Jul 1, 2018

Gary Cohn's golf analogy to sway Trump on trade

Illustration: Lazaro Gamio/Axios

During his year and a bit as Trump's chief economic adviser, Gary Cohn tried many different tactics to persuade the president why some of his most hardwired instincts on trade were, in Cohn's view, misguided.

What we're hearing: In one memorable Oval Office meeting, Cohn told a fictional story about Trump's Scottish golf course to explain why Trump shouldn't try to remove a key protection in international trade deals, according to three sources familiar with the meeting.

Cohn said to Trump: "Mr. President, think about your golf course at Turnberry. If a bunch of birds started nesting in the bunker on the 18th hole and they were an endangered species, what if the town of Turnberry decided to close down the 18th hole to protect the endangered species?

  • "Without ISDS," Cohn continued, "that case would be heard in the local court in Turnberry," and the local court would decide whether Trump was owed compensation.
  • The killshot — or so Cohn apparently thought: "Mr. President, which would prefer? Having the local court in Turnberry hear the case where they'd probably shut down the hole forever and take it from you [without compensation]? Or go to ISDS, which is an arbitration panel where you choose on arbitrator, Turnberry chooses one, and the two of you mutually agree upon a third?"

What happened next: Trump's trade negotiator Robert Lighthizer interjected and said Cohn's golf course example was "ridiculous." Then Trump agreed it was ridiculous and went off on a tangent about what a magnificent property Turnberry was, how it was "one of the greatest places in the world," and mentioned all the things he'd done for Scotland, meaning this imaginary situation would "never happen."

Why this matters: The fight over whether to keep the investor-state dispute settlement (or ISDS) is a major sticking point in the Trump administration's NAFTA negotiations with Canada and Mexico.

  • Cohn vehemently opposed Trump's and Lighthizer's desire to rid NAFTA of ISDS — a provision, commonly negotiated in trade deals, that allows U.S. investors to sue foreign countries before international tribunals for alleged expropriations or discriminatory practices.
  • Trump and Lighthizer believe ISDS undermines American sovereignty because it allows foreign companies to sue the U.S. government. And they believe the legal certainty it provides incentivizes American investments overseas.

Ya can't make it up: The Trump Panama Hotel is in a commercial dispute involving the Panamanian government. The Trump Organization's lawyers are invoking rights under the countries' investment treaty and threatening to bring a claim for damages.

  • In other words: Trump's lawyers are invoking, in Panama, the very provision Cohn tried to talk Trump out of removing from NAFTA.

Go deeper

Mark Cuban opens door to 2020 run

Photo: Axios Events

Businessman and Dallas Mavericks owner Mark Cuban revived talk of an improbable 2020 presidential bid during an Axios virtual event on Friday.

  • "Everything's a reset right now," Cuban told Axios CEO Jim VandeHei from Dallas. "If this would would've been a month ago, I would have said absolutely not. But obviously things are crazy, things are changing. So I'll keep an open mind. But I seriously doubt it."

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 2 p.m. ET: 1,066,706 — Total deaths: 56,767 — Total recoveries: 223,697Map.
  2. U.S.: Total confirmed cases as of 2 p.m. ET: 258,214 — Total deaths: 6,605 — Total recoveries: 9,408Map.
  3. Business latest: Mark Cuban criticizes "arrogant" 3M on respirator production — The wartime mobilization effort to produce ventilators and medical supplies got started too late.
  4. Politics latest: Lawmakers on both sides of the aisle are worried about the difficulties of delivering the $2.2 trillion in stimulus aid.
  5. Jobs update: The U.S. lost 701,000 jobs in March, but the new report doesn't reflect the height of the virus' impact on the economy.
  6. World update: About half of the deaths worldwide are in Italy and Spain, with fatalities exponentially increasing across Europe.
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Mark Cuban criticizes "arrogant" 3M on respirator production

Photo: Axios Events

Businessman and Dallas Mavericks owner Mark Cuban said during an Axios virtual event Friday that 3M is "arrogant" for not speaking up about respirator production in the midst of the coronavirus outbreak.

What he said: Cuban criticized the company for "making more globally than domestically," echoing a similar line from President Trump now that the U.S. is the epicenter of the pandemic. "You can't ghost the American people," he told Axios CEO Jim VandeHei from Dallas.