August 2021 Volume 3

WASHINGTON UPDATE

Deep Dive on Trade Policy in The Biden Administration By Alex Perkins

There are a number of folks with trade-related responsibilities in any Administration – the State Department, the Department of Commerce, the Department of the Treasury– but the first among equals is the Office of the U.S. Trade Representative (USTR), a 200+ team of trade experts housed in the Executive Office of the President. The current U.S. Trade Representative is Ambassador Katherine Tai, the first Asian-American woman to hold this cabinet-level position. Previously, she served as Chief Trade Counsel for the U.S. House of Representatives’ Committee on Ways and Means, which has jurisdiction over international trade issues. In that role, she was the architect of the revisions made to the United States-Canada- Mexico Agreement (USMCA) text demanded by Democrats in exchange for supporting the NAFTA rewrite. Prior to that, Tai served in USTR’s Office of General Counsel as the chief counsel for China trade enforcement. Despite playing what would appear to be a partisan role in the USMCA process, she is liked and respected by stakeholders across the spectrum – from the Business Round Table to the AFL-CIO – which explains why the U.S. confirmed her nomination on March 17, 2021, by a vote of 98-0. Not Your Father’s Trade Policy So, after a little under 200 days into this Administration, what can we conclude about Ambassador Tai and her approach to trade- policy? Here are a few thoughts: At least rhetorically, this is not your father’s trade policy. In every speech that Ambassador Tai has given and in almost every press statement that USTR issues, they highlight the Ambassador’s efforts to reorient U.S. trade policy and make it more worker-centered and inclusive – essentially the translation of President Biden’s Build Back Agenda into trade-speak. Ambassador Tai most clearly defined what a worker-centered inclusive trade policy means in her remarks to the AFL-CIO back in June. Here are a few key quotes: “By bringing workers from all backgrounds and experiences to the table, we will create inclusive trade policy that advances economic security and racial and gender equity. We want to lift up women, communities of color, and rural America – people that have been systematically excluded or overlooked…” “Enforcing all of our trade rules is a priority for the Biden-Harris Administration. Those who work hard and play by the rules, you deserve to have the government on your side when faced with illegal and unfair trade practices...” “… a worker-centered trade policy means addressing the damage

that U.S. workers and industries have sustained from competing with trading partners that do not allow workers to exercise their internationally recognized labor rights…” Acknowledging that we have limited data to work with, it’s safe to say that a worker-centered, inclusive trade policy is as much about process as it is about substance – lifting up the voices of workers and domestic U.S. industry and limiting the influence of multinationals in shaping trade policy. And regarding that substance, if properly framed, almost any trade decision can be arguably worker-centered and inclusive. So, we won’t really know what the Ambassador means until she translates rhetoric into policy and puts more meat on the bone. With that said, there are some patterns emerging that are worth noting, which indicate that the Ambassador and the Administration are more interested in enforcement, especially of labor rights, and levelling the playing field for domestic workers and industry than increasing market access for U.S. exporters. Trade and Leverage The Ambassador likes her leverage, as she readily conceded in a Wall Street Journal article, back in March, when she stated, “No negotiator walks away from leverage, right?” Statements like these, as well as her actions, have quashed the hopes of those who thought that, given President Biden’s repeated rhetoric regarding the importance rebuilding bridges with friends and allies, she would quickly lift the Trump-era Section 232 tariffs on steel and aluminum imports from the European Union (EU) and possibly, Japan and South Korea. Instead, the Ambassador deftly persuaded the EU to refrain from ratcheting up its retaliatory tariffs on a range of U.S. products from bourbon to boats, which were originally imposed in response to the Section 232 tariffs and scheduled to double in June, days before the President’s visit to Europe. In exchange, she made a vague commitment to negotiate the possible resolution of the tariffs by December 2021. This soft deadline to conclude talks does not appear tobe coincidental – despite record high prices, domestic stakeholders led by the unions remain steadfast in their opposition to lifting the Section 232 tariffs. But by December, we may have an infrastructure/reconciliation deal – a top priority of these same stakeholders given the expected increased demand for steel and aluminum it will generate – making the elimination of the tariffs more palatable, especially if the EU, as expected, commits to meaningful steps to address the root cause of the issue, Chinese steel and aluminum production overcapacity.

FIA MAGAZINE | AUGUST 2021 5