The Trump administration wants to redefine American trade policy. What will change?

The Wall Street Journal’s Jacob M. Schlesinger spoke with Michael Froman, the U.S. trade representative during the second term of the Obama administration, and Peter Morici from the University of Maryland, an economist who has questioned the free-trade consensus.

Here are edited excerpts of the discussion.

What Has Changed?

MR. SCHLESINGER: One hundred and three days in, what has changed significantly in trade policy?

MR. FROMAN: The main thing that President Trump has done is that he has withdrawn the U.S. from the Trans-Pacific Partnership. It said the U.S. is going to step back from the leadership role that it played through the negotiation of TPP.

Much of the other things that he has done have been more in line with launching studies. And then with regard to the North American Free Trade Agreement, where there was a big debate whether he was going to pull out of Nafta or renegotiate it, we’re now in renegotiation mode.

MR. MORICI: We’ve been on a continuum of a more muscular trade policy. Members of Congress have felt more discontent because the benefits of globalization have gone to one group of Americans and the adjustment costs have gone to another. In many communities, adjustment hasn’t taken place in the way the textbooks say it should.

We’re awfully far out in time in places like Reading, Pa., and so forth from when the factories closed. But not just the workers but their children seem unable to move into another world, into other opportunities.

If we go back and look at the Obama years, Mr. Obama was hardly wimpish on trade. He pursued trade cases with considerable vigor. Now we see Mr. Trump ratcheting that up. A lot of the campaign rhetoric seems to have fallen to the side.

It’s no great accomplishment to nix TPP because Congress wasn’t going to pass it. We are going to see this administration be a bit more aggressive.

I don’t see a fundamental reordering of our relationship with our Nafta partners, nor with China, but rather an updating of Nafta to reflect the negotiating goals that were in the TPP.

The New Order

MR. SCHLESINGER: There’s a line, I think coined by Elizabeth Warren, that personnel is policy. So what really matters in these kind of policies is the people you put in place.

Peter Navarro recently became head of the Office of Trade and Manufacturing, Wilbur Ross the commerce secretary, and Robert Lighthizer, who will probably be confirmed soon as U.S. trade representative to succeed Ambassador Froman.

MR. MORICI: Of the three, so far Wilbur is designated to lead trade policy. He’s a sort of a venture capitalist. A private-equity guy might be more accurate.

His most notable history relating to trade was turning around a couple of the large integrated mills when we had the steel tariff at the beginning of the Bush years, and then more recently running a large textile firm, which benefits greatly from something called rules of origin. How much fiber must you have in fabric and how much fabric must you have in apparel for it to qualify for free trade?

PETER MORICI | ‘I’m very anxious to see what spin [Robert] Lighthizer puts on all this when he arrives.’ Photo: Ralph Alswang/Dow Jones

When you ask Wilbur, “What are we going to do about Nafta?” He says, “We’re going to redo the rules of origin.” Some of the most rigorous rules of origin on the planet are on apparel that moved between the United States and Mexico.

These personalities aren’t deeply steeped in the intricacies of American trade policy and of the requirements and opportunities that the World Trade Organization offers us.

The notion that we’re going to study the WTO as to whether it is worth our interests and we’re going to have bilateral agreements instead of plural lateral agreements—think about it.

With the 12 partners in the TPP, we’re now going to have 121 cross agreements? I find that ludicrous.

At the same time, I’m very anxious to see what spin Mr. Lighthizer puts on all this when he arrives, because he has a very solid knowledge of these things.

MR. SCHLESINGER: So far, what the Trump administration has done is launch a lot of studies. What are the specific things that you are watching most closely?

MR. FROMAN: I think this administration’s made the renegotiation of Nafta their top trade priority. We viewed the Trans-Pacific Partnership as the renegotiation of Nafta because Mexico and Canada were part of it.

They agreed to give us access to their energy markets. They improved intellectual property. They improved investor protections. And they did that not because we were giving them anything, because they already had full access to our market, but because they were getting access to Japan and other markets and TPP. Now the question will be if we make a bilateral or a trilateral agreement, will Mexico and Canada be able to give us the same or more?

Mexico has an election coming up next year. They have candidates who are not particularly pro-American, and to the degree that we’re seen as embarrassing the Mexican government or forcing them to agree to a one-sided deal, it’ll be interesting to see how that plays into the politics there.

MR. MORICI: Embarrassing negotiating partners in international negotiations isn’t a terribly effective strategy. You can, sort of, intimidate another businessman or woman across the table and that may or may not work. With a political leader, electorates don’t like that sort of thing.

Donald Trump hasn’t transitioned from being wa candidate to being a president very effectively. That has to happen soon if he’s going to get something done in these negotiations. Again, cooler heads will hopefully prevail and bringing in a real trade professional, I think, would be very useful, and we’re about to get that.