Dean A. Pinkert is a partner in Hughes Hubbard’s International Trade practice. He is a former Commissioner of the U.S. International Trade Commission. Pinkert was nominated by President Bush and confirmed by the Senate in 2007, and was designated Vice Chairman by President Obama in 2014.
As a commissioner, Pinkert participated in numerous anti-dumping, countervailing duty, and safeguard investigations, including the special safeguard investigation of passenger tires that resulted in import relief for the domestic tire industry and was upheld by the World Trade Organization. He participated in an unprecedented number of final determinations in Section 337 investigations during his tenure, notably dissenting in an electronic devices case that went to President for policy review. President Obama, relying on many of the factors cited in the dissent, overruled the commission for the first time since 1987.
Pinkert spoke with MetalMiner Editor Jeff Yoders by phone about several issues facing metals producers and manufacturers, including global steel and aluminum overcapacity and how the new Trump administration can approach trade and overcapacity issues. This is the final post in our three-part series that covers border-adjustment and tax policy.
JY: The reason you might want to avoid a VAT is that it would apply to all transactions, right? It would be on individuals and not companies.
DP: Think of it as the difference between a sales tax in the United States and an income tax. They are completely different. A VAT is essentially a national sales tax. We have sales taxes but the issue we’re talking about is the corporate income tax. If the U.S. adopted a VAT it would be a huge change so the idea here is to stay within the corporate income tax concept, but make some tweaks so that U.S. companies aren’t disadvantaged relative to foreign companies. Because we’re not talking about a VAT, though, you might get a different outcome at the World Trade Organization when it’s challenged by another country.
A VAT would be a big change. We are getting into some areas of policy that I’m not an expert on here, but there are all sorts of other issues that go way beyond the issue, but from a trade perspective the idea of a border adjustment is supposed to neutralize the advantage that VAT tax countries might have in international trade. The WTO may come to the conclusion that, even though a border-adjustment does have some features of a VAT, it’s still not acceptable because it might be viewed as an export subsidy.
JY: If you were called to the Oval Office to advise the administration on how to move forward on making trade more fair, what the most pressing issues are and what the administration should do first, what would you tell them?
DP: Wow, that’s a great question. The administration has obviously talked about taking the Trans-Pacific Partnership off the table and I understand that. There are a whole series of issues, though, that I think, should be discussed with our trading partners. Those include services trade, non-tariff barriers, intellectual property, labor rights. Whether TPP was the right agreement or not, let’s leave that to one side, it would be a big opportunity cost for the administration not to address those issues. It sounds to me that when I listen to (German President Angela) Merkel and President Trump or (U.S. Trade Representative nominee) Bob Lighthizer at his confirmation hearing, it sounds me like the administration is going to be aggressive in pursuing negotiations and understanding on those issues with our trading partners.
JY: Losing the intellectual property portions of TPP is something that I think we in the press did not do a good enough job of communicating to the public exactly how it would have brought a level of IP enforcement to the countries in that agreement. Places that have a completely different view of IP.
DP: A lot of what happens in these trade negotiations is of benefit of the trading partner to agree to. Many people think of it as we’re going to go into this negotiation and they’re going to get some things from us and we’re going to get some things from them. But, in many cases, the things we “get from them” are actually good for those trading partner nations. The broadest example is if you go back to the WTO agreements in the early ’90s. One of the things that was agreed to is that countries would have a system of judicial review of the decisions that were being made on trade for their country. That wasn’t just good for the U.S. or individual trading partners, it was good for everybody.
Intellectual property enforcement might look like a give to an Asian country but it could be a tremendous benefit to them.
JY: Yeah, we talk about economic change but there’s not much we can change about another country or society we trade with. It’s the actual people within it who can create more change in that society.
DP: Yes, and sometimes it’s convenient for a country, I’m not naming names, that knows it needs to modernize and reform to tell its people “well, we had to do this because of the negotiations.”
It’s more convenient to say that than to say we needed to change because it’s good for us. I think judicial review is a good example of that.
JY: Anything else you’d like to see about trade or your time at the ITC?
DP: Yes, there is something else. This is a time of uncertainty about what the exact strategy and tactics the new administration is going to employ in the international trade area are. It’s an opportunity for everybody to rethink their assumptions and think about how people in many parts of the U.S. have been affected by trade and technology. Hopefully the result will be we will address the problems that are being experiencing many people in our communities.
If you think about the issues of opioid addiction and family breakdown in many of our communities, this is happening in places where the traditional sources of jobs have dried up. That’s where these things are happening.
With this new administration we have new opportunities to address that, you might have heard that one of the reasons I left the ITC when I did was, that after 10 years there, I saw an opportunity to come to Hughes Hubbard and I thought it was an opportunity, with that platform, to try to help companies to understand and take advantage of this new environment in trade.