are always needed in any negotiation regardless of the counterpart. It is the degree of patience that differs. 

Riley

Is there a danger with the Chinese of over-assuming a degree of centralized control there? I don’t know whether that makes sense or not.

Barshefsky

At the central level there is central control. So if you are negotiating, as I sometimes did, with the President of the country, or the Premier, you are dealing with the center. The problem is that on any given issue, the central government may not have strong control over the provinces - governors, mayors, local governments. You might get central government buy-in on a particular issue—intellectual property rights enforcement, for example. But, you may not have the cooperation of provincial level officials. Trademark counterfeiting and software and audiovisual music piracy occur locally, not in some central factory. So you have to find a way to get the provincial governments’ attention as well. 

When we did the second IPR [Intellectual Property Rights] Agreement with the Chinese, the goal was to eradicate piracy in Guangdong Province, which was exporting pirated software to the U.S. It just so happens that Guangdong is an apparel export center. So I went to the Provincial Governor and Provincial Party Secretary and said, Here’s the deal: Either you’re going to close these factories or you won’t sell another garment in the United States. You choose. He closed the factories. 

The central government would not have entered the province to close local factories. It could have, but it wouldn’t have. So we had to get both the central government and the provincial government to appreciate the drastic consequences for the province and for China if they continued to protect these piraters.

Riley

It’s striking, again from an outside perspective, that the Chinese would accept your negotiating with someone other than the national authorities. 

Barshefsky

I wasn’t negotiating; I just thought it was important for the Governor and Party Secretary of Guangdong to know the lay of the land. There was no negotiation per se.

Elliott

Just a statement of fact.

Barshefsky

Just a statement of fact. But in many instances , Canada, the EU and so on, the U.S. will negotiate at the central level and communicate with state or provincial officials. The goal at the end of the day is an agreement that will be honored. If the local government is key to local enforcement, then it has to be on-board as well. Anything you can do to ensure this is fair game in my view.

Riley

The same thing happened on the reverse side? Do trade negotiators coming into the United States sometimes—

Barshefsky

Yes, they will see members of Congress, go to various states and so on. 

Riley

Or the Governor of South Carolina?

Barshefsky

Sure. 

So, the Chinese are quite pragmatic. If you can show that an agreement will benefit them, they’ll be receptive, even if it also benefits you. That makes for the possibility of agreement, whatever the issue. Forgive the stereotype, but the Chinese tend to be natural-born deal-makers, with extraordinary business acumen and an entrepreneurial bent. That does not mean you will always succeed in agreements negotiation, but it gives you ample opportunity to find the formula that works. 

Riley

Others? I’m trying to recall—

Barshefsky

The Koreans are very tough. Singapore officials are very smart, sometimes exasperating, but very good. The Indian government is exasperating, statist in mentality, a bit better now than in years past. Mexico? Delightful, but often defensive under the U.S. shadow. Canada? Very process-oriented, often slow to get down to business of a real nature. I could go through a hundred countries like this.

Riley

We may have more specific questions about this later, especially from my expert on this. But I will ask you about your negotiations with Europe. I guess this doesn’t occur until after you become USTR, right? During your deputy period, that’s somebody else’s—

Barshefsky

Yes.

Riley

So you come in. Is your negotiating with Europe almost exclusively through Brussels now?

Barshefsky

Yes and no. Brussels has competence – that is exclusive jurisdiction—over trade issues, so the chief interlocutor is the European Commission, and in particular the Trade Commissioner. 

Riley

Who was, during your time—?

Barshefsky

Sir Leon Brittan, and at the end of the Clinton years, Pascal Lamy. But, I often talked to the member states as well. For example, Peter Mandelson, who is now the EU [European Union] Trade Commissioner—he took Pascal Lamy’s place—was my Trade Minister counterpart in the U.K. when I was USTR. There were issues on which I just went to him, or indicated that I had concerns about the Commission’s direction. Sometimes I just wanted to know what the thinking was in the U.K. Similarly, in Germany, in France, and so on.

Sometimes I’d go to the Trade Minister, sometimes the Foreign Minister, sometimes the Finance Minister. When you’re doing trade agreements you often have contact with all three, because of the way in which foreign governments organize their negotiating teams, or are structured. Brazil is a good example. The Foreign Minister is responsible for trade agreement negotiations 

In other countries—the Japan Insurance Agreement is an example—the negotiation was with the Ministry of Finance, who had competence over insurance in Japan, rather than MITI [Ministry of International Trade and Industry]—METI [Ministry of Economy, Trade and Industry] now. Who you deal with varies quite a bit.

Riley

Were the commissioners that you dealt with jealous of their prerogatives in terms of their contact with you? Was there some anxiety about your not respecting the Commission?

Barshefsky

Always.

Riley

How did you deal with that?

Barshefsky

Of course, you deal with the Commission from the beginning to the end. There is no question about its primacy on trade. There was always concern in the Commission to the extent USTR was going to member states individually, and greater concern to the extent member states were going to USTR. During the Information Technology negotiations, I received calls from a number of European capitals, saying, What’s going on? We don’t think we’re getting the full story from the Commission. 

There was a lot of interaction all around. Bear in mind that the position of Brussels has to reflect, at least in part, what the member states want. That suggests that one should try and influence the member states before Brussels comes up with a unified policy. Or, if Brussels already has a policy, generally only the member states can force its reconsideration. You spend a lot of time in European capitals as a result. Oftentimes I would travel to five or six countries in four or five days. 

I’ll never forget, I was in Europe and found that I was missing a document. I called my office, told them where I was, asked them to fax it and gave them fax number. I went out for some reason, and came back to find no document. Unfortunately, I needed it for that evening. I reached out to my office a second time, went through the fax number again, et cetera. Well, I thought I was in France. I didn’t realize I was in London. Ultimately, our embassy in Paris found me to say, We’re getting all these urgent faxes for you. You aren’t still here, are you? No, I left Paris two days ago. I had already been to some other country in the middle. I had just forgotten where I was. 

Riley

Amazing.

Barshefsky

It didn’t happen often, but once in a while you’re just not sure where you are.

Riley

Which raises the question about the degree of interaction or cooperation with the Ambassador in these countries.

Barshefsky

Oh, quite a bit.

Riley

Is there a lot of—

Barshefsky

You mean the U.S. Ambassador?

Riley

The U.S. Ambassador. For example, when you’re going to China, Jim Sasser, or somebody that you’re—

Barshefsky

Of course. Jim and I would spend time together. The U.S. Ambassadors in these countries are often very important. When Walter Mondale was Ambassador to Japan, followed by Tom Foley, we didn’t do anything in-country of significance without sitting down with them first. 

Riley

Even in your negotiations you would have the Ambassador—

Barshefsky

The Ambassador would often be at the table. He and his staff would do the follow-up, the message sending, see the Prime Minister in the interim, make sure there’s no misunderstanding and that what was said was understood. Mondale, in particular—I single him out because so much of the Framework was under his watch—was a stupendous Ambassador. So adept, clever, very smart. On some of the earlier agreements—for example, the build-out of Japan’s cellular network, which is a great story—Mondale was very helpful. 

Riley

You said there’s a great story there? Please.

Barshefsky

It is a remarkable example of overreach having worked. We had a telecom agreement with Japan, entered into by the previous administration, that was ambiguous, but which I read as saying that Japan was going to build out their cellular network, and do so in a way that would be compatible with U.S. equipment providers. Japan wasn’t building out their network. So we took on the issue and engaged various Ministers in Japan—Telecom, Trade, et cetera. I said, You’re violating this agreement by not building out your network. Here’s what the agreement provides. There was a lot of to-ing and fro-ing on the Japanese side: What’s she talking about? I assume that’s what they said in Japanese, if not worse.

Riley

Yiddish and Japanese are not close enough to—

Barshefsky

No. Well, they were going to have to get back to me. The agreement at issue had been negotiated by [Sidney] Linn Williams, who was Carla Hills’ Asia deputy. Linn was terrific. I called Linn when I got back to the States and I said, Look, here’s how I read the agreement. I just wanted you to know that because it wouldn’t surprise me if the Japanese Minister called you to find out if that’s what you thought the agreement said. Linn said, No problem. Happy to oblige. Sure enough, Linn made clear his view about the meaning of the agreement, and then the negotiation was just really about how fast they were going to build out their network. It was really a great moment. Mondale reinforced my interpretation at every turn with the Japanese government—very helpful. 

Riley

I’m going to impose a five-minute break here because I think I need one. Then we’ll come back and we’ve got about two and a half more hours on the clock, if you can tolerate that.

[BREAK]
Riley

There was a question posed, evidently, during the break about Cabinet status for the USTR.

Barshefsky

I hadn’t known until just a moment ago that apparently there is some question whether USTR should retain Cabinet status. It would be a terrible mistake for the USTR not to have Cabinet status, if you are serious in pursuing a trade policy that is a substantial contributor to U.S. growth and a substantial component of an overall economic strategy for the United States.

Elliott

That’s precisely the concern of the trade policy community, I think, that this is a signal of the priority—

Barshefsky

—of the administration. I think that’s a terrible mistake, very shortsighted. Perhaps it shouldn’t surprise me that there is a lack of appreciation for the importance of USTR’s role in helping to generate economic growth and ensuring a sustainable trading system.

Riley

Another example of this is the Small Business Administration, where Philip Lader was named. At the SBA there was an agreement that it would hold Cabinet status for at least his tenure there.

Barshefsky

Yes, but the USTR Cabinet rank is statutory. 

Riley

And it may very—

Barshefsky

But, look, even if it is statutory, this kind of thing can be undone. I think it would be terribly unfortunate.

Elliott

So you obviously felt that it was important in your job for you to have that.

Barshefsky

Important, first of all, for your own heft within the administration. Important also for your perceived heft in foreign countries. A cabinet rank helps to ensure that foreign countries can’t downgrade their negotiating teams using as an excuse the fact that the USTR is not of Cabinet or ministerial rank. 

Elliott

So on all those grounds.

Barshefsky

Right.

Riley

I had a series of questions that I wanted to ask you under the general heading of foreign perceptions in the United States. We touched on this earlier, but I wonder if I could get you to elaborate a little bit. Did you get the sense in dealing with people overseas that they had a perception or some kind of stereotype about Americans as negotiators? Did they view us as soft touches? Did they view us as ill informed? As bulls in a china shop? 

Barshefsky

Well, perhaps all of the above. Mainly bulls in a china shop—too aggressive, not sufficiently sensitive to other countries’ limitations and domestic situation. Hectoring. I can recall the absolute surprise, shock, of my counterparts when, in APEC meetings, I withdrew a particular demand because the Korean Minister had explained the impossibility of the request. I had acted so out of character for an American, but I knew the Minister was right. That bought me unbelievable goodwill—not only from him, but every other delegation—which fortuitously I was able to leverage in subsequent talks. 

More particularly, my observation is that Americans generally, as negotiators, talk too much, a complaint of various countries. The best piece of negotiating advice I ever got was from one of the people on my staff. We were in negotiations with the Japanese and I laid out our position on a particular issue. They sat silently, obviously not understanding the position I laid out—fair enough. This was in the telecom sector—not the same issue we just discussed—and it’s complicated stuff. I laid out the position again - fleshed it out a little more. I wanted to be sure that I was being sufficiently clear, which I might not have been. Long silence on the other side of the table with discussion among themselves. Obviously, we had a real miscommunication. So I said, Look, let me just start from the beginning. I apologize if I haven’t been clear. 

Wendy Cutler, who was at that time deputy in our Japan shop at USTR was a career negotiator who didn’t really know me. Her immediate boss, Ira Wolf, who would have staffed the negotiation was out of town. She wrote me a note and it said, Ambassador Barshefsky, stop talking. Wendy. Single best piece of advice.

The fact is, they understood perfectly well what I said the first time. Once you are in repetition mode, you will never stake out your position in exactly the same way twice, let alone three times. Those differences expose the seams in your thinking—what does the U.S. really claim it needs versus what it wants. Everyone wants the moon and the stars, but the question is, what do you need to have? And here I was about to start yet a third iteration. 

So, I got this note, and I looked at it. I looked at it for a long time, as though there must have been a lot of words on it. And I folded it, and I sat quietly. And that’s how we sat. Ultimately it was the Japanese who were thinking, What just happened here? and began talking. And the talks began a bit more in earnest, although it still took a year and a half to get a deal. 

One of the most important things in a negotiation is to watch the other side, because the body talks before the mouth ever opens. You know where they are if you watch more and listen more. You can’t do that very effectively if you’re yammering on and on about concepts plainly understood in any event. That was a great piece of advice.

Riley

The body language is trans-cultural? 

Barshefsky

Oh, yes. 

Riley

Folded arms or something, doesn’t mean a—

Barshefsky

There are always people who are very hard to read, poker faces. 

Riley

Poker bodies.

Barshefsky

Poker bodies. And there are always those who will be easy to read, and then there are lots of people who fall in the middle. Certainly I don’t mean to imply that negotiations are just a matter of watching the other side. You have to know what you think they’re going to say, what you’re going to say in response, what they’re going to counter with, what your reaction is going to be, what their next move is going to have to be, what your next move is going to be—all of that has to be thought through before you walk into the room. 

The substantive preparation is quite extensive, and you have to be agile enough so that if they surprise you by saying blue, you can, without a moment’s hesitation, retort red, And if they say green you say, without missing a beat, yellow, and then lead things back to where you want to go. 

So it’s not just a question of watching. But most times you pick up whether you’re getting through, whether they have room, whether you can trust your counterpart or not, by watching. We all have the experience of meeting someone for the first time and during the conversation you can see that the eyes don’t match the mouth, the smile is forced, the bend of the shoulders doesn’t match the words, or the sincere tone doesn’t match the facial features. There’s no magic in it. But Wendy’s advice, Stop talking, was the best piece of advice anyone ever gave me on negotiation. 

Riley

Well, I don’t want you to stop talking today, so we can set that advice aside. This is not a negotiation.

Barshefsky

I did develop from all my experience what I call Barshefsky’s Ten Tips on Negotiations. The best tip—actually, many people, after I tell them this, will write or e-mail me to say, You were right,—is that the only word for no is no, and sometimes no doesn’t mean no. The example we used earlier, I’ll lose my job if I agree to that, is not no. I’ll get fired. That’s not no. No one has ever agreed to such an outrageous proposal. That’s not no. Impossible! That’s not no. Never! That’s actually not no. You reformulate your approach to come up with a thousand other ways to succeed.

You can’t be put off by anything other than a no that’s actually a no. And it takes a long time in a negotiation to get to that point. A real no isn’t generally the first thing that comes out of the mouth in a negotiation—and if it is, it isn’t actually the final word—if only because the other side needs to flesh out the whole of your thinking. A real no typically comes toward the end. So you keep pushing at it, and come up with a thousand variations to get to where you want to go. At some point down the road, and it may be a year later, no may actually mean no. But generally, by that time, you should have been able to find another way to deal with the issue, even if not perfect, just in case the no was real.

As to when even a final no does not mean no, think of an adult’s response to a nagging child—they wear you down until you say yes. That’s where you want to land. It takes experience to know when pushing further is counterproductive. If it would be, that’s the real no.

Riley

Do you recall ever just really bollixing? Just really fouling up a negotiation?

Barshefsky

Oh yes. The Japanese semiconductor negotiation. I started down a road and realized maybe a month later that I was headed in the wrong direction—that the way the negotiation would play out, would leave me one or two moves short of being able to get to where I wanted to go. I had combined several issues that I should not have. I had to pull apart what I had done and essentially start again without paying a price for it by way of concessions. It was very stressful, but I got back on track and ultimately it worked out fine. 

But, sure. There are times, as in life, where something comes out of your mouth and you think, Why did I say that? You hope it doesn’t happen very often, but sometimes it happens. So, yes, there are mistakes along the way.

Riley

What about—oh, please, go ahead.

Elliott

Well, I was going to use this as the opportunity to ask the one that I personally, because of my research, have been dying to ask, which is not you, but something that the President said—when he made the comment to the Seattle reporter about labor standards right before the Seattle Ministerial—

Barshefsky

He said that labor standards should be enforced by trade sanctions—a very controversial proposition and unacceptable to most countries.

Elliott

Yes, at some point saying—

Barshefsky

You needed trade sanctions—

Elliott

Whether you know, because there’s a big debate at the institute, how that came about? Slip of the tongue? It’s hard to believe it was a slip of the tongue. Did you ever talk to him about it? Do you know what he was thinking? And how important, then, do you think that was, actually, in the failure in Seattle?

Riley

And this will stay within the confines of the tape unless you say otherwise.

Elliott

Yes.

Barshefsky

The short answer is no, his comment didn’t create the failure in Seattle. It certainly did not help. But did it create the failure? Absolutely not. Nor did the protestors. Their actions were logistically inconvenient for the delegates, but had no substantive impact on the outcome.

Elliott

What did he think it did?

Barshefsky

I’ll get to that in a minute. Let me try and put Seattle in context. Seattle had worried me for quite some time. I had asked my chief of staff, probably six weeks before Seattle, whether we could walk away from the meeting without penalty from the City of Seattle. We had contracts for every hotel room, the convention center, et cetera. 

I didn’t think the WTO talks were destined to come together. The Geneva process, in which countries generate a unified text from which to negotiate, was a mess. We were going to end up with a text that would not have been useable—a heavily bracketed text, meaning a text that instead of being a draft agreement, essentially catalogued all the disagreements among the WTO members on every issue. Bottom line, we couldn’t cancel the meeting because the contractual penalties would have been severe. So we went ahead with Seattle. The U.S. delegation was large and very strong, and came prepared to push as hard as we could. In the midst of all of this, of course, is the European Commission scandal. If you recall, the entire Commission, of which Leon Brittan had been a part, was forced to resign because of alleged financial impropriety on the part of two commissioners. 

Elliott

Oh, I had forgotten that. 

Barshefsky

Pascal Lamy, became the new European Trade Commissioner. He had been in the job six or seven weeks at most and then showed up in Seattle. It was a brand new Commission, and a brand new Commissioner, coming in on the heels of this scandal. This new Commission and Lamy inherited the negotiating mandate – the list of European demands and conditions for the Seattle talks – from the prior Commission. Among the issues on the Commission list was the demand for full negotiations on investment and on competition policy – new areas for the WTO, which in the Geneva process, countries had completely rejected, as did the U.S. We tried very hard to persuade Lamy to withdraw the issues – as we had repeatedly argued to Leon Brittan. There was no way Lamy could compromise. He was a brand new commissioner, didn’t know the lay of the land, and he was not going to start his new role by asking the Commission to drop two key demands from its list of must-haves. That was in 1999. Ironically, but predictably, five years later, Lamy was forced to withdraw these issues from the Doha round. Leon Brittan had persuaded the Commission to build its original mandate in important part around these two issues. Lamy was stuck with them in Seattle. 

What did we have in Seattle? We had a Europe that essentially came to observe, not to negotiate. The U.S. was constrained on the anti-dumping question and on labor issues, although we might have gotten through these. Still, both were highly politically charged, not only in the administration but in the context of the Vice President’s primary politics. And most countries literally hated the labor issue, particularly any whiff that labor rights violations might even remotely be enforceable by trade sanctions, a position we did not take in Geneva. Developing countries didn’t really want to enter into a new round of talks. From their point of view, it was too soon after Uruguay. Least developed countries felt there was nothing in it for them given the divergent interests. These were all exposed in the Geneva Process, and intensified when Ministers actually came together in Seattle. 

Into this tumult and constellation of interests stepped Bill Clinton. The comment that he made on enforcing labor rights through trade sanctions, was certainly not helpful. Delegations became very alarmed. We were in the middle of negotiating a labor text at the time with a large number of countries, which was quite a benign document, but given the President’s comments, every word began to be looked at for ulterior motive, a message, a signal, a buried trap. His comment was unfortunate, but not the reason behind the lack of consensus among the parties. Why did Bill Clinton say what he said? I honestly don’t know the answer.

Elliott

And if you did, you wouldn’t say?

Barshefsky

I don’t know the answer. When I saw him that day, he said, How are we doing? I said, Not too well. He said, Why? I said, I’m not too thrilled with the newspaper today [in which his comments appeared]. He said, How bad was it? I said, Not helpful, but I don’t think this is going to go anywhere in any event. I just don’t see this coming together. Even though I and my staff worked around the clock—I went through two Secret Service details and didn’t sleep for six days—a Round was not going to launch. After Seattle, he and I had several very long talks, in the Oval, on the phone at night, late. It just wasn’t going to come together. 

There is an interesting pattern to multilateral talks. The Uruguay Round was attempted to be launched in 1982. It failed. It launched four years later in 1986. Carla tried to close it in 1990. It failed. She tried to close it again in 1992. It failed. We closed it a year later. Global Telecom deal? We failed once to launch it and twice to close it. The Financial Services deal? We failed to launch it once, and failed to close it twice. If you look at the Doha Round—the Cancun Ministerial is a great example—you think you’re on the cusp of an agreement— [hits table] Gone.

Elliott

Do you think Doha would have started without 9/11?

Barshefsky

No, without question, no. Doha was launched on two false premises. First, that most countries wanted a Round. They didn’t. They wanted to show solidarity with the U.S. in the wake of 9/11 – they never wanted a round that would compel them to further open their markets. Second, Doha launched as a development round. Developing countries took this to mean the elimination of developed country agricultural subsidies. That was not going to happen. 

The difficulty in any multilateral setting —and this is what happened with the Uruguay Round, Seattle, Telecom, Financial Services, Cancun—is that every country’s positions are contingent and conditional on every other country’s, and on their own internal processes. If one link is broken, one country pulls back, things begin to unravel very quickly and alliances crumble. In essence, that is what happened with the Doha Cancun Ministerial. It would have happened at the Doha launch itself, but for 9/11. 

My nervousness, weeks before Seattle, was, as I said, that the Geneva process would produce nothing useable because the sharpness of these divisions had become increasingly clear as Seattle approached. So pre-Seattle, I had my staff draft a variety of alternative documents—pulling the rabbit out of the hat kinds of documents. 

But the fact is, no consensus was possible. The one thing I vowed I would not do—and did not do—was to devise a text both ambiguous and muddled, in order to get consensus. That, I believed, would have enshrined the divisions that were so evident, in a highly damaging way for the long term. Some textual ambiguity is often unavoidable and indeed useful—it’s called constructive ambiguity. But what would have had to be developed here was far beyond that—ambiguity, not constructive, but potentially destructive to the WTO, as Doha’s even less ambiguous text shows. I made clear to Congress and to my staff pre-Seattle that we would not go down this road. 

Elliott

Just one follow-up on the European position—In your view, the European insistence, or Brittan’s insistence, and Lamy’s for a while, on competition and investment—was it really an offensive agenda, or was it a defensive agenda to avoid talking about agriculture?

Barshefsky

Oh, it was a little bit of both. Leon Brittan was intellectually interested in competition. He had been Competition Commissioner before he had been Trade Commissioner. He was also interested in investment. That was one part of it. But the other part is the well-cultivated (no pun intended) European position that the only circumstance under which they can negotiate on agriculture is if they have a very broad-based agenda, so that member states feel they’ve gotten something in exchange for terribly difficult concessions on agriculture. 

There are two problems with this. Number one, agriculture concessions would not have been tradable for either investment or competition policy. Is the argument that the French would be assuaged over agriculture subsidy cuts by getting acknowledgement from countries that competition policy is important? I don’t think so. Second, the fiction that’s been created about the only way in which Europe can negotiate was unmasked once competition and investment were stripped from Doha by the Commission, leaving only a narrow traditional negotiating agenda. Europe is still in the talks, and will still continue to negotiate over agriculture. 

So part of this was, for Leon, an intellectual exercise, and wanting to expand the WTO system, which is laudable and should eventually happen. Part of it was maintaining the fiction that you need a lot of things in the mix or Europe won’t move on agriculture. And part of it was a stall strategy for the new Commission. 

The irony is that Lamy and I had several lengthy negotiating sessions in Seattle on investment and competition. My proposal to Lamy would have actually preserved something on both of his issues that I thought I could sell to the other delegations. Not what the Commission wanted, but enough to get the ball rolling. He turned it down because the mandate was unequivocal. Had he been able to agree, Europe would have gotten what they wanted by now. But it would have required completely unacceptable compromise — too new a Commission and too new in his job. There was just no way for that to happen. 

Surprisingly, we did negotiate a strong agriculture text. It took months, of course, pre-Seattle, and a final eight hours, word by word, for four paragraphs. Lamy had absented himself from the room during this last session. He came back at the end of it with Europe’s rejection of the text. That was truly the end. 

Riley

I want to use this as an opening into a much broader set of questions about President Clinton’s personal role in your job and in the business of negotiating trade agreements. I wonder if you could tell us a little bit. It’s not clear to me, again, as an outsider—at what point do you want the President involved? At what point does he need to be involved? You’ve got certain kinds of ad hoc negotiations going on, but then there are these ministerial conferences that he’s attending on a regularized basis that I’m assuming you’re going to. Let me just open up that whole line of questioning for you to deal with. Give us your evaluation of Clinton as a negotiator, specifically related to what you’d like to see him do, and what he did.

Barshefsky

First, at the beginning of each year, all of the agencies were asked to prepare, What have you accomplished? Where are you headed? memos for the President. You laid out what the agency had done thus far, the shape of the agenda going forward, the priorities and where we intended to put most of our effort. He had a very good sense of the larger pieces for the various agencies, and the direction and critical negotiations for ours. 

Second, I had many meetings with the President on a variety of trade issues, and on particularly large negotiations. He was always creative and ready to help.

Third, trade was always on the agenda in his meetings with leaders and other officials, except perhaps in the most rare of circumstances. The President always wanted to know precisely the issues on which he could be of help, and how we would like them discussed. 

Virtually every meeting had a trade component. He always made sure that every official knew the importance he ascribed to the trade agenda and the particular issues at hand. He would try and move those issues along. There were a lot of avenues of communication and a lot of ways in which he directly interacted with the trade agenda and impacted it. And he enjoyed doing so. 

He didn’t always say what you wanted him to say. Early on, a number of us would take bets on whether he would be tough enough. But he almost always got the job done, even if he did it in his way. Over time—and many people pointed this out to me— he was quite faithful in talking about the issues in the way that had been suggested.

Riley

Are you in the Oval Office, or wherever the meetings are occurring?

Barshefsky

Oh, yes, of course.

Riley

So you’re there listening to this and you don’t have to get a report.

Barshefsky

Correct.

Elliott

What about on the golf course in Singapore?

Barshefsky

I knew what was going to happen, but I was not on the golf course.

Elliott

Did you? So it wasn’t just spontaneous, the way the press reported it? At least that’s my recollection of the press.

Barshefsky

No, it was not spontaneous.

Riley

Were the decisions that were taken—was there a process of interaction between you and the President on such issues, or is he basically getting his cues from you on what the policy ought to be?

Barshefsky

A mix. Sometimes it would be from me directly, one-on-one. Sometimes two or three of us would go in and say, Here are the economic issues on the agenda with foreign leader So-and-So, and I would do the trade piece of that. Sometimes it would be by memo with suggested talking points. You always got a crack at his attention. So there were various ways. 

Bill Clinton loves issues, and this is what made serving such a great experience. You’d go in, you’d say, Here’s where we are. Here’s the push I think it would be helpful if you could provide. He always wanted to know more. And what next? Well, and then what? Exceptionally inquisitive and insightful. That made all eight years quite extraordinary, because that level of interaction between a USTR and a President is very unusual. It had nothing to do with me being USTR. It had to do with Bill Clinton and his natural curiosity on an intellectual level, his desire to be involved.

Riley

What you’ve described is a pretty controlled environment, when you’re talking about instances of foreign visitors to Washington. How about the flip side of the coin when he’s out doing—I don’t know how many of your issues were typically on the table during these ministerial meetings, APEC and so forth.

Barshefsky

Oh, all the time. The only times trade was not formally on the agenda would be, for example, at NATO meetings, or other defense-related matters. But even in that context, I would say to him, You know, President So-and-So of such-and-such a country will, of course, be at the NATO meeting. It would be really helpful, if you have a minute on the margins of the meeting, to say X or Y. He was quite good at doing that. But was trade formally on the agenda? No.

Riley

Let me pose the question this way: If you’re looking at one of these foreign meetings that would last, I don’t know, 24 to 48 hours, there must be an awful lot of preparation that goes into programming the President to go into those meetings so that—

Barshefsky

Correct.

Riley

—maybe not out on the golf course, but when they’re out in their funny shirts taking a photo opportunity—

Barshefsky

Absolutely.

Riley

So what’s the process of getting them primed for that?

Barshefsky

There’s a huge internal process. It would have been run by a combination of the Chief of Staff, the NEC and the NSC, gathering inputs from the relevant agencies. You’d go through countless meetings distilling the issues, prioritizing the issues, making sure he’s got the right background materials, making sure he’s got the right talking points, making sure he understands why the talking points are written as they are and what the nuance might be. Then there are oral briefings—on the plane and on the ground. There is a huge amount of preparation.

Riley

And you’re at his elbow a good portion of the time during these meetings?

Barshefsky

In the room, generally yes, of course. Take APEC. Before leaving Washington you’d say,: Look, here’s the declaration we want to get. Here are the 17 trouble areas. Fifteen of these will be gone by the time you arrive, one will be on the verge of settling and one is terrible. It’s a terrible issue and you will need to talk to these seven leaders. And it’s going to be very difficult. It’s not going to pleasant. He’d say, I’m up for it. I got it, I got it, I got it. 

He’d arrive and there would be a morning or an evening briefing. Not everyone was invited—just the people who had issues coming up that required attention. I was always there because trade tended to be such an important component. He would look around the room, and the Chief of Staff would call on us one by one. Let’s just get it out on the table. My turn would come, Mr. President, the 15 are gone. One is on the verge. I think it’s not going to be a problem. We have one issue that’s just very tough. The resistance is slightly different than it appeared when I briefed you originally. Here are the four calls you’re going to need to make. When do I have to make them? You need to make them tomorrow afternoon. John, schedule them in for tomorrow afternoon. Then you follow up, and you make sure the calls happened. 

It is very intense. And there are times an issue gets lost. It gets dropped, either because the meeting’s too loaded up or because he’s decided he doesn’t want to do it, or the Chief of Staff has said, You ain’t doing this. Or the NSC has said, We have bigger fish to fry. Forget that. And you find this out when you’re on the ground, or sometimes when you’re leaving and you thought the issue had been raised. That happens to everybody at one point or another. Not often, but it happens.

Riley

Did the President enjoy doing this kind of work?

Barshefsky

Oh, yes. 

Riley

I get the impression from the current President that he would rather be any place in the world than in one of these ministerial—

Barshefsky

Bill Clinton thrived on this stuff. Part of it was the pleasure he got just from being with people. Part, I think, was the pleasure he got from his own personal effort and contribution. Part of it was just his own energy level, which was very high. Always on the move, always on the go. What’s next? What’s next? And part of it was just seeing ideas that he had articulated, in 1992, 1993, come to fruition in rather concrete ways— sometimes in unexpected ways. He got enormous pleasure out of that. 

He was very generous with his time, very generous in his appreciation—extremely so. And he was always very quick to take blame when something went wrong, which was quite remarkable. To say the least, things that went wrong were definitely not his doing, but he would say, I probably should have done it differently. I’m sorry. I think I caused a problem, I’m sorry. It was really quite unbelievable, very magnanimous, even if perhaps inside he was angry at one or another official—very magnanimous and gracious.

Riley

Were there any geographical areas or any issues areas that, for whatever reason, seemed to be particularly perplexing to him, or particularly difficult for him to grapple with?

Barshefsky

Issues? Countries? No. You’d have to be kidding. For Clinton, the harder and more complicated, the better. But what was always difficult for him was personal confrontation. He might get angry, but he never actually wanted to confront directly, other than a very brief flash of anger more generally directed to the room, not the person. He likes people and wants to be liked. To the extent that adding that edge might have been helpful in a given situation, you had to find a way to accomplish that without counting on him being more aggressive on a personal level.

Riley

So he was not very good at controlled anger in that way?

Barshefsky

Yes, that’s a good description. I’ll leave it to the trade context since that’s where I know it best. He was not very good at being demanding in a way that compelled a personal and direct response. But he was adept at making the other party – however exasperating—understand the importance, see the vision, what could be accomplished and why the direction was so common-sensical. He was so gifted at that and personally compelling, that [loud sirens]—

Riley

That’s what happens when you start talking about the President. 

Barshefsky

—You learned how to use all of these gifts to best advantage, and you learned not to depend on him finger-wagging at a foreign leader, or something of that sort. 

I don’t think there’s any way for someone who hadn’t spent a lot of time with him to fully appreciate how brilliant this guy is. It’s like the Garrison Keillor line, Lake Wobegon, where all the kids are above average. Everyone in Washington is thought of as smart, right? At least by everyone in Washington. Oh so smart is the common refrain. There’s smart, and then there is that very occasional, rare, genuinely brilliant person. Bill Clinton is in that category,--hugely intelligent, intuitive and fluid in his thinking. I don’t think there was ever a meeting I had with the President on any issue, which by the time I walked out, I hadn’t wished I had a piece of paper and a pencil so I could have taken notes. That’s the kind of intellect he has. What a joy to work for someone like that. An unbelievable experience.

Riley

What about his reputation among the people that you were negotiating with? They must have had a walking-around image of this person that you were representing. How did that appear to you in your negotiations?

Barshefsky

As is evidenced by his international approval ratings, he had a little bit of that John Kennedy touch. People in foreign countries often looked at him in the way in which they imagined America—young, vigorous, smart, nice, friendly, attractive—and they liked him. He was never a liability—even going through what he went through with Ken Starr and [Monica] Lewinsky. 

I never felt I had to be apologetic. I never felt I had to say his name in a whisper or look abashed, at all. I never felt that way. This was partly because foreigners, by and large, liked him. They had confidence in his nature, thought he had put the U.S. on a tremendous track—nothing breeds accolades like success—and that the troubles he was having, were troubles either of an inconsequential nature, or ones that were no different from anybody else. And as to Starr, the international view ranged from outrage to utterly disbelieving that one person could hijack our democracy. 

Riley

Your own personal reaction to that, when you learned about it? Unless you’re reading Matt Drudge, I guess it first showed up on the pages of the Washington Post in January of ’98. 

Barshefsky

It did. My reaction at the time was—I guess sadness. It was a fairly bleak period, more so because I felt very bad for him, for his family, for Monica Lewinsky, who I didn’t know from Adam. This is a drama that should never have been played out publicly. When it is played out publicly, there is this element of voyeurism. You feel you know things you shouldn’t know, and you don’t want to know. It feels like a burden. I felt sadness because it would be a difficult period for him, and distracting. 

Riley

But you didn’t notice any change in your negotiating agenda as a result of this?

Barshefsky

No. The pace of the agenda remained the same. My own method of operating remained the same. All the more so because I felt it important that we not succumb to the view that there should be any difference.

Riley

Was there a Cabinet meeting? Did you attend a Cabinet meeting soon thereafter? I guess there was one that was fairly famous because—I guess Madeleine Albright and others, Donna Shalala—

Barshefsky

I was out of the country. Had I not been, I would have been, I’m sure, outside after the Cabinet meeting, but I was out of the country.

Riley

Did you have any noticeable difficulties in your job, being a woman in that position?

Barshefsky

Generally, no. I believe that being a woman is advantageous. First of all, had I been a man they would have committed homicide on me. Being a woman meant that there was a certain aggressiveness beyond which most male negotiators will not go. That was the rule, but there were occasional exceptions. 

I think being a woman is helpful on the body language/intuition side. Not that men don’t have that as well, but I think it’s a trait more typically associated with women. Being a woman also created opportunities for relationships and conversations that would have been atypical for a man, and were rather of a more personal nature. Oftentimes my counterparts would begin talking to me about their daughters and their wives, about life, about their own aspirations. I always thought, well, if I were a man I would be out golfing or drinking, but I’m not sure the conversations would have been at all the same. I always thought being a woman was to my advantage. 

The most important thing, with respect to the question, Does it hurt or help being a woman?, is status. Rank trumps gender. If you’re a woman and you’re a Cabinet Secretary, you are their counterpart. You will be treated with the deference appropriate to that rank and that status.

Riley

And you found this true in your negotiating across the world? Interesting.

Barshefsky

Across the world. There is just a certain propriety about it. If you were a lower ranked woman, the difficulty might have been greater. But if you know this is who your counterpart is, this is who you have to deal with, this is a person of rank, there is a certain protocol that goes with it, which sets at least a baseline of behavior. Then, as I said, being a woman helped in the course of many negotiations. Once in a while, of course, the situation became quite a bit more dicey. But by and large, I always thought it was helpful.

Elliott

Do you think that your job was made easier because Carla Hills was your predecessor? Did she plow the ground at all, or do you think she had a similar experience?

Barshefsky

No, I think it’s pretty individual. I suspect Carla had very much the same experience. 

Riley

I want to make sure that we get the full story, and there may be some other bits and pieces of things. Your work on the deal with China in 1999 is very important and I think probably helps illuminate a lot of things that we’d like to know about how you worked and how this White House worked, because there was a point at which you weren’t able to bring the President along with you. 

Barshefsky

Yes.

Riley

I don’t know how early to start this story, but maybe the thing for us to do is just ask you to begin at what you think is the best point to begin with. Let’s track through what happened with the President. I guess that was in the spring.

Barshefsky

April.

Riley

April of that year. In November you went and spent a week with Gene Sperling in China. I’m assuming that must have been the concluding element or close to the concluding element in the same process. If you could sort of talk us through that, that would be really important for us to have in the record.

Barshefsky

As I said in the beginning of the interview, I always had my eye on China’s WTO accession. Our earliest negotiations with the Chinese started not with the WTO issues, but with intellectual property rights, textiles, and a bunch of other market access issues for about the first year. In 1994, I began looking at where we were on the WTO front. There had been sporadic discussions with the Chinese for several years prior to the Clinton presidency on the GATT (the forerunner of the WTO), but these talks did absolutely nothing to advance the ball. So I began a process to determine what the Chinese were actually thinking, based on these early discussions. 

It became clear to me that the Chinese had no idea what GATT accession actually meant, or that it would force fundamental change in China’s policies and economic programs. The Chinese simply assumed they would get a political deal with no painful restructuring. This, in my view, could not be allowed to happen; we were not going to let China enter the WTO on terms different from everybody else—terms weaker than the norm. And if our goal was to push China onto a more internationalist path, WTO talks were our leverage. I made abundantly clear to the Chinese over many, many meetings, that there would be no political deal. Ultimately, I created a roadmap, an eight- or ten-page paper, which went through, not the specific commitments they would have to make, but the range of topic areas that had to be covered in any accession agreement, plus a couple of other bells and whistles.

Riley

The timing of this would have been roughly—

Barshefsky

Ninety-five. I did that, much to the objection of many people in the administration, because it seemed to me that the talks would never go anywhere without a full understanding of the WTO and buy-in from the Chinese leadership. And it seemed to me that there was no question but that no one in the leadership had any idea what WTO membership actually meant or what it would entail. The earlier discussions had never established this baseline understanding and had never garnered Chinese leadership attention.

This roadmap paper created quite a stir in the Chinese government, but it allowed them to get their heads around what they would need to do to join the WTO. In doing the paper, we were also mindful of a lot of the economic reforms that were taking place in China at the time. So, with the paper was an explanation by me orally to them, why WTO accession would be quite consistent with their economic reform agenda. It would accelerate their development through deeper and more comprehensive reform, then cement those reforms and thereby bring China into the global system.

It was from that point on that the negotiations began getting serious. There were many ups and downs, and countless long sessions. The President had a state visit to China in 1998 and wanted to know if I’d have a deal in time for the visit. I said, Highly unlikely, but we’ll give it a shot. We worked very hard. It’s Clinton’s state visit, so the leverage is really on China’s side. I could have gotten a deal, but it would have been sub-par in my view. So the President got to Beijing and said, Where are we? And I said, You aren’t going to have a deal. He was great. He said, Not good enough? I said, Nowhere near. He said, Good. Leave it go. Then negotiations continued again intensively up to the Zhu visit in April.

Riley

From his vantage point there was enough else going on to justify this visit without his having—

Barshefsky

Of course. The Chinese Premier, Zhu Rongji, subsequently came to Washington in April of 1999.

Riley

This is after we bombed their embassy?

Barshefsky

No, this is before. I had been negotiating very intensively from the time of Clinton’s state visit forward. Zhu and I had a number of meetings in advance of his April visit, even though some White House political advisors argued that the President shouldn’t do the agreement when Zhu was in Washington, lest Congress think the President was soft or just wanted an agreement for agreement’s sake. They had no specific plan for reaching agreement post-visit. No suggestion as to when or how a deal might get done. Or if. The thinking was short-term only—not now.

Riley

Right. And you’d had the problem of the campaign contributions two years—

Barshefsky

Yes, but that wasn’t part of this at all. I pushed Clinton’s staff and several other Cabinet folks very hard. Rubin, Summers, Podesta, Sperling, Madeleine, Bill Daley, Sandy Berger. I fought very hard, as did Sandy, for the proposition that if I could get the deal I wanted, we should finish the agreement. I thought my chances of getting a strong deal were high. 

There ensued a huge debate. Prior to that time I typically had weekly meetings with Rubin, who had been always on board for doing a deal, including in April. Rubin did an about-face. This was all reported in the press at the time, accurately. I don’t know for certain what motivated Bob, though I have a pretty good guess, but it was a stunning reversal. Podesta and Sperling were also very much against doing the deal while Zhu would be in Washington. 

Given this turn of events, I became increasingly concerned. A week before Zhu Rongji came to the U.S., I went back to China to warn him that the President might not take the deal. We had a range of issues still outstanding. I told him that he could agree to every issue I wanted, he and I could shake hands, but at the end of the day, the President might say no, and he needed to know that. He needed to know there were a number of advisors urging the President not to do a deal when he [Zhu] came to Washington. 

I went to Beijing for that meeting and flew back home. I went for two reasons. One, because I owed it to Zhu. He needed to know in advance—to prepare himself— that it was possible this deal would not be accepted by the President when he arrived. And second, I did it because, if in fact the President didn’t accept the deal, I would have no way of keeping it on track for the future if Zhu felt he had been deceived. 

I went back to Washington. Countless additional meetings ensued. Everybody was in camps. I was firmly of the view that the President should do the deal and reinforced that directly with him the day before he met with Zhu. I also had Mickey Kantor phone the President to urge that the deal be finalized. He believed, as did I, that the President would tell Zhu that we should complete the agreement while he was in Washington. I, in the meantime, had stopped negotiating. The short answer is, the political advisors won out. 

Riley

I’m not quite sure, from this distance, what the concern of the political advisors—

Barshefsky

Largely, the Democratic Caucus.

Riley

And it was completely on human rights?

Barshefsky

Too much strain. No, it was just too much strain on the Democratic Caucus—a politically inopportune time. The President was relying on the caucus in so many ways, including supporting him personally. And the caucus was split, but largely negative, on China in any event. It was just not the time to do the deal, in the view of some.

Riley

Okay. 

Barshefsky

By the next day, the press reported that Clinton had walked away. He was derided in every newspaper in the country. The editorials were scathing. Clinton was as mad as I have ever seen him, ever. One of his advisors made a reasonably lame attempt to show the President a favorable editorial, which the President batted out of the advisor’s hand, saying, Don’t show that to me. This is a total screw-up. And it was. I think this was among the worst political advice he had ever gotten from his assistants. He asked me if I thought I could hold the deal together, and could he perhaps persuade Zhu Rongji to reengage? I told him, I think it’s worth a try, and that I would hold the deal together, if I at all could. I didn’t say the if I at all could, out loud, but I was thinking it. 

Zhu was not going to be mollified, and he would not re-engage. He was embarrassed, though he knew this was all a distinct possibility. Instead he went on the offensive by saying to the press in every city to which he went, including while still in Washington, We were 90 percent of the way there, 95 percent of the way there. I can’t believe this. I was ready to finish. And of course the business community was up in arms. 

Riley

Did he take some shots at you also?

Barshefsky

Zhu? No, not at all. He was gracious. He pulled me aside at the dinner the President hosted in his honor and thanked me for being both honest and a friend. To make a long story short, Zhu left Washington and I spent all night with Wu Yi [then Vice-Premier] trying to hold the deal together by getting the Chinese to agree that it would remain intact in full until such time as we reengaged. This was a truly torturous negotiation, culminating in our insistence that her lead negotiator sign the agreement as evidence of near completion. Intact. Of course, at the end, there were several areas from which China retreated. Most of those we got back, a few we didn’t. 

That was genuinely a very low point, in part because I had worked so hard, in part because of the schism it created in the administration, and in part because the President ended up mortified by his advisors. I was also concerned that once Zhu returned to China, he would be politically vulnerable because of the failure, and that the agreement would not hold together for very long. Then we had the mistaken bombing of the Chinese embassy in Yugoslavia, and an almost five-month hiatus with no contact with the Chinese at all. 

Riley

Is that right?

Barshefsky

At any level of the administration, on any issue, other than our explanation for the accidental bombing.

Elliott

I was just going to ask—maybe you could expand a little bit on the negotiation to get them to just do the standstill. At that point, what leverage did you have? What appeals did you use to get them—just that if they wanted the deal at all?

Barshefsky

I remember I talked all night. I’ll never forget it. My basic argument was that, this was the one chance the U.S. and China had to create an enduring foundation for the relationship. There was no other foundation. There would be no other foundation if it was not economic in nature. If this agreement was allowed to lie fallow and ultimately collapse, what exactly would the nature of the relationship be? What would stabilize it? What would develop it? Where would the trust come from? What would happen? Arguments along those lines proved effective. I also made arguments based on China’s own internal reforms. Not doing the agreement would be read as suggesting that China would not continue with its internal reforms, or that its internal reforms were reversible, affecting business confidence in China and its global positioning. Lots of arguments of this nature. 

Subsequently, we tried to reengage the Chinese once the dust had settled, no pun intended, on the embassy bombing. We crafted a proposal for Clinton to make to the Chinese, under which the Chinese might resume the talks. Clinton sent a letter to this effect to Jiang, who then responded. There were then phone calls, and ultimately Clinton and Jiang met on the fringes of an APEC meeting in the Fall of 1999. And negotiations were set to resume. 

By that juncture, I was largely negotiating only with Zhu Rongji, in very long intense sessions, three or four hours at a stretch, which is a lot for a Premier. In many ways, this was a remarkable exercise, as it was before he came to Washington, because Zhu was a very exceptional leader. Brilliant, decisive, visionary. Ironically, at this time there were many people advising the President that we should move fast to get an agreement finalized, lest anything else happen. I argued against and prevailed, because speed would not have enhanced our bargaining position.

Then it came time for what was hoped to be the last week. I suggested in one of our little mini-Cabinet meetings on this, that either Podesta or Gene come with me. I said, The Chinese were sucker-punched once. It isn’t going to happen again. It seems to me they’ll get the picture that the White House isn’t going to walk away a second time if one of you comes. 

Riley

And each of those had been influential in convincing the President to—

Barshefsky

Yes, each of them had been against it, and the Chinese knew that. Every newspaper in the country knew it. Each was against. 

Riley

Who drew the short straw?

Barshefsky

Well, there was quite a bit of discussion about that, with some people opposed believing that this was not a good idea. The view was, We don’t want the White House too close to this. What if it failed? Ultimately, I prevailed. For Podesta to leave for a week, or what could have been a week, given that he was Chief of Staff, was really impossible. Gene was not in that position. I had, of course, a second reason for wanting either Gene or Podesta with me, and that was, if one was with me he wouldn’t be making mischief back home. So we went. 

Riley

Had Gene ever done anything like this before?

Barshefsky

No, not at all. As he says, I would script for him what he needed to say and when. It worked very well. 

Elliott

At this point was he supportive? Or was it just that the President had told him he wanted him to do this?

Barshefsky

I had to persuade the President as well, that this was the way to go. I did that on the basis that this would give the Chinese full confidence that the White House would not back away a second time. Of course, the White House wasn’t going to back away a second time. There was never any question about that. And Zhu Rongji already knew that I wouldn’t go back to China unless there was an intention to conclude, all things being equal. But however remote, I also wanted to avoid nasty surprises. I just had to be sure that I covered my back. That meant either John or Gene not sitting in the White House. 

Riley

So you’re there for a week.

Barshefsky

There for a week, very intense.

Riley

Is Gene seeing some things he’s never seen before?

Barshefsky

He got quite an education. 

Riley

I hear the Chinese serve crow very well. 

Barshefsky

We had been in China for a week. There were delays in our negotiations of many hours at a stretch as the Chinese conferred internally. I felt that we had to shake them up a bit and move their internal process along. Call the question, if you will. So after five tortuous days, I told everyone in our delegation to pack their bags, we were leaving. I told the President the night before on the phone, Well, I’m going to give this ’til tomorrow morning and that’s it, we’re gone. And the reason, Mr. President, is that this doesn’t look good for the United States and it doesn’t look good for you. We are not supplicants. This is a negotiation Either they’re going to do this deal, and they’re going to do it by tomorrow, or the position of the United States should be, ‘Goodbye.’ He agreed. 

Everyone packed their bags. I knew the Chinese would know. For good measure, we also began sending luggage to the airport. I went to the Trade Ministry the next morning, early, telling them I was coming, to say goodbye. I was in a reasonably aggravated mood. I rarely lost my temper in a negotiation. I usually used humor to defuse tense situations, but I had had it. I said So, this is really the time that either you are going to do this agreement as we have discussed, under the parameters we’ve set up, or we’re going. My Trade Minister counterpart said, Wait, wait. You can’t leave. And I said, Ah, but we are. 

Literally, at that point, almost on cue, Wu Yi came into the room and said, Zhu Rongji is here. He’s come to the Ministry. He has never come to this Ministry before. And he wants to meet with you. So Zhu and I, Qian Qichen, who was then the Foreign Minister, Gene and others met. Zhu and I went through the outstanding issues – by that point there were relatively few. We discussed each, went back and forth and so on, and ultimately came to agreement. It was done. 

I went back to the room where we had originally been meeting and I said to my team, We’re done. We have an agreement with Zhu Rongji, and we’re done. Turning to my Chinese counterpart who was still trying to redo a particular provision, I said No more negotiation on anything. It’s done. It’s finished. Then, Gene and I went to call the President, using the ladies’ bathroom to make the call to get some privacy. That was quite a scene. 

We called Clinton, who Sandy Berger had to get out of the shower somewhere in Europe. I told him we had completed the talks with a deal in hand. Clinton was thrilled and quite laudatory. By now there were hundreds of reporters gathered at the Ministry. We walked from the bathroom to a crowd of people and reporters. The Chinese Trade Minister and I did a mini-signing. And that was that. I flew back through Hong Kong where we stayed up all night to put together materials on the deal. Then home. PNTR was done the next year. 

Riley

Was that your most satisfying accomplishment during your tenure?

Barshefsky

You know, there are a lot of things that were satisfying. In terms of historic importance, there’s nothing that compares to the China deal. .This was an agreement of historic economic, political, and global importance. I appreciated its true magnitude not when I started the effort, but during its course. 

More narrowly, I liked the way the deal came together. And I liked how I handled the deal itself. I was very grateful I went to China the week before Zhu came to the U.S. I don’t know what might have happened had I not made that trip. I don’t think a deal would have been possible—or at least not as comprehensive or tough as this one. 

But there were many agreements of which I was very proud. We negotiated over 300 trade agreements during the Clinton presidency. Many with both economic and strong foreign policy aspects, others just great economic or sectoral deals. Our trade agreement with Vietnam normalized the U.S.-Vietnam relationship for the first time since the Vietnam War, and was the precursor to its WTO accession. It also paved the way for Clinton’s state visit to Vietnam, which was a marvelous experience. Our FTA with Jordan and other agreements in the Middle East were directed at growth, but also had a strong foreign policy rationale with an eye toward eventual peace. There were huge economic agreements—the Global Telecom Agreement, the Global Financial Services Agreement, the Information Technology Agreement, the Global Agreement on Duty-Free Cyberspace—all huge agreements in economic terms. But the China agreement stands in a separate category because it is extraordinary in almost every way imaginable. It opened China as a global market, created a foundation for U.S.-China relations, and brought China into the international community, in a way far more compatible than otherwise would have been possible.

Riley

In my limited experience abroad, I don’t think anything that I’ve ever touched has had quite the sensitivity of the two-China issue. Is that something that you ever brushed against?

Barshefsky

Of course, Taiwan is a neuralgic issue with the Chinese. To the Western mind it’s almost inconceivable that for China anything other than eventual reunification would be a disaster. But that is what the Chinese feel, by and large. And there’s something of a boost to integration, in any event, when you consider the 350,000 Taiwans living in Shanghai. Taiwan is the single biggest investor in China. The level of integration is already very high. But, there is an obsession about Taiwan that’s very hard for the West to grasp. 

Taiwan became an issue on the WTO front. Simultaneous with doing the China agreement, we negotiated a Taiwan WTO deal. Taiwan raised the prospect of not recognizing China in the WTO when Taiwan entered. That is to say they would take a formal reservation, and not apply WTO privileges to China. So I said to the Taiwans, You’re never going to be in the WTO if you fail to recognize China. We’re not playing this game. You are not going to use an agreement with the United States to bring the China-Taiwan issue into the WTO. 

China then got the idea that maybe it would withhold privileges from Taiwan. And I said to China, You know, big as you are, you’re not getting in either. We’re not playing this game. Each had to commit to recognize the other up front, before the accession votes. And each did. It was, in its own way, all silly stuff because each knew what the U.S. response would be, but it’s stuff that you don’t want to have get out of hand.

Elliott

I don’t know if you can really assess, because you said you had several issues that were outstanding as of April, but at the end of the day—my guess is that we couldn’t have gotten a better deal in April than what we got in November, but I don’t know. Were you able to get past that and negotiate an equivalent deal?

Barshefsky

The deal was almost identical—but not quite.

Elliott

Did we lose something?

Barshefsky

One thing in particular, which I’ll get to. Let me say first that the deal is a great deal substantively. The strongest evidence of that is that no one, no one—not labor, not the textile industry, not any company, not any member of Congress—said to me, I need more. Go back. No one.

Elliott

That is pretty amazing.

Barshefsky

No one. We bested what everyone thought we’d get almost across the board. For example, on special safeguards. Labor had asked for a special provision that provided for potential import relief for a 10-year period. We came back with 12 years. 

Elliott

Is that right?

Barshefsky

They wanted ten, thinking I would get five. I got 12. I just wanted to stick the point home. The one thing we lost, which I would have liked to have gotten back but couldn’t, was 51 percent ownership in telecom. 

Elliott

And you had that in April, or you think you could have gotten that?

Barshefsky

I had it in April in the text. That fifty-one percent ownership became fifty-fifty in the final deal. Fifty-one was very controversial in China. I’m not sure the Chinese would ever have implemented it. But I would have liked to have kept it.

Elliott

What about the implementation? Do you think that’s been—

Barshefsky

Best, as to be expected. Implementation is excellent on things that can be objectively measured. This is true for all countries. Tariffs were to have gone from e.g., 25 percent to 10 percent. You know if that’s happened or not. A tariff is a tax and taxes are absolute and measurable. In all other areas we wrote the agreement in as black and white terms as possible to eliminate, as much as we could, instances of bureaucratic discretion and non-compliance. But you can’t get around it entirely. Anytime you have licensing regimes or standards-setting regimes and so on, there will be elements that are much more difficult to enforce. 

Predictably, areas hardest for the Chinese to negotiate were agriculture, which is hard for every country, including ours; services—banking and telecom in particular; and intellectual property rights, which remains a problem.

Riley

We’re getting close to being at the end of this. Just a few more questions. One, were you involved in the decisions related to the steel industry protection? 

Barshefsky

Yes.

Riley

That’s something we ought to talk about because it has future implications. With the current administration we’ve got something very different.

Barshefsky

The administration was under pressure for almost two years to provide some form of unilateral relief to the steel industry, or to bring cases on behalf of the steel industry against foreign parties.

Elliott

Triggered by the Asian financial crisis, or did it begin even before that?

Barshefsky

I don’t remember now. It may have begun even before the crisis. We did not provide relief. By we I mean ultimately a concordance of views between Treasury, USTR, State, and a couple of other agencies. It was a very difficult decision because the President felt so strongly about the question of potential job loss. I did as well. 

At the end of the day, the point of greatest resonance for me was the signal we would be sending, post-Asian financial crisis, about imposing unilateral restraints, or closing our market. Asia was still in such financial peril and was so dependent on U.S. growth and the U.S. market for its own stability, that I couldn’t imagine what the effect might be were we to say, Your major export earner, steel, is no longer welcome in the U.S. For me, the potential instability that might ensue, the knock-on effects to the U.S. economy, and the potential for a protectionist race around the world, with countries doing to us what we were doing to them, was of sufficient concern that I felt we simply had to resist. 

As far as bringing cases on behalf of the industry, I was unequivocally opposed. Number one, industries can bring cases on their own behalf. I saw no reason on earth why U.S. taxpayers should pay for litigation on behalf of an industry that routinely used private lawyers to bring cases. Second—and borne out some years later—they had a very weak case. I sat down with the industry at the time and said, You’ll lose the case. You want the administration to bring a case it’s going to lose somewhere along the line. That’s how the facts looked at the time. Maybe you’ll make it through Commerce. Maybe you’ll make it through a preliminary WTO ruling, but somewhere along the line, you will lose. I can’t imagine why you would want your last hope for relief— the administration— paralyzed because it lost its own case. How then could you go back to the administration and ask them to do anything further for you? The industry ultimately brought its own cases and, as I predicted, lost in the end.

The political cost of all of this was high. Some analysts believed that the Administration’s decision cost Al Gore West Virginia. I doubted that at the time and even more so in retrospect. But I think all of us—speaking for the group of us who had countless steel meetings with the President—remained comfortable that unilateral relief carried significant risk for the U.S. economy and global recovery, and we simply could not, should not, take that risk.

Riley

Do you recall who the principal voices were within the administration who were pushing in the opposite direction? 

Barshefsky

Political advisors, of course. The Congressional Steel Caucus, of course. Democrats. Some individual administration officials.

Elliott

Did the Vice President—do you remember if he expressed a view at that time?

Barshefsky

I remember him being in meetings. I don’t remember him expressing a view. Most of the discussion was with the President. 

Elliott

Did the President himself bring up the political implications? You’re still a year and half out from the election.

Barshefsky

No, the President was quite appropriately—and this is true for all us—very concerned about the trend in employment in the industry, and wanted a solution. But he felt it had to be a solution that was also responsible to our overall growth and the broader global economy. Having said that, he was very concerned and the jobs issue plagued him. He would say in any one of a number of meetings, I wish we could find a solution that didn’t put other elements of our economy at risk, didn’t put the global economy at risk. We need to try and find a solution. It’s just very hard, other than trying to enhance special provisions for job loss, job retraining, et cetera. 

Riley

There are a couple of events that I had noted that I’ll just toss out, and if you have any specific recollections about them that you want to record, fine. If not, we can move on. One was Clinton’s talks with [Ryutaro] Hashimoto in April of ’97. You were working that meeting also. Is anything notable about this or any of his other meetings with the Japanese that we ought to talk about?

Barshefsky

No, I don’t think anything in particular.

Riley

Then in 1998 in Geneva, a WTO ministerial meeting. Anything memorable about that?

Barshefsky

Clinton spoke. He was completely marvelous. We very much wanted him to speak. Europe at that time was making mischief about the U.S. being disengaged with respect to the multilateral process, and we thought, Well, what better way to counter that than have the President make remarks in Geneva? It was wildly successful. That was really a marvelous event. Also interesting at that event was, from my point of view, that I met Fidel Castro. 

Riley

Oh, really? Did you avoid shaking hands with him?

Elliott

Or just make sure the photographers didn’t catch it?

Barshefsky

I’m trying to think. I certainly didn’t avoid him. I don’t know if I shook hands with him or not. But anyway, there he was.

Riley

Did he look like you thought he would look?

Barshefsky

Yes, he did.

Elliott

He looked exactly like his picture? Did he have a cigar?

Barshefsky

He did. He had the green suit and the beard and the whole nine yards.

Riley

Epaulets? 

Barshefsky

The whole nine yards, and I thought to myself, It’s a sad testament to U.S.–Cuba policy that this man looks as good now as he did 40 years ago. U.S. presidents look tired and worn out after four.

Riley

[laughing] That just completely drove out of my mind what my next question was. Bananas. Did you spend a lot of time on bananas?

Barshefsky

I spent a lot of time on bananas, which became a WTO case that established the proposition that even if what you’re providing from the U.S. are only services attendant to a product – for example distribution—but the product itself is grown somewhere else, you still have a cause of action in the WTO. That was a an important precedent to establish. 

Bananas was an example of a couple of things. It showed absolute European policy intransigence, particularly as it relates to former colonies, even if the policy is demonstrably adverse to the interests of the former colonies. These countries hadn’t diversified their economies because of an economically dangerous reliance on a colonial-era bananas regime still encouraged by the EU. That was a disservice to these economies. Absent diversification, every time there was a hurricane, half their GDP [gross domestic product] would be wiped out overnight, literally. 

Riley

That sounds like an argument you’ve made before.

Barshefsky

Oh, yes. But it was also a WTO case that arose out of a fair amount of political pressure from the Hill—Democrat and Republican—because of Chiquita’s quite substantial influence on the Hill. As a result, even with the WTO precedent—which was very positive—I spent a lot more time on the Hill on bananas than bananas were ever worth. 

Elliott

Some would argue that that case was kind of the tipping point in terms of the sort of tit-for-tat thing we’ve gotten into with E.U. and dispute settlement.

Barshefsky

No. The tipping point was not really bananas. Leon Brittan was very upset when he looked at the total number of cases the U.S. had won in the WTO against Europe, relative to European wins against the U.S. That was before the bananas case. His staff had been working on an FSC [Foreign Sales Corporation] case for quite some time even though the issue had been settled years earlier, to try to even-up the litigation score. 

Elliott

Right.

Riley

Going to just a couple of very broad questions to conclude. You’ve talked about what you felt like your greatest accomplishments were. What about the unfinished business? Was there anything in particular that you look back on and you regret?

Barshefsky

I don’t have any regrets, I have to say. We did over 300 trade agreements, one of which was NAFTA, one of which was the Uruguay Round, one of which was China PNTR, one of which was a global telecom deal, and so on. In the broadest sense, we established trade as an important part of both domestic economic and foreign policy. We demonstrated, through the kinds of agreements we did, that trade agreements were important to U.S. export performance and to shifting the locus of job creation in the U.S. to higher valued-added jobs. We also showed that trade agreements are a vehicle not only for economic growth but also, going back to Roosevelt’s and Truman’s articulation, a force for peace and stability. It is a critical basis for diplomatic relations among countries, and alliance building—particularly important after the Cold War and a weakening of the alignments it had spawned. As I said, it is the foundation of our relationship with China. It is the foundation of our relations with Vietnam. It is our foundation with the APEC countries taken as a whole, and so on. If you look around the world, trade is typically the anchor; it is a vehicle through which U.S. influence and Western norms are spread. 

Take the U.S.-Jordan Free Trade Agreement. We had an FTA [Free Trade Agreement] with Israel; I wanted one with an Arab country. My notion was that given an FTA with Israel and one with, for example, Jordan, it would only be a matter of time before Jordan had an FTA with Israel, which is the point. In this regard, I didn’t care about the agreements with us per se, but rather my goal or hope was to see an eventual FTA with each other. To further this possibility, we also started a special program by which joint Jordanian and Israeli investment into an industrial trade zone would qualify the resulting products for duty-free treatment in the U.S. I then tried to add Egypt into the mix, which refused because it didn’t want to be in an agreement with Israel at that time. But the point is that apart from the economic benefits to the U.S., a U.S. – Jordan FTA could open up the possibility of further middle east integration – an adjunct to peace. You have to lay these foundations. In a region like the Middle East, which is the most restrictive and difficult in trade terms, even worse than Sub-Saharan Africa, the only way to build a sustainable peace is to also build sustainable economic growth. Without that, peace would never last. 

So, we took a very broad view of what trade policies could accomplish apart from just solving individual sectoral disputes. Then, multilaterally, finishing the Uruguay Round was critical to ensuring an even more robust rules-based system. And the global agreements on telecom, high-tech, cyberspace and financial services, showed, among other things, that you could negotiate sectoral deals in the WTO without a formal Round; that is, that the WTO is itself a forum for ongoing negotiation. You don’t need to launch and then wait interminably for a round to conclude. You can instead take the 10, or 15, or 20 countries in the world that account for the vast bulk of global trade in a particular sector, reach agreement, and then add everyone else. That’s how we did each of our sectoral deals. The global telecom and financial services agreements are of enormous economic consequence. The ITA is considered one of the most successful trade agreements, ever, for its near immediate and substantial economic gains through the elimination of global tariffs on technology inputs and end products. What you need is continuous, timely liberalization, or the WTO system will atrophy. As it is, globalization tends to be back-end driven. Business driven. But global agreements produced through multilateral rounds tend to focus on more traditional areas of trade, such as agriculture or textiles, rather than newer-economy concerns, such as services, ICT, and so on. The average length of a Round – soup to nuts – is 12-15 years. Globalization moves too fast for that. If you are to help shape policies in newer areas, open markets and maintain a robust rules-based system covering all forms of trade, you have to be agile and quick. Sectoral deals in high-value or emerging areas do just that.

I feel very good about all of this. There is one area that I wanted to do differently and could not get consensus in the administration, in part because the politics were bad, but also because Treasury was staunchly against it. I wanted to do what I dubbed the P-5, which was a concoction by me and Tim Fischer, the Australian Trade Minister, P standing for Project 5.

Riley

Not a silent p in this case.

Barshefsky

Not a silent p in this case. My concept was to take five of the APEC countries that were more advanced—the U.S., Australia, New Zealand, Singapore and Chile, with Korea in observer status—and negotiate a free trade agreement with the five. This would have become, de facto, the basis for an APEC-wide free trade agreement over time. Treasury was very opposed to this approach. It will be proven to have been wrong. Politically, the timing was also awkward, though I fought very hard for it. 

That agreement needs to happen, because from the U.S. point of view, trade policy must be reflective of the new and capable of addressing our positioning in the world. The new is the emergence of China and India, and the question of U.S. involvement in Asia as a continued dominant player. We’re losing that. We will lose that. The question is, how does the U.S. rebalance the equation? P5 would have been the start to that rebalancing. Because I felt so strongly about this, and despite continued opposition, I made sure that the U.S. launched individual free trade agreement talks with both Singapore and Chile before the Clinton term expired. This was the residual legacy of P-5.

P-5 is the one area, which I’ve thought about quite a bit over the years. Not pursuing it was a mistake by the Clinton administration. It should be pursued by this current administration, which so far has shown virtually no interest in Asia. We’re in a potentially perilous position with respect to our own competitiveness and global positioning, and to sit still is not acceptable. 

Riley

I wanted to ask you about that, because it’s very common when we get this final stage of the interview, in talking with those who worked in the domestic policy shop, or those who worked in the broader foreign policy shop, to look at what’s happened since 2000 and to feel that much of their good work has been undone.

Barshefsky

I don’t feel that way at all. It’s a great luxury, I have to say. Trade policy, despite the occasional fits and starts, has been on a reasonably consistent trajectory since Franklin Roosevelt. Every administration since—six Republican, six Democrat—has pursued a more open trade path, a freer trade path. Jerry Ford made the best comment on this. He once said that when he and John Kennedy were in the Congress, neither had a perfect record on trade. But when each became President, they became free traders. That is the picture you see at 10,000 feet when you’re President of the United States—the importance of trade as an engine of growth, alliance-building, and an adjunct to peace and stability. 

As a matter of policy, therefore, the trend has been toward ever-increasing global liberalization, largely pushed by the U.S. No one has come up with a better economic model that produces the aggregate gains of a more open trade regime. The dislocation is the challenge, but the answer certainly can’t be that we ought to hope poor and uncompetitive countries remain poor and uncompetitive. The point is, we have to find a way to make the poor wealthier – both countries and people—which, in the U.S., is largely a function of tax and domestic policy. And we need a better way of dealing with workers who are dislocated. 

Riley

I want to make sure that I’m hearing—go ahead.

Barshefsky

And so, if you look at trade policy over time, just as the Kennedy Round begat the Tokyo Round, which begat the Uruguay Round, which begat the Doha Round, these open trade policies have been followed by every President and every USTR since the position was created. Carter administration policies formed the foundation for [Ronald] Reagan, Reagan for Bush I, Bush I for—and so on. Each was the foundation for the next, and each took it to the next level, finishing any unfinished business, devising new agreements and concepts, and leaving some areas to be completed. In the case of our administration, as we’ve discussed, we finished NAFTA and the Uruguay Round, negotiated over 300 additional agreements, and inaugurated free trade agreement talks with Singapore and Chile. These talks will be completed by the Bush administration. After them, the next administration will complete whatever was left on the table, and they’ll add new things. That is how it happens in the trade world. The trend line is very consistent across administrations.

Riley

But do you think any President who is serving from 1993 to 2001 would have had the same level of accomplishments that you had, or the same devotion to free trade?

Barshefsky

I think the level of accomplishment is quite specific to an administration. And I do think the Clinton Administration deservedly stands out in this regard. But the policy trajectory across administrations is consistent.

Elliott

What I was going to ask is, are you a believer in the bicycle theory? Because of some of the signals about USTR maybe being downgraded, or the fact that there isn’t a USTR, the fact that Social Security and taxes are clearly the priorities—if trade policy went into stasis for the next four years, would the system keep stumbling along? Would someone else pick up the leadership? Would it be okay to just come back and the next President in four years pick it up, or could that be a potentially—not that he would do anything protectionist, necessarily, but just kind of dropping it on the back burner.

Barshefsky

I don’t know the answer. I think there’s a tendency to over-dramatize the fits and starts in trade policy or trade negotiations. The world has yet to collapse for the failure either to open a round or to close it. And countries have yet to retreat from any of those failures. Does that suggest there is no bicycle theory? No, I’m not saying that. But there is a tendency to over-dramatize what’s really happening. 

If the proposition is that globalization tends to be driven by companies—and I think this is correct, by and large—then liberal policies are reinforced by existing commercial arrangements, including investment-led arrangements. This may provide sufficient stability to the system overall so that various shocks or failures can be withstood quite successfully. So, too, countries’ policies and laws change in order to comply with global rules—they are not easily reversed on short order. So after the hiccup ends, you begin again at the appropriate time. 

Would I want to test the theory that one could stop bicycling? I wouldn’t be anxious to, no. But I’m not persuaded, necessarily, that the bicycle theory speaks to what is actually happening in many of these countries. 

Riley

Let me try one slight variation on that. Is it your opinion that the presence of the position of the USTR creates institutional momentum in a positive direction because you’ve got somebody who’s charged with dealing with this? The fact of this position’s creation, therefore, in effect creates a bicycle rider where there might not otherwise be one. 

Barshefsky

Certainly, the creation of USTR put a spotlight on trade and trade policy and that does create its own momentum, as does the appointment of a USTR, who will be professionally impelled to succeed, regardless of Administration. USTR is successful because it is focused on a historic mandate, it’s mission is clear, the means are well tested and the staff is the most dedicated, tough and able in the entire government. And to return to something we talked about earlier, that’s why any downgrading of USTR is not in the U.S. interest. That’s because people actually do make a difference on an individual basis. The more credibility you have, the more heft you have, the more a player you’re perceived to be, the more you accomplish. The less credibility you have, the more on the outside you appear to be, the less political heft, the less you accomplish. 

That’s how it works in the world of international trade policy and trade negotiations. Why on earth should the U.S.—would the U.S., could the U.S.—in effect, unilaterally disarm? What exactly would the purpose of that be? Who would benefit from that? Our economy? I don’t think so. Exports? I don’t think so. Workers? I don’t think so. It’s arguably a gift to other countries, which might then be able to say, We don’t really need to open our market to the U.S., or put our top people on that negotiation. We don’t really need to demonstrate political will in opening our market. Look who the U.S. has on the case. What a misguided policy, if in fact that’s the direction.

Riley

Anything else? You have been most generous with your time.

Barshefsky

You know, it’s funny. I don’t really look back at my time in the administration. I think when Clinton’s term ended I was so exhausted that I was ready for it to be over. I had stopped counting the number of times I had been around the world after the first term, and I served both terms. I was ready to get back to some more normal life. I also knew that what we accomplished was very substantial, and would not be reversed, as I explained earlier. I didn’t have to worry. 

A lot of people approached me about doing a book. I just couldn’t bring myself to do it. I didn’t want to spend two years looking backward in time. It just didn’t appeal to me. But during these interviews, it has been fun to recollect things you think you forgot. As I talk about it, I get images in my mind, as I’m sure you could tell. I could see the room, I could see the people, I could see the faces. That’s been a real pleasure.

Riley

Well, that’s the great fun for us, that you’re describing these vivid recollections that you had, and so we really feel like we’ve got a front row seat to history. And this is true regardless of who it is that we’re talking with. There are some who I think have felt probably less burned out and have been able to spend a bit more time casting their glances back. But all of these are extraordinarily valuable, precisely because you’re too busy, you don’t have the time to keep—as you said, I’d love to have the chance to write the notes down after I came out of the Oval Office. 

Barshefsky

Exactly.

Riley

You don’t do that. You don’t write your books. But fortunately, we’re going to have as good an approximation as we can get of these accumulated memories—somewhere on the order of 100 to 125 interviews when this is over. And that won’t be a bad picture, I think.

Barshefsky

That’ll be great. I would look forward to seeing the whole package ultimately. It would make very interesting reading.

Riley

Well, it’s great fun for us to do, and again, thanks for letting us come to talk.

Barshefsky

Thank you so much.