US trade hawk hunts bigger fish in Trump’s China battles

US trade hawk hunts bigger fish in Trump’s China battles

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Before joining Donald Trump’s administration, one of Nazak Nikakhtar’s main jobs was to represent US catfish farmers seeking punitive duties against Vietnamese importers.

The 45-year-old Iranian-born trade lawyer and economist has since moved from the relatively small pool of the transpacific seafood business to the rougher waters of the US president’s trade war with China — a little-known hardliner playing a big role in implementing the administration’s combustible international economic agenda.

Ms Nikakhtar is the acting head of the commerce department’s bureau of industry and security — and awaiting confirmation to be its permanent chief — at a time when the unit is in the spotlight because of Mr Trump’s moves to expand export controls in the stand-off with Beijing.

This month, Mr Trump placed Huawei, the Chinese telecommunications network company, on a special export blacklist preventing American companies from selling to it without a licence, with more Chinese technology companies expected to suffer a similar fate.

Although the decision was made by the US president, Ms Nikakhtar is overseeing the crackdown. People familiar with her views say she has not shied away from warning American businesses of the danger of extensive economic relationships with China. And they say she is more in favour of disentangling the two economies rather than fostering closer ties.

“There’s no question she’s hawkish. She believes that far too much of the supply chain has moved to China and that whether pursuing self-interest or not, companies have prioritised the short term over the national interest,” said one person familiar with her views.

To some, this approach has placed Ms Nikakhtar squarely in the camp of Peter Navarro, the White House manufacturing policy chief and author of a book called Death by China. Others say that her lawyerly expertise aligns her more with Robert Lighthizer, the US trade representative leading the negotiations with Beijing — who is known for his rigour and attention to detail, in addition to a worldview that is deeply sceptical of globalisation.

Either way, Ms Nikakhtar’s rapid rise to a key position in the US administration worries some lobbyists and export control experts, who are looking for flexibility and pragmatism to prevent a backlash against US companies. “I think there will be growing concern in the business community about her,” said one former senior commerce department official.
Not only are US technology companies wary of stringent export controls because they could lose billions of sales to the Chinese market, but they are also worried such controls could hamper US innovation in the long run by cutting off their access to research and development in China.

A commerce department official said Ms Nikakhtar was “concerned about China’s damaging behaviour and any other country that poses a significant threat to US national security”. She had also “repeatedly explained to US industry that our technological leadership is synonymous with national security”. As recently as last week, Ms Nikakhtar “actively” engaged with US business on “relevant issues” including Huawei, the official said.

One of the difficulties in assessing Ms Nikakhtar’s approach is that she has made few public remarks since joining the Trump administration. Ms Nikakhtar declined a request for an interview.

However, a glimpse of her opinions came in congressional testimony in late 2017, when she complained that America’s “commitment to free and fair trade” was not always mutual, echoing the US president’s frequent laments. “I watched US industry struggle to stay alive . . . our industries were eroding, our output was declining and good hardworking Americans were losing their jobs because our trading partners were not competing fairly,” she said.

Ms Nikakhtar also described how she emigrated from Iran to the US in 1979, aged six, in the aftermath of the revolution with her parents who became physicians at veterans’ hospitals. “I knew growing up that I wanted to be part of the American industrial growth,” she said.

Alan Price, chair of the international trade practice at law firm Wiley Rein, recalled that Ms Nikakhtar was part of a coalition of US and European lawyers in 2015 and 2016 trying to convince the EU not to grant China the status of a market economy.

“She was very familiar with the economic distortions in China that exist because it is state-owned, state-managed, state-controlled — and provides incredible unfair advantages,” Mr Price said. A critical challenge for her will be to see if she can forge common cause with US allies in trying to implement more stringent export controls on China, especially given the collapse in trust in transatlantic relations.

Ms Nikakhtar’s first position working for Mr Trump — under Wilbur Ross, the commerce secretary and steel industry investor — was as assistant secretary for industry and analysis. This immediately put her on the front line of another controversial trade gambit by the US president. Ms Nikakhtar played a pivotal role in crafting a confidential report sent to Mr Trump in February that labelled automotive imports a threat to US national security, providing the legal basis for the US to slap tariffs on allies including the EU, Japan and South Korea.

Toyota, which has big manufacturing operations in the US, responded scathingly after the comments were made public this month, saying the message was that its investments were unwelcome. “Our operations and employees contribute significantly to the American way of life, the US economy and are not a national security threat,” it said.

During her time in private practice, her clients included, apart from the catfish farmers, foreign companies such as Samsung Electronics and Hyundai Steel. She represented the United Arab Emirates in a case featuring Mr Lighthizer working for US Steel on the other side. Her husband, Eugene Degnan, is also a trade lawyer, at the Washington-based firm of Morris Manning & Martin, which often represents foreign exporters facing possible punitive duties. A commerce department official said Ms Nikakhtar had “recused herself from all matters that pose any potential conflict, including all matters involving her former law firm and her husband’s law firm”.

Chuck Levy, of Cassidy Levy Kent, the law firm where Ms Nikakhtar worked before joining the Trump administration, suggested business had little to fear from her hawkishness. “She’s smart and hardworking and digs into the facts and she asks questions. I don’t think she’s an ideological or close-minded person,” he said. But her broader task, of interpreting Mr Trump’s fusion of economic issues with national security, was certainly daunting.

“Striking the balance between maintaining the competitiveness of US companies and at the same time protecting its national security . . . it’s not an easy job” said Mr Levy.

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