Fred Hochberg is a veteran business leader and LGBT rights advocate. He is the most recent chairman of the Export-Import Bank of the United States and former co-chair of the Human Rights Campaign. Before beginning his career in public service, he served as the president and chief operating officer of the Lillian Vernon Corporation for nearly two decades.
Harvard Political Review: Since March, the [Export-Import] Bank’s five board members’ seats have remained vacant. How vital are the roles of the chairman and the board members to the mission of the bank?
Fred Hochberg: The Export-Import Bank was started in the 1930s by [Franklin Delano Roosevelt]. The Securities Exchange Commission, the Federal Election Commission, the Federal Communications Commission: a lot of those were [founded] in the ’30s. Sometimes, they can be like a five-headed monster because they have five board members. In Ex-Im’s case, as with those others, the board makes major decisions. The fact that right now, the Ex-Im Bank has been without a board, without a quorum, for almost three years has stalled [it] from doing major work. It can only do loans for small businesses, and, at that, small loans.
The last year I was there, we did about four or five billion dollars in loans. The last time the bank had done that was 40 years earlier, so the bank is a shadow of itself. It is not supporting the number of U.S. jobs; it is not making sure that U.S. companies compete globally and go toe-to-toe with the Chinese and the Germans and the Koreans and so forth. We have hampered our American workers and companies by not having that fully operational.
HPR: How might the appointment of a chairperson to the Ex-Im Bank, specifically in the context of the current trade disputes between the United States and China, change the game?
FH: Let’s remember one thing: there is a chair and four board members. The Senate today could confirm the other four board members and the bank would get right to work. [It would] have a quorum, which is only three [board members], so they could be operational within 24 hours if the Senate decided to vote on the other four. In that case, the vice-chair would be the acting chair, and they would be back in business. It could be done within 24 hours if the Senate wanted to act. They do not.
We want to make sure that U.S. companies and workers are on a level playing field when they are trying to compete with places like China. We are at a real disadvantage right now. I must have made close to eight or ten trips to sub-Saharan Africa when I served with President Obama. In city after city, the beautiful soccer stadiums are built by the Chinese, or the Ministry of Foreign Affairs is built by the Chinese. We are there, but we are more absent.
HPR: How do you believe that the power of China’s consumer base, in the context of this trade dispute, changes the ground rules for that?
FH: Substantially. I said this recently on Bloomberg TV, and it was in the New York Times this week. China is very successful, and has been, in mobilizing consumers to boycott or shun products from countries that do not pass muster with China. That certainly happened in their dispute with Japan over the islands right off the coast of China. A ‘soft boycott’ is a powerful tool that China can deploy far better than Western market-driven economies like the United States or Europe.
HPR: What do you believe the outcome of this trade dispute will be for the United States and China? What do you believe the ultimate effect will be?
FH: It is not clear what we actually want. China has been breaking the rules for a long time. Technology transfers, where they force U.S. companies to partner with a Chinese company and therefore transfer the technology, [have] been a policy for a long time. We also have intellectual property or IPR theft, where they actually steal software. Those are legitimate complaints. China has failed to address them in any substantial way.
President Trump has also said we have too big a trade deficit with China. He wants it reduced by a hundred million dollars. Trade deficits are a little bit of a misnomer because that means we buy more things from China than they buy from us. What is complicated is [that] a lot of [the] products we own and like in America were assembled in China. A lot of them are made by American companies, number one. Number two: China often assembles things, so since it is the point of last shipment, the deficit attaches to them. But a lot of the components come from Taiwan, South Korea, [and] other places in Southeast Asia. That is one reason why just looking at the trade deficit is a little simplistic.
But President Trump also says, ‘I want to cut it by a hundred billion dollars.’ China could find a way to cut the trade deficit by a hundred billion dollars but not address the issues of technology transfer and intellectual property theft. I am not exactly sure what is a win.
HPR: A common thread here seems to be that China has more leverage in terms of its trade disputes with the United States. Do you see the way in which the United States approaches trade — TPP, NAFTA, or bilateral trade agreements — changing permanently as a result of China’s growing leverage in the trade realm?
FH: China has growing leverage. It is the second largest economy in the world. [This] is not like when we had a trade negotiation with Panama or Colombia. China is a very large economy: 1.4 billion people that American companies want to sell to.
I know President Trump and Secretary [Wilbur] Ross prefer these bilateral trade agreements. When the rest of the world looks at how we have treated Canada and Mexico — in a somewhat shabby fashion and somewhat embarrassing or humiliating publicly — it is going to take a long time for somebody else to want to take a chance to do a bilateral trade agreement with the United States. Who knows what the collateral reputational damage could be to that foreign leader or that country? That is a nice idea that the administration has; I just do not see it happening.
HPR: Do you think it is fair to say that in the future the United States will either have to join these larger trade agreements, like the TPP, or give more in their trade relations?
FH: My hunch would be that we are not going to do any trade deals for years. I think that Congress has soured on this. American labor has felt they have not gotten a fair deal. We may just have to go through a period without a trade deal. There may be some consequences, and it may not be great for the entire economy, but I do not think the politics are with us right now to thoughtfully, smartly entertain doing a trade deal. Let’s see what happens. The public is not there. We live in a democracy, and if the public is not there, we have got to find other solutions.
Image Credit: Foreign Press Centers – US Department of State
This interview has been edited and condensed.