Trump's trade chief lectures his boss on MOUs and gets an earful in return

The exchange between US President Donald Trump and US trade representative Robert Lighthizer unfolded in the Oval Office on Feb 22, 2019, during a meeting with a Chinese trade delegation.
The exchange between US President Donald Trump and US trade representative Robert Lighthizer unfolded in the Oval Office on Feb 22, 2019, during a meeting with a Chinese trade delegation.PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - An exasperated Robert Lighthizer, the United States trade representative, tried to gently educate his boss Donald Trump on the meaning of a "memorandum of understanding", leading to a presidential lecture in front of television cameras and a top Chinese official.

The exchange between the President and his top trade negotiator unfolded in the Oval Office last Friday (Feb 22) when the President was asked during a meeting with a Chinese trade delegation about how long so-called memorandums of understanding (MOUs) would last in an eventual accord with Beijing.

Negotiators have been drafting MOUs on areas such as agriculture, non-tariff barriers, services, technology transfer, currency and intellectual property as the two nations work toward a deal.

Mr Trump told gathered reporters that the memorandums would "be very short term. I don't like MOUs because they don't mean anything. To me, they don't mean anything".

Mr Lighthizer then jumped in to defend the strategy, with Mr Trump looking on. "An MOU is a binding agreement between two people," he said. "It's detailed. It covers everything in great detail. It's a legal term. It's a contract."

But the President, unswayed, fired back at Mr Lighthizer. "By the way I disagree," Mr Trump said.

The top Chinese negotiator, Vice-Premier Liu He, laughed out loud.


"The real question is, Bob," Mr Trump said, "how long will it take to put that into a final binding contract?"

The exchange marked the latest instance in which Mr Trump tried to reshape the branding of a major trade agreement during high-stakes negotiations.

Last year, he persuaded leaders from Canada and Mexico to change the name of the North America Free Trade Agreement, known as Nafta, to the US-Mexico-Canada Agreement, or USMCA.

Mr Trump said the prior agreement carried the baggage of closed factories, while his new acronym evoked the US Marine Corps.

Mr Derek Scissors, a China expert at the American Enterprise Institute, said that Mr Lighthizer is in a bind because he wants China to treat a deal with the US as binding even though it's not.

"The Trump administration originally chose MOUs because no truly binding agreement can be made on the exchange rate or large future purchases of corn, much less technology coercion China denies has ever happened," he said.

"If the administration switches to calling it a binding trade agreement, members of Congress will want to vote on it. If they don't get to, this looks exactly like Obama not wanting Congress to vote on the Iran nuclear deal."

But in Friday's debate over MOUs, Mr Lighthizer eventually deferred to his boss.

"From now on we're not using the word memorandum of understanding anymore. We're going to use the term trade agreement," Mr Lighthizer told reporters.

"We'll have the same document. It's going to be called a trade agreement."

He then turned to Mr Liu to ask if the Chinese would accommodate the new terminology, winning a nod from the Chinese leader.

"Good, I like that term much better," Mr Trump said, before again complaining that MOUs were not that meaningful.

"We'll never use that word again!" Mr Lighthizer responded.

As Mr Trump turned to take another question from reporters, Mr Lighthizer whispered to Mr Liu about not calling the agreements an MOU.