Listening to Americans on Trade Policy

Show Notes

What Cathy is reading:
Five things to know about the Facebook lawsuits by Heather Kelly, The Washington Post, December 9, 2020

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Transcript

Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the audio before quoting in print and write yeutterinstitute@unl.edu to report any errors. Transcripts will be posted within one week of the show.

Jill O'Donnell: Welcome to Trade Matters, a podcast by the Yeutter Institute at the University of Nebraska - Lincoln. I'm Jill O'Donnell. This is our last episode for 2020. Trade Matters is going on holiday break and we will be back with more episodes in the new year. In the meantime, enjoy today’s episode and some of our past ones, and stay in touch on Twitter @YeutterUNL.

Our guest today is Catherine Novelli, President of Listening for America. Cathy has worked in the field of international trade policy for over 30 years including at the Office of the US Trade Representative and most recently, at the State Department as Under Secretary for Economic Growth, Energy, and the Environment.

Cathy, thank you so much for joining us on Trade Matters today.

Cathy Novelli: It's my pleasure to be with you.

Jill O'Donnell: So I want to jump right in and begin by asking you about a nonprofit you started recently called Listening for America. And I think this is really timely because it seems to me that your efforts through this nonprofit are part of a groundswell of effort among US foreign policy thinkers, current and former, and beyond, to make more efforts to reach average Americans around the country and engage with them on their perceptions of US foreign policy and trade policy and how it impacts them. So I'd like to start off by asking you, tell us a little bit more about Listening for America, the nonprofit you started. You've talked with Americans all over the country about their experiences with international trade and globalization through this nonprofit. So tell us why you started it and what your goals are.

Cathy Novelli: Well, I was dispatched when I was Under Secretary of State for Economic Growth, Energy and the Environment in the Obama administration. I was dispatched to go around the country talking to people about the Trans-Pacific Partnership Agreement. And so I went in the Midwest to do that because I was born and raised in Ohio. And what I found was that there was not support for the Trans-Pacific Partnership, but in the conversations when you ask people why they were concerned, the concerns that were raised actually were not what the agreement did. And my response to a lot of these comments was, "Well, if the agreement actually did all the things that you're saying it does, I wouldn't support it either." And I really saw that there is just a lack of factual information, not just about what went into that agreement or what it was about, but also in general about trade. And I also realized that there was some deep-seated, depending on who you talk to, some deep-seated anxiety about the changing world that was happening and a perception that having open markets was just a fundamentally unfair thing, not in the abstract, but actually the way that it had been working in the US. And so I decided to actually launch Listening for America to go talk to people from all walks of life around the whole country to try to find out what were they thinking and how was this actually impacting them on a daily basis. And so we have been in operation for two years. We've gone to virtually every region of the country. We've talked to thousands of people and we've talked to them in informal conversations, as well as in focus groups. And it has been extremely interesting this whole process. And one of the things I found is that whatever my expectations are when I go into a state, they're always shattered by the reality.

Jill O'Donnell: So expand on that a little bit more, if you would. I'm curious to hear a little more detail about what you're hearing from people and what takeaways you could share so far from all the conversations and focus groups that you've held. So if you could pick up on your last point there that they're kind of shattered by the reality, if I can borrow your words for a second, tell us a little bit more about that.

Cathy Novelli: Well, interestingly, one of the things that I've found is that a lot of, especially small businesses who benefit from all of the trade agreements that the United States has in place in order to access foreign markets, really don't know that they're getting those benefits. And secondly, that a lot of businesses who are actually engaged in foreign commerce don't perceive that they are doing that. And two quick examples of that. One was a small business in Ann Arbor, Michigan that did Salesforce type of work for small businesses. And the owner of it proudly told me that they were in 23 countries now and growing. And I then asked him, "So what does international trade and trade agreements mean to you?" And his answer was, "Well, they don't mean anything to me because they only apply to manufactured goods and I'm a service." And I said, "Well, do you know that the World Trade Organization actually has a whole chapter on services, and one of the reasons why you're able to so easily do these cross-border services is because the WTO actually provides for the ability to do that?" He had no idea whatsoever. The second example was a small business outside of Philadelphia. And this company provided a service of tracking where trucks were going, how the drivers were doing for longhaul type of truck driving for places like Federal Express, UPS, et cetera. And he said, "I have nothing to do with international trade at all." And so I started asking him sort of how do you do this service, and he said, "Well, we have a transponder that we put on the truck and then we look at the data." And I said, "Well, where does the transponder come from?" And he said, "Oh, well that comes from China." And I said, "Oh, well, do you program the transponder here in your office?" And he said, "No, engineers in India do that, and we do some of it." And I said, "Well, are these trucks only operating in the US?" And he said, "No, the trucks are going to Canada and Mexico too." And so to me, here is a person who is tied in and their business is tied in with the global world who their perception is that they're a purely domestic business. And I think there's a lot of that that goes on and we really need to do a better job of educating people about what the benefits of trade are. I think everyone has heard about the job displacement that can be caused by international competition, but not so many people have heard about all the benefits.

Jill O'Donnell: So a couple of follow-ups there. One is what would you suggest in terms of increasing opportunities for education and increasing opportunities for small business owners, like the individuals you just described, to gain a greater understanding of the role they actually are playing in international commerce and trade? And secondly, I also wonder how many of the concerns or anxieties that you've heard about from people, you mentioned deep-seated anxiety about the changing world earlier in our conversation a few minutes ago, how many of those anxieties do you think are actually related to trade challenges, or are they really related to challenges that need a domestic policy solution, which would be outside the purview of trade negotiators?

Cathy Novelli: I think those are excellent questions. So I will tackle the second one first. One of the things that we ask people in focus groups, especially when they talk about trade, positive job loss, it has all these jobs going overseas. And so we ask people, "Well, have you lost your job because of that? Do you know anyone personally who has?" We have almost never found such a person in thousands of people that we have interviewed, but that is kind of the myth. One thing I will tell you to illustrate that is, in Iowa, there was factory that shut down. It was making washing machines. And everybody that we talked to said, "Oh, well, it left and went to Mexico. It left because of trade." And then when I was talking to somebody who was a National Public Radio reporter, he said, no, that's totally false. The company that owned the plant was actually taken over by Whirlpool and they moved all the jobs to Benton Harbor, Michigan. So I think trade becomes a scapegoat, even when it is not the cause. I think there is a lot of anxiety about job loss, even if you are not someone who's lost a job. And so I think that there's a lot of that. I think recently stoking the whole China situation has caused some more anxiety. And so I think what the solution is to all of that in terms of educating people is a much bigger effort than has been made so far. And that really requires more than just a few people reading Federal Register inputs from individuals. I think it requires something much, much greater. And I would say I think you are correct that a lot of these anxieties that people have, trade may be part of it, but it's not the whole thing.

Jill O'Donnell: So let me pick up there too on, you mentioned Federal Register notices, and so I'd like to get your take on whether you think the US government is properly organized to take in the perspectives and feedback of ordinary Americans on trade policy like you're doing through Listening for America. And I want to just mention Office of the US Trade Representatives' 2020 trade policy agenda and the 2019 annual report, which includes three paragraphs on public outreach. It mentions USTR's open door policy and it discusses Federal Register notices and public hearings to solicit public comment. And these are probably not things most Americans are aware of or seek out or feel they have the time to do, if they're even aware of them. So this overall question I have for you is, is USTR set up to receive feedback from ordinary Americans in a way that is accessible to them? Because it seems this feedback, understanding how people are perceiving trade in their lives is an important first step to determining how to do better outreach and communication about its benefits and its role, its true role.

Cathy Novelli: I would agree with your last statement. I would also say I think that it not only is important to understand what people's perceptions are, it's also important to understand what their reality is, and that trade policy traditionally has really been an inside the beltway kind of thing. And the reason why there's a perception that the only folks who have access to providing input are big corporations is because those are the entities that can afford to hire people to monitor this all the time as a full-time job and provide their input. So in answer to your question about USTR structure, I think USTR is open to input from any quarter. I don't think they're not open to that. I think though that there needs to be a different kind of effort to reach the general public, and that effort just has never been part of the lexicon, the practice of USTR because they've been spending their time with an outward focus trying to break down barriers, trying to make more opportunity, with the theory that that doesn't just run down to the benefit of large companies. And I agree that it doesn't just. I think that rather than sort of passively wait for people to provide input to you and then read the comments, which some people will do, I think you're completely right that most people don't even know what the Federal Register is and they would have no idea how to file comments. They wouldn't even know kind of enough factual information about what the comments are being solicited about to say anything that would be terribly specific in terms of negotiating objectives. So to me, part of the need is for USTR, and more broadly, for the US government to do much more active outreach, to go to the people instead of expecting them to come that to them via the Federal Register. So I think that is one thing that would be really, really important, to actually have, as part of what you do, ingrained in your methodology, that you going to go out to the public yourself to the cities where people live and outreach. Obviously you can't go to every single city, but I do think it's really important to make sure that you're at least trying to get a representative sample of people from all walks of life and not just those who spend full time, all the time looking at policies.

Jill O'Donnell: Right. And I find it very interesting that in your prior role, when the TPP was being negotiated, that you did, in your official capacity as Undersecretary for Economic Growth, Energy and the Environment actually go travel outside the beltway to other parts of the US when that was under negotiation to understand how people were perceiving it. And it sounds like you're talking about ingraining that sort of strategy into what USTR and perhaps other elements of the US government do. So how would that work?

Cathy Novelli: I would add there that I think that even when people have done what I did, and there were a lot of people who did that for the Trans-Pacific Partnership in the administration, it was really more of a, "Let me tell you about this agreement." I think there's a difference between going in the mode of, "I'm just going to tell you what I'm doing," and going in the mode of I'm think, "We're thinking of doing this. What do you think?" And taking those comments back and thinking about is there a way to incorporate what we are hearing back from people into whatever we are undertaking right now? And to me, that is a very big difference, waiting until something's fully baked and then going and saying, "Okay, I'm going to tell you what's in it and you'll like it," versus, "Here's what we're thinking, what's your input on this?" And that's what the Federal Register is supposed to be for, but I would say it's a very inadequate tool for actually reaching the general public.

Jill O'Donnell: Right. So a few follow ups there too. I have talked with other former trade negotiators for the US like yourself, who talked about how they would stay up late at night reading 400 comments that poured in. And so, as you said, I think that I agree that USTR is very open to input from all quarters. Because I think sometimes people wonder if their voice is being heard or what happens after you hit send on something that you send off, whether it's via the Federal Register or some other mechanism. And I think you just make a really important point there about incorporating feedback at an earlier stage in the process. And so I wonder, what do you think it would take to actually shift to a point where that is really ingrained in how the relevant agencies operate? Should they start holding field hearings out in other parts of the country as a negotiation is underway, or how would you recommend at this stage that changes could be instituted to make that happen?

Cathy Novelli: I think there needs to be a multi-layered approach. One is to definitely hold field hearings. I think there needs to be a second prong of that, which is one of the groups that we talked to all around the country were the people in the local government, in some state governments who are in charge of economic development for their city, and we talked to a lot of small businesses. And I think that should be the second prong because trade needs to be perceived as part of the economic development at a state and local level by people negotiating these agreements. And they need the input of what is happening there and what's going to be most useful for the economic development so that you build more of a bottom up approach instead of just a top down approach. I think you have to have both things. Obviously you have economic theory, you have the input from big companies, but I think you need this other input as well to figure out how you're going to shift priorities.

Jill O'Donnell: Okay. I'd like to also ask you about other elements of the US government. We've talked about the Office of US Trade Representative, where you've worked. You also served as Undersecretary for Economic Growth, Energy and the Environment in the State Department, which includes the Office of the Chief Economist at the State Department, not an office that we necessarily hear a whole lot about outside the beltway. Tell us a little bit more about the mission of that office, how it relates to USTR and perhaps other elements of the US government, such as the Department of Commerce, what their role would be in a new strategy to take in public input as we've just discussed?

Cathy Novelli: Well, every agency has economists in it. So there is this one at the State Department. There's also a chief economist at USTR. The Commerce Department has many, many economists. And when I was Undersecretary, the Chief Economist worked as an arm of helping us shape policy. And certainly we worked on trade policy, but we worked much more broadly on economic policy, economic international policies. We worked on telecommunications policy internationally. We worked on digital issues. We worked on many, many things. And the Chief Economist was, and his staff, an integral piece of that in two ways. One was providing us input from an economic point of view how are the policies we're thinking of going to have a positive or negative effects on what we want to achieve. And secondly, my Chief Economist actually started a whole liaison with chief economists and other foreign ministries in the world to talk about the economic underpinnings of policies that we in the US government had decided we were going to pursue, with the idea that if you could get different economists agreeing, it made it a lot easier to get political agreement about things. And that was extremely effective.

Jill O'Donnell: Okay. So I want to follow up too and ask another question here about what to do with all this feedback once it is gathered, whether it's through Listening for America or whether it's through current or perhaps future mechanisms established within the government to engage on the ground with people and understand their perceptions about policies under development. So trade policy of course has different impacts in different states, depending on the economic drivers in a particular state, which could lead to differing of course perceptions about specific trade policies. So once this feedback is gathered, what should federal level officials, trade negotiators, others whose job it is to pursue the national interest do when feedback from the American public might be in conflict with each other?

Cathy Novelli: That is a question that confronts a government official on a daily basis. And the feedback that conflicts isn't only from the American public. You also have feedback from different companies with different interests that conflict as well. And part of the role of a government official is to take a step back, to look at all the feedback and say, "How do I balance all these things for the greater good?" And that happens every day, all the time for a domestic policy and for an international policy. I think as we've been talking about how do we get more input, obviously the balance is going to be struck in a different place depending on what the input is that you have. And so, if you have more input from the general public, from small businesses, from cities, if you have more of that, you're going to balance your priorities in a different way than if you don't have any of that, not because you are purposely trying to, to have a policy that isn't as balanced, but because that's all the input you have. So your output's only going to be as good as your input.

Jill O'Donnell: Okay. So Cathy, I need to follow up with a last question here that I ask every guest on the show, and that is what is something you've read recently about trade or local commerce that's been particularly striking to you?

Cathy Novelli: I would say what I've read most recently is the FTC taking actions against Facebook to say that they think Facebook should be broken up. And while that may sound like a wholly domestic issue, Facebook is global. It is all over the world. The issues of digital access, of privacy, of integration are everywhere. And the concerns about Facebook are felt in Europe, they are felt all over the globe. And I think that these issues of digital platforms, of how competition will be maintained across borders, inside borders, that is going to be one of the key questions that US trade policy is going to have to confront in the future.

Jill O'Donnell: Okay. So a very forward-looking issue there. Is there any particular article, a report that you've read on this specific issue that you would recommend?

Cathy Novelli: I've just been reading the articles in The Washington Post. I believe that there are some analyses that have been done in Brookings, I don't have the exact titles of those articles, but Bill Baer, the former Assistant US Attorney General for Antitrust has been writing about this quite prolifically.

Jill O'Donnell: We will look those up because this is certainly a major issue and yet another facet of trade policy that will continue to take off and be important to dive into. Cathy Novelli, thank you so much for joining us today to help us understand the importance of listening and what to do with that feedback. We really appreciate it.

Cathy Novelli: My pleasure, thank you.

Jill O’Donnell: That’s it for this episode of Trade Matters. Thanks for listening. If you like the podcast, leave us a review. It helps new listeners find us. We will be back with more episodes in 2021. Meanwhile, a big thank you to Alex Voichoskie and Jacy Thoman for helping produce this podcast.

Opinions expressed on Trade Matters are solely those of the guests or hosts and not the Yeutter Institute or the University of Nebraska – Lincoln.