This Trade Hawk Is Hunting Bigger Fish in Trump’s China Battles

This Trade Hawk Is Hunting Bigger Fish in Trump’s China Battles

Nazak Nikakhtar, acting head of the Commerce Department’s Bureau of Industry and Security.

SourceAlex Edelman/CNP/AP

Why you should care

Because Nazak Nikakhtar is an under-the-radar hard-liner making the tech cold war happen.

Before joining Donald Trump’s administration, one of Nazak Nikakhtar’s main jobs was to represent U.S. 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 Trump’s trade war with China — a little-known hard-liner playing a big role in implementing the administration’s combustible international economic agenda.

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 Trump’s moves to expand export controls in the standoff with Beijing.

Striking the balance between maintaining the competitiveness of U.S. companies and at the same time protecting its national security … it’s not an easy job.

Chuck Levy, Cassidy Levy Kent

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

Although the decision was made by Trump, 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. They also say she is more in favor of disentangling the two economies 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 prioritized the short term over the national interest,” says one person familiar with Nikakhtar’s views.

To some, this approach has placed Nikakhtar squarely in the camp of Peter Navarro, the White House manufacturing policy chief and co-author of a book titled Death by China. Others say that her lawyerly expertise aligns her more with Robert Lighthizer, the U.S. trade representative leading the negotiations with Beijing who is known for his rigor and attention to detail, in addition to a worldview that is deeply skeptical of globalization.

Either way, Nikakhtar’s rapid rise to a key position in the U.S. administration worries some lobbyists and export control experts, who are looking for flexibility and pragmatism to prevent a backlash against U.S. companies. “I think there will be growing concern in the business community about her,” says one former senior Commerce Department official.

Not only are U.S. technology companies wary of stringent export controls because they could lose billions of dollars in sales to the Chinese market but they are also worried such controls could hamper U.S. innovation in the long run by cutting off their access to research and development in China.

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

One of the difficulties in assessing Nikakhtar’s approach is that she has made few public remarks since joining the Trump administration. 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 Trump’s frequent laments. “I watched U.S. 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.

Nikakhtar also described how in 1979, in the aftermath of the revolution, she emigrated from Iran to the U.S., at age 6, 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, recalls that Nikakhtar was part of a coalition of U.S. and European lawyers in 2015 and 2016 trying to convince the European Union 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,” Price says. A critical challenge for Nikakhtar will be to see if she can forge a common cause with U.S. allies in trying to implement more stringent export controls on China, especially given the collapse in trust in transatlantic relations.

Nikakhtar’s first position working for 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 U.S. president. Nikakhtar played a pivotal role in crafting a confidential report sent to Trump in February that labeled automotive imports a threat to U.S. national security, providing the legal basis for the U.S. to slap tariffs on allies including the EU, Japan and South Korea.

Toyota, which has big manufacturing operations in the U.S., 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 U.S. economy and are not a national security threat,” it said.

During Nikakhtar’s 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 Lighthizer working for U.S. 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 says 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 Nikakhtar worked before joining the Trump administration, suggests business has 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 says. But her broader task, of interpreting Trump’s fusion of economic issues with national security, is certainly daunting.

“Striking the balance between maintaining the competitiveness of U.S. companies and at the same time protecting its national security … it’s not an easy job,” says Levy.

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By James Politi

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